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T. Rowe Price
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Semiannual Report
Latin America Fund
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April 30, 1998
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REPORT HIGHLIGHTS
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Latin America Fund
* After an initial setback, Latin American markets weathered the effects
of the East Asian crisis quite well.
* The largest stock markets, Brazil, Argentina, and Mexico, achieved
double-digit returns for the six months ended April 30, 1998.
* The fund's returns for both the 6- and 12-month periods outstripped
those of the benchmark index and also the average competitor fund.
* Brazil, the strongest market in recent months, remained our largest
holding (44% of net assets), with Mexico second (27%).
* Despite much progress, the region's economies remain vulnerable to
boom and bust cycles, and continued market volatility can be expected.
<PAGE>
FELLOW SHAREHOLDERS
During the six months ended April 30, most Latin American stock markets
bounced back from their lows of last October, when nervousness over East Asia's
currency and economic difficulties spread to virtually all emerging markets.
Buoyed by Brazil's successful defense of its currency, the larger markets led
the recovery, with Brazil, Argentina, and Mexico recording double-digit gains
for the period. Chile, Peru, Venezuela, and Colombia lagged.
================================================================================
Performance Comparison
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Periods Ended 4/30/98 6 Months 12 Months
- --------------------------------------------------------------------------------
Latin America Fund 16.84% 12.17%
MSCI EMF Latin America Index 7.97 6.42
Lipper Latin America
Funds Average 10.14 7.69
================================================================================
Your fund's results for the 6- and 12-month periods were strong in absolute
terms and also compared with those of the benchmark index and the average
competitor fund. Total returns benefited from our overweightings in Brazil and
Argentina, two of the strongest markets in the past six months, and from
concentrations in four stocks-TELEBRAS and PETROBRAS (Brazil), TELMEX (Mexico),
and YPF (Argentina)-that outperformed both their country and overall Latin
American MSCI indices.
MARKET AND PORTFOLIO REVIEW
As is often the case, events in Brazil dominated the region's financial
environment. A devaluation of the real in October 1997 would almost certainly
have sparked a loss of confidence similar to the Mexican peso crisis in late
1994. In fact, the Brazilian government acted quickly and decisively on a number
of fronts to restore confidence, even at the cost of a sharp slowdown in the
economy, and there was no devaluation. The rest of the region has been
relatively unscathed so far by the Asian meltdown. Economic growth has been
surprisingly robust in a number of areas, particularly Argentina and Mexico.
================================================================================
Market Performance
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(In U.S. Dollar Terms)
Periods Ended 4/30/98 6 Months 12 Months
- --------------------------------------------------------------------------------
Argentina 13.72% 10.22%
Brazil 16.61 0.08
Chile -14.15 -15.80
Mexico 14.12 33.72
Peru 2.48 -5.74
Venezuela -35.14 -6.84
Source: FAMEInformation Services, Inc.; using MSCI indices.
================================================================================
<PAGE>
BRAZIL proved equal to the task of defending its currency from a fierce
speculative attack last fall. The government led by President Cardoso doubled
interest rates, announced an austerity package, resurrected and passed a bill to
reform the inefficient civil service, and passed an ambitious privatization
schedule. In virtually all cases, the privatization program has so far attracted
better-than-expected interest.
Six months ago, we worried that these actions might trigger a recession,
but now we are looking for growth of about 1.8% in real terms for 1998,
considerably lower than 3.4% in 1997 but at least in positive territory.
Nevertheless, Brazil is not out of the woods yet. Despite the austerity package,
the government's budget deficit rose sharply and is expected to rise further,
aggravated by failure to pass important sections of a Social Security reform
bill. The deficit is a major concern for the financial markets, as it is
financed largely by short-term debt that must constantly be rolled over.
Unemployment rose to 8.2% at the end of April versus 5.6% before the interest
rate hike.
Brazil remained the fund's dominant position, at 44% of net assets, and
Telebras the fund's largest holding at 17.5% of net assets. This giant telecom
holding company is slated to be broken up into 12 different companies as part of
the privatization and deregulation process. Yet its stock trades at only 10
times earnings, and other valuation measures are modest as well. Bearing in mind
the strong growth characteristics of the telecom sector at this stage of its
development and the huge efficiency improvements we expect from private
management, we view these multiples as unusually attractive. The principal
addition to our Brazilian position was the electric utility of Rio de Janeiro,
CERJ, now the fund's seventh largest holding.
[pie chart "Geographic Diversification" showing Brazil 44%, Mexico 27%,
Argentina 13%, Chile 6%, Peru 2%, Venezuela 2%, Other and reserves 6%.]
Economic momentum in MEXICO remained robust, seemingly unscathed by fallout
from the Asian crisis. First quarter GDP growth was over 6%, and high consumer
confidence reflects the recovery of real wages after the battering they took
during the '94 to '95 peso crisis. While banking sector restructuring has been
crucial to the country's comeback, bad loans still impede the ability of banks
to expand their balance sheets, and the entire bailout cost is expected to equal
14% of GDP. Recently, Mexico's government announced significant spending cuts,
since falling oil prices have slashed government revenues.
The fund is slightly underweighted in Mexico, since we question whether
Mexico's growth rate can be maintained. In addition, valuations of high-quality
growth stocks have reached pre-peso-crisis levels. For some time we have been
focusing on growth stocks with sustainable earnings, and this led us to a large
position in the beverage sector. PANAMCO and COCA-COLA FEMSA (both Coca-Cola),
along with MODELO and FEMSA (both beer), together make up approximately 32% of
the Mexican position.
<PAGE>
Like Mexico, ARGENTINA has enjoyed faster-than-expected growth, with
construction particularly strong. The country's currency peg to the dollar held
up well in the fall of 1997, and increased confidence in the banking system
forestalled the kind of capital flight that occurred in 1995. However, progress
has come at the cost of a deteriorating current account, which concerns
investors, as does the possibility of governmental vote-buying strategies, such
as additional infrastructure expenditures, in the months preceding next year's
presidential elections. Against this background, we made few changes in the
Argentine position, which is dominated by YPF, a natural gas and pipeline
company. Despite sharply lower oil prices, YPF's long-term growth prospects
remain intact, in our view, and we do not think the stock's valuation reflects
its potential. In the near term, the company should benefit from export projects
to Chile, Uruguay, and Brazil, and from the opening of a pipeline to Bolivia and
Brazil in 2000.
At 6% of net assets, CHILE is our largest underweight position versus the
MSCI Latin America index. Although the economy is in generally good shape, we
are concerned about a worsening of its current account deficit following years
of strong internal growth. In addition, tighter monetary policy has pushed
interest rates up over the past year. Apart from general concerns, we still fail
to find interesting, sustainable growth situations in the stock market. Chile
was the first Latin American country to privatize and deregulate, with the
result that key sectors of the market are now considered mature, and the few
stocks with growth potential tend to be aggressively valued.
================================================================================
Industry Diversification
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Percent of Net Assets
10/31/97 4/30/98
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Services 41.1% 40.8%
Energy 24.5 23.2
Consumer Goods 13.4 14.2
Finance 9.0 9.6
Materials 6.3 3.8
Multi-industry 2.4 -
All Other 0.3 2.2
Reserves 3.0 6.2
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Total 100.0% 100.0%
================================================================================
In the smaller markets of VENEZUELA and PERU, the fund holds only three
stocks totaling less than 4% of net assets-about half of the index weighting in
these countries. Venezuela suffers from an overdependence on oil, and the
government has reduced 1998 GDP forecasts from 6% to only 0.8% because of the
drop in oil prices. Inflation remains over 30%, and interest rates over 40% to
protect the currency. Peru's economy has suffered at the hands of El Nino, and
falling metal prices plus strong imports have pushed up the current account
deficit. However, we think the picture will brighten there in the second half.
We have no holdings in Colombia, where inflation and unemployment are high.
<PAGE>
OUTLOOK
It has been a tumultuous six months in Latin America since we last wrote,
but on the whole the region survived the stress well, with most financial
markets landing firmly in positive territory. However, most economies are
pushing against significant current account constraints, not helped by commodity
price weakness. In addition, political cycles in the region have often brought
economic risks, and the next 18 months will see five important elections. These
will have significant effects on the investment environment both before and
after they take place. Given Brazil's key role in the region, the reelection of
President Cardoso this coming October would be viewed favorably by investors.
And while this outcome is fairly certain, it is not assured. Brazil's large
budget deficit is also a source of concern. In Argentina, where President Menem
may run again, an apparent shift to more populist policies is somewhat
unsettling, and in Venezuela, a former coup leader has emerged as a presidential
candidate.
In summary, despite much progress and great potential, most Latin American
countries have not reached a state of sustainable economic growth, with the
possible exception of Chile. Further reforms across the board are needed over a
prolonged period to break the traditional boom-and-bust cycles of these
economies. For this reason, you should always be prepared for volatility in the
region's stock markets, and an investment in the fund should represent neither a
major portion of your assets nor your only source of international
diversification.
Respectfully submitted,
/s/
Martin G. Wade
President
May 21, 1998
<PAGE>
T. Rowe Price Latin America Fund
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PORTFOLIO HIGHLIGHTS
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/98
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Telecomunicacoes Brasileiras (Telebras), Brazil ....................... 17.5%
Telefonos de Mexico (Telmex), Mexico .................................. 6.7
YPF Sociedad Anonima (YPF), Argentina ................................. 6.1
Petrol Brasileiros (Petrobras), Brazil ................................ 4.6
Cemex, Mexico ......................................................... 4.3
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Telefonica de Argentina, Argentina .................................... 3.2
Electricidade de Rio de Janeiro (Cerj), Brazil ........................ 2.7
Cia Energetica Minas Gerais (Cemig), Brazil ........................... 2.6
Panamerican Beverages (Panamco), Mexico ............................... 2.6
Unibanco, Brazil ...................................................... 2.5
- --------------------------------------------------------------------------------
Fomentos Economico Mexicano (FEMSA), Mexico ........................... 2.4
Eletrobras, Brazil .................................................... 2.4
Telecomunicacoes de Sao Paulo (Telesp), Brazil ........................ 2.1
Grupo Modelo (Modelo), Mexico ......................................... 2.1
Kimberly-Clark Mexico, Mexico ......................................... 2.0
- --------------------------------------------------------------------------------
Chilectra, Chile ...................................................... 2.0
Telefonica del Peru, Peru ............................................. 1.9
Pao de Acucar, Brazil ................................................. 1.9
Perez Companc, Argentina .............................................. 1.7
Banco Itau, Brazil .................................................... 1.6
- --------------------------------------------------------------------------------
Brahma, Brazil ........................................................ 1.6
Compania Anonima Nacional Telefonos de Venezuela (CANTV), Venezuela ... 1.5
Coca-Cola Femsa, Mexico ............................................... 1.5
Banco Bradesco, Brazil ................................................ 1.4
Grupo Elektra, Mexico ................................................. 1.4
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Total ................................................................. 80.3%
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<PAGE>
T. Rowe Price Latin America Fund
================================================================================
================================================================================
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 graph shown here]
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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 4/30/98 1 Year 3 Years Inception Date
- --------------------------------------------------------------------------------
Latin America Fund 12.17% 18.93% 3.29% 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>
T. Rowe Price Latin America Fund
====================================================================================================================================
Unaudited
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
<CAPTION>
6 Months Year 12/29/93
Ended Ended to
4/30/98 10/31/97 10/31/96 10/31/95 10/31/94
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period .............. $ 9.60 $ 8.14 $ 6.49 $ 10.32 $ 10.00
Investment activities
Net investment income ........ 0.10 0.13 0.10 0.05 (0.03)
Net realized and
unrealized gain (loss) ....... 1.49 1.44 1.60 (3.92) 0.29
Total from
investment activities ........ 1.59 1.57 1.70 (3.87) 0.26
Distributions
Net investment income ........ (0.12) (0.11) (0.06) -- --
Net realized gain ............ -- (0.03) -- -- --
Total distributions .......... (0.12) (0.14) (0.06) -- --
Redemption fees added
to paid-in-capital ........... 0.02 0.03 0.01 0.04 0.06
NET ASSET VALUE
End of period .................... $ 11.09 $ 9.60 $ 8.14 $ 6.49 $ 10.32
Ratios/Supplemental Data
Total return ..................... 16.84% 19.94% 26.52% (37.11)% 3.20%
Ratio of expenses to
average net assets ............... 1.46%+ 1.47% 1.66% 1.82% 1.99%+
Ratio of net investment
income to average
net assets ....................... 1.69%+ 1.30% 1.29% 0.76% (0.35)%+
Portfolio turnover rate .......... 6.8% 32.7% 22.0% 18.9% 12.2%+
Average commission
rate paid ........................ $ 0.0000 $ 0.0001 $ 0.0001 $- $-
Net assets, end of period
(in thousands) ................... $ 385,311 $ 398,066 $ 213,691 $ 148,600 $ 198,435
<FN>
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Latin America Fund
================================================================================
Unaudited April 30, 1998
================================================================================
Statement of Net Assets
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
ARGENTINA 13.2%
Common Stocks 13.2%
Banco Frances del Rio de la Plata ADR (USD) .. 126,128 $ 3,665
Banco Rio de la Plata ADR (USD) * ............ 229,160 3,151
Perez Companc (Class B) ...................... 1,094,699 6,580
Telecom Argentina Stet (Class B) ADR (USD) ... 49,270 1,774
Telefonica de Argentina (Class B) ADR (USD) .. 317,067 12,227
YPF Sociedad Anonima (Class D) ADR (USD) ..... 669,928 23,364
Total Argentina (Cost $45,464) ............... 50,761
BRAZIL 43.9%
Common Stocks 10.7%
Cia Paranaense de Energia Copel .............. 230,480,000 2,660
Electricidade de Rio de Janeiro * ............ 14,111,071,000 10,241
Eletrobras ................................... 227,525,630 9,351
Light Servicos de Electricidade .............. 5,028,000 2,022
Pao de Acucar GDS (USD) ...................... 272,760 7,262
Unibanco GDR (USD) ........................... 246,700 9,806
41,342
Preferred Stocks 33.2%
Banco Bradesco ............................... 581,203,509 5,336
Banco Itau ................................... 9,356,000 6,299
Banco Nacional * ............................. 53,568,000 0
Brahma ....................................... 9,334,482 6,081
Cia Energetica Minas Gerais .................. 210,030,595 10,192
Ericsson Telecomunicacoes .................... 48,340,000 1,479
Petrol Brasileiros ........................... 70,175,711 17,795
Telecomunicacoes Brasileiras ADR (USD) ....... 552,451 67,295
Telecomunicacoes de Minas Gerais (Class B) ... 17,013,000 2,626
Telecomunicacoes de Sao Paulo ................ 24,209,367 8,235
Telecomunicacoes do Parana ................... 1,733,526 990
Telecomunicacoes do Rio de Janeiro ........... 9,058,272 1,426
127,754
Total Brazil (Cost $141,582) ................. 169,096
CHILE 5.5%
Common Stocks 5.5%
Chilectra ADR (144a) (USD) ................... 275,381 7,676
Chilquinta ADR (USD) ......................... 19,737 $ 234
Compania Cervecerias Unidas ADS (USD) ........ 89,116 2,462
Compania de Telecomunicaciones de Chile ADR (USD) 101,010 2,532
Embotelladora Andina ADR (USD) ............... 126,851 2,862
Empresa Nacional de Electricidad Chile ADR (USD) 135,141 2,356
Enersis ADS (USD) ............................ 98,039 2,886
Santa Isabel ADR (USD) * ..................... 9,305 154
Total Chile (Cost $20,554) ................... 21,162
<PAGE>
MEXICO 27.4%
Common Stocks 27.4%
Cemex (Class B) * ............................ 1,402,746 8,420
Cemex ADS (144a) (USD) * ..................... 814,575 8,044
Cifra (Class V) ADR (USD) .................... 129,293 2,262
Coca-Cola Femsa ADR (USD) .................... 341,000 5,797
Control Commercial Mexicana, Units
(Each unit consists of 3
Class B shares and 1 Class C share) . 659,570 817
Fomentos Economico Mexicano (Class B) * ...... 1,271,458 9,416
Gruma (Class B) * ............................ 127,500 293
Grupo Elektra ................................ 3,723,390 5,322
Grupo Financiero Banamex (Class B) * ......... 1,124,500 3,507
Grupo Financiero Bancomer (Class B) .......... 5,086,000 3,514
Grupo Industrial Maseca (Class B) ............ 3,210,605 2,317
Grupo Modelo (Class C) ....................... 839,970 7,944
Kimberly-Clark Mexico (Class A) .............. 1,571,941 7,721
Panamerican Beverages (Class A) (USD) ........ 253,978 10,127
TV Azteca ADR (USD) .......................... 232,100 4,323
Telefonos de Mexico (Class L) ADR (USD) ...... 455,888 25,815
Total Mexico (Cost $92,468) .................. 105,639
PERU 2.3%
Common Stocks 2.3%
Credicorp (USD) .............................. 75,790 $1,269
Telefonica del Peru (Class B) ADR (USD) ...... 338,148 7,482
Total Peru (Cost $8,793) ..................... 8,751
VENEZUELA 1.5%
Common Stocks 1.5%
Compania Anonima Nacional Telefonos de Venezuela
(Class D) ADR (USD) * ............... 176,344 $5,908
Total Venezuela (Cost $6,148)................. 5,908
SHORT-TERM INVESTMENTS 5.8%
Money Market Funds 5.8%
Reserve Investment Fund, 5.65% ............... 22,434,945 22,435
Total Short-Term Investments (Cost $22,435) .. 22,435
<PAGE>
Total Investments in Securities
99.6% of Net Assets (Cost $337,444) .......... $383,752
Other Assets Less Liabilities ................ 1,559
NET ASSETS ................................... $385,311
Net Assets Consist of:
Accumulated net investment income -
net of distributions ......................... $2,999
Accumulated net realized gain/loss -
net of distributions ......................... (11,368)
Net unrealized gain (loss) ................... 46,299
Paid-in-capital applicable to 34,733,405
shares of $0.01 par value capital stock
outstanding; 2,000,000,000 shares of
the Corporation authorized ................... 347,381
NET ASSETS ................................... $385,311
NET ASSET VALUE PER SHARE .................... $11.09
* Non-income producing
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 4.1%
of net assets.
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Latin America Fund
================================================================================
Unaudited
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
4/30/98
Investment Income
Income
Dividend (net of foreign taxes of $ 252) .................. $ 5,882
Interest .................................................. 345
Total income .............................................. 6,227
Expenses
Investment management ..................................... 2,120
Shareholder servicing ..................................... 554
Custody and accounting .................................... 128
Prospectus and shareholder reports ........................ 46
Registration .............................................. 26
Legal and audit ........................................... 9
Directors ................................................. 3
Miscellaneous ............................................. 7
Total expenses ............................................ 2,893
Net investment income ........................................ 3,334
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ................................................ 15,233
Foreign currency transactions ............................. (266)
Net realized gain (loss) .................................. 14,967
Change in net unrealized gain or loss
Securities ................................................ 41,709
Other assets and liabilities
denominated in foreign currencies ......................... 2
Change in net unrealized gain or loss ..................... 41,711
Net realized and unrealized gain (loss) ...................... 56,678
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ....................................... $ 60,012
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
T. Rowe Price Latin America Fund
====================================================================================================================================
Unaudited
====================================================================================================================================
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
In thousands
<CAPTION>
6 Months Year
Ended Ended
4/30/98 10/31/97
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income ............................................... $ 3,334 $ 4,843
Net realized gain (loss) ............................................ 14,967 19,195
Change in net unrealized gain or loss ............................... 41,711 3,795
Increase (decrease) in net assets from operations ................... 60,012 27,833
Distributions to shareholders
Net investment income ............................................... (4,783) (2,762)
Net realized gain ................................................... -- (753)
Decrease in net assets from distributions ........................... (4,783) (3,515)
Capital share transactions *
Shares sold ......................................................... 50,036 341,722
Distributions reinvested ............................................ 4,552 3,342
Shares redeemed ..................................................... (123,296) (186,039)
Redemption fees received ............................................ 724 1,032
Increase (decrease) in net assets from capital
share transactions .................................................. (67,984) 160,057
Net Assets
Increase (decrease) during period ...................................... (12,755) 184,375
Beginning of period .................................................... 398,066 213,691
End of period .......................................................... $ 385,311 $398,066
*Share information
Shares sold ......................................................... 4,870 32,418
Distributions reinvested ............................................ 434 406
Shares redeemed ..................................................... (12,029) (17,619)
Increase (decrease) in shares outstanding ........................... (6,725) 15,205
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Latin America Fund
================================================================================
Unaudited April 30, 1998
================================================================================
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company industry;
these principles may require the use of estimates by fund management.
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.
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.
Investments in open-end mutual funds are valued at the closing net asset
value per share of the mutual fund on the day of valuation.
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.
<PAGE>
PREMIUMS AND DISCOUNTS Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
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, 1998, 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.
OTHER Purchases and sales of portfolio securities, other than short-term
securities, aggregated $26,355,000 and $107,870,000, respectively, for the six
months ended April 30, 1998.
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 $26,336,000, which expire in 2004. The fund
intends to retain gains realized in future periods that may be offset by
available capital loss carryforwards.
At April 30, 1998, the aggregate cost of investments for federal income tax
and financial reporting purposes was $337,444,000, and net unrealized gain
aggregated $46,308,000, of which $57,478,000 related to appreciated investments
and $11,170,000 to depreciated investments.
<PAGE>
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 $347,000 was payable
at April 30, 1998. 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, 1998, and for the six months then ended, the
effective annual group fee rate was 0.32%. 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.
(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. The fund incurred expenses
pursuant to these related party agreements totaling approximately $494,000 for
the six months ended April 30, 1998, of which $100,000 was payable at
period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum)
may invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings to
it and in proportion to the average daily value of its shares owned by Spectrum,
pursuant to special servicing agreements between and among Spectrum, the
underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. Spectrum International Fund
held approximately 0.2% of the outstanding shares of the Latin America Fund at
April 30, 1998. For the six months then ended, the fund was allocated $3,000 of
Spectrum expenses, $2,000 of which was payable at period-end.
<PAGE>
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve Funds
are offered as cash management options only to mutual funds and other accounts
managed by T. Rowe Price and its affiliates and are not available to the public.
The Reserve Funds pay no investment management fees. Distributions from the
Reserve Funds to the fund for the six months ended April 30, 1998, totaled
$295,000 and are reflected as interest income in the accompanying Statement of
Operations.
During the six months ended April 30, 1998, the fund, in the ordinary
course of business, placed security purchase and sale orders aggregating
$51,071,000 with certain affiliates of the manager and paid commissions of
$157,000 related thereto.
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
<PAGE>
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.
INVESTOR CENTERS:
101 East Lombard St.
Baltimore, MD 21202
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 4/30/98
