PBMRY PT Bumi Resources TBK (PK)

Item 1. Report to Shareholders

The views and opinions in this report were current as of October 31, 2012. 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.

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Manager’s Letter

Fellow Shareholders

Non-U.S. stock markets finished with solid gains for the year ended October 31, 2012. Volatility was high, however, amid political and economic troubles in Europe, a sluggish recovery in the U.S., and decelerating growth in China and other key emerging markets. Investor sentiment was buoyed by resilient corporate earnings and central bank actions around the world designed to stimulate asset prices and economic growth. The Overseas Stock Fund performed well in this turbulent environment, outpacing the MSCI EAFE Index and its Lipper peer group average for the 12-month period.

As shown in the Performance Comparison table, the Overseas Stock Fund gained 1.98% and 7.36% for the 6- and 12-month periods ended October 31, 2012, respectively. The fund trailed the MSCI EAFE Index for the six-month period by a slim margin but comfortably outperformed for the full year. The fund outpaced its Lipper peer group average over both periods. Our health care holdings generated exceptional absolute gains for the year and outpaced the broader market by a wide margin, while allocations to the consumer discretionary and financials sectors also produced strong returns. Information technology was modestly negative, but materials and telecommunication services weighed more heavily on performance. Stock selection provided a significant boost to performance versus the benchmark MSCI index, led by consumer discretionary and health care.

MARKET ENVIRONMENT

Non-U.S. equities gained moderately in the past year, but volatility was high as investors vacillated between optimism about economically supportive central bank actions and resilient corporate earnings and concerns about a muted U.S. economic recovery, recession in Europe, and slowing growth in key emerging markets. European stocks were solidly positive despite the region’s economic and fiscal uncertainty, with Germany, Switzerland, and Nordic markets registering the largest gains. Singapore and Hong Kong turned in the best results among developed Asian markets, but Japan continued to struggle and declined for the period. Performance among emerging markets was mixed. Emerging Asian markets generated decent gains, but Latin American markets fell overall.

The U.S. economy grew at a modest pace despite an anemic employment market and a contentious election cycle that forestalled substantive action on the govern ment’s profound fiscal challenges. Corporations held off on hiring and capital expenditures as they awaited greater clarity on the direction of government fiscal and regulatory policies. Corporate fundamentals remained strong, however, with ample cash on balance sheets and healthy earnings, despite signs of a modest slowdown toward the end of the period. The Federal Reserve maintained its highly accommodative monetary policy, initiating a third round of quantitative easing—known as QE3—and announcing its intent to keep interest rates very low until at least mid-2015.

Much of Europe slipped into recession, but supportive central bank actions appeared to stabilize the Continent’s long-running debt problems. The European Central Bank (ECB) announced a pair of long-term refinancing operations, the first of which provides European banks with inexpensive, three-year loans to help them purchase sovereign debt. This was followed by a conditional offer for the ECB itself to purchase short-term sovereign debt to keep bond yields in countries such as Spain and Italy from rising to unsustainable levels. Although the ECB rationalized this action as necessary for effective policy transmission within its mandate, it comes closer to outright sovereign debt monetization in the eyes of many observers.

China remained a key focus for investors amid concerns about slowing domestic consumer demand and a high-profile leadership transition. However, the government is continuing to take steps to revive the economy, and although there will likely be periods of disruption, we are optimistic that it can achieve sustained growth at lower levels given its considerable financial resources. We continue to have a positive view of the long-term structural growth story in emerging markets.

PORTFOLIO HIGHLIGHTS AND POSITIONING

Our health care shares were the portfolio’s strongest performers by a wide margin over the past 12 months, and stock selection provided a significant boost to returns versus the MSCI benchmark. Pharmaceutical firms were particularly strong, with Sanofi , Bayer , and Astellas Pharma among the fund’s top overall performers. Sanofi is an example of how in-depth fundamental analysis can help to identify a stock poised for outperformance. Patent expirations and a gloomy European economic environment weighed on Sanofi’s valuation. However, our internal analysis found a management team focused on cutting costs and rationalizing the company’s product portfolio to emphasize growth, and the stock surged as patent issues receded. Bayer benefited from a solid product pipeline in its core pharmaceutical business (particularly in emerging markets) and its growing, high value-added agricultural business. Astellas Pharma is a top player in Japan’s prescription drug market, and the stock performed well as a result of improved expectations for the company’s oncology pipeline. Australian biotechnology company CSL was another solid contributor based on the strength of its global plasma extraction business. We eliminated our position in Terumo , a Japanese medical device maker, on strength and initiated a position in Takeda Pharmaceutical , Japan’s largest pharmaceutical company. (Please refer to the fund’s portfolio of investments for a complete list of holdings and the amount each represents in the portfolio.)

Our consumer discretionary holdings also performed well. Stock selection made a strong contribution even as the sector underperformed the broader market. UK homebuilder Persimmon was particularly strong. The company excels at buying real estate at depressed valuations, resulting in a very attractive portfolio of land for development. Management made good on a pledge to return capital to shareholders and paid out special dividends, providing a further boost to shares. Media firm WPP was a solid contributor as the company continues to manage costs effectively while it expands into digital media and emerging markets. Shares of German automaker Volkswagen rose, with the company holding its own in core European markets and growing its share in key emerging markets, including China. Japanese automaker Toyota Motor performed well as it continued to regain its global reputation for efficiency and quality, but Nissan Motor lost ground as Chinese consumers shunned Japanese cars amid heightened tensions over ownership of an uninhabited island chain near Taiwan. Brazilian company PDG Realty suffered from significant cost overruns and an ill-timed acquisition. In addition, the company raised new capital—a disappointing development given its depressed valuations and modest need for additional funding.

Financials stocks were strong contributors, with commercial banks among our top performers. Australia & New Zealand Banking shares rose on strength in its core Australian market and growth in other Asian markets. Sweden’s Swedbank benefited from its skilled management team and the relative health of the Nordic economies. The UK’s Barclays was able to shake off concerns over the LIBOR scandal (several European financial institutions were accused of manipulating the London Interbank Offered Rate, a leading measure of short-term interest rates) and bounced back from depressed valuations earlier in the year. Insurance companies also performed well, led by Munich Re , Allianz , and AIA Group . Banco Santander Brasil weighed on returns as nonperforming loans were higher than expected. Government efforts to help consumers through lower loan rates also pressured margins. We eliminated positions in French banks BNP Paribas and Societe Generale due to their anemic growth prospects and potential exposure to the LIBOR scandal.

Our consumer staples shares were up for the year, although stock selection and an underweight allocation detracted from results relative to the benchmark. Swiss food company Nestle and Anglo-Dutch consumer goods company Unilever were among our better performers in the sector. Nestle continues to expand margins by cutting costs and growing its business in emerging markets, which now account for approximately 30% of revenues. Unilever also benefited from its significant presence in higher-growth emerging markets, while management continues to control costs and rationalize the company’s product line. We initiated a position in French beverage maker Danone . Although growth in its core European markets is pressured by the region’s recession, Danone should benefit from growing exposure to consumers in developing markets and ample room for manage ment to trim costs. Shares of UK retailer Tesco fell for the year. The company has struggled to increase sales and market share in the UK, but we are reasonably optimistic that management will successfully regain positive growth momentum.

Our industrials and business services stocks eked out a modest overall gain. SembCorp Industries , whose SembCorp Marine subsidiary builds offshore oil-drilling platforms, was a bright spot in the sector amid robust demand in Asia and the Middle East. Philips Electronics also performed well as a new management team focused on cutting costs, rationalizing business lines, and promoting innovation. Airplane engine maker Rolls-Royce Holdings has been a very good stock for the fund, benefiting from order strength in its commercial aviation business and favorable results from its contract service model. French construction and engineering company Bouygues was among our biggest detractors, due largely to fierce competition in France’s wireless telecommunications industry. Carillion , a high-end construction services and building maintenance provider, suffered from concerns over decreased government spending.

The fund’s information technology holdings declined slightly overall, but stock selection boosted results relative to the benchmark. Samsung Electronics was among the fund’s best overall performers. The company is firing on all cylinders as it transitions from production of low-margin, commodity-type products to higher-margin goods such as smartphones and tablet computers. ASML , which builds equipment that other companies use to manufacture semiconductors, was another good performer. Shares of communication equipment maker Alcatel Lucent fell due to balance sheet weakness and commoditization in some of its core businesses. We are optimistic that the company will benefit over the long term from its exceptional patent portfolio, inherited in part from the old Bell Laboratories. We initiated positions in Tencent Holdings and Baidu . Tencent is the largest online community in China with over 80% penetration among Chinese Internet users and enjoys strong growth in its core social platform, including online entertainment and gaming. Slower economic growth in China has dampened revenues for Baidu, but we believe this is more of a short-term cyclical challenge than a structural problem. Baidu remains the dominant Web search company in a Chinese market with huge growth potential.

In terms of geographic positioning, European stocks continue to account for the bulk of the portfolio, in large part due to the high number of well-established, large-cap companies in the region. Although we remain underweight Europe versus the benchmark MSCI EAFE Index amid heightened political and economic uncertainty, the risk-averse atmosphere has resulted in opportunities to purchase some high-quality companies selling at compelling valuations. We are particularly interested in European companies looking outside their home markets for opportunities to grow revenues, especially in faster-growing emerging markets. Our portfolio has relatively more exposure to the UK, Germany, Norway, and Sweden than to the troubled economies of southern Europe.

Japan is our second-largest geographic allocation, but we remain underweight relative to the index. Japanese manufacturers are struggling with weaker global demand and the strength of the yen, which makes their products less competitive on world markets. In addition, a dispute with China over an uninhabited island chain has resulted in sharp declines in sales of Japanese goods in China and a decline in travel to Japan by Chinese tourists. Japan’s exports to Europe have continued to decline, and only exports to the U.S. have shown any real growth. Japan’s debt ratios are now among the highest in the world, and although most debt is domestically owned (unlike the U.S.), it calls into question the sustainability of stimulus policies.

The Pacific ex Japan region is our third-largest allocation, and we have a modest overweight versus the fund’s benchmark. Growth has slowed somewhat, but the region’s economies continue to expand, driven by positive long-term trends toward increased urbanization, industrialization, and domestic consumption. We have significant exposure to Australia, which should continue to benefit from growing trade with China and Southeast Asia. Adding to their attraction, Australian companies typically have strong corporate governance and shareholder-friendly policies.

Among emerging markets, we maintain a modest allocation to Latin America. Although economic growth is slowing, particularly in Brazil, it remains strong in comparison with much of the developed world. High debt levels are not an issue in many of these economies, employment levels are healthy, wages are on the rise, and the “wealth effect” has the potential to create robust consumer demand for years to come.

INVESTMENT OUTLOOK

We expect continued market volatility in the face of ongoing uncertainties in developed and emerging markets alike. In the U.S., we are hopeful that the Obama administration and congressional Republicans will set aside a divisive election cycle and work together to confront, if not resolve, the nation’s profound fiscal challenges. Corporations are likely to remain hesitant to spend money on hiring and capital expenditures unless and until they see policies that are both fiscally prudent and supportive of economic growth.

European policymakers appear to have stabilized the patient, but a cure remains elusive as we await substantive progress on the long-term debt problems plaguing the eurozone. The political, social, and economic turmoil roiling the region has only highlighted the stark contrast between the stronger economies of northern Europe and their weaker counterparts in the south. Policymakers are struggling to keep the eurozone intact as they try to simultaneously implement much-needed fiscal discipline and structural reforms without strangling economic growth.

Although China has averted a hard economic landing, there are a number of significant structural challenges hanging over the economy and markets. We are optimistic that the country’s new leadership will continue to promote sustainable growth rates and spur increased domestic consumption. How long an increasingly wealthy and educated populace will tolerate the limitations of one-party rule remains an open question, however, especially if economic growth is less robust.

The muted economic environment is certainly challenging, but we continue to find companies doing a good job of controlling costs and growing profits. Although valuations are not as attractive as they were a year ago, they remain reasonable. We will continue to leverage our independent global research platform to uncover compelling investment opportunities, focusing on companies that are able to grow earnings through sound business models regardless of short-term economic uncertainty.

Respectfully submitted,

Raymond A. Mills
Chairman of the fund’s Investment Advisory Committee

November 14, 2012

The committee chairman has day-to-day responsibility for managing the portfolio and works with committee members in developing and executing the fund’s investment program.

RISKS OF INTERNATIONAL INVESTING

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

Lipper averages: The averages of available mutual fund performance returns for specified time periods in categories defined by Lipper Inc.

MSCI EAFE Index: An index that measures equity market performance of developed countries in the Europe, Australasia, and Far East regions.

Performance and Expenses

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.

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 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.

The accompanying notes are an integral part of these financial statements.

The accompanying notes are an integral part of these financial statements.

The accompanying notes are an integral part of these financial statements.

The accompanying notes are an integral part of these financial statements.

The accompanying notes are an integral part of these financial statements.

Notes to Financial Statements

T. Rowe Price International Funds, Inc. (the corporation), is registered under the Investment Company Act of 1940 (the 1940 Act). The Overseas Stock Fund (the fund) is a diversified, open-end management investment company established by the corporation. The fund commenced operations on December 29, 2006. The fund seeks long-term growth of capital through investments in the common stocks of non-U.S. companies.

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), which require 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. Premiums and discounts on debt securities are amortized for financial reporting purposes. 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. Distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared and paid annually. Capital gain distributions, if any, are generally declared and paid by the fund annually.

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.

Credits The fund earns credits on temporarily uninvested cash balances held at the custodian, which reduce the fund’s custody charges. Custody expense in the accompanying financial statements is presented before reduction for credits.

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, the fund may distribute portfolio securities rather than cash as payment for a redemption of fund shares (in-kind redemption). For financial reporting purposes, the fund recognizes a gain on in-kind redemptions to the extent the value of the distributed securities on the date of redemption exceeds the cost of those securities. 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, 2012, the fund realized $60,763,000 of net gain on $176,264,000 of in-kind redemptions.

New Accounting Pronouncements In May 2011, the Financial Accounting Standards Board (FASB) issued amended guidance to align fair value measurement and disclosure requirements in U.S. GAAP with International Financial Reporting Standards. The guidance is effective for fiscal years and interim periods beginning on or after December 15, 2011. Adoption had no effect on net assets or results of operations.

In December 2011, the FASB issued amended guidance to enhance disclosure for offsetting assets and liabilities. The guidance is effective for fiscal years and interim periods beginning on or after January 1, 2013. Adoption will have no effect on the fund’s net assets or results of operations.

NOTE 2 - VALUATION

The fund’s financial instruments are reported at fair value as defined by GAAP. The fund determines the values of its assets and liabilities 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.

Valuation Methods 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, 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. Debt securities with remaining maturities of less than one year at the time of acquisition generally use amortized cost in local currency to approximate fair value. However, if amortized cost is deemed not to reflect fair value or the fund holds a significant amount of such securities with remaining maturities of more than 60 days, the securities are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service.

Investments in mutual funds are valued at the mutual fund’s closing net asset value per share on the day of valuation.

Other investments, including restricted securities and private placements, and those financial instruments 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 (the Board). Subject to oversight by the Board, the Valuation Committee develops pricing-related policies and procedures and approves all fair-value determinations. The Valuation Committee regularly makes good faith judgments, using a wide variety of sources and information, to establish and adjust valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of private-equity instruments, the Valuation Committee considers a variety of factors, including the company’s business prospects, its financial performance, strategic events impacting the company, relevant valuations of similar companies, new rounds of financing, and any negotiated transactions of significant size between other investors in the company. Because any fair-value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions.

For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted under the circumstances described below. 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 closing 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 closing 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. A 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 closing prices and information to evaluate and/or adjust those prices. The fund cannot predict how often it will use closing prices and how often it will determine it necessary to adjust those prices to reflect fair value. As a means of evaluating its security valuation process, the fund routinely compares closing prices, the next day’s opening prices in the same markets, and adjusted prices. Additionally, trading in the underlying securities of the fund may take place in various foreign markets on certain days when the fund is not open for business and does not calculate a net asset value. As a result, net asset values may be significantly affected on days when shareholders cannot make transactions.

Valuation Inputs Various inputs are used to determine the value of the fund’s financial instruments. These inputs are summarized in the three broad levels listed below:

Level 1 – quoted prices in active markets for identical financial instruments

Level 2 – observable inputs other than Level 1 quoted prices (including, but not limited to, quoted prices for similar financial instruments, interest rates, prepayment speeds, and credit risk)

Level 3 – unobservable inputs

Observable inputs are those based on market data obtained from sources independent of the fund, and unobservable inputs reflect the fund’s own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level. For example, non-U.S. equity securities actively traded in foreign markets generally are reflected in Level 2 despite the availability of closing prices because the fund evaluates and determines whether those closing prices reflect fair value at the close of the NYSE or require adjustment, as described above. The following table summarizes the fund’s financial instruments, based on the inputs used to determine their values on October 31, 2012:

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.

Repurchase Agreements All repurchase agreements are fully collateralized by U.S. government securities. Collateral is in the possession of the fund’s custodian or, for tri-party agreements, the custodian designated by the agreement. Collateral is evaluated daily to ensure that its market value exceeds the delivery value of the repurchase agreements at maturity. Although risk is mitigated by the collateral, the fund could experience a delay in recovering its value and a possible loss of income or value if the counterparty fails to perform in accordance with the terms of the agreement.

Securities Lending The fund lends its securities to approved brokers to earn additional income. It receives as collateral cash and U.S. government securities valued at 102% to 105% of the value of the securities on loan. Collateral is maintained over the life of the loan in an amount not less than the value of loaned securities as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the fund the next business day. Cash collateral is invested by the fund’s lending agent(s) in accordance with investment guidelines approved by management. Although risk is mitigated by the collateral, the fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return the securities or if collateral investments decline in value. Securities lending revenue recognized by the fund consists of earnings on invested collateral and borrowing fees, net of any rebates to the borrower and compensation to the lending agent. In accordance with GAAP, investments made with cash collateral are reflected in the accompanying financial statements, but collateral received in the form of securities is not. At October 31, 2012, the value of loaned securities was $106,897,000; the value of cash collateral investments was $113,391,000.

Other Purchases and sales of portfolio securities other than short-term securities aggregated $1,609,519,000 and $565,242,000, respectively, for the year ended October 31, 2012.

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. For the year ended October 31, 2012, the following reclassifications were recorded to reflect tax character (there was no impact on results of operations or net assets):

Distributions during the years ended October 31, 2012 and October 31, 2011, totaled $83,150,000 and $44,890,000, respectively, and were characterized as ordinary income for tax purposes. At October 31, 2012, the tax-basis cost of investments and components of net assets were as follows:

The difference between book-basis and tax-basis net unrealized appreciation (depreciation) is attributable to the deferral of losses from wash sales for tax purposes. The fund intends to retain realized gains to the extent of available capital loss carryforwards. As a result of the Regulated Investment Company Modernization Act of 2010, net capital losses realized on or after November 1, 2011 (effective date) may be carried forward indefinitely to offset future realized capital gains; however, post-effective losses must be used before pre-effective capital loss carryforwards with expiration dates. Accordingly, it is possible that all or a portion of the fund’s pre-effective capital loss carryforwards could expire unused. The fund’s available capital loss carryforwards as of October 31, 2012, expire as follows: $9,477,000 in fiscal 2015, $114,187,000 in fiscal 2016, $219,677,000 in fiscal 2017, $35,538,000 in fiscal 2018, $14,917,000 in fiscal 2019; $118,992,000 have no expiration.

NOTE 5 - FOREIGN TAXES

The fund is subject to foreign income taxes imposed by certain countries in which it invests. Acquisition of certain foreign currencies related to security transactions are also subject to tax. Additionally, capital gains realized by the fund 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 realized loss on foreign currency transactions. Current and deferred tax expense attributable to net capital gains is reflected as a component of realized and/or change in unrealized gain/loss on securities in the accompanying financial statements. At October 31, 2012, the fund had no deferred tax liability attributable to foreign securities and $165,000 of foreign capital loss carryforwards, that expire in 2016.

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). 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 0.35% 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 0.28% for assets in excess of $300 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, 2012, the effective annual group fee rate was 0.30%.

In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share price and provides certain other 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 fund. For the year ended October 31, 2012, expenses incurred pursuant to these service agreements were $148,000 for Price Associates; $222,000 for T. Rowe Price Services, Inc.; and $69,000 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, 2012, the fund was charged $222,000 for shareholder servicing costs related to the college savings plans, of which $182,000 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, 2012, approximately 3% of the outstanding shares of the fund 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 Retirement Funds (Retirement Funds) may invest. The Retirement Funds do not invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to a special servicing agreement, expenses associated with the operation of the 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 Retirement Funds. Expenses allocated under this agreement are reflected as shareholder servicing expense in the accompanying financial statements. For the year ended October 31, 2012, the fund was allocated $7,152,000 of Retirement Funds’ expenses, of which $4,068,000 related to 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, 2012, approximately 86% of the outstanding shares of the fund were held by the Retirement Funds.

The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the T. Rowe Price Reserve Investment Funds), open-end management investment companies managed by Price Associates and considered affiliates of the fund. The T. Rowe Price Reserve Investment 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 public. The T. Rowe Price Reserve Investment Funds pay no investment management fees.

Report of Independent Registered Public Accounting Firm

To the Board of Directors of T. Rowe Price International Funds, Inc. and
Shareholders of T. Rowe Price Overseas 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 T. Rowe Price Overseas Stock Fund (one of the portfolios comprising T. Rowe Price International Funds, Inc., hereafter referred to as the “Fund”) at October 31, 2012, and 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, 2012 by correspondence with the custodian and brokers, and confirmation of the underlying funds by correspondence with the transfer agent, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Baltimore, Maryland
December 14, 2012

Tax Information (Unaudited) for the Tax Year Ended 10/31/12

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.

For taxable non-corporate shareholders, $92,240,000 of the fund’s income represents qualified dividend income subject to the 15% rate category.

For corporate shareholders, $272,000 of the fund’s income qualifies for the dividends-received deduction.

The fund will pass through foreign source income of $110,127,000 and foreign taxes paid of $5,001,000.

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 website, sec.gov. The description of our proxy voting policies and procedures is also available on our website, troweprice.com. To access it, click on the words “Our Company” at the top of our corporate homepage. Then, when the next page appears, click on the words “Proxy Voting Policies” on the left side of the page.

Each fund’s most recent annual proxy voting record is available on our website and through the SEC’s website. To access it through our website, follow the directions above, then click on the words “Proxy Voting Records” on the right side of the Proxy Voting Policies 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 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.