- --------------------------------------------------------------------------------
T. Rowe Price
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SemiAnnual Report
Latin America Stock Fund
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April 30, 1997
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Report Highlights
================================================================================
o Led by Brazil and Argentina, Latin American markets rebounded sharply
during the six months ended April 1997.
o The Latin America Fund rose 24.94% for the six-month period, exceeding its
Lipper peer group average but not the Morgan Stanley benchmark index.
o The fund benefited from its overweighted position in Brazil, but
performance was hurt somewhat by exposure to smaller companies, which
underperformed. * Our country allocations were largely unchanged; Brazil
remained the largest commitment at 47% of net assets.
o In the past year, Latin American investors have had a major dose of the
volatility that characterizes these markets. Nevertheless, we believe the
region's many favorable trends underscore its long-term investment
potential.
Fellow Shareholders
================================================================================
Latin American markets performed strongly over the six months ended April
1997, buoyed by the twin themes of economic recovery and market-oriented policy
reform. Over this period, your fund rose 24.94%, slightly trailing the MSCI
Latin America Index and exceeding its Lipper peer group average.
<PAGE>
================================================================================
Performance Comparison
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Periods Ended 4/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Latin America Fund 24.94% 29.39%
MSCI EMFLatin America Index 25.86 33.28
Lipper Latin America
Funds Average 23.61 30.38
================================================================================
Relative to the index, your fund benefited from its overweighted position
in the Brazilian market, which was up 38.45%, and from its underweighting in the
Chilean market, which rose only 5.13%. On the other hand, performance was held
back by exposure to smaller companies, which underperformed. Following an
intensive round of company visits, we gradually pared the fund's overall
holdings of smaller companies to around 9% as of the end of April. For the
12-month period, the fund's return was in line with the Lipper average but
trailed the index, as shown in the table.
Portfolio Review
As background for our discussion of investment strategy in the various
Latin American markets, we thought it would be helpful to show some of their
economic and financial statistics (see table on page 2).
In BRAZIL, the sale of the government's controlling interest in the giant
diversified mining company, CVRD, represented another important landmark in the
nation's huge privatization program, which is forecast to transfer more than $50
billion of assets to the private sector over the coming three years. T he next
stage of the privatization program will focus primarily on telecommunications,
electricity, roads, and ports and will attract much-needed capital to the
country's infrastructural requirements, as well as provide significant funds to
reduce government debt. TELECOMUNICACOES BRASILEIRAS (TELEBRAS), the
government-controlled telecommunications holding company and your fund's largest
holding (16.4% of net assets), is set to be a prime beneficiary of the
privatization process; its stock rose 54% over the six months ended April 30.
Despite strong capital inflows that are more than covering the current account
deficit, the government is concerned over galloping import growth at a time when
exports have been subdued, and announced an increase in taxes on consumer credit
in an attempt to slow down consumption of durable goods. We see the economy
slowing to around 4% GDP growth in 1997. We added to UNIBANCO, Brazil's
third-largest private sector bank, and reduced weightings in USIMINAS, a flat
steel producer.
<PAGE>
================================================================================
Economic Statistics
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Percent change from previous year
Argentina Brazil Chile Mexico Peru
- --------------------------------------------------------------------------------
Real GDP
As of 4th Q 1996 9.2% 5.4% 7.7% 7.6% 8.5%
Industrial Production
As of 2/97 7.9 2.9 7.2 8.2 4.1
Inflation
As of 3/97 1.0 9.0 6.8 24.5 9.3
Current account balance
as percent of GDP
1997 forecast -1.9 -3.8 -3.5 -1.7 -5.3
================================================================================
Strong GDP numbers in MEXICO masked continued weakness from consumers,
whose real wages have fallen around 30% since the peso crisis at the end of
1994. Supermarket store sales in the first two months of the year, for example,
fell 1.1% compared with the same period the year before. Although the peso has
been almost unchanged for 18 months (a period when domestic prices have
increased over 30%), exporters continue to do well and the trade balance remains
in positive territory. Inflation has fallen steadily. Although prices still
increased 24.5% for the year ended March 31, we see this coming down to around
15% by the end of 1997. On a political front, uncertainty surrounds
Congressional elections in July, in which the ruling PRI faces the prospect of
losing control of Congress for the first time since 1919. On the other hand, the
market was relieved by the removal of the annual threat of decertification by
the U.S., following the decision by the Zedillo administration to dismantle the
ineffective and corrupt anti-drug agency. Mexico remained our second-largest
holding at 20% of net assets. We sold some smaller-company stocks during the
past six months, including Pepsi bottler EMBOTELLADORES DEL VALLE ANAHUAC
(EMVASA), but otherwise made no significant changes to the position.
================================================================================
Market Performance
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(In U.S. Dollar Terms)
Periods Ended 4/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Argentina 28.39% 24.24%
Brazil 38.45 65.12
Chile 5.13 4.63
Mexico 17.13 11.44
Peru 18.75 15.45
Venezuela 8.64 63.27
- --------------------------------------------------------------------------------
Source: FAME Information Services, Inc.; using MSCI indices.
================================================================================
<PAGE>
Nowhere has economic recovery been as abrupt as in ARGENTINA, which
currently enjoys one of the world's fastest annual growth rates (although
measured off a low base) as well as one of the world's lowest inflation rates.
Encouragin gly, the trade balance has not deterio-rated despite this recent
surge of economic activity. Nevertheless, as trade expands among the Mercosur
countries (currently Brazil, Argentina, Paraguay, and Uruguay), so the
interrelationships between their economies will increase. Thus, a slowing
Brazilian economy will undoubtedly affect Argentina's export performance. As in
Mexico, the ruling party is facing the uncertainty of Congressional elections
later in the year, and, at a time when the unemployment rate of 17.3% is one of
the highest in the world, the reform process will inevitably come under intense
scrutiny. That said, the country's hyperinflationary history should strengthen
resolve to continue on the current path. Your fund's stock selection in this
market continues to focus on the oil and gas, telecommunications, and banking
sectors.
CHILE is the model on which the rest of the region is basing its economic
policy initiatives. Following a prolonged period of market-oriented
restructuring, long-term GDP growth potential in Chile is in the 5% to 6% range
per year, substantially higher than the rest of the region. Nevertheless, the
electricity sector, which accounts for around 35% of the MSCI Chilean Index, has
been held back by exceptionally severe drought conditions and the expectation of
excess supply over the next few years. Moreover, electricity distribution
margins, which are regulated, are set to fall by up to 10% during the course of
the year. It is difficult to find interesting growth situations at reasonable
valuations in this market, and we have remained very underweighted.
GEOGRAPHIC DIVERSIFICATION [Edgar description: pie chart showing Brazil
47%, Mexico 20%, Argentina 12%, Chile 7%, Peru 1%, Venezuela 1%, Other and
Reserves 12%]
In PERU, the hostage situation proved irrelevant to the stock market. More
important issues were the pickup in the economy following a fairly sharp and
unexpected slowdown in the second half of 1996, and the signing of a Brady deal
that paves the way for further debt restructuring and access to cheaper capital.
With Fujimori's popularity soaring, there is a decent chance that he will be
elected for a third term (although the Constitution would have to be changed
once again), which would be viewed positively by the market. Your fund purchased
shares in CREDICORP, Peru's leading bank.
Inflation in VENEZUELA remains easily the highest in the region, hitting
64.9% for the 12 months ended April 30. In May, minimum wages were increased
more than 40%, and it seems unlikely that the government inflation target of 35%
in 1997 will be achievable. The currency has been remarkably stable since the
devaluation of April 1996, and at some stage the government will have to attempt
an orderly currency depreciation in line with inflation. The International
Monetary Fund has extended its period of surveillance and will be focusing on a
continuation of liberalization measures in the public sector, the removal of
gasoline subsidies, and reduced import tariffs. Your fund maintained its small
holdings in the recently privatized telecom monopoly COMPANIA ANONIMA NACIONAL
TELEFONOS DE VENEZUELA (CANTV) and margarine and mayonnaise producer MAVESA.
<PAGE>
Outlook
The market-oriented reform process, led by Brazil's massive privatization
program, is attracting huge amounts of foreign capital into the region, in both
direct and portfolio investment inflows. Related to this, regional economies
have recovered remarkably quickly from the recession and loss of confidence
triggered by the peso crisis at the end of 1994. Short-term risks include the
possibility that the surge of growth translates into current account pressures
or that disaffection with the reform process forces governments to change course
on their economic policies.
Stock market performance in Latin American countries has been, and will
continue to be, highly volatile. Nevertheless, we see forces at workNradical
economic and financial reform, increasing intra-regional trade, strong corporate
earnings growth, and reasonable valuationsNcapable of driving stock returns
higher over time. We believe the region's potential will reward the patient
investor.
Respectfully submitted,
[Signature]
Martin G. Wade
President
May 20, 1997
================================================================================
Portfolio Highlights
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Industry Diversification
Percent of Percent of
Net Assets Net Assets
10/31/96 4/30/97
- --------------------------------------------------------------------------------
Services 36.7% 37.0%
Energy 18.5 19.5
Consumer Goods 13.8 11.2
Finance 11.2 8.9
Materials 11.9 8.5
Multi-industry 3.4 3.3
Miscellaneous - -
Reserves 4.5 11.6
Total 100.0% 100.0%
================================================================================
<PAGE>
================================================================================
Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/97
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Telecomunicacoes Brasileiras, Brazil ................................ 16.4%
Cemex, Mexico ....................................................... 3.7
Cia Energetica Minas Gerais, Brazil ................................. 3.6
Telefonica de Argentina, Argentina .................................. 3.5
Eletrobras, Brazil .................................................. 3.4
Petrol Brasileiros, Brazil .......................................... 3.3
Telecomunicacoes de Sao Paulo, Brazil ............................... 3.3
Perez Companc, Argentina ............................................ 3.0
Brahma, Brazil ...................................................... 2.9
Telefonos de Mexico, Mexico ........................................ 2.9
Cifra, Mexico ....................................................... 2.9
YPF Sociedad Anonima, Argentina ..................................... 2.1
Banco Bradesco, Brazil .............................................. 2.0
Kimberly-Clark Mexico, Mexico ....................................... 1.9
Panamerican Beverages, Mexico ....................................... 1.8
Banco Frances del Rio, Argentina .................................... 1.8
Empresa Nacional de Electricidad, Chile ............................. 1.6
Chilectra, Chile .................................................... 1.5
Companhia Siderurgica Nacional, Brazil .............................. 1.5
Grupo Financiero Banamex, Mexico .................................... 1.4
Cia Cimento Portland Itau, Brazil ................................... 1.4
Grupo Modelo, Mexico ................................................ 1.3
Unibanco, Brazil .................................................... 1.3
Banco Itau, Brazil .................................................. 1.1
Compania Anonima Nacional Telefonos de Venezuela, Venezuela ......... 1.1
- --------------------------------------------------------------------------------
Total ............................................................... 70.7%
================================================================================
<PAGE>
================================================================================
Performance Comparison
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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.
[Latin America Fund SEC Chart shown here]
================================================================================
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
================================================================================
Since Inception
Periods Ended 4/30/97 1 Year 3 Years Inception Date
Latin America Fund 29.39% 5.33% 0.77% 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.
================================================================================
<PAGE>
<TABLE>
Unaudited
================================================================================
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C>
6 Months Year 12/29/93
Ended Ended to
4/30/97 10/31/96 10/31/95 10/31/94
NET ASSET VALUE
Beginning of period .................... $ 8.14 $ 6.49 $ 10.32 $ 10.00
Investment activities
Net investment income ............ 0.12 0.10 0.05 (0.03)
Net realized and
unrealized gain (loss) ........... 1.88 1.60 (3.92) 0.29
Total from
investment activities ............ 2.00 1.70 (3.87) 0.26
Distributions
Net investment income ............ (0.11) (0.06) -- --
Net realized gain ................ (0.03) -- -- --
Total distributions .............. (0.14) -- -- --
Redemption fees added
to paid-in-capital ............... -- 0.01 0.04 0.06
NET ASSET VALUE
End of period .......................... $ 10.00 $ 8.14 $ 6.49 $ 10.32
Ratios/Supplemental Data
Total return ........................... 24.94% 26.52% (37.11)% 3.20%
Ratio of expenses to
average net assets ..................... 1.48%+ 1.66% 1.82% 1.99%+
Ratio of net investment
income to average
net assets ............................. 3.08%+ 1.29% 0.76% (0.35)%+
Portfolio turnover rate ................ 31.3%+ 22.0% 18.9% 12.2%+
Average commission
rate paid .............................. $ 0.0001 $ 0.0001 $- $-
Net assets, end of period
(in thousands) ......................... $ 355,682 $ 213,691 $ 148,600 $ 198,435
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited April 30, 1997
================================================================================
Statement of Net Assets
Shares/Par Value
In thousands
ARGENTINA 11.7%
Common Stocks 11.7%
Banco Frances del Rio ADR (USD) .................. 206,498 $ 6,272
Enron Global Power & Pipeline (USD) .............. 45,648 1,347
Perez Companc (Class B) .......................... 1,325,474 10,751
Telecom Argentina Stet (Class B) ADR (USD) ....... 46,370 2,318
Telefonica de Argentina (Class B) ADR (USD) ...... 376,707 12,526
Transportadora de Gas del Sur ADS (USD) .......... 89,870 1,123
YPF Sociedad Anonima (Class D) ADR (USD) ......... 267,304 7,384
Total Argentina (Cost $35,597) ................... 41,721
BRAZIL 46.9%
Common Stocks 7.5%
Cia Paranaense de Energia Copel .................. 88,489,000 1,364
Cia Paulista de Forca e Luz ...................... 4,655,000 722
Companhia de Electricidade do Estado de
Rio de Janeiro * ................................. 1,294,989,000 816
Companhia Siderurgica Nacional ................... 146,335,393 5,227
Eletrobras ....................................... 26,973,863 12,200
Telecomunicacoes Brasileiras ..................... 53,416,000 5,751
Telecomunicacoes de Minas Gerais * ............... 279,267 40
Telecomunicacoes de Sao Paulo * .................. 1,457,616 403
26,523
Preferred Stocks 39.4%
Banco Bradesco ................................... 860,677,509 7,122
Banco Itau ....................................... 7,489,000 4,049
Banco Nacional ................................... 53,568,000 -
Brahma ........................................... 15,299,555 10,408
Brasmotor ........................................ 5,972,000 1,432
Centrais Electricas de Santa Catarina * .......... 565,000 797
Cia Brasileira de Petroleo Ipiranga .............. 36,899,000 574
Cia Cimento Portland Itau ........................ 14,048,507 4,954
Cia Energetica Minas Gerais * .................... 131,438,595 5,993
Cia Energetica Minas Gerais ADR (144a) (USD) * ... 10,283 467
Cia Energetica Minas Gerais ADR,
Sponsored, Nonvoting (USD) * ............ 142,043 6,445
Cia Energetica Minas Gerais ADR, Cv. (USD) * ..... 2,258 103
Cia Paulista de Forca e Luz ...................... 27,050 $ 4
Dixie Toga ....................................... 562,023 423
Electricidade de Sao Paulo * ..................... 6,758,000 1,357
Globex Utilidades ................................ 49,000 875
Lojas Americanas * ............................... 130,180,000 1,848
Lojas Renner ..................................... 16,043,000 965
Multibras Eletrodomesticos ....................... 353,000 418
<PAGE>
Pao de Acucar GDR (USD) .......................... 68,000 1,343
Petrol Brasileiros ............................... 55,743,711 11,741
Telecomunicacoes Brasileiras ..................... 1,136,294 130
Telecomunicacoes Brasileiras ADR (USD) ........... 454,109 52,109
Telecomunicacoes Brasileiras ADR (144a) (USD) .... 3,342 384
Telecomunicacoes de Minas Gerais ................. 17,013,000 2,710
Telecomunicacoes de Sao Paulo .................... 39,890,733 11,328
Telecomunicacoes do Parana ....................... 1,600,000 1,098
Telecomunicacoes do Rio de Janeiro ............... 17,386,000 2,894
Unibanco ......................................... 121,432,151 4,486
Usiminas ......................................... 2,772,829,779 3,285
Usiminas ADR (144a) (USD) ........................ 47,500 558
140,300
Total Brazil (Cost $111,587) ..................... 166,823
CHILE 7.0%
Common Stocks 7.0%
Chile Fund (USD) ................................. 40,000 970
Chilectra ADR (144a) (USD) ....................... 86,436 5,316
Chilgener ADS (USD) .............................. 123,046 3,507
Chilquinta ADR (USD) ............................. 34,000 527
Compania Cervecerias Unidas ADS (USD) ............ 76,710 1,707
Compania de Telecomunicaciones de Chile ADR (USD) 99,269 3,214
Empresa Nacional de Electricidad ADS (USD) ....... 294,686 5,673
Enersis ADS (USD) ................................ 80,940 2,549
Santa Isabel ADR (USD) ........................... 28,000 682
Sociedad Quimica Minera de Chile (Class B) ADR (USD) 9,425 558
Total Chile (Cost $23,944) ....................... 24,703
GUATEMALA 0.2%
Common Stocks 0.2%
Basic Petroleum (USD) ............................ 20,200 $ 634
Total Guatemala (Cost $226) ...................... 634
MEXICO 19.9%
Common Stocks 19.9%
Apasco ........................................... 99,796 590
Banco Quadrum ADR (USD) .......................... 69,100 242
Cemex ............................................ 580,000 1,905
Cemex (Class B) .................................. 905,746 3,328
Cemex ADS (USD) .................................. 1,185,575 7,854
Cifra (Class B) ADR (USD) ........................ 6,739,018 10,142
Coca-Cola Femsa ADR (USD) ........................ 28,000 977
Control Commercial Mexicana,
Units (Each unit consists of 3 'B'
shares and 1 'C' share) .......................... 659,570 500
Corporacion Geo (Class B) ........................ 218,000 1,012
Fomentos Economico Mexicano (Class B) ............ 716,893 3,365
<PAGE>
Gruma (Class B) * ................................ 125,000 590
Grupo Elektra .................................... 203,539 1,903
Grupo Financiero Banamex (Class B) * ............. 2,303,000 4,927
Grupo Financiero Banamex (Class L) * ............. 41,100 82
Grupo Financiero Bancomer (Class B) GDS (USD) * .. 2,555 18
Grupo Financiero Bancomer (Class L) * ............ 8,669 3
Grupo Financiero Bancomer ADS (144a) (USD) * ..... 9,150 64
Grupo Financiero Inbursa (Class B) ............... 220,000 753
Grupo Industrial Maseca (Class B) * .............. 1,397,605 1,365
Grupo Modelo (Class C) ........................... 748,970 4,543
Grupo Televisa GDR (USD) * ....................... 83,404 1,929
Interamericas Communications (USD)* .............. 28,000 68
Jugos de Valle (Class B) * ....................... 388,940 600
Kimberly-Clark Mexico (Class A) .................. 1,846,941 6,717
Panamerican Beverages (Class A) (USD) ............ 217,978 6,321
Seguros Comercial Americana (Class B) ............ 94,500 285
Sigma Alimentos (Class B) ........................ 49,800 535
Telefonos de Mexico (Class L) ADR (USD) .......... 248,888 10,267
Total Mexico (Cost $76,322) ...................... 70,885
PERU 1.4%
Common Stocks 1.4%
Cementos Lima .................................... 23,141 $ 421
Credicorp (USD) .................................. 64,680 1,358
Minsur (Class T) ................................. 110,751 456
Telefonica del Peru (Class B) ADS (USD) .......... 118,688 2,849
Total Peru (Cost $4,423) ......................... 5,084
VENEZUEL 1.3%
Common Stocks 1.3%
Compania Anonima Nacional Telefonos
de Venezuela (Class D) ADR (USD) * .......... 129,200 3,876
Mavesa ADR (USD) ................................. 104,436 718
Total Venezuela (Cost $4,165) .................... 4,594
SHORT-TERM INVESTMENTS 7.5%
Commercial Paper 6.1%
Abbott Laboratories, 5.50%, 5/6/97 ............... $ 1,000,000 999
Asset Securitization Cooperative, 4(2), 5.53%, 6/4/97 5,000,000 4,974
Bex America Finance, 5.54%, 5/27/97 .............. 4,000,000 3,984
Great Lakes Chemical, 4(2), 5.56%, 5/27/97 ....... 1,350,000 1,345
Kingdom of Sweden, 5.55%, 5/30/97 ................ 350,000 348
Preferred Receivables Funding, 5.58%, 6/12/97 .... 5,000,000 4,967
Statoil (Den Norske Stats Oljeselskap), 5.55%, 5/1/97 350,000 350
Investments in Commercial Paper
through a joint account, 5.60%, 5/1/97 4,775,751 4,776
21,743
Other 1.4%
Commerzbank, CD, 5.54%, 5/22/97 .................. 5,000,000 5,000
5,000
Total Short-Term Investments (Cost $26,743) 26,743
<PAGE>
Total Investments in Securities
95.9% of Net Assets (Cost $283,007) $ ............ 341,187
Other Assets Less Liabilities .................... 14,495
NET ASSETS ....................................... $ 355,682
Net Assets Consist of:
Accumulated net investment income -
net of distributions ........................................ $ 3,719
Accumulated net realized gain/loss -
net of distributions ........................................ (51,121)
Net unrealized gain (loss) .................................. 58,171
Paid-in-capital applicable to 35,585,586
shares of $0.01 par value capital stock
outstanding; 2,000,000,000 shares
of the Corporation authorized ............................... 344,913
NET ASSETS .................................................. $ 355,682
NET ASSET VALUE PER SHARE ................................... $ 10.00
* Nonincome producing
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 1.9%
of net assets.
CD Certificate of Deposit
USD U.S. dollar
<PAGE>
Unaudited
================================================================================
Statement of Operations
In thousands
6 Months
Ended
4/30/97
- --------------------------------------------------------------------------------
Investment Income
Income
Dividend (net of foreign taxes of $ 151) ................. $ 5,642
Interest ................................................. 382
Total income ............................................. 6,024
Expenses
Investment management .................................... 1,421
Shareholder servicing .................................... 373
Custody and accounting ................................... 103
Prospectus and shareholder reports ....................... 17
Registration ............................................. 25
Legal and audit .......................................... 6
Directors ................................................ 4
Miscellaneous ............................................ 7
Total expenses ........................................... 1,956
Net investment income ........................................ 4,068
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ............................................... (5,440)
Foreign currency transactions ............................ (97)
Net realized gain (loss) ................................. (5,537)
Change in net unrealized gain or loss
Securities ............................................... 57,371
Other assets and liabilities
denominated in foreign currencies ........................ 7
Change in net unrealized gain or loss .................... 57,378
Net realized and unrealized gain (loss) ...................... 51,841
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ....................................... $ 55,909
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited
================================================================================
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/97 10/31/96
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations
Net investment income ................... $ 4,068 $ 2,499
Net realized gain (loss) ................ (5,537) (29,540)
Change in net unrealized gain or loss ... 57,378 65,785
Increase (decrease) in net assets
from operations ......................... 55,909 38,744
Distributions to shareholders
Net investment income ................... (2,762) (1,323)
Net realized gain ....................... (753) --
Decrease in net assets from distributions (3,515) (1,323)
Capital share transactions *
Shares sold ............................. 136,335 96,325
Distributions reinvested ................ 3,342 1,236
Shares redeemed ......................... (50,229) (70,187)
Redemption fees received ................ 149 296
Increase (decrease) in net assets
from capital share transactions ......... 89,597 27,670
Net Assets
Increase (decrease) during period ........... 141,991 65,091
Beginning of period ......................... 213,691 148,600
End of period ............................... $355,682 $213,691
*Share information
Shares sold ............................. 14,489 12,407
Distributions reinvested ................ 406 180
Shares redeemed ......................... (5,562) (9,239)
Increase (decrease) in shares outstanding 9,333 3,348
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unaudited April 30, 1997
================================================================================
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 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.
Short-term debt securities are valued at amortized cost which 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.
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.
<PAGE>
EMERGING MARKETS At April 30, 1997, 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 $97,968,000 and $39,547,000, respectively, for the six
months ended April 30, 1997.
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 $45,003,000, of which $2,386,000 expires in 2002,
$12,876,000 in 2003, and $29,741,000 in 2004. The fund intends to retain gains
realized in future periods that may be offset by available capital loss
carryforwards.
At April 30, 1997, the aggregate cost of investments for federal income tax
and financial reporting purposes was $283,007,000 and net unrealized gain
aggregated $58,180,000, of which $74,411,000 related to appreciated investments
and $16,231,000 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 $297,000 was payable
at April 30, 1997. 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 0.30% for assets in
excess of $80 billion. At April 30, 1997, 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.
<PAGE>
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.
(TRPS) 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. Additionally, the fund is one
of several T. Rowe Price mutual funds (the underlying funds) in which the T.
Rowe Price Spectrum International Fund (Spectrum) invests. In accordance with an
agreement among Spectrum, the underlying funds, Price Associates, and TRPS,
expenses from the operation of Spectrum are borne by the underlying funds based
on each underlying fund's proportionate share of assets owned by Spectrum. The
fund incurred expenses pursuant to these related party agreements totaling
approximately $356,000 for the six months ended April 30, 1997, of which $51,000
was payable at period-end.
During the six months ended April 30, 1997, the fund, in the ordinary
course of business, placed security purchase and sale orders aggregating
$468,000 with certain affiliates of the manager and paid commissions of $1,000
related thereto.
================================================================================
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
INVESTMENT SERVICES AND INFORMATION
- --------------------------------------------------------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE Shareholder service representatives are available from 8 a.m. to
10 p.m. ET Monday through Friday and from 8:30 a.m. to 5 p.m. ET on weekends.
Call 1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
IN PERSON Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. You can also
drop off applications or obtain prospectuses and other literature at these
centers.
AUTOMATED 24-HOUR SERVICES
TELE*ACCESS [REGISTRATION MARK] Call 1-800-638-2587 to obtain information
such as account balance, date and amount of your last transaction, latest
dividend payment, fund prices, and yields. Additionally, you have the ability to
request prospectuses, statements, and account and tax forms; to reorder checks;
and to initiate purchase, redemption, and exchange orders for identically
registered accounts.
<PAGE>
T.ROWE PRICE ONLINE Through a personal computer via dial-up modem, you can
replicate all the services available on Tele*Access plus conduct transactions in
your Discount Brokerage and Variable Annuity accounts.
ACCOUNT SERVICES
CHECKING Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield and Emerging Markets Bond Funds).
AUTOMATIC INVESTING Build your account over time by investing directly from
your bank account or paycheck with Automatic asset builder. additionally,
automatic exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A $50 minimum
makes it easy to get started.
AUTOMATIC WITHDRAWAL If you need money from your fund account on a regular
basis, you can establish scheduled, automatic redemptions.
DIVIDEND AND CAPITAL GAINS PAYMENT OPTIONS Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
DISCOUNT BROKERAGE*
INVESTMENTS AVAILABLE You can trade stocks, bonds, options, precious
metals, and other securities at a savings over regular commission rates.
TO OPEN AN ACCOUNT Call a shareholder service representative for more \
information.
Investment Information
COMBINED STATEMENT A comprehensive overview of your T. Rowe Price accounts
is provided. The summary page gives you earnings by tax category, provides total
portfolio value, and lists your investments by typeNstock, bond, and money
market. Detail pages itemize account transactions by fund.
SHAREHOLDER REPORTS Portfolio managers review the performance of the funds
in plain language and discuss T. Rowe Price's economic outlook.
T. ROWE PRICE REPORT This is a quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
PERFORMANCE UPDATE This quarterly report reviews recent market develop-
ments and provides comprehensive performance information for every T. Rowe Price
fund.
INSIGHTS This library of information includes reports on mutual fund tax
issues, investment strategies, and financial markets.
DETAILED INVESTMENT GUIDES Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Diversifying Overseas: A Guide to International Investing,
Retirees Financial Guide, and Retirement Planning Kit (also available on disk
for PC use) can help you determine and reach your investment goals.
* A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
<PAGE>
================================================================================
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
STOCK FUNDS
- --------------------------------------------------------------------------------
DOMESTIC
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
- --------------------------------------------------------------------------------
DOMESTIC TAXABLE
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
<PAGE>
DOMESTIC TAX-FREE
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
Global Government Bond
Emerging Markets Bond
International Bond
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
- --------------------------------------------------------------------------------
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
<PAGE>
* Closed to new investors.
** Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
FOR YIELD, PRICE, LAST TRANSACTION,
CURRENT BALANCE, OR TO CONDUCT
TRANSACTIONS, 24 HOURS, 7 DAYS
A WEEK, CALL TELE*ACCESS [REGISTRATION MARK]:
1-800-638-2587 toll free
FOR ASSISTANCE
WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
TO OPEN A DISCOUNT BROKERAGE
ACCOUNT OR OBTAIN INFORMATION,
CALL: 1-800-638-5660 toll free
INTERNET ADDRESS:
www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price Latin America Stock Fund.
INVESTOR CENTERS:
101 East Lombard St.
Baltimore, MD 21202
<PAGE>
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor.
F97-051 4/30/97
