Annual Report
Latin America Fund
October 31, 2000
T. Rowe Price
REPORT HIGHLIGHTS
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Latin America Fund
o Stocks throughout the region lost ground during the six months ended
October 31; an earlier rally provided strong gains for the 12-month period.
o The fund's returns for both the 6- and 12-month periods easily surpassed
the market index and average competitor.
o We benefited from our large positions in Latin America's strongest
economies, Mexico and Brazil.
o Telecommunications holdings hurt returns, but our move into financial
stocks was a plus.
o We are encouraged by trends in Mexico and Brazil, but cautious about the
pace of reforms in Brazil.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
Fellow Shareholders
Latin American markets tumbled over the past six months after posting strong
returns during the previous half year. Rapid swings are common in the region,
but this time a major culprit was global concern over earnings for
telecommunications and media companies. Stocks in those countries with the
strongest economies-Mexico and Brazil-held up best, boosted by solid performance
in the financial sector.
Performance Comparison
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Periods Ended 10/31/00 6 months 12 months
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Latin America Fund 0.20% 27.41%
MSCI EMF Latin America Index -5.46 14.24
Lipper Latin America
Funds Average -4.35 20.19
Fund performance was flat for the six months ended October 31, 2000, but
far superior to the losses registered by the regional MSCI index and the
Lipper average of Latin America funds. A rally late in 1999 and early in
2000 lifted the fund to double-digit returns for the 12-month period, also
well ahead of its benchmark index and average competitor.
MARKET AND PORTFOLIO REVIEW
Although our holdings in telecommunications stocks hurt returns, we
benefited from timely country and sector allocations. Together, Mexico and
Brazil accounted for 86% of fund assets at the end of October. This focus
was a major factor in the fund's strong performance versus its benchmarks
as those two markets posted only modest losses during the period compared
with steeper declines elsewhere in the region. Sector and stock selection
also contributed positively to performance, including positions in
financial stocks in Mexico and Brazil and in Petrobras, the
government-controlled Brazilian oil and gas company. At the beginning of
the period, we had a large position in telecommunications and media, and
although these holdings had performed well in the previous six-month
period, they hurt returns during the global sell-off in telecom stocks.
Telecom Argentina, Embratel Participacoes, and Telesp Celular were
particularly hard hit. We cut our exposure during the third quarter and
used the proceeds to add to our financial stocks and to Petrobras, but
about 34% of fund assets remain in the dynamic telecom and media sector.
Market Performance
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(In U.S. Dollar Terms)
Periods Ended 10/31/00 6 Months 12 Months
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Argentina -17.44% -15.89%
Brazil (Free) -2.78 30.66
Chile -9.66 1.19
Mexico -2.53 17.98
Peru -22.50 -15.60
Venezuela -1.95 -2.65
Source: RIMES Online, using MSCI indices.
Mexico's economy remains buoyant, supported by strengthening ties to the
booming U.S., recovering real wages, and high oil prices. Second-quarter
GDP grew at an annualized rate of 7.6%, and July retail sales were up 10.4%
over the previous year. The central bank is uncomfortable with this rate of
growth, but tighter monetary policy has proven relatively ineffective at
slowing down the economy. While we think that a deterioration in the
current account balance is inevitable as the U.S. economy slows and oil
prices move back to more normal levels, we believe that Mexico's economy
has moved to a higher growth path, and that the longer-term story of
greater integration with the U.S. economy remains very powerful.
Financial Stocks Do Well
Opposition candidate Vicente Fox won convincingly in the June presidential
election, triggering a brief surge in the Mexican markets and a sharp
appreciation of the Mexican peso versus the dollar. But by mid-August
post-election euphoria had subsided as concerns about economic overheating
reemerged. The financial sector rose strongly, helping to offset the
negative impact of telecom and media stocks. Following the recent takeover
of Bancomer by Spanish bank BBVA and of Banco Serfin by Spanish bank BSCH,
the Mexican banking system is now comfortably capitalized and fully
provisioned against past-due loans. We expect a reenergized and prudently
managed banking sector to provide a solid platform for sustainable economic
growth over the next few years. Nevertheless, more than five years after
Mexico's uncontrolled devaluation brought the banking system to the brink
of collapse, the reemergence of loan growth remains elusive: second-quarter
real loan growth was a tepid 3.5% over the previous year.
We added aggressively to the newly formed Grupo Financiero BBVA Bancomer,
Mexico's largest financial institution and now our fourth-largest holding.
Following BBVA's cash and equity injection, the bank has been able to
strengthen its balance sheet-its third-quarter coverage ratio for bad loans
reached a comfortable 113%-and we believe that the new management team will
achieve an impressive and sustainable improvement in profitability over the
next 24 months through a combination of merger synergies and cost-cutting.
More Competition for Cellular
Telmex-Mexico's largest cellular company and the fund's largest
holding-held up better than many telecom companies but was nevertheless
down just over 8% during the period. The company announced plans to spin
off its cellular and international divisions into a separately listed
company to be called America Movil, which will enter into a joint venture
with Bell Canada/SBC. This should focus investor interest on the value of
these fast-growing but capital-absorbing parts of Telmex's business. On the
other hand, Mexican regulators look ready to force the company to allow
competitors greater access to its domestic network. This, combined with an
inevitable cut in the interconnection rates that Telmex charges
competitors, will put pressure on margins in its fixed-line phone service,
but we believe that the high-growth cellular and data business (around 25%
of total revenues) will be relatively unaffected by the changing regulatory
environment.
Brazil Remains on Track
The economic recovery in Brazil remains on track. Second-quarter GDP grew
at almost 4% annualized, and despite an upward blip in July and August, we
expect inflation to fall to 7% in 2000-an impressive performance just one
year after the uncontrolled devaluation. The budget numbers have also been
encouraging. August's surplus was $3.5 billion, well ahead of expectations,
and the nominal deficit this year looks to be less than 4% of GDP, despite
the discovery of yet another financial "skeleton in the cupboard." This
time, a compulsory retirement and unemployment fund was found to have
earned insufficient real rates of return during the hyperinflationary
period of the late '80s and early '90s, representing a new public liability
of around $20 billion, or 3.5% of GDP.
As in Mexico, the banking sector helped counteract poor performance of
telecom stocks. Brazilian banks have adapted well to lower interest rates
and remain among the most profitable banks in the region in spite of their
high cost structure. As in other parts of the world, the Brazilian telecom
sector was very weak. Auctions for three PCS (personal communication
services) licenses per region are now scheduled for the first quarter of
2001, and analysts fear that the market is not big enough to absorb so many
new players. Having witnessed the carnage of markets with too many
aggressive players in other parts of the world, we cut our position in
Telebras accordingly.
Geographic Diversification
Mexico Brazil Argentina Chile Other and Reserves Venezuela Spain
48 38 4 4 3 2 1
Based on net assets as of 10/31/00.
As mentioned earlier, in August we purchased shares of oil and gas company
Petrobras as the Brazilian government sold off some of its ownership in the
company. New private sector management is rapidly changing the corporate
culture toward one of shareholder value creation, and we were attracted by
the company's clear and ambitious profitability targets, an
industry-leading production growth profile, around 20 years' worth of
reserves, and world-class deepwater technology.
Picture Clouded Elsewhere in Region
Argentina's embryonic recovery, which showed signs of picking up toward the
end of 1999, was cut short by a round of tax increases introduced by the
incoming de la Rua administration. The economy once again seems to be stuck
in a deflationary rut-third-quarter GDP growth was close to zero, consumer
prices continue to fall, and fiscal deficit targets set by the
International Monetary Fund will once again be overshot. Argentina's
relative competitiveness has deteriorated sharply over the past couple of
years, as the Brazilian real and other currencies in the region have
devalued while Argentina has maintained its peg to the strong U.S. dollar.
This monetary discipline should force through reforms and cost-cutting
measures, but the evidence so far is not encouraging. In the absence of the
necessary reform measures, currency convertibility is strangling the
economy. We cut our position in Telecom Argentina, which has to contend
with sweeping deregulation of what was until recently a comfortable
regional monopoly. At the same time, we added to energy conglomerate Perez
Companc, whose oil production growth profile in Venezuela looks intriguing.
Our allocation to Argentina ended the period at 4%, down slightly from
April.
Industry Diversification
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Percent of Net Assets
4/30/00 10/31/00
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Services 56.1% 43.3%
Finance 14.5 19.8
Energy 11.0 14.9
Consumer Goods 10.1 14.4
Materials 4.4 4.3
Reserves 3.9 3.3
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Total 100.0% 100.0%
Even though the Chilean economy has rebounded strongly-second-quarter GDP
was up 6.1% from the previous year-consumers have remained surprisingly
quiet, perhaps waiting for confirmation of recovery and the sustainability
of the pickup in copper prices, which bottomed in the middle of 1999. Once
again, we found few interesting growth ideas in this market, although we
added slightly to Coca-Cola bottler Embotelladora Andina, which enjoyed
solid volume growth in both Chile and Brazil and margin expansion in all
its regions. Our allocation to Chile ended the period at 4% of fund assets.
Venezuela (2% of assets) is enjoying the windfall benefits of current high
oil prices, but still only managed GDP growth of 2.6% in the second quarter
after a sharp contraction in 1999. The left-leaning President Chavez has
introduced price and wage controls, and the political risks are high. We
continue to hold CANTV, the dominant telecom provider, which is churning
out considerable free cash flow and remains one of the cheapest telecom
stocks in the world.
We are basically staying clear of Peru (0.1% of fund assets) and Colombia
(0%). Both countries are suffering serious political upheaval. President
Fujimori of Peru was forced to announce his resignation shortly after
widely discredited elections had returned him to power. At this stage, a
peaceful transfer of power looks highly uncertain. The situation in
Colombia deteriorates day by day, with violence relating to the
well-financed guerrilla insurgency on the rise.
OUTLOOK
We are encouraged by developments in Mexico, where the broadening of
democracy, greater integration with the U.S. economy, and the
recapitalization of the banking sector all bode well for sustainable
long-term economic development. While we believe Brazil is still a long way
behind, notably in developing a competitive manufacturing export base, we
recognize that progress since the devaluation has been well ahead of
expectations, particularly regarding the government's finances.
Nevertheless, we already sense a loss of momentum in the Brazilian reform
process, and are cautious about prospects for the broadening and deepening
of key reforms prior to presidential elections in 2002.
Respectfully submitted,
John R. Ford
President, T. Rowe Price International Funds, Inc.
November 18, 2000
T. Rowe Price Latin America Fund
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
10/31/00
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Telefonos de Mexico (Telmex), Mexico 15.6%
Petroleo Brasileiro (Petrobras), Brazil 12.7
Grupo Financiero Banamex, Mexico 5.8
Grupo Financiero BBVA Bancomer, Mexico 5.5
Telebras, Brazil 5.2
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Ambev, Brazil 4.5
Grupo Televisa, Mexico 4.4
Pao de Acucar, Brazil 4.1
Fomento Economico Mexicano, Mexico 3.3
Banco Itau, Brazil 2.9
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Wal-Mart de Mexico, Mexico 2.3
Cemex, Mexico 2.3
Companhia Vale do Rio Doce, Brazil 2.1
Coca-Cola Femsa, Mexico 2.0
Grupo Iusacell, Mexico 1.8
--------------------------------------------------------------------------------
Unibanco, Brazil 1.6
Compania Anonima Nacional Telefonos de
Venezuela (CANTV), Venezuela 1.6
Enersis, Chile 1.6
Perez Companc, Argentina 1.5
Grupo Modelo, Mexico 1.4
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Banco Frances del Rio de la Plata, Argentina 1.4
Grupo Elektra, Mexico 1.4
Tele Norte Leste Participacoes, Brazil 1.3
Telefonica, Spain 1.2
Embratel Participacoes, Brazil 1.1
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Total 88.6%
Note: Table excludes reserves.
T. Rowe Price Latin America Fund
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Performance Comparison
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This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with 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.
Latin America Fund
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EMF MSCI Lipper
Latin Latin Latin
America America America
Fund Index Fund
12/93 10000 10000 10000
10/94 12179 10448 10320
10/95 8363 7311 6490
10/96 10315 8881 8211
10/97 12796 10632 9848
10/98 9214 7321 7492
10/99 11164 8286 8508
10/00 12754 10005 10841
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 10/31/00 1 Year 3 Years 5 Years Inception Date
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Latin America Fund 27.41% 3.25% 10.81% 1.19% 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
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Financial Highlights For a share outstanding throughout each period
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Year
Ended
10/31/00 10/31/99 10/31/98 10/31/97 10/31/96
NET ASSET VALUE
Beginning of period $ 8.03 $ 7.22 $ 9.60 $ 8.14 $ 6.49
Investment activities
Net investment
income (loss) 0.05 0.09 0.16 0.13 0.10
Net realized
and unrealized
gain (loss) 2.14 0.86 (2.45) 1.44 1.60
Total from
investment
activities 2.19 0.95 (2.29) 1.57 1.70
Distributions
Net investment income (0.04) (0.14) (0.12) (0.11) (0.06)
Net realized gain -- -- -- (0.03) --
Total distributions (0.04) (0.14) (0.12) (0.14) (0.06)
Redemption fees added
to paid-in-capital 0.01 -- 0.03 0.03 0.01
NET ASSET VALUE
End of period $10.19 $8.03 $7.22 $9.60 $8.14
Ratios/Supplemental Data
Total return(diamond) 27.41% 13.57% (23.93)% 19.94% 26.52%
Ratio of total expenses
to average net assets 1.46% 1.62% 1.53% 1.47% 1.66%
Ratio of net investment
income (loss) to average
net assets 0.42% 1.05% 1.35% 1.30% 1.29%
Portfolio turnover rate 27.5% 43.2% 19.0% 32.7% 22.0%
Net assets,
end of period
(in thousands) $228,655 $200,385 $204,761 $398,066 $213,691
(diamond) 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.
T. Rowe Price Latin America Fund
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October 31, 2000
Portfolio of Investments Shares Value
--------------------------------------------------------------------------------
In thousands
ARGENTINA 3.6%
Common Stocks 3.6%
Banco Frances del Rio de la Plata ADR (USD) 143,868 $ 3,147
Grupo Financiero Galicia ADR (USD) * 36,059 527
Perez Companc 2,394,033 3,448
Telecom Argentina ADR (USD) 61,640 1,060
Total Argentina (Cost $11,502) 8,182
BRAZIL 38.1%
Common Stocks 23.2%
Brasil Telecom Participacoes ADR (USD) 27,488 1,490
Companhia Vale do Rio Doce ADR (USD) 202,200 4,727
Embratel Participacoes ADR (USD) 156,900 2,540
Pao de Acucar ADR (USD) 261,532 9,317
Petroleo Brasileiro (Petrobras) ADR (USD) * 454,000 13,194
Tele Norte Leste Participacoes ADR (USD) 131,310 2,905
Telebras ADR (USD) 163,386 11,968
Telemig Celular ADR (USD) 19,300 1,013
Telesp Celular ADR (USD) 69,700 2,204
Unibanco GDR (USD) 148,000 3,737
53,095
Preferred Stocks 14.9%
Ambev * 46,452,410 10,366
Banco Itau 84,371,000 6,563
Cia Energetica Minas Gerais 82,376,141 1,251
Petroleo Brasileiro (Petrobras) 601,057 15,935
34,115
Total Brazil (Cost $72,394) 87,210
CHILE 3.6%
Common Stocks 3.6%
Banco Santiago ADR (USD) 98,258 1,941
Compania de Telecomunicaciones de Chile
(Class A) ADR (USD) * 13,150 201
Embotelladora Andina ADR (USD) 201,518 2,418
Enersis ADR (USD) * 202,723 3,598
Total Chile (Cost $10,809) 8,158
MEXICO 48.4%
Common Stocks 48.4%
Cemex Participating Certificates
(Represents 2 Series A and 1 Series B shares) 1,225,504 $5,152
Coca-Cola Femsa (Class L) ADR (USD) 242,300 4,649
Corporacion Interamericana de Entretenimiento * 559,400 2,527
Fomennto Economico Mexico, UBD Units
(Represents 1 Series B and
4 Series D shares) 1,966,910 7,487
Grupo Elektra, Participating Certificates
(Represents 1 Class L share and
2 Class B shares) 3,021,090 3,128
Grupo Financiero Banamex * 8,487,000 13,189
Grupo Financiero BBVA Bancomer * 20,449,000 12,660
Grupo Iusacell ADR (USD) * 309,000 4,017
Grupo Modelo (Class C) 1,185,680 3,162
Grupo Sanborns * 546,300 910
Grupo Televisa GDR (USD) * 187,200 10,132
Kimberly-Clark de Mexico (Class A) 890,041 2,276
Organizacion Soriana 149,000 467
Telefonos de Mexico (Telmex) (Class L) ADR (USD) 662,576 35,738
Wal-Mart de Mexico ADR (USD) * 215,693 5,244
Total Mexico (Cost $75,614) 110,738
PERU 0.1%
Common Stocks 0.1%
Credicorp (USD) 37,790 276
Total Peru (Cost $663) 276
SPAIN 1.2%
Common Stocks 1.2%
Telefonica ADR (USD) * 45,858 2,657
Total Spain (Cost $3,175) 2,657
VENEZUELA 1.6%
Common Stocks 1.6%
Compania Anonima Nacional Telefonos de Venezuela (CANTV)
(Class D) ADR (USD) 193,364 $ 3,674
Total Venezuela (Cost $6,592) 3,674
UNITED STATES 0.1%
Common Stocks 0.1%
StarMedia Network * 60,000 365
Total United States (Cost $1,760) 365
SHORT-TERM INVESTMENTS 3.1%
Money Market Funds 3.1%
Reserve Investment Fund, 6.68% # 7,009,778 7,010
Total Short-Term Investments (Cost $7,010) 7,010
Total Investments in Securities
99.8% of Net Assets (Cost $189,519) $228,270
Other Assets Less Liabilities 385
NET ASSETS $228,655
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* Non-income producing
# Seven-day yield
ADR American depository receipt
GDR Global depository receipt
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Latin America Fund
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October 31, 2000
Statement of Assets and Liabilities
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In thousands
Assets
Investments in securities, at value (Cost $189,519) $228,270
Securities lending collateral 26,997
Other assets 1,656
Total assets 256,923
Liabilities
Obligation to return securities lending collateral 26,997
Other liabilities 1,271
Total liabilities 28,268
NET ASSETS $228,655
----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $689
Accumulated net realized gain/loss - net of distributions (54,395)
Net unrealized gain (loss) 38,731
Paid-in-capital applicable to 22,448,522 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 243,630
NET ASSETS $228,655
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NET ASSET VALUE PER SHARE $10.19
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Latin America Fund
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Statement of Operations
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In thousands
Year
Ended
10/31/00
Investment Income (Loss)
Income
Dividend (net of foreign taxes of $410) $ 4,193
Interest 523
Securities lending 78
Total income 4,794
Expenses
Investment management 2,734
Shareholder servicing 668
Custody and accounting 197
Prospectus and shareholder reports 53
Legal and audit 28
Registration 27
Directors 7
Miscellaneous 14
Total expenses 3,728
Net investment income (loss) 1,066
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (5,970)
Foreign currency transactions (178)
Net realized gain (loss) (6,148)
Change in net unrealized gain or loss
Securities 59,410
Other assets and liabilities
denominated in foreign currencies 15
Change in net unrealized gain or loss 59,425
Net realized and unrealized gain (loss) 53,277
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $54,343
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Latin America Fund
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Statement of Changes in Net Assets
--------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/00 10/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 1,066 $ 2,112
Net realized gain (loss) (6,148) (35,160)
Change in net unrealized gain or loss 59,425 54,790
Increase (decrease) in net assets from operations 54,343 21,742
Distributions to shareholders
Net investment income (998) (3,788)
Capital share transactions *
Shares sold 143,415 114,750
Distributions reinvested 946 3,608
Shares redeemed (169,684) (140,909)
Redemption fees received 248 221
Increase (decrease) in net
assets from capital
share transactions (25,075) (22,330)
Net Assets
Increase (decrease) during period 28,270 (4,376)
Beginning of period 200,385 204,761
End of period $228,655 $200,385
*Share information
Shares sold 13,280 14,781
Distributions reinvested 96 546
Shares redeemed (15,879) (18,729)
Increase (decrease) in shares outstanding (2,503) (3,402)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Latin America Fund
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October 31, 2000
Notes to Financial Statements
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NOTE 1 - SIGNIFICANTACCOUNTINGPOLICIES
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 fund seeks long-term growth of capital through
investments primarily in the common stocks of companies located, or with
primary operations, in Latin America.
The accompanying financial statements were prepared in accordance with
generally accepted accounting principles, which require the use of
estimates made by fund management.
Valuation Equity securities are valued at the last quoted sales price at
the time the valuations are made. A security that 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.
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 denominated in foreign
currencies are translated into U.S. dollar values each day at the
prevailing exchange rate, using the mean of the bid and offer prices of
such currencies against U.S. dollars quoted by a major bank. 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 net investment
income and realized gains determined in accordance with generally accepted
accounting principles. Credits earned on daily uninvested cash balances at
the custodian are used to reduce the fund's custody charges.
NOTE 2 - INVESTMENTTRANSACTIONS
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, 2000, approximately 95.4% of the fund's
net assets were invested 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. It receives as collateral cash and U.S. government
securities valued at 102%-105% of the value of the securities on loan. Cash
collateral 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 the value of loaned securities, as determined at the
close of fund business each day; any additional collateral required due to
changes in security values is delivered to the fund the next business day.
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 the securities. At October 31, 2000, the
value of loaned securities was $27,268,000; aggregate collateral consisted
of $26,997,000 in the securities lending collateral pool.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $66,346,000 and $95,246,000, respectively, for the
year ended October 31, 2000.
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, 2000, the fund had $54,395,000 of
capital loss carryforwards, $14,499,000 of which expires in 2004,
$33,638,000 in 2007, and $6,258,000 in 2008. 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, 2000. The
results of operations and net assets were not affected by the
increases/(decreases) to these accounts.
---------------------------------------------------------------------------
Undistributed net investment income $ (168,000)
Undistributed net realized gain 179,000
Paid-in-capital (11,000)
At October 31, 2000, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$189,519,000. Net unrealized gain aggregated $38,751,000 at period-end, of
which $55,025,000 related to appreciated investments and $16,274,000 to
depreciated investments.
NOTE 4 - FOREIGN TAXES
The fund is subject to foreign income taxes imposed by certain countries in
which it invests. Foreign income taxes are accrued by the fund as a
reduction of dividend and interest income.
NOTE 5 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price International, Inc. (the manager), a
wholly owned subsidiary of T. Rowe Price Associates, Inc. (Price
Associates).
The investment management agreement between the fund and the manager
provides for an annual investment management fee, of which $204,000 was
payable at October 31, 2000. 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, 2000,
and for the year then ended, the effective annual group fee rate was 0.32%.
The fund pays a pro-rata share of the group fee based on the ratio of its
net assets to those of the group.
In addition, the fund has entered into agreements with Price Associates and
two wholly owned subsidiaries of Price Associates, pursuant to which the
fund receives certain other services. Price Associates computes the daily
share price and maintains the financial records of the fund. T. Rowe Price
Services, Inc. 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 $626,000 for the year ended October 31, 2000, of which
$65,000 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, Price Associates, and, in
the case of T. Rowe Price Spectrum International, T. Rowe Price
International. Spectrum International Fund held approximately 0.6% of the
outstanding shares of the Latin America Fund at October 31, 2000. For the
year then ended, the fund was allocated $3,000 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 Price Associates. The Reserve Funds are
offered as cash management options only to mutual funds and other accounts
managed by Price Associates or T. Rowe Price International, 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, 2000, totaled $514,000 and are reflected as interest income in
the accompanying Statement of Operations.
During the year ended October 31, 2000, the fund, in the ordinary course of
business, placed security purchase and sale orders aggregating $6,705,000
with certain affiliates of the manager and paid commissions of $18,000
related thereto.
T. Rowe Price Latin America Fund
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Report of Independent Accountants
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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, 2000, 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 accounting principles generally accepted in the United
States of America. 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 auditing standards generally
accepted in the United States of America, 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, 2000 by correspondence
with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 17, 2000
T. Rowe Price Latin America Fund
--------------------------------------------------------------------------------
Tax Information (Unaudited) for the Tax Year Ended 10/31/00
--------------------------------------------------------------------------------
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 $1,307,000 and foreign
taxes paid of $410,000.
Annual Meeting Results
--------------------------------------------------------------------------------
The T. Rowe Price Latin America Fund held an annual meeting on October 25,
2000, to approve a new investment management agreement, to elect directors
to the fund, and to ratify the appointment of PricewaterhouseCoopers LLP as
the fund's independent accountants.
The results of voting were as follows (by number of shares):
For approval of a new investment management agreement:
Affirmative: 12,360,648.887
Against: 349,593.449
Abstain: 336,982.235
Total: 13,047,224.571
For nominees to the Board of Directors of the Latin America Fund: M. David
Testa
Affirmative: 12,594,129.554
Withhold: 453,095.017
Total: 13,047,224.571
Martin G. Wade
Affirmative: 12,586,852.579
Withhold: 460,371.992
Total: 13,047,224.571
Anthony W. Deering
Affirmative: 12,605,835.704
Withhold: 441,388.867
Total: 13,047,224.571
Donald W. Dick, Jr.
Affirmative: 12,615,465.769
Withhold: 431,758.802
Total: 13,047,224.571
Paul M. Wythes
Affirmative: 12,591,781.032
Withhold: 455,443.539
Total: 13,047,224.571
To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants:
Affirmative: 12,598,337.608
Against: 208,515.224
Abstain: 240,371.739
Total: 13,047,224.571
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
For the hearing impaired, call:
1-800-367-0763
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
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 - new address
105 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
2260 Briargate Parkway
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
San Francisco Area
1990 North California Boulevard
Suite 100
Walnut Creek
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price, Invest With Conficence(registered trademark)
T. Rowe Price Investment Services, Inc., Distributor. F97-050 10/31/00
