N-CSR 1 lam.txt T. ROWE PRICE LATIN AMERICA FUND 04-30-03 Item 1. Report to Shareholders T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Financials T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Financial Highlights For a share outstanding throughout each period -------------------------------------------------------------------------------- 6 Months Year Ended Ended 4/30/03 10/31/02 10/31/01 10/31/00 10/31/99 10/31/98 NET ASSET VALUE Beginning of period $ 7.25 $ 8.21 $ 10.19 $ 8.03 $ 7.22 $ 9.60 Investment activities Net investment income (loss) 0.08 0.18 0.15 0.05 0.09 0.16 Net realized and unrealized gain (loss) 1.20 (0.79) (2.09) 2.14 0.86 (2.45) Total from investment activities 1.28 (0.61) (1.94) 2.19 0.95 (2.29) Distributions Net investment income -- (0.29) (0.04) (0.04) (0.14) (0.12) Net realized gain -- (0.06) -- -- -- -- Total distributions -- (0.35) (0.04) (0.04) (0.14) (0.12) Redemption fees added to paid-in-capital -- -- -- 0.01 -- 0.03 NET ASSET VALUE End of period $ 8.53 $ 7.25 $ 8.21 $ 10.19 $ 8.03 $ 7.22 Ratios/Supplemental Data Total return^ 17.66% (8.15)% (19.10)% 27.41% 13.57% (23.93)% Ratio of total expenses to average net assets 1.61%! 1.53% 1.49% 1.46% 1.62% 1.53% Ratio of net investment income (loss) to average net assets 2.22%! 1.88% 1.40% 0.42% 1.05% 1.35% Portfolio turnover rate 10.8%! 21.0% 29.9% 27.5% 43.2% 19.0% Net assets, end of period (in thousands) $139,391 $126,905 $155,239 $228,655 $200,385 $204,761 ^ Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions and payment of no redemption or account fees. ! Annualized The accompanying notes are an integral part of these financial statements. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) April 30, 2003 Statement of Net Assets Shares Value -------------------------------------------------------------------------------- In thousands BRAZIL 40.2% Common Stocks 33.1% Brasil Telecom Participacoes ADR (USD) 68,000 $ 2,407 Companhia de Bebidas ADR(USD) 425,624 8,466 Companhia Vale do Rio DoceADR (1 ADR represents 1 common share) (USD) 19,400 542 Companhia Vale do Rio DoceADR (1 ADR represents 1 preferred A share)(USD) 240,200 6,341 Embraer Aircraft ADR (USD) 205,082 2,844 Grupo Pao de Acucar ADR (USD)(misc. symbol) 36,732 533 Petroleo Brasileiro(Petrobras) ADR (1 ADR represents 1 preferred share)(USD) 920,057 15,742 Petroleo Brasileiro (Petrobras)ADR (USD)(1 ADR represents 1 common share) (USD)(misc. symbol) 133,700 2,480 Tele Norte Leste Participacoes ADR (USD)(misc. symbol) 132,425 1,437 Telebras ADR (USD)(misc. symbol) 180,436 4,688 Telesp Celular Participacoes ADR (USD)*(misc. symbol) 83,000 320 Unibanco GDR (USD)(misc. symbol) 18,400 334 46,134 Preferred Stocks 7.1% Ambev 10 0 Banco Bradesco 755,740,687 3,117 Banco Itau Holding Financeira 96,356,000 6,446 Telemar Norte Leste 17,600,000 269 9,832 Total Brazil (Cost $60,659) 55,966 CHILE 3.5% Common Stocks 3.5% Banco Santander ADR (USD)*(misc. symbol) 221,766 4,839 Total Chile (Cost $4,020) 4,839 MEXICO 47.5% Common Stocks 47.5% America Movil ADR, Series L (USD) 638,576 10,709 Cemex Participating Certificates (Represents 2 Series A and 1 Series B shares) 1,081,248 4,891 Coca-Cola Femsa ADR, Series L (USD) (misc. symbol) 154,800 3,290 Femsa UBD Units (Represents 1 Series B and 4 Series D shares) (misc. symbol) 1,093,410 $ 4,125 Grupo Aeroportuario del Sureste ADR (USD) 233,200 2,987 Grupo Financiero BBVA Bancomer, Series B *(misc. symbol) 10,713,301 9,298 Grupo Modelo, Series C 1,156,580 2,578 Grupo Televisa ADR (USD) * 91,997 2,791 Kimberly-Clark de Mexico, Series A (misc. symbol) 438,241 1,074 Telmex ADR, Series L (USD) 445,476 13,458 Wal-Mart de Mexico (misc. symbol) 3,960,630 10,946 Total Mexico (Cost $44,963) 66,147 PERU 2.0% Common Stocks 2.0% Compania de Minas Buenaventura ADR, Series B (USD) 106,600 2,835 Total Peru (Cost $1,803) 2,835 VENEZUELA 0.4% Common Stocks 0.4% Compania Anonima Nacional Telefonos de Venezuela (CANTV) Series D, ADR (USD) 57,057 594 Total Venezuela (Cost $1,640) 594 SHORT-TERM INVESTMENTS 4.7% Money Market Funds 4.7% T. Rowe Price Reserve Investment Fund 1.30% # 6,604,591 6,604 Total Short-Term Investments (Cost $6,604) 6,604 SECURITIES LENDING COLLATERAL 12.9% Money Market Pooled Account 12.9% Investment in money market pooled account managed by JPMorgan Chase Bank, London 18,054,942 18,055 Total Securities Lending Collateral (Cost $18,055) 18,055 Total Investments in Securities 111.2% of Net Assets (Cost $137,744) $155,040 Other Assets Less Liabilities Including $18,055 obligation to return securities lending collateral (15,649) NET ASSETS $139,391 -------- Net Assets Consist of: Undistributed net investment income (loss) $1,369 Undistributed net realized gain (loss) (69,511) Net unrealized gain (loss) 17,297 Paid-in-capital applicable to 16,337,723 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized 190,236 NET ASSETS $139,391 -------- NET ASSET VALUE PER SHARE $8.53 # Seven-day yield * Non-income producing (misc. symbol) All or a portion of this security is on loan at April 30, 2003 - See Note 2 ADR American Depository Receipts GDR Global Depository Receipts USD United States dollar The accompanying notes are an integral part of these financial statements. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Statement of Operations -------------------------------------------------------------------------------- In thousands 6 Months Ended 4/30/03 Investment Income (Loss) Income Dividend (net of foreign taxes of $164) $ 2,251 Securities lending 90 Interest 23 Total income 2,364 Expenses Investment management 660 Shareholder servicing 213 Custody and accounting 87 Registration 12 Prospectus and shareholder reports 9 Legal and audit 9 Directors 3 Miscellaneous 2 Total expenses 995 Net investment income (loss) 1,369 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities (3,864) Foreign currency transactions 5 Net realized gain (loss) (3,859) Change in net unrealized gain (loss) Securities 22,951 Other assets and liabilities denominated in foreign currencies 1 Change in net unrealized gain (loss) 22,952 Net realized and unrealized gain (loss) 19,093 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $20,462 ------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Statement of Changes in Net Assets -------------------------------------------------------------------------------- In thousands 6 Months Year Ended Ended 4/30/03 10/31/02 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ 1,369 $ 3,045 Net realized gain (loss) (3,859) (14,379) Change in net unrealized gain (loss) 22,952 1,045 Increase (decrease) in net assets from operations 20,462 (10,289) Distributions to shareholders Net investment income -- (5,412) Net realized gain -- (1,118) Decrease in net assets from distributions -- (6,530) Capital share transactions * Shares sold 11,603 29,812 Distributions reinvested -- 6,103 Shares redeemed (19,582) (47,505) Redemption fees received 3 75 Increase (decrease) in net assets from capital share transactions (7,976) (11,515) Net Assets Increase (decrease) during period 12,486 (28,334) Beginning of period 126,905 155,239 End of period $ 139,391 $ 126,905 *Share information Shares sold 1,494 3,180 Distributions reinvested -- 699 Shares redeemed (2,654) (5,294) Increase (decrease) in shares outstanding (1,160) (1,415) The accompanying notes are an integral part of these financial statements. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) April 30, 2003 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 1940 Act). 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 accounting principles generally accepted in the United States of America, which require the use of estimates made by fund management. Valuation Investments are valued at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price, or official closing price for certain markets, 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. Listed securities not traded on a particular day are valued at the mean of the latest bid and ask prices for domestic securities and the last quoted sale price for international securities. Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Other investments and those 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. Most foreign markets close before the NYSE. Developments that could affect the values of securities that occur between the close of a foreign market and the close of the NYSE normally will not be reflected in security valuations. However, if such developments are so significant that they will, in the judgment of the officers of the fund, clearly and materially affect the value of securities, the previous closing prices may be adjusted to reflect the fair value of the securities as of the close of the NYSE, 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, including investments, 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 ask prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of such gains and losses. Expenses Paid Indirectly Credits earned on temporarily uninvested cash balances at the custodian are used to reduce the fund's custody charges. Redemption Fees A 2% fee is assessed on redemptions of fund shares held less than 1 year. Such fees are deducted from redemption proceeds and retained by the fund, and have the primary effect of increasing paid-in capital. 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. NOTE 2 - INVESTMENT TRANSACTIONS Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks or enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund's prospectus and Statement of Additional Information. Emerging Markets At April 30, 2003, approximately 94% 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% to 105% of the value of the securities on loan. Cash collateral is invested in a money market pooled account managed by the fund's lending agent in accordance with investment guidelines approved by fund management. 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. Securities lending revenue recognized by the fund consists of earnings on invested collateral and borrowing fees, net of any rebates to the borrower and compensation to the lending agent. At April 30, 2003, the value of loaned securities was $16,993,000; aggregate collateral consisted of $18,055,00 in the money market pooled account. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $6,544,000 and $18,209,000, respectively, for the six months ended April 30, 2003. 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 to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Temporary differences are not adjusted. The amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year-end; accordingly, tax-basis balances have not been determined as of April 30, 2003. The fund intends to retain realized gains to the extent of available capital loss carryforwards. As of October 31, 2002, the fund had $65,652,000 of unused capital loss carryforwards, of which $11,454,000 expire in 2004, $33,638,000 expire in 2007, and $20,560,000 expire thereafter through 2010. At April 30, 2003, the cost of investments for federal income tax purposes was substantially the same as for financial reporting and totaled $137,744,000. Net unrealized gain aggregated $17,297,000 at period-end, of which $29,059,000 related to appreciated investments and $11,762,000 related 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 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), which is wholly owned by T. Rowe Price Group, Inc. The investment management agreement between the fund and the manager provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.75% of the fund's average daily net assets, and the fund's pro-rata share of a group fee. The group fee is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in excess of $120 billion. The fund's portion of the group fee is determined by the ratio of its net assets to those of the group. At April 30, 2003, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $112,000. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc. provides shareholder and administrative services in its capacity as the fund's transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. Expenses incurred pursuant to these service agreements totaled $193,000 for the six months ended April 30, 2003, of which $42,000 was payable at period-end. The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum Funds) may invest. The Spectrum Funds do not invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to special servicing agreements, expenses associated with the operation of the Spectrum Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum Funds. At April 30, 2003, no shares of the fund were held by the Spectrum Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and T. Rowe Price 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, trusts, and other accounts managed by Price Associates and/or its affiliates, and are not available to the public. The Reserve Funds pay no investment management fees. Distributions from the Reserve Funds to the fund for the six months ended April 30, 2003, totaled $27,000 and are reflected as interest income in the accompanying Statement of Operations. Item 9. Controls and Procedures (a) The registrant's Principal Executive Officer and Principal Financial Officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) At the date of filing this Form N-CSR, the registrant's Principal Executive Officer and Principal Financial Officer are aware of no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. T. Rowe Price International Funds, Inc. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date June 12, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date June 12, 2003 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date June 12, 2003