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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Post-Effective Amendment No. 1 / X /
(Check appropriate box or boxes)
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
____________________________________________________
(Exact Name of Registrant as Specified in Charter)
100 East Pratt Street, Baltimore, Maryland 21202
__________________________________________ __________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 410-547-2000
____________
Henry H. Hopkins, Esquire
Vice President and Legal Counsel
100 East Pratt Street
Baltimore, Maryland 21202
_______________________________________
(Name and Address of Agent for Service)
It is proposed that this filing will become effective immediately
upon filing pursuant to Rule 485(b) the Securities Act of 1933.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
_________________________________________________________________
No filing fee is required because an indefinite number of shares
have previously been registered pursuant to Rule 24f-2 under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the
registrant's fiscal year ended December 31, 1995 was filed on
February 26, 1996. Pursuant to Rule 429, this Registration
Statement relates to shares previously registered on Form N-1A
(File No.: 333-10209).
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T. ROWE PRICE INTERNATIONAL FUNDS, INC.
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
Under the Securities Act of 1933
N-14 Item No. Location
PART A
1. Beginning of Registration Cover Page of Registration
Statement and Outside Front Statement; Front Cover
Cover Page of Prospectus Page of Prospectus
2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
3. Synopsis Information and Risk Summary; Risk Factors
Factors
4. Information About the Transaction Summary; Reasons for the
Reorganization;
Information About the
Reorganization
5. Information About the Registrant Prospectus Cover Page;
Summary; Comparison of
Investment Policies;
Information About TRP;
Information About PH Bond;
Financial Statements and
Experts
6. Information About the Company Prospectus Cover Page;
Being Acquired Summary; Comparison of
Investment Policies;
Information About TRP;
Information About PH Bond;
Financial Statements and
Experts
7. Voting Information Prospectus Cover Page;
Notice of Special Meeting
of Shareholders; Summary;
Voting Information
8. Interest of Certain Persons None
and Experts
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9. Additional Information Required Not applicable
for Reoffering by Persons Deemed
to be Underwriters
PART B
10. Cover Page Cover Page
11. Table of Contents Not Applicable
12. Additional Information Incorporation of Documents
about the Registrant by Reference in the
Statement of Additional
Information
13. Additional Information Incorporation of Documents
about the Company Being by Reference in the
Acquired Statement of Additional
Information
14. Financial Statements Incorporation of Documents
by Reference in the
Statement of Additional
Information and
Incorporation of Documents
by Reference in Part C
PART C
The information required to be included in Part C is set
forth under the appropriate Item, so numbered, in Part C of this
Registration Statement.
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PRELIMINARY COPY
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND
(a series of T. Rowe Price International Funds, Inc.)
100 East Pratt Street
Baltimore, Maryland 21202
M. David Testa
Chairman of the Board
September 13, 1996
Dear Shareholder:
On July 31, 1996, the Board of Directors of the T. Rowe
Price Short-Term Global Income Fund (the "Fund") agreed to a Plan
of Reorganization, which involves a transfer of substantially all
Fund assets to T. Rowe Price Global Government Bond Fund (the
"Global Government Fund"). Shareholders of the Fund will receive
shares of Global Government Bond Fund in exchange for their Fund
shares.
The Reorganization is conditioned upon several factors,
including approval by Fund shareholders. Accordingly, you are
cordially invited to attend a special meeting of Fund
shareholders at the offices of the Fund, 100 East Pratt Street,
Baltimore, Maryland, on Wednesday, October 30, 1996 at 9:00 a.m.,
to vote on the Reorganization. If it is approved, the
Reorganization will take place on or about November 1, 1996.
The Reorganization is considered necessary because, among
other reasons, investor demand has shifted from short-term
securities to longer-term bonds in an effort to achieve greater
total returns. As the universe of short-term bond investors
declines, Fund redemptions are expected to increase, eroding the
asset base of the Fund and putting upward pressure on its expense
ratio. This combination of negative factors will make it
increasingly difficult for the Fund manager, Rowe Price-Fleming
International, Inc. to invest shareholder assets effectively at a
reasonable cost to Shareholders.
As the accompanying Combined Proxy Statement and Prospectus
explain in detail:
o there are no transaction fees to buy or sell shares of
Global Government Fund;
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o you will continue to have free exchange privileges
among the wide range of T. Rowe Price funds;
o it is expected that the Reorganization will be a tax-
free exchange of shares and that Fund shareholders will
retain their original cost basis and holding period;
and
o all expenses related to the Reorganization, except for
brokerage fees and extraordinary expenses, will be
assumed by Rowe Price-Fleming International, Inc.
Both the Fund and Global Government Fund have similar
investment objectives and programs. The main difference is that
the Fund has a maximum weighted average maturity of three years
while Global Government's target is seven years. Therefore,
Global Government is normally more sensitive to changes in
interest rates, meaning its share price can normally be expected
to fluctuate more. In addition, because the Fund utilizes a more
active currency hedging strategy, Global Government Fund's
greater exposure to currency fluctuations may make it somewhat
riskier. However, we believe the potential is also greater for
higher total returns over time.
We encourage you to read the enclosed proxy material, sign
the enclosed proxy card, and return it to us in the postage-paid
envelope promptly.
The Board of Directors of your Fund has unanimously approved
this proposal and recommends that you vote FOR approval of the
Plan.
Sincerely,
M. David Testa
Chairman of the Board
CUSIP#77956H807/FUND#063
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T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND
(a series of T. Rowe Price International Funds, Inc.)
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on October 30, 1996
NOTICE IS HEREBY GIVEN that a special meeting of shareholders
of the T. Rowe Price Short-Term Global Income Fund (the "Fund"),
a series of the T. Rowe Price International Funds, Inc. (the
"Company"), will be held on Wednesday, October 30, 1996, at 9:00
o'clock a.m., Eastern time, at the offices of the Fund, 100 East
Pratt Street, Baltimore, Maryland 21202, for the following
purposes:
1. To consider and act upon a proposal to approve or
disapprove an Agreement and Plan of Reorganization and an
Amendment to the Charter of T. Rowe Price International Funds,
Inc. The Agreement and Plan provides for the transfer of
substantially all of the assets of the Fund to T. Rowe Price
Global Government Bond Fund (the "Global Government Fund"), a
separate series of T. Rowe Price International Funds, Inc., in
exchange solely for shares of the Global Government Fund, and the
distribution of the Global Government Fund shares to the
shareholders of the Fund. The Charter amendment provides for the
change and reclassification of the shares of the Fund into shares
of the Global Government Fund.
2. To consider and act upon such other business as may
properly come before the meeting.
M. David Testa
Chairman of the Board
September 13, 1996
100 East Pratt Street
Baltimore, Maryland 21202
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED. IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER
SOLICITATION, WE ASK YOUR COOPERATION IN MAILING YOUR PROXY
PROMPTLY.
CUSIP#77956H807/FUND#063
PAGE 7
Combined Proxy Statement and Prospectus
Dated September 13, 1996
Acquisition of the Assets of
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND
(a series of the T. Rowe Price International Funds, Inc.)
By and In Exchange for Shares of
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND
(a series of the T. Rowe Price International Funds, Inc.)
This Combined Proxy Statement and Prospectus is furnished in
connection with the solicitation of proxies by the Board of
Directors of the T. Rowe Price International Funds, Inc. (the
"Company") for use at a special meeting of shareholders of the T.
Rowe Price Short-Term Global Income Fund (the "Fund") to be held
on Wednesday, October 30, 1996, at which shareholders of the Fund
will be asked to approve or disapprove an Agreement and Plan of
Reorganization dated September 6, 1996 (the "Plan"), between the
Company on behalf of the Fund and the Company on behalf of the T.
Rowe Price Global Government Bond Fund ("Global Government
Fund"), a separate series of the Company. A copy of the Plan is
included as Exhibit A to this Combined Proxy Statement and
Prospectus.
The proposed Reorganization and Plan provide for the
transfer of substantially all of the assets of the Fund to the
Global Government Fund in exchange for shares of the Global
Government Fund and the distribution of the Global Government
Fund shares received in the exchange to Fund shareholders in
complete liquidation of the Fund. Shareholders of the Fund will
receive Global Government Fund shares having an aggregate net
asset value equal to the aggregate net asset value of their Fund
shares on the business day immediately preceding the closing date
of the reorganization. Approval of the Plan will constitute
approval of an amendment to the Charter of the Company
confirming, solely for Maryland corporate law purposes, the
change and reclassification of the shares of the Fund into shares
of the Global Government Fund. The form of the proposed Charter
amendment is set forth as Exhibit B to this Combined Proxy
Statement and Prospectus.
The Global Government Fund seeks to provide high current
income and, secondarily, capital appreciation and protection of
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principal by investing primarily in high-quality foreign and U.S.
government bonds. The investment objective, policies and
restrictions of the Global Government Fund and the Fund are
similar, but differ in certain respects, including the weighted
average maturities. See "Comparison of Investment Objectives,
Policies and Restrictions."
This Combined Proxy Statement and Prospectus sets forth
concisely the information you should know about the Global
Government Fund and the Plan before voting on the Plan and the
transactions contemplated thereby. Please read this Combined
Proxy Statement and Prospectus and keep it for future reference.
A Prospectus for the T. Rowe Price International Fixed Income
Funds, which includes the Global Government Fund and the Fund,
dated May 1, 1996, is incorporated herein by reference. This
prospectus was mailed to all shareholders of the Fund and Global
Government Fund at the time of the annual May 1, 1996 update and
to all purchasers of Fund shares after May 1, 1996. Therefore,
the International Fixed Income Funds,' prospectus is not included
with this Combined Proxy Statement and Prospectus. Additional
copies of the International Fixed Income Funds' prospectus are
available at no cost by calling 1-800-225-5132, or by writing T.
Rowe Price International Funds, Inc., 100 East Pratt Street,
Baltimore, Maryland 21202. A Statement of Additional Information
dated September 13, 1996, containing further information about
the Global Government Fund and the Plan has been filed with the
Securities and Exchange Commission and is available upon request
without charge by writing T. Rowe Price International Funds,
Inc., 100 East Pratt Street, Baltimore, Maryland 21202, or by
calling 1-800-225-5132. The Statement of Additional Information
is incorporated herein by reference. This Combined Proxy
Statement and Prospectus was first mailed to shareholders on or
about September 13, 1996.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS COMBINED PROXY STATEMENT AND PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PAGE 9
TABLE OF CONTENTS
PAGE
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Reasons For the Reorganization . . . . . . . . . . . . . . . 10
Information About the Reorganization . . . . . . . . . . . . 11
Comparison of Investment Objectives, Policies and
Restrictions . . . . . . . . . . . . . . . . . . . . . . . . 15
Information About the Funds . . . . . . . . . . . . . . . . . 21
Voting Information . . . . . . . . . . . . . . . . . . . . . 21
Transfer Agent and Custodian . . . . . . . . . . . . . . . . 23
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . 23
Financial Statements . . . . . . . . . . . . . . . . . . . . 23
Exhibit A -- Agreement and Plan of Reorganization . . . . . . 24
Exhibit B -- Articles of Amendment . . . . . . . . . . . . . 38
No person has been authorized to give any information or to make
any representations not contained in this Combined Proxy
Statement and Prospectus or in the materials expressly
incorporated herein by reference and if given or made, such other
information or representation must not be relied upon as having
been authorized by T. Rowe Price International Funds, Inc.
PAGE 10
SUMMARY
The information contained in this summary is qualified by
reference to the more detailed information appearing elsewhere in
this Combined Proxy Statement and Prospectus, in the Plan
(Exhibit A hereto), and the Prospectus of the Global Government
Fund and the Fund.
Proposed Transactions
At a meeting held on July 31, 1996, the Board of Directors
of the Company, including all of the directors who are not
"interested persons" of the Company (the "independent directors")
as defined in the Investment Company Act of 1940 (the "Investment
Company Act"), approved the Plan. The Plan provides for the
transfer of substantially all the assets of the Fund to the
Global Government Fund in exchange for shares of the Global
Government Fund. Following the transfer, the Global Government
Fund shares received in the exchange will be distributed to
shareholders of the Fund in complete liquidation of the Fund. As
a result of the proposed transactions, each Fund shareholder will
cease to be a shareholder of the Fund and instead will become the
owner of shares of the Global Government Fund having an aggregate
net asset value equal to the aggregate net asset value of the
shareholder's Fund shares determined on the business day
preceding the closing date of the reorganization.
For the reasons set forth below under "Reasons for the
Reorganization," the Board of Directors of the Company, including
all of the independent directors, has concluded that the
reorganization is in the best interests of the shareholders of
the Fund and therefore recommends that shareholders vote for
approval of the Plan.
Voting Information
Shareholders of record at the close of business on September
6, 1996, are entitled to notice of and to vote at the meeting and
any adjournments thereof. The affirmative vote of a majority of
the outstanding shares of the Fund is required for approval of
the Plan. Each shareholder will be entitled to one vote for each
Fund share, and a proportionate vote for each fractional share,
held on the record date for the meeting. Any proxy may be
revoked at any time prior to its exercise by filing with the
Secretary of the Company a written notice of revocation, by
PAGE 11
delivering a duly executed proxy bearing a later date, or by
attending the meeting and voting in person. Executed proxies
that are unmarked will be voted for approval of the Plan. See
"Voting Information." Approval of the Plan by shareholders of
Global Government Fund is not required and the Plan is not being
submitted for their approval.
Tax Consequences
In the opinion of counsel to the Company, for federal income
tax purposes, no gain or loss will be recognized by the Fund or
its shareholders as a result of the reorganization, the holding
period and adjusted basis of the Global Government Fund shares
received by a shareholder will be the same as the holding period
and adjusted basis of the shareholder's shares of the Fund, and
the holding period and adjusted basis of each asset of the Fund
in the hands of the Global Government Fund will be the same as
the holding period and adjusted basis of the asset in the hands
of the Fund immediately prior to the reorganization. See
"Information About the Reorganization -- Tax Considerations."
Investment Objectives and Policies
The Fund seeks a high level of current income consistent
with modest share price fluctuation by investing primarily in
high-quality fixed income securities. The Global Government Fund
seeks high current income and, secondarily, capital appreciation
and protection of principal by investing primarily in high-
quality foreign and U.S. government bonds. The investment
policies and restrictions of the Fund and the Global Government
Fund are similar in certain respects; however, the Fund's
weighted average maturity may not exceed three years while the
Global Government Fund targets a weighted average maturity of
seven years, and the Fund normally has a more active currency
hedging program than Global Government Fund. Each fund invests
primarily in high quality bonds, although the Global Government
Fund must invest at least 65% of its assets in government bonds
while the Fund may invest in either corporate or government
bonds. There are other differences which Fund shareholders
should consider. See "Comparison of Investment Objectives,
Policies and Restrictions."
Management Arrangements
The Fund and the Global Government Fund are advised and
managed by Rowe Price-Fleming International, Inc. ("Price-
Fleming"), 100 East Pratt Street, Baltimore, Maryland 21202,
PAGE 12
which was incorporated in Maryland in 1979 as a joint venture
between T. Rowe Price Associates, Inc. ("Price Associates") and
Robert Fleming Holdings Limited ("Flemings"). Price Associates
was incorporated in Maryland in 1947 as successor to the
investment counseling firm founded by Mr. Thomas Rowe Price, Jr.
in 1937. Flemings was incorporated in the United Kingdom in 1974
as successor to the business founded by Robert Fleming in 1873.
Price-Fleming serves as investment manager to all of the
international funds of the Company and to a variety of individual
and institutional investors, including limited partnerships and
other mutual funds. As of June 30, 1996, Price-Fleming was
providing investment management services to assets of
approximately $26.6 billion for over 600,000 individual and
institutional investor accounts. Price-Fleming is responsible
for selection and management of the Fund's and the Global
Government Fund's portfolio investments. The Board of Directors
of the Company is responsible for the management of the business
affairs of the Fund and the Global Government Fund. Additional
information concerning the Fund's and the Global Government
Fund's investment advisory and management arrangements is set
forth under "Management of the Fund" and "Expenses and Management
Fee" in the International Fixed Income Funds' prospectus and in
the related Statement of Additional Information.
Fees and Expenses
Set forth below are the fees and expenses of the funds based
on 1995 average net assets and pro forma fees and expenses,
assuming the transaction takes place as scheduled.
_________________________________________________________________
Shareholder Transaction Expenses
Short-Term Global Pro
Global Government Forma
Income Bond Combined
_________________________________________________________________
Sales charge "load"
on purchases None None None
_________________________________________________________________
Sales charge "load"
on reinvested dividends None None None
_________________________________________________________________
Redemption fees None None None
_________________________________________________________________
Exchange fees None None None
_________________________________________________________________
PAGE 13
Annual Fund Expenses Percentage of Fiscal 1995 Average Net
Assets
Short-Term Global Pro
Global Government Forma
Income Bond Combined
(after (after (after
reduction)ab reduction)ab reduction)ab
_________________________________________________________________
Management fee 0.29% 0.20% 0.60%
_________________________________________________________________
Marketing fees (12b-1) None None None
_________________________________________________________________
Total other (shareholder
servicing, custodial,
auditing, etc.) 0.71% 1.00% 0.60%
_________________________________________________________________
Total fund expenses 1.00% 1.20% 1.20%
_________________________________________________________________
a Had Price-Fleming not agreed to waive management fees in
accordance with expense limitation agreements, the Fund's
management fee and total expense ratio would have been 0.59%
and 1.30%, respectively; the Global Government Fund's
management fee and total expense ratio would have been 0.69%
and 1.69%, respectively; and the Pro Forma combined
management fee and total expense ratio would have been 0.69%
and 1.29%, respectively.
b Organization expenses are charged to the fund for a period
not to exceed 60 months. The unamortized organization
expenses of the Fund will be paid to the Fund by Price-
Fleming prior to the closing of the Reorganization.
Note: A $5 fee is charged for wire redemptions under $5,000,
subject to change without notice, and a $10 fee is charged
for small accounts when applicable (see "Small Account Fee"
under "Transaction Procedures and Special Requirements" in
the Prospectus for the Global Government Fund and Fund).
_________________________________________________________________
Based on assets of the funds as of June 30, 1996, and actual
expenses incurred from January 1 through June 30, 1996,
annualized, the pro forma combined expense ratio of the Fund and
the Global Government Fund, reflecting the Global Government
Fund's expense limitation, is estimated to be 1.20%.
The Global Government Fund and the Fund each pay Price-
Fleming an investment management fee which consists of a group
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fee and an individual fund fee. The group fee varies and is
based on the combined net assets of all mutual funds sponsored
and managed by Price-Fleming and T. Rowe Price Associates, Inc.
and distributed by T. Rowe Price Investment Services, Inc.,
excluding T. Rowe Price Spectrum Fund, Inc. and any institutional
or private label funds (the "Group Funds"). The Global
Government Fund and the Fund each pay, as its portion of the
group fee, an amount equal to the ratio of its daily net assets
to the daily net assets of all the Group Funds. In addition, the
Global Government Fund and the Fund each pay an individual fund
fee of 0.35% and 0.25%, respectively, based on each fund's net
assets. Based on total Group Funds' assets of approximately
$54.7 billion at June 30, 1996, the total management fees for the
Global Government Fund and the Fund were 0.68% and 0.58%,
respectively, of net assets.
For the year ended December 31, 1995, the group fee rate and
total combined management fee rate for the Global Government Fund
were 0.34% and 0.69%, respectively, and for the Fund were 0.34%
and 0.59%, respectively.
During the year ended December 31, 1995, the Global
Government Fund and the Fund also paid T. Rowe Price Services,
Inc., and T. Rowe Price Retirement Plan Services, Inc., wholly
owned subsidiaries of Price Associates, and Price Associates for
certain additional services under separate contracts. These
services included (i) transfer and dividend disbursing agent
functions and shareholder services for all accounts; (ii) sub-
accounting and recordkeeping for shareholder accounts in certain
retirement plans (the Fund did not pay any fees for these
services); and (iii) calculation of daily share price and
maintenance of portfolio and general accounting records. For the
year ended December 31, 1995, the Global Government Fund paid
fees totaling approximately $63,000, $2,000, and $100,000,
respectively; and the Fund paid fees totaling approximately
$74,000, $0, and $110,000, respectively, for these services.
Purchase, Redemption and Exchange of Shares
Shares of the Fund and the Global Government Fund are sold
on a continuous basis. Shares of the funds are sold at their net
asset value without a sales charge. Each fund requires a minimum
initial investment of $2,500 ($1,000 for retirement plans).
These minimums will not apply in connection with the
reorganization. The minimum subsequent investment is generally
$100 ($50 for retirement plans).
PAGE 15
Redemption and exchange rights of the funds are identical.
Shares of the funds may be redeemed at their respective net asset
values; however, redemptions in excess of $250,000 or 1% of net
assets in any 90-day period may be subject to certain conditions.
Shares of the funds may be exchanged for shares of other members
of the T. Rowe Price family of funds, subject to certain
limitations, as provided in the prospectus of the funds.
Dividends and Distributions
The funds' policies on dividends and distributions are
identical. Each fund has a policy of distributing all of its net
investment income and capital gains to its respective
shareholders. Dividends from net investment income for each fund
are declared daily and paid monthly. Distributions from capital
gains, if any, are normally declared and paid in December.
Dividends and capital gain distributions are automatically
reinvested in additional shares, unless and until the shareholder
elects to receive them in cash.
Risk Factors
What are the main risks of investing in these funds and how
do they differ?
The risks are the usual ones associated with investments in
U.S. or foreign fixed income securities, including:
o Interest rate or market risk: the decline in bond
prices that accompanies a rise in the overall level of
interest rates. (Bond prices and interest rates move
in opposite directions.) Because of its longer
weighted average maturity and because prices of long-
term bonds are more sensitive to interest rate changes
than prices of short-term bonds, the Global Government
Fund has greater interest rate risk than the Fund.
o Credit risk: the chance that any of a fund's holdings
will have its credit downgraded or will default,
potentially reducing the fund's share price and income
level. Each fund invests primarily in high quality
securities. The Global Government Fund must invest
primarily in government bonds while the Fund may invest
in either government or corporate bonds. Each fund may
also invest up to 10% of its assets in non-investment
grade, high risk securities.
PAGE 16
o Currency risk: the possibility that a fund's foreign
holdings will be adversely affected by fluctuations in
currency markets. Further information on the funds'
currency hedging programs is set forth below.
How does currency fluctuation affect the performance of a
global fund?
Fluctuating currencies can have either a positive or
negative impact on all global funds regardless of the credit
quality of their holdings. U.S. shareholders benefit when
foreign currencies appreciate against the dollar and are injured
when foreign currencies lose value against the dollar. For
example, if a French bond rose 10% in price during a year, but
the U.S. dollar gained 5% against the French franc during that
time, the U.S. investor's return would be reduced to 5%. This is
because the franc would "buy" fewer dollars at the end of the
year than at the beginning, or, conversely, a dollar would buy
more francs.
Price-Fleming actively manages currency risk in the Fund and
may also do so in the Global Government Fund in an effort to
reduce the negative impact of a strong dollar. The Fund is the
more conservative of these two funds because of its shorter
average maturity and more extensive use of hedging back to the
U.S. dollar.
What are some of the other risks of foreign investing?
Foreign investing involves sovereign risk. Sovereign risk
includes the potential for adverse local political or economic
developments, potential nationalization, withholding taxes on
income from sources within such countries and currency blockage
(which would prevent cash from being brought back to the United
States). Foreign companies and governments may have less public
or less reliable information available about them and foreign
companies may be subject to less governmental regulation than
U.S. companies. Securities of foreign companies may be less
liquid or more volatile than securities of U.S. companies.
There are additional differences in the investment programs
of the funds which Fund shareholders should consider. See "Risk
Factors" and "Comparison of Investment Objectives, Policies and
Restrictions."
PAGE 17
REASONS FOR THE REORGANIZATION
Reasons for the Reorganization and Liquidation
The Company's Board of Directors, including all of the
independent directors, has determined that the proposed
transaction is in the best interests of the shareholders of the
Fund and the Global Government Fund and that the interests of
shareholders of the Fund and the Global Government Fund will not
be diluted as a result of the proposed transaction.
The Directors of the Fund believe the transaction is in the
best interests of the Fund for the following reasons:
Shrinking assets and asset class. The assets of the Fund
have been shrinking over the last two years and there is no sign
this trend will reverse itself. The Fund's net assets as of
December 31, 1994 were $56 million and as of June 30, 1996, $37
million. The shareholder base has similarly shrunk from
approximately 4,000 to 2,150. This has paralleled a similar
trend in the whole asset class of short-term global funds which
has been experiencing net redemptions for some time.
Impact on investment program. If the described trends
continue, the shrinking assets of the Fund will affect the
ability of the Fund's manager, Price-Fleming, to optimize the
Fund's investment program. The Fund needs to be larger to take
full advantage of diversification and yield opportunities in the
market.
Impact on expense ratio. The continued decrease in the
Fund's assets has caused the Fund's actual expense ratio to rise.
While the Fund's expense cap has effectively muted any impact on
shareholders, there is no requirement for Price-Fleming to
maintain the expense cap indefinitely and little opportunity for
the Fund's expenses to fall below the cap. While the Global
Government Fund's expense ratio is higher, this is due to its
higher management fee and the fact that it is currently a smaller
fund. The higher management fee is justified because of the
greater complexity of the Global Government Fund's investment
program. Over time, it is hoped that the assets of the Global
Government Fund will increase leading to a lowering of its
expense ratio.
Global Government Fund's investment program. While the
investment program of Global Government Fund differs from that of
the Fund, in that the Global Government Fund has a longer
PAGE 18
weighted average maturity and a less active currency hedging
program and therefore a somewhat more volatile risk/return ratio,
in the view of Price-Fleming the investment program of Global
Government Fund has been and continues to be a viable one.
Tax-free reorganization. The merger permits Fund
shareholders to defer recognition of gain or loss on their
investment.
No dilution. The assets of the Fund will be transferred to
Global Government Fund at their fair market value on the
valuation date of the transaction. Shares of Global Government
Fund equal in value to the assets will be received in exchange.
Expenses of the transaction (other than brokerage, interest,
taxes and extraordinary items) will be borne by Price-Fleming.
Therefore, shareholders of the Fund will not be diluted as a
result of the transaction.
The Board of Directors based its decision to approve the
Plan on an inquiry into a number of factors, including the
following:
(1) the relative past growth in assets and investment
performance and future prospects of the funds and
similar funds;
(2) the expense ratios of each fund and the impact of the
proposed transaction on them;
(3) the tax-free nature of the reorganization to the funds
and their shareholders;
(4) the compatibility of the investment objectives,
policies and restrictions of the funds; and
(5) the comparative investment performance of the funds.
If the Plan is not approved by Fund shareholders, the
Company's Board of Directors may consider other appropriate
action, such as the liquidation of the Fund or a merger or other
business combination with an investment company other than Global
Government Fund. Such other actions may require shareholder
approval.
PAGE 19
INFORMATION ABOUT THE REORGANIZATION
The following summary of the terms and conditions of the
Plan is qualified by reference to the Plan, which is included as
Exhibit A to this Combined Proxy Statement and Prospectus.
Plan of Reorganization
If the shareholders of the Fund approve the Plan, the
reorganization of the Fund will be consummated on or about
November 1, 1996, or such other date as is agreed to by the Fund
and Global Government Fund (the "Closing Date"). The parties may
postpone the Closing Date until a later date on which all of the
conditions to the obligations of each of the parties under the
Plan are satisfied, provided that the Plan may be terminated by
either party if the Closing Date does not occur on or before
January 31, 1997. See "Conditions to Closing" below.
On the Closing Date, the Fund will transfer substantially
all of its assets to Global Government Fund in exchange for
shares of the Global Government Fund having an aggregate net
asset value equal to the aggregate value of the assets so
transferred as of the close of regular trading on the New York
Stock Exchange on the business day immediately preceding the
Closing Date (the "Valuation Date"). The Global Government Fund
will not assume or otherwise be responsible for any liabilities
of the Fund. The number of Global Government Fund shares issued
in the exchange will be determined by dividing the aggregate
value of the assets of the Fund transferred (computed in
accordance with the policies and procedures set forth in the
current Prospectus of the Global Government Fund, subject to
review and approval by the Fund) by the net asset value per share
of the Global Government Fund as of the close of regular trading
on the Valuation Date. While it is not possible to determine the
exact exchange ratio until the Valuation Date, due to, among
other matters, market fluctuations and differences in the
relative performances of the Fund and the Global Government Fund,
if the Valuation Date had been June 30, 1996, shareholders of the
Fund would have received 0.449 shares of the Global Government
Fund for each Fund share held.
As soon as practicable after the Closing Date, the Fund will
distribute, in liquidation of the Fund, pro rata to its
shareholders of record as of the close of business on the
Valuation Date, the full and fractional shares of the Global
Government Fund received in the exchange. The Fund will
accomplish this distribution by transferring the Global
PAGE 20
Government Fund shares then credited to the account of the Fund
on the books of the Global Government Fund to open accounts on
the share records of the Global Government Fund in the names of
the Fund's shareholders, and representing the respective pro rata
number of Global Government Fund shares due such shareholders.
All issued and outstanding shares of the Fund will be
simultaneously cancelled on the books of the Company.
The Fund was closed to investments in new accounts at 4:00
p.m. on July 31, 1996 and will be closed to existing accounts by
September 13, 1996.
The stock transfer books of the Company with respect to the
Fund will be permanently closed as of the close of business on
the Valuation Date. The Fund will only accept redemption
requests received prior to the close of regular trading on the
New York Stock Exchange on the Valuation Date. Redemption
requests received thereafter will be deemed to be requests for
redemption of the Global Government Fund shares to be distributed
to Fund shareholders pursuant to the Plan.
The Plan provides that after the Closing Date the Company
will pay or make provision for all liabilities of the Fund and
distribute all remaining assets of the Fund, if any, to its
former shareholders.
Conditions to Closing
The obligation of the Fund to transfer its assets to the
Global Government Fund pursuant to the Plan is subject to the
satisfaction of certain conditions precedent, including
performance by the Global Government Fund in all material
respects of its agreements and undertakings under the Plan,
receipt of certain documents from the Global Government Fund,
receipt of an opinion of counsel to the Global Government Fund
and approval of the Plan by the shareholders of the Fund as
described above. The obligation of the Global Government Fund to
consummate the reorganization is subject to the satisfaction of
certain conditions precedent, including performance by the Fund
of its agreements and undertakings under the Plan, receipt of
certain documents and financial statements from the Fund, receipt
of an opinion of counsel to the Fund and receipt of a limited
review letter from the auditors for the Fund as to certain
financial and accounting matters.
PAGE 21
The consummation of the proposed transaction is subject to a
number of conditions set forth in the Plan, some of which may be
waived by the Board of Directors of the Company. The Plan may be
terminated and the proposed transaction abandoned at any time,
before or after approval by the shareholders of the Fund, prior
to the Closing Date. In addition, the Plan may be amended in any
mutually agreeable manner, except that no amendment may be made
subsequent to the meeting of shareholders of the Fund that would
detrimentally affect the value of Global Government Fund's shares
to be distributed.
Expenses of Reorganization
Price-Fleming is responsible for the payment of all expenses
of the Fund incurred in connection with the reorganization (other
than taxes, interest, brokerage or extraordinary items).
Tax Considerations
The reorganization is intended to qualify for federal income
tax purposes as a tax-free reorganization under Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended
(the "Code"), with no gain or loss recognized as a consequence of
the reorganization by the Global Government Fund, the Fund or its
shareholders. The consummation of the transactions contemplated
under the Plan is conditioned upon receipt of an opinion from
Shereff, Friedman, Hoffman & Goodman, LLP, counsel to the
Company, to the effect that, on the basis of certain
representations of fact by officers of the Fund and Global
Government Fund, the existing provisions of the Code, current
administrative rules and court decisions, for federal income tax
purposes: (1) no gain or loss will be recognized by the Fund on
the transfer of its assets to the Global Government Fund solely
in exchange for shares of the Global Government Fund and no gain
or loss will be recognized by the Fund on the distribution of
shares received pursuant to the Plan to shareholders of the Fund
in complete liquidation of the Fund; (2) no gain or loss will be
recognized by the Global Government Fund on the receipt of the
assets of the Fund solely in exchange for the Global Government
Fund shares; (3) the adjusted basis of each asset of the Fund in
the hands of the Global Government Fund will be the same as the
adjusted basis of such asset in the hands of the Fund immediately
prior to the transaction; (4) the holding period of each asset of
the Fund in the hands of the Global Government Fund will include
the holding period of such asset in the hands of the Fund
immediately prior to the transaction; (5) no gain or loss will be
recognized by Fund shareholders upon the receipt of the Global
PAGE 22
Government Fund shares (including fractional shares) solely in
exchange for shares of the Fund; (6) the adjusted basis of the
Global Government Fund shares received by each Fund shareholder
(including fractional shares) will be the same as the adjusted
basis of the Fund shares surrendered in exchange therefore; and
(7) the holding period of the Global Government Fund shares
(including fractional shares) received by each Fund shareholder
will include the holding period of the Fund shares surrendered in
exchange therefore, provided that such shares were held as a
capital asset in the hands of the Fund shareholder on the date of
the exchange.
It is anticipated that at the date of the reorganization,
both the Fund and Global Government Fund will have tax basis net
capital losses available to offset future tax basis net capital
gains. Applicable provisions of the Internal Revenue Code may
limit the ability of Global Government Fund to use such losses to
offset future gains, or may extend the period during which such
offset would otherwise have occurred.
Shareholders should recognize that an opinion of counsel is
not binding on the Internal Revenue Service (the "IRS") or on any
court. The Company does not expect to obtain a ruling from the
IRS regarding the consequences of the reorganization.
Accordingly, if the IRS sought to challenge the tax treatment of
the reorganization and was successful, neither of which is
anticipated, the reorganization would be treated as a taxable
sale of assets of the Fund, followed by the taxable liquidation
of the Fund.
Description of Global Government Fund Shares
Full and fractional shares of the Global Government Fund
will be issued to shareholders of the Fund in accordance with the
procedures under the Plan as described above. Each Global
Government Fund share will be fully paid and nonassessable when
issued, will have no preemptive or conversion rights and will be
transferrable on the books of the Company. Ownership of Global
Government Fund shares by former shareholders of the Fund will be
recorded electronically and the Company will issue a confirmation
to such shareholders relating to those shares acquired as a
result of the reorganization. After the reorganization, former
shareholders of the Fund who were eligible to participate in the
dividend reinvestment program, the automatic withdrawal plan or
the automatic investment plan will automatically become
participants in the corresponding programs offered in respect of
the Global Government Fund.
PAGE 23
The voting rights of the Fund and Global Government Fund are
the same. As shareholders of the Global Government Fund, former
shareholders of the Fund will have the same voting rights with
respect to the Global Government Fund and the Company as they
currently have with respect to the Fund and the Company. The
Company does not routinely hold annual meetings of shareholders.
The Fund and Global Government Fund are "series," within the
meaning of Rule 18f-2 under the Investment Company Act, of the
Company. The Company currently has twelve such series -- the
Fund, Global Government Fund, the International Discovery Fund,
the International Stock Fund, the European Stock Fund, the New
Asia Fund, the Japan Fund, the Latin America Fund, the Emerging
Markets Stock Fund, the Global Stock Fund, the International Bond
Fund, and the Emerging Markets Bond Fund. The Board of Directors
of the Company may designate additional classes or series without
shareholder approval. As is the case with the Global Government
Fund, shares of the Fund (and of any other class or series which
may be designated by the Board of Directors) have equal voting
rights on matters affecting the Company as a whole. Also like
the Global Government Fund, if a matter affects only the Fund (or
any other class or series), then unless otherwise required by the
Investment Company Act, only shareholders of the Fund (or the
other class or series) are entitled to vote on the matter.
Capitalization
The following table shows the unaudited capitalization of
the Fund and the Global Government Fund as of June 30, 1996, and
on a pro forma basis as of that date giving effect to the
proposed acquisition of Fund assets. The actual net assets of
the Fund and the Global Government Fund on the Valuation Date
will differ due to fluctuations in net asset values, subsequent
purchases and redemptions of shares.
Global
Government Pro Forma
Fund Fund Combined
Net Assets (000's) $36,639 $27,936 $64,575
Net Asset Value Per Share $4.47 $9.96 $9.96
Shares Outstanding (000's) 8,195 2,804 6,482
Other Matters
To the extent permitted by law, the Plan may be amended
without shareholder approval by the Board of Directors of the
PAGE 24
Company; and the Company may waive without shareholder approval
any default by the Fund or Global Government Fund or the failure
to satisfy any of the conditions of their obligations, provided
that no such amendment or waiver may be made if it would
adversely affect shareholders of the Fund or the Global
Government Fund. The Plan may be terminated and the
reorganization abandoned at any time before or, to the extent
permitted by law, after the approval of shareholders of the Fund
by action of the Board of Directors of the Company. The Company
may, at its election, terminate the Plan in the event that the
reorganization has not closed on or before January 31, 1997.
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objective, policies and restrictions of the
Global Government Fund are described in greater detail in the
International Fixed Income Funds' prospectus, which is
incorporated herein by reference.
Investment Policies
In seeking to achieve their respective investment
objectives, the Global Government Fund and the Fund are guided by
similar but different investment policies and restrictions which
should be considered by the shareholders of the Fund. Unless
otherwise specified, the investment policies and restrictions of
the Global Government Fund and the Fund described below may be
changed without shareholder approval. Policies stated to be
fundamental policies of a fund may not be changed without the
approval of the holders of (i) a majority of the outstanding
shares of such fund, or (ii) 67% of the shares of such fund
represented at a meeting of shareholders at which the holders of
more than 50% of the outstanding shares of such fund are
represented, whichever is less.
o The Fund. The Fund's objective is to provide a high level
of current income consistent with modest share price
fluctuation by investing primarily in high-quality fixed
income securities. The Fund will invest at least 65% of its
assets in high-quality securities, but may invest up to 10%
of assets in below-investment-grade, high-risk bonds,
including bonds in default or those with the lowest rating.
To reduce the impact of interest rate changes on the Fund's
share price, the portfolio's dollar-weighted average
maturity will not exceed three years, although the Fund can
hold individual securities with longer maturities.
PAGE 25
To reduce the effect of currency fluctuations on share
price, Price-Fleming will actively manage the Fund's foreign
currency exposure either by hedging or by investing in
securities with currencies highly correlated to the U.S.
dollar. Due to the high cost of currency hedging, Price-
Fleming will not attempt to eliminate all currency risk, but
rather only the amount thought necessary to minimize price
declines while providing high current income.
o Global Government Fund. Global Government Fund's objective
is to provide high current income and, secondarily, capital
appreciation and protection of principal by investing
primarily in high-quality foreign and U.S. government bonds.
Global Government Fund will normally have at least 65% of
its assets in bonds issued or guaranteed by the U.S. or
foreign governments or their agencies and by foreign
authorities, provinces, and municipalities. Global
Government Fund may also invest up to 10% of total assets in
below-investment-grade, high-risk bonds including bonds in
default or those with the lowest rating.
To reduce the effect of interest rate changes on Global
Government Fund's share price while seeking higher yields,
the weighted average maturity of the portfolio is likely to
average around seven years, although Global Government Fund
may adopt longer or shorter maturities in anticipation of
falling or rising interest rates. Global Government Fund
may also hold individual securities with maturities longer
or shorter than seven years.
Global Government Fund has wide flexibility to engage in
hedging strategies to reduce the impact of currency
fluctuations on the share price.
Each fund is considered "non-diversified" for purposes of
the Investment Company Act.
What other kinds of securities can the funds invest in?
The Fund and Global Government Fund invest primarily in
high-quality securities to reduce credit risk. However, each may
also invest a portion of assets in high-risk securities in an
effort to enhance performance. The funds ordinarily invest in
the securities of at least three countries; however, each may
invest in the securities of one country, including the U.S., for
temporary defensive purposes.
PAGE 26
How does currency fluctuation affect the performance of the
funds?
Fluctuating currencies can have either a positive or
negative impact on all international and global funds regardless
of the credit quality of their holdings. U.S. shareholders
benefit when foreign currencies appreciate against the dollar and
are injured when foreign currencies lose value against the
dollar.
Price-Fleming actively manages currency risk in the Fund and
may also do so in the Global Government Fund in an effort to
reduce the negative impact of a strong dollar. The Fund is the
more conservative of these two funds because of its shorter
average maturity and more extensive use of hedging back to the
U.S. dollar.
Investment Restrictions
Except as previously discussed, the investment restrictions
of the funds are the same.
Risk Factors
What are the main risks of investing in the funds?
As noted previously, the risks are the usual ones associated
with investments in U.S. or foreign fixed income securities,
including:
o Interest rate or market risk: the decline in bond
prices that accompanies a rise in the overall level of
interest rates. (Bond prices and interest rates move
in opposite directions.) Because prices of long-term
bonds are more sensitive to interest rate changes than
prices of short-term bonds, Global Government Fund has
greater interest rate risk than the Fund.
o Credit risk: the chance that any of a fund's holdings
will have its credit downgraded or will default,
potentially reducing the fund's share price and income
level.
o Currency risk: the possibility that a fund's foreign
holdings will be adversely affected by fluctuations in
currency markets.
PAGE 27
What are the particular risks associated with global
investing and these funds?
Global investing involves risks in addition to purely
domestic investing which can increase the potential for losses in
the funds. These risks can be significantly magnified for
investments in emerging markets. Currency risk cannot be
eliminated entirely and there is no guarantee that hedging will
always work. In addition it may not be possible to effectively
hedge the currencies of certain countries, particularly in
emerging markets. Furthermore, hedging costs can be significant,
and they are paid out of a fund's capital and reflected in the
net asset value.
o Currency fluctuations. Transactions in foreign
securities are conducted in local currencies, so
dollars must often be exchanged for another currency
when a security is bought or sold or a dividend is
paid. Likewise, share price quotations and total
return information reflect conversion into dollars.
Fluctuations in foreign exchange rates can
significantly increase or decrease the dollar value of
a foreign investment, boosting or offsetting its local
market return. For example, if a French bond rose 10%
in price during a year, but the U.S. dollar gained 5%
against the French franc during that time, the U.S.
investor's return would be reduced to 5%. This is
because the franc would "buy" fewer dollars at the end
of the year than at the beginning, or, conversely, a
dollar would buy more francs.
o Costs. It is more expensive for U.S. investors to
trade in foreign markets than in the U.S. Mutual funds
offer a very efficient way for individuals to invest
abroad, but the overall expense ratios of the funds are
usually somewhat higher than those of typical domestic
funds.
o Political and economic factors. The economies,
markets, and political structures of a number of the
countries in which each fund can invest do not compare
favorably with the U.S. and other mature economies in
terms of wealth and stability. Therefore, investments
in these countries will be riskier and more subject to
erratic and abrupt price movements. This is especially
true for emerging markets such as those found in Latin
America, China, and certain Asian countries, Eastern
PAGE 28
Europe, and Africa. However, even investments in
countries with highly developed economies are subject
to risk.
Some economies are less well developed (for example,
those in Latin America, Eastern Europe, Africa, and
certain Asian countries), overly reliant on particular
industries, and more vulnerable to the ebb and flow of
international trade, trade barriers, and other
protectionist or retaliatory measures (for example,
Japan, Southeast Asia, Latin America, Eastern Europe,
and Africa). This makes investment in such markets
significantly riskier than in other countries. Some
countries, particularly in Latin America and Africa,
are grappling with severe inflation and high levels of
national debt. Investments in countries that have
recently begun moving away from central planning and
state-owned industries toward free markets, such as
Eastern Europe, China, and Africa, should be regarded
as speculative.
Certain countries have histories of political
instability and upheaval (for example, Latin America
and Africa) that could cause their governments to act
in a detrimental or hostile manner toward private
enterprise or foreign investment. Actions such as
nationalizing a company or industry, expropriating
assets, or imposing punitive taxes could have a severe
effect on security prices and impair a fund's ability
to repatriate capital or income. Significant external
risks, including war, currently affect some countries.
Governments in many emerging market countries
participate to a significant degree in their economies
and securities markets.
While certain countries have made progress in economic
growth, liberalization, fiscal discipline, and
political and social stability, there is no assurance
these trends will continue.
o Legal, regulatory, and operational. Certain countries
lack uniform accounting, auditing, and financial
reporting standards, have less governmental supervision
of financial markets than in the U.S., do not honor
legal rights enjoyed in the U.S., and have settlement
practices, such as delays, which could subject a fund
to risks not customary in the U.S. In addition,
PAGE 29
securities markets in these countries have
substantially lower trading volumes than U.S. markets,
resulting in less liquidity and more volatility than in
the U.S.
o Pricing. Portfolio securities may be listed on foreign
exchanges that are open days (such as Saturdays) when
the funds do not compute their prices. As a result, a
fund's net asset value may change significantly on days
when shareholders cannot make transactions.
What kinds of securities can the funds invest in?
Each fund may invest in a wide variety of fixed income
securities, Brady bonds, hybrid instruments, private placements,
loan participations and assignments and high-yield/high-risk
securities. Additionally, the funds may engage in different
types of management practices, including: foreign currency
transactions, borrowing money and transferring assets, futures
and options, and lending of portfolio securities.
COMPARISON OF TOTAL RETURNS OF THE FUNDS
Set forth below is total return information for each fund
through June 30, 1996. This information is derived from the
"Financial Highlights" table of the International Fixed Income
Funds' prospectus and the Global Bond Funds June 30, 1996
semiannual report.
Fund 1991 1992 1993 1994 1995 1996
Short-Term
Global Income -- (0.22)%ab 7.87%b (2.92)%b 8.34%b 3.08%be
Global
Government
Bond 11.31%cd 3.26%d 11.15%d (3.06)%d 18.13%d(0.16)%de
a From June 30, 1992 (commencement of operations) to December
31, 1992.
b Excludes expenses in excess of a 1.00% voluntary expense
limitation in effect through December 31, 1997.
c From December 28, 1990 (commencement of operations) to
December 31, 1991.
d Excludes expenses in excess of a 1.20% voluntary expense
limitation in effect through December 31, 1996.
e From January 1, 1996 to June 30, 1996.
PAGE 30
COMPARISON OF 1995 PERFORMANCE OF THE FUNDS
1995 Performance of the Fund
The following information is excerpted from the Fund's annual
report dated December 31, 1995. Additional and more recent
information about the Fund's performance is set forth in its
semiannual report dated June 30, 1996.
The Fund benefited early in 1995 from minimal exposure to
Latin American credits in the aftermath of the Mexican peso
crisis. As the year progressed, the Fund extended the weighted
average maturity of the portfolio to take advantage of declining
interest rates, which further helped performance.
The Fund concentrated its holdings during the first half of
1995 in core European markets, including Germany, France,
Belgium, and Austria, as the likelihood of German interest cuts
increased. Later, the Fund added positions in Spain, Italy,
Australia, and Canada. During the second half off 1995, the Fund
established small positions in U.S. dollar-denominated Mexican
debt and assumed some currency exposure to Poland and the Czech
Republic, which contributed positively to Fund performance near
year-end.
Performance Comparison as of 12/31/95
<TABLE>
<CAPTION>
Salomon Brothers
Short-Term Global 1-3 Year
Income Fund Treasury Index
<S> <C> <C>
6/1/92 $ 10,000 $ 10,000
Dec-92 9,978 10,300
Dec-93 10,763 10,855
Dec-94 10,449 10,913
Dec-95 11,321 12,084
</TABLE>
Note: The index return does not reflect expenses, which have been
deducted from the Fund's return.
PAGE 31
Average Annual Compound Total Return
Periods Ended December 31, 1995
Since Inception
1 Year 6/30/92
__________ _____________________
8.34% 3.60%
Investment return and principal value represent past performance
and will vary. Shares may be worth more or less at redemption
than at original purchase.
1995 Performance of Global Government Fund
The following information is excerpted from the Global
Government Fund's annual report dated December 31, 1995.
Additional and more recent information about the Global
Government Fund's performance is set forth in its semiannual
report dated June 30, 1996.
The Global Government Fund outperformed its unhedged
benchmark over the second half of 1995 because of its
underweighted allocation to Japanese bonds and currency. This
underweighting hindered results to some extent during the first
six months of 1995 when Japanese bonds returned 8% in dollar
terms.
In addition, the Global Government Fund also underweighted
U.S. Treasuries, which did not do as well as foreign bonds. The
Global Government Fund's preference for the better-performing
markets of Europe helped returns. Extensive exposure to all
European bond maturities benefited the Global Government Fund as
rates fell across the yield curve.
The Global Government Fund's small holdings in emerging
market debt aided performance in the second half of 1995 as those
markets rebounded sharply from first quarter losses.
PAGE 32
Performance Comparison as of 12/31/95
<TABLE>
<CAPTION>
T. Rowe Price J.P. Morgan
Global Government Global Government
Bond Fund Bond Hedged Index
<S> <C> <C>
12/28/90 $ 10,000 $ 10,000
Dec-91 11,131 11,308
Dec-92 11,493 12,061
Dec-93 12,775 13,528
Dec-94 12,384 12,980
Dec-95 14,630 15,303
</TABLE>
Note: The index return does not reflect expenses, which have been
deducted from the Global Government Fund's return.
Average Annual Compound Total Return
Periods Ended December 31, 1995
Since Inception
1 Year 5 Years 12/28/90
_________ ____________ __________________
18.13% 7.91% 7.91%
Investment return and principal value represent past performance
and will vary. Shares may be worth more or less at redemption
than at original purchase.
THE ANNUAL AND SEMI-ANNUAL REPORTS FOR THE FUND AND THE
GLOBAL GOVERNMENT FUND DATED DECEMBER 31, 1995 AND JUNE 30, 1996,
RESPECTIVELY, ARE AVAILABLE AT NO COST BY CALLING 1-800-225-5132.
INFORMATION ABOUT THE FUNDS
Information about the Global Government Fund and the Fund is
included in the current International Fixed Income Funds'
prospectus dated May 1, 1996, a copy of which is incorporated
herein by reference. Additional information about the Global
Government Fund and the Fund is included in the Statement of
Additional Information dated the same date as the Prospectus,
which has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. Copies of this
PAGE 33
Prospectus and Statement of Additional Information may be
obtained without charge by writing T. Rowe Price International
Funds, Inc., 100 East Pratt Street, Baltimore, Maryland 21202, or
by calling 1-800-225-5132.
The funds file proxy materials, reports and other
information with the Securities and Exchange Commission. These
reports can be inspected and copied at the public reference
facilities maintained by the Securities and Exchange Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's New York Regional Office, 75 Park Place, New York,
New York 10007, and Chicago Regional Office, 500 West Madison
Street, Room 1400, Chicago, Illinois 60606. Copies of these
materials can also be obtained from the Public Reference Branch,
Office of Filings, Information and Consumer Services, Securities
and Exchange Commission, Washington, D.C. 20549, at prescribed
rates.
VOTING INFORMATION
If the enclosed proxy is executed properly and returned
unmarked in time to be voted at the meeting, the shares
represented will be voted for approval of the Plan. Any proxy
may be revoked at any time prior to its exercise by filing with
the Secretary of the Company a written notice of revocation, by
delivering a duly executed proxy bearing a later date, or by
attending the meeting and voting in person.
The Board of Directors has fixed the close of business on
September 6, 1996, as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting and
any adjournments thereof. As of such date, there were
approximately 7,250,225.996 outstanding shares of the Fund, each
share being entitled to one vote and a proportionate vote for
each factional share. According to information available to the
Company, no person was the beneficial owner of 5% or more of the
outstanding shares of the Fund on on the record date. On such
date the directors and officers of the Company as a group owned
less than 1% of the outstanding shares of the Fund. According to
information available to the Global Government Fund, no person
was the beneficial owner of 5% or more the outstanding shares of
the Global Government Fund on such date. On such date, the
directors and officers of the Global Government Fund, as a group,
owned less than 1% of the outstanding shares of the Global
Government Fund.
PAGE 34
Shareholders are entitled to one vote for each full share,
and a proportionate vote for each fractional share, of the Fund
held as of the record date. Under Maryland law, shares owned by
two or more persons (whether as joint tenants, co-fiduciaries, or
otherwise) will be voted as follows, unless a written instrument
or court order providing to the contrary has been filed with the
Fund: (1) if only one votes, that vote will bind all; (2) if more
than one votes, the vote of the majority will bind all; and (3)
if more than one votes and the vote is evenly divided, the vote
will be cast proportionately.
A majority of the shares of the Fund outstanding as of the
record date must be present in person or represented by proxy for
the transaction of business at the meeting. The affirmative vote
of a majority of the outstanding shares of the Fund is required
for approval of the Plan. If a quorum is present at the meeting
but sufficient votes for the Plan are not received, the persons
named as proxies may propose one or more adjournments of the
meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of
those shares present at the meeting or represented by proxy. The
persons named as proxies will vote for such adjournment those
shares which they are entitled to vote for the Plan; they will
vote against such adjournment those shares which they have been
instructed to vote against the Plan.
Abstentions and "broker non-votes" (as defined below) are
counted for purposes of determining whether a quorum is present,
but do not represent votes cast with respect to any Proposal.
"Broker non-votes" are shares held by a broker or nominee for
which an executed proxy is received by the Fund, but are not
voted as to one or more Proposals because instructions have not
been received from the beneficial owners or persons entitled to
vote and the broker or nominee does not have discretionary voting
power.
In addition to solicitation by mail, solicitations on behalf
of the Board of Directors may also be made by personal interview,
telegram and telephone. Certain officers and regular agents of
the Company, who will receive no additional compensation for
their services, may use their efforts, by telephone or otherwise,
to request the return of proxies. In addition, D. F. King & Co.,
Inc., has been retained to perform various proxy advisory and
solicitation services. The cost of preparing, assembling,
mailing and transmitting proxy materials and of soliciting
proxies on behalf of the Board of Directors (including the fees
PAGE 35
and expenses of D. F. King & Co.) will be borne by Price-Fleming.
Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy
material to their principals, and Price-Fleming will reimburse
them for their expenses in doing so.
The management of the Company knows of no other business
which may come before the meeting. However, if any additional
matters are properly presented at the meeting, the persons named
in the enclosed proxy, or their substitutes, will vote thereon in
accordance with their best judgment in the interests of the Fund
and the Company.
Shareholders of the Fund will not be entitled to any rights
of share appraisal in connection with the reorganization.
However, a shareholder has the right until the Valuation Date of
the reorganization to redeem his Fund shares at their net asset
value and thereafter a shareholder may redeem the Global
Government Fund shares received in the reorganization at their
net asset value.
Solicitation of proxies by telephone. In addition to
soliciting proxies by mail, in person or by telephone, the Fund
may arrange to have votes recorded by telephone. The telephone
voting procedure is designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of
their shares in accordance with their instructions and to confirm
that their instructions have been properly recorded. The Fund
has been advised by counsel that these procedures are consistent
with the requirements of applicable law. If these procedures
were subject to a successful legal challenge, such votes would
not be counted at the meeting. The Fund is unaware of any such
challenge at this time. Shareholders would be called at the
telephone number Price Associates has in its records for their
accounts, and would be asked for their social security number or
other identifying information. The shareholders would then be
given an opportunity to authorize proxies to vote their shares at
the meeting in accordance with their instructions. To ensure
that the shareholders' instructions have been recorded correctly,
they will also receive a confirmation of their instructions in
the mail. A special toll-free number will be available in case
the information contained in the confirmation is incorrect.
PAGE 36
TRANSFER AGENT AND CUSTODIAN
T. Rowe Price Services, Inc., 100 East Pratt Street,
Baltimore, Maryland 21202, serves as the transfer agent and
dividend disbursing agent for the funds. State Street Bank and
Trust Company ("State Street"), 225 Franklin Street, Boston,
Massachusetts 02110, is the custodian for the funds' domestic
securities and The Chase Manhattan Bank, N.A., London ("Chase"),
Woolgate House, Coleman Street, London, England, EC2P 2HD, is the
custodian of the funds' portfolio securities purchased outside
the United States.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of
the Global Government Fund are being passed upon by Shereff,
Friedman, Hoffman & Goodman, LLP, 919 Third Avenue, New York, New
York 10022.
FINANCIAL STATEMENTS
The audited financial statements of the Global Government
Fund and the Fund for the year ended December 31, 1995,
incorporated by reference in this Combined Proxy Statement and
Prospectus and in the Prospectus for the Global Government Fund
and the Fund, have been so incorporated in reliance on the report
of Coopers & Lybrand L.L.P., independent accountants, given on
the authority of said firm as experts in accounting and auditing.
The unaudited financial statements of the Global Government Fund
and the Fund contained in the Semiannual Report dated June 30,
1996 are also incorporated by reference herein.
PAGE 37
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is
made this 6th day of September, 1996, by and between T. Rowe
Price International Funds, Inc., a corporation organized and
existing under the laws of Maryland (the "Company") on behalf of
its separately designated series, the T. Rowe Price Global
Government Bond Fund (the "Fund"), and the Company on behalf of
its separately designated series, the T. Rowe Price Short-Term
Global Income Fund (the "Acquired Fund"). All references in this
agreement to the Fund and the Acquired Fund are, as applicable,
to the Company on behalf of each such fund.
W I T N E S S E T H:
The Company is registered under the Investment Company Act
of 1940 ("1940 Act") as an open-end management investment
company, and, through the Acquired Fund, owns securities which
are assets of the character in which the Fund is permitted to
invest. The Company has agreed to combine the Fund and the
Acquired Fund through the transfer of substantially all of the
assets of the Acquired Fund to the Fund in exchange solely for
shares of Common Stock, par value $.01 per share, of the Fund
(the "Acquiring Fund Shares") and the distribution of Acquiring
Fund Shares to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund. The Company wishes to enter
into a definitive agreement setting forth the terms and
conditions of the foregoing transactions as a "plan of
reorganization" and "liquidation" within the meaning of Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, in consideration of the mutual promises
herein contained, the parties hereto agree as follows:
1. Assets to be Transferred
A. Reorganization. Prior to the close of regular trading
on the New York Stock Exchange (the "Exchange") on the Closing
Date (as hereinafter defined), all the assets of the Acquired
Fund, net of appropriate reserves and those assets described in
PAGE 38
paragraph 1.C. below, shall be delivered as provided in paragraph
2.C. to State Street Bank and Trust Company, custodian of the
Fund's U.S. assets (the "Custodian") or, in the case of
securities maintained outside of the United States, The Chase
Manhattan Bank, N.A., London (the "Foreign Custodian"), in
exchange for and against delivery by the Fund to the Acquired
Fund on the Closing Date of a number of Acquiring Fund Shares
(including, if applicable, fractional shares) having an aggregate
net asset value equal to the value of the assets of the Acquired
Fund so transferred, assigned and delivered, all determined and
adjusted as provided in paragraph 1.B. below. Notwithstanding the
foregoing, the assets of the Acquired Fund to be acquired by the
Fund shall constitute at least 90% of the fair market value of
the net assets of the Acquired Fund and at least 70% of the fair
market value of the gross assets of the Acquired Fund.
B. Valuation. The net asset value of shares of the Fund
and the value of the assets of the Acquired Fund to be
transferred shall, in each case, be computed as of the close of
regular trading on the Exchange on the Valuation Date (as
hereinafter defined). The net asset value of the Acquiring Fund
Shares shall be computed in the manner set forth in the Fund's
current prospectus and statement of additional information under
the Securities Act of 1933 (the "1933 Act"). The value of the
assets of the Acquired Fund to be transferred shall be computed
by the Company in accordance with the policies and procedures of
the Fund as described in the Fund's current prospectus and
statement of additional information under the 1933 Act, subject
to review and approval by the Acquired Fund and to such
adjustments, if any, agreed to by the parties.
C. Excludable Assets. If on the Closing Date the assets
of the Acquired Fund include accounts receivable, causes of
actions, claims and demands of whatever nature, contract rights,
leases, business records, books of accounts and shareholder
records, the Fund may for reasonable cause refuse either to
accept or to value such assets (other than fully collectible and
transferable dividends, interest and tax refunds). For purposes
of this paragraph l.C., "reasonable cause" includes the inability
to obtain a reliable value, the likelihood of engaging in
protracted collection efforts or the likelihood of engaging in
burdensome administrative responsibilities to receive value. In
addition, there shall be deducted from the assets of the Acquired
Fund described in paragraph I.A. assets not transferred pursuant
to paragraph I.A. and cash in an amount estimated by the Acquired
Fund to be sufficient to pay all the liabilities of the Acquired
Fund, including, without limitation, (i) amounts owed to any
PAGE 39
shareholders including declared but unpaid dividends and amounts
owed to any former shareholders in respect of redemptions in the
ordinary course of business, (ii) accounts payable and other
accrued and unpaid expenses incurred in the normal operation of
its business up to and including the Closing Date, and (iii) the
costs and expenses, if any, incurred by the Acquired Fund in
making and carrying out this Agreement (other than costs and
expenses to be paid for by Rowe Price-Fleming International,
Inc.).
2. Definitions
A. Closing and Closing Date. Subject to the terms and
conditions hereof, the closing of the transactions contemplated
by this Agreement (the "Closing") shall be conducted at the
offices of the Company in Baltimore, Maryland beginning at 10:00
a.m., Eastern time, on November 1, 1996, or at such other place
or on such later business day as may be agreed upon by the
parties. In the event that on the Valuation Date (i) the Exchange
is closed or trading thereon is restricted, or (ii) trading or
the reporting of trading on the Exchange or elsewhere is
disrupted so that accurate appraisal of the value of the Acquired
Fund assets or the net asset value of the Acquiring Fund Shares
is impractical, the Closing shall be postponed until the first
business day after the first business day when trading on the
Exchange or elsewhere shall have been fully resumed and reporting
thereon shall have been restored, or such other business day as
soon thereafter as may be agreed upon by the parties. The date on
which the Closing actually occurs is herein referred to as the
"Closing Date."
B. Valuation Date. The business day next preceding the
Closing Date shall be the "Valuation Date." The stock transfer
books of the Acquired Fund will be permanently closed as of the
close of business on the Valuation Date. The Acquired Fund shall
only accept redemption requests received by it in proper form
prior to the close of regular trading on the Exchange on the
Valuation Date. Redemption requests received thereafter shall be
deemed to be redemption requests for Acquiring Fund shares to be
distributed to Acquired Fund shareholders pursuant to the Plan
(assuming that the transactions contemplated by this Agreement
have been consummated).
C. Delivery. Portfolio securities shall be delivered by
the Acquired Fund to the Custodian or the Foreign Custodian, to
be held until the Closing for the account of the Acquired Fund,
no later than three (3) business days preceding the Closing (the
PAGE 40
"Delivery Date"), duly endorsed in proper form for transfer in
such condition as to constitute a good delivery thereof, in
accordance with the custom of brokers, and shall be accompanied
by all necessary state stock transfer stamps, if any, or a check
for the appropriate purchase price thereof. Cash of the Acquired
Fund shall be delivered by the Acquired Fund on the Closing Date
and shall be in the form of currency or wire transfer in federal
funds, payable to the order of the Custodian or the Foreign
Custodian. A confirmation for the Acquiring Fund Shares, credited
to the account of the Acquired Fund and registered in the name of
the Acquired Fund, shall be delivered by the Fund to the Acquired
Fund at the Closing.
3. Failure to Deliver Securities. If, on the Delivery
Date, the Acquired Fund is unable to make delivery under
paragraph 2.C. to the Custodian or the Foreign Custodian of any
of the portfolio securities of the Acquired Fund, the Fund may
waive the delivery requirements of paragraph 2.C. with respect to
said undelivered securities, if the Acquired Fund has delivered
to the Custodian or the Foreign Custodian by or on the Delivery
Date and, with respect to said undelivered securities, such
documents in the form of executed copies of an agreement of
assignment and escrow agreement and due bills and the like as may
be required by the Fund or the Custodian or the Foreign
Custodian, including brokers' confirmation slips.
4. Post-Closing Distribution and Liquidation of the
Acquired Fund. As soon as practicable after the Closing, the
Acquired Fund shall pay or make provisions for all of its debts,
taxes and other liabilities and shall distribute all of the
remaining assets thereof to the shareholders of the Acquired
Fund; appropriate articles supplementary or such other filings
amending the Company's charter to eliminate the designation of
shares of the Acquired Fund shall be filed with the Maryland
State Department of Assessments and Taxation; and the Acquired
Fund shall no longer be listed on the Company's Form N-SAR. At,
or as soon as may be practicable following the Closing Date, the
Company shall for federal income tax purposes liquidate the
Acquired Fund and distribute the Acquiring Fund Shares received
hereunder by instructing the Fund that the pro rata interest (in
full and fractional Acquiring Fund Shares) of each of the holders
of record of shares of the Acquired Fund as of the close of
business on the Valuation Date as certified by the Acquired
Fund's transfer agent (the "Acquired Fund Record Holders") be
registered on the books of the Fund in the names of each of the
Acquired Fund Record Holders. The Fund agrees to comply promptly
with said instruction. All issued and outstanding shares of the
PAGE 41
Acquired Fund shall thereupon be cancelled on the books of the
Company. The Fund shall have no obligation to inquire as to the
validity, propriety or correctness of any such instruction, but
shall, in each case, assume that such instruction is valid,
proper and correct. The Company shall record on the books of the
Fund the ownership of Acquiring Fund Shares by Acquired Fund
Record Holders. No redemption or repurchase of any Fund Shares
credited to Acquired Fund Record Holders in respect of the
Acquired Fund Shares represented by unsurrendered stock
certificates shall be permitted until such certificates have been
surrendered to the Custodian for cancellation. Any transfer taxes
payable upon issuance of Acquiring Fund Shares in a name other
than the name of the Acquired Fund Record Holder on the books of
the Company as of the Closing Date shall, as a condition of such
issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
5. Acquired Fund Securities. The Acquired Fund has
provided the Fund with a list of all of the Acquired Fund's
portfolio investments as of the date of execution of this
Agreement. The Acquired Fund may sell any of these investments
and will confer with the Fund with respect to investments for the
Acquired Fund. The Fund will, within a reasonable time prior to
the Closing Date, furnish the Acquired Fund with a statement of
the Fund's investment objectives, policies and restrictions and a
list of the investments, if any, on the list referred to in the
first sentence of this paragraph 5 that do not conform to such
objectives, policies and restrictions. In the event that the
Acquired Fund holds any investments that the Fund may not hold,
the Acquired Fund will, consistent with the foregoing and its own
policies and restrictions, use its reasonable efforts to dispose
of such investments prior to the Closing Date, provided, however,
that in no event will the Acquired Fund be required to dispose of
assets to an extent which would cause less than 50% of the
historic business assets of the Acquired Fund to be transferred
to the Fund pursuant to this Agreement or to take any action that
is inconsistent with paragraph 8.M. below. In addition, if it is
determined that the portfolios of the Acquired Fund and the Fund,
when aggregated, would contain any investments exceeding certain
percentage limitations applicable to the Fund with respect to
such investments, the Acquired Fund will, if requested by the
Fund, in a manner consistent with the foregoing and its own
policies and restrictions, use its reasonable efforts to dispose
of an amount of such investments sufficient to avoid violating
such limitations as of the Closing Date. On the Delivery Date,
the Acquired Fund shall deliver to the Fund a list setting forth
the securities then owned by the Acquired Fund (the "Securities
PAGE 42
List"), which shall be prepared in accordance with the
requirements of the Code and the regulations promulgated
thereunder for specific identification tax lot accounting and
which shall clearly reflect the bases used for determination of
gain and loss realized on the partial sale of any security
transferred to the Fund. The records from which the Securities
List will be prepared shall be made available by the Acquired
Fund prior to the Closing Date for inspection by the Fund's
Treasurer or his designee or the auditors of the Fund upon
reasonable request.
6. Liabilities and Expenses. The Fund shall not assume
any of the liabilities of the Acquired Fund, and the Acquired
Fund will use its reasonable efforts to discharge all its known
liabilities, so far as may be possible, prior to the Closing
Date. The Fund shall not be responsible for any of the Acquired
Fund's expenses in connection with the carrying-out of this
Agreement.
7. Legal Opinions.
A. Opinion of Acquired Fund Counsel. At the Closing, the
Acquired Fund shall furnish the Fund with such written opinions
(including opinions as to certain federal income tax matters) of
Shereff, Friedman, Hoffman & Goodman, LLP, and the factual
representations supporting such opinions as shall be, in form and
substance reasonably satisfactory to the Fund.
B. Opinion of Fund Counsel. At the Closing, the Fund
shall furnish the Acquired Fund with a written opinion of
Shereff, Friedman, Hoffman & Goodman, LLP, and the factual
representations supporting such opinions shall be, in form and
substance reasonably satisfactory to the Acquired Fund.
8. Acquired Fund Representations, Warranties and
Covenants. The Acquired Fund hereby represents and warrants to
the Fund, and covenants and agrees with the Fund:
A. that the audited statement of assets and
liabilities, including the schedule of portfolio
investments, and the related statement of operations and
statement of changes in net assets of the Acquired Fund as
of December 31, 1995 and for the year then ended heretofore
delivered to the Fund were prepared in accordance with
generally accepted accounting principles, reflect all
liabilities of the Acquired Fund, whether accrued or
contingent, which are required to be reflected or reserved
PAGE 43
against in accordance with generally accepted accounting
principles, and present fairly the financial position and
results of operations of the Acquired Fund as of said date
and for the period covered thereby;
B. that the Acquired Fund will furnish to the Fund an
unaudited statement of assets and liabilities, including the
schedule of portfolio investments (or a statement of net
assets in lieu of a statement of assets and liabilities and
a schedule of portfolio investments), and the related
statement of operations and statement of changes in net
assets of the Acquired Fund for the period commencing on the
date following the date specified in paragraph 8.A. above
and ending on June 30, 1996. These financial statements will
be prepared in accordance with generally accepted accounting
principles and will reflect all liabilities of the Acquired
Fund, whether accrued or contingent, which are required to
be reflected or reserved against in accordance with
generally accepted accounting principles, will present
fairly the financial position and results of operations of
the Acquired Fund as of the dates of such statements and for
the periods covered thereby;
C. that there are no legal, administrative or other
proceedings pending or, to the knowledge of the Acquired
Fund, overtly threatened against the Acquired Fund which
would individually or in the aggregate materially affect the
financial condition of the Acquired Fund or the Company's
ability to consummate the transactions contemplated hereby;
D. that the execution and delivery of this Agreement
by the Acquired Fund and the consummation of the
transactions contemplated herein have been authorized by the
Board of Directors by vote taken at a meeting of the Board
of Directors of the Company duly called and held on July 31,
1996, and that the Acquired Fund will (i) take all steps
necessary duly to call, give notice of, convene and hold a
meeting of the shareholders of the Acquired Fund as soon as
practicable and in accordance with applicable Maryland and
federal law, for the purpose of approving this Agreement and
the transactions contemplated herein and for such other
purposes as may be necessary and desirable, and (ii)
recommend to such shareholders the approval of this
Agreement and the transactions contemplated herein and such
other matters as may be submitted to such shareholders in
connection with the transactions contemplated herein;
PAGE 44
E. that from the date of this Agreement through the
Closing Date, there shall not have been:
(1) any material change in the business, results
of operations, assets or financial condition or the
manner of conducting the business of the Acquired Fund
(other than changes in the ordinary course of its
business or relating to the transactions contemplated
by this Agreement, including, without limitation,
dividends and distributions in the ordinary course,
changes in the net asset value per share, redemptions
in the ordinary course of business, and changes in
sales volume), which has had a material adverse effect
on such business, results of operations, assets or
financial condition, except in all instances as set
forth in the financial statements of the Acquired Fund
referred to in paragraphs 8.A. and B. above;
(2) any loss (whether or not covered by
insurance) suffered by the Company materially and
adversely affecting the assets of the Acquired Fund,
other than depreciation of securities;
(3) issued any option to purchase or other right
to acquire stock of the Acquired Fund of any class
granted by the Company to any person (excluding sales
in the ordinary course and a dividend reinvestment
program);
(4) any indebtedness incurred by the Company in
respect of the Acquired Fund for borrowed money or any
commitment to borrow money entered into by the Company
in respect of the Acquired Fund, except as provided in
the current prospectus and statement of additional
information of the Acquired Fund or so long as it will
not prevent the Acquired Fund from complying with
paragraph 8.I.;
(5) any amendment to the Articles of
Incorporation or By-Laws of the Company except to
effectuate the transactions contemplated hereunder or
otherwise as disclosed in writing to the Fund; or
(6) any grant or imposition of any lien, claim,
charge or encumbrance upon any asset of the Acquired
Fund except as provided in the current prospectus and
statement of additional information of the Acquired
PAGE 45
Fund or so long as it will not prevent the Acquired
Fund from complying with paragraph 8.I.;
F. that there are no material contracts outstanding
to which the Company or Acquired Fund is bound other than as
disclosed to the Fund;
G. that the Acquired Fund has filed all federal,
state and local tax returns and reports required by law to
have been filed, that all federal, state and local income,
franchise, property, sales, employment or other taxes
payable pursuant to such returns and reports have been paid
so far as due, or provision has been made for the payment
thereof, and that, to the knowledge of the Acquired Fund, no
such return is currently under audit and no assessment has
been asserted with respect to any such return other than
with respect to all such matters which are not material
individually or in the aggregate;
H. that, as promptly as practicable, but in any case
within 60 days after the Closing Date, the Acquired Fund
shall furnish the Fund with a statement of the earnings and
profits of the Acquired Fund for federal income tax
purposes;
I. that on the Closing Date the Acquired Fund will
have good and marketable title to the assets of the Acquired
Fund to be conveyed hereunder, free and clear of all liens,
mortgages, pledges, encumbrances, charges, claims and
equities whatsoever, and full right, power and authority to
sell, assign, transfer and deliver such assets and shall
deliver such assets to the Fund as set forth in paragraph
1.A. hereof. Upon delivery of such assets, the Fund will
receive good and marketable title to such assets, free and
clear of all liens, mortgages, pledges, encumbrances,
charges, claims and equities, except as to adverse claims of
which the Fund has notice at or prior to the time of
delivery. Except as set forth on the Securities List, none
of the securities comprising the assets of the Acquired Fund
will be "restricted securities" under the 1933 Act or the
rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder;
J. that the Proxy Statement/Prospectus (hereinafter
defined) at the time of delivery by the Acquired Fund to its
shareholders in connection with the meeting of shareholders
to approve this transaction, on the Closing Date and at the
PAGE 46
time of the liquidation of the Acquired Fund set forth in
paragraph 4. above, as amended or as supplemented if it
shall have been amended or supplemented, will conform in all
material respects to the applicable requirements of the 1933
Act, the Securities Exchange Act of 1934 (the "1934 Act")
and the 1940 Act and the rules and regulations of the
Commission thereunder, and will not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not materially misleading, except that
no representations or warranties in this section apply to
statements or omissions which are based on written
information furnished by the Fund to the Acquired Fund;
K. that the Acquired Fund is not, and the execution,
delivery and performance of this Agreement will not result,
in a material violation of any provision of the Company's
Articles of Incorporation or By-Laws or of any material
agreement, indenture, instrument, contract, lease or other
undertaking to which the Acquired Fund is a party or by
which it is bound and that this Agreement constitutes a
valid and legally binding obligation of the Acquired Fund,
enforceable against the Acquired Fund in accordance with its
terms, except as enforceability may be affected by
bankruptcy laws, laws affecting creditors generally and
general principles of equity;
L. that the Acquired Fund will take all actions
within its control necessary to cause the exchange of
Acquiring Fund Shares for assets of the Acquired Fund made
under this Agreement to qualify, as of and after the
Closing, as a reorganization within the meaning of Section
368(a)(1)(C) of the Code; and
M. that the Acquired Fund is registered with the
Commission under the 1940 Act, classified as a management
company and subclassified as an open-end company.
9. Fund Representations, Warranties and Covenants.
The Fund hereby represents and warrants to the Acquired Fund, and
covenants and agrees with the Acquired Fund:
A. that the audited statement of assets and
liabilities, including the schedule of portfolio
investments, and the related statement of operations
and statement of changes in net assets of the Fund as
PAGE 47
of December 31, 1995 and for the year then ended
heretofore delivered to the Acquired Fund were prepared
in accordance with generally accepted accounting
principles, reflect all liabilities of the Fund,
whether accrued or contingent, which are required to be
reflected or reserved against in accordance with
generally accepted accounting principles, and present
fairly the financial position and results of operations
of the Fund as of said date and for the period covered
thereby;
B. that the Fund shall furnish to the Acquired
Fund unaudited schedules of portfolio investments and
unaudited statements of assets and liabilities (or a
statement of net assets in lieu of a statement of
assets and liabilities and a schedule of portfolio
investments) and the related statements of operation
and statements of changes in net assets of the Fund for
the semiannual period of the Fund occurring between the
date following the date specified in paragraph 9.A.
above and June 30, 1996. These financial statements
will be prepared in accordance with generally accepted
accounting principles, will reflect all liabilities of
the Fund, whether accrued or contingent, which are
required to be reflected or reserved against in
accordance with generally accepted accounting
principles, will present fairly the financial position
and results of operations of the Fund as of the dates
of such statements and for the periods covered
thereby;
C. that there are no legal, administrative or
other proceedings pending or, to its knowledge, overtly
threatened against the Fund which would individually or
in the aggregate materially affect the financial
condition of the Fund or the Company's ability to
consummate the transactions contemplated hereby;
D. that the execution and delivery of this
Agreement by the Fund and the consummation of the
transactions contemplated herein have been authorized
by the Board of Directors of the Company by vote taken
at a meeting of the Board of Directors of the Company
duly called and held on July 31, 1996, and that
approval by the Fund's shareholders of this Agreement
or the consummation of the transactions contemplated
PAGE 48
herein is not required under applicable Maryland and
federal law;
E. that from the date of this Agreement through
the Closing Date, there shall not have been any
material change in the business, results of operations,
assets or financial condition or the manner of
conducting the business of the Fund (other than changes
in the ordinary course of its business, including,
without limitation, dividends and distributions in the
ordinary course, changes in the net asset value per
share, redemptions in the ordinary course of business
and changes in sales volume), which has had an adverse
material effect on such business, results of
operations, assets or financial condition, except in
all instances as set forth in the financial statements
of the Fund referred to in paragraph 9.A. and B. above;
F. that the Fund is registered with the
Commission under the 1940 Act, classified as a
management company and subclassified as an open-end
non-diversified company;
G. that the shares of the Fund to be issued
pursuant to paragraph I.A. will be duly registered
under the 1933 Act by the Registration Statement
(hereinafter defined) in effect on the Closing Date and
at the time of the liquidation of the Acquired Fund set
forth in paragraph 4. above;
H. that the Acquiring Fund Shares are duly
authorized and validly issued and are fully paid,
nonassessable and free of any preemptive rights and
conform in all material respects to the description
thereof contained in the Proxy Statement/Prospectus as
in effect on the Closing Date and at the time of the
liquidation of the Acquired Fund set forth in paragraph
4. above;
I. that the Fund is not, and the execution,
delivery and performance of this Agreement will not
result, in a material violation of any provision of the
Company's Articles of Incorporation or By-Laws or of
any material agreement, indenture, instrument,
contract, lease or other undertaking to which the Fund
is a party or by which it is bound, and that this
Agreement constitutes a valid and legally binding
PAGE 49
obligation of the Fund, enforceable against the Fund in
accordance with its terms, except as enforceability may
be affected by bankruptcy laws, laws affecting
creditors generally and general principles of equity;
J. that the Fund will take all actions within
its control necessary to cause the exchange of
Acquiring Fund Shares for assets of the Acquired Fund
made under this Agreement to qualify, as of and after
the Closing, as a reorganization within the meaning of
Section 368(a)(1)(C) of the Code;
K. that the Fund has filed all federal, state
and local tax returns and reports required by law to
have been filed, that all federal, state and local
income, franchise, property, sales, employment or other
taxes payable pursuant to such returns and reports have
been paid so far as due, or provision has been made for
the payment thereof, and that, to the knowledge of the
Fund, no such return is currently under audit and no
assessment has been asserted with respect to any such
return, other than with respect to all such matters
those which are not material individually or in the
aggregate;
L. that the Proxy Statement/Prospectus at the
time of delivery by the Acquired Fund to its
shareholders in connection with the meeting of
shareholders to approve this transaction, on the
Closing Date and at the liquidation of the Acquired
Fund set forth in paragraph 4. above, as amended or as
supplemented if it shall have been amended or
supplemented, and the Registration Statement on the
effective date thereof, on the Closing Date and at the
liquidation of the Acquired Fund set forth in paragraph
4. above, will conform in all material respects to the
applicable requirements of the 1933 Act, the 1934 Act
and the 1940 Act and the rules and regulations of the
Commission thereunder, and will not include any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances under which such statements were
made, not materially misleading, except that no
representations or warranties in this section apply to
statements or omissions which are based on written
PAGE 50
information furnished by the Acquired Fund to the Fund;
and
M. the current prospectus and statement of
additional information of the Fund (copies of which
have been delivered to the Acquired Fund) conform in
all material respects to the applicable requirements of
the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and do not
include any untrue statement of a material fact or omit
to state any material fact required to be stated
therein or necessary to make the statements therein, in
light of the circumstances under which they were made,
not materially misleading.
10. Certain Conditions.
Unless waived by the parties in writing in their sole
discretion, all obligations of the parties hereunder are subject
to the fulfillment, prior to or at the Closing, of each of the
following conditions:
A. Registration Statement and Proxy
Statement/Prospectus. The Fund will file a
registration statement on Form N-14 with the Commission
under the 1933 Act in order to register the Acquiring
Fund Shares to be issued hereunder. Such registration
statement in the form in which it shall become
effective and, in the event any post-effective
amendment thereto becomes effective prior to the
Closing Date, such registration statement as amended,
is referred to herein as the "Registration Statement."
The Acquired Fund will file preliminary proxy materials
with the Commission under the 1940 Act and the 1934
Act, relating to the meeting of the shareholders of the
Acquired Fund at which this Agreement and the
transactions herein contemplated will be considered and
voted upon, in the form of a combined proxy statement
and prospectus and related statement of additional
information included in the Registration Statement. The
combined proxy statement and prospectus and related
statement of additional information that is first filed
pursuant to Rule 497(b) under the 1933 Act is referred
to herein as the "Proxy Statement/Prospectus." The Fund
and the Acquired Fund each will exert reasonable
efforts to cause the Registration Statement to become
effective under the 1933 Act as soon as practical and
PAGE 51
agree to cooperate in such efforts. The Registration
Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness
thereof shall have been issued and, to the knowledge of
the parties hereto, no investigation or proceeding for
that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act. Upon
effectiveness of the Registration Statement, the
Acquired Fund will cause the Proxy Statement/Prospectus
to be delivered to the shareholders of the Acquired
Fund entitled to vote on the transactions contemplated
by this Agreement at least 20 days prior to the date of
the meeting of shareholders called to act upon such
transactions.
B. Shareholder Vote. The obligations of the
Acquired Fund under this Agreement shall be subject to
the shareholders of the Acquired Fund duly approving
the execution and delivery of this Agreement and the
transactions contemplated herein, including the
Amendment to the Charter of the Company in
substantially the form attached as Exhibit B.
C. Pending or Threatened Proceedings. On the
Closing Date, no action, suit or other proceeding shall
be threatened or pending before any court or
governmental agency in which it is sought to restrain
or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions
contemplated herein.
D. Appropriate Articles. The Company shall
execute and file with the Maryland State Department of
Assessments and Taxation, Articles of Amendment,
confirming solely for purposes of Maryland General
Corporate laws, the change and reclassification of the
shares of the Acquired Fund into the shares of the
Acquiring Fund and shall file articles supplementary or
other documents, as necessary to eliminate designation
of the Acquired Fund as a separate series of the
Company.
E. Declaration of Dividend. The Acquired Fund
shall have declared a dividend or dividends which,
together with all previous such dividends, shall have
the effect of distributing to the Acquired Fund
shareholders all of the investment company taxable
PAGE 52
income and realized capital gain for all taxable
periods of the Acquired Fund which are required to be
distributed to avoid federal income or excise tax
applicable to regulated investment companies.
F. Comfort letter. The Fund shall receive from
the Acquired Fund on the Closing Date a comfort letter
from independent auditors reasonably acceptable to the
Fund, dated as of the Closing Date, to the effect that
they have performed a limited review in accordance with
Statement of Auditing Standards No. 71 of the AICPA
that included a reading of the minute books of the
Acquired Fund, inquiries of officials of the Acquired
Fund responsible for financial accounting matters, and
such other inquiries and procedures as they may have
considered necessary, and on the basis of such limited
review nothing came to their attention that caused them
to believe that the computations required to perform
the exchange and valuation referred to in paragraphs 1
(A) and (B) of this Agreement as of the date of such
exchange and valuation were not in conformance with
this Agreement.
G. State Securities Laws. The parties shall
have received all permits and other authorizations
necessary under state securities laws to consummate the
transactions contemplated herein.
H. Performance of Covenants. Each party shall
have performed and complied in all material respects
with each of its agreements and covenants required by
this Agreement to be performed or complied with by it
prior to or at the Valuation Date and the Closing Date.
I. Representations and Warranties. The
representations and warranties of each party set forth
in this Agreement will be true and correct on the
Closing Date, and each party shall deliver to the other
a certificate of a duly authorized officer of such
party to that effect.
11. Notices. All notices, requests, instructions and
demands in the course of the transactions herein contemplated
shall be in writing addressed to the respective parties as
follows and shall be deemed given: (i) on the next day if sent by
prepaid overnight courier and (ii) on the same day if given by
hand delivery or telecopy.
PAGE 53
If to the Fund or Acquired Fund:
Henry H. Hopkins, Esquire
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Fax Number (410) 345-6575
with a copy to:
Joel H. Goldberg, Esquire
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Fax Number (212) 758-9526
or to such other address as the parties from time to time may
designate by written notice to all other parties hereto.
12. Termination.
A. This Agreement may be terminated by the Fund or the
Acquired Fund upon the giving of written notice to the other, if
the conditions specified in paragraphs 8., 9. and 10. have not
been performed or do not exist on or before January 31, 1997.
B. In the event of termination of this Agreement pursuant
to paragraph 12.A. of this Agreement, neither party (nor its
officers or directors) shall have any liability to the other.
13. Exhibits. All Exhibits shall be considered as part of
this Agreement.
14. Miscellaneous. This Agreement shall bind and inure to
the benefit of the parties and their respective successors and
assigns. It shall be governed by, construed and enforced in
accordance with the laws of the State of Maryland. The Acquired
Fund and the Fund represent and warrant to each other that there
are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein. The
Acquired Fund and the Fund agree that no party has made any
representation, warranty or covenant not set forth herein and
that this Agreement constitutes the entire agreement between the
parties as to the subject matter hereof. The representations,
warranties and covenants contained in this Agreement or in any
document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated
PAGE 54
hereunder for a period of three years thereafter. The paragraph
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement shall be
executed in any number of counterparts, each of which shall be
deemed an original. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies under
or by reason of this Agreement. Whenever used herein, the use of
any gender shall include all genders.
15. Amendments. The Acquired Fund and the Fund by mutual
consent of their Board of Directors or authorized committees or
officers may amend this Agreement in such manner as may be agreed
upon, whether before or after the meeting of stockholders of the
Acquired Fund at which action upon the transactions contemplated
hereby is to be taken; provided, however, that after the
requisite approval of the stockholders of the Acquired Fund has
been obtained, this Agreement shall not be amended or modified so
as to change the provisions with respect to the transactions
herein contemplated in any manner which would materially and
adversely affect the rights of such stockholders without their
further approval.
16. Waiver. The failure of any party hereto to enforce at
any time any of the provisions of this Agreement shall in no way
be construed to be a waiver of any such provision, nor in any way
to affect the validity of this Agreement or any part hereof or
the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be
held to be a waiver of any other or subsequent breach.
17. Liability.
A. The Company and the Fund acknowledge and agree that all
obligations of the Acquired Fund under this Agreement are binding
only with respect to the Acquired Fund; that any liability of the
Acquired Fund under this Agreement or in connection with the
transactions contemplated herein shall be discharged only out of
the assets of the Acquired Fund; and that no other portfolio of
the Company shall be liable with respect to this Agreement or in
connection with the transactions contemplated herein.
B. The Company and the Acquired Fund acknowledge and agree
that all obligations of the Fund under this Agreement are binding
only with respect to the Fund; that any liability of the Fund
PAGE 55
under this Agreement or in connection with the transactions
contemplated herein shall be discharged only out of the assets of
the Fund; and that no other portfolio of the Company shall be
liable with respect to this Agreement or in connection with the
transactions contemplated herein.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed and by their officers thereunto
duly authorized, as of the day and year first above written.
WITNESS: T. ROWE PRICE INTERNATIONAL FUNDS,
INC., on behalf of the T. Rowe
Price Global Government Bond Fund
__________________________ By__________________________(SEAL)
Title: Vice President
WITNESS: T. ROWE PRICE INTERNATIONAL FUNDS,
INC., on behalf of the T. Rowe
Price Short-Term Global Income
Fund
__________________________ By__________________________(SEAL)
Title: Vice President
PAGE 56
Exhibit B
T. ROWE PRICE INTERNATIONAL FUNDS, INC.
ARTICLES OF AMENDMENT
T. Rowe Price International Funds, Inc., a Maryland
corporation, having its principal office in Baltimore City,
Maryland (which is hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The charter of the Corporation is hereby amended
by:
Changing and reclassifying each share of the
T. Rowe Price Short-Term Global Income Fund (the
"Short-Term Fund") series of Common Stock (par
value $.01 per share) of the Corporation, which is
issued at the close of business on the effective
date of this amendment, into a number of shares of
the T. Rowe Price Global Government Bond Fund (the
"Global Fund") series of Common Stock (par value
$.01 per share) of the Corporation determined in
accordance with the following formula and as
further described in the Agreement and Plan of
Reorganization dated September 6, 1996 (the
"Reorganization Agreement") and filed as an
exhibit to the Corporation's Combined Proxy
Statement and Prospectus; the holder of each share
of the Short-Term Fund so change and reclassified
shall also be entitled to receive his or her pro
rata interest in any remaining shares formally
attributable to the Short-Term Fund, as
contemplated by the Reorganization Agreement.
Such formula is as follows: (A) the quotient of:
(x) the aggregate net assets (determined as of the
effective date in accordance with the
Reorganization Agreement) of the Short-Term Fund
(as of the effective date) divided by (y) the net
asset value per share of the Global Fund (as of
the effective date) shall be divided by (B) the
number of issued and outstanding shares of the
Short-Term Fund (as of the effective date).
Following this reclassification, the authorized
but unissued shares of the Short-Term Fund series
PAGE 57
shall be reclassified into undesignated shares of
common stock of the Corporation and the
Corporation shall file Articles Supplementary
confirming such change.
SECOND: This amendment does not change the aggregate
number of shares of authorized common stock of the Corporation.
THIRD: The foregoing amendments have been declared
advisable by the Board of Directors of the Corporation and
approved by the shareholders of the Corporation entitled to vote
thereon.
FOURTH: The foregoing amendments shall be effective as of
5:00 p.m. on October 31, 1996.
IN WITNESS WHEREOF, the Corporation has caused these
presents to be signed in its name and on its behalf of its
President and witnessed by its Assistant Secretary on this 31st
day of October, 1996.
T. ROWE PRICE INTERNATIONAL FUNDS,
INC.
By: ______________________________
Vice President
ATTEST:
______________________
Assistant Secretary
PAGE 58
THE UNDERSIGNED, the Vice President of T. ROWE PRICE
INTERNATIONAL FUNDS, INC. who executed on behalf of the
Corporation the foregoing Articles of Amendment of which this
certificate is made a part, hereby acknowledges in the name and
on behalf of the Corporation the foregoing Articles of Amendment
to be the corporate act of the Corporation and hereby certifies
to the best of his knowledge, information and belief the matters
and facts set forth herein with respect to the authorization and
approval thereof are true in all material respects under the
penalties of perjury.
____________________________
Vice President
PAGE 59
T. Rowe Price PROXY
_________________________________________________________________
INSTRUCTIONS:
1. Cast your vote by checking the appropriate box on the
reverse side. If you do not check a box, your vote will be
cast FOR that proposal.
2. Sign and date the card below.
3. Please return the signed card promptly using the enclosed
postage paid envelope, even if you will be attending the
meeting.
4. Please do not enclose checks or any other correspondence.
Please fold and detach card at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
T. ROWE PRICE SHORT-TERM SPECIAL MEETING: 9:00 A.M. EASTERN TIME
GLOBAL INCOME FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints M. David Testa and Martin G.
Wade, as proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as
designated below, all shares of stock of the Fund, which the
undersigned is entitled to vote at the Special Meeting of
Shareholders to be held on Wednesday, October 30, 1996, at the
time indicated above, at the offices of the Fund, 100 East Pratt
Street, Baltimore, Maryland, and at any and all adjournments
thereof, with respect to the matters set forth below and
described in the Notice of Special Meeting and Proxy Statement
dated September 13, 1996, receipt of which is hereby
acknowledged.
PAGE 60
Dated: _______________, 1996
Please sign exactly as name
appears. Only authorized
officers should sign for
corporations. For information
as to the voting of stock
registered in more than one
name, see page 22 of the
Notice of Special Meeting and
Proxy Statement.
______________________________
______________________________
Signature(s)
CUSIP#77956H807/FUND#063
PAGE 61
T. Rowe Price We Need Your Proxy Vote Before October 30, 1996
_________________________________________________________________
Please refer to the Proxy Statement discussion for this
matter.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE PROPOSAL.
Please fold and detach card at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Please vote by filling in the appropriate boxes below, as
shown, using blue or black ink or dark pencil. Do not use red
ink. (Example of darkened box appears here.)
1. To approve or disapprove an Agreement and Plan of
Reorganization and an Amendment of the Charter of the T.
Rowe Price International Funds, Inc. The Agreement and Plan
provides for the transfer of substantially all of the assets
of the T. Rowe Price Short-Term Global Income Fund ("Fund")
to T. Rowe Price Global Government Bond Fund (the "Global
Government Fund"), a separate series of T. Rowe Price
International Funds, Inc., in exchange solely for shares of
the Global Government Fund, and the distribution of the
Global Government Fund shares to the shareholders of the
Fund. The Charter amendment provides for the change and
reclassification of the shares of the Fund into the shares
of the Global Government Fund.
FOR /__ / AGAINST /__/ ABSTAIN /__/ 1.
2. To consider and act upon such other business as may properly
come before the meeting.
CUSIP#77956H807/FUND#063
PAGE 62
STATEMENT OF ADDITIONAL INFORMATION FOR
T. ROWE PRICE INTERNATIONAL FUNDS, INC. ON BEHALF OF
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND
Acquisition of the assets of
T. ROWE PRICE INTERNATIONAL FUNDS, INC. ON BEHALF OF
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (the Fund)
By and in exchange for shares of
T. ROWE PRICE INTERNATIONAL FUNDS, INC. ON BEHALF OF
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (Global Government
Fund)
This Statement of Additional Information relates
specifically to the proposed acquisition of substantially all of
the assets of the Fund by the Global Government Fund in exchange
for shares of the Global Government Fund.
This Statement of Additional Information consists of this
Cover Page, the Statement of Additional Information of the Global
Government Fund and the Fund, and the semiannual and annual
reports of the Global Government Fund and the Fund. Each of
these documents described below is attached hereto and
incorporated by reference herein.
(1) Statement of Additional Information, dated May 1, 1996
for T. Rowe Price International Fixed Income Funds
including the Global Government Fund and the Fund;
(2) the annual report, dated, December 31, 1995, for the
Global Government Fund and the Fund; and
(3) the semiannual report, dated June 30, 1996 for the
Global Government Fund and the Fund.
This Statement of Additional Information is not a
prospectus; a Proxy Statement/Prospectus dated September 13,
1996, relating to the above-reference transaction may be obtained
from T. Rowe Price Associates, Inc. This Statement of Additional
Information should be read in conjunction with such Proxy
Statement/Prospectus. The date of this Statement of Additional
Information is September 13, 1996.
PAGE 63
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
Principal Amount Market Value
(000's) (000's)
___________________ _________________
Security Pro Forma Pro Forma
Description STG GGB Combined STG GGB Combined
_________________________________________________________________
AUSTRALIA
_________________________________________________________________
Government Bonds
_________________________________________________________________
Commonwealth of
Australia, 6.25%,
3/15/99 AUD 1,500 275 1,775 $1,121 $206 $1,327
_________________________________________________________________
Commonwealth of
Australia,
6.75%, 11/15/06 730 730 492 492
_________________________________________________________________
New South Wales
Treasury Corporation,
6.50%, 5/01/06 730 730 476 476
_________________________________________________________________
1,121 1,174 2,295
_________________________________________________________________
Short-Term Investments
_________________________________________________________________
_________________________________________________________________
Chase Manhattan Bank,
N.A., fixed deposit,
7.00%, 7/01/96 655 655 515 515
_________________________________________________________________
515 515
_________________________________________________________________
Total Australia 1,636 1,174 2,810
_________________________________________________________________
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 64
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
Principal Amount Market Value
(000's) (000's)
___________________ _________________
Security Pro Forma Pro Forma
Description STG GGB Combined STG GGB Combined
_________________________________________________________________
CANADA
_________________________________________________________________
Government Bonds
_________________________________________________________________
Government of
Canada, 8.00%,
3/15/97 CAD 2,000 2,000 $1,493 $1,493
_________________________________________________________________
Government of
Canada, 6.25%,
2/01/98 2,000 2,000 1,473 1,473
_________________________________________________________________
Government of
Canada, 7.75%,
9/01/99 1,750 500 2,250 1,323 $378 1,701
_________________________________________________________________
Government of
Canada, 7.50%,
3/01/01 875 875 655 655
_________________________________________________________________
Government of
Canada, 7.00%,
12/01/06 625 625 435 435
_________________________________________________________________
Total Canada 4,289 1,468 5,757
_________________________________________________________________
PAGE 65
DENMARK
_________________________________________________________________
Government Bonds
_________________________________________________________________
Kingdom of
Denmark, 9.00%,
11/15/98 DKK 5,000 5,000 926 926
_________________________________________________________________
Kingdom of Denmark,
6.00%,
12/10/99 5,000 5,000 866 866
_________________________________________________________________
Kingdom of Denmark,
9.00%,
11/15/00 6,000 5,600 11,600 1,135 1,059 2,194
_________________________________________________________________
Kingdom of Denmark,
8.00%, 3/15/06 4,000 4,000 711 711
_________________________________________________________________
Total Denmark 2,927 1,770 4,697
_________________________________________________________________
_________________________________________________________________
FRANCE
_________________________________________________________________
Government Bonds
_________________________________________________________________
Bons du Tresor
Annuel, 7.25%,
8/12/97 FRF 5,000 5,000 1,004 1,004
_________________________________________________________________
Total France 1,004 1,004
_________________________________________________________________
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 66
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
Principal Amount Market Value
(000's) (000's)
___________________ _________________
Security Pro Forma Pro Forma
Description STG GGB Combined STG GGB Combined
_________________________________________________________________
GERMANY
_________________________________________________________________
Government Bonds
_________________________________________________________________
Bundesobligation,
6.375%,
5/20/98 DEM 2,250 2,250 $1,539 $1,539
_________________________________________________________________
Bundesobligation,
5.75%, 8/22/00 700 700 $468 468
_________________________________________________________________
Bundesobligation,
7.25%, 10/21/02 375 375 263 263
_________________________________________________________________
Bundesobligation,
6.50%, 7/15/03 1,810 1,810 1,211 1,211
_________________________________________________________________
Federal National
Mortgage Assn.,
5.00%, 2/16/01 500 500 321 321
_________________________________________________________________
Treuhandanstalt,
7.00%,
11/25/99 2,520 1,130 3,650 1,763 791 2,554
_________________________________________________________________
Treuhandanstalt,
7.50%, 9/09/04 400 400 281 281
_________________________________________________________________
3,302 3,335 6,637
PAGE 67
_________________________________________________________________
Corporate Bonds
_________________________________________________________________
Frankfurt
Hypothekenbank,
5.75%, 3/05/03 470 470 302 302
_________________________________________________________________
302 302
_________________________________________________________________
Total Germany 3,302 3,637 6,939
_________________________________________________________________
IRELAND
_________________________________________________________________
Government Bonds
_________________________________________________________________
Republic of
Ireland,
8.00%,
10/18/00 IEP 750 725 1,475 1,250 1,208 2,458
_________________________________________________________________
Total Ireland 1,250 1,208 2,458
_________________________________________________________________
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 68
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
Principal Amount Market Value
(000's) (000's)
___________________ _________________
Security Pro Forma Pro Forma
Description STG GGB Combined STG GGB Combined
_________________________________________________________________
ITALY
_________________________________________________________________
Government Bonds
_________________________________________________________________
Buoni del Tesoro
Poliennali, 9.50%,
12/01/97
ITL 1,000,000 1,000,000 $661 $661
_________________________________________________________________
Buoni del Tesoro
Poliennali, 9.50%,
12/01/99 5,540,000 3,205,000 8,745,000 3,719 $2,151 5,870
_________________________________________________________________
Buoni del Tesoro
Poliennali,
9.50%,
2/01/01 860,000 860,000 580 580
_________________________________________________________________
European Investment
Bank, 7.45%,
2/04/99 500,000 400,000 900,000 323 258 581
_________________________________________________________________
4,703 2,989 7,692
_________________________________________________________________
Short-Term Investments
_________________________________________________________________
UBS, fixed deposit,
8.75%, 7/05/96 606,211 606,211 396 396
_________________________________________________________________
396 396
_________________________________________________________________
Total Italy 4,703 3,385 8,088
_________________________________________________________________
PAGE 69
JAPAN
_________________________________________________________________
Government Bonds
_________________________________________________________________
Government of
Japan,
3.20%,
3/20/06 JPY 75,000 75,000 683 683
_________________________________________________________________
International
Bank for
Reconstruction
and Development,
5.25%, 3/20/02 30,000 30,000 313 313
_________________________________________________________________
Republic of
Austria, 5.00%,
1/22/01 50,000 50,000 511 511
_________________________________________________________________
Total Japan 1,507 1,507
_________________________________________________________________
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 70
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
Principal Amount Market Value
(000's) (000's)
___________________ _________________
Security Pro Forma Pro Forma
Description STG GGB Combined STG GGB Combined
_________________________________________________________________
NETHERLANDS
_________________________________________________________________
Government Bonds
_________________________________________________________________
Government of
Netherlands,
7.75%,
1/15/00 NLG 1,500 580 2,080 $956 $370 $1,326
_________________________________________________________________
Government of
Netherlands,
9.00%, 1/15/01 1,000 1,000 669 669
_________________________________________________________________
Government of
Netherlands,
8.25%, 2/15/07 365 365 241 241
_________________________________________________________________
Total Netherlands 956 1,280 2,236
_________________________________________________________________
SPAIN
_________________________________________________________________
Government Bonds
_________________________________________________________________
Bonos del Estado,
11.00%,
6/15/97 ESP 162,500 162,500 1,312 1,312
_________________________________________________________________
Bonos del Estado,
8.30%,
12/15/98 90,000 90,000 715 715
_________________________________________________________________
PAGE 71
Bonos del Estado,
10.10%,
2/28/01 30,000 135,000 165,000 252 1,136 1,388
_________________________________________________________________
Bonos del Estado,
8.40%,
4/30/01 25,000 50,000 75,000 198 395 593
_________________________________________________________________
Bonos del Estado,
10.90%, 8/30/03 40,000 40,000 350 350
_________________________________________________________________
Total Spain 2,477 1,881 4,358
_________________________________________________________________
SWEDEN
_________________________________________________________________
Government Bonds
_________________________________________________________________
Kingdom of Sweden,
10.25%,
5/05/00 SEK 10,400 5,200 15,600 1,736 868 2,604
_________________________________________________________________
Kingdom of Sweden,
10.25%, 5/05/03 1,700 1,700 289 289
_________________________________________________________________
Total Sweden 1,736 1,157 2,893
_________________________________________________________________
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 72
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
Principal Amount Market Value
(000's) (000's)
___________________ _________________
Security Pro Forma Pro Forma
Description STG GGB Combined STG GGB Combined
_________________________________________________________________
UNITED KINGDOM
_________________________________________________________________
Government Bonds
_________________________________________________________________
Kingdom of Sweden,
6.25%,
12/08/99 GBP 750 750 $1,133 $1,133
_________________________________________________________________
United Kingdom
Treasury,
6.00%, 8/10/99 320 320 $485 485
_________________________________________________________________
United Kingdom
Treasury,
7.00%, 11/06/01 500 175 675 764 267 1,031
_________________________________________________________________
United Kingdom
Treasury,
9.75%, 8/27/02 175 175 301 301
_________________________________________________________________
United Kingdom
Treasury,
7.50%, 12/07/06 100 100 151 151
_________________________________________________________________
1,897 1,204 3,101
_________________________________________________________________
Corporate Bonds
_________________________________________________________________
Abbey National,
7.75%, 6/23/98 800 800 1,264 1,264
_________________________________________________________________
PAGE 73
Deutsche Siedlungs
Bank, 7.50%,
12/27/00 250 180 430 390 281 671
_________________________________________________________________
Swiss Bank
Corporation Jersey,
8.75%, 6/20/05 200 200 317 317
_________________________________________________________________
1,654 598 2,252
_________________________________________________________________
Total United Kingdom 3,551 1,802 5,353
_________________________________________________________________
UNITED STATES
_________________________________________________________________
Government Bonds
_________________________________________________________________
Central Bank of
Philippines FLIRB,
FRN, 5.00%,
6/01/08 USD 175 115 290 158 104 262
_________________________________________________________________
Government of Poland
Discount, FRN,
6.438%, 10/27/24 250 250 233 233
_________________________________________________________________
Republic of
Argentina, BOCON
PRE 2, FRN,
5.422%, 4/01/01 190 270 460 217 309 526
_________________________________________________________________
Republic of
Argentina, FRB,
6.313%, 3/31/05 99 99 77 77
_________________________________________________________________
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 74
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
Principal Amount Market Value
(000's) (000's)
___________________ _________________
Security Pro Forma Pro Forma
Description STG GGB Combined STG GGB Combined
_________________________________________________________________
UNITED STATES (continued)
_________________________________________________________________
Government Bonds
_________________________________________________________________
Republic of Argentina
Par, FRN, 5.25%,
3/31/23 250 250 $137 $137
_________________________________________________________________
Republic of Brazil
(Class C), 8.00%,
4/15/14 271 271 167 167
_________________________________________________________________
Republic of Brazil
IDU, FRN, 6.375%,
1/01/01 116 116 109 109
_________________________________________________________________
Republic of Panama,
FRN, 6.629%,
5/10/02 138 138 129 129
_________________________________________________________________
Republic of Venezuela
DCB, FRN, 6.625%,
12/18/07 250 250 177 177
_________________________________________________________________
U.S. Treasury Bonds,
7.125%, 2/15/23 630 630 636 636
_________________________________________________________________
U.S. Treasury Bonds,
6.25%, 8/15/23 80 80 73 73
_________________________________________________________________
U.S. Treasury Notes,
6.875%, 2/28/97 500 500 504 504
_________________________________________________________________
PAGE 75
U.S. Treasury Notes,
5.875%,
8/15/98 1,275 1,500 2,775 $1,267 1,491 2,758
_________________________________________________________________
U.S. Treasury Notes,
6.75%, 6/30/99 1,365 1,365 1,381 1,381
_________________________________________________________________
U.S. Treasury Notes,
6.50%, 5/31/01 200 200 200 200
_________________________________________________________________
U.S. Treasury Notes,
7.50%, 5/15/02 800 800 838 838
_________________________________________________________________
U.S. Treasury Notes,
7.25%, 8/15/04 590 590 610 610
_________________________________________________________________
United Mexican States,
FRN, 10.805%,
7/21/97 500 500 520 520
_________________________________________________________________
2,162 7,175 9,337
_________________________________________________________________
Corporate Bonds
_________________________________________________________________
Advanta Credit Card
Master Trust Series
1996-B (Class A),
FRN, 5.828%,
1/15/07 1,000 1,000 1,005 1,005
_________________________________________________________________
BNDES, 6.00%,
9/15/96 222 222 222 222
_________________________________________________________________
Ce Casecnan Water &
Energy, 11.95%,
11/15/10 65 40 105 66 41 107
_________________________________________________________________
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 76
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
Principal Amount Market Value
(000's) (000's)
___________________ _________________
Security Pro Forma Pro Forma
Description STG GGB Combined STG GGB Combined
_________________________________________________________________
UNITED STATES (continued)
_________________________________________________________________
Corporate Bonds (continued)
_________________________________________________________________
Indover Bank, FRN,
6.175%,
10/26/97 1,000 1,000 $1,005 $1,005
_________________________________________________________________
Landesbank Rheinland-Pfalz,
FRN, 5.406%,
3/25/98 1,000 1,000 1,001 1,001
_________________________________________________________________
Petroleos Mexicanos,
8.00%, 7/01/98 1,000 1,000 995 995
_________________________________________________________________
The Money Store Asset
Backed Notes (ClassNotes
Trust) Series 1996-1
(Class A-7), FRN,
5.654%, 3/15/01 750 750 750 750
_________________________________________________________________
5,044 $41 5,085
_________________________________________________________________
Hybrid Instruments
_________________________________________________________________
United Mexican States, FRN,
5.625%, 11/27/96,
Redemption value linked
to the greater of a
Mexican Cetes option or
LIBOR option 500 500 563 563
_________________________________________________________________
563 563
PAGE 77
_________________________________________________________________
Short-Term Investments
_________________________________________________________________
Investments in Commercial
Paper through a joint
account, 5.49 - 5.60%,
7/01/96 2,143 980 3,123 2,143 980 3,123
_________________________________________________________________
Kredietbank N.A. Finance,
commercial paper, 5.31%,
7/03/96 1,000 1,000 999 999
_________________________________________________________________
Smith Barney Shearson,
commercial paper, 5.35%,
7/02/96 1,000 1,000 1,000 1,000
_________________________________________________________________
4,142 980 5,122
_________________________________________________________________
Total United States 11,911 8,196 20,107
_________________________________________________________________
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 78
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
Market Value
(000's)
_________________
Pro Forma
STG GGB Combined
_________________________________________________________________
Total Investments in Securities $39,742 $28,465 $68,207
_________________________________________________________________
Net unrealized gain (loss) on
open forward currency exchange
contracts (see detail below) (173) (79) (252)
_________________________________________________________________
Other Assets Less Liabilities (2,930) (450) (3,380)
_________________________________________________________________
NET ASSETS $36,639 $27,936 $64,575
_________________________________________________________________
* Listed by currency denomination ITL Italian lira
AUD Australian dollar JPY Japanese yen
BEF Belgian franc NLG Dutch guilder
CAD Canadian dollar SEK Swedish krona
DEM German deutschemark USD U.S. dollar
DKK Danish krone DCB Debt conversion bond
ESP Spanish peseta FLIRB Front loaded interest
reduction bond
FRF French franc FRB Floating rate bond
GBP British sterling FRN Floating rate note
IEP Irish punt IDU Interest due bond
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 79
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
_________________________________________________________________
FORWARD CURRENCY EXCHANGE CONTRACTS
(In thousands)
_________________________________________________________________
SHORT-TERM GLOBAL INCOME FUND
_________________________________________________________________
Counterparty Settlement Currency Currency Unrealized
Delivered Received Gain (Loss)
_________________________________________________________________
Chase Manhattan 7/12/96 SEK 11,512 USD 1,701 $(38)
_________________________________________________________________
Citibank 7/12/96 SEK 1,676 USD 253 1
_________________________________________________________________
Chase Manhattan 7/12/96 USD 253 SEK 1,679 1
_________________________________________________________________
Citibank 7/17/96 ESP 280,269 USD 2,159 (28)
_________________________________________________________________
Chase Manhattan 7/19/96 GBP 209 USD 322 (2)
_________________________________________________________________
Citibank 7/19/96 GBP 2,529 USD 3,912 (15)
_________________________________________________________________
Chase Manhattan 7/19/96 IEP 823 USD 1,310 (5)
_________________________________________________________________
Chase Manhattan 7/19/96 USD 768 GBP 498 5
_________________________________________________________________
Chase Manhattan 7/24/96 AUD 1,310 USD 1,034 6
_________________________________________________________________
Chase Manhattan 7/29/96 BEF 11,331 USD 361 (2)
_________________________________________________________________
Chase Manhattan 7/29/96 DKK 17,762 USD 2,987 (48)
_________________________________________________________________
Chase Manhattan 7/29/96 NLG 2,292 USD 1,340 (7)
_________________________________________________________________
UBS 8/08/96 DEM 5,484 USD 3,594 (22)
_________________________________________________________________
Chase Manhattan 8/08/96 FRF 8,755 USD 1,694 (12)
_________________________________________________________________
Chase Manhattan 8/16/96 ITL 1,300,494 USD 843 (2)
_________________________________________________________________
Chase Manhattan 9/25/96 CAD 5,795 USD 4,249 (4)
_________________________________________________________________
PAGE 80
Chase Manhattan 9/25/96 USD 383 CAD 521 (1)
_________________________________________________________________
Net unrealized gain (loss) on open forward currency exchange
contracts ($173)
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 81
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND (STG)
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND (GGB)
PRO FORMA COMBINED PORTFOLIO OF INVESTMENTS*
JUNE 30, 1996
Unaudited
_________________________________________________________________
FORWARD CURRENCY EXCHANGE CONTRACTS
(In thousands)
_________________________________________________________________
GLOBAL GOVERNMENT BOND FUND
_________________________________________________________________
Counterparty Settlement Currency Currency Unrealized
Delivered Received Gain (Loss)
_________________________________________________________________
Chase Manhattan 7/08/96 FRF 1,000 USD 191 ($3)
_________________________________________________________________
Chase Manhattan 7/12/96 SEK 1,911 NLG 484 (4)
_________________________________________________________________
Chase Manhattan 7/12/96 SEK 1,982 USD 293 (6)
_________________________________________________________________
J.P. Morgan 7/12/96 SEK 1,979 USD 292 (6)
_________________________________________________________________
Citibank 7/12/96 SEK 1,787 USD 270 1
_________________________________________________________________
Chase Manhattan 7/12/96 USD 200 DEM 303 (1)
_________________________________________________________________
Citibank 7/17/96 ESP 114,486 USD 882 (12)
_________________________________________________________________
Chase Manhattan 7/24/96 DKK 2,948 JPY 54,151 (7)
_________________________________________________________________
Chase Manhattan 7/24/96 GBP 351 JPY 58,065 (11)
_________________________________________________________________
Chase Manhattan 7/24/96 IEP 229 JPY 39,135 (7)
_________________________________________________________________
Chase Manhattan 7/24/96 NLG 1,047 JPY 66,179 (8)
_________________________________________________________________
Chase Manhattan 7/24/96 USD 744 JPY 80,000 (10)
_________________________________________________________________
Chase Manhattan 8/08/96 DEM 1,244 USD 815 (5)
Net unrealized gain (loss) on open forward currency exchange
contracts ($79)
Pro Forma Combined ($252)
PAGE 82
The accompanying notes are an integral part of these pro forma
financial statements.
PAGE 83
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
Unaudited
Short-Term Pro
Global Global Forma Pro
Income Government Adjust- Forma
Fund Bond Fund ments Combined
Dollar amounts in thousands
Assets
Investments in
securities,
at cost $39,650 $28,207 $67,857
Unrealized gain
(loss) on
securities 92 258 350
_________________________________________________________________
Investments in
securities,
at value 39,742 28,465 68,207
Other assets 1,596 1,870 3,466
_________________________________________________________________
Total assets 41,338 30,335 71,673
_________________________________________________________________
Liabilities
Payable for
investment
securities
purchased 4,085 2,127 6,212
Other
liabilities 614 272 886
_________________________________________________________________
Total liabilities 4,699 2,399 7,098
_________________________________________________________________
NET ASSETS $36,639 $27,936 $64,575
_________________________________________________________________
PAGE 84
Net Assets Consist of:
Accumulated net
investment
income - net of
distributions $(218) $37 $(181)
Accumulated net
realized gain/
loss - net of
distributions (174) (565) (739)
Net unrealized
gain (loss) (107) 192 85
Paid-in-capital
applicable to
$0.01 par value
per share capital
stock outstanding;
2,000,000,000
shares authorized 37,138 28,272 65,410
_________________________________________________________________
NET ASSETS $36,639 $27,936 $64,575
_________________________________________________________________
FUND SHARES
OUTSTANDING 8,195,376 2,803,742 (4,516,783) 6,482,335
(Note 2)
_________________________________________________________________
NET ASSET VALUE
PER SHARE $4.47 $9.96 $9.96
_________________________________________________________________
PAGE 85
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996
Unaudited
Short-Term Pro
Global Global Forma Pro
Income Government Adjust- Forma
Fund Bond Fund ments Combined
In thousands
Investment Income
Interest income $2,848 $1,992 $4,840
_________________________________________________________________
Expenses
Investment
management 109 63 $249 Note 2B 421
Shareholder servicing 78 72 150
Custody and
accounting 142 128 (127) Note 2A 143
Registration 29 34 63
Legal and audit 22 23 (22) Note 2A 23
Prospectus and
shareholder reports 8 7 (2) Note 2A 13
Directors 7 6 (7) Note 2A 6
Miscellaneous 12 4 (12) Note 2C 4
_________________________________________________________________
Total expenses 407 337 79 823
_________________________________________________________________
Net investment
income 2,441 1,655 (79) 4,017
_________________________________________________________________
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 554 200 754
Futures --- 5 5
Options --- 16 16
Foreign currency
transactions 1,009 309 1,318
_________________________________________________________________
Net realized
gain (loss) 1,563 530 2,093
_________________________________________________________________
PAGE 86
Change in net
unrealized gain
or loss
Securities (623) (776) (1,399)
Options --- 129 129
Other assets and
liabilities
denominated in
foreign currencies (128) (211) (339)
_________________________________________________________________
Change in net
unrealized gain
or loss (751) (858) (1,609)
_________________________________________________________________
Net realized and
unrealized
gain (loss) 812 (328) 484
_________________________________________________________________
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS $3,253 $1,327 $(79) $4,501
PAGE 87
T. ROWE PRICE SHORT-TERM GLOBAL INCOME FUND
T. ROWE PRICE GLOBAL GOVERNMENT BOND FUND
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
JUNE 30, 1996
Unaudited
Note 1 - Basis of Presentation
Subject to approval of the Agreement and Plan of Reorganization
("Agreement") by the shareholders of T. Rowe Price Short-Term
Global Income Fund (STG), a series of T. Rowe Price International
Funds, Inc., T. Rowe Price Global Government Bond Fund (GGB),
also a series of T. Rowe Price International Funds, Inc., would
acquire substantially all of the assets of STG in exchange for
shares of GGB at the net asset value as of the Valuation Date as
defined in the Agreement. Shares of GGB would then be
distributed such that shareholders of STG will receive GGB shares
having an aggregate net asset value equal to the aggregate net
asset value of their STG shares, resulting in complete
liquidation of STG.
The pro forma information is intended to provide the shareholders
of STG and GGB with information about the impact of the proposed
merger by showing how it might have affected historical financial
statements if the transaction had been consummated at an earlier
date. The pro forma combined Portfolio of Investments and
Statement of Assets and Liabilities as of June 30, 1996 and the
pro forma combined Statement of Operations for the year ended
June 30, 1996 have been presented as if the proposed merger had
taken place on July 1, 1995. This information is based upon
historical financial statement data giving effect to the pro
forma adjustments described below. The accounting and valuation
policies of STG and GGB are identical. The pro forma financial
statements should be read in conjunction with the separate
financial statements of STG and GGB incorporated by reference
into this Statement of Additional Information.
Note 2 - Pro Forma Adjustments
The pro forma combined Statement of Assets and Liabilities for
STG and GGB reflects a decrease in the number of shares
outstanding resulting from the conversion of STG shares to GGB
shares.
PAGE 88
The pro forma combined Statement of Operations for STG and GGB
reflects the following adjustments:
A) A decrease in expenses resulting from the elimination of
duplicate fees.
B) An increase in investment management expenses reflecting:
(I) the difference between the STG effective fee rate of
0.58% and the GGB effective fee rate of 0.68%, and (ii) the
difference between the STG expense limitation of 1.00% and
the GGB expense limitation of 1.20%.
C) Elimination of STG's deferred organizational costs and
duplicate expenses.
PAGE 89
PART C
OTHER INFORMATION
Indemnification.
The Registrant maintains comprehensive Errors and Omissions and
Officers and Directors insurance policies written by the Evanston
Insurance Company, The Chubb Group and ICI Mutual. These
policies provide coverage for the named insureds, which include
T. Rowe Price Associates, Inc. ("Price Associates"), Rowe Price-
Fleming International, Inc., T. Rowe Price Investment Services,
Inc., T. Rowe Price Services, Inc., T. Rowe Price Trust Company,
T. Rowe Price Stable Asset Management, Inc., RPF International
Bond Fund and forty-three other investment companies, namely, T.
Rowe Price Growth Stock Fund, Inc., T. Rowe Price New Horizons
Fund, Inc., T. Rowe Price New Era Fund, Inc., T. Rowe Price New
Income Fund, Inc., T. Rowe Price Prime Reserve Fund, Inc., T.
Rowe Price Tax-Free Income Fund, Inc., T. Rowe Price Tax-Exempt
Money Fund, Inc., T. Rowe Price Growth & Income Fund, Inc., T.
Rowe Price Tax-Free Short-Intermediate Fund, Inc., T. Rowe Price
Short-Term Bond Fund, Inc., T. Rowe Price High Yield Fund, Inc.,
T. Rowe Price Tax-Free High Yield Fund, Inc., T. Rowe Price New
America Growth Fund, T. Rowe Price Equity Income Fund, T. Rowe
Price GNMA Fund, T. Rowe Price Capital Appreciation Fund, T. Rowe
Price State Tax-Free Income Trust, T. Rowe Price California Tax-
Free Income Trust, T. Rowe Price Science & Technology Fund, Inc.,
T. Rowe Price Small-Cap Value Fund, Inc., Institutional
International Funds, Inc., T. Rowe Price U.S. Treasury Funds,
Inc., T. Rowe Price Index Trust, Inc., T. Rowe Price Spectrum
Fund, Inc., T. Rowe Price Balanced Fund, Inc., T. Rowe Price
Short-Term U.S. Government Fund, Inc., T. Rowe Price Mid-Cap
Growth Fund, Inc., T. Rowe Price OTC Fund, Inc., T. Rowe Price
Tax-Free Insured Intermediate Bond Fund, Inc., T. Rowe Price
Dividend Growth Fund, Inc., T. Rowe Price Blue Chip Growth Fund,
Inc., T. Rowe Price Summit Funds, Inc., T. Rowe Price Summit
Municipal Funds, Inc., T. Rowe Price Equity Series, Inc., T. Rowe
Price International Series, Inc., T. Rowe Price Fixed Income
Series, Inc., T. Rowe Price Personal Strategy Funds, Inc., T.
Rowe Price Value Fund, Inc., T. Rowe Price Capital Opportunity
Fund, Inc., T. Rowe Price Corporate Income Fund, Inc., T. Rowe
Price Health Sciences Fund, Inc., T. Rowe Price Mid-Cap Value
Fund, Inc., and Institutional Equity Funds, Inc. The Registrant
and the forty-three investment companies listed above, with the
exception of Institutional International Funds, Inc. and
Institutional Equity Funds, Inc., will be collectively referred
to as the Price Funds. The investment manager for the Price
PAGE 90
Funds and Institutional Equity Funds, Inc., excluding T. Rowe
Price International Funds, Inc. and T. Rowe Price International
Series, Inc., is the Manager. Price-Fleming is the manager to T.
Rowe Price International Funds, Inc., T. Rowe Price International
Series, Inc. and Institutional International Funds, Inc. and is
50% owned by TRP Finance, Inc., a wholly-owned subsidiary of the
Manager, 25% owned by Copthall Overseas Limited, a wholly-owned
subsidiary of Robert Fleming Holdings Limited, and 25% owned by
Jardine Fleming International Holdings Limited. In addition to
the corporate insureds, the policies also cover the officers,
directors, and employees of each of the named insureds. The
premium is allocated among the named corporate insureds in
accordance with the provisions of Rule 17d-1(d)(7) under the
Investment Company Act of 1940.
Article X, Section 10.01 of the Registrant's By-Laws
provides as follows:
Section 10.01. Indemnification and Payment of Expenses
in Advance: The Corporation shall indemnify any individual
("Indemnitee") who is a present or former director, officer,
employee, or agent of the Corporation, or who is or has been
serving at the request of the Corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, who,
by reason of his position was, is, or is threatened to be
made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter collectively
referred to as a "Proceeding") against any judgments,
penalties, fines, settlements, and reasonable expenses
(including attorneys' fees) incurred by such Indemnitee in
connection with any Proceeding, to the fullest extent that
such indemnification may be lawful under Maryland law. The
Corporation shall pay any reasonable expenses so incurred by
such Indemnitee in defending a Proceeding in advance of the
final disposition thereof to the fullest extent that such
advance payment may be lawful under Maryland law. Subject
to any applicable limitations and requirements set forth in
the Corporation's Articles of Incorporation and in these By-
Laws, any payment of indemnification or advance of expenses
shall be made in accordance with the procedures set forth in
Maryland law.
Notwithstanding the foregoing, nothing herein shall
protect or purport to protect any Indemnitee against any
liability to which he would otherwise be subject by reason
PAGE 91
of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of
his office ("Disabling Conduct").
Anything in this Article X to the contrary
notwithstanding, no indemnification shall be made by the
Corporation to any Indemnitee unless:
(a) there is a final decision on the merits by a court
or other body before whom the Proceeding was
brought that the Indemnitee was not liable by
reason of Disabling Conduct; or
(b) in the absence of such a decision, there is a
reasonable determination, based upon a review of
the facts, that the Indemnitee was not liable by
reason of Disabling Conduct, which determination
shall be made by:
(i) the vote of a majority of a quorum of
directors who are neither "interested
persons" of the Corporation as defined in
Section 2(a)(19) of the Investment Company
Act of 1940, nor parties to the Proceeding;
or
(ii) an independent legal counsel in a written
opinion.
Anything in this Article X to the contrary
notwithstanding, any advance of expenses by the Corporation
to any Indemnitee shall be made only upon the undertaking by
such Indemnitee to repay the advance unless it is ultimately
determined that such Indemnitee is entitled to
indemnification as above provided, and only if one of the
following conditions is met:
(a) the Indemnitee provides a security for his
undertaking; or
(b) the Corporation shall be insured against losses
arising by reason of any lawful advances; or
(c) there is a determination, based on a review of
readily available facts, that there is reason to
believe that the Indemnitee will ultimately be
PAGE 92
found entitled to indemnification, which
determination shall be made by:
(i) a majority of a quorum of directors who are
neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of
the Investment Company Act, nor parties to
the Proceeding; or
(ii) an independent legal counsel in a written
opinion.
Section 10.02 of the Registrant's By-Laws provides as
follows:
Section 10.02. Insurance of Officers, Directors,
Employees and Agents: To the fullest extent permitted by
applicable Maryland law and by Section 17(h) of the
Investment Company Act, as from time to time amended, the
Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, or
agent of the Corporation, or who is or was serving at the
request of the Corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against any liability asserted
against him and incurred by him in or arising out of his
position, whether or not the Corporation would have the
power to indemnify him against such liability.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
PAGE 93
expressed in the Act and will be governed by the final
adjudication of such issue.
Exhibits.
(1)(a) Articles of Amendment and Restatement of T. Rowe
Price International Funds, Inc., dated February 16,
1990 (electronically filed with Amendment No. 42
dated February 28, 1994)
(1)(b) Articles Supplementary of T. Rowe Price
International Funds, Inc., dated March 4, 1991
(electronically filed with Registration Statement on
Form N-14 dated August 15, 1996)
(1)(c) Articles of Amendment of T. Rowe Price International
Funds, Inc., dated May 1, 1991 (electronically filed
with Registration Statement on Form N-14 dated
August 15, 1996)
(1)(d) Articles Supplementary of T. Rowe Price
International Funds, Inc., dated October 18, 1991
(electronically filed with Registration Statement on
Form N-14 dated August 15, 1996)
(1)(e) Articles Supplementary of T. Rowe Price
International Funds, Inc., dated May 4, 1992
(electronically filed with Amendment No. 44 dated
December 22, 1994)
(1)(f) Articles Supplementary of T. Rowe Price
International Funds, Inc., dated November 4, 1993
(electronically filed with Amendment No. 41 dated
December 16, 1993)
(1)(g) Articles Supplementary of T. Rowe Price
International Funds, Inc. dated February 18, 1994
(electronically filed with Amendment No. 42 dated
February 28, 1994)
(1)(h) Articles Supplementary of T. Rowe Price
International Funds, Inc. dated November 2, 1994
(electronically filed with Amendment No. 44 dated
December 22, 1994)
PAGE 94
(1)(i) Articles Supplementary of T. Rowe Price
International Funds, Inc. dated January 25, 1995
(electronically filed with Amendment No. 49 dated
March 22, 1995)
(1)(j) Articles Supplementary of T. Rowe Price
International Funds, Inc. dated October 11, 1995
(electronically filed with Amendment No. 50 dated
October 12, 1995)
(2) By-Laws of Registrant, as amended to May 1, 1991 and
September 30, 1993 (electronically filed with
Amendment No. 41 dated December 16, 1993)
(3) Inapplicable
(4) Agreement and Plan of Reorganization dated September
5, 1996 (See Exhibit A of the Proxy)
(5) Incorporated by reference to Exhibits 1 and 2 above.
(6)(a) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price International Bond Fund,
dated May 1, 1990 (electronically filed with
Amendment No. 42 dated February 28, 1994)
(6)(b) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price International Stock Fund,
dated May 1, 1990 (electronically filed with
Amendment No. 42 dated February 28, 1994)
(6)(c) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price International Discovery
Fund, dated May 1, 1991 (electronically filed with
Amendment No. 42 dated February 28, 1994)
(6)(d) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price European Stock Fund, dated
May 1, 1990 (electronically filed with Amendment No.
42 dated February 28, 1994)
PAGE 95
(6)(e) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price New Asia Fund, dated May 1,
1991 (electronically filed with Amendment No. 42
dated February 28, 1994)
(6)(f) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price Global Government Bond Fund,
dated November 7, 1990 (electronically filed with
Amendment No. 42 dated February 28, 1994)
(6)(g) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price Japan Fund, dated November
6, 1991 (electronically filed with Amendment No. 42
dated February 28, 1994)
(6)(h) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price Short-Term Global Income
Fund, dated April 23, 1992 (electronically filed
with Amendment No. 42 dated February 28, 1994)
(6)(i) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price Latin America Fund, dated
November 3, 1993 (electronically filed with
Amendment No. 41 dated December 16, 1993)
(6)(j) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price Emerging Markets Bond Fund,
dated November 2, 1994 (electronically filed with
Amendment No. 44 dated December 22, 1994)
(6)(k) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price Emerging Markets Stock Fund,
dated January 25, 1995 (electronically filed with
Amendment No. 49 dated March 22, 1995)
(6)(l) Investment Management Agreement between Registrant
and Rowe Price-Fleming International, Inc., on
behalf of T. Rowe Price Global Stock Fund, dated
November 1, 1995 (electronically filed with
Amendment No. 51 dated December 20, 1995)
PAGE 96
(7) Underwriting Agreement between Registrant and T.
Rowe Price Investment Services, Inc., dated May 1,
1990 (electronically filed with Amendment No. 42
dated February 28, 1994)
(8) Inapplicable
(9)(a) Custodian Agreement between T. Rowe Price Funds and
State Street Bank and Trust Company dated September
28, 1987, as amended June 24, 1988, October 19,
1988, February 22, 1989, July 19, 1989, September
15, 1989, December 15, 1989, December 20, 1989,
January 25, 1990, February 21, 1990, June 12, 1990,
July 18, 1990, October 15, 1990, February 13, 1991,
March 6, 1991, September 12, 1991, November 6, 1991,
April 23, 1992, September 2, 1992, November 3, 1992,
December 16, 1992, December 21, 1992, January 28,
1993, April 22, 1993, September 16, 1993, November
3, 1993, March 1, 1994, April 21, 1994, July 27,
1994, September 21, 1994, November 1, 1994, November
2, 1994, January 25, 1995, September 20, 1995,
November 1, 1995, December 11, 1995, April 24, 1996,
and August 2, 1996 (electronically filed with
Registration Statement on Form N-14 dated August 15,
1996)
(9)(b) Global Custody Agreement between The Chase Manhattan
Bank, N.A. and T. Rowe Price Funds, dated January 3,
1994, as amended April 18, 1994, August 15, 1994,
November 28, 1994, May 31, 1995, November 1, 1995,
and July 31, 1996 (electronically filed with
Registration Statement on Form N-14 dated August 15,
1996)
(10) Inapplicable
(11) Opinion of and Consent of Shereff, Friedman, Hoffman
& Goodman, LLP as to the legality of securities
(electronically filed with Registration Statement on
Form N-14 dated August 15, 1996)
(12) Opinion and Consent of Shereff, Friedman, Hoffman &
Goodman, LLP on certain tax matters (electronically
filed with Registration Statement on Form N-14 dated
August 15, 1996)
PAGE 97
(13) Inapplicable
(14)(a) Consent of Coopers & Lybrand, L.L.P.
(14)(b) Opinion of Shereff, Friedman, Hoffman & Goodman,
LLP
(15) Inapplicable
(16) Inapplicable
(17)(a) Declaration pursuant to Rule 24f-2 under the 1940
Act is hereby incorporated by reference from
Registrant's Form 24F-2 dated February 26, 1996
(electronically filed February 26, 1996 and August
15, 1996 with Registration Statement on Form N-14)
(17)(b) Prospectus for the T. Rowe Price International Fixed
Income Funds, dated May 1, 1996 (electronically
filed with Registration Statement on Form N-14 dated
August 15, 1996)
(17)(c) Statement of Additional Information for the T. Rowe
Price International Fixed Income Funds, dated May 1,
1996 (electronically filed with Registration
Statement on Form N-14 dated August 15, 1996)
(17)(d) Annual Report for the Global Income Funds dated
December 31, 1995 (electronically filed with
Registration Statement on Form N-14 dated August 15,
1996)
(17)(e) Semiannual Report for the Global Income Funds dated
June 30, 1996 (electronically filed with
Registration Statement on Form N-14 dated August 15,
1996)
Undertakings.
(a) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered through
the use of a prospectus which is a part of this
Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule
145(c) of the Securities Act, the reoffering prospectus
will contain the information called for by the
PAGE 98
applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the
information called for by the other items of the
applicable form.
(b) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) about will be filed
as a part of an amendment to the registration statement
and will not be used until the amendment is effective,
and that, in determining any liability under the 1933
Act, each post-effective amendment shall be deemed to
be a new Registration Statement for the securities
offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide
offering of them.
PAGE 99
As required by the Securities Act of 1933, as amended, the
Registrant certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933, and has caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Baltimore,
and State of Maryland, on this 10th day of September, 1996.
T. ROWE PRICE INTERNATIONAL FUNDS,
INC.
/s/M. David Testa
By: ______________________________
M. David Testa
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
_________ ______ _____
/s/M. David Testa Chairman of the Board September 10, 1996
M. David Testa (Chief Executive Officer)
/s/Carmen F. Deyesu Treasurer September 10, 1996
Carmen F. Deyesu (Chief Financial Officer)
/s/Martin G. Wade President and Director September 10, 1996
Martin G. Wade
* Director September 10, 1996
Anthony W. Deering
* Director September 10, 1996
Donald W. Dick, Jr.
*
Paul M. Wythes Director September 10, 1996
*/s/Henry H. Hopkins, Attorney-In-Fact
Henry H. Hopkins, Attorney-In-Fact
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of T. Rowe Price
International Funds, Inc.
We consent to the following with respect to Post-Effective
Amendment No. 1 to the Registration Statement of T. Rowe Price
International Funds, Inc. (the "Corporation") on Form N-14 (File
No. 333-10209) under the Securities Act of 1933, with respect to
the transfer of all the assets and liabilities of T. Rowe Price
Short-Term Global Income Fund (one of the portfolios comprising
the Corporation) to the T. Rowe Price Global Government Bond Fund
(one of the portfolios comprising the Corporation) in exchange
for shares of T. Rowe Price Global Government Bond Fund:
1. The incorporation by reference of our report dated
January 18, 1996, on our audits of the financial statements and
financial highlights of T. Rowe Price Short-Term Global Income
Fund and T. Rowe Price Global Government Bond Fund, which report
is included in the Annual Report to Shareholders for the year
ended December 31, 1995, in the Statement of Additional
Information of T. Rowe Price International Funds, Inc., dated May
1, 1996, and the Combined Proxy Statement and Prospectus of T.
Rowe Price Short-Term Global Income Fund and T. Rowe Price Global
Government Bond Fund.
2. The reference to our Firm under the headings
"Independent Accountants" in the Statement of Additional
Information of T. Rowe Price International Funds, Inc., dated May
1, 1996, and "Financial Statements" in the Combined Proxy
Statement and Prospectus of T. Rowe Price Short-Term Global
Income Fund and T. Rowe Price Global Government Bond Fund.
/s/Coopers & Lybrand, L.L.P.
COOPERS & LYBRAND, L.L.P.
Baltimore, Maryland
September 10, 1996
September 10, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: T. Rowe Price International Funds, Inc.
T. Rowe Price Global Government Bond Fund
File No.: 333-10209
Commissioners:
We are counsel to the above-referenced registrant which
proposes to file, pursuant to paragraph (b) of Rule 485 (the
"Rule"), Post-Effective Amendment No. 1 (the "Amendment") to its
registration statement on Form N-14 under the Securities Act of
1933, as amended.
Pursuant to paragraph (b)(4) of the Rule, we represent that
the Amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b) of the
Rule.
Sincerely,
/s/Shereff, Friedman, Hoffman & Goodman, LLP
Shereff, Friedman, Hoffman & Goodman, LLP
