- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
Annual Report
Latin America Fund
- --------------------------------------------------------------------------------
April 30, 1999
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REPORT HIGHLIGHTS
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LATIN AMERICA FUND
* Latin American markets posted strong gains for the past six months despite
a steep interim decline and widespread recession.
* Brazil's January devaluation and programs addressing fiscal and monetary
concerns revived investor confidence in the region.
* The fund provided double-digit returns for the six-month period but lagged
its benchmarks due in part to our focus on growth stocks, which trailed
cyclicals.
* At almost 38% of net assets on April 30, Mexico replaced Brazil as the
fund's largest exposure.
* We expect continued market volatility; upside potential is considerable but
disappointing economic progress could trigger declines.
================================================================================
Fellow Shareholders
================================================================================
Latin American markets and your fund posted strong gains for the six months
ended April 30 despite volatility that was extraordinary even by the region's
standards. Last fall, stocks rebounded from the sharp summer declines triggered
by Russia's financial crisis, but the rebound was interrupted in December when
Brazil failed to enact expected fiscal reforms and had to devalue its currency.
However, subsequent actions by the Brazilian government and the International
Monetary Fund revived investor confidence and sparked a vigorous rally.
================================================================================
Performance Comparison
----------------------
Periods Ended 4/30/99 6 Months 12 Months
--------------------- -------- ---------
Latin America Fund 21.64% -20.81%
MSCI EMF Latin
America Index 28.33 -14.42
Lipper Latin America
Funds Average 25.52 -21.78
================================================================================
<PAGE>
With a return of almost 22% for the past six months, your fund participated
in the resurgence of Latin American stocks but lagged its MSCI benchmark index
and peer group average. The difference in results reflected our precautionary
selling of some Brazilian stocks in January when government debt default seemed
a real possibility. Thus, we missed out on some of the rally. In addition, we
typically limit our exposure to stocks of cyclical and highly leveraged
companies, which were among the best performers. For the 12-month period, the
fund also trailed the benchmark index but suffered slightly less than the
average peer fund.
================================================================================
MARKET AND PORTFOLIO REVIEW
================================================================================
The contrast between 6- and 12-month returns in the major Latin American
markets speaks to the dramatic price swings during the past year. Twelve-month
results reflected the steep losses of last August and September, which were only
partially offset by subsequent gains. Only Argentina managed a positive 12-month
return, and Mexican stocks were basically flat. The strong six-month results
mask large losses in December and January that were erased by the "relief
rally," as investors--relieved that repercussions from Brazil's devaluation
appeared contained and not too severe--poured back into the markets.
================================================================================
Market Performance
------------------
(In U.S. Dollar Terms)
----------------------
Periods Ended 4/30/99 6 Months 12 Months
--------------------- -------- ---------
Argentina 27.92% 2.57%
Brazil (Free) 14.40 -30.96
Chile 31.24 -4.82
Mexico 44.03 -0.41
Peru 20.17 -27.76
Venezuela 52.34 -15.21
- --------------------------------------------------------------------------------
Source: FAME Information Services, Inc.; using MSCI indices.
================================================================================
In BRAZIL, President Cardoso emerged from the October elections with a more
or less unchanged power base from which to tackle the financial contagion raging
across emerging markets worldwide and threatening to engulf Brazil. In early
November, a new Fiscal Stability Program was announced consisting of a
shorter-term Three-Year Action Plan of spending cuts and tax increases and a
longer-term Working Agenda to tackle root causes of structural problems. The
latter included administrative reform to establish public payroll limits and
define criteria for laying off public servants, social security reform to reduce
the country's yawning pension funding deficit, and labor reform to increase
labor force flexibility. At the same time, the government announced primary
(i.e., before interest payments) budget surplus targets of 2.6% of GDP for 1999
moving to 3.0% by 2001. Cardoso's challenge was to persuade the often
recalcitrant Congress to pass these unpopular measures quickly to dampen fears
that Brazil could not put its fiscal house in order. When the Congress passed a
couple of important social security votes, the IMF approved a $41 billion
financial package. Interest rates fell, and investors hoped that maybe, just
maybe, Brazil was tackling its longstanding fiscal problems.
<PAGE>
In our October 31 annual report, we said that if Congress backtracked on
any key area of the Fiscal Stability Program the market reaction would be
savage. Within weeks, that prediction came true. To the surprise and dismay of
financial markets, Congress voted against measures to tax pensions of retired
state workers and then failed to vote on a measure to increase the tax rate on
state workers' income. The failure to pass the very fiscal measures on which the
IMF package was based, together with an unexpected delay in the implementation
of the new financial transactions tax, proved to be a knockout blow. December
saw a massive outflow of reserves.
The COUP DE GRACE came in early January when the new governor of the State
of Minas Gerais tried to force a debt renegotiation by declaring a moratorium on
interest payments to the federal government. The markets finally lost patience.
On January 13, facing an overwhelming wave of currency selling, the Central Bank
was forced to stop defending the real. Following an abortive attempt at a
controlled mini-devaluation, the real was cut loose to float freely: it dropped
over 30% versus the U.S. dollar in less than three weeks.
Devaluation was a major loss of face for Cardoso. The real had been the
proud flagship of his economic reform and privatization programs, and currency
stability was a key weapon in the fight against inflation. With 20% of domestic
debt denominated in U.S. dollars and another 60% carrying floating interest
rates, devaluation blasted a huge hole in the fiscal program. Once again, the
situation threatened to spiral out of control. Since the average maturity of
government debt was about six months, the Central Bank was constantly
refinancing even at a time of sharply rising interest rates and plummeting
confidence. Public sector net debt, which had been just 30% of GDP in 1996, rose
to 50% of GDP and beyond. The nominal fiscal deficit was potentially heading for
15% of GDP by year-end, an unsustainable situation. With the specter of
government default raising its ugly head as rumours spread, Brazil reached the
edge of the precipice.
- ------------------------------
For a number of reasons,
however, Brazil did not go
over the precipice.
==============================
For a number of reasons, however, Brazil did not go over the precipice.
First, Arminio Fraga, a savvy market player and former fund manager for George
Soros, was appointed president of the Central Bank. Second, with a proverbial
gun to its head, Congress passed the very same social security laws it had
recently rejected, and also approved a financial transactions tax, the last step
in the Fiscal Adjustment package. Third, reflecting Brazil's recession, imports
fell more than 19% in the first two months of the calendar year and, despite
continuing weak exports, the February trade balance went into surplus. Finally,
another agreement was reached with the IMF, this time with even tougher primary
surplus targets of 3.1% of GDP for 1999 rising to 3.3% by 2001. The IMF also
made $8 billion immediately available for the Central Bank to help finance the
government deficit resulting from large Eurobond maturities in coming months.
This proved to be a crucial turning point in stabilizing the currency and
persuading international banks to roll over credit lines to Brazilian
corporations.
<PAGE>
A key factor behind the swift return of confidence was the relative
robustness of the Brazilian banking system. Unlike in Asia, the larger banks
have been conservatively managed, and bad loan ratios tend to be very low and
adequately covered by loan-loss provisions. Moreover, and again in striking
contrast to the Asian situation, the larger banks were more than fully hedged
against devaluation and, therefore, able to book substantial one-time currency
gains. The corporate sector did have modest foreign currency debt exposure, but
the initial impact proved manageable. As it turned out, by far the biggest loser
from devaluation was the government.
The inflation response to devaluation was a major unknown, and it was
critical to crush inflationary expectations to minimize the threat of an
inflation-devaluation spiral. The recession helped in this regard since there
was little pricing power in most sectors of the economy. Original
post-devaluation inflation forecasts varied widely, with analysts talking about
a 30% annual rate compared with just 3.8% in 1998. In the event, inflation was
well below expectations, and by May inflationary expectations for 1999 had
fallen to under 10%. The politically sensitive annual minimum wage increase of
4.6%, announced at the beginning of May, was also below expectations--another
sign of the government's determination to crush inflation at the earliest
opportunity.
- ------------------------------
By the end of April, the
Brazil MSCI Index was up over
60% in U.S. dollars from its
January lows.
==============================
The turnaround from the January gloom was remarkable. With the currency
recovering, interest rates falling, and good news on inflation, investors
practically fell over one another to get a piece of the action. In March, less
than three months after the devaluation, Brazil's largest private bank was able
to issue a $200 million Eurobond, marking Brazil's return to the international
capital markets and paving the way for a $2 billion government bond issue. By
April, the government was sufficiently confident to proceed with the
privatization of Comgas, a large gas distrib-utor based in Sao Paulo, which was
snapped up by a consortium led by British Gas for more than double the minimum
price. By the end of April, the Brazil MSCI index was up over 60% in U.S.
dollars from its January lows.
Within the portfolio we shifted some money out of Brazil, when debt default
seemed possible, and into the relatively safe haven of Mexico. By the end of
April, the fund was neutrally weighted in Brazil against the Morgan Stanley
Latin America index at 29% of net assets. We added to positions in CVRD
(Companhia Vale do Rio Doce) the mining conglomerate, which benefited from
devaluation, and cut exposure to banks, which hold 70% of outstanding government
debt, on default concerns.
(Edgar description: Pie Chart here showing country allocation as of
4/30/99. Mexico 38%; Brazil 29%; Argentina 19%; Chile 6%; Other and reserves 4%;
Peru 2%; Venezuela 2%)
<PAGE>
MEXICO had an equally remarkable six months. In an initial,
all-too-familiar sign of financial contagion, the peso spiked down and interest
rates up on the day of the Brazilian devaluation. Memories were fresh from the
1995 Tequila crisis, when the peso devaluation triggered financial distress
across the entire region, but this time the outcome was different. The Mexican
markets quickly decoupled from the Brazilian crisis on the downside and went on
to enjoy the euphoria associated with Brazilian recovery on the upside. Over the
six-month period ended April, the MSCI Mexico index was up 44% in U.S. dollars,
the region's best performer.
What were the reasons? First of all, the Mexican economy is by far the most
open in Latin America. Exports compose around 30% of GDP, the large majority of
which are directed to the U.S. Clearly Mexico was a prime beneficiary of the
strong U.S. economy -- strong exports led economic growth and made up for
lackluster consumption. Second, despite low oil prices, Mexico's 1998 fiscal
deficit was only 1.2% of GDP, a striking contrast to the Brazilian situation and
a reflection of the disciplined fiscal approach now adopted by the government.
This prudent policymaking bolstered the view that Mexico would avoid the savage
economic and political cycles that it has consistently suffered over the past
two decades. It now seems possible that presidential elections in 2000,
previously regarded as a key investment risk, will be relatively smooth.
Finally, Mexico made substantial progress on resolving its banking crisis. Even
though loan growth remains negative and the banks are still unwilling to lend, a
number of political hurdles were cleared, and sharply falling interest rates
have aided the banks.
The fund added Grupo Televisa, the nation's largest broadcaster, which is
successfully slashing costs and gaining market share, and cut positions in Grupo
Modelo, Mexico's largest brewer, where valuations are looking stretched. Mexico
is now the fund's largest position, at 38% of net assets.
The ARGENTINE economy slowed sharply following the Brazil devaluation.
March industrial production fell 11.5% from the previous year's level, the
largest contraction since the Tequila crisis, and consumption also slowed
substantially. In many ways, this was surprising. Although 30% of exports go to
Brazil, total exports make up only 8% of Argentina's GDP. Half of the banking
assets are controlled by foreigners, and the banking system is now far stronger
than when confidence was last tested in 1995. The government was able to access
international markets shortly after the Brazil devaluation, and by the end of
February had secured half its financing needs for 1999.
Argentina's problem appeared to be a sudden drop in investment, reflecting
depressed business and consumer sentiment and the reluctance of the banks to
lend. First quarter investment demand fell 12% from the previous year, despite
falling interest rates. Frustrated by the situation, President Menem sought to
improve credibility by publicly discussing the possibility of dollarization of
the economy. After a blaze of publicity in the international press, the issue
seems to have faded, and we are not at all convinced that dollarization would be
any substitute for the structural reforms needed to improve the economy's
competitiveness and long-term growth profile.
<PAGE>
- ------------------------------
After a period of adjustment
. . . we believe that Chile
will continue its long-term
superior growth path.
==============================
At the end of April, Repsol, a Spanish oil company, made a cash bid of
$44.78 per share for YPF SOCIEDAD ANONIMA, Argentina's biggest energy company
and our third-largest holding. The stock rose about 60% in 1999 before the bid
was accepted in early May by YPF's highly regarded management. Argentina was the
fund's third largest exposure on April 30, at 19% of net assets.
In CHILE, the economy experienced its sharpest slowdown in more than 10
years. Consumption has been the greatest weakness: March retail sales were down
4.3% from a year earlier in real terms, the eighth consecutive month of negative
growth. Clearly the copper price, which by March was down over 45% from mid-1997
levels, was an important factor in Chile's deteriorating external accounts. Even
the weather has hurt, with a severe drought cutting hydroelectricity output,
resulting in a serious electricity shortfall. Chile has been the region's most
successful economy since the mid-1980s, based on its policies of wide-ranging
privatization and deregulation, low import tariff barriers, disciplined fiscal
policy, and stringent banking sector supervision. After a period of adjustment,
and based on our view that the copper price may have bottomed, we believe that
Chile will continue its long-term superior growth path.
================================================================================
Industry Diversification
------------------------
Percent of Net Assets
10/31/98 4/30/99
---------------------
Services 41.3% 46.9%
Energy 24.3 20.6
Consumer Goods 16.9 15.8
Materials 4.7 6.5
Finance 8.3 6.2
All Other 0.2 --
Reserves 4.3 4.0
Total 100.0% 100.0%
================================================================================
The fund participated in the tender offer by Endesa de Espana for ENERSIS,
the electricity holding com-pany, and bought some Banco Santiago, whose
valuations have come down to levels we find attractive. The smaller economies of
Peru and Venezuela have not avoided the region-wide slowdown. Peru is in
recession and is only now beginning to recover from the damaging effects of El
Nino in 1998. Hurt by weak exports and falling commodity prices, the current
account deficit deterio-rated further in 1998. Following a recent agreement with
the IMF, the government is trying to stimulate the economy through greater
public expenditure, and a recent pickup in exports may mark the turning point.
<PAGE>
With oil composing 14% of GDP, 70% of exports, and over 40% of government
revenues, VENEZUELA was highly exposed to plummeting oil prices last year. By
the fourth quarter, GDP had declined by 8.2% from a year earlier, and the fiscal
deficit had rocketed to 7% of GDP. Although decelerating, inflation in the 12
months ended March was still 27.6%, and the currency is looking increasingly
overvalued. The new president, Hugo Chavez, has obtained wide-ranging powers to
change the Constitution and decree tax and other legislation, and we see the
region's greatest economic and political risk here. Our 2% position remains
underweighted versus the index.
SUMMARY AND OUTLOOK
- -------------------
Brazil has pulled off what many thought was impossible -- a 30% devaluation
with low inflation in the aftermath, together with a material fiscal adjustment
passed by Congress. These are no small feats, and the spectacular rally in the
markets is a reflection of this.
Nevertheless, Brazil still has to produce the fiscal goods and achieve the
primary surplus targets set by the IMF. Even though first quarter fiscal numbers
look encouraging, they include several one-time items. In the past, Brazil has
never ceased to disappoint on fiscal discipline, and any disappointment on this
front could still send markets into reversal later in the year. The government
must now take advantage of positive momentum to consolidate and broaden reform
through further administrative, social security, and fiscal stability
legislation. Unfortunately, Cardoso's ability to push through further unpopular
fiscal measures is questionable. His popularity has plunged since reelection in
October, and March unemployment of 19.9% in Sao Paulo is at record levels.
Except for Mexico, the entire region is now in recession, and stock
valuations are already factoring in recovery in the second half of the year. If
this fails to materialize, there may be scope for earnings disappointments. On
the other hand, if Brazilian interest rates continue to fall, possibly setting
the stage for higher sustainable regional economic growth, the upside remains
considerable. Either way, the sort of market volatility we have seen over the
past few months is unlikely to diminish.
Our stock selection process will continue to focus on large-cap companies
with solid, sustainable growth rates; low debt; experienced managements that
seek attractive returns on capital; and reasonable stock valuations. We believe
this strategy will enabl e the fund to perform well over time in the dynamic but
volatile Latin American environment.
Respectfully submitted,
/s/
Martin G. Wade
President
May 18, 1999
================================================================================
<PAGE>
T. Rowe Price Latin America Fund
- --------------------------------
Portfolio Highlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
4/30/99
- -------------------------------------------------------------------------------
Telebras, Brazil 13.3%
- -------------------------------------------------------------------------------
Telefonos de Mexico, Mexico 12.7
- -------------------------------------------------------------------------------
YPFSociedad Anonima, Argentina 9.5
- -------------------------------------------------------------------------------
Cemex, Mexico 4.2
- -------------------------------------------------------------------------------
Femsa, Mexico 3.5
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Pao de Acucar, Brazil 3.3
- -------------------------------------------------------------------------------
Banco Itau, Brazil 2.7
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Grupo Televisa, Mexico 2.5
- -------------------------------------------------------------------------------
Companhia Vale do Rio Doce, Brazil 2.5
- -------------------------------------------------------------------------------
Telefonica de Argentina, Argentina 2.4
- -------------------------------------------------------------------------------
Petrol Brasileiros, Brazil 2.4
- -------------------------------------------------------------------------------
Grupo Modelo, Mexico 2.3
- -------------------------------------------------------------------------------
Telecom Argentina Stet, Argentina 2.2
- -------------------------------------------------------------------------------
Kimberly-Clark de Mexico, Mexico 2.1
- -------------------------------------------------------------------------------
Cia Energetica Minas Gerais, Brazil 2.1
- -------------------------------------------------------------------------------
Chilectra, Chile 2.1
- -------------------------------------------------------------------------------
Compania Anonima Nacional Telefonos de Venezuela, Venezuela 2.0
- -------------------------------------------------------------------------------
Coca-Cola Femsa, Mexico 1.9
- -------------------------------------------------------------------------------
Telefonica del Peru, Peru 1.6
- -------------------------------------------------------------------------------
Grupo Elektra, Mexico 1.5
- -------------------------------------------------------------------------------
Grupo Industrial Maseca, Mexico 1.4
- -------------------------------------------------------------------------------
TV Azteca, Mexico 1.4
- -------------------------------------------------------------------------------
Banco Frances del Rio de la Plata, Argentina 1.4
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Panamerican Beverages, Mexico 1.3
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Perez Companc, Argentina 1.3
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Total 83.6%
================================================================================
<PAGE>
T. Rowe Price Latin America Fund
- --------------------------------
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.
[SEC Chart for Latin America Fund placed 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 4/30/99 1 Year 3 Years 5 Years Inception Date
- --------------------- ------ ------- ------- --------- ---------
Latin America Fund -20.81% 4.75% 0.75% -1.73% 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
For a share outstanding throughout each period
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6 Months Year 12/29/93
Ended Ended Through
4/30/99 10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
NET ASSET VALUE
Beginning of period $ 7.22 $ 9.60 $ 8.14 $ 6.49 $ 10.32 $ 10.00
- --------------------------------------------------------------------------------
Investment activities
Net investment income 0.09 0.16 0.13 0.10 0.05 (0.03)
Net realized and
unrealized gain (loss) 1.43 (2.45) 1.44 1.60 (3.92) 0.29
- --------------------------------------------------------------------------------
Total from
investment activities 1.52 (2.29) 1.57 1.70 (3.87) 0.26
- --------------------------------------------------------------------------------
Distributions
Net investment income (0.14) (0.12) (0.11) (0.06) - -
Net realized gain - - (0.03) - - -
- --------------------------------------------------------------------------------
Total distributions (0.14) (0.12) (0.14) (0.06) - -
- --------------------------------------------------------------------------------
Redemption fees added
to paid-in-capital - 0.03 0.03 0.01 0.04 0.06
- --------------------------------------------------------------------------------
NET ASSET VALUE
================================================================================
End of period $ 8.60 $ 7.22 $ 9.60 $ 8.14 $ 6.49 $10.32
Ratios/Supplemental=Data
Total return* 21.64% (23.93)% 19.94% 26.52% (37.11)% 3.20%
- --------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.68%+ 1.53% 1.47% 1.66% 1.82% 1.99%+
- --------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 2.36%+ 1.35% 1.30% 1.29% 0.76% (0.35)%+
- --------------------------------------------------------------------------------
Portfolio turnover rate 36.1%+ 19.0% 32.7% 22.0% 18.9% 12.2%+
- --------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $233,970 $204,761 $398,066 $213,691 $148,600 $198,435
- --------------------------------------------------------------------------------
</TABLE>
* Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment of
all distributions and payment of no redemption or account fees.
+ Annualized
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
T. Rowe Price Latin America Fund
- --------------------------------
Unaudited
April 30, 1999
PORTFOLIO OF INVESTMENTS
- ------------------------
Shares Value
In thousands
ARGENTINA==19.3%
Common Stocks 19.3%
Banco Frances del Rio de la Plata ADR (USD) 123,268 $ 3,174
- -----------------------------------------------------------------------------
Banco Rio de la Plata (Class B) ADR (USD) 223,970 2,898
- -----------------------------------------------------------------------------
Perez Companc (Class B) 497,499 3,086
- -----------------------------------------------------------------------------
Telecom Argentina Stet (Class B) ADR (USD) 145,920 5,034
- -----------------------------------------------------------------------------
Telefonica de Argentina (Class B) ADR (USD) 150,997 5,643
- -----------------------------------------------------------------------------
Transportadora de Gas del Sur (Class B) ADS (USD) 320,910 3,069
- -----------------------------------------------------------------------------
YPF Sociedad Anonima (Class D) ADR (USD) 530,258 22,271
- -----------------------------------------------------------------------------
Total Argentina (Cost $40,066) 45,175
BRAZIL==28.5%
Common Stocks 20.0%
Companhia Vale do Rio Doce ADR (USD) 309,000 5,929
- -----------------------------------------------------------------------------
Electricidade de Rio de Janeiro 7,824,093,000 2,120
- -----------------------------------------------------------------------------
Pao de Acucar GDR (USD) 446,017 7,777
- -----------------------------------------------------------------------------
Telebras ADR (USD) 340,396 31,040
- -----------------------------------------------------------------------------
46,866
- -----------------------------------------------------------------------------
Preferred Stocks 8.5%
Banco Itau 11,837,000 6,271
- -----------------------------------------------------------------------------
Brahma 6,107,482 2,890
- -----------------------------------------------------------------------------
Cia Energetica Minas Gerais 208,008,141 4,947
- -----------------------------------------------------------------------------
Petrol Brasileiros 34,579,711 5,600
- -----------------------------------------------------------------------------
Telebras ADR (USD) * 330,270 26
- -----------------------------------------------------------------------------
Telecomunicacoes de Minas Gerais (Class B) 5,965,000 148
- -----------------------------------------------------------------------------
19,882
- -----------------------------------------------------------------------------
Total Brazil (Cost $81,628) 66,748
<PAGE>
CHILE==6.4%==================================================================
Common Stocks 6.4%
Banco Santiago ADR (USD) 74,220 1,317
- -----------------------------------------------------------------------------
Chilectra ADR (144a) (USD) 223,087 4,936
- -----------------------------------------------------------------------------
Compania Cervecerias Unidas ADS (USD) 85,916 2,110
- -----------------------------------------------------------------------------
Compania de Telecomunicaciones de Chile
(Class A) ADR (USD) 101,010 $ 2,670
- -----------------------------------------------------------------------------
Embotelladora Andina ADR (USD) 151,802 2,742
- -----------------------------------------------------------------------------
Enersis ADS (USD) 57,929 1,112
- -----------------------------------------------------------------------------
Total Chile (Cost $16,295) 14,887
- -----------------------------------------------------------------------------
MEXICO==37.9%
Common Stocks 37.9%
Cemex (Class B) 1,346,746 6,253
- -----------------------------------------------------------------------------
Cemex ADR (Represents 2 Participating Certificates)
(144a) (USD) 362,575 3,422
- -----------------------------------------------------------------------------
Cemex, Participating Certificates
(Represents 1 Class A share) 42,082 196
- -----------------------------------------------------------------------------
Cifra (Class V) ADR (USD) * 129,293 2,529
- -----------------------------------------------------------------------------
Coca-Cola Femsa (Class L) ADR (USD) 218,300 4,516
- -----------------------------------------------------------------------------
Femsa UBD (Class L)
(Represents 1 Class B and 4 Series D shares) * 2,267,910 8,100
- -----------------------------------------------------------------------------
GPO Sanborn * 786,300 1,557
- -----------------------------------------------------------------------------
Gruma (Class B) 129,625 248
- -----------------------------------------------------------------------------
Grupo Elektra, Participating Certificates
(Represents 1 Class L and 2 Class B shares) 5,034,390 3,541
- -----------------------------------------------------------------------------
Grupo Industrial Maseca (Class B) 4,735,605 3,280
- -----------------------------------------------------------------------------
Grupo Modelo (Class C) 2,034,880 5,362
- -----------------------------------------------------------------------------
Grupo Televisa ADR (USD) * 145,000 5,945
- -----------------------------------------------------------------------------
Kimberly-Clark de Mexico (Class A) 1,279,941 4,987
- -----------------------------------------------------------------------------
Organizacion Soriana 601,000 2,706
- -----------------------------------------------------------------------------
Panamerican Beverages (Class A) (USD) 139,978 3,106
- -----------------------------------------------------------------------------
<PAGE>
Telefonos de Mexico (Class L) ADR (USD) 390,888 29,610
- -----------------------------------------------------------------------------
TV Azteca ADR (USD) 462,100 3,235
- -----------------------------------------------------------------------------
Total Mexico (Cost $80,170) 88,593
PERU==2.0%
Common Stocks 2.0%
Credicorp (USD) 75,790 767
- -----------------------------------------------------------------------------
Telefonica del Peru (Class B) ADR (USD) 253,318 3,816
- -----------------------------------------------------------------------------
Total Peru (Cost $6,510) 4,583
VENEZUELA==2.0%
Common Stocks 2.0%
Compania Anonima Nacional Telefonos de Venezuela
(Class D) ADR (USD) 167,858 $ 4,616
- -----------------------------------------------------------------------------
Total Venezuela (Cost $5,883) 4,616
SHORT-TERM=INVESTMENTS==5.3%
Money Market Funds 5.3%
Reserve Investment Fund, 5.01% # 12,532,484 12,532
- -----------------------------------------------------------------------------
Total Short-Term Investments (Cost $12,532) 12,532
- -----------------------------------------------------------------------------
=Total=Investments=in=Securities
101.4% of Net Assets (Cost $243,084) $237,134
Other Assets Less Liabilities (3,164)
NET ASSETS $233,970
================================================================================
* Non-income producing
# Seven day yield
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 period-end amounts
to 3.6% of net assets.
ADR American depository receipt
ADS American depository share
GDR Global depository receipt
USD U.S. dollar
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Latin America Fund
- --------------------------------
Unaudited April 30, 1999
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------
In thousands
Assets
Investments in securities, at value (cost $243,084) $ 237,134
Securities lending collateral 17,000
Other assets 2,141
- ------------------------------------------------------------------------------
Total assets 256,275
==Liabilities
Obligation to return securities lending collateral 17,000
Other liabilities 5,305
- ------------------------------------------------------------------------------
Total liabilities 22,305
NET ASSETS $ 233,970
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 2,118
Accumulated net realized gain/loss - net of distributions (47,308)
Net unrealized gain (loss) (5,954)
Paid-in-capital applicable to 27,193,004 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 285,114
NET ASSETS $ 233,970
NET ASSET VALUE PER SHARE $ 8.60
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
4/30/99
-------
Investment Income
Income
Dividend (net of foreign taxes of $ 372) $ 3,530
Interest 249
Total income 3,779
Expenses
Investment management 1,003
Shareholder servicing 404
Custody and accounting 92
Prospectus and shareholder reports 52
Legal and audit 9
Registration 8
Directors 3
Miscellaneous 1
Total expenses 1,572
Expenses paid indirectly (1)
Net expenses 1,571
Net investment income 2,208
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (31,769)
Foreign currency transactions (1,040)
Net realized gain (loss) (32,809)
Change in net unrealized gain or loss
Securities 69,503
Other assets and liabilities
denominated in foreign currencies 27
Change in net unrealized gain or loss 69,530
Net realized and unrealized gain (loss) 36,721
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 38,929
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Latin America Fund
- --------------------------------
Unaudited
Statement of Changes in Net Assets
In thousands
6 Months Year
Ended Ended
4/30/99 10/31/98
==Increase=(Decrease)=in=Net=Assets============================================
Operations
Net investment income $ 2,208 $ 4,447
Net realized gain (loss) (32,809) 11,412
Change in net unrealized gain or loss 69,530 (80,072)
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 38,929 (64,213)
- -------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (3,788) (4,783)
- -------------------------------------------------------------------------------
Capital share transactions *
Shares sold 65,674 93,003
Distributions reinvested 3,608 4,554
Shares redeemed (75,305) (222,813)
Redemption fees received 91 947
Increase (decrease) in net assets from capital
share transactions (5,932) (124,309)
==Net=Assets===================================================================
Increase (decrease) during period 29,209 (193,305)
Beginning of period 204,761 398,066
End of period $ 233,970 $ 204,761
- --------------------------------------------------------------------------------
*Share information
Shares sold 9,029 10,587
Distributions reinvested 546 434
Shares redeemed (10,736) (24,125)
- -------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (1,161) (13,104)
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Latin America Fund
- --------------------------------
Unaudited
April 30, 1999
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.
Investments in 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.
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. Expenses paid indirectly reflect credits earned
on daily, uninvested cash balances at the custodian, used to reduce the fund's
custody charges.
<PAGE>
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, 1999, 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.
Securities Lending The fund lends its securities to approved brokers to
earn additional income and receives cash and U.S. government securities as
collateral against the loans. Cash collateral received is invested in a money
market pooled account by the fund's lending agent. Collateral is maintained over
the life of the loan in an amount not less than 100% of the value of loaned
securities. Although risk is mitigated by the collateral, the fund could
experience a delay in recovering its securities and a possible loss of income or
value if the borrower fails to return them. At April 30, 1999, the value of
loaned securities was $17,000,000; aggregate collateral consisted of $17,000,000
in the securities lending collateral pool.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $33,490,000 and $42,685,000, respectively, for the six
months ended April 30, 1999.
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. As of October 31, 1998, the fund had capital loss carryforwards
for federal income tax purposes of $14,499,000, all of which expires in 2004.
The fund intends to retain gains realized in future periods that may be offset
by available capital loss carryforwards.
At April 30, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled $243,084,000.
Net unrealized loss aggregated $5,950,000 at period end, of which $24,126,000
related to appreciated investments and $30,076,000 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 $184,000 was payable
at April 30, 1999. 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, 1999, 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.
<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. The fund incurred expenses
pursuant to these related party agreements totaling approximately $389,000 for
the six months ended April 30, 1999, of which $92,000 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 0.7% of the outstanding shares of the fund at April 30, 1999.
For the six months then ended, the fund was allocated $4,000 of Spectrum
expenses, $2,000 of which was payable at period-end.
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, 1999, totaled
$154,000 and are reflected as interest income in the accompanying Statement of
Operations.
During the six months ended April 30, 1999, the fund, in the ordinary
course of business, placed security purchase and sale orders aggregating
$15,999,000 with certain affiliates of the manager and paid commissions of
$46,000 related thereto.
================================================================================
<PAGE>
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 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
appropriate to the fund or
funds covered in this report.
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
4200 West Cypress St.
10th Floor
Tampa, FL 33607
4410 ArrowsWest Drive
Colorado Springs, CO 80907
Warner Center Plaza 5
Mezzanine Level 21800 Oxnard
Street, Suite 270 Woodland
Hills, CA 91367
(OPENS MID-JUNE)
T. Rowe Price Investment Services, Inc., Distributor. F97-051 4/30/99
