<PAGE>
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T. Rowe Price
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Annual Report
Latin America Fund
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October 31, 1999
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REPORT HIGHLIGHTS
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LATIN AMERICA FUND
- ------------------
* Most Latin American economies continued to struggle with recession,
budgetary pressures, and political uncertainties.
* Stocks declined in all major markets during the six months ended
October 31, but 12-month gains benefited from the strong rally of late
1998 and early 1999.
* The fund's six-month returns fell in concert with the markets;
12-month returns lagged market and competitor benchmarks because of
our overweighted position in Brazil.
* We have increased holdings in Mexico, which currently appears to have
the brightest economic prospects in the region. * While the worst of
the region's recent troubles may be past, we cannot predict whether
growth patterns will remain boom-and-bust or become more sustainable.
UPDATES AVAILABLE
- -----------------
FOR UPDATES ON EACH FUND FOLLOWING THE END OF EVERY CALENDAR QUARTER,
PLEASE SEE OUR WEB SITE AT WWW.TROWEPRICE.COM.
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FELLOW SHAREHOLDERS
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These have been tough times for Latin American economies, many of which are
in recession. The region's stock market performance for the past six months
reflected this difficult environment, with all the major markets -- and your
fund -- generating negative returns. For the fund's fiscal year ended October
31, however, returns were positive as substantial gains in late 1998 and early
1999 more than offset the subsequent declines. Thus, the Latin American markets
continued the roller-coaster pattern of the past five years.
PERFORMANCE COMPARISON
----------------------
Periods Ended 10/31/99 6 Months 12 Months
---------------------- -------- ---------
Latin America Fund -6.63% 13.57%
MSCI EMF Latin America Index -5.58 21.17
Lipper Latin America
Funds Average -7.42 16.19
<PAGE>
For the six-month period, the fund held up a bit better than the average
competitor, as represented by the Lipper average, but lagged the regional MSCI
index. For the 12-month period, the fund provided a solid gain but did not
compare favorably with its benchmarks. That performance difference was primarily
due to our overweighted position in Brazilian stocks, which did not participate
in the region's sharp stock market rebound in late 1998 and early 1999. For
longer periods, the fund's average annual returns are better than those of the
average competitor fund.*
* For the 3-, 5-, and since-inception periods ended 10/31/99, the
fund's average annual returns were 1.19%, -3.79, and -2.73%,
respectively, versus -1.79%, -4.58%, and -3.27% for the Lipper
Latin America Funds Average. The fund's inception date was
12/29/93.
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THE SECTOR FACTOR IN INTERNATIONAL INVESTING
- --------------------------------------------
Computer chips made in Ireland. Hollywood animation--from India. Internet
venture capitalists from Japan. Companies today have growth opportunities, labor
pools, competitive threats, acquisition targets, and potential suitors all over
the world.
International investing is no longer just a matter of having local
expertise in global markets. Today's investor needs to be aware of global
industry trends in addition to local realities. For the past 20 years, T. Rowe
Price and its international investing arm, Rowe Price-Fleming International,
have participated in the evolution of this new global marketplace and have
evolved with it. Rowe Price-Fleming's international sector team works in concert
with our regional portfolio managers, looking at cross-border trends that can
create opportunities and risks in industries such as technology,
pharmaceuticals, and financial services.
Nowhere is this global sector imperative more evident than in
telecommunications. Telecom firms need global scale to compete, and their
fortunes are no longer exclusively tied to local or even regional factors. Hence
Deutsche Telekom's unsuccessful bid for Telecom Italia, and the bid by Germany's
Mannesmann for U.K. wireless phone company Orange.
The chart below shows that global sector factors are growing increasingly
important to the direction of stock prices. In the case of Telecom Italia, the
chart shows that the correlation of its stock price to the global telecom sector
(blue bar) rose significantly in 1997-98. (Data from the two years is averaged
together.) The gray bar shows that during this period the stock's correlation to
the Italian market declined. The examples of ING Groep and Societe Generale show
that while their stock prices became modestly more correlated to their local
markets, they became even more correlated to other global financial concerns.
<PAGE>
"We have sharpened our understanding of global trends that drive stock
prices in the longer term, because we've got to be totally on top of the
competitive forces affecting returns at different companies," said John Ford,
chief investment officer at Rowe Price-Fleming. "For example, what is the
relative attractiveness of a Denso in Japan compared with another auto
components company such as Valeo in France? We've got to be aware of
cross-border valuations and industry trends." Of course, local factors still
dominate the outlook for some companies. The task for the informed international
investor is to appreciate both the global and the local influences. Rowe
Price-Fleming International, with its experienced team of investment
professionals worldwide, is as well positioned as ever to find the best
investment opportunities for you.
Influence of Globalaztion on Stocks Chart is shown here.
================================================================================
MARKET AND PORTFOLIO REVIEW
- ---------------------------
The economic picture has not been pretty south of the U.S. border. The
Argentine economy contracted nearly 5% in the second quarter from the same
period a year earlier, and the Venezuelan economy shrank by nearly 10%. Chile is
suffering its first recession since the early 1980s, and Colombia's economy is
the worst in living memory. Brazil is stumbling through a bit better than
expected, but the deeply unpopular President Cardoso faces immense challenges in
pushing through his equally unpopular fiscal adjustment program. Propped up by
the powerhouse U.S. economy, Mexico has fared better, although consumer recovery
remains elusive.
================================================================================
Market Performance
------------------
(In U.S. Dollar Terms)
Periods Ended 10/31/99 6 Months 12 Months
---------------------- ------------------
Argentina -5.95% 20.31%
Brazil (Free) -5.43 8.19
Chile -6.87 22.23
Mexico -3.86 38.47
Peru -5.97 12.99
Venezuela -4.41 45.62
Source: RIMES Online, using MSCI indices.
================================================================================
<PAGE>
In a diverse region with little in the way of intra-regional trade, it is
sometimes puzzling to see Latin American economies lurch in relatively
synchronized fashion from boom to bust and back again. The answer lies in the
region's single most important unifying feature -- its continuing dependence on
external capital markets to bridge large financing needs. In the weeks before
Brazil's devaluation back in January, external credit market conditions
tightened savagely. Compounded by the uncertainty of elections in these young
democracies, domestic banks stopped lending and the corporate sector cut staff
and pared investment plans. Unemployment in the region consequently soared,
reaching critical levels in Argentina, Chile, Colombia, and Venezuela.
Agricultural commodity prices, important especially in Argentina and Brazil,
continued their downward spiral. Despite plunging imports, the regional current
account deficit will still be around 3% of GDP this year.
Elections are now out of the way in Argentina, where new President de la
Rua has so far been saying the right things, particularly regarding the urgent
need for fiscal prudence. Mexico carried out its first-ever presidential
primaries in early November, an important step toward more open democracy in a
nation whose elections have previously been accompanied by economic crisis.
Across the region, there is now tentative evidence of economic pickup in most of
the weaker economies, and external credit conditions have begun to improve. We
believe that the worst of this most painful period is behind us. Whether the
next development is another sudden lurch toward growth or a more sustainable and
steady pickup remains to be seen.
The outlook for BRAZIL hinges on the government's ability to push through
the fiscal austerity program agreed upon with the International Monetary Fund.
As an example of the sorts of issues that lie ahead, even with a relatively
young population, the Social Security deficit this year is projected to be
around U.S. $10 billion and will balloon in coming years unless the rules are
changed. To address this issue, the Cardoso government proposed a Social
Security reform bill, which aims to extend the 11% social contribution currently
paid by active public workers to retired public workers and to introduce
progressively higher rates of social contribution on better-paid active and
retired workers. Congress rejected this bill a total of four times before
finally passing it at the time of the January currency devaluation under intense
pressure from international capital markets. The bill was subsequently
challenged in the courts and in September was overruled by the Supreme Court on
the grounds of unconstitutionality. With these sorts of barriers to reform, it
is not difficult to see what a huge challenge lies ahead for President Cardoso,
whose ability to maneuver is severely curtailed by his plummeting approval
rating.
=============================
With these barriers
to reform, it is
not difficult to see
what a huge challenge
lies ahead for
President Cardoso.
=============================
<PAGE>
Also of concern was the recent large issuance of dollar-linked government
debt, bringing the total to U.S. $50 billion -- around 25% of all domestic
obligations. Back in January the government took a large loss from the
devaluation and seems to be exposing itself once again to currency uncertainty.
We see this as a sign of weakness and view a reduction in dollar-linked debt, a
lengthening in average maturity (currently under 12 months), and a shift back to
fixed rate local currency debt as key objectives needed to stabilize government
finances.
Considering the dire sentiment of international capital markets earlier in
the year and the precarious state of domestic finances, the Brazilian economy
seems to have held up remarkably well. GDP growth should just about make it into
positive territory for the year, although third quarter numbers are slightly
weaker than expected. Foreign direct investment has continued to flow in nicely
and is fully funding the current account deficit. The inflation outlook appears
benign, and the 8% year-end target looks easily achievable. Trade numbers were
disappointing, however, because imports did not shrink as much as expected and
weak agricultural prices hurt export earnings.
The value of the newly floating currency is the most obvious barometer of
confidence in the government. By the end of October, the real had reached 1.95
to the dollar, down 38% year-to-date and well below the recent high in May of
1.65. This reflects doubts about the ability and will of the Cardoso government
to force through unpopular reform measures. We expect an uncertain and volatile
few months.
We continue to overweight Brazil (about 32% of fund assets), particularly
the telecommunications sector where we maintain a major position in TELEBRAS.
Both fixed line and cellular subscriber growth are currently very strong, as
private sector management is unleashed in a business with huge growth potential.
The oil and gas company PETROBRAS, the fund's third-largest holding, is
benefiting from new management that appears to be focusing on profitability and
shareholder returns. Petrobras has tremendous exploration potential, and its
production growth profile over the next few years is one of the best in the
world.
[Pie chart showing Geographic Diversification on 10/31/99: Mexico 45%,
Brazil 32%, Argentina 10%, Chile 7%, Venezuela 3%, Peru 2%, Other and reseres
1%]
We are steadily warming to the MEXICAN story. The economy appears to have
decoupled from the rest of the region, and at a time of regional recession we
now expect Mexican GDP growth of more than 3% this year. About one-fourth of GDP
is now exported to the U.S. (compared with less than 8% in 1980), and Mexico is
easily the most open and competitive large economy in the region. (For example,
Mexico has surpassed Canada and Japan as the largest supplier of foreign car
parts to the U.S.) Exports continued to grow in the third quarter, as the U.S.
economy remained strong and oil prices rebounded. Real wages have been
increasing steadily over the past two years, although this is not yet reflected
in consumer expenditures, which, if anything, seem to have decelerated recently.
<PAGE>
Two other developments support our increased enthusiasm. First, the banking
sector has made significant strides toward restructuring and recovery. Banking
regulators have strengthened loan classification and provisioning rules and
announced stricter regulatory capital requirements. Their takeover of one of the
largest banks in the country suggests that they are serious about cleaning up
the system, whose overall bailout costs have now risen to over 17% of GDP. In
addition, an aggressive debtor relief program has yielded spectacular short-term
results. True, inadequate bankruptcy and foreclosure laws are still a key
weakness, and we do not expect the banks to expand their loan portfolios until
they are satisfied that these have been strengthened. Nevertheless a
better-capitalized, more transparent, and prudently managed banking system adds
credibility to Mexico's nascent economic recovery.
=============================
. . . political
developments, always a
major concern
in Mexico . . . are
encouraging.
=============================
Second, political developments, always a major concern in Mexico in advance
of presidential elections, are encouraging. The ruling PRI party held
unprecedented primary elections in early November, a significant step toward
more open democracy. Aside from this, the two main opposition parties, bound
together by little more than a desire to oust the PRI, have finally abandoned
talk of an alliance. We saw little hope that such an alliance could govern
successfully and are relieved by this development.
To increase our weighting in Mexico (the fund's largest exposure), we
bought shares in GRUPO IUSACELL, Mexico's second-largest cellular player, which
is controlled by Bell Atlantic. Strong subscriber growth and expanding margins
make up an attractive growth story. (Phone use has exploded since the cost of
calls began to be billed to the caller rather than the receiver.) We also bought
into BANACCI, Mexico's largest private sector bank, as we gained confidence on
the country's banking recovery. The fund's largest position is now TELMEX, which
is refashioning itself as a growth company by aggressively pursuing customers
for both fixed line and cellular service. The company has also moved into the
Internet through a joint venture with Microsoft and intends to have the best
Spanish-language Internet site.
The ARGENTINE economy contracted sharply after Brazil's devaluation. Once
again, the issue has less to do with trade to Brazil (accounting for 30% of
exports) than with Argentina's continuing and constant need to tap the skittish
and unreliable international capital markets. Second quarter GDP declined 4.9%
from a year earlier, and unemployment remained at over 14%, despite a drop in
the number of job seekers. The deflationary environment has deepened, with
prices falling 2% during the year ended September. Export performance was poor,
held back by the Brazilian devaluation, the weak Brazilian economy, and
plummeting agricultural commodity prices. Despite deep recession and a collapse
in imports, the current account remains more than 4% of GDP. Our exposure in
Argentina dropped from 19% of assets to 10% over the six months mainly because
our substantial holding in YPF, the big energy company, exited the portfolio
when the company was acquired by Repsol, a Spanish oil company.
<PAGE>
This year alone, Brazil, Chile, and Colombia decided to float their
currencies, and Mexico was forced to float the peso in 1995. Argentina, now
virtually alone within Latin America, continues with its currency peg to the
U.S. dollar, and many believe that this policy allows insufficient flexiblity to
adjust to external shocks. Argentina's large U.S. dollar-denominated external
debt (nearly 50% of GDP) and foreign private sector debt mean that any
devaluation would necessitate debt restructuring on an enormous scale.
Convertibility is, therefore, deeply embedded in the economy and still enjoys
widespread political support. As a result, falling prices and productivity gains
must be the route to improved international competitiveness, but this will take
much longer than the devaluation route followed by other countries in the
region.
The other area of concern has been the political vacuum left by the
enforced departure of President Menem, who, after 10 years in power, failed in
his attempts to change the constitution to allow a potential third consecutive
term. Elections in October were won convincingly by the opposition Alliance
candidate Fernando de la Rua, although his party failed to win a majority in
Congress and faces an opposition Peronist party that retains a majority in the
Senate in addition to controlling most of the provincial administrations. De la
Rua's first priority will be to tackle the widening fiscal deficit, and the
markets are anticipating a fiscal austerity package to be announced imminently.
At a time of deep recession, this package will undoubtedly face stiff opposition
and will test de la Rua's credibility and resolve.
=============================
Even the previously
robust Chilean economy
has succumbed to the
regional malaise.
=============================
We believe the recessionary environment has been fully priced into
Argentine stocks and, despite the uncertain outlook, we are neutral in this
market. We are overweight in the telecommunications sector, where our largest
holding is TELECOM ARGENTINA, controlled by France Telecom and Telecom Italia.
We are also slightly overweight in the banking sector on the expectation of a
pickup in loan demand into the year 2000.
Even the previously robust CHILEAN economy has succumbed to the regional
malaise. Growth had slowed steadily from the middle of 1997, and by the end of
1998 the economy had fallen into its first recession in 16 years. Economic
activity dropped 4.7% over the 12 months to July 1999. Unemployment has surged
to 11.5% of the workforce (versus 6% at the beginning of 1998) and has become a
central issue of the December presidential elections. In contrast to Argentina,
economic adjustment came both from currency depreciation (down 20% against the
dollar since the start of 1998) and an improving export-import situation. With
copper prices rebounding from midyear lows, we believe that Chile is relatively
well positioned for cyclical recovery.
The Chilean stock market is dominated by electric utilities and CTC, the
dominant telecommunications carrier controlled by Telefonica de Espana. We feel
growth is already priced into these sectors, and for this reason we remain very
underweight in this market.
<PAGE>
================================================================================
INDUSTRY DIVERSIFICATION
------------------------
Percent of Net Assets
4/30/99 10/31/99
------- --------
Services 46.9% 53.9%
Consumer Goods 15.8 14.4
Finance 6.2 13.0
Energy 20.6 11.3
Materials 6.5 5.6
Reserves 4.0 1.8
Total 100.0% 100.0%
================================================================================
Of the smaller economies, PERU has come through the current regional crisis
relatively unscathed, as commodity-related industries have rebounded and fishing
volumes recovered from the El Nino weather effect. GDP growth will be close to
zero in 1999. Meanwhile, the VENEZUELAN economy collapsed in the second quarter,
as unemployment rose to a record 15.3%. President Chavez pushed through
elections for a new constituent assembly, which he hopes will completely rewrite
the constitution. Despite the high risks, we are sticking with our position in
CANTV, the cheaply valued dominant telecommunications provider controlled by
GTE. In COLOMBIA, unemployment rose to over 20% as the recession dug in. Second
quarter GDP fell sharply, and the ongoing guerilla insurgency is taking a heavy
toll on the economy.
Your fund's industry diversification is weighted heavily toward services,
as shown in the table. The largest exposure within that sector is the
telecommunications industry, at 40% of fund assets versus about 29% for the MSCI
EMF Latin America Index. Other components of this sector include broadcasting
and merchandising. We focus on these areas, particularly telecommunications,
because they are currently the most fertile fields for well-managed companies
with solid growth prospects.
OUTLOOK
- -------
Over the past five years, the structural weaknesses of the Latin American
economies have been cruelly exposed. An acute shortage of capital has forced
central banks to tap the international credit markets continuously, even as risk
premiums have soared. The entire region has, therefore, been hostage to
international credit conditions and sudden changes in sentiment. An
overdependence on commodity exports at a time of plunging prices and the poor
export performance of an uncompetitive manufacturing base have translated into
continuing trade balance problems. When you add to this dangerous cocktail the
1994 Mexican peso devaluation and susbsequent banking crisis, and the
unsustainable fiscal deficit seen in Brazil, the result has been five years of
poor economic performance accompanied by soaring unemployment.
<PAGE>
Nevertheless, conditions have improved steadily in Mexico, the Brazilian
fiscal adjustment may be under way, and other economies are hinting at recovery.
Valuations are cheap -- as usual in Latin America. As confidence returns, risk
premiums have room to fall a long way. But the road ahead outside Mexico is a
tough one, and we expect conditions to remain highly volatile.
While your fund has had periods of strong gains, its performance history is
punctuated with periods of decline -- mirroring the boom-and-bust pattern of
Latin America. We believe that our focus on large-cap companies with solid,
sustainable growth rates, low debt, and experienced managements will enable
patient shareholders to participate in the long-term potential of this region.
Respectfully submitted,
/s/
Martin G. Wade
President
November 22, 1999
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T. ROWE PRICE LATIN AMERICA FUND
- --------------------------------
PORTFOLIO HIGHLIGHTS
- --------------------
TWENTY-FIVE LARGEST HOLDINGS
- ----------------------------
Percent of
Net Assets
10/31/99
--------
Telefonos de Mexico (Telmex), Mexico ...........................5.6%
Telebras, Brazil ...............................................0.6
Petrol Brasileiros (Petrobras), Brazil .........................4.4
Cemex, Mexico ..................................................3.7
Femsa, Mexico ..................................................3.5
Pao de Acucar, Brazil ..........................................3.5
Banco Itau, Brazil .............................................3.5
Grupo Televisa, Mexico .........................................3.3
GPO Fin Banamex, Mexico ........................................3.0
Telecom Argentina, Argentina ...................................2.5
Compania Anonima Nacional
Telefonos de Venezuela (CANTV), Venezuela ......................2.5
Grupo Modelo, Mexico ...........................................2.5
Cia Energetica Minas Gerais, Brazil ............................2.3
Grupo Iusacell, Mexico .........................................2.2
Enersis, Chile .................................................2.1
Kimberley-Clark de Mexico, Mexico ..............................2.0
Telefonica del Peru, Peru ......................................2.0
Brahma, Brazil .................................................1.9
Telefonica de Argentina, Argentina .............................1.8
Companhia Vale do Rio Doce, Brazil .............................1.7
<PAGE>
Coca-Cola Femsa, Mexico ........................................1.6
Control Commercial Mexicana, Mexico ............................1.6
Perez Companc, Argentina .......................................1.5
Banco Rio de la Plata, Argentina ...............................1.4
Embotelladora Andina, Chile ....................................1.4
Total .........................................................82.1%
Note: Table excludes reserves
================================================================================
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 benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
[SEC chart for Latin America 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 10/31/99 1 Year 3 Years 5 Years Inception Date
- ---------------------- ------ ------- ------- --------- ----
Latin America Fund 13.57% 1.19% -3.79% -2.73% 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.
================================================================================
<PAGE>
T. ROWE PRICE LATIN AMERICA FUND
- --------------------------------
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
- --------------------
Year
Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
NET ASSET VALUE
Beginning of period $ 7.22 $ 9.60 $ 8.14 $ 6.49 $ 10.32
- -----------------------------------------------------------------------------
Investment activities
Net investment income 0.09 0.16 0.13 0.10 0.05
Net realized and
unrealized gain (loss) 0.86 (2.45) 1.44 1.60 (3.92)
- -----------------------------------------------------------------------------
Total from
investment activities 0.95 (2.29) 1.57 1.70 (3.87)
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 8.03 $ 7.22 $ 9.60 $ 8.14 $ 6.49
Ratios/Supplemental=Data=====================================================
Total return** 13.57% (23.93)% 19.94% 26.52% (37.11)%
- -----------------------------------------------------------------------------
Ratio of total expenses to
average net assets 1.62% 1.53% 1.47% 1.66% 1.82%
- -----------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 1.05% 1.35% 1.30% 1.29% 0.76%
- -----------------------------------------------------------------------------
Portfolio turnover rate 43.2% 19.0% 32.7% 22.0% 18.9%
- -----------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 200,385 $ 204,761 $398,066 $213,691 $148,600
- -----------------------------------------------------------------------------
** 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.
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE LATIN AMERICA FUND
- -------------------------------- October 31, 1999
PORTFOLIO OF INVESTMENTS
------------------------
SHARES VALUE
------ -----
In thousands
ARGENTINA 9.5%
Common Stocks 9.5%
Banco de Galicia Buenos Aires (Class B) ADR (USD) 82,750 $ 1,748
- ------------------------------------------------------------------------------
Banco Frances del Rio de la Plata ADR (USD) 123,268 2,697
- ------------------------------------------------------------------------------
Banco Rio de la Plata (Class B) ADR (USD) 223,970 2,884
- ------------------------------------------------------------------------------
Perez Companc (Class B) 497,499 2,996
- ------------------------------------------------------------------------------
Telecom Argentina (Class B) ADR (USD) 184,340 5,069
- ------------------------------------------------------------------------------
Telefonica de Argentina (Class B) ADR (USD) 140,157 3,592
- ------------------------------------------------------------------------------
Total Argentina (Cost $22,692) 18,986
- ------------------------------------------------------------------------------
BRAZIL 31.6%
Common Stocks 19.4%
Companhia Vale do Rio Doce ADR (USD) 167,000 3,324
- ------------------------------------------------------------------------------
Electricidade de Rio de Janeiro * 7,824,093,000 1,563
- ------------------------------------------------------------------------------
Pao de Acucar GDR (USD) 319,032 6,979
- ------------------------------------------------------------------------------
Tele Centro Sul Participacoes ADR (USD) 27,488 1,642
- ------------------------------------------------------------------------------
Tele Norte Leste Participacoes ADR (USD) * 90,579 1,529
- ------------------------------------------------------------------------------
Telebras ADR (USD) 272,386 21,212
- ------------------------------------------------------------------------------
Telesp Participacpoes ADR (USD) * 88,302 1,429
- ------------------------------------------------------------------------------
Unibanco GDR (USD) 52,000 1,203
- ------------------------------------------------------------------------------
38,881
- ------------------------------------------------------------------------------
Preferred Stocks 12.2%
Banco Itau 121,123,000 6,950
- ------------------------------------------------------------------------------
Brahma 6,107,482 3,895
- ------------------------------------------------------------------------------
Companhia Energetica de Minas Gerais 325,776,141 4,640
- ------------------------------------------------------------------------------
Petrol Brasileiros 55,782,711 8,873
- ------------------------------------------------------------------------------
Telebras ADR (USD) * 330,270 16
- ------------------------------------------------------------------------------
Telecomunicacoes de Minas Gerais (Class B) 6,191,290 128
- ------------------------------------------------------------------------------
24,502
- ------------------------------------------------------------------------------
Total Brazil (Cost $80,875) 63,383
- ------------------------------------------------------------------------------
<PAGE>
CHILE 7.0%
Common Stocks 7.0%
Banco Santiago ADR (USD) 98,258 1,965
- ------------------------------------------------------------------------------
Chilectra ADR (144a) (USD) 144,238 2,524
- ------------------------------------------------------------------------------
Compania Cervecerias Unidas ADS (USD) 57,074 1,245
- ------------------------------------------------------------------------------
Compania de Telecomunicaciones de Chile
(Class A) ADR (USD) 84,850 1,416
- ------------------------------------------------------------------------------
Embotelladora Andina ADR (USD) * 172,102 $ 2,797
- ------------------------------------------------------------------------------
Enersis ADS (USD) 183,129 4,120
- ------------------------------------------------------------------------------
Total Chile (Cost $16,541) 14,067
- ------------------------------------------------------------------------------
MEXICO 45.2%
Common Stocks 45.2%
Cemex ADR, Participating Certificates
(Represents 2 Class A and 1
Class B shares) (USD) * 51,030 1,148
- ------------------------------------------------------------------------------
Cemex (Represents 2 Class A & 1 Class B shares) * 1,398,746 6,330
- ------------------------------------------------------------------------------
Cifra (Class V) ADR (USD) * 129,293 2,036
- ------------------------------------------------------------------------------
Coca-Cola Femsa (Class L) ADR (USD) 233,300 3,237
- ------------------------------------------------------------------------------
Control Commercial Mexicana, Units
(Each unit consists of 3 Class B
and 1 Class C shares) 3,778,000 3,129
- ------------------------------------------------------------------------------
Femsa UBD
(Represents 1 Class B and
4 Series D shares) 2,183,910 7,089
- ------------------------------------------------------------------------------
GPO Fin Banamex * 2,442,000 6,110
- ------------------------------------------------------------------------------
GPO Fin Bancomer * 5,702,000 1,513
- ------------------------------------------------------------------------------
GPO Sanborns 786,300 1,145
- ------------------------------------------------------------------------------
Gruma (Class B) * 131,785 172
- ------------------------------------------------------------------------------
Grupo Elektra, Participating Certificates
(Represents 1 Class L and
2 Class B shares) 5,034,390 2,409
- ------------------------------------------------------------------------------
Grupo Industrial Maseca (Class B) 1,673,605 836
- ------------------------------------------------------------------------------
Grupo Iusacell ADR(USD) 367,000 4,358
- ------------------------------------------------------------------------------
Grupo Modelo (Class C) 2,034,880 4,975
<PAGE>
- ------------------------------------------------------------------------------
Grupo Televisa ADR (USD) * 157,000 6,673
- ------------------------------------------------------------------------------
Kimberly-Clark de Mexico (Class A) 1,279,941 4,101
- ------------------------------------------------------------------------------
Organizacion Soriana 596,000 2,208
- ------------------------------------------------------------------------------
Panamerican Beverages (Class A) ADR (USD) 23,078 371
- ------------------------------------------------------------------------------
Telefonos de Mexico (Class L) ADR (USD) * 364,888 31,198
- ------------------------------------------------------------------------------
TV Azteca ADR (USD) 376,100 1,528
- ------------------------------------------------------------------------------
Total Mexico (Cost $83,738) 90,566
- ------------------------------------------------------------------------------
PERU 2.4%
Common Stocks 2.4%
Credicorp ADR (USD) 75,790 805
- ------------------------------------------------------------------------------
Telefonica del Peru (Class B) ADR (USD) 339,268 $ 3,923
- ------------------------------------------------------------------------------
Total Peru (Cost $6,942) 4,728
- ------------------------------------------------------------------------------
VENEZUELA 2.5%
Common Stocks 2.5%
Compania Anonima Nacional Telefonos de Venezuela
(Class D) ADR (USD) 193,364 4,991
- ------------------------------------------------------------------------------
Total Venezuela (Cost $6,592) 4,991
- ------------------------------------------------------------------------------
SHORT TERM INVESTMENTS 1.3%
Money Market Funds 1.3%
Reserve Investment Fund, 5.51% # 2,668,100 2,668
- ------------------------------------------------------------------------------
Total Short-Term Investments (Cost $2,668) 2,668
- ------------------------------------------------------------------------------
Total Investments in Securities
99.5% of Net Assets (Cost $220,048) $ 199,389
Other Assets Less Liabilities 996
NET ASSETS $ 200,385
* 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 1.3% 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
- -------------------------------- October 31, 1999
STATEMENT OF ASSETS AND LIABILITIES
----------------------------------- In thousands
ASSETS
Investments in securities, at value (cost $220,048) $ 199,389
Securities lending collateral 27,503
Other assets 4,395
Total assets 231,287
Liabilities
Obligation to return securities lending collateral 27,503
Other liabilities 3,399
Total liabilities 30,902
NET ASSETS $ 200,385
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 789
Accumulated net realized gain/loss - net of distributions (48,426)
Net unrealized gain (loss) (20,694)
Paid-in-capital applicable to 24,952,025 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 268,716
NET ASSETS $ 200,385
NET ASSET VALUE PER SHARE $ 8.03
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE LATIN AMERICA FUND
- --------------------------------
STATEMENT OF OPERATIONS
----------------------- In thousands
Year
Ended
10/31/99
--------
Investment Income
Income
Dividend (net of foreign taxes of $569) $ 4,897
Interest 490
- ---------------------------------------------------------------
Total income 5,387
- ---------------------------------------------------------------
Expenses
Investment management 2,162
Shareholder servicing 786
Custody and accounting 184
Prospectus and shareholder reports 86
Registration 27
Legal and audit 21
Directors 6
Miscellaneous 4
- ---------------------------------------------------------------
Total expenses 3,276
Expenses paid indirectly (1)
- ---------------------------------------------------------------
Net expenses 3,275
- ---------------------------------------------------------------
Net investment income 2,112
- ---------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (33,927)
Foreign currency transactions (1,233)
- ---------------------------------------------------------------
Net realized gain (loss) (35,160)
- ---------------------------------------------------------------
Change in net unrealized gain or loss
Securities 54,794
Other assets and liabilities
denominated in foreign currencies (4)
- ---------------------------------------------------------------
Change in net unrealized gain or loss 54,790
- ---------------------------------------------------------------
Net realized and unrealized gain (loss) 19,630
- ---------------------------------------------------------------
INCREASE (DECREASE) IN NET
===============================================================
ASSETS FROM OPERATIONS $ 21,742
===============================================================
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. ROWE PRICE LATIN AMERICA FUND
- --------------------------------
STATEMENT OF CHANGES IN NET ASSETS
---------------------------------- In thousands
Year
Ended
10/31/99 10/31/98
Increase (Decrease) in Net Assets Operations
Net investment income $ 2,112 $ 4,447
Net realized gain (loss) (35,160) 11,412
Change in net unrealized gain or loss 54,790 (80,072)
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 21,742 (64,213)
- -------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (3,788) (4,783)
- -------------------------------------------------------------------------------
Capital share transactions *
Shares sold 114,750 93,003
Distributions reinvested 3,608 4,554
Shares redeemed (140,909) (222,813)
Redemption fees received 221 947
- -------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions (22,330) (124,309)
- -------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period (4,376) (193,305)
Beginning of period 204,761 398,066
End of period $ 200,385 $ 204,761
===============================================================================
*Share information
Shares sold 14,781 10,587
Distributions reinvested 546 434
Shares redeemed (18,729) (24,125)
- -------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (3,402) (13,104)
The accompanying notes are an integral part of these financial statements.
================================================================================
T. ROWE PRICE LATIN AMERICA FUND
- -------------------------------- OCTOBER 31, 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.
<PAGE>
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, which are used to reduce the
fund's custody charges.
================================================================================
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 October 31, 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.
<PAGE>
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 October 31, 1999, the value of
loaned securities was $27,378,000; aggregate collateral consisted of $27,503,000
in the securities lending collateral pool.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $83,940,000 and $104,172,000, respectively, for the year
ended October 31, 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, 1999, the fund had capital loss carryforwards
for federal income tax purposes of $48,426,000, of which $14,499,000 expires in
2004 and $33,927,000 expires in 2007. The fund intends to retain gains realized
in future periods that may be offset by available capital loss carryforwards.
In order for the fund's capital accounts and distributions to shareholders
to reflect the tax character of certain transactions, the following
reclassifications were made during the year ended October 31, 1999. The results
of operations and net assets were not affected by the increases/(decreases) to
these accounts.
================================================================================
Undistributed net investment income $(1,233,000)
Undistributed net realized gain 1,233,000
================================================================================
At October 31, 1999, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$220,048,000. Net unrealized loss aggregated $20,659,000 at period-end, of which
$20,455,000 related to appreciated investments and $41,114,000 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.
<PAGE>
The investment management agreement between the fund and the manager
provides for an annual investment management fee, of which $174,000 was payable
at October 31, 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 0.295% for assets in
excess of $120 billion. At October 31, 1999, and for the year then ended, the
effective annual group fee rates 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. 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 $756,000 for the year ended
October 31, 1999, of which $88,000 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 held no shares of the
fund at October 31, 1999. For the year then ended, the fund was allocated $6,000
of Spectrum expenses.
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 year ended October 31, 1999, totaled $262,000
and are reflected as interest income in the accompanying Statement of
Operations.
During the year ended October 31, 1999, the fund, in the ordinary course of
business, placed security purchase and sale orders aggregating $41,243,000 with
certain affiliates of the manager and paid commissions of $112,000 related
thereto.
================================================================================
<PAGE>
T. ROWE PRICE LATIN AMERICA FUND
- --------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------
TO THE BOARD OF DIRECTORS OF T. ROWE PRICE INTERNATIONAL FUNDS, INC. AND
SHAREHOLDERS OF LATIN AMERICA FUND
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Latin America Fund (one of the
portfolios comprising T. Rowe Price International Funds, Inc., hereafter
referred to as the "Fund") at October 31, 1999, and the results of its
operations, the changes in its net assets and the financial highlights for each
of the fiscal periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 17, 1999
================================================================================
T. ROWE PRICE LATIN AMERICA FUND
- --------------------------------
Tax Information (Unaudited) for the Tax Year Ended 10/31/99
We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund will pass through foreign source income of $1,447,000 and foreign
taxes paid of $568,000.
================================================================================
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
- ----------------------------------
INVESTMENT SERVICES AND INFORMATION
- -----------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
-------------------------------------
BY PHONE 1-800-225-5132 Available Monday
through Friday from 8 a.m. to 10 p.m. ET and
weekends from 8:30 a.m. to 5 p.m. ET.
IN PERSON Available in T. Rowe Price
Investor Centers.
ACCOUNT SERVICES
----------------
CHECKING AVAILABLE on most fixed income
funds ($500 minimum).
AUTOMATIC INVESTING From your bank
account or paycheck.
AUTOMATIC WITHDRAWAL Scheduled,
automatic redemptions.
DISTRIBUTION OPTIONS Reinvest all, some,
or none of your distributions.
AUTOMATED 24-HOUR SERVICES Including
Tele*AccessRegistration Mark and the T. Rowe
Price Web site on the Internet. Address:
www.troweprice.com
BROKERAGE SERVICES*
-------------------
INDIVIDUAL INVESTMENTS Stocks, bonds,
options, precious metals, and other
securities at a savings over full-service
commission rates. **
INVESTMENT INFORMATION
----------------------
COMBINED STATEMENT Overview of all your
accounts with T. Rowe Price.
SHAREHOLDER REPORTS Fund managers'
reviews of their strategies and results.
T. ROWE PRICE REPORT Quarterly
investment newsletter discussing markets and
financial strategies.
<PAGE>
PERFORMANCE UPDATE Quarterly review of
all T. Rowe Price fund results.
INSIGHTS Educational reports on
investment strategies and financial markets.
INVESTMENT GUIDES Asset Mix Worksheet,
College Planning Kit, Diversifying Overseas:
A Guide to International Investing, Personal
Strategy Planner, Retirees Financial Guide,
and Retirement Planning Kit.
* T. Rowe Price Brokerage is a
division of T. Rowe Price
Investment Services, Inc., Member
NASD/SIPC.
** Based on a September 1999 survey
for representative-assisted stock
trades. Services vary by firm, and
commissions may vary depending on
size of order.
================================================================================
FOR FUND AND ACCOUNT INFORMATION
OR TO CONDUCT TRANSACTIONS,
24 HOURS, 7 DAYS A WEEK
By touch-tone telephone
TELE*ACCESS 1-800-638-2587
By Account Access on the Internet
WWW.TROWEPRICE.COM/ACCESS
FOR ASSISTANCE
WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132
TO OPEN A BROKERAGE ACCOUNT
OR OBTAIN INFORMATION, CALL:
1-800-638-5660
INTERNET ADDRESS:
www.troweprice.com
PLAN ACCOUNT LINES FOR RETIREMENT
PLAN PARTICIPANTS:
The appropriate 800 number appears
on your retirement account statement.
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 appropriate
to the fund or funds covered in this
report.
WALK-IN INVESTOR CENTERS:
For directions, call 1-800-225-5132
or visit our Web site
BALTIMORE AREA
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
BOSTON AREA
386 Washington Street
Wellesley
COLORADO SPRINGS
4410 ArrowsWest Drive
LOS ANGELES AREA
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
TAMPA
4200 West Cypress Street
10th Floor
WASHINGTON, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Investment Services, Inc., Distributor. F97-050 10/31/99
