N-CSRS 1 lam.txt T. ROWE PRICE LATIN AMERICA FUND Item 1. Report to Shareholders T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- April 30, 2004 Certified Semiannual Report This report is certified under the Sarbanes-Oxley Act of 2002, which requires that public companies, including mutual funds, affirm that the information provided in their annual and semiannual shareholder reports fully and fairly represents their financial position. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) Financial Highlights For a share outstanding throughout each period 6 Months Year Ended Ended 4/30/04 10/31/03 10/31/02 10/31/01 10/31/00 10/31/99 NET ASSET VALUE Beginning of period $ 10.32 $ 7.25 $ 8.21 $ 10.19 $ 8.03 $ 7.22 Investment activities Net investment income (loss) 0.16 0.13 0.18 0.15 0.05 0.09 Net realized and unrealized gain (loss) 0.86 2.94 (0.79) (2.09) 2.14 0.86 Total from investment activities 1.02 3.07 (0.61) (1.94) 2.19 0.95 Distributions Net investment income (0.16) -- (0.29) (0.04) (0.04) (0.14) Net realized gain -- -- (0.06) -- -- -- Total distributions (0.16) -- (0.35) (0.04) (0.04) (0.14) Redemption fees added to paid-in-capital -- -- -- -- 0.01 -- NET ASSET VALUE End of period $ 11.18 $ 10.32 $ 7.25 $ 8.21 $ 10.19 $ 8.03 --------------------------------------------------------- Ratios/ Supplemental Data Total return^ 9.90% 42.34% (8.15)% (19.10)% 27.41% 13.57% Ratio of total expenses to average net assets 1.41%! 1.55% 1.53% 1.49% 1.46% 1.62% Ratio of net investment income (loss) to average net assets 2.74%! 1.55% 1.88% 1.40% 0.42% 1.05% Portfolio turnover rate 38.9%! 27.4% 21.0% 29.9% 27.5% 43.2% Net assets, end of period (in thousands) $193,227 $166,059 $126,905 $155,239 $228,655 $200,385 ^ 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 Semiannual Report (Unaudited) Portfolio of Investments (SS.) ++ Shares Value -------------------------------------------------------------------------------- (Cost and value in $ 000s) ARGENTINA 2.0% Common Stocks 2.0% Quilmes Industrial ADR (USD) * 51,800 945 Tenaris ADR (USD) 94,700 2,840 Total Argentina (Cost $3,259) 3,785 BRAZIL 47.2% Common Stocks 35.5% Brasil Telecom Participacoes ADR (USD) 47,200 1,463 Cia De Concessoes 105,300 901 Companhia de Bebidas ADR (USD) 302,624 5,677 Companhia Siderurgica Nacional 57,677,000 2,735 Companhia Vale do Rio Doce ADR (USD) 210,600 8,232 Companhia Vale do Rio Doce ADR (USD) (1ADR represents 1 common share) 109,200 4,969 Embraer Aircraft ADR (USD) 110,082 2,840 Grupo Pao de Acucar ADR (USD) * 18,900 336 Petroleo Brasileiro (Petrobras) ADR (USD) 983,357 24,535 Petroleo Brasileiro (Petrobras) ADR 1 ADR represents 1 common share) (USD) 55,900 1,615 Tele Centro Oeste Celular ADR (USD) 70,966 608 Tele Norte Leste Participacoes * 237,394,900 2,582 Tele Norte Leste Participacoes ADR (USD) 368,100 4,358 Telemig Celular Participacoes ADR (USD) 27,100 829 Telesp Celular Participacoes ADR (USD) * 588,200 4,194 Votorantim Celulose ADR (USD) 86,200 2,707 68,581 Preferred Stocks 11.7% Ambev 10 0 Banco Bradesco 99,291 4,023 Banco Itau Holding Financeira 108,343,300 8,581 Caemi Mineracao e Metalurgica * 4,498,000 1,636 Cia Energetica Minas Gerais (Cemig) 247,555,000 3,786 Cia Suzano de Papel e Celulose 554,400 2,450 Gerdau 197,600 2,082 22,558 Total Brazil (Cost $83,607) 91,139 CHILE 3.8% Common Stocks 3.8% Banco Santander ADR (USD) 162,166 4,048 Enersis ADR (USD) 559,000 3,382 Total Chile (Cost $6,993) 7,430 MEXICO 42.2% Common Stocks 42.2% America Movil ADR (USD) 623,776 21,084 Cemex 1,342,508 7,854 Coca-Cola Femsa ADR, Series L (USD) * 21,900 465 Consorcio ARA * 1,011,700 2,751 Controladora Comercial Mexicana 2,160,000 2,387 Femsa, UBD Units 652,900 2,836 Grupo Aeroportuario del Sureste ADR (USD) 186,100 3,638 Grupo Financiero Banorte 528,200 1,876 Grupo Modelo, Series C 1,937,000 4,844 Grupo Televisa ADR (USD) 197,800 8,622 Kimberly-Clark de Mexico, Series A 438,241 1,163 Telmex ADR (USD) 390,476 13,331 Wal-Mart de Mexico 3,706,074 10,792 Total Mexico (Cost $54,255) 81,643 PERU 1.9% Common Stocks 1.9% Compania de Minas Buenaventura ADR, Series B (USD) 169,600 3,670 Total Peru (Cost $1,437) 3,670 SHORT-TERM INVESTMENTS 1.7% Money Market Funds 1.7% T. Rowe Price Reserve Investment Fund, 1.09% # 3,353,857 3,354 Total Short-Term Investments (Cost $3,354) 3,354 SECURITIES LENDING COLLATERAL 11.6% Money Market Pooled Account 11.6% Investment in money market pooled account managed by JP Morgan Chase Bank, London, 1.06% # 22,333,725 22,334 Total Securities Lending Collateral (Cost $22,334) 22,334 Total Investments in Securities 110.4% of Net Assets (Cost $175,239) $213,355 -------- (ss.) Denominated in currency of country of incorporation unless otherwise noted ++ At April 30, 2004, a substantial number of the fund's international securities were valued by the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. See Note 1. # Seven-day yield * Non-income producing ADR American Depository Receipts USD U.S. dollar The accompanying notes are an integral part of these financial statements. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) April 30, 2004 Statement of Assets and Liabilities -------------------------------------------------------------------------------- (Amounts in $ 000s except shares and per share amounts) Assets Investments in securities, at value (cost $175,239) $ 213,355 Other assets 2,899 Total assets 216,254 Liabilities Obligation to return securities lending collateral 22,334 Other liabilities 693 Total liabilities 23,027 NET ASSETS $ 193,227 ----------- Net Assets Consist of: Undistributed net investment income (loss) $ 2,237 Undistributed net realized gain (loss) (49,364) Net unrealized gain (loss) 38,113 Paid-in-capital applicable to 17,277,901 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized 202,241 NET ASSETS $ 193,227 ----------- NET ASSET VALUE PER SHARE $ 11.18 ----------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) Statement of Operations -------------------------------------------------------------------------------- ($ 000s) 6 Months Ended 4/30/04 Investment Income (Loss) Income Dividend (net of foreign taxes of $496) $ 4,168 Securities lending 64 Total income 4,232 Expenses Investment management 1,085 Shareholder servicing 230 Custody and accounting 76 Registration 14 Prospectus and shareholder reports 12 Legal and audit 10 Directors 3 Miscellaneous 3 Total expenses 1,433 Net investment income (loss) 2,799 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities 13,095 Foreign currency transactions (150) Net realized gain (loss) 12,945 Change in net unrealized gain (loss) Securities 49 Other assets and liabilities denominated in foreign currencies (3) Change in net unrealized gain (loss) 46 Net realized and unrealized gain (loss) 12,991 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 15,790 ----------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) Statement of Changes in Net Assets -------------------------------------------------------------------------------- ($ 000s) 6 Months Year Ended Ended 4/30/04 10/31/03 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ 2,799 $ 2,134 Net realized gain (loss) 12,945 3,311 Change in net unrealized gain (loss) 46 43,722 Increase (decrease) in net assets from operations 15,790 49,167 Distributions to shareholders Net investment income (2,664) -- Capital share transactions * Shares sold 44,508 25,506 Distributions reinvested 2,496 -- Shares redeemed (33,118) (35,575) Redemption fees received 156 56 Increase (decrease) in net assets from capital share transactions 14,042 (10,013) Net Assets Increase (decrease) during period 27,168 39,154 Beginning of period 166,059 126,905 End of period $ 193,227 $ 166,059 ---------- ---------- (Including undistributed net investment income of $2,237 at 4/30/04 and $2,102 at 10/31/03) *Share information Shares sold 3,720 2,978 Distributions reinvested 226 -- Shares redeemed (2,758) (4,386) Increase (decrease) in shares outstanding 1,188 (1,408) The accompanying notes are an integral part of these financial statements. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Semiannual Report (Unaudited) April 30, 2004 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 portfolio 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 The fund values its investments and computes its net asset value per share 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, for certain markets, the official closing price at the time the valuations are made, except for OTC Bulletin Board securities, which are valued at the mean of the latest bid and asked prices. 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 asked prices for domestic securities and the last quoted sale price for international securities. Investments in mutual funds are valued at the mutual fund's closing net asset value per share 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 the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. Most foreign markets close before the close of trading on the NYSE. If the fund determines that developments between the close of a foreign market and the close of the NYSE will, in its judgment, materially affect the value of some or all of its portfolio securities, which in turn will affect the fund's share price, the fund will adjust the previous closing prices to reflect the fair value of the securities as of the close of the NYSE, as determined in good faith by the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. A fund may also fair value securities in other situations, such as when a particular foreign market is closed but the fund is open. In deciding whether to make fair value adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U. S. markets that represent foreign securities and baskets of foreign securities. The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day's opening prices in the same markets, and adjusted prices. 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 asked 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 security gains and losses. Redemption Fees A 2% fee is assessed on redemptions of fund shares held less than 1 year to deter short-term trading and protect the interests of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund, and have the primary effect of increasing paid-in capital. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared and paid an annual basis. Capital gain distributions, if any, are declared and paid by the fund, typically on an annual basis. Other In the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is dependent on claims that may be made against the fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote. 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, 2004, approximately 97% 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, 2004, the value of loaned securities was $21,902,000; aggregate collateral consisted of $22,334,000 in the money market pooled account. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $52,431,000 and $37,177,000, respectively, for the six months ended April 30, 2004. 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 under Subchapter M of the Internal Revenue Code 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. Financial records are not adjusted for temporary differences. 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, 2004. The fund intends to retain realized gains to the extent of available capital loss carryforwards. As of October 31, 2003, the fund had $62,309,000 of unused capital loss carryforwards, of which $8,110,000 expire in fiscal 2004, $33,638,000 expire in fiscal 2007, and $20,561,000 thereafter through fiscal 2010. At April 30, 2004, the cost of investments for federal income tax purposes was $175,239,000. Net unrealized gain aggregated $38,113,000 at period-end, of which $44,418,000 related to appreciated investments and $6,305,000 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 average daily net assets to those of the group. At April 30, 2004, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $190,000. 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 $196,000 for the six months ended April 30, 2004, of which $44,000 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 a special servicing agreement, 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, 2004 and during the six months then ended, no shares of the fund were held by the Spectrum Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and the 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 to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates, and are not available for direct purchase by members of the public. The Reserve Funds pay no investment management fees. During the six months ended April 30, 2004, dividend income from the Reserve Funds totaled $33,000. T. Rowe Price Latin America Fund -------------------------------------------------------------------------------- Certified Semiannual Report Information on Proxy Voting -------------------------------------------------------------------------------- A description of the policies and procedures that the T. Rowe Price Latin America Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, upon request by calling 1-800-225-5132. It also appears in the fund's Statement of Additional Information (Form 485B), which can be found on the SEC's Web site, www.sec.gov. Item 2. Code of Ethics. A code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions is filed as an exhibit to the registrant's annual Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the registrant's most recent fiscal half-year. Item 3. Audit Committee Financial Expert. Disclosure required in registrant's annual Form N-CSR. Item 4. Principal Accountant Fees and Services. Disclosure required in registrant's annual Form N-CSR. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedule of Investments. Not applicable. The complete schedule of investments is included in Item 1 of this Form N-CSR. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 9. Submission of Matters to a Vote of Security Holders. Not applicable. Item 10. 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) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. Exhibits. (a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is filed with the registrant's annual Form N-CSR. (2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (3) Written solicitation to repurchase securities issued by closed-end companies: not applicable. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. 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 15, 2004 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 15, 2004 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date June 15, 2004