Item 1. Report to Shareholders
October 31, 2004
Annual Report
Institutional Emerging Markets Equity Fund
T. Rowe Price
The views and opinions in this report were current as of October 31, 2004. 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 of 2002, 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.
T. Rowe Price Institutional Emerging Markets Equity Fund
Fellow Shareholders
Emerging stock markets posted solid gains in the 6- and 12-month periods through
October 31, 2004, that far surpassed the returns for developed stock markets.
During the past year, world economies staged a broad-based recovery. Emerging
markets generally benefited from ongoing price increases of oil and raw
materials and stronger currencies. The energy sector was by far the best
performer throughout the year, and materials and utilities stocks chipped in
solid gains since April--explaining why value indexes outdistanced their growth
counterparts. As in the developed markets, small-cap stocks outperformed
large-caps across emerging markets.
Performance Review
Performance Comparison
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Periods Ended 10/31/04 6 Months 12 Months
- --------------------------------------------------------------------------------
Institutional Emerging
Markets Equity Fund 9.71% 19.58%
MSCI Emerging
Markets Index 9.16 19.40
Lipper Emerging Markets
Funds Average 8.63 19.50
Please see the fund's quarter-end returns following this letter.
The Institutional Emerging Markets Equity Fund returned 9.71% for six months and
19.58% for the year ended October 31, 2004. As shown in the table, the
portfolio's performance was about the same in the first and second halves of our
fiscal year. However, these results mask several sharp market swings.
Nevertheless, we are pleased to report that your portfolio's results were better
than the MSCI and Lipper benchmarks for both periods.
From a regional perspective, Latin American stocks performed the best over the
past six months, paced by rising oil and materials prices and stellar results in
Brazil. Asian markets were basically flat due to weakness in South Korea and
Taiwan--the technology sector was a significant drag on returns in both
countries. Emerging Europe, the Mediterranean, and Africa performed well, but
individual country performance was mixed. Eastern European countries, Turkey,
and Egypt were strongest, while Israel (weak technology and pharmaceuticals) and
Russia (primarily due to the problems at Yukos) were lower.
Portfolio Review
Far East
Geographic Diversification
- --------------------------------------------------------------------------------
Periods Ended 4/30/04 10/31/04
- --------------------------------------------------------------------------------
Far East 50.5% 44.0%
Africa and Middle East 19.1 20.4
Latin America 17.0 19.2
Europe 8.3 9.0
Other and Reserves 5.1 7.4
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Total 100.0% 100.0%
Asia's markets languished during the past six months. On a macro level, Asia
appears strong, but from a micro view, the outlook is more difficult. Within
North Asia, domestic-oriented companies in Taiwan and South Korea appear
relatively attractive, although we think the sizable technology markets in both
of these economies may be nearing a cyclical peak. Therefore, we reduced our
exposure in the tech sector significantly over the past six months. South Asia
looks less attractive on a valuation basis, despite strong growth in a number of
previously red-hot markets, including India. We are similarly cautious about
investing directly in China (see the special report on China on the following
page). Although economic growth is strong, in our view, there is an absence of
high-quality, industry-leading companies that can sustain profitability
throughout a full business cycle.
Hyundai Motor, the largest auto manufacturer in South Korea, was a leading Asian
contributor for the last six months. The company's new product offerings have
been well received, and it has been gaining market share in the U.S., Europe,
and several emerging markets, including China and India. (Please refer to our
portfolio of investments for a complete listing of the fund's holdings.)
Asian information technology companies (specifically semiconductors and related
equipment holdings) were among the worst performers for the six-month period.
Samsung Electronics, Via Technologies, and Taiwan Semiconductor Manufacturing,
for example, were significant detractors since April. However, Samsung was a
solid contributor for the year.
China: A Powerful Global Growth Engine
China has increasingly become the growth engine for Asia, and T. Rowe Price
investment managers believe that it will have an expanding impact on the global
economy. Investing in China, however, presents unique challenges that warrant a
cautious investment approach.
China's economy has grown rapidly over the past year, fueled by massive
fixed-asset investment by the government, high levels of foreign investment, and
the rapid emergence of its urban middle class. In December 2003, money supply
was growing at a 30% annual pace, and the supply of raw materials could not keep
pace. China currently consumes 25% of the world's raw materials, and this will
continue to rise.
Over the past year, the Chinese government has attempted to cool this boom, and
the continuing challenge will be achieving a manageable rate of growth. We
believe the next stage of China's modernization must be to tackle its financial
architecture. Due to the lack of a functioning bond market, interest rate
inflexibility, and a rigid foreign exchange structure, the government has had to
rely on administrative measures to slow the economy.
The secular rise in inflation is another growing concern. The country is
reaching the limit of its ability to supply domestic raw materials to its
industries, meaning that growth will have to be met by imported raw materials
and paid for with hard currency. These trends probably mean that China's low
interest rates are likely to climb further, which could have major implications
for its economy and potentially for inflation trends around the world. (The
government edged rates higher in October for the first time in nearly a decade.)
More importantly, it raises some question about the long-term sustainability of
China's blistering growth.
Accordingly, we have remained cautious about the quality of investment
opportunities in China, almost exclusively focusing on industry leaders that we
believe are capable of achieving sustained profitability through economic peaks
and troughs. An alternative strategy has been to invest in non-Chinese companies
that we believe will benefit from accelerating Chinese demand. While we are
pleased that more high-growth, privately owned mainland companies are starting
to be listed, we remain extremely selective and seek to avoid owning Chinese
companies with opaque ownership structures and a lack of corporate transparency.
[GRAPHIC OMITTED]
Will China's GDP Growth Slow?
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Real GDP Growth
Rate
'97 10.29%
'98 6.39
'99 3.14
'00 8.96
'01 7.30
'02 6.74
'03 14.16
'04* 9.20
'05* 8.00
*Estimates
Sources: FactSet Research Systems, OECD, Consensus Economics Inc.
Market Performance
- --------------------------------------------------------------------------------
Six Months Local Local Currency U.S.
Ended 10/31/04 Currency vs. U.S. Dollars Dollars
- --------------------------------------------------------------------------------
Brazil 28.59% 3.19% 32.68%
India 3.99 -1.97 1.94
Israel -11.31 2.90 -9.27
Malaysia 2.12 0.00 2.12
Mexico 15.95 -1.12 14.66
Russia 7.39 0.93 7.39
South Africa 13.83 12.97 28.59
South Korea -7.61 4.81 -3.16
Taiwan -5.41 -0.55 -5.94
Thailand 1.96 -2.57 -0.66
Source: RIMES Online, using MSCI indices.
As we reduced exposure to the Asian tech and telecom sectors, we added to
positions in energy and financials. The portfolio's largest purchase in Asia
over the last six months was S-Oil, one of South Korea's largest oil refiners,
and in Taiwan, we bought Cathay Financial and Chinatrust Financial. We initiated
a position in S-Oil because there is a shortage of Asian oil refining capacity,
and, coupled with higher oil prices, we expect margins and profits to improve.
We eliminated China Mobile, the leading provider of mobile telecommunications
services in China, because in our view, the company's growth prospects have
diminished and we see increasing competition that could pressure margins.
Latin America
Latin American stocks continued their strong performance over the past six
months, posting the best results among emerging markets and contributing to the
portfolio's solid returns. Markets in the region generally benefited from
stronger currencies and ongoing increases in the price of oil and raw materials,
which led energy and materials stocks higher for the period. Consumer and
financial stocks also performed well in the region as economic growth fueled
stronger consumer demand.
As is often the case in Latin America, performance was extremely volatile over
the course of the past year. Markets more exposed to rising rates, such as
Brazil, declined the most but also bounced back higher. High commodity prices
and still relatively low interest rates favored materials and companies with
higher leverage, a detriment to our investment style, which focuses on
high-quality, steady-growth companies in the region.
Brazil was the region's top performer over the last six months. Brazilian energy
and materials stocks, which make up about half of the market, surged on news of
better-than-expected economic growth, industrial production, jobless rates,
and trade surpluses. Petroleo Brasileiro (Petrobras) was a top contributor for
both the six and 12 months, supported by record-high oil prices and expectations
of rising oil production. We increased our position, and the stock remains the
portfolio's largest
Sector Diversification
- --------------------------------------------------------------------------------
Percent of Percent of
Net Assets Net Assets
4/30/04 10/31/04
- --------------------------------------------------------------------------------
Financials 18.0% 22.7%
Telecommunications Services 15.0 14.6
Consumer Discretionary 12.3 13.7
Energy 8.3 11.7
Materials 11.3 8.9
Information Technology 16.4 8.0
Consumer Staples 5.9 7.7
Industrials and Business Services 5.6 3.9
Trusts 0.0 2.0
Utilities 0.6 1.4
Health Care 1.5 0.0
Reserves 5.1 5.4
Total 100.0% 100.0%
- --------------------------------------------------------------------------------
holding (3.5% of net assets). New purchases included Natura Cosmeticos, the
largest Brazilian cosmetics company with a direct distribution model and over
400,000 sales representatives. We participated in the company's initial public
offering in late May and have continued to add to the position. The company is
benefiting from strong underlying growth in the cosmetics market. We also
added low-cost airline GOL and toll road operator Cia Concessoes Rodoviarias on
their initial public offerings. Although both are quality companies that
we'd like to own, we eliminated them after they reached our target price.
Wireless operator America Movil was our second-largest holding at the end of the
reporting period, and a standout contributor for six and 12 months, benefiting
from faster-than-expected penetration in many markets. Rebounding economies have
spurred consumer spending, which in turn has led to rising growth. The company
remains the dominant player in Mexico, well ahead
of its closest competitors, and it is aggressively gaining market share in
Brazil and other parts of Latin America.
Wal-Mart de Mexico is now among the portfolio's 10-largest holdings, thanks to
additional purchases over the past six months. This leading retailer has
significant advantages over its competition, including a much more efficient
distribution network. It continues to benefit from expansion opportunities and
solid same-store sales growth. Margins are improving as well, and we believe
that the valuation is still attractive.
Africa, Emerging Europe, and the Middle East
Stocks in European emerging markets, the Middle East, and African countries
produced strong returns over the past year. However, for the past six months,
gains were more moderate, and returns among countries were mixed. Stocks in
Egypt, Turkey, and central European countries fared best, while the Russian
market was hobbled by the government's ongoing political and tax disputes with
oil company Yukos. Israeli stocks also fell sharply amid weakness among
technology and pharmaceutical shares.
This is the most expensive region among emerging markets. Within Central and
Eastern Europe, the macroeconomic outlook is problematic, and many sustainable
growth companies are expensive. However, we are finding good investment
opportunities at the periphery of the region. Israel's economy has begun to
recover from several years of recession, and we believe that our Israeli stock
positions will benefit from this improvement over the long term. In the period,
we initiated a position in Bank Leumi, a leading retail bank, after the company
reported strong results.
Turkey's economy is also strong, and its leaders are optimistic that the
European Union will set a timetable in mid-December for Turkey to work toward
full EU membership. However, rising global interest rates have had a negative
impact on the country, due to very high debt levels. We have reduced our
exposure in Turkey by trimming several strong performers. Turkcell, for example,
was among the portfolio's top contributors over the last 12 months, and our
largest sale in Turkey.
We added several new companies in Egypt during the last six months because we
are encouraged by the reform efforts of the new government that came into power
in July. Our largest new Egyptian purchase is Commercial International Bank,
which should benefit from new banking reform proposals. We also added
telecommunication services companies Vodafone Egypt, Egyptian Company for Mobile
Services, and Orascom Telecom to the portfolio. Subscriber growth in the
wireless industry appears to be strong and could increase as the economy and
consumer spending strengthen.
The Russian economy, which is leveraged to energy and raw materials prices,
remained strong in the last six months. Wireless companies have greatly
benefited from this upturn, and consumers have been driving wireless penetration
growth at an accelerating rate, particularly in the regions outside Moscow. Our
large positions in Mobile TeleSystems and VimpleCom, Russia's two largest
wireless providers, were solid performance contributors for the last six
months.
In contrast, Yukos was the portfolio's largest detractor in both the 6- and
12-month periods. Yukos was one of the most attractive Russian energy companies
because of its strong production growth, lower relative costs, and a significant
reserve base. The company has been a significant (and hugely profitable)
portfolio holding for several years. However, the government's recent attempts
to force the company to pay back taxes have jeopardized its ability to produce
oil and pushed it to the verge of bankruptcy. We decided to eliminate the stock
when the government prepared to circumvent Russian law by selling Yukos'
assets at deep discounts to cover the tax liabilities.
Naspers, a South African-based pay-TV, Internet, and print media company that we
purchased earlier this year, was another top performer. The company continues to
produce strong earnings gains, primarily driven by good subscriber growth and
cost controls in South Africa and huge subscriber growth and solid margins in
its Greek pay-TV business.
OUTLOOK
Although emerging markets are generally healthy, they face several areas of
vulnerability. Economic growth and commodity prices are both strong, and
currencies are attractive. Valuations remain appealing, as well, although the
valuation gap with developed markets has narrowed over the last two years.
However, in an environment of rising global inflation and higher interest rates,
emerging markets would not be immune to a tightening of global liquidity and
increased risk aversion. These factors impacted second-quarter results, but
softer economic data from the U.S. and Japan supported a third-quarter rally.
With the balance of these economic forces in mind, we remain somewhat cautious.
Emerging market equities are a cyclical asset class. If global growth rises
rapidly
and interest rates increase sharply, we could see a repeat of the second
quarter's sharp sell-off. If global growth stabilizes, liquidity expands, and
the valuation and currency benefits remain in place, emerging markets could
continue to provide solid returns.
Respectfully submitted,
David J.L. Warren
President, T. Rowe Price International Funds, Inc.
November 21, 2004
Risks of International Investing
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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.
Glossary
- --------------------------------------------------------------------------------
MSCI Emerging Markets Index: A capitalization-weighted index of stocks from 26
emerging market countries that includes only securities that may be traded by
foreign investors.
T. Rowe Price Institutional Emerging Markets Equity Fund
Portfolio Highlights
Twenty-Five Largest Holdings
- --------------------------------------------------------------------------------
Percent of
Net Assets
Company Country 10/31/04
- --------------------------------------------------------------------------------
Petrobras Brazil 3.5%
America Movil Mexico 3.0
Samsung Electronics South Korea 2.5
iShares MSCI Emerging Markets Index Fund Europe/Far East 2.0
AO VimpelCom Russia 1.7
Naspers South Africa 1.6
Wal-Mart de Mexico Mexico 1.6
Lukoil Oil Russia 1.6
Cathay Financial Holding Taiwan 1.5
Impala Platinum Holdings South Africa 1.4
Hyundai Motor South Korea 1.4
Kookmin Bank South Korea 1.3
Mobile Telesystems Russia 1.3
Chinatrust Financial Taiwan 1.3
PetroKazakhstan Kazakhstan 1.2
Makhteshim-Agan Industries Israel 1.2
Sanlam South Africa 1.2
Tele Norte Leste Brazil 1.1
S-Oil South Korea 1.1
Zee Telefilms India 1.1
Grupo Televisa Mexico 1.1
Shinsegae South Korea 1.1
Bank Hapoalim Israel 1.0
South Korea Telecom South Korea 1.0
Taishin Financial Holdings Taiwan 1.0
- --------------------------------------------------------------------------------
Total 37.8%
- --------------------------------------------------------------------------------
Note: Table excludes investments in the T. Rowe Price Reserve Investment Fund.
Growth 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.
[GRAPHIC OMITTED]
Institutional Emerging Markets Equity Fund
- --------------------------------------------------------------------------------
As of 10/31/04
Institutional Emerging Markets Equity Fund $16,973
MSCI Emerging Markets Index $17,760
MSCI Emerging Institutional Emerging
Markets Index Markets Equity Fund
10/02 $10000 $10000
1/03 10288 9950
4/03 10593 10070
7/03 12752 12042
10/03 14874 14194
1/04 16722 15921
4/04 16270 15471
7/04 15739 15011
10/04 17760 16973
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
Since
Inception
Periods Ended 10/31/04 1 Year 10/31/02
- --------------------------------------------------------------------------------
Institutional Emerging Markets Equity Fund 19.58% 30.28%
MSCI Emerging Markets Index 19.40 33.35
Lipper Emerging Markets Funds Average 19.50 32.58
Returns do not reflect taxes that the shareholder may pay on distributions or
the redemption of fund shares. Past performance cannot guarantee future results.
T. Rowe Price Institutional Emerging Markets Equity Fund
Fund Expense Example
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.
Actual Expenses
The first line of the following table ("Actual") provides information about
actual account values and actual expenses. You may use the information in 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 in 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.
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.
T. Rowe Price Institutional Emerging
Markets Equity Fund
- --------------------------------------------------------------------------------
Expenses
Beginning Ending Paid During
Account Account Period*
Value Value 5/1/04 to
5/1/04 10/31/04 10/31/04
- --------------------------------------------------------------------------------
Actual $ 1,000 $ 1,097.10 $ 5.79
Hypothetical
(assumes 5% return
before expenses) 1,000 1,019.61 5.58
* Expenses are equal to the fund's annualized expense ratio for the six-month
period (1.1%), multiplied by the average account value over the period,
multiplied by the number derived by dividing the number of days in the
most recent fiscal half year (184) by the days in the year (366) to reflect
the half-year period.
Quarter-End Returns
- --------------------------------------------------------------------------------
Since
Inception
Periods Ended 9/30/04 1 Year 10/31/02
- --------------------------------------------------------------------------------
Institutional Emerging Markets Equity Fund 25.83% 29.73%
MSCI Emerging Markets Index 26.53 33.31
Lipper Emerging Markets Funds Average 25.55 32.33
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 information, please visit our Web site
(troweprice.com) or contact a T. Rowe Price representative at 1-800-638-8790.
Request a prospectus, which includes investment objectives, risks, fees,
expenses, and other information you should read and consider carefully before
investing.
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.
T. Rowe Price Investment Services, Inc., Distributor.
Financial Highlights
T. Rowe Price Institutional Emerging Markets Equity Fund
For a share outstanding
throughout each period
-------------------------------
Year 10/31/02
Ended Through
10/31/04 10/31/03
NET ASSET VALUE
Beginning of period $ 14.18 $ 10.00
Investment activities
Net investment income (loss) 0.15 0.09
Net realized and
unrealized gain (loss) 2.58 4.10
Total from
investment activities 2.73 4.19
Distributions
Net investment income (0.09) (0.01)
Net realized gain (0.21) --
Total distributions (0.30) (0.01)
NET ASSET VALUE
End of period $ 16.61 $ 14.18
-------------------------------------
Ratios/Supplemental Data
Total return^ 19.58% 41.94%
Ratio of total expenses to
average net assets 1.10% 1.10%
Ratio of net investment
income (loss) to average
net assets 1.28% 1.34%
Portfolio turnover rate 69.1% 70.4%
Net assets, end of period
(in thousands) $ 34,182 $ 15,650
^ 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.
The accompanying notes are an integral part of these financial statements.
Portfolio of Investments (1)
T. Rowe Price Institutional Emerging Markets Equity Fund
October 31, 2004
Shares Value
- --------------------------------------------------------------------------------
(Cost and value in $ 000s)
EUROPE/FAR EAST 2.0%
Common Stocks 2.0%
iShares MSCI Emerging Markets
Index Fund (USD) 3,800 674
Total Europe/Far East (Cost $673) 674
ARGENTINA 0.7%
Common Stocks 0.7%
Quilmes Industrial ADR (USD) 1,181 19
Tenaris ADR (USD) 4,800 215
Total Argentina (Cost $163) 234
BRAZIL 9.7%
Common Stocks 8.4%
Cia Energetica Minas
Gerais (Cemig) 8,457,000 196
Companhia Siderurgica Nacional 11,815 175
Companhia Vale do Rio
Doce ADR (USD) 7,200 131
Companhia Vale do Rio Doce ADR
(1 ADR represents 1
common share) (USD) 7,830 166
Embraer Aircraft ADR (USD) 1,800 48
Grendene * 1,900 23
Natura Cosmeticos 6,800 138
Petroleo Brasileiro (Petrobras)
ADR (USD) 26,700 870
Petroleo Brasileiro (Petrobras)ADR
(1 ADR represents 1
common share) (USD) 8,700 309
Tele Norte Leste ADR (USD) 14,800 194
Tele Norte Leste Participaco * 14,699 186
Telesp Celular
Participacoes ADR (USD) * 33,300 199
Votorantim Celulose ADR (USD) 7,100 245
2,880
Preferred Stocks 1.3%
Banco Itau Holdings Financiera * 2,631 319
Caemi Mineracao e Metalurgica * 126,200 76
Suzano Bahia Sul Papel 9,601 41
436
Total Brazil (Cost $2,577) 3,316
CHINA 4.7%
Common Stocks 4.7%
China Insurance (HKD) 252,000 115
China Resources
Enterprise (HKD) 110,000 154
China Telecom, 144A (HKD) * 290,000 93
China Telecom
(H shares)(HKD) 442,000 142
Cnooc (HKD) 615,500 318
Gome Electrical
Appliances (HKD) * 57,000 46
Gome Electrical Appliances
(Regulation S shares)
(HKD) * 174,000 140
Luen Thai Holdings (HKD) * 229,000 118
Pacific Basin Shipping
144A (HKD) * 124,000 58
Pacific Basin Shipping (HKD) * 129,000 61
Panva Gas Holdings (HKD) * 311,000 132
Shanghai Forte Land Company
(H shares) (HKD) 390,000 121
tom.com (HKD) * 584,000 113
Total China (Cost $1,472) 1,611
CZECH REPUBLIC 0.6%
Common Stocks 0.6%
Komercni Banka 1,529 193
Total Czech Republic (Cost $152) 193
EGYPT 2.8%
Common Stocks 2.8%
Commercial International Bank 47,235 269
Egyptian Company for
Mobile Services 12,377 236
Orascom Construction Industries 15,400 177
Orascom Telecom GDR (USD) * 3,800 65
Orascom Telecommunications * 3,407 118
Vodafone Egypt * 11,550 87
Total Egypt (Cost $762) 952
ESTONIA 0.3%
Common Stocks 0.3%
Hansabank (EUR) 10,200 103
Total Estonia (Cost $96) 103
HONG KONG 0.3%
Common Stocks 0.3%
Kingboard Chemical
Holdings, 144A * 58,000 121
Total Hong Kong (Cost $110) 121
HUNGARY 0.3%
Common Stocks 0.3%
OTP Bank 4,300 109
Total Hungary (Cost $92) 109
INDIA 6.4%
Common Stocks 6.4%
Arvind Mills * 107,336 187
Ballarpur Industries, 144A * 28,050 46
Ballarpur Industries
(Regulation S shares) * 3,600 6
Bharti Tele-Ventures * 2,000 7
HDFC Bank 16,000 147
HDFC Bank ADR (USD) 900 32
Hindalco Industries 3,910 102
I-Flex Solutions 13,900 182
ITC 7,330 176
Kotak Mahindra Finance 33,000 131
LIC Housing Finance GDR
(Regulation S
shares) (USD) @ 15,452 96
National Thermal Power, 144A * 19,000 26
Oil & Natural Gas 6,000 104
Oil & Natural Gas
(Regulation S shares) 4,000 70
Petronet LNG * 223,700 115
Power Trading 73,600 85
Tata Tea 16,000 145
UTI Bank 50,400 170
Zee Telefilms 111,500 368
Total India (Cost $1,861) 2,195
INDONESIA 0.9%
Common Stocks 0.9%
Indosat 360,300 187
Telekomunikasi, Series B 263,000 126
Total Indonesia (Cost $231) 313
ISRAEL 5.1%
Common Stocks 5.1%
Bank Hapoalim 129,100 355
Bank Leumi 93,900 198
Check Point Software
Technologies (USD) * 10,495 237
Lipman Electronic
Engineering (USD) 5,900 141
Makhteshim-Agan Industries 97,500 407
NICE Systems ADR (USD) * 3,100 66
Orbotech (USD) * 7,800 132
Partner Communications
ADR (USD) * 31,040 203
Total Israel (Cost $1,672) 1,739
KAZAKHSTAN 1.2%
Common Stocks 1.2%
PetroKazakhstan (USD) 11,171 412
Total Kazakhstan (Cost $315) 412
MALAYSIA 4.7%
Common Stocks 4.7%
Astro All Asia
(Ordinary shares) * 193,200 264
Astro All Asia
(Regulation S shares) * 20,000 27
Berjaya Sports Toto 154,500 158
CIMB Berhad 106,000 137
Hong Leong Bank 111,300 154
IJM 102,500 127
Magnum 123,300 81
Malaysian Industrial Development
Finance Berhad 255,300 81
MK Land Holdings 176,300 82
Multi-Purpose Holdings * 17,100 5
Multi-Purpose Holdings
Warrants, 2/26/09 * 15,900 2
Public Bank BHD 19,150 35
Sime Darby 75,900 114
Symphony House 199,650 41
Symphony House
Warrants, 4/28/09 * 32,250 2
Telekom Malaysia 42,000 127
Telekom Malaysia
(Regulation S shares) 9,000 27
Tenaga Nasional * 55,000 161
Total Malaysia (Cost $1,623) 1,625
MEXICO 8.8%
Common Stocks 8.8%
America Movil ADR
Series L (USD) 23,100 1,016
Cemex 28,916 167
Consorcio ARA * 45,100 121
Grupo Aeroportuario del
Sureste ADR (USD) 3,800 87
Grupo Financiero Banorte 42,800 201
Grupo Modelo, Series C 55,000 141
Grupo Televisa ADR (USD) 6,624 364
Organizacion Soriana, Series B 26,700 86
Telmex ADR (USD) 4,339 149
Urbi Desarrollos Urbanos * 36,900 137
Wal-Mart de Mexico, Series V 166,234 544
Total Mexico (Cost $2,349) 3,013
RUSSIA 5.9%
Common Stocks 5.9%
AO VimpelCom ADR (USD) * 5,200 593
Gazprom ADR (USD) 3,900 146
Lukoil (USD) 4,770 148
Lukoil ADR (USD) 3,130 392
MMC Norilsk Nickel (USD) 4,400 274
Mobile Telesystems ADR (USD) 3,100 450
Total Russia (Cost $1,386) 2,003
SOUTH AFRICA 9.6%
Common Stocks 9.6%
ABSA Group 28,100 307
African Bank Investments 121,800 284
Anglo American 14,050 307
Impala Platinum Holdings 6,150 494
Investec 6,300 144
Naspers (N shares) 59,900 548
Pick 'N Pay Stores 42,400 154
SABMiller 16,300 234
Sanlam 224,340 394
Sappi 8,600 123
Standard Bank Investment 32,796 287
Total South Africa (Cost $2,431) 3,276
SOUTH KOREA 16.1%
Common Stocks 15.1%
Amorepacific 1,445 282
Cheil Communications 970 128
Daewoo Shipbuilding & Marine
Engineering 8,690 128
Hanaro Telecom * 43,164 123
Hyundai Department Store * 2,740 79
Hyundai Motor * 860 42
Hyundai Motor GDR, 144A (USD) 3,900 93
Kookmin Bank * 12,570 420
Kookmin Bank ADR (USD) * 1,100 37
Korean Air Lines * 4,000 61
Kumgang Korea Chemical 2,240 238
LG Chemical 8,100 303
LG Electronics * 1,990 112
Lotte Chilsung Beverage 280 192
Ncsoft * 2,200 210
Plenus 7,670 78
S-Oil 7,330 370
Samsung Electronics 2,180 855
Shinhan Financial 13,500 266
Shinsegae 1,280 360
SK Corporation * 5,130 268
South Korea Telecom 2,140 335
Woori Finance Holdings 13,960 100
Woori Finance Holdings
(Regulation S shares) * 8,890 64
5,144
Preferred Stocks 1.0%
Hyundai Motor 12,890 356
356
Total South Korea (Cost $4,671) 5,500
SWITZERLAND 0.7%
Common Stocks 0.7%
Compagnie Financiere Richemont
GDR (ZAR) 86,500 242
Compagnie Financiere Richemont
Equity Units, Class A 100 3
Total Switzerland (Cost $200) 245
TAIWAN 9.4%
Common Stocks 9.4%
Acer 76,183 111
Advantech 75,795 162
Basso Industry 70,000 145
Cathay Financial Holding 265,000 508
Cheng Shin Rubber Industry 101,488 121
Chinatrust Financial 392,733 448
E.Sun Financial 261,000 178
E.Sun Financial GDR
144A (USD) * 1,800 31
Evergreen Marine * 26 0
Far Eastern Department Stores 197,000 93
Far Eastern Textile 301,505 201
Formosa Petrochemical * 79,000 132
Polaris Securities 177,000 91
Quanta Computer 133,226 215
Taishin Financial Holdings 409,887 335
Taiwan Cellular 116,000 116
Taiwan Semiconductor
Manufacturing 99,693 131
Via Technologies * 158,000 91
Yuanta Core Pacific * 126,000 89
Total Taiwan (Cost $3,067) 3,198
THAILAND 1.5%
Common Stocks 1.5%
Bangkok Bank NVDR * 62,300 142
C.P. 7-Eleven 54,300 71
Kasikornbank Public NVDR * 74,000 82
Land & Houses NVDR 481,300 106
Siam Commercial Bank 92,100 99
Total Thailand (Cost $440) 500
TURKEY 2.9%
Common Stocks 2.9%
Akbank 28,254,298 127
Anadolu Efes Biracilik
ve Malt Sanayii 6,432,750 102
Arcelik * 15,415,300 94
Dogus Otomotiv * 6,116,200 20
Hurriyet Gazete 92,176,350 183
Turkcell Iletisim Hizmetleri 28,563,174 175
Turkcell Iletisim
Hizmetleri ADR (USD) 1,769 27
Turkiye Garanti Bankasi * 62,558,852 167
Turkiye Is Bankasi (Isbank) 26,815,100 111
Total Turkey (Cost $630) 1,006
SHORT-TERM INVESTMENTS 6.1%
Money Market Funds 6.1%
T. Rowe Price Reserve Investment
Fund, 1.81% #+ 2,093,342 2,093
Total Short-Term Investments
(Cost $2,093) 2,093
Total Investments in Securities
100.7% of Net Assets (Cost $29,066) $ 34,431
The accompanying notes are an integral part of these financial statements.
(1) Denominated in currency of country of incorporation unless otherwise noted
# Seven-day yield
* Non-income producing
+ Affiliated company--See Note 5
@ Valued by the T. Rowe Price Valuation Committee, established by the fund's
Board of Directors
144A Security was purchased pursuant to Rule 144A under
the Securities Act of 1933 and may be resold in transactions exempt from
registration only to qualified institutional buyers--total value of such
securities at period-end amounts to $468 and represents 1.4% of net assets
ADR American Depository Receipts
EUR Euro
GDR Global Depository Receipts
HKD Hong Kong dollar
NVDR Non Voting Depository Receipt
USD United States dollar
ZAR South African rand
Statement of Assets and Liabilities
T. Rowe Price Institutional Emerging Markets Equity Fund
October 31, 2004
(In thousands except shares and per share amounts)
Assets
Investments in securities, at value
Affiliated companies (cost $2,093) $ 2,093
Other companies (cost $26,973) 32,338
Total investments in securities 34,431
Other assets 581
Total assets 35,012
Liabilities
Total liabilities 830
NET ASSETS $ 34,182
--------------------
Net Assets Consist of:
Undistributed net investment income (loss) $ 155
Undistributed net realized gain (loss) 1,010
Net unrealized gain (loss) 5,368
Paid-in-capital applicable to 2,057,278 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares of the Corporation authorized 27,649
NET ASSETS $ 34,182
--------------------
NET ASSET VALUE PER SHARE $ 16.61
--------------------
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Institutional Emerging Markets Equity Fund
($ 000s)
Year
Ended
10/31/04
Investment Income (Loss)
Dividend income (net of foreign taxes of $83) $ 600
Investment management and administrative expense 277
Net investment income (loss) 323
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (net of foreign taxes of $141) 904
Foreign currency transactions (30)
Net realized gain (loss) 874
Change in net unrealized gain (loss)
Securities (net of decrease in deferred
foreign taxes of $5) 2,831
Other assets and liabilities
denominated in foreign currencies 3
Change in net unrealized gain (loss) 2,834
Net realized and unrealized gain (loss) 3,708
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 4,031
--------------------
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Institutional Emerging Markets Equity Fund
($ 000s)
Year 10/31/02
Ended Through
10/31/04 10/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 323 $ 95
Net realized gain (loss) 874 256
Change in net unrealized gain (loss) 2,834 2,534
Increase (decrease) in net assets from
operations 4,031 2,885
Distributions to shareholders
Net investment income (115) (2)
Net realized gain (268) --
Decrease in net assets from distributions (383) (2)
Capital share transactions *
Shares sold 19,092 12,921
Distributions reinvested 280 2
Shares redeemed (4,488) (156)
Increase (decrease) in net assets from
capital share transactions 14,884 12,767
Net Assets
Increase (decrease) during period 18,532 15,650
Beginning of period 15,650 --
End of period $ 34,182 $ 15,650
--------------- ---------------
(Including undistributed net investment
income of $155 at 10/31/04 and $88 at
10/31/03)
*Share information
Shares sold 1,228 1,116
Distributions reinvested 19 --
Shares redeemed (293) (13)
Increase (decrease) in shares outstanding 954 1,103
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Institutional Emerging Markets Equity Fund
October 31, 2004
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Institutional International Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act). The
Institutional Emerging Markets Equity Fund (the fund), a diversified, open-end
management investment company, is one portfolio established by the corporation.
The fund commenced operations on October 31, 2002. The fund seeks long-term
growth of capital through investments primarily in the common stocks of
companies located (or with primary operations) in emerging markets.
The accompanying financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, which
require the use of estimates made by fund management.
Valuation
The fund values its investments and computes its net asset value per share at
the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day
that the NYSE is open for business. Equity securities listed or regularly traded
on a securities exchange or in the over-the-counter market are valued at the
last quoted sale price or, for certain markets, the official closing price at
the time the valuations are made, except for OTC Bulletin Board securities,
which are valued at the mean of the latest 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 latest
bid and asked prices for domestic securities and the last quoted sale price for
international securities.
Investments in mutual funds are valued at the mutual fund's closing net asset
value per share on the day of valuation.
Other investments 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 T. Rowe Price Valuation Committee,
established by the fund's Board of Directors. In the course of making a good
faith determination of a security's fair value, the fund reviews a variety of
factors, including market and trading trends and the value of comparable
securities, such as unrestricted securities of the same issuer.
Most foreign markets close before the close of trading on 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, which in turn will affect the fund's share price, the
fund will adjust the previous closing prices to reflect the fair value of the
securities as of the close of the NYSE, as determined in good faith by the T.
Rowe Price Valuation Committee, established by the fund's Board of Directors. A
fund may also fair value securities in other situations, such as when a
particular foreign market is closed but the fund is open. In deciding whether to
make fair value adjustments, 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 uses outside
pricing services to provide it with closing market prices and information used
for adjusting those prices. The fund cannot predict how often it will use
closing prices and how often it will adjust those prices. As a means of
evaluating its fair value process, the fund routinely compares closing market
prices, the next day's opening prices in the same markets, and adjusted prices.
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.
Redemption Fees
A 2% fee is assessed on redemptions of fund shares held less than 1 year to
deter short-term trading and 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 have the
primary effect of increasing paid-in capital. The fees may cause the redemption
price per share to differ from the net asset value per share.
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. Investment transactions
are accounted for on the trade date. Realized gains and losses are reported on
the identified cost basis.
Distributions to shareholders are recorded on the ex-dividend date. Income
distributions are declared and paid on an annual basis. Capital gain
distributions, if any, are declared and paid by the fund, typically on an annual
basis.
Other
In the normal course of business, the fund enters into contracts that provide
general indemnifications. The fund's maximum exposure under these arrangements
is dependent on claims that may be made against the fund in the future and,
therefore, cannot be estimated; however, based on experience, the risk of
material loss from such claims is considered remote.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Emerging Markets
At October 31, 2004, approximately 91% of the fund's net assets were invested in
securities of companies located in emerging markets or denominated in or
linked to the currencies of emerging market countries. Future economic or
political developments could adversely affect the liquidity or value, or both,
of such securities.
Restricted Securities
The fund may invest in securities that are subject to legal or contractual
restrictions on resale. Although certain of these securities may be readily
sold, for example, under Rule 144A, others may be illiquid, and their sale may
involve substantial delays and additional costs, and prompt sale at an
acceptable price may be difficult.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $30,858,000 and $16,465,000, respectively, for the year ended October
31, 2004.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code and distribute to shareholders all of its taxable income
and gains. Federal income tax regulations differ from generally accepted
accounting principles; therefore, distributions determined in accordance with
tax regulations may differ significantly 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. Financial records are not adjusted for temporary differences.
Distributions during the year ended October 31, 2004 totaled $383,000 and were
characterized as ordinary income for tax purposes. At October 31, 2004, the
tax-basis components of net assets were as follows:
- --------------------------------------------------------------------------------
Unrealized appreciation $ 5,931,000
Unrealized depreciation (563,000)
Net unrealized appreciation (depreciation) 5,368,000
Undistributed ordinary income 623,000
Undistributed long-term capital gain 542,000
Paid-in capital 27,649,000
Net assets $ 34,182,000
--------------------
For the year ended October 31, 2004, the fund recorded the following
permanent reclassifications to reflect tax character. Reclassifications
between income and gain relate primarily to the character of foreign
capital gain taxes. Results of operations and net assets were not affected
by these reclassifications.
- --------------------------------------------------------------------------------
Undistributed net investment income $ (141,000)
Undistributed net realized gain 141,000
At October 31, 2004, the cost of investments for federal income tax
purposes was $29,066,000.
NOTE 4 - FOREIGN TAXES
The fund is subject to foreign income taxes imposed by certain countries in
which it invests. Foreign income taxes are accrued by the fund as a reduction of
income.
Gains realized upon disposition of certain Indian securities held by the fund
are subject to capital gains tax in India, payable prior to repatriation of sale
proceeds. The tax is computed on net realized gains, and realized losses in
excess of gains may be carried forward eight years to offset future gains. In
addition, the fund accrues a deferred tax liability for net unrealized gains on
Indian securities when applicable. At October 31, 2004, the fund had no deferred
tax liability.
NOTE 5 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price International, Inc. (the manager), a wholly
owned subsidiary of T. Rowe Price Associates, Inc. (Price Associates), which is
wholly owned by T. Rowe Price Group, Inc. The investment management and
administrative agreement between the fund and the manager provides for an all-
inclusive annual fee equal to 1.10% of the fund's average daily net assets. The
fee is computed daily and paid monthly. The agreement provides that investment
management, shareholder servicing, transfer agency, accounting, and custody
services are provided to the fund, and interest, taxes, brokerage commissions,
directors' fees and expenses, and extraordinary expenses are paid directly by
the fund. At October 31, 2004, $33,000 was payable under the agreement.
The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe
Price Government Reserve Investment Fund (collectively, the Reserve Funds),
open-end management investment companies managed by Price Associates and
affiliates of the fund. The Reserve Funds are offered as cash management options
to mutual funds, trusts, and other accounts managed by Price Associates and/or
its affiliates, and are not available for direct purchase by members of the pub-
lic. The Reserve Funds pay no investment management fees. During the year ended
October 31, 2004, dividend income from the Reserve Funds totaled $10,000, and
the value of shares of the Reserve Funds held at October 31, 2004, and October
31, 2003, was $2,093,000 and $488,000, respectively.
T. Rowe Price Institutional Emerging Markets Equity Fund
Report of Independent Registered Public Accounting Firm
To the Board of Directors of T. Rowe Price Institutional International Funds,
Inc. and Shareholders of T. Rowe Price Institutional Emerging Markets Equity
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 T. Rowe Price Institutional
Emerging Markets Equity Fund (one of the portfolios comprising T. Rowe Price
Institutional International Funds, Inc., hereafter referred to as the "Fund") at
October 31, 2004, and the results of its operations, the changes in its net
assets and the financial highlights for each of the fiscal periods presented, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and 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 auditing 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, 2004, by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 22, 2004
T. Rowe Price Institutional Emerging Markets Equity Fund
Tax Information (Unaudited) for the Tax Year Ended 10/31/04
- --------------------------------------------------------------------------------
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 $268,000 from short-term
capital gains.
For taxable non-corporate shareholders, $482,000 of the fund's income represents
qualified dividend income subject to the 15% rate category.
The fund will pass through foreign source income of $605,000 and foreign taxes
paid of $223,000.
Information on Proxy Voting Policies, Procedures, and Records
- --------------------------------------------------------------------------------
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, which you may
request by calling 1-800-225-5132 or by accessing the SEC's Web site,
www.sec.gov. The description of our proxy voting policies and procedures is also
available on our Web site, www.troweprice.com. To access it, click on the words
"Company Info" at the top of our homepage for individual investors. Then, in the
window that appears, click on the "Proxy Voting Policy" navigation button in the
top left corner.
Each fund's most recent annual proxy voting record is available on our Web site
and through the SEC's Web site. To access it through our Web site, follow the
directions above, then click on the words "Proxy Voting Record" at the bottom of
the Proxy Voting Policy page.
How to Obtain Quarterly Portfolio Holdings
- --------------------------------------------------------------------------------
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 Web site
(www.sec.gov); hard copies may be reviewed and copied at the SEC's Public
Reference Room, 450 Fifth St. N.W., Washington, DC 20549. For more information
on the Public Reference Room, call 1-800-SEC-0330.
T. Rowe Price Institutional Emerging Markets Equity Fund
About the Fund's Directors and Officers
- --------------------------------------------------------------------------------
Your fund is governed by a Board of Directors that meets regularly to review
investments, performance, compliance matters, advisory fees and expenses, and
other business affairs, and is responsible for protecting the interests of
shareholders. The majority of the fund's directors are independent of T. Rowe
Price Associates, Inc. (T. Rowe Price); "inside" directors are officers of T.
Rowe Price. The Board of Directors elects the fund's officers, who are listed in
the final table. The business address of each director and officer is 100 East
Pratt Street, Baltimore, MD 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 1-800-225-5132.
Independent Directors
Name
(Year of Birth)
Year Elected* Principal Occupation(s) During Past 5 Years and
Directorships of Other Public Companies
Anthony W. Deering
(1945)
1991 Director, Chairman of the Board, and Chief Executive
Officer, The Rouse Company, real estate developers;
Director, Mercantile Bank (4/03 to present)
Donald W. Dick, Jr.
(1943)
1989 Principal, EuroCapital Advisors, LLC, an acquisition
and management advisory firm
David K. Fagin
(1938)
2001 Director, Golden Star Resources Ltd., Canyon
Resources Corp. (5/00 to present), and Pacific Rim
Mining Corp. (2/02 to present); Chairman and
President, Nye Corporation
Karen N. Horn
(1943)
2004 Managing Director and President, Global Private
Client Services, Marsh, Inc. (1999-2003);
Managing Director and Head of International Private
Banking, Bankers Trust (1996-1999)
F. Pierce Linaweaver
(1934)
2001 President, F. Pierce Linaweaver & Associates, Inc.,
consulting environmental and civil engineers
John G. Schreiber
(1946)
2001 Owner/President, Centaur Capital Partners, Inc., a
real estate investment company; Partner, Blackstone
Real Estate Advisors, L.P.
* Each independent director oversees 111 T. Rowe Price portfolios and serves
until retirement, resignation, or election of a successor.
Inside Director
Name
(Year of Birth)
Year Elected**
[Number of T. Rowe
Price Portfolios
Overseen] Principal Occupation(s) During Past 5 Years and
Directorships of Other Public Companies
James S. Riepe
(1943)
2002
[111] 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 and
Director, T. Rowe Price Global Asset Management
Limited, T. Rowe Price Global Investment Services
Limited, T. Rowe Price Investment Services, Inc.,
T. Rowe Price Retirement Plan Services, Inc., and
T. Rowe Price Services, Inc.; Chairman of the Board,
Director, President, and Trust Officer, T. Rowe
Price Trust Company; Director, T. Rowe Price
International, Inc.; Chairman of the Board,
Institutional International Funds
** Inside directors serve until retirement, resignation, or election of a
successor.
T. Rowe Price Institutional Emerging Markets Equity Fund
Officers
Name (Year of Birth)
Title and Fund(s) Served Principal Occupation(s)
Christopher D. Alderson (1962)
Vice President, Institutional
International Funds Vice President, T. Rowe Price, T. Rowe
Price Group, Inc., and T. Rowe Price
International, Inc.
Mark C.J. Bickford-Smith (1962)
Vice President, Institutional
International Funds Vice President, T. Rowe Price Group,
Inc., and T. Rowe Price International,
Inc.
Stephen V. Booth, CPA (1961)
Vice President, Institutional
International Funds Vice President, T. Rowe Price, T. Rowe
Price Group, Inc., and T. Rowe Price
Trust Company
Joseph A. Carrier (1960)
Treasurer, Institutional
International Funds Vice President, T. Rowe Price, T. Rowe
Price Group, Inc., T. Rowe Price
Investment Services, Inc., and T. Rowe
Price Trust Company
Roger L. Fiery III, CPA (1959)
Vice President, Institutional
International Funds Vice President, T. Rowe Price, T. Rowe
Price Group, Inc., T. Rowe Price
International, Inc., and T. Rowe Price
Trust Company
Gregory S. Golczewski (1966)
Vice President, Institutional
International Funds Vice President, T. Rowe Price and
T. Rowe Price Trust Company
Henry H. Hopkins (1942)
Vice President, Institutional
International Funds Director and Vice President, T. Rowe
Price Group, Inc., T. Rowe Price
Investment Services, Inc., T. Rowe
Price Services, Inc., and T. Rowe Price
Trust Company; Vice President, T. Rowe
Price, T. Rowe Price International,
Inc., and T. Rowe Price Retirement Plan
Services, Inc.
Patricia B. Lippert (1953)
Secretary, Institutional
International Funds Assistant Vice President, T. Rowe Price
and T. Rowe Price Investment Services,
Inc.
George A. Murnaghan (1956)
Vice President, Institutional
International Funds Vice President, T. Rowe Price, T. Rowe
Price Group, Inc., T. Rowe Price
International, Inc., T. Rowe Price
Investment Services, Inc., and T. Rowe
Price Trust Company
R. Todd Ruppert (1956)
Vice President, Institutional
International Funds Vice President, T. Rowe Price, T. Rowe
Price Group, Inc., T. Rowe Price
Retirement Plan Services, Inc., and
T. Rowe Price Trust Company; Chief
Investment Officer, Director, and
President, T. Rowe Price Global Asset
Management Limited and T. Rowe Price
Global Investment Services Limited
James B.M. Seddon (1964)
Vice President, Institutional
International Funds Vice President, T. Rowe Price Group,
Inc., and T. Rowe Price International,
Inc.
Julie L. Waples (1970)
Vice President, Institutional
International Funds Vice President, T. Rowe Price
David J.L. Warren (1957)
President, Institutional
International Funds Director and Vice President, T. Rowe
Price; Vice President, T. Rowe Price
Group, Inc.; Chief Executive Officer,
Director, and President, T. Rowe Price
International, Inc.; Director, T. Rowe
Price Global Asset Management Limited
and T. Rowe Price Global Investment
Services Limited
William F. Wendler II, CFA (1962)
Vice President, Institutional
International Funds Vice President, T. Rowe Price, T. Rowe
Price Group, Inc., and T. Rowe Price
International, Inc.
Edward A. Wiese, CFA (1959)
Vice President, Institutional
International Funds Vice President, T. Rowe Price, T. Rowe
Price Group, Inc., and T. Rowe Price
Trust Company; Chief Investment Officer,
Director, and Vice President, T. Rowe
Price Savings Bank
Unless otherwise noted, officers have been employees of T. Rowe Price or T.
Rowe Price International for at least five years.
Item 2. Code of Ethics.
The registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR,
applicable to its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. A copy of this code of ethics is filed as an exhibit to this Form
N-CSR. No substantive amendments were approved or waivers were granted to this
code of ethics during the period covered by this report.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors/Trustees has determined that Mr. David K.
Fagin qualifies as an audit committee financial expert, as defined in Item 3 of
Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form
N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
2004 2003
Audit Fees $9,490 $11,266
Audit-Related Fees 912 670
Tax Fees 4,863 3,550
All Other Fees 124 --
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, specifically the issuance of a report on internal
controls. Tax fees include amounts related to tax compliance, tax planning, and
tax advice. Other fees include the registrant's pro-rata share of amounts for
agreed-upon procedures in conjunction with service contract approvals by the
registrant's Board of Directors/Trustees.
(e)(1) The registrant's audit committee has adopted a policy whereby audit and
non-audit services performed by the registrant's principal accountant for the
registrant, its investment adviser, and any entity controlling, controlled by,
or under common control with the investment adviser that provides ongoing
services to the registrant require pre-approval in advance at regularly
scheduled audit committee meetings. If such a service is required between
regularly scheduled audit committee meetings, pre-approval may be authorized by
one audit committee member with ratification at the next scheduled audit
committee meeting. Waiver of pre-approval for audit or non-audit services
requiring fees of a de minimis amount is not permitted.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Less than 50 percent of the hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $849,000 and $819,000, respectively, and
were less than the aggregate fees billed for those same periods by the
registrant's principal accountant for audit services rendered to the T. Rowe
Price Funds.
(h) All non-audit services rendered in (g) above were pre-approved by the
registrant's audit committee. Accordingly, these services were considered by the
registrant's audit committee in maintaining the principal accountant's
independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable. The complete schedule of investments is included in Item 1 of
this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) The registrant's principal executive officer and principal financial officer
are aware of no change in the registrant's internal control over financial
reporting that occurred during the registrant's second fiscal quarter covered by
this report that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is
attached.
(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(3) Written solicitation to repurchase securities issued by closed-end
companies: not applicable.
(b) A certification by the registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940,
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price Institutional International Funds, Inc.
By /s/ James S. Riepe
-----------------------------------
James S. Riepe
Principal Executive Officer
Date December 17, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James S. Riepe
-----------------------------------
James S. Riepe
Principal Executive Officer
Date December 17, 2004
By /s/ Joseph A. Carrier
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Joseph A. Carrier
Principal Financial Officer
Date December 17, 2004