Semiannual Report
Latin America Fund
April 30, 1996
T. Rowe Price
REPORT HIGHLIGHTS
o Latin American markets came roaring back over the past six months, with
returns ranging from 10% to nearly 40% in several countries.
o Argentina and Mexico posted the greatest gains, followed by Peru.
However, Chile and Venezuela were weak.
o Your fund returned over 22% for the six-month period, outstripping its
benchmark index.
o The fund's overall geographic diversification did not change
significantly. Brazil is the largest exposure, at 37% of net assets,
followed by Mexico at 28%.
o Our outlook for the Latin American stock markets is favorable for the
balance of 1996, as capital inflows and falling interest rates should
stimulate growth throughout the region.
Fellow Shareholders
After the peso devaluation crisis of late 1994 and early 1995, Latin American
markets revived strongly over the last six months. The two larger stock
markets of Mexico and Brazil spurred the recovery, markets that make up 37%
and 28% of your fund's net assets, respectively. Argentina, a 13% fund
position, posted the highest six-month return at almost 38%, while markets in
Chile and Venezuela were the weakest.
Performance Comparison
Periods Ended 4/30/96 6 months 12 months
_____________________________________________________________________________
Latin America Fund 22.17% 15.92%
MSCI EMF Latin America Index 16.46 15.00
Against this generally favorable backdrop, your fund rose 22.17% during the
six-month period and provided a positive return for the 12-month period.
Performance for both periods exceeded the benchmark index, as shown. The
advantage in the past six months was due at least in part to our overweighting
in Brazil and underweighting of Chile, Colombia, and Peru. Stock selection was
also positive, with good returns on Brazilian holdings in particular.
In Brazil, the rapid fall in inflation and strong economic growth have
dramatically improved the lot of the average Brazilian, which is reflected in
President Cardoso's high standing in opinion polls. In the short term,
economic policy remains on track, with the Brazilian real (currency) steady,
the trade account in balance, and inflation and interest rates falling
steadily. For this to be longer lasting, however, Congress must pass
constitutional reforms that will enable federal and state spending and debt to
be controlled. While some tax legislation was passed during the first quarter,
progress has been slow: social security legislation has become bogged down,
and the oft-delayed privatization of the state electricity distributor, Light,
was postponed again until the second quarter. Shares of companies operating in
the private sector, such as appliance manufacturers, steel producers, and
retailers, enjoyed better performance as demand picked up. Among the fund's
best performers were Brahma, a brewer, Banco Bradesco, and steel producer
Usiminas. We remain enthusiastic about Brazil's longer-term potential and are
comfortable with our commitment there.
In Mexico, the first signs of economic recovery have been glimpsed, with
retail and car sales picking up marginally. As the peso has steadied, interest
rates have started to ease, and we expect this gradual revival to continue. We
established a holding in Grupo Cementos de Chihuahua, a regional cement
producer, and trimmed our holding in Grupo Televisa after the shares had
performed strongly.
Market Performance
In U.S. Dollar Terms
Periods Ended 4/30/96 6 Months 12 Months
_____________________________________________________________________________
Argentina 37.7% 31.5%
Brazil 11.5 13.4
Chile - 0.9 - 7.1
Mexico 30.1 28.2
Peru 21.1 25.9
Venezuela - 12.9 16.8
Source: Randall Helms Database, using MSCI Indices.
The Argentine economy is taking some time to claw its way out of last year's
recession, but there were signs of progress and clearly investors were
encouraged. The government has agreed on fiscal targets with the International
Monetary Fund (IMF), and the political tensions between President Menem and
his Finance Minister Cavallo appear to have eased. Conditions for a steady
economic recovery are now in place, with the banking sector in a position to
lend and inflation remarkably low at 2.1%. The missing ingredient is
confidence, and, with unemployment still over 17%, it will take time for
economic momentum to build. We believe that Argentina is well-placed to follow
the favorable path established by Chile over the last decade, and your fund
remains overweighted in this market.
Chart 1 - Geographic Diversification
While Argentina has been slow to get back on the growth path, its neighbor
Chile has been suffering from the perception that it is growing too fast. The
government's 6.5% inflation target for this year looks optimistically low, and
interest rates may have to be tightened further this summer. With valuations
in this market looking stretched, we remained underweighted in Chile (9.5% of
net assets) versus its weight in the fund's index.
Political uncertainty elsewhere has caused investor concern. In Colombia,
President Samper has been struggling to avoid being impeached for funding his
election with drug money, while in Peru, Prime Minister Cordova resigned due
to policy disagreements with President Fujimori. Nevertheless, in both
countries there are grounds for optimism, as Samper is expected to resign
later in the year and Peru's commitment to IMF targets and economic prudence
has been reconfirmed by the latest cabinet reshuffle.
In Venezuela, President Caldera is at last close to agreement with the IMF to
tackle the economic crisis. With inflation running over 80%, negative GDP
growth, and a large fiscal deficit, this agreement is overdue. The plan is to
dismantle foreign exchange controls, lift gasoline prices toward open market
levels, and cut the fiscal deficit from 7% of GDP to 3% next year. The program
will be hard to implement and some austerity will result, but if the
Venezuelan economy can be restored to health, the stock market should resume
its recovery.
OUTLOOK
Capital inflows from corporate and stock-market investors combined with
falling interest rates should continue to stimulate economic growth around the
region over the remainder of 1996. If the U.S. interest rate backdrop remains
benign, we believe the year's strong start in most Latin American stock
markets should be sustained.
Respectfully submitted,
Martin G. Wade
President
May 20, 1996
Revisiting the Case for International Equity Investing
Chart 2 - Correlation of Returns
Over the past 15 years, a growing number of U.S. investors have added
international stocks to their portfolios, mixing domestic and foreign stocks
in the pursuit of higher overall returns with lower volatility. In recent
months, however, some naysayers have questioned the benefits of international
diversification. Some claim that the era of higher international returns is
over, citing the recent superior performance of U.S. stocks. Others point to
short periods when U.S. and international markets moved in tandem, so-called
"high correlation," as proof that foreign stocks no longer offer adequate
diversification.
On the contrary, performance and correlation, when viewed over the long term,
reinforce the case for international diversification. For instance, although
U.S. stocks have recently outperformed, foreign stocks have outpaced them in
seven of the last 12 years. (We used the MSCI Europe, Australia, and Far East
Index - EAFE - to measure foreign stocks and the Standard & Poor's 500 Stock
Index for domestic equities.)
Furthermore, correlations have remained low over the long term. The chart
shows the correlation of various foreign markets to the U.S. over two 10-year
periods. A measurement of 100% would indicate that foreign stocks moved in the
same direction as U.S. stocks all of the time. The overall correlation of
foreign stocks has actually declined: from 1981 through 1990, the EAFE and the
S&P 500 moved in the same direction 41% of the time, but from 1986 through
1995, the correlation dropped to 34%. Correlations declined in the
Netherlands, Germany, and Japan and rose only modestly in the U.K. and Hong
Kong.
Inevitably, there are short periods when foreign markets move with the U.S.
market, usually when the latter is experiencing significant volatility. In
general, however, foreign markets follow their own path depending mostly on
the unique fundamentals of each country. In our opinion, the case for
international diversification remains solid. Foreign stocks may be poised to
regain leadership because many international economies are at earlier stages
of expansion than the U.S. economy. If correlations remain low over the long
term, as we expect, diversifying into foreign stocks could continue to be an
effective way to limit risk and enhance returns.
T. Rowe Price Latin America Fund
Portfolio Highlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/96
_____________________________________________________________________________
Telecomunicacoes Brasileiras, Brazil 8.7%
Telefonos de Mexico, Mexico 5.5
Cemex, Mexico 5.1
Telefonica de Argentina, Argentina 4.3
Banco Bradesco, Brazil 3.9
_____________________________________________________________________________
Cifra, Mexico 3.6
Naviera Perez, Argentina 2.9
Brahma, Brazil 2.7
YPF Sociedad Anonima, Argentina 2.6
Usiminas, Brazil 2.5
_____________________________________________________________________________
Cia Energetica Minas Gerais, Brazil 2.3
Telecomunicacoes de Sao Paulo, Brazil 2.2
Eletrobras, Brazil 2.0
Kimberly-Clark Mexico, Mexico 1.9
Panamerican Beverages, Mexico 1.8
_____________________________________________________________________________
Enersis, Chile 1.8
Chilectra, Chile 1.8
Empresa Nacional de Electric, Chile 1.8
Grupo Financiero Banamex, Mexico 1.6
Grupo Televisa, Mexico 1.5
_____________________________________________________________________________
Fomentos Economico Mexicano, Mexico 1.5
Brasmotor, Brazil 1.3
Companhia Siderurgica Nacional, Brazil 1.3
Cia Cimento Portland Itau, Brazil 1.2
Petrol Brasileiros, Brazil 1.2
_____________________________________________________________________________
Total 67.0%
Portfolio Highlights
Industry Diversification
Percent of Percent of
Net Assets Net Assets
10/31/95 4/30/96
_____________________________________________________________________________
Services 45.4% 34.2%
Energy 22.8 18.8
Consumer Goods 12.3 13.7
Materials 11.8 12.2
Finance 6.6 8.7
Multi-Industry 0.1 3.6
Miscellaneous - 0.6
Reserves 1.0 8.2
_____________________________________________________________________________
Total 100.0% 100.0%
Performance Comparison
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal-year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
Chart 3 - SEC Graph - Latin America Fund
Average Annual Compound Total Return
1 Since Inception
Periods Ended 4/30/96 Year Inception Date
_____________________________________________________________________________
Latin America Fund 15.92% - 9.47% 12/29/93
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
T. Rowe Price Latin America Fund
Unaudited
Financial Highlights For a share outstanding throughout each period
6 Months Year 12/29/93
Ended Ended to
4/30/96 10/31/95 10/31/94
NET ASSET VALUE
Beginning of period $ 6.49 $ 10.32 $ 10.00
Investment activities
Net investment income 0.08 0.05 (0.03)
Net realized and
unrealized gain (loss) 1.34 (3.92) 0.29
Total from
investment activities 1.42 (3.87) 0.26
Distributions
Net investment income (0.06) - -
Redemption fees
added to paid-in-capital 0.01 0.04 0.06
NET ASSET VALUE
End of period $ 7.86 $ 6.49 $ 10.32
Ratios/Supplemental Data
Total return 22.2% (37.1)% 3.2%
Ratio of expenses to
average net assets 1.70%! 1.82% 1.99%!
Ratio of net investment
income to average
net assets 2.38%! 0.76% (0.35)%!
Portfolio turnover rate 27.10%! 18.90% 12.20%!
Average commission rate paid $ 0.0012 - -
Net assets, end of period
(in thousands) $ 196,708 $ 148,600 $ 198,435
! Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Latin America Fund
Unaudited April 30, 1996
Statement of Net Assets Shares/Par Value
In thousands
ARGENTINA 13.4%
Common Stocks 13.3%
Astra Cia Argentina de Petroleo 191,000 $ 406
Buenos Aires Embotelladora (Class B)
ADR (USD) 90,529 1,437
Capex GDR (USD) 6,100 90
Capex (Class A) GDR (USD) 24,500 361
Enron Global Power & Pipeline (USD) 24,648 607
Fiplasto (Class B) * 87,400 302
Juan Minetti 126,439 510
Mirgor ADS (USD) 83,000 254
Naviera Perez (Class B) 926,318 5,762
Polledo (Class B) * 260,000 196
Quilmes Industrial (USD) 21,000 252
Sociedad Comercial del Plata * 207,000 619
Telecom Argentina Stet (Class B) ADR (USD) 13,350 604
Telefonica de Argentina (Class B) ADR (USD) 274,013 8,015
Telefonica de Argentina (Class B) ADS (USD) 13,270 388
Transportadora de Gas del Sur ADR (USD) 102,015 1,313
YPF Sociedad Anonima (Class D) ADR (USD) 234,453 5,129
_____________________________________________________________________________
26,245
Preferred Stocks 0.1%
Quilmes Industrial ADR, new (USD) 10,500 125
_____________________________________________________________________________
125
_____________________________________________________________________________
Total Argentina (Cost $28,916) 26,370
BELIZE 0.2%
Common Stocks 0.2%
BHI (USD) 28,333 411
_____________________________________________________________________________
Total Belize (Cost $498) 411
BRAZIL 37.4%
Common Stocks 5.0%
Ceteco Holding (NLG) 16,318 691
Cia Paulista de Forca e Luz 8,980,000 580
Companhia Siderurgica Nacional 88,250,000 2,491
Eletrobras 16,525,863 3,981
Telecomunicacoes Brasileiras 49,844,000 2,115
Telecomunicacoes de Minas Gerais 189,000 $ 13
_____________________________________________________________________________
9,871
Preferred Stocks 32.4%
Artex 228,951,941 309
Bahia Sul Celulose * 792,000 196
Banco Bradesco 683,357,952 7,715
Banco Itau 2,555,000 999
Banco Nacional 53,568,000 0
Brahma 10,954,555 5,267
Brasmotor 9,556,000 2,601
Casa Anglo Bras 2,632,000 138
Ceval Alimentos 36,100,000 418
Cia Acos Especiais Itabira 105,653,815 456
Cia Bras de Frigorificos 678,000 376
Cia Cimento Portland Itau 8,300,000 2,384
Cia Energetica Minas Gerais 62,141,595 1,566
Cia Energetica Minas Gerais ADR (USD)* 10,283 258
Cia Energetica Minas Gerais ADR,
cv. (USD) * 2,258 57
Cia Energetica Minas Gerais ADR,
non voting (USD) * 105,243 2,644
Cia Tecidos Norte de Minas 2,699,998 1,132
Dixie Toga * 1,143,023 1,072
Duratex 12,000,000 575
Eberle 4,969,940,000 200
Eluma * 12,098,000 329
Eucatex 750,000 106
Industia e Comercio Chapeco 324,438,000 62
Ipiranga Petroleo 33,850,000 317
Kepler Weber 18,801 123
Lojas Americanas 97,701,000 2,265
Lojas Arapua 47,600,000 489
Lojas Renner 29,380,000 1,051
Mesbla * 4,722,000 90
Multibras Eletrodomesticos 485,000 508
Petrol Brasileiros 19,531,000 2,274
Pettenati 7,360,000 89
Refrigeracao Parana 207,932,163 518
Serrana * 382,500 251
Sifco * 6,954,000 315
Telecomunicacoes Brasileiras 1,136,294 $ 62
Telecomunicacoes Brasileiras ADR (USD) 3,342 181
Telecomunicacoes Brasileiras ADR,
level II (USD) 273,779 14,818
Telecomunicacoes de Minas Gerais 3,245,000 265
Telecomunicacoes de Sao Paulo 24,588,335 4,387
Usiminas 3,335,350,000 3,799
Usiminas ADR (USD) 95,000 1,087
Weg 2,048,500 882
Wentex Textile * 500,000 1,058
_____________________________________________________________________________
63,689
_____________________________________________________________________________
Total Brazil (Cost $70,000) 73,560
CHILE 9.5%
Common Stocks 9.5%
Chile Fund (USD) 80,000 1,960
Chilectra ADR (USD) 64,852 3,567
Chilgener ADS (USD) 82,400 1,844
Chilquinta ADR (USD) 34,000 548
Cia de Telecomunicaciones
de Chile ADR (USD) 16,276 1,485
Compania Cervecerias Unidas ADS (USD) 63,392 1,347
Empresa Nacional de Electric ADS (USD) 177,000 3,452
Enersis ADS (USD) 120,331 3,580
Genesis Chile Fund (USD) 10,950 446
Sociedad Quimica Minera de Chile ADR (USD) 9,425 504
_____________________________________________________________________________
Total Chile (Cost $19,367) 18,733
COLOMBIA 0.6%
Common Stocks 0.6%
Cementos Diamante (Class B) GDS (USD) 18,000 356
Gran Cadena Almacenes (Class B) ADS (USD) 31,200 530
Maderas y Sinteticos Sociedad Anoma
ADR (USD) 14,000 222
_____________________________________________________________________________
Total Colombia (Cost $1,035) 1,108
ECUADOR 0.1%
Common Stocks 0.1%
La Cemento Nacional GDR (USD) * 1,470 231
La Cemento Nacional GDS (USD) * 500 $ 78
_____________________________________________________________________________
Total Ecuador (Cost $404) 309
GUATEMALA 0.4%
Common Stocks 0.4%
Basic Petroleum (USD) * 26,500 769
_____________________________________________________________________________
Total Guatemala (Cost $295) 769
MEXICO 28.2%
Common Stocks 28.2%
Altos Hornos de Mexico * 154,086 1,118
Apasco 133,796 726
Banco Quadrum ADR (USD) !* 126,100 741
Cemex (Class B) 843,673 3,577
Cemex ADS, (144a) (USD) * 817,575 6,438
Cifra (Class B) ADR (USD) * 5,240,516 7,049
Controladora Commercial Mexicana
(Class B) * 677,570 617
Embotelladores del Valle Anahuac
(Class B) * 457,050 295
Fomentos Economico Mexicano (Class B) 970,000 2,924
Grupo Cementos de Chihuahua (Class B) 442,000 415
Grupo Elektra 187,539 1,258
Grupo Financiero Banamex (Class B) * 1,370,000 3,157
Grupo Financiero Banamex (Class L) * 41,100 84
Grupo Financiero Bancomer (Class L) * 8,669 3
Grupo Financiero Bancomer ADR (USD) 9,150 82
Grupo Financiero Bancomer
(Class B) GDS (USD) * 2,555 23
Grupo Financiero Inbursa (Class B) 316,000 1,229
Grupo Herdez (Class A) * 1,997,067 621
Grupo Industrial Maseca (Class B) 324,800 317
Grupo Mexicano de Desarrollo
(Class L) ADS (USD) * 40,000 110
Grupo Modelo (Class C) 230,000 1,082
Grupo Radio Centro ADS (USD) 49,600 440
Grupo Televisa GDR (USD) * 96,404 2,989
Internacional de Ceramica * 314,925 462
Jugos de Valle (Class B) * 350,000 462
Kimberly-Clark Mexico (Class A) 205,711 3,765
Panamerican Beverages (Class A) ADR (USD) 82,786 $ 3,632
Sears Roebuck de Mexico
(Class B) ADS (USD) * 59,000 295
Sears Roebuck de Mexico
(Class B) GDS (USD) * 30,000 150
Seguros Comercial Americana (Class B) * 945,000 324
Sigma Alimentos (Class B) 40,900 295
Telefonos de Mexico (Class L) ADS (USD) 316,054 10,746
_____________________________________________________________________________
Total Mexico (Cost $72,069) 55,426
PERU 1.1%
Common Stocks 0.9%
Cementos Lima 23,141 272
Cementos Yura (Class C) (USD) 27,500 213
Compania de Seguard la Fenix Peruana 15,466 163
Compania Embotelladora del Pacifico
(Class B) (USD) * 450,000 302
Enrique Ferreyros 129,838 175
Explosivos (Class T) * 127,704 127
Minsur 30,104 244
Peru Real Estate (Class B) * 728,333 261
_____________________________________________________________________________
1,757
Corporate Bonds 0.2%
International Financial Holdings,
6.50%, 8/01/99 USD 290,000 432
_____________________________________________________________________________
432
_____________________________________________________________________________
Total Peru (Cost $2,866) 2,189
PUERTO RICO 0.2%
Common Stocks 0.2%
Pepsi Cola Puerto Rico Bottling
Company (USD) * 40,000 375
_____________________________________________________________________________
Total Puerto Rico (Cost $560) 375
VENEZUELA 0.7%
Common Stocks 0.7%
Mavesa ADR (USD) 122,291 650
Sudamtex de Venezuela (Class B) ADR (USD) 87,203 425
Venezolana de Prerreducidos
Caroni GDS (USD) 60,000 359
_____________________________________________________________________________
Total Venezuela (Cost $1,942) 1,434
SHORT-TERM INVESTMENTS 5.6%
Commercial Paper 5.6%
Asset Securitization Cooperative, 4(2)
5.30%, 6/10/96 $ 1,000,000 $ 994
Barnett Banks, 5.32%, 5/15/96 2,000,000 1,994
Countrywide Funding, 5.33%, 6/11/96 1,000,000 994
Delaware Funding, 5.30%, 7/23/96 1,000,000 987
Den Danske, 5.305%, 5/28/96 2,000,000 1,990
Tasmanian Public Finance, 5.27%, 9/23/96 1,000,000 975
Yorkshire Building Society, 5.30%, 5/17/96 1,000,000 997
Investments in Commercial Paper through
a joint account, 5.36%-5.37%, 5/01/96 2,036,468 2,036
_____________________________________________________________________________
Total Short-Term Investments (Cost $10,967) 10,967
Total Investments in Securities
97.4% of Net Assets (Cost $208,919) $ 191,651
Other Assets Less Liabilities 5,057
NET ASSETS $ 196,708
Net Assets Consist of:
Accumulated net investment income -
net of distributions $ 1,937
Accumulated net realized gain/loss -
net of distributions (32,920)
Net unrealized gain (loss) (17,270)
Paid-in-capital applicable to 25,012,351 shares
of $0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 244,961
NET ASSETS $ 196,708
NET ASSET VALUE PER SHARE $ 7.86
! Affiliated company
* Non-income producing
NLG Dutch guilder
USD U.S. dollar
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4.2 of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors."
144a Security was purchased pursuant to Rule 144a under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at year-end amounts to
3.3% of net assets.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Latin America Fund
Unaudited
Statement of Operations
In thousands
6 Months
Ended
4/30/96
Investment Income
Income
Dividend (net of foreign taxes of $250) $ 3,237
Interest 251
Total income 3,488
Expenses
Investment management 926
Shareholder servicing 354
Custody and accounting 94
Prospectus and shareholder reports 31
Registration 21
Legal and audit 14
Directors 4
Miscellaneous 10
Total expenses 1,454
Net investment income 2,034
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (17,519)
Foreign currency transactions (110)
Net realized gain (loss) (17,629)
Change in net unrealized gain or loss
Securities 47,720
Other assets and liabilities
denominated in foreign currencies 2
Change in net unrealized gain or loss 47,722
Net realized and unrealized gain (loss) 30,093
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 32,127
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Latin America Fund
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/96 10/31/95
Increase (Decrease) in Net Assets
Operations
Net investment income $ 2,034 $ 1,220
Net realized gain (loss) (17,629) (12,905)
Change in net unrealized gain or loss 47,722 (64,916)
Increase (decrease) in net assets
from operations 32,127 (76,601)
Distributions to shareholders
Net investment income (1,323) -
Capital share transactions*
Shares sold 52,893 100,910
Distributions reinvested 1,236 -
Shares redeemed (36,986) (75,007)
Redemption fees received 161 863
Increase (decrease) in net assets from
capital share transactions 17,304 26,766
Net Assets
Increase (decrease) during period 48,108 (49,835)
Beginning of period 148,600 198,435
End of period $ 196,708 $ 148,600
*Share information
Shares sold 7,140 14,030
Distributions reinvested 180 -
Shares redeemed (5,212) (10,355)
Increase (decrease) in shares outstanding 2,108 3,675
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Latin America Fund
Unaudited April 30, 1996
Notes to Financial Statements
Note 1 - Significant Accounting Policies
T. Rowe Price International Funds, Inc. (the Corporation) is registered under
the Investment Company Act of 1940. The Latin America Fund (the fund), a
nondiversified, open-end management investment company, is one of the
portfolios established by the Corporation and commenced operations on December
29, 1993.
Valuation
Equity securities listed or regularly traded on a securities exchange
(including Nasdaq) are valued at the last quoted sales price at the time the
valuations are made. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
Affiliated Companies
Investments in companies 5% or more of whose outstanding voting securities are
held by the fund are defined as "Affiliated Companies" in Section 2(a)(3) of
the Investment Company Act of 1940.
Currency Translation
Assets and liabilities are translated into U.S. dollars at the prevailing
exchange rate at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing exchange rate on the dates of such transactions. The effect of
changes in foreign exchange rates on realized and unrealized security gains
and losses is reflected as a component of such gains and losses.
Other
Income and expenses are recorded on the accrual basis. Investment transactions
are accounted for on the trade date. Realized gains and losses are reported on
the identified cost basis. Dividend income and distributions to shareholders
are recorded by the fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax regulations
and may differ from those determined in accordance with generally accepted
accounting principles.
Note 2 - Investment Transactions
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Emerging Markets
At April 30, 1996, the fund held investments in securities of companies
located in emerging markets. Future economic or political developments could
adversely affect the liquidity or value, or both, of such securities.
Commercial Paper Joint Account
The fund, and other affiliated funds, may transfer uninvested cash into a
commercial paper joint account, the daily aggregate balance of which is
invested in high-grade commercial paper. All securities purchased by the joint
account satisfy the fund's criteria as to quality, yield, and liquidity.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $25,503,000 and $22,172,000, respectively, for the six months ended
April 30, 1996.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income. The fund has unused realized capital loss carryforwards
for federal income tax purposes of $15,262,000, of which $2,386,000 expire in
2002, and $12,876,000 expire in 2003. The fund intends to retain gains
realized in future periods that may be offset by available capital loss
carryforwards.
At April 30, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $208,919,000 and net unrealized loss
aggregated $17,268,000, of which $20,653,000 related to appreciated
investments and $37,921,000 to depreciated investments.
Note 4 - Related Party Transactions
The fund is managed by Rowe Price-Fleming International, Inc. (the Manager),
which is owned by T. Rowe Price Associates, Inc. (Price Associates), Robert
Fleming Holdings Limited, and Jardine Fleming Holdings Limited under a joint
venture agreement.
The investment management agreement between the fund and the Manager provides
for an annual investment management fee, of which $169,000 was payable at
April 30, 1996. The fee is computed daily and paid monthly, and consists of an
Individual Fund Fee equal to 0.75% of average daily net assets and a Group
Fee. The Group Fee is based on the combined assets of certain mutual funds
sponsored by the Manager or Price Associates (the Group). The Group Fee rate
ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in
excess of $34 billion. At April 30, 1996, and for the six months then ended,
the effective annual Group Fee rate was 0.33%. The fund pays a pro rata share
of the Group Fee based on the ratio of its net assets to those of the Group.
In addition, the fund has entered into agreements with Price Associates and
two wholly owned subsidiaries of Price Associates, pursuant to which the fund
receives certain other services. Price Associates computes the daily share
price and maintains the financial records of the fund. T. Rowe Price Services,
Inc., is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price Retirement
Plan Services, Inc., provides subaccounting and recordkeeping services for
certain retirement accounts invested in the fund. The fund incurred expenses
pursuant to these related party agreements totaling approximately $342,000 for
the six months ended April 30, 1996, of which $63,000 was payable at
period-end.
During the six months ended April 30, 1996, the fund, in the ordinary course
of business, paid commissions of $18,000 to, and placed security purchase and
sale orders aggregating $4,533,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions.
For yield, price, last transaction, and current balance, 24 hours, 7 days a
week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Latin America
Fund.
Invest With Confidence(registered trademark)
T. Rowe Price
T. Rowe Price Investment Services, Inc., Distributor REPTLAM 4/30/96
Chart 1 - Geographic Diversification - pie chart: Brazil 37%; Mexico 28%;
Argentina 13%; Chile 10%; Peru 1%; Venezuela 1.0%; Colombia 1%; Other and
Reserves 9%. Based on net assets as of 4/30/96
Chart 2 - Correlation of Returns - A bar chart showing the correlation of
total returns of various international countries with the US stock market from
1981-1990 and from 1986-1995.
Footnote: Percentage of time that foreign markets moved in the same direction
as the U.S. market. Sources: Morgan Stanley Capital International indexes,
Standard & Poor's 500 Stock Index, and Frank Russell Company.
Chart 3 - SEC Graph - Latin America Fund - A line graph showing growth of
$10,000 in the fund and in MSCI EMF Latin America Index from 12/29/93 through
4/30/96.
