ANNual REPORT October 31, 2016
T. Rowe Price
PRMSX
Emerging Markets Stock Fund
PRZIX
Emerging Markets Stock Fund–I Class The fund invests in companies in developing markets worldwide.
T. R owe P rice E merging M arkets S tock F und
HIGHLIGHTS • Emerging markets stocks rallied during the 12-month period ended October 31, 2016, as investors grew more confident that the U.S. Federal Reserve would take a gradual approach to raising interest rates. • The Emerging Markets Stock Fund gained 14.25% in the reporting period and outperformed its benchmark and Lipper peer group. • Stock selection in Brazil and China boosted relative results, while our overweight to the consumer staples sector and underweight to energy detracted. • Valuations for emerging markets stocks are attractive, with many trading at discounts to their historical averages and relative to their growth prospects.
The views and opinions in this report were current as of October 31, 2016. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of the fund’s future investment intent. The report is certified under the Sarbanes-Oxley Act, which requires mutual funds and other public companies to affirm that, to the best of their knowledge, the information in their financial reports is fairly and accurately stated in all material respects. REPORTS ON THE WEB Sign up for our Email Program, and you can begin to receive updated fund reports and prospectuses online rather than through the mail. Log in to your account at troweprice.com for more information.
T. Rowe Price Emerging Markets Stock Fund Manager’s Letter
Fellow Shareholders Emerging markets stocks rallied during the past year as global central banks stayed accommodative, commodities prices recovered, and investors grew more confident in the reform outlook for some key emerging markets. Brazil’s market soared as investors anticipated an economic turnaround under President Michel Temer and important reforms after the impeachment of former President Dilma Rousseff. During the period, your fund outperformed its benchmark, thanks in large part to stock selection in the financials and consumer discretionary sectors.
PERFORMANCE REVIEW P erformance C omparison Periods Ended 10/31/16
Total Return 6 Months 12 Months
Emerging Markets Stock Fund
12.08%
14.25%
Emerging Markets Stock Fund–I Class
12.17
14.45
MSCI Emerging Markets Index
9.68
9.67
Lipper Emerging Markets Funds Average
8.06
7.88
The Emerging Markets Stock Fund returned 14.25% for the 12 months ended October 31, 2016, versus the 9.67% return of its benchmark, the MSCI Emerging Markets Index, and 7.88% for its Lipper peer group average. (Results for I Class shares varied slightly because of their differing fee structure.) Stock selection accounted for the fund’s relative outperformance.
MARKET ENVIRONMENT
Emerging markets stocks rallied over the past 12 months as deep pessimism at the start of the period gave way to rising optimism about the outlook for most developing countries. Worries about China’s 1
growth slowdown and collapsing commodity Periods Ended 10/31/16 Total Return prices prevailed when (In U.S. Dollar Terms) 6 Months 12 Months our reporting period Brazil 31.03% 71.23% began last November. But starting early this Russia 5.98 19.47 year, investor sentiment Taiwan 21.57 18.89 began to turn as China South Korea 6.10 5.58 stepped up efforts to India 8.80 3.99 stabilize its economy and currency and as oil prices South Africa 2.79 1.88 rebounded from 13-year China 12.30 1.75 lows. Emerging markets Philippines 0.83 1.64 stocks also benefited from accommodative monetary Source: RIMES Online, using MSCI indexes. policies, which played a key role in supporting risk appetite. Low or negative government bond yields in many developed countries further encouraged investors to buy riskier assets, such as emerging markets stocks. M arket P erformance
Most emerging markets advanced in U.S. dollar terms over the past 12 months. Brazil’s stocks led the advancers as investors anticipated an economic turnaround under a new president after the impeachment of his predecessor. Stocks in Indonesia and Russia G eographic D iversification posted slimmer doubleEurope Other and digit gains as stronger 7% Reserves commodity prices 3% lifted the outlook for Middle East and Africa their resource-driven 9% economies. China Latin underperformed as America Pacific the country’s slowing 18% ex Japan 63% growth, rising debt, and weakening currency unnerved investors in the early part of our Based on net assets as of 10/31/16. reporting period. Some individual emerging markets suffered from increased political risk. Most notably, investors shied from investments in Mexico amid concerns that the new Trump administration could seek to change established trade agreements. 2
PORTFOLIO REVIEW
Our investments in quality companies with long runways for growth weathered the challenging economic conditions in many of emerging market countries and had promising results. In particular, the fund benefited overall from its investments in China and Brazil. From a sector perspective, our financial and consumer discretionary stocks added value. In China, our positions in leading technology companies helped performance, while in Brazil our focus on banking stocks contributed. On the other hand, our stock selection in and overweight to the United Arab Emirates, the Philippines, and Turkey hurt results. Asia
Our Asian holdings represented about two-thirds of the portfolio. Although China is the largest country allocation, it is also our largest underweight as we have little exposure to its manufacturing and banking sectors. We focus on companies in industries exposed to long-term growth in domestic demand and disposable incomes, such as Internet, consumer products, clean energy, and insurance, or what we call the “new China.” Tencent Holdings, the country’s dominant online social media and gaming company, was a strong performer, adding value as it increased its user base and advertising revenues. We also hold a large position in Baidu, the leading Chinese online search engine operator. (Please refer to the portfolio of investments for a complete list of holdings and the amount each represents in the portfolio.) We have a large allocation to India, where the economic fortunes of many companies have greatly improved thanks in part to low oil prices, a better monsoon season, and new reforms being introduced by the Modi administration. While the pace of those reforms has been somewhat frustrating to many investors, we think the country is heading in the right direction and hold significant positions in the financials and information technology sectors. Our position in Infosys, India’s leading IT company, weighed on performance, but the company is an important long-term holding that stands to benefit from solid long-term demand and management initiatives. We have long maintained underweight allocations to South Korea and Taiwan, two of Asia’s most developed markets. While they lack the demographic tailwinds and rapid economic growth rates of less mature emerging markets, they are home to some attractively valued technology suppliers that have done a good job of capturing and
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increasing global market share. Our global emerging markets analyst team visited South Korea and Taiwan earlier this fall to research several companies, an informative trip that helped shape our views of the changing investment opportunities in each market. In South Korea, we increased our position in Samsung Electronics on weakness after the company scrapped its Galaxy Note 7 smartphone following numerous reports of the devices catching fire. While the Note 7’s issues weighed on Samsung’s stock, we see it as a temporary problem. More important are the prospects for its components business, which we think are turning in part because margins should improve. Furthermore, we are optimistic that a new generation of leaders within the company will usher in more shareholder-friendly capital allocation policies, which could lead to a higher payout ratio for dividends. Taiwan’s technology sector features many highly innovative, costeffective producers that consistently deliver high-quality products. Besides generating steady earnings growth, many of these companies have shareholder-friendly policies and a willingness to pay high dividends. Taiwan Semiconductor Manufacturing was one of the top contributors to relative performance. Catcher Technology, which makes metal casings for Apple’s iPhone and other mobile devices, detracted from results, in part due to disappointing iPhone sales trends. We believe the company will continue to generate attractive growth as it gains share in the high-end metal casings market. Latin America
Our allocation to Brazil rose over the period as its market surged roughly 71% in dollar terms. The political turmoil over the past year created significant volatility, which allowed us to add to some of our holdings at very attractive valuations. Longer term, we have a favorable view of Brazil’s prospects, particularly as some of the much needed reforms are implemented and the economy begins to heal. Many of our Brazilian holdings have successfully weathered challenging economic conditions. Although many positions have rallied strongly, we believe that their earnings prospects are attractive, particularly as the economy is expected to resume expanding next year. Our sector positioning is concentrated in domestic-focused names in the financials and consumers sectors. We like private banks, which we expect to improve as macroeconomic headwinds continue to dissipate, nonperforming loan (NPL) provisions fall, and loan growth picks up. Brazil has a consolidated and well-capitalized banking system, with the 4
retail franchises of leading banks generating a sustainable competitive advantage. Itau Unibanco Holding, one of Brazil’s largest financial institutions with exposure to retail and corporate lending, contributed the most to absolute and relative returns for the 12-month period. Brazilian financial services conglomerate Banco Bradesco was also a top contributor. Shares of both banks rallied as it appeared that interest rates and their provisions for NPLs were peaking. As always, we will keep a keen eye on valuations and will trim positions if the stocks become too rich. Our preference for quality consumer stocks helped results. These include department store chain Lojas Renner and drugstore retailer Raia Drogasil. Both stocks have done very well, even as Brazil has struggled. As the economy recovers, so too will employment, wages, and consumption, which should allow both companies to continue to deliver strong earnings growth. Mexican stocks were the region’s worst performers for the year, declining more than 4%. The anti-trade rhetoric from the U.S. presidential election S ector D iversification hurt investment in the country, especially as Percent of Net Assets the peso became a proxy 4/30/16 10/31/16 for a Trump victory. Information Technology 26.2% 30.9% However, the Mexican Financials 25.9 25.8 consumer remains strong, Consumer Staples 19.1 16.8 buoyed by remittances, real wage increases, and Consumer Discretionary 12.5 12.5 employment growth. Industrials and Business Services
2.7
2.6
Utilities
2.5
2.3
Health Care
2.3
2.1
Materials
1.7
1.8
Real Estate
2.4
1.5
Energy
0.9
0.9
Telecommunication Services
0.0
0.0
Other and Reserves
3.8
2.8
100.0%
100.0%
Total
Historical weightings reflect current industry/sector classifications.
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Our positions are concentrated in consumer and financial companies, with very limited exposure to the more commodityrelated firms. One exception is Fresnillo, the world’s largest primary silver producer and Mexico’s secondlargest gold producer, which performed strongly amid the rebound in
commodity prices. Discount retailer Wal-Mart de Mexico (Walmex) came under pressure this year, though we added to our position on weakness as we are confident that it will increase its market share. Within financials, Grupo Financiero Santander Mexico suffered during the period, but we believe its earnings should improve on increased loan growth and net interest margin. Europe, Middle East, and Africa (EMEA)
The fund benefited from our position in Russia’s dominant bank, Sberbank. Sberbank is another example of a quality company, with leading technology and a solid management team, that was able to successfully navigate tough economic conditions better than its competitors. Investors were particularly impressed with its ability to increase its return on equity and take market share during tumultuous times. On the other hand, food retailer Magnit weighed on results. We think the stock is attractively valued and that the company’s management can turn the business around. Magnit should also benefit from Russia’s improving macroeconomic conditions. We maintained slight overweights to Turkey and South Africa. In Turkey, some of our holdings were negatively affected by the politicsdriven sell-off in the country’s stock market. As a result, our overweight to food retailer BIM Birlesik Magazalar hurt results. We eliminated Turkiye Halk Bankasi due in part to its weak growth prospects. We are concerned about developments in the country, including the failed military coup and President Erdogan’s push for increased power and control, but are comfortable with the quality and growth prospects of our holdings. In South Africa, we favor companies that have a strong competitive position and that will benefit from a better macro environment as the country begins to move out of its period of sluggish growth. Department store operator Woolworths Holdings and Shoprite Holdings, the continent’s biggest food retailer, rank among our top holdings.
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Outlook
As of this writing, global investors are digesting the U.S. presidential election’s unexpected outcome. Many of the president-elect’s campaign proposals, if enacted, could change longstanding global trade and security agreements and negatively impact investors’ risk appetite. We will carefully monitor U.S. trade and economic policy and its impact on your fund by increasing positions in our preferred companies during times of volatility or reducing names whose risk/reward profile has grown less favorable. We have a high level of conviction in our holdings, which are all high-quality companies that should do well in the longer term despite a high level of uncertainty in the near term. Outside the U.S., our outlook for emerging markets has brightened as several headwinds weighing on our asset class in recent years have begun to subside. Oil and other commodities prices have rebounded after plunging in 2015. Many emerging markets currencies have recovered after hitting record lows early this year. China’s economy appears to have stabilized thanks to stepped-up stimulus, while Brazil and Russia—which have been in recession since 2014—are expected to return to economic growth next year. Finally, while fears of higher U.S. interest rates have periodically led to emerging markets sell-offs in recent years, we do not anticipate a significant or lasting decline in most emerging markets once the Fed starts to gradually tighten policy in the coming months, as we expect it will. Our outlook varies by country and is tempered by several risks. Continued global oversupply in commodities will force raw materials producers to adjust to lower revenues. Many emerging markets are prone to domestic strife and geopolitical tensions, which flared up in several countries this year and contributed to stock market and currency volatility. Finally, China’s ongoing reliance on government spending to drive growth has raised alarm about the country’s rapid debt buildup. We believe that China’s policymakers are attuned to the risks of too much debt and will steer the economy to avoid a fullblown crisis. Over the long term, deleveraging China’s banking system and overhauling the economy will be a long and slow process. We should gain more insight into the scope of reforms in late 2017, when China holds its twice-a-decade party congress and five of the seven members of the country’s top leadership committee are due to retire.
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Even after the past year’s advance, valuations among emerging markets stocks are attractive and trade at a discount relative to their history and developed markets peers. As we have noted in previous letters, returns in the emerging universe have shown greater dispersion in recent years. Thanks to the insights of T. Rowe Price’s global emerging markets equity analyst team, we continue to find companies around the world with underappreciated potential and scope for improved performance. We look forward to buying and holding these companies for your fund in our ongoing effort to deliver solid returns. Thank you for investing with T. Rowe Price. Respectfully submitted,
Gonzalo Pángaro Portfolio manager and chairman of the fund’s Investment Advisory Committee November 28, 2016 The committee chairman has day-to-day responsibility for managing the portfolio and executing the fund’s investment program.
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T. Rowe Price Emerging Markets Stock Fund
R isks of I nternational I nvesting Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. Funds investing in a single country or in a limited geographic region tend to be riskier than more diversified funds. Risks can result from varying stages of economic and political development; differing regulatory environments, trading days, and accounting standards; and higher transaction costs of non-U.S. markets. Non-U.S. investments are also subject to currency risk, or a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency. G lossary Lipper averages: The averages of available mutual fund performance returns for specified time periods in categories defined by Lipper Inc. MSCI Emerging Markets Index: A capitalization-weighted index of stocks from 26 emerging markets that only includes securities that may be traded by foreign investors. Note: MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI.
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T. Rowe Price Emerging Markets Stock Fund
P ortfolio H ighlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of Net Assets 10/31/16
Tencent Holdings, China Samsung Electronics, South Korea Itau Unibanco Holding, Brazil Taiwan Semiconductor Manufacturing, Taiwan Lojas Renner, Brazil
5.5% 4.9 4.3 3.8 3.5
Alibaba Group Holding, China AIA Group, Hong Kong Sberbank, Russia Infosys, India Magnit, Russia
3.0 2.7 2.3 2.3 2.3
Baidu, China LG Household & Health Care, South Korea Housing Development Finance, India Uni-President Enterprises, Taiwan Catcher Technology, Taiwan
2.2 2.1 1.7 1.7 1.7
Ping An Insurance, China Bank Central Asia, Indonesia Wal-Mart de Mexico, Mexico Raia Drogasil, Brazil Woolworths Holdings, South Africa
1.5 1.4 1.4 1.3 1.3
Hengan International Group, China Banco Bradesco, Brazil FirstRand, South Africa Universal Robina, Philippines Largan Precision, Taiwan
1.3 1.3 1.2 1.2 1.2
Total
57.1%
Note: The information shown does not reflect any exchange-traded funds (ETFs), cash reserves, or collateral for securities lending that may be held in the portfolio.
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T. Rowe Price Emerging Markets Stock Fund Performance and Expenses G rowth of $10,000 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.
E M E R G I N G M A R K E T S S TO C K F U N D As of 10/31/16 $40,000
Emerging Markets Stock Fund $13,908
34,000
MSCI Emerging Markets Index $14,551
28,000
Lipper Emerging Markets Funds Average $13,535
22,000 16,000 10,000
10/06
10/07
10/08
10/09
10/10
10/11
10/12
10/13
10/14
10/15 10/16
Note: Performance for the I Class will vary due to its differing fee structure. See returns table below.
A verage A nnual C ompound T otal R eturn Periods Ended 10/31/16
1 Year
5 Years
Since Inception 10 Years Inception Date
Emerging Markets Stock Fund
14.25%
2.54%
3.35%
Emerging Markets Stock Fund–I Class
14.45
—
—
—
—
15.60% 8/28/15
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. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results.
11
T. Rowe Price Emerging Markets Stock Fund
F und E xpense E xample As a mutual fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees or sales loads, and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the entire period. Please note that the fund has two share classes: The original share class (Investor Class) charges no distribution and service (12b-1) fee, and the I Class shares are also available to institutionally oriented clients and impose no 12b-1 or administrative fee payment. Each share class is presented separately in the table. Actual Expenses The first line of the following table (Actual) provides information about actual account values and expenses based on the fund’s actual returns. You may use the information on this line, together with your account balance, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The information on the second line of the table (Hypothetical) is based on hypothetical account values and expenses derived from the fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the fund’s actual return). You may compare the ongoing costs of investing in the fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Note: T. Rowe Price charges an annual account service fee of $20, generally for accounts with less than $10,000. The fee is waived for any investor whose T. Rowe Price mutual fund accounts total $50,000 or more; accounts electing to receive electronic delivery of account statements, transaction confirmations, prospectuses, and shareholder reports; or accounts of an investor who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $100,000). This fee is not included in the accompanying table. If you are subject to the fee, keep it in mind when you are estimating the ongoing expenses of investing in the fund and when comparing the expenses of this fund with other funds. You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs, such as redemption fees or sales loads. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. To the extent a fund charges transaction costs, however, the total cost of owning that fund is higher.
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T. Rowe Price Emerging Markets Stock Fund
F und E xpense E xample ( continued ) E merging M arkets S tock F und
Beginning Account Value 5/1/16
Ending Account Value 10/31/16
Expenses Paid During Period* 5/1/16 to 10/31/16
$1,000.00
$1,120.80
$6.72
Hypothetical (assumes 5% return before expenses)
1,000.00
1,018.80
6.39
I Class Actual
1,000.00
1,121.70
5.81
Hypothetical (assumes 5% return before expenses)
1,000.00
1,019.66
5.53
Investor Class Actual
*Expenses are equal to the fund’s annualized expense ratio for the 6-month period, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (184), and divided by the days in the year (366) to reflect the half-year period. The annualized expense ratio of the Investor Class was 1.26%, and the I Class was 1.09%.
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T. Rowe Price Emerging Markets Stock Fund
Q uarter- E nd R eturns Periods Ended 9/30/16
1 Year
5 Years
10 Years
Emerging Markets Stock Fund
21.96%
5.35%
4.04%
Emerging Markets Stock Fund–I Class
22.18
–
–
Since Inception –
Inception Date –
17.54% 8/28/15
Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end performance, please visit our website (troweprice.com) or contact a T. Rowe Price representative at 1-800-225-5132 or, for I Class shares, 1-800-638-8790 . The performance information shown does not reflect the deduction of a 2% redemption fee on shares held for 90 days or less. If it did, the performance would be lower. This table provides returns through the most recent calendar quarter-end rather than through the end of the fund’s fiscal period. It 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. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. When assessing performance, investors should consider both short- and long-term returns.
E xpense R atio Emerging Markets Stock Fund
Emerging Markets Stock Fund–I Class
1.24%
1.09
The expense ratio shown is as of the fund’s fiscal year ended 10/31/15. This number may vary from the expense ratio shown elsewhere in this report because it is based on a different time period and, if applicable, includes acquired fund fees and expenses but does not include fee or expense waivers.
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T. Rowe Price Emerging Markets Stock Fund
F inancial H ighlights
For a share outstanding throughout each period
Investor Class Year Ended 10/31/16 10/31/15 10/31/14 10/31/13 10/31/12
NET ASSET VALUE Beginning of period
$ 29.96
$ 34.69
$ 33.61
$ 32.31
$ 30.98
0.15
0.17
0.19
0.24
0.17
4.09 4.24
(4.62) (4.45)
1.13 1.32
1.22 1.46
1.28 1.45
(0.15) (0.01) (0.16)
(0.19) (0.09) (0.28)
(0.24) – (0.24)
(0.16) – (0.16)
(0.12) – (0.12)
Investment activities Net investment income
(1)
Net realized and unrealized gain / loss Total from investment activities Distributions Net investment income Net realized gain Total distributions
NET ASSET VALUE End of period
$ 34.04
$ 29.96
$ 34.69
$ 33.61
$ 32.31
(12.85)%
3.99%
4.52%
4.74%
1.24%
1.24%
1.25%
1.27%
Ratios/Supplemental Data (2)
Total return Ratio of total expenses to average net assets Ratio of net investment income to average net assets Portfolio turnover rate Net assets, end of period (in millions)
(1) (2)
(3)
14.25% 1.26%
(3)
0.50%
(3)
0.52%
0.58%
0.72%
0.55%
24.4%
15.8%
23.3%
29.9%
24.1%
$ 7,448
$ 8,726
$ 7,953
$ 7,306
$ 6,804
Per share amounts calculated using average shares outstanding method. 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 waived related to the waiver of fund-level expenses ratably across all classes in accordance with SEC rules.
The accompanying notes are an integral part of these financial statements.
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T. Rowe Price Emerging Markets Stock Fund
F inancial H ighlights
For a share outstanding throughout each period
I Class Year 8/28/15 Ended Through 10/31/16 10/31/15
NET ASSET VALUE Beginning of period
$ 29.97
$ 28.93
Investment activities Net investment income
(1)
Net realized and unrealized gain / loss Total from investment activities Distributions Net investment income Net realized gain Total distributions
–
0.27 4.03 4.30
(3)
1.04 1.04
(0.16) (0.01) (0.17)
– – –
NET ASSET VALUE End of period
$ 34.10
$ 29.97
14.45%
3.59%
Ratios/Supplemental Data (2)
Total return
Ratio of total expenses to average net assets Ratio of net investment income to average net assets Portfolio turnover rate Net assets, end of period (in millions)
(1) (2)
(3) (4) (5)
1.09%
(4)
1.09%
(5)
0.89%
(4)
0.05%
(5)
24.4% $ 1,559
15.8% $
9
Per share amounts calculated using average shares outstanding method. 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. Total return is not annualized for periods less than one year. Amounts round to less than $0.01 per share See Note 6. Excludes expenses waived (0.01% of average net assets) related to the contractual operating expense limitation in effect through 2/28/18. Annualized
The accompanying notes are an integral part of these financial statements.
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T. Rowe Price Emerging Markets Stock Fund
October 31, 2016
P ortfolio of I nvestments
‡
Shares
$ Value
385,500
64,768
1,307,000
36,857
(Cost and value in $000s)
ARGENTINA 1.1% Common Stocks 1.1% MercadoLibre (USD) Tenaris, ADR (USD)
101,625
Total Argentina (Cost $67,059)
BELGIUM 0.3% Common Stocks 0.3% Anheuser-Busch InBev
213,915
24,551 24,551
Total Belgium (Cost $27,203)
BRAZIL 12.1% Common Stocks 6.5% BR Malls Participacoes BRF Lojas Renner (1)
12,005,270
47,991
2,971,228
49,697
37,783,850
319,482
Multiplan Empreendimentos
2,393,000
48,138
Raia Drogasil
5,322,300
118,468 583,776
Preferred Stocks 5.6% Banco Bradesco
10,797,900
113,222
Itau Unibanco
32,277,612
389,111 502,333 1,086,109
Total Brazil (Cost $775,757)
CHILE 1.5% Common Stocks 1.5% Banco Santander Chile, ADR (USD)
3,514,461
80,305
SACI Falabella
7,385,663
57,994
Total Chile (Cost $129,652)
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138,299
T. Rowe Price Emerging Markets Stock Fund
Shares
$ Value
(Cost and value in $000s)
CHINA 19.8% Common Stocks 18.8% 58.com, ADR (USD) (2)
765,800
32,049
Alibaba Group Holding, ADR (USD) (2)
2,635,974
268,052
Anhui Conch Cement, H Shares (HKD)
8,850,500
24,535
BAIC Motor, H Shares (HKD) Baidu, ADR (USD) (2) Beijing Enterprises Holdings (HKD)
17,624,500
18,475
1,122,500
198,525
7,651,000
38,277
China Longyuan Power, H Shares (HKD)
46,418,000
35,492
China Mengniu Dairy (HKD)
49,160,000
93,179
CNOOC (HKD)
34,961,000
44,493
CSPC Pharmaceutical (HKD)
49,220,000
51,025
Dongfeng Motor, H Shares (HKD)
23,136,000
24,074
14,331,000
114,104
Hengan International Group (HKD) Huaneng Renewables, H Shares (HKD)
108,310,000
36,450
Ping An Insurance, H Shares (HKD)
22,528,000
118,950
Sunny Optical Technology (HKD)
10,438,000
51,009
Tencent Holdings (HKD)
18,537,300
491,903
4,144,800
56,659
Vipshop Holdings, ADR (USD) (2)
1,697,251 Common Stocks - China A shares 1.0% Anhui Conch Cement (3) Kweichow Moutai (3) Kweichow Moutai (CNH) Ping An Insurance (3)
9,249,524
23,278
879,884
41,318
76,677
3,602
3,370,247
17,228 85,426
Total China (Cost $1,294,603)
18
1,782,677
T. Rowe Price Emerging Markets Stock Fund
Shares
$ Value
4,142,900
33,930
(Cost and value in $000s)
COLOMBIA 0.4% Common Stocks 0.4% Grupo Aval Acciones y Valores, ADR (USD)
33,930
Total Colombia (Cost $48,423)
HONG KONG 3.1% Common Stocks 3.1% AIA Group ASM Pacific Technology
39,090,200
246,722
3,583,300
34,583 281,305
Total Hong Kong (Cost $212,650)
INDIA 11.3% Common Stocks 11.3% Axis Bank
13,700,941
99,865
Container Corporation of India
1,930,727
39,663
Glenmark Pharmaceuticals
3,618,719
50,797
HDFC Bank
1,702,576
38,112
Housing Development Finance
7,428,794
153,166
ICICI Bank
18,387,111
76,220
Infosys
13,622,526
204,461
Maruti Suzuki India
845,422
74,686
NTPC Limited
19,334,313
43,496
Power Grid Corporation of India
19,093,816
49,917
1,343,961
48,096
11,470,027
91,057
2,429,998
45,946
Tata Consultancy Tata Motors Yes Bank
1,015,482
Total India (Cost $775,304)
INDONESIA 2.9% Common Stocks 2.9% Astra International
19
141,569,300
89,240
T. Rowe Price Emerging Markets Stock Fund
Shares
$ Value
105,625,800
125,678
34,200,800
47,246
(Cost and value in $000s)
Bank Central Asia Matahari Department Store
262,164
Total Indonesia (Cost $215,659)
MALAYSIA 0.3% Common Stocks 0.3% Astro Malaysia Holdings
40,715,900
27,662 27,662
Total Malaysia (Cost $40,629)
MEXICO 2.8% Common Stocks 2.8% Fresnillo (GBP)
3,489,643
Grupo Financiero Santander Mexico, Class B, ADR (USD)
6,472,189
58,573
59,091,948
124,993
Wal-Mart de Mexico
70,050
253,616
Total Mexico (Cost $229,968)
PHILIPPINES 3.4% Common Stocks 3.4% BDO Unibank
22,196,750
51,707
GT Capital Holdings
1,859,895
50,355
SM Investments
6,756,284
93,763
Universal Robina
28,830,230
108,361 304,186
Total Philippines (Cost $227,857)
RUSSIA 5.1% Common Stocks 5.1% Magnit, GDR (USD) Sberbank, ADR (USD)
20
5,127,418
203,507
22,233,191
210,993
T. Rowe Price Emerging Markets Stock Fund
Shares
$ Value
2,276,330
44,821
(Cost and value in $000s)
Yandex, A Shares (USD) (2)
459,321
Total Russia (Cost $385,043)
SOUTH AFRICA 6.9% Common Stocks 6.9% Aspen Pharmacare Holdings
4,218,192
91,889
FirstRand
31,091,112
111,417
Mr Price
3,118,948
35,557
444,537
74,505
20,110,365
97,482
Naspers, N Shares Sanlam Shoprite Holdings Woolworths Holdings
6,492,235
95,816
19,961,142
115,633 622,299
Total South Africa (Cost $682,336)
SOUTH KOREA 10.9% Common Stocks 10.2% AMOREPACIFIC
300,942
38,925
Hyundai Glovis
120,603
18,287
Hyundai Motor
741,944
90,778
LG Household & Health Care
263,093
188,539
NAVER
128,202
96,018
Samsung Electronics
264,458
378,804
2,870,365
102,849
SK Hynix
914,200 Preferred Stocks 0.7% Samsung Electronics
58,156
66,936 66,936
Total South Korea (Cost $731,163)
21
981,136
T. Rowe Price Emerging Markets Stock Fund
Shares
$ Value
19,319,000
151,516
(Cost and value in $000s)
TAIWAN 9.5% Common Stocks 9.5% Catcher Technology Delta Electronics
9,821,763
51,821
Largan Precision
881,000
104,271
Quanta Computer
24,003,000
48,679
Taiwan Semiconductor Manufacturing
57,722,111
344,787
Uni-President Enterprises
78,877,410
152,718 853,792
Total Taiwan (Cost $606,977)
THAILAND 2.3% Common Stocks 2.3% CP ALL
46,755,200
81,159
Kasikornbank, NVDR
17,135,800
84,216
Siam Cement, NVDR
3,154,100
45,062 210,437
Total Thailand (Cost $161,044)
TURKEY 1.6% Common Stocks 1.6% BIM Birlesik Magazalar
4,442,846
72,367
Turkiye Garanti Bankasi
25,301,215
68,767 141,134
Total Turkey (Cost $123,021)
UNITED ARAB EMIRATES 1.9% Common Stocks 1.9% DP World (USD)
4,764,107
85,516
Emaar Malls
51,281,680
35,882
First Gulf Bank
16,473,250
51,578
Total United Arab Emirates (Cost $150,028)
22
172,976
T. Rowe Price Emerging Markets Stock Fund
Shares
$ Value
155,263,671
155,264
(Cost and value in $000s)
SHORT-TERM INVESTMENTS 1.7% Money Market Funds 1.7% T. Rowe Price Government Reserve Fund, 0.34% (1)(4)
155,264
Total Short-Term Investments (Cost $155,264) Total Investments in Securities 98.9% of Net Assets (Cost $7,039,640) ‡
(1) (2) (3) (4)
ADR CNH GBP GDR HKD NVDR USD
$
8,907,965
Country classifications are generally based on MSCI categories or another unaffiliated third party data provider; Shares are denominated in the currency of the country presented unless otherwise noted. Affiliated Company Non-income producing China A shares held through the QFII are subject to certain restrictions. See Note 3. Seven-day yield American Depository Receipts Offshore China Renminbi British Pound Global Depository Receipts Hong Kong Dollar Non-Voting Depository Receipts U.S. Dollar
23
T. Rowe Price Emerging Markets Stock Fund
Affiliated Companies ($000s)
The fund may invest in certain securities that are considered affiliated companies. As defined by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. The following securities were considered affiliated companies for all or some portion of the year ended October 31, 2016. Purchase and sales cost and investment income reflect all activity for the period then ended. Purchase Cost
Affiliate BR Malls Participacoes $ Lojas Renner T. Rowe Price Government Reserve Fund +
426 $ 14,241
Sales Cost
Investment Income
112,416 $ 28,132
¤
—$ 4,647
¤
Totals
616 $
5,263 $
Value 10/31/16
Value 10/31/15
*$ 319,482
70,146 203,627
155,264
195,265
474,746 $
469,038
* On the date indicated, issuer was held but not considered an affiliated company. + At October 31, 2015, the underlying fund’s name was T. Rowe Price Reserve Investment Fund. ¤ Purchase and sale information not shown for cash management funds.
Amounts reflected on the accompanying financial statements include the following amounts related to affiliated companies: Investment in securities, at cost
$
Dividend income Interest income
358,875 5,263 -
Investment income
$
5,263
Realized gain (loss) on securities
$
(25,223)
Capital gain distributions from mutual funds
$
-
The accompanying notes are an integral part of these financial statements.
24
T. Rowe Price Emerging Markets Stock Fund
October 31, 2016
S tatement of A ssets and L iabilities ($000s, except shares and per share amounts)
Assets Investments in securities, at value (cost $7,039,640)
$ 8,907,965
Receivable for investment securities sold
44,593
Foreign currency (cost $35,801)
35,201
Receivable for shares sold
21,125
Cash
12,480
Dividends receivable
5,121
Other assets
30,384
Total assets
9,056,869
Liabilities Payable for shares redeemed
10,177
Investment management fees payable
8,035
Due to affiliates
632
Other liabilities
31,191
Total liabilities
50,035
NET ASSETS
$ 9,006,834
Net Assets Consist of: Undistributed net investment income
$
Accumulated undistributed net realized loss
42,462 (719,361)
Net unrealized gain
1,867,625
Paid-in capital applicable to 264,485,360 shares of $0.01 par value capital stock outstanding; 18,000,000,000 shares of the Corporation authorized
7,816,108
NET ASSETS
$ 9,006,834
NET ASSET VALUE PER SHARE Investor Class ($7,448,283,600 / 218,779,717 shares outstanding)
$
34.04
I Class ($1,558,550,043 / 45,705,643 shares outstanding)
$
34.10
The accompanying notes are an integral part of these financial statements.
25
T. Rowe Price Emerging Markets Stock Fund
S tatement of O perations ($000s)
Year Ended 10/31/16
Investment Income (Loss) Income Dividend (net of foreign taxes of $19,566) Interest (net of foreign taxes of $1)
$
Total income Expenses Investment management Shareholder servicing Investor Class I Class Prospectus and shareholder reports Investor Class I Class Custody and accounting Registration Legal and audit Directors Miscellaneous Waived / paid by Price Associates
154,472 29 154,501 90,651
$
Total expenses Net investment income
13,431 5 227 22
13,436
249 1,591 132 194 35 2,158 (27) 108,419 46,082
Realized and Unrealized Gain / Loss Net realized gain (loss) Securities Foreign currency transactions Net realized gain Change in net unrealized gain / loss Securities Other assets and liabilities denominated in foreign currencies
573,025 1,295 574,320
639,941 57
Change in net unrealized gain / loss
639,998
Net realized and unrealized gain / loss
1,214,318
INCREASE IN NET ASSETS FROM OPERATIONS
The accompanying notes are an integral part of these financial statements.
26
$ 1,260,400
T. Rowe Price Emerging Markets Stock Fund
S tatement of C hanges in N et A ssets ($000s)
Year Ended 10/31/16
10/31/15
Increase (Decrease) in Net Assets Operations Net investment income Net realized gain (loss) Change in net unrealized gain / loss Increase (decrease) in net assets from operations
$
46,082 574,320 639,998
$
1,260,400
Distributions to shareholders Net investment income Investor Class I Class Net realized gain Investor Class I Class Decrease in net assets from distributions Capital share transactions* Shares sold Investor Class I Class Distributions reinvested Investor Class I Class Shares redeemed Investor Class I Class Redemption fees received Increase (decrease) in net assets from capital share transactions
43,261 (170,487) (1,002,483) (1,129,709)
(41,290) (1,946)
(43,762) –
(2,753) (121) (46,110)
(20,730) – (64,492)
1,463,630 1,580,030
2,870,283 8,666
43,210 2,021
63,014 –
(3,860,289) (171,707) 873
(967,904) (6) 1,846
(942,232)
1,975,899
Net Assets Increase during period Beginning of period End of period Undistributed net investment income
27
272,058 8,734,776 $
9,006,834 42,462
781,698 7,953,078 $
8,734,776 39,572
T. Rowe Price Emerging Markets Stock Fund
S tatement of C hanges in N et A ssets (000s)
*Share information Shares sold Investor Class I Class Distributions reinvested Investor Class I Class Shares redeemed Investor Class I Class Increase (decrease) in shares outstanding
The accompanying notes are an integral part of these financial statements.
28
Year Ended 10/31/16
10/31/15
51,339 50,670
90,680 298
1,503 70
2,051 –
(125,355) (5,332) (27,105)
(30,666) – 62,363
T. Rowe Price Emerging Markets Stock Fund
October 31, 2016
N otes to F inancial S tatements
T. Rowe Price International Funds, Inc. (the corporation), is registered under the Investment Company Act of 1940 (the 1940 Act). The Emerging Markets Stock Fund (the fund) is a diversified, open-end management investment company established by the corporation. 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 fund has two classes of shares: the Emerging Markets Stock Fund (Investor Class) and the Emerging Markets Stock Fund–I Class (I Class). I Class shares generally are available only to investors meeting a $1,000,000 minimum investment or certain other criteria. Each class has exclusive voting rights on matters related solely to that class; separate voting rights on matters that relate to both classes; and, in all other respects, the same rights and obligations as the other class. Note 1 - Significant Accounting Policies Basis of Preparation The fund is an investment company and follows accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 (ASC 946). The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), including, but not limited to, ASC 946. GAAP requires the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Income tax-related interest and penalties, if incurred, would be recorded as income tax expense. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Income distributions are declared and paid by each class annually. Distributions to shareholders are recorded on the ex-dividend date. Capital gain distributions are generally declared and paid by the fund annually.
29
T. Rowe Price Emerging Markets Stock Fund
Currency Translation Assets, including investments, 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 asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses. Class Accounting Shareholder servicing, prospectus, and shareholder report
expenses incurred by each class are charged directly to the class to which they relate. Expenses common to both classes, investment income, and realized and unrealized gains and losses are allocated to the classes based upon the relative daily net assets of each class. Redemption Fees A 2% fee is assessed on redemptions of fund shares held
for 90 days or less to deter short-term trading and to protect the interests of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund and are recorded as an increase to paid-in capital. The fees may cause the redemption price per share to differ from the net asset value per share. In-Kind Redemptions In accordance with guidelines described in the fund’s prospectus, and when considered to be in the best interest of all shareholders, the fund may distribute portfolio securities rather than cash as payment for a redemption of fund shares (in-kind redemption). Gains and losses realized on in-kind redemptions are not recognized for tax purposes and are reclassified from undistributed realized gain (loss) to paid-in capital. During the year ended October 31, 2016, the fund realized $18,098,000 of net gain on $41,476,000 of in-kind redemptions. New Accounting Guidance In October 2016, the Securities and Exchange
Commission (SEC) issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is required for financial statements filed with the SEC on or after August 1, 2017; adoption will have no effect on the fund’s net assets or results of operations.
30
T. Rowe Price Emerging Markets Stock Fund
Note 2 - VALUATION
The fund’s financial instruments are valued and each class’s net asset value (NAV) per share is computed at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day the NYSE is open for business. However, the NAV per share may be calculated at a time other than the normal close of the NYSE if trading on the NYSE is restricted, if the NYSE closes earlier, or as may be permitted by the SEC. Fair Value The fund’s financial instruments are reported at fair value, which GAAP defines as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The T. Rowe Price Valuation Committee (the Valuation Committee) is an internal committee that has been delegated certain responsibilities by the fund’s Board of Directors (the Board) to ensure that financial instruments are appropriately priced at fair value in accordance with GAAP and the 1940 Act. Subject to oversight by the Board, the Valuation Committee develops and oversees pricing-related policies and procedures and approves all fair value determinations. Specifically, the Valuation Committee establishes procedures to value securities; determines pricing techniques, sources, and persons eligible to effect fair value pricing actions; oversees the selection, services, and performance of pricing vendors; oversees valuationrelated business continuity practices; and provides guidance on internal controls and valuation-related matters. The Valuation Committee reports to the Board and has representation from legal, portfolio management and trading, operations, risk management, and the fund’s treasurer.
Various valuation techniques and inputs are used to determine the fair value of financial instruments. GAAP establishes the following fair value hierarchy that categorizes the inputs used to measure fair value: Level 1 – quoted prices (unadjusted) in active markets for identical financial instruments that the fund can access at the reporting date Level 2 – inputs other than Level 1 quoted prices that are observable, either directly or indirectly (including, but not limited to, quoted prices for similar financial instruments in active markets, quoted prices for identical or similar financial instruments in inactive markets, interest rates and yield curves, implied volatilities, and credit spreads) Level 3 – unobservable inputs
31
T. Rowe Price Emerging Markets Stock Fund
Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and reflect the assumptions that market participants would use to price the financial instrument. Unobservable inputs are those for which market data are not available and are developed using the best information available about the assumptions that market participants would use to price the financial instrument. GAAP requires valuation techniques to maximize the use of relevant observable inputs and minimize the use of unobservable inputs. When multiple inputs are used to derive fair value, the financial instrument is assigned to the level within the fair value hierarchy based on the lowest-level input that is significant to the fair value of the financial instrument. Input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level but rather the degree of judgment used in determining those values. Valuation Techniques Equity securities listed or regularly traded on a securities exchange or in the over-the-counter (OTC) market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made. OTC Bulletin Board securities are valued at the mean of the closing bid and asked prices. 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. Listed securities not traded on a particular day are valued at the mean of the closing bid and asked prices for domestic securities and the last quoted sale or closing price for international securities.
For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted to reflect the fair value of such securities at the close of the NYSE. If the fund determines that developments between the close of a foreign market and the close of the NYSE will, in its judgment, materially affect the value of some or all of its portfolio securities, the fund will adjust the previous quoted prices to reflect what it believes to be the fair value of the securities as of the close of the NYSE. In deciding whether it is necessary to adjust quoted prices to reflect fair value, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The fund may also fair value securities in other situations, such as when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with quoted prices and information to evaluate or adjust those prices. The fund cannot predict how often it will use quoted prices and how often it will
32
T. Rowe Price Emerging Markets Stock Fund
determine it necessary to adjust those prices to reflect fair value. As a means of evaluating its security valuation process, the fund routinely compares quoted prices, the next day’s opening prices in the same markets, and adjusted prices. Actively traded equity securities listed on a domestic exchange generally are categorized in Level 1 of the fair value hierarchy. Non-U.S. equity securities generally are categorized in Level 2 of the fair value hierarchy despite the availability of quoted prices because, as described above, the fund evaluates and determines whether those quoted prices reflect fair value at the close of the NYSE or require adjustment. OTC Bulletin Board securities, certain preferred securities, and equity securities traded in inactive markets generally are categorized in Level 2 of the fair value hierarchy. Investments in mutual funds are valued at the mutual fund’s closing NAV per share on the day of valuation and are categorized in Level 1 of the fair value hierarchy. Assets and liabilities other than financial instruments, including short-term receivables and payables, are carried at cost, or estimated realizable value, if less, which approximates fair value. Thinly traded financial instruments and those 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 the Valuation Committee. The objective of any fair value pricing determination is to arrive at a price that could reasonably be expected from a current sale. Financial instruments fair valued by the Valuation Committee are primarily private placements, restricted securities, warrants, rights, and other securities that are not publicly traded. Subject to oversight by the Board, the Valuation Committee regularly makes good faith judgments to establish and adjust the fair valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of an equity investment with limited market activity, such as a private placement or a thinly traded public company stock, the Valuation Committee considers a variety of factors, which may include, but are not limited to, the issuer’s business prospects, its financial standing and performance, recent investment transactions in the issuer, new rounds of financing, negotiated transactions of significant size between other investors in the company, relevant market valuations of peer companies, strategic events affecting the company, market liquidity for the issuer, and general economic conditions and events. In consultation with the investment and pricing teams, the Valuation Committee will determine an appropriate valuation technique based on available information, which may include both observable and unobservable inputs. The Valuation Committee typically will afford greatest 33
T. Rowe Price Emerging Markets Stock Fund
weight to actual prices in arm’s length transactions, to the extent they represent orderly transactions between market participants, transaction information can be reliably obtained, and prices are deemed representative of fair value. However, the Valuation Committee may also consider other valuation methods such as market-based valuation multiples; a discount or premium from market value of a similar, freely traded security of the same issuer; or some combination. Fair value determinations are reviewed on a regular basis and updated as information becomes available, including actual purchase and sale transactions of the issue. Because any fair value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions, and fair value prices determined by the Valuation Committee could differ from those of other market participants. Depending on the relative significance of unobservable inputs, including the valuation technique(s) used, fair valued securities may be categorized in Level 2 or 3 of the fair value hierarchy. Valuation Inputs The following table summarizes the fund’s financial instruments, based on the inputs used to determine their fair values on October 31, 2016: Level 1
($000s)
Quoted Prices Investments in Securities, except:
$
Argentina Belgium
— $
Level 2
Level 3
Total Value
Significant Significant Observable Unobservable Inputs Inputs 5,958,682 $
— $
5,958,682
101,625
—
—
101,625
—
24,551
—
24,551
Chile
80,305
57,994
—
138,299
China
555,285
1,227,392
—
1,782,677
Colombia
33,930
—
—
33,930
Mexico
58,573
195,043
—
253,616
Russia
44,821
414,500
—
459,321
155,264
—
—
155,264
Short-Term Investments Total
$
1,029,803 $
7,878,162 $
— $
8,907,965
There were no material transfers between Levels 1 and 2 during the year ended October 31, 2016. 34
T. Rowe Price Emerging Markets Stock Fund
Note 3 - OTHER Investment Transactions
Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks and/or to 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 and Frontier Markets The fund may invest, either directly or through investments in T. Rowe Price institutional funds, in securities of companies located in, issued by governments of, or denominated in or linked to the currencies of emerging and frontier market countries; at periodend, approximately 93% of the fund’s net assets were invested in emerging markets and 1% in frontier markets. Emerging markets, and to a greater extent frontier markets, generally have economic structures that are less diverse and mature, and political systems that are less stable, than developed countries. These markets may be subject to greater political, economic, and social uncertainty and differing regulatory environments that may potentially impact the fund’s ability to buy or sell certain securities or repatriate proceeds to U.S. dollars. Such securities are often subject to greater price volatility, less liquidity, and higher rates of inflation than U.S. securities. Investing in frontier markets is significantly riskier than investing in other countries, including emerging markets. China A shares The fund invests in certain Chinese equity securities (A shares)
that have limited availability to investors outside of China. The fund gains access to the A share market either through the Shanghai-Hong Kong Stock Connect program (Stock Connect) or through a wholly owned subsidiary of Price Associates, which serves as the registered Qualified Foreign Institutional Investor (QFII) for all participating T. Rowe Price-sponsored products (each a participating account). Related to A shares held through the QFII, investment decisions are specific to each participating account, and each account bears the economic consequences of its holdings and transactions in A shares. Further, the fund’s ability to repatriate cash associated with its A shares held through the QFII is subject to certain restrictions and administrative processes involving the Chinese government; consequently, the fund may experience substantial delays in gaining access to its assets or incur a loss of value in the event of noncompliance with governmental requirements. A shares acquired through the QFII are valued using the onshore renminbi exchange rate (CNY), and those acquired through Stock Connect are valued using the offshore renminbi exchange rate (CNH). CNY and CNH exchange rates may differ; accordingly, 35
T. Rowe Price Emerging Markets Stock Fund
A shares of the same issue purchased through different channels may not have the same U.S. dollar value. Generally, the fund is not subject to capital gain tax related to its A share investments. Other Purchases and sales of portfolio securities other than short-term securities
aggregated $2,062,491,000 and $2,997,480,000, respectively, for the year ended October 31, 2016. Note 4 - Federal Income Taxes
No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Distributions determined in accordance with federal income tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences. The fund files U.S. federal, state, and local tax returns as required. The fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended to six years in certain circumstances. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes. Reclassifications to paid-in capital relate primarily to redemptions in kind. Reclassifications between income and gain relate primarily to the character of foreign capital gains taxes. For the year ended October 31, 2016, the following reclassifications were recorded to reflect tax character (there was no impact on results of operations or net assets): ($000s)
Undistributed net investment income
$
Undistributed net realized gain
(17,922)
Paid-in capital
17,879
36
43
T. Rowe Price Emerging Markets Stock Fund
Distributions during the years ended October 31, 2016 and October 31, 2015, totaled $46,110,000 and $64,492,000, respectively, and were characterized as ordinary income for tax purposes. At October 31, 2016, the tax-basis cost of investments and components of net assets were as follows: ($000s)
Cost of investments
$
7,195,079
Unrealized appreciation
$
2,112,740
Unrealized depreciation
(400,554)
Net unrealized appreciation (depreciation)
1,712,186
Undistributed ordinary income
57,174
Capital loss carryforwards
Paid-in capital Net assets
(578,634)
7,816,108
$
9,006,834
The difference between book-basis and tax-basis net unrealized appreciation (depreciation) is attributable to the deferral of losses from wash sales and the realization of gains/losses on passive foreign investment companies for tax purposes. The fund intends to retain realized gains to the extent of available capital loss carryforwards. Because the fund is required to use capital loss carryforwards that do not expire before those with expiration dates, all or a portion of its capital loss carryforwards subject to expiration could ultimately go unused. During the year ended October 31, 2016, the fund utilized $530,665,000 of capital loss carryforwards. The fund’s available capital loss carryforwards as of October 31, 2016, expire as follows: $573,427,000 in fiscal 2017 and $5,207,000 in fiscal 2018. Note 5 - FOREIGN TAXES
The fund is subject to foreign income taxes imposed by certain countries in which it invests. Additionally, certain foreign currency transactions are subject to tax, and capital gains realized upon disposition of securities issued in or by certain foreign countries are subject to capital gains tax imposed by those countries. All taxes are computed in accordance with the applicable foreign tax law, and, to the extent permitted, capital losses are used to offset capital gains. Taxes attributable to income are accrued by the fund as a reduction of income. Taxes incurred on the purchase of foreign currencies are recorded as 37
T. Rowe Price Emerging Markets Stock Fund
realized loss on foreign currency transactions. Current and deferred tax expense attributable to capital gains is reflected as a component of realized or change in unrealized gain/loss on securities in the accompanying financial statements. At October 31, 2016, the fund had no deferred tax liability attributable to foreign securities and $14,819,000 of foreign capital loss carryforwards, including $2,555,000 that expire in 2022, $200,000 that expire in 2023, and $12,064,000 that expire in 2024. Note 6 - related Party Transactions
The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). Price Associates has entered into a sub-advisory agreement(s) with one or more of its wholly owned subsidiaries, to provide investment advisory services to the fund. The investment management agreement between the fund and Price Associates provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.75% of the fund’s average daily net assets, and a group fee. The group fee rate is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.270% for assets in excess of $500 billion. The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. At October 31, 2016, the effective annual group fee rate was 0.29%. The I Class is subject to an operating expense limitation (I Class limit) pursuant to which Price Associates is contractually required to pay all operating expenses of the I Class, excluding management fees, interest, borrowing-related expenses, taxes, brokerage commissions, and other non-recurring expenses permitted by the investment management agreement, to the extent such operating expenses, on an annualized basis, exceed 0.05% of average net assets. This agreement will continue until February 28, 2018, and may be renewed, revised, or revoked only with approval of the fund’s Board. The I Class is required to repay Price Associates for expenses previously paid to the extent the class’s net assets grow or expenses decline sufficiently to allow repayment without causing the class’s operating expenses to exceed the I Class limit in effect at the time of the waiver. However, no repayment will be made more than three years after the date of a payment or waiver.
38
T. Rowe Price Emerging Markets Stock Fund
Pursuant to these agreements, $27,000 of expenses were waived/paid by Price Associates during the year ended October 31, 2016 and remain subject to repayment by the fund. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates provides certain accounting and administrative services to the fund. T. Rowe Price Services, Inc., provides shareholder and administrative services in its capacity as the fund’s transfer and dividend-disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retirement accounts invested in the Investor Class and I Class. For the year ended October 31, 2016, expenses incurred pursuant to these service agreements were $60,000 for Price Associates; $980,000 for T. Rowe Price Services, Inc.; and $150,000 for T. Rowe Price Retirement Plan Services, Inc. The total amount payable at period-end pursuant to these service agreements is reflected as Due to Affiliates in the accompanying financial statements. Additionally, the fund is one of several mutual funds in which certain college savings plans managed by Price Associates may invest. As approved by the fund’s Board of Directors, shareholder servicing costs associated with each college savings plan are borne by the fund in proportion to the average daily value of its shares owned by the college savings plan. For the year ended October 31, 2016, the fund was charged $335,000 for shareholder servicing costs related to the college savings plans, of which $286,000 was for services provided by Price. The amount payable at period-end pursuant to this agreement is reflected as Due to Affiliates in the accompanying financial statements. At October 31, 2016, approximately 2% of the outstanding shares of the Investor Class were held by college savings plans. The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum Funds) and T. Rowe Price Retirement Funds (Retirement Funds) and T. Rowe Price Target Funds (Target Funds) may invest. None of the Spectrum Funds, Retirement Funds, Target Funds invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to special servicing agreements, expenses associated with the operation of the Spectrum Funds and Retirement Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum Funds and Retirement Funds.
39
T. Rowe Price Emerging Markets Stock Fund
Prior to February 1, 2016, the Target Funds were subject to the same special servicing agreement; thus expenses associated with the operation of the Target Funds prior to that date were borne by the underlying Price Funds. Effective February 1, 2016, expenses associated with the operation of the Target Funds are borne by the Target Funds. Expenses allocated under these agreements are reflected as shareholder servicing expense in the accompanying financial statements. For the year ended October 31, 2016, the fund was allocated $211,000 of Spectrum Funds’ expenses, $9,829,000 of Retirement Funds’ expenses, and $36,000 of Target Funds’ expenses. Of these amounts, $3,982,000 related to services provided by Price. At period-end, the amount payable to Price pursuant to these agreements are reflected as Due to Affiliates in the accompanying financial statements. Additionally, redemption fees received by the Spectrum Funds are allocated to each underlying Price fund in proportion to the average daily value of its shares owned by the Spectrum Funds. Approximately $1,000 of redemption fees reflected in the accompanying financial statements were received from the Spectrum Funds. At October 31, 2016, approximately 70% of the outstanding shares of the Investor Class were held by the Spectrum Funds and Retirement Fund and approximately 2% of the outstanding shares of the I Class were held by the Target Funds. In addition, other mutual funds, trusts, and other accounts managed by Price Associates or its affiliates (collectively, Price funds and accounts) may invest in the fund and are not subject to the special servicing agreements disclosed above. No Price fund or account may invest for the purpose of exercising management or control over the fund. At October 31, 2016, approximately 15% of the I Class’s outstanding shares were held by Price funds and accounts. The fund may invest in the T. Rowe Price Government Reserve Fund, the T. Rowe Price Treasury Reserve Fund, or the T. Rowe Price Short-Term Fund (collectively, the Price Reserve Investment Funds), open-end management investment companies managed by Price Associates and considered affiliates of the fund. The Price Reserve Investment Funds are offered as short-term investment options to mutual funds, trusts, and other accounts managed by Price Associates or its affiliates and are not available for direct purchase by members of the public. The Price Reserve Investment Funds pay no investment management fees.
40
T. Rowe Price Emerging Markets Stock Fund
The fund may participate in securities purchase and sale transactions with other funds or accounts advised by Price Associates (cross trades), in accordance with procedures adopted by the fund’s Board and Securities and Exchange Commission rules, which require, among other things, that such purchase and sale cross trades be effected at the independent current market price of the security. During the year ended October 31, 2016, the fund had no purchases or sales cross trades with other funds or accounts advised by Price Associates.
41
T. Rowe Price Emerging Markets Stock Fund
R eport of I ndependent R egistered P ublic A ccounting F irm
To the Board of Directors of T. Rowe Price International Funds, Inc. and Shareholders of T. Rowe Price 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 the T. Rowe Price Emerging Markets Stock Fund (one of the portfolios comprising T. Rowe Price International Funds, Inc., hereafter referred to as the “Fund”) at October 31, 2016, the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2016 by correspondence with the custodian, and confirmation of the underlying fund by correspondence with the transfer agent, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP Baltimore, Maryland December 15, 2016
42
T. Rowe Price Emerging Markets Stock Fund
T ax I nformation (U naudited ) for the T ax Y ear E nded 10/31/16 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’s distributions to shareholders included $2,874,000 from short-term capital gains. For taxable non-corporate shareholders, $76,064,000 of the fund’s income represents qualified dividend income subject to a long-term capital gains tax rate of not greater than 20%. For corporate shareholders, $274,000 of the fund’s income qualifies for the dividendsreceived deduction. The fund will pass through foreign source income of $78,636,000 and foreign taxes paid of $18,751,000.
I nformation on P roxy V oting P olicies, P rocedures, and R ecords A description of the policies and procedures used by T. Rowe Price funds and portfolios to determine how to vote proxies relating to portfolio securities is available in each fund’s Statement of Additional Information. You may request this document by calling 1-800-225-5132 or by accessing the SEC’s website, sec.gov. The description of our proxy voting policies and procedures is also available on our corporate website. To access it, please visit the following Web page: https://www3.troweprice.com/usis/corporate/en/utility/policies.html Scroll down to the section near the bottom of the page that says, “Proxy Voting Policies.” Click on the Proxy Voting Policies link in the shaded box. Each fund’s most recent annual proxy voting record is available on our website and through the SEC’s website. To access it through T. Rowe Price, visit the website location shown above, and scroll down to the section near the bottom of the page that says, “Proxy Voting Records.” Click on the Proxy Voting Records link in the shaded box.
H ow to O btain Q uarterly P ortfolio H oldings The fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available electronically on the SEC’s website (sec.gov); hard copies may be reviewed and copied at the SEC’s Public Reference Room, 100 F St. N.E., Washington, DC 20549. For more information on the Public Reference Room, call 1-800-SEC-0330.
43
T. Rowe Price Emerging Markets Stock Fund
A bout the F und’s D irectors and O fficers Your fund is overseen by a Board of Directors (Board) that meets regularly to review a wide variety of matters affecting or potentially affecting the fund, including performance, investment programs, compliance matters, advisory fees and expenses, service providers, and business and regulatory affairs. The Board elects the fund’s officers, who are listed in the final table. At least 75% of the Board’s members are independent of T. Rowe Price Associates, Inc. (T. Rowe Price), and its affiliates; “inside” or “interested” directors are employees or officers of T. Rowe Price. The business address of each director and officer is 100 East Pratt Street, Baltimore, Maryland 21202. The Statement of Additional Information includes additional information about the fund directors and is available without charge by calling a T. Rowe Price representative at 1-800-638-5660.
Independent Directors Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen]
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years
William R. Brody, M.D., Ph.D. (1944) 2009 [186]
President and Trustee, Salk Institute for Biological Studies (2009 to present); Director, BioMed Realty Trust (2013 to 2016); Chairman of the Board, Mesa Biotech, a molecular diagnostic company (March 2016 to present); Director, Radiology Partners, an integrated radiology practice management company (June 2016 to present); Director, Novartis, Inc. (2009 to 2014); Director, IBM (2007 to present)
Anthony W. Deering (1945) 1991 [186]
Chairman, Exeter Capital, LLC, a private investment firm (2004 to present); Director, Brixmor Real Estate Investment Trust (2012 to present); Director and Advisory Board Member, Deutsche Bank North America (2004 to present); Director, Under Armour (2008 to present); Director, Vornado Real Estate Investment Trust (2004 to 2012)
Bruce W. Duncan (1951) 2013 [186]
Chief Executive Officer and Director (2009 to present), Chairman of the Board (January 2016 to present) and President (2009 to September 2016), First Industrial Realty Trust, an owner and operator of industrial properties; Chairman of the Board (2005 to May 2016) and Director (1999 to May 2016), Starwood Hotels & Resorts, a hotel and leisure company; Director, Boston Properties (May 2016 to present)
Robert J. Gerrard, Jr. (1952) 2012 [186]
Advisory Board Member, Pipeline Crisis/Winning Strategies, a collaborative working to improve opportunities for young African Americans (1997 to present)
*Each independent director serves until retirement, resignation, or election of a successor.
44
T. Rowe Price Emerging Markets Stock Fund
Independent Directors (continued) Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen]
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years
Paul F. McBride (1956) 2013 [186]
Advisory Board Member, Vizzia Technologies (2015 to present)
Cecilia E. Rouse, Ph.D. (1963) 2012 [186]
Dean, Woodrow Wilson School (2012 to present); Professor and Researcher, Princeton University (1992 to present); Director, MDRC, a nonprofit education and social policy research organization (2011 to present); Member of National Academy of Education (2010 to present); Research Associate of Labor Program (2011 to present) and Board Member (2015 to present), National Bureau of Economic Research (2011 to present); Chair of Committee on the Status of Minority Groups in the Economic Profession (2012 to present) and Vice President (2015 to present), American Economic Association
John G. Schreiber (1946) 2001 [186]
Owner/President, Centaur Capital Partners, Inc., a real estate investment company (1991 to present); Cofounder, Partner, and Cochairman of the Investment Committee, Blackstone Real Estate Advisors, L.P. (1992 to 2015); Director, General Growth Properties, Inc. (2010 to 2013); Director, Blackstone Mortgage Trust, a real estate financial company (2012 to 2016); Director and Chairman of the Board, Brixmor Property Group, Inc. (2013 to present); Director, Hilton Worldwide (2013 to present); Director, Hudson Pacific Properties (2014 to 2016)
Mark R. Tercek (1957) 2009 [186]
President and Chief Executive Officer, The Nature Conservancy (2008 to present)
*Each independent director serves until retirement, resignation, or election of a successor.
45
T. Rowe Price Emerging Markets Stock Fund
Inside Directors Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen]
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years
Edward C. Bernard (1956) 2006 [186]
Director and Vice President, T. Rowe Price; Vice Chairman of the Board, Director, and Vice President, T. Rowe Price Group, Inc.; Chairman of the Board, Director, and President, T. Rowe Price Investment Services, Inc.; Chairman of the Board and Director, T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of the Board, Chief Executive Officer, Director, and President, T. Rowe Price International and T. Rowe Price Trust Company; Chairman of the Board, all funds
Brian C. Rogers, CFA, CIC (1955) 2006 [131]
Chief Investment Officer, Director, and Vice President, T. Rowe Price; Chairman of the Board, Chief Investment Officer, Director, and Vice President, T. Rowe Price Group, Inc.; Vice President, T. Rowe Price Trust Company
*Each inside director serves until retirement, resignation, or election of a successor.
Officers Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Jason R. Adams (1979) Vice President
Vice President T. Rowe Price and T. Rowe Price Group, Inc.; formerly, Research Analyst, Caxton Associates (to 2015)
Ulle Adamson, CFA (1979) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Roy H. Adkins (1970) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Christopher D. Alderson (1962) President
Company’s Representative and Vice President, Price Hong Kong; Vice President, Price Singapore; Director and Vice President, T. Rowe Price International; Vice President, T. Rowe Price Group, Inc.
Syed H. Ali (1970) Vice President
Vice President, Price Singapore and T. Rowe Price Group, Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
46
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Paulina Amieva (1981) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Malik S. Asif (1981) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, student, The University of Chicago Booth School of Business (to 2012)
Harishankar Balkrishna (1983) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Sheena L. Barbosa (1983) Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Peter J. Bates, CFA (1974) Executive Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Luis M. Baylac (1982) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Oliver D.M. Bell, IMC (1969) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
R. Scott Berg, CFA (1972) Executive Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Steven E. Boothe, CFA (1977) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Peter I. Botoucharov (1965) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Director, EMEA Macroeconomic Research and Strategy (to 2012)
Tala Boulos (1984) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Vice President, CEEMEA Corporate Credit Research, Deutsche Bank (to 2013)
Darrell N. Braman (1963) Vice President and Secretary
Vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, T. Rowe Price Investment Services, Inc., and T. Rowe Price Services, Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
47
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Ryan N. Burgess, CFA (1974) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Sheldon Chan (1981) Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Andrew Chang (1983) Vice President
Vice President, T. Rowe Price Group, Inc.
Tak Yiu Cheng, CFA, CPA (1974) Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Carolyn Hoi Che Chu (1974) Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Archibald Ciganer Albeniz, CFA (1976) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Richard N. Clattenburg, CFA (1979) Executive Vice President
Vice President, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International
Michael J. Conelius, CFA (1964) Executive Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company
Michael F. Connelly, CFA (1977) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Andrew S. Davis (1978) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Richard de los Reyes (1975) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Michael Della Vedova (1969) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Shawn T. Driscoll (1975) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Bridget A. Ebner (1970) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
David J. Eiswert, CFA (1972) Executive Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
48
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Henry M. Ellenbogen (1973) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Ryan W. Ferro (1985) Vice President
Vice President, T. Rowe Price; formerly, student, Tucker School of Business at Dartmouth (to 2014); Director, Corporate Development, ModusLink Global Solutions, Inc. (to 2012)
Mark S. Finn, CFA, CPA (1963) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Quentin S. Fitzsimmons (1968) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Portfolio Manager, Royal Bank of Scotland Group (to 2015); Executive Director, Threadneedle Investment, Ltd. (to 2012)
Melissa C. Gallagher (1974) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Justin T. Gerbereux, CFA (1975) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
John R. Gilner (1961) Chief Compliance Officer
Chief Compliance Officer and Vice President, T. Rowe Price; Vice President, T. Rowe Price Group, Inc., and T. Rowe Price Investment Services, Inc.
Vishnu Vardhan Gopal (1979) Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Joel Grant (1978) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly, Analyst, Fidelity International (to 2014)
Paul D. Greene II (1978) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Benjamin Griffiths, CFA (1977) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Amanda B. Hall, CFA (1985) Vice President
Vice President, T. Rowe Price International; formerly, student, Stanford Graduate School of Business (to 2014); Investment Analyst, Bill Gates Investments (to 2012)
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
49
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Richard L. Hall (1979) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly, Financial Attaché, U.S. Department of Treasury, International Affairs Division (to 2012)
Nabil Hanano, CFA (1984) Vice President
Employee, T. Rowe Price; formerly, Senior Equity Research Associate, Raymond James (to 2012)
Steven C. Huber, CFA, FSA (1958) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International
Stefan Hubrich, Ph.D., CFA (1974) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Arif Husain, CFA (1972) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Director/Head of UK and Euro Fixed Income, AllianceBernstein (to 2013)
Tetsuji Inoue (1971) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Equity Sales, JP Morgan Chase Securities Ltd. (to 2012)
Michael Jacobs (1971) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Vice President, JP Morgan Asset Management (to 2013)
Randal S. Jenneke (1971) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Prashant G. Jeyaganesh (1983) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Nina P. Jones, CPA (1980) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Yoichiro Kai (1973) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Jai Kapadia (1982) Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
50
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Andrew J. Keirle (1974) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Paul J. Krug, CPA (1964) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Christopher J. Kushlis, CFA (1976) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Shengrong Lau (1982) Vice President
Vice President, Price Singapore and T. Rowe Price Group, Inc.; formerly, student, The Wharton School, University of Pennsylvania (to 2012)
Mark J. Lawrence (1970) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Jacqueline Liu (1979) Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.; formerly, Investment Analyst, Fidelity International Hong Kong Limited (to 2014)
Anh Lu (1968) Executive Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Oxana Lyalina (1987) Vice President
Employee, T. Rowe Price; formerly, Senior Analyst, Goldman Sachs International (to 2013)
Sebastien Mallet (1974) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Ryan Martyn (1979) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Catherine D. Mathews (1963) Treasurer and Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Jonathan H.W. Matthews, CFA (1975) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Raymond A. Mills, Ph.D., CFA (1960) Executive Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
51
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Jihong Min (1979) Vice President
Vice President, Price Singapore and T. Rowe Price Group, Inc.; formerly, Financial Analyst, Geosphere Capital Management, Singapore (to 2012)
Eric C. Moffett (1974) Executive Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Samy B. Muaddi, CFA (1984) Executive Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Tobias F. Mueller (1980) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Jared T. Murphy (1986) Vice President
Employee, T. Rowe Price; formerly, student, Stanford Graduate School of Business (to 2015); Associate, ShawSpring Partners (to 2013)
Joshua Nelson (1977) Executive Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International
Philip A. Nestico (1976) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Michael Niedzielski (1979) Vice President
Vice President T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, Manager and Analyst, Fidelity Investments, Boston and London Offices (to 2015)
Sridhar Nishtala (1975) Vice President
Vice President, Price Singapore and T. Rowe Price Group, Inc.
Jason Nogueira, CFA (1974) Executive Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
David Oestreicher (1967) Vice President
Director, Vice President, and Secretary, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; Chief Legal Officer, Vice President, and Secretary, T. Rowe Price Group, Inc.; Vice President and Secretary, T. Rowe Price and T. Rowe Price International; Vice President, Price Hong Kong and Price Singapore
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
52
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Michael D. Oh, CFA (1974) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Kenneth A. Orchard (1975) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Curt J. Organt, CFA (1968) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Paul T. O’Sullivan (1973) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Oluwaseun A. Oyegunle, CFA (1984) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly, student, The Wharton School, University of Pennsylvania (to 2013); Summer Investment Analyst, T. Rowe Price International (2012); Analyst, Asset & Resource Management Limited (to 2012)
Gonzalo Pángaro, CFA (1968) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Vivek Rajeswaran (1985) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly, student, Columbia Business School (to 2012)
John W. Ratzesberger (1975) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company; formerly, North American Head of Listed Derivatives Operation, Morgan Stanley (to 2013)
Shannon H. Rauser (1987) Assistant Secretary
Employee, T. Rowe Price
Melanie A. Rizzo (1982) Vice President
Employee, T. Rowe Price
David L. Rowlett, CFA (1975) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Mariel Santiago (1981) Vice President
Vice President, T. Rowe Price; formerly, Equity Research Analyst, HSBC Securities, Inc. (to 2014)
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
53
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Federico Santilli, CFA (1974) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Sebastian Schrott (1977) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Deborah D. Seidel (1962) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Services, Inc.
Jeneiv Shah, CFA (1980) Vice President
Vice President, T. Rowe Price International
Robert W. Sharps, CFA, CPA (1971) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
John C.A. Sherman (1969) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Robert W. Smith (1961) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Gabriel Solomon (1977) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Eunbin Song, CFA (1980) Vice President
Vice President, Price Singapore and T. Rowe Price Group, Inc.
Joshua K. Spencer, CFA (1973) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
David A. Stanley (1963) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Taymour R. Tamaddon, CFA (1976) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Ju Yen Tan (1972) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Sin Dee Tan, CFA (1979) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Dean Tenerelli (1964) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
54
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Siby Thomas (1979) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Justin Thomson (1968) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Mitchell J.K. Todd (1974) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Mark J. Vaselkiv (1958) Executive Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Kes Visuvalingam, CFA (1968) Vice President
Director, Responsible Officer, and Vice President, Price Hong Kong; Director, Chief Executive Officer, and Vice President, Price Singapore; and Vice President, T. Rowe Price Group, Inc.
Verena E. Wachnitz, CFA (1978) Executive Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
David J. Wallack (1960) Vice President
Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company
Dai Wang (1989) Vice President
Employee, T. Rowe Price; formerly, student Harvard Business School (to 2014); Analyst, Goldman Sachs (to 2012)
Hiroshi Watanabe, CFA (1975) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Christopher S. Whitehouse (1972) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Clive M. Williams (1966) Vice President
Vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International
J. Howard Woodward, CFA (1974) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Marta Yago (1977) Vice President
Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International
Benjamin T. Yeagle (1978) Vice President
Vice President, T. Rowe Price and T. Rowe Price Group, Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
55
T. Rowe Price Emerging Markets Stock Fund
Officers (continued) Name (Year of Birth) Position Held With International Funds
Principal Occupation(s)
Ernest C. Yeung, CFA (1979) Executive Vice President
Director, Responsible Officer, and Vice President, Price Hong Kong; Vice President, T. Rowe Price Group, Inc.
Alison Mei Ling Yip (1966) Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Wenli Zheng (1979) Vice President
Vice President, Price Hong Kong and T. Rowe Price Group, Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years.
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T. Rowe Price Mutual Funds This page contains supplementary information that is not part of the shareholder report.
STOCK FUNDS
BOND FUNDS
MONEY MARKET FUNDS (cont.)
Domestic
Domestic Taxable
Tax-Free
Corporate Income Credit Opportunities Floating Rate GNMA High Yield‡ Inflation Protected Bond Limited Duration Inflation Focused Bond New Income Short-Term Bond Total Return Ultra Short-Term Bond U.S. Bond Enhanced Index U.S. Treasury Intermediate U.S. Treasury Long-Term
California Tax-Free Money1 Maryland Tax-Free Money1 New York Tax-Free Money1 Summit Municipal Money Market1 Tax-Exempt Money1
Blue Chip Growth Capital Appreciation‡ Capital Opportunity Diversified Mid-Cap Growth Dividend Growth Equity Income Equity Index 500 Extended Equity Market Index Financial Services Growth & Income Growth Stock Health Sciences‡ Media & Telecommunications Mid-Cap Growth‡ Mid-Cap Value‡ New America Growth New Era New Horizons‡ QM U.S. Small & Mid-Cap Core Equity QM U.S. Small-Cap Growth Equity QM U.S. Value Equity Real Estate Science & Technology Small-Cap Stock‡ Small-Cap Value Tax-Efficient Equity Total Equity Market Index U.S. Large-Cap Core Value
ASSET ALLOCATION FUNDS Balanced Global Allocation Personal Strategy Balanced Personal Strategy Growth Personal Strategy Income Real Assets Spectrum Growth Spectrum Income Spectrum International Target Date Fundsˆ
INTERNATIONAL/GLOBAL FUNDS Stock
MONEY MARKET FUNDS
Africa & Middle East Asia Opportunities Emerging Europe Emerging Markets Stock Emerging Markets Value Stock European Stock Global Consumer Global Growth Stock Global Industrials Global Real Estate Global Stock Global Technology International Concentrated Equity International Discovery International Equity Index International Growth & Income International Stock Japan Latin America New Asia Overseas Stock QM Global Equity
Taxable
Bond
Domestic Tax-Free California Tax-Free Bond Georgia Tax-Free Bond Intermediate Tax-Free High Yield Maryland Short-Term Tax-Free Bond Maryland Tax-Free Bond New Jersey Tax-Free Bond New York Tax-Free Bond Summit Municipal Income Summit Municipal Intermediate Tax-Free High Yield Tax-Free Income Tax-Free Short-Intermediate Virginia Tax-Free Bond
Cash Reserves1 Government Money2 U.S. Treasury Money2
Emerging Markets Bond Emerging Markets Corporate Bond Emerging Markets Local Currency Bond Global High Income Bond Global Multi-Sector Bond Global Unconstrained Bond International Bond
Call 1-800-225-5132 to request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. ‡Closed to new investors except for a direct rollover from a retirement plan into a T. Rowe Price IRA invested in this fund. ˆThe Target Date Funds are inclusive of the Retirement Funds, the Target Funds, and the Retirement Balanced Fund.
Retail Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. Beginning October 14, 2016, the Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time. 2 Government Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time. 1
T. Rowe Price Investment Services, Inc. 100 East Pratt Street Baltimore, MD 21202 2016-US-28364
F111-050 12/16
