Semiannual Report
0Global Bond Funds
June 30, 1996
T. Rowe Price
Report Highlights
o Bonds reversed last year's gains as yields rose and prices fell,
reflecting an upturn in economic growth and fear of renewed inflation.
o Short-Term Global Income Fund lagged its benchmark because of low
exposure to emerging markets, while Global Government Bond Fund
surpassed its unhedged benchmark due to an overweighting in Italy and
Spain.
o European bonds outpaced other major markets, while emerging market
credits were the star performers during the past six months.
o Both funds were generally overweighted in European securities and
maintained a generally low exposure to underperforming Japanese bonds.
o We anticipate relative stability in the currency markets and believe
bonds offer good value in many areas. In our view, emerging markets
should continue their first half strength, spurred by credit upgrades
and fiscal prudence.
Fellow Shareholders
The first half of 1996 contrasted sharply with the final six months of 1995,
when bond prices rose and yields fell, reflecting slow global economic growth
and low inflation. As markets this year focused on an upturn in the economic
cycle and the potential for a pickup in inflation, bond prices declined.
FINANCIAL REVIEW
So far in 1996, bond prices have fallen in many countries in anticipation of
the higher interest rates that would be needed to ward off the inflationary
threat of stronger economic activity. The United States, which is ahead in the
cycle, provided the worst market returns in local currency terms. Emerging
markets continued their strong 1995 performance, shrugging off the negative
impact of other markets and focusing on the ongoing improvement in their
credit ratings.
Currency markets were more stable, as we had anticipated in our last report,
with a bias toward a firmer U.S. dollar, notwithstanding the collapse of
balanced budget negotiations in Washington. Weakness in the Japanese yen
continued, albeit at a slower pace. The German mark was down as Germany sought
to make it more competitive by promoting a weakening of its currency against
major trading partners. The effect of all this was to propel the Italian lira
into second place behind the Australian dollar in currency market performance.
MARKET ENVIRONMENT
Bond markets began the year positively, assisted by the same influences that
aided bond markets during the final period of 1995, namely, soft economic
data. However, February brought a sharp change in sentiment, and interest
rates troughed in many global markets before rising steeply.
The major catalyst for this reversal was a slew of strong economic data in the
U.S., particularly regarding employment, which continued to strengthen in the
second quarter. Of specific concern was a potential firming in wages that gave
rise to worries about inflation.
Most global bond markets fell in sympathy with the U.S., despite their having
little in common with the American situation. In Japan, there is still spare
capacity in the economy, which is only just emerging from recession. A similar
picture can be painted for Europe, although Economic Monetary Union (EMU)
considerations had a significant impact of their own on bonds.
Bond Market Performance
Total Returns In Local In U.S.
6 Months ended 6/30/96 Currency Dollars
Canada 1.33% 1.20%
Denmark 3.17 - 2.52
Germany 0.97 - 5.06
Italy 11.20 15.08
Japan 0.89 - 5.11
Spain 9.10 3.23
Sweden 6.61 6.48
United Kingdom 1.25 1.33
United States - 1.44 - 1.44
Source: J.P. Morgan.
The prospect of greater fiscal discipline in Europe helped government bonds
outpace those in other major markets. The best-performing markets in Europe
were the high-yielding countries, which responded well to positive electoral
results, underlining their respective will to further reduce the fiscal
burden.
All three high-yielding markets posted healthy returns in local currencies.
Italy returned 11.2% (15.1% in dollar terms since the lira was among the few
foreign currencies to appreciate against the greenback), Spain 9.1%, and
Sweden 6.6%.
Improving inflation figures facilitated lower interest rates in these
countries, driving bond prices higher along with the currencies of Italy and
Sweden. Italian assets, especially, reaped the benefits of a fortuitous
election as investors gave a hearty thumbs-up to the results.
Japanese bonds again proved disappointing, ending the period barely positive
in local currency terms and distinctly negative when translated into U.S.
dollars. Both the yen and Japanese bonds were the worst performers in major
markets, with Germany running a close second. While inflationary pressures
were largely absent at the end of June, fixed income investors remained
concerned about expansive fiscal measures taken to stimulate strong growth in
Japan during the second quarter. With low nominal yields, a suspect financial
sector, and a deliberate policy to keep the yen weak, investors had good
reason to underweight Japanese bonds.
Within the dollar bloc, Canadian and Australian bonds in particular outpaced
their U.S. counterparts. Fiscal reform was the main influence in Canada, while
Australia was another beneficiary of a positive election outcome, firmer
commodity prices, and strong overseas demand.
Economic restructuring throughout emerging markets provided the boost for
excellent returns there, making them the best-performing assets during the
first half of 1996 following a strong second half of 1995. After the close of
the review period, Boris Yeltsin's victory provided Russian bond prices with a
substantial boost.
PORTFOLIO REVIEWS
Short-Term Global Income Fund
Your fund provided positive returns over the past 6- and 12-month periods
ended June 30 but lagged its Lipper benchmark. Emerging markets helped boost
returns, but our lower exposure there relative to the competition accounted
for the slight underperformance.
Performance Comparison
Periods Ended 6/30/96 6 Months 12 Months
Short-Term Global Income Fund 3.08% 8.19%
Lipper Short World Multi-Market
Income Funds Average 3.45 8.55
During the past six months, we concentrated on the areas where we thought
interest rates still had room to fall, a strategy that proved beneficial.
These markets included the short maturities in Italy, Spain, the United
Kingdom, and Canada. Also assisting performance was our reluctance to take
significant interest rate risk in the U.S., as sentiment regarding the future
direction of interest rates began to change during the first quarter.
Chart 1 - Geographic Diversification
In line with your fund's investment policy, currency risk was virtually
eliminated through the hedging of assets denominated in foreign currencies.
Global Government Bond Fund
Your fund turned in a negative performance during the half-year ended June 30
but outperformed the unhedged index in a disappointing environment, largely
because of the fund's lower exposure to Japanese bonds and currency in favor
of an overweighting in Italy and Spain.
Performance Comparison
Periods Ended 6/30/96 6 Months 12 Months
Global Government Bond Fund - 0.16% 4.94%
J.P. Morgan Global Government Bond Index
(unhedged) - 1.16 2.05
J.P. Morgan Global Government Bond Index
(fully hedged) 1.63 9.11
We were generally overweighted in European government bonds, which fared
better than those in other regions due to Europe's dull economic climate. In
addition, rate cuts in parts of Europe and positive political news aided
relative performance. A modest allocation to emerging markets also provided a
boost.
We gradually reduced overall interest rate risk later in the period, after
exposure to rising longer-term rates in the first quarter began to have a
negative impact. Also helping performance was greater exposure to dollar-bloc
currencies at the expense of most core European currencies, although we had a
greater weighting in European securities. Within the former markets, we
underweighted U.S. bonds in favor of Australian and Canadian securities.
Chart 2 - Geographic Diversification
STRATEGY AND OUTLOOK
At the end of 1995 we cautioned that last year's returns were unlikely to be
repeated as we approached the end of the monetary easing stage of the interest
rate cycle.
This has proved to be the case, with interest rates advancing in many key
markets.
Investors have become concerned at the prospect of above-trend global growth.
The sell-off to date in the U.S. has virtually matched that of 1994. Worries
about rekindled inflation are not without foundation but may be overdone.
Speculation has not approached the levels of two years ago, particularly in
the smaller markets most prone to sudden withdrawals of capital. The market
decline this year has preempted monetary tightening, arguably discounting the
worst-case scenarios rather than responding to a policy shock. In anything
other than a major inflationary scenario, bonds continue to offer good value,
in our view.
SPECULATION HAS NOT APPROACHED THE LEVELS OF TWO YEARS AGO, PARTICULARLY IN
THE SMALLER MARKETS MOST PRONE TO SUDDEN WITHDRAWALS OF CAPITAL.
So far this year, the U.S. economy has caused the most concern in world
markets, and this should continue to be the case in coming months.
Stronger-than-expected first half growth, characterized by a tightening labor
market, has raised the specter of wage inflation and the likelihood of a more
restrictive monetary policy. However, with the consumer likely to be a less
dynamic force, and with industry's capital investment programs constrained,
economic growth could well tail off in the second half of the year. Moderation
in the pace of U.S. growth, with or without a precautionary interest rate hike
by the Federal Reserve, would be encouraging for fixed income investors.
We expect foreign currency markets to continue trading in narrow ranges with
relatively low volatility. With none of the major currencies at extreme
valuations, and with economic growth in Japan and Europe catching up with that
in the U.S., the dollar's advance from current levels should be subdued.
Our bond market allocations reflect the uncertainty of the medium-term
outlook: overall portfolio durations deviate very little from benchmarks,
pending opportunities to increase exposure as sentiment improves. Within
Europe, investments are concentrated among shorter maturities in the non-core
markets most likely to benefit from cuts in money market rates. We remain
underweighted in Japanese bonds. Our small currency overweighting favors the
dollar-bloc and peripheral European sectors at the expense of the yen and
deutschemark-bloc markets.
Emerging credits look set to do well again, spurred by continued credit
improvement as governments in these regions pursue a path toward prudent
economic management.
Respectfully submitted,
Peter B. Askew
Executive Vice President
July 19, 1996
T. Rowe Price Global Bond Funds
Portfolio Highlights
Key Statistics
12/31/95 6/30/96
Short-Term Global Income Fund
Price Per Share $ 4.46 $ 4.47
Dividends Per Share
For 6 months 0.13 0.13
For 12 months 0.27! 0.26
Dividend Yield *
For 6 months 6.15% 5.74%
For 12 months 6.43 6.05
Weighted Average Maturity (years) 2.8 2.9
Weighted Average Effective Duration (years) 2.1 2.0
Weighted Average Quality ** AA AA
Global Government Bond Fund
Price Per Share $ 10.26 $ 9.96
Dividends Per Share
For 6 months 0.30 0.28
For 12 months 0.59 0.58
Dividend Yield *
For 6 months 6.10% 5.74%
For 12 months 6.22 6.03
Weighted Average Maturity (years) 7.9 6.1
Weighted Average Effective Duration (years) 4.9 4.0
Weighted Average Quality ** AA+ AA+
* Dividends earned and reinvested for the periods indicated are annualized
and divided by the average daily net asset values per share for the same
period.
** Based on Rowe Price-Fleming research.
! Includes $0.17 tax return of capital.
T. Rowe Price Global Bond Funds
Performance Comparison
These charts show the value of a hypothetical $10,000 investment in each fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
Chart 3 - Short-Term Global Income Fund
Chart 4 - Global Government Bond Fund
Average Annual Compound Total Return
This table shows how each fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Since Inception
Periods Ended 6/30/96 1 Year 5 Years Inception Date
Short-Term Global
Income Fund 8.19% - 3.93% 6/30/92
Global Government
Bond Fund 4.94 7.94% 7.14 12/28/90
Investment return represents past performance and will vary. Shares of the
bond funds may be worth more or less at redemption than at original purchase.
T. Rowe Price Short-Term Global Income Fund
Unaudited
Financial HighlightsFor a share outstanding throughout each period
6 Months Year 6/30/92
Ended Ended to
6/30/9612/31/95 12/31/9412/31/93 12/31/92
NET ASSET VALUE
Beginning of period $ 4.46 $ 4.38 $ 4.82 $ 4.78 $ 5.00
Investment activities
Net investment
income 0.13* 0.27* 0.30* 0.32* 0.20*
Net realized and
unrealized gain
(loss) 0.01 0.08 (0.44) 0.04 (0.21)
Total from
investment
activities 0.14 0.35 (0.14) 0.36 (0.01)
Distributions
Net investment income(0.13) (0.10) (0.06) (0.32) (0.20)
Net realized gain - - - - (0.01)
Tax return of capital - (0.17) (0.24) - -
Total distributions (0.13) (0.27) (0.30) (0.32) (0.21)
NET ASSET VALUE
End of period $ 4.47 $ 4.46 $ 4.38 $ 4.82 $ 4.78
Ratios/Supplemental Data
Total return 3.08%* 8.34%* (2.92)%* 7.87%* (0.22)%*
Ratio of expenses to
average net assets 1.00%!* 1.00%* 1.00%* 1.00%* 1.00%!*
Ratio of net investment
income to average
net assets 5.66%!* 6.36%* 6.59%* 6.74%* 7.92%!*
Portfolio turnover rate179.7%!167.4% 120.2% 92.9% 334.1%!
Net assets, end of period
(in thousands) $36,639 $40,061 $56,374 $97,118 $66,297
*Excludes expenses in excess of a 1.00% voluntary expense limitation in
effect through 12/31/97.
!Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Government Bond Fund
Unaudited
Financial HighlightsFor a share outstanding throughout each period
6 Months Year 12/28/90
Ended Ended to
6/30/9612/31/9512/31/9412/31/9312/31/9212/31/91
NET ASSET VALUE
Beginning of
period $10.26 $ 9.22 $10.08 $ 9.85 $10.30 $10.00
Investment activities
Net invest-
ment income 0.28* 0.59* 0.54* 0.56* 0.76* 0.77*
Net realized
and unrealized
gain (loss)(0.30) 1.04 (0.84) 0.51 (0.44) 0.30
Total from
investment
activities (0.02) 1.63 (0.30) 1.07 0.32 1.07
Distributions
Net invest-
ment income(0.28) (0.59) (0.51) (0.56) (0.76) (0.77)
Net realized
gain - - (0.02) (0.28) (0.01) -
Tax return
of capital - - (0.03) - - -
Total dis-
tributions (0.28) (0.59) (0.56) (0.84) (0.77) (0.77)
NET ASSET VALUE
End of period$9.96 $10.26 $ 9.22 $10.08 $ 9.85 $10.30
Ratios/Supplemental Data
Total return(0.16)%*18.13%*(3.06)%*11.15%* 3.26%* 11.31%*
Ratio of
expenses to
average net
assets 1.20%!* 1.20%* 1.20%* 1.20%* 1.20%* 1.20%*
Ratio of net
investment
income to average
net assets 5.68%!* 6.08%* 5.57%* 5.57%* 7.51%* 8.07%*
Portfolio
turnover rate217.9%!290.7% 254.1% 134.0% 236.6% 93.6%
Net assets,
end of period
(in thousands)$27,936$28,207$36,516 $48,758$53,546 $39,775
*Excludes expenses in excess of a 1.20% voluntary expense limitation in
effect through 12/31/96.
!Annualized.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Short-Term Global Income Fund
Unaudited June 30, 1996
Statement of Net Assets! Par Value
In thousands
AUSTRALIA 4.5%
Government Bonds 3.1%
Commonwealth of Australia, 6.25%, 3/15/99AUD 1,500 $1,121
_____________________________________________________________________________
1,121
Short-term Investments 1.4%
Chase Manhattan Bank, N.A.,
fixed deposit, 7.00%, 7/01/96 655 515
_____________________________________________________________________________
515
_____________________________________________________________________________
Total Australia (Cost $1,620) 1,636
CANADA 11.7%
Government Bonds 11.7%
Government of Canada , 8.00%, 3/15/97 CAD 2,000 1,493
Government of Canada, 6.25%, 2/01/98 2,000 1,473
Government of Canada , 7.75%, 9/01/99 1,750 1,323
_____________________________________________________________________________
Total Canada (Cost $4,278) 4,289
DENMARK 8.0%
Government Bonds 8.0%
Kingdom of Denmark, 9.00%, 11/15/98 DKK 5,000 926
Kingdom of Denmark, 6.00%, 12/10/99 5,000 866
Kingdom of Denmark, 9.00%, 11/15/00 6,000 1,135
_____________________________________________________________________________
Total Denmark (Cost $2,980) 2,927
FRANCE 2.8%
Government Bonds 2.8%
Bons du Tresor Annuel, 7.25%, 8/12/97 FRF 5,000 1,004
_____________________________________________________________________________
Total France (Cost $1,041) 1,004
GERMANY 9.0%
Government Bonds 9.0%
Bundesobligation, 6.375%, 5/20/98 DEM 2,250 1,539
Treuhandanstalt, 7.00%, 11/25/99 2,520 1,763
_____________________________________________________________________________
Total Germany (Cost $3,444) 3,302
IRELAND 3.4%
Government Bonds 3.4%
Republic of Ireland, 8.00%, 10/18/00 IEP 750 $1,250
_____________________________________________________________________________
Total Ireland (Cost $1,210) 1,250
ITALY 12.8%
Government Bonds 12.8%
Buoni del Tesoro Poliennali, 9.50%, 12/01/97ITL1,000,000 661
Buoni del Tesoro Poliennali, 9.50%, 12/01/995,540,000 3,719
European Investment Bank, 7.45%, 2/04/99 500,000 323
_____________________________________________________________________________
Total Italy (Cost $4,625) 4,703
NETHERLANDS 2.6%
Government Bonds 2.6%
Government of Netherlands, 7.75%, 1/15/00NLG 1,500 956
_____________________________________________________________________________
Total Netherlands (Cost $995) 956
SPAIN 6.8%
Government Bonds 6.8%
Bonos del Estado, 11.00%, 6/15/97 ESP 162,500 1,312
Bonos del Estado, 8.30%, 12/15/98 90,000 715
Bonos del Estado, 10.10%, 2/28/01 30,000 252
Bonos del Estado, 8.40%, 4/30/01 25,000 198
_____________________________________________________________________________
Total Spain (Cost $2,464) 2,477
SWEDEN 4.7%
Government Bonds 4.7%
Kingdom of Sweden, 10.25%, 5/05/00 SEK 10,400 1,736
_____________________________________________________________________________
Total Sweden (Cost $1,698) 1,736
UNITED KINGDOM 9.7%
Government Bonds 5.2%
Kingdom of Sweden, 6.25%, 12/08/99 GBP 750 1,133
United Kingdom Treasury, 7.00%, 11/06/01 500 764
_____________________________________________________________________________
1,897
Corporate Bonds 4.5%
Abbey National, 7.75%, 6/23/98 800 $1,264
Deutsche Siedlungs Bank, 7.50%, 12/27/00 250 390
_____________________________________________________________________________
1,654
_____________________________________________________________________________
Total United Kingdom (Cost $3,465) 3,551
UNITED STATES 32.5%
Government Bonds 5.9%
Central Bank of Philippines FLIRB,
FRN, 5.00%, 6/01/08 USD 175 158
Republic of Argentina BOCON PRE 2,
FRN, 5.422%, 4/01/01 190 217
U.S. Treasury Notes, 5.875%, 8/15/98 1,275 1,267
United Mexican States, FRN, 10.805%, 7/21/97 500 520
_____________________________________________________________________________
2,162
Corporate Bonds 13.8%
Advanta Credit Card Master Trust Series 1996-B
(Class A), FRN, 5.828%, 1/15/07 1,000 1,005
BNDES, 6.00%, 9/15/96 222 222
Ce Casecnan Water & Energy, 11.95%, 11/15/10 65 66
Indover Bank, FRN, 6.175%, 10/26/97 1,000 1,005
Landesbank Rheinland-Pfalz, FRN, 5.406%, 3/25/981,000 1,001
Petroleos Mexicanos, 8.00%, 7/01/98 1,000 995
The Money Store Asset Backed Notes
(ClassNotes Trust) Series 1996-I (Class A-7), FRN,
5.654%, 3/15/01 750 750
_____________________________________________________________________________
5,044
Hybrid Instruments 1.5%
United Mexican States, FRN, 5.625%, 11/27/96,
Redemption value linked to the greater
of a Mexican Cetes option
or LIBOR option 500 563
_____________________________________________________________________________
563
Short-term Investments 11.3%
Investments in Commercial Paper through a joint account,
5.49-5.60%, 7/01/96 2,143 2,143
Kredietbank N.A. Finance, commercial paper,
5.31%, 7/03/96 1,000 999
Smith Barney Shearson, commercial paper,
5.35%, 7/02/96 1,000 $1,000
_____________________________________________________________________________
4,142
_____________________________________________________________________________
Total United States (Cost $11,830) 11,911
Total Investments in Securities
108.5% of Net Assets (Cost $39,650) $39,742
Forward Currency Exchange Contracts
In thousands
Unrealized
Counterparty SettlementDeliver Receive Gain (Loss)
Chase Manhattan7/12/96 SEK 11,512 USD 1,701 $ (38)
Citibank 7/12/96 SEK 1,676 USD 253 1
Chase Manhattan7/12/96 USD 253 SEK 1,679 1
Citibank 7/17/96 ESP 280,269 USD 2,159 (28)
Chase Manhattan7/19/96 GBP 209 USD 322 (2)
Citibank 7/19/96 GBP 2,529 USD 3,912 (15)
Chase Manhattan7/19/96 IEP 823 USD 1,310 (5)
Chase Manhattan7/19/96 USD 768 GBP 498 5
Chase Manhattan7/24/96 AUD 1,310 USD 1,034 6
Chase Manhattan7/29/96 BEL 11,331 USD 361 (2)
Chase Manhattan7/29/96 DKK 17,762 USD 2,987 (48)
Chase Manhattan7/29/96 NLG 2,292 USD 1,340 (7)
UBS 8/08/96 DEM 5,484 USD 3,594 (22)
Chase Manhattan8/08/96 FRF 8,755 USD 1,694 (12)
Chase Manhattan8/16/96 ITL1,300,494 USD 843 (2)
Chase Manhattan9/25/96 CAD 5,795 USD 4,249 (4)
Chase Manhattan9/25/96 USD 383 CAD 521 (1)
Net unrealized gain (loss) on open forward
currency exchange contracts (173)
Other Assets Less Liabilities (2,930)
_____________________________________________________________________________
NET ASSETS $36,639
Net Assets Consist of:
Accumulated net investment income - net of distributions$(218)
Accumulated net realized gain/loss - net of distributions(174)
Net unrealized gain (loss) (107)
Paid-in-capital applicable to 8,195,376 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 37,138
_____________________________________________________________________________
NET ASSETS $36,639
_____________________________________________________________________________
NET ASSET VALUE PER SHARE $ 4.47
_____________________________________________________________________________
! Listed by currency denomination
AUD Australian dollar
BEF Belgian franc
CAD Canadian dollar
DEM German deutschemark
DKK Danish krone
ESP Spanish peseta
FRF French franc
GBP British sterling
IEP Irish punt
ITL Italian lira
NLG Dutch guilder
SEK Swedish krona
USD U.S. dollar
FLIRB Front loaded interest reduction bond
FRN Floating rate note
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Government Bond Fund
Unaudited June 30, 1996
Portfolio of Investments! Par Value
In thousands
AUSTRALIA 4.2%
Government Bonds 4.2%
Commonwealth of Australia, 6.25%, 3/15/99AUD 275 $ 206
Commonwealth of Australia, 6.75%, 11/15/06 730 492
New South Wales Treasury Corporation,
6.50%, 5/01/06 730 476
_____________________________________________________________________________
Total Australia (Cost $1,172) 1,174
CANADA 5.3%
Government Bonds 5.3%
Government of Canada, 7.75%, 9/01/99 CAD 500 378
Government of Canada, 7.50%, 3/01/01 875 655
Government of Canada, 7.00%, 12/01/06 625 435
_____________________________________________________________________________
Total Canada (Cost $1,461) 1,468
DENMARK 6.3%
Government Bonds 6.3%
Kingdom of Denmark, 9.00%, 11/15/00 DKK 5,600 1,059
Kingdom of Denmark, 8.00%, 3/15/06 4,000 711
_____________________________________________________________________________
Total Denmark (Cost $1,744) 1,770
GERMANY 13.0%
Government Bonds 11.9%
Bundesobligation, 5.75%, 8/22/00 DEM 700 468
Bundesobligation, 7.25%, 10/21/02 375 263
Bundesobligation, 6.50%, 7/15/03 1,810 1,211
Federal National Mortgage Assn., 5.00%, 2/16/01 500 321
Treuhandanstalt, 7.00%, 11/25/99 1,130 791
Treuhandanstalt, 7.50%, 9/09/04 400 281
_____________________________________________________________________________
3,335
Corporate Bonds 1.1%
Frankfurt Hypothekenbank, 5.75%, 3/05/03 470 302
_____________________________________________________________________________
302
_____________________________________________________________________________
Total Germany (Cost $3,633) 3,637
IRELAND 4.3%
Government Bonds 4.3%
Republic of Ireland, 8.00%, 10/18/00 IEP 725 $1,208
_____________________________________________________________________________
Total Ireland (Cost $1,180) 1,208
ITALY 12.1%
Government Bonds 10.7%
Buoni del Tesoro Poliennali, 9.50%, 12/01/99ITL3,205,0002,151
Buoni del Tesoro Poliennali, 9.50%, 2/01/01 860,000 580
European Investment Bank, 7.45%, 2/04/99 400,000 258
_____________________________________________________________________________
2,989
Short-term Investments 1.4%
UBS, fixed deposit, 8.75%, 7/05/96 606,211 396
_____________________________________________________________________________
396
_____________________________________________________________________________
Total Italy (Cost $3,312) 3,385
JAPAN 5.4%
Government Bonds 5.4%
Government of Japan, 3.20%, 3/20/06 JPY 75,000 683
International Bank for Reconstruction
and Development, 5.25%, 3/20/02 30,000 313
Republic of Austria, 5.00%, 1/22/01 50,000 511
_____________________________________________________________________________
Total Japan (Cost $1,548) 1,507
NETHERLANDS 4.6%
Government Bonds 4.6%
Government of Netherlands, 7.75%, 1/15/00NLG 580 370
Government of Netherlands, 9.00%, 1/15/01 1,000 669
Government of Netherlands, 8.25%, 2/15/07 365 241
_____________________________________________________________________________
Total Netherlands (Cost $1,296) 1,280
SPAIN 6.7%
Government Bonds 6.7%
Bonos del Estado, 10.10%, 2/28/01 ESP 135,000 1,136
Bonos del Estado, 8.40%, 4/30/01 50,000 395
Bonos del Estado, 10.90%, 8/30/03 40,000 $ 350
_____________________________________________________________________________
Total Spain (Cost $1,856) 1,881
SWEDEN 4.2%
Government Bonds 4.2%
Kingdom of Sweden, 10.25%, 5/05/00 SEK 5,200 868
Kingdom of Sweden, 10.25%, 5/05/03 1,700 289
_____________________________________________________________________________
Total Sweden (Cost $1,129) 1,157
UNITED KINGDOM 6.5%
Government Bonds 4.3%
United Kingdom Treasury, 6.00%, 8/10/99 GBP 320 485
United Kingdom Treasury, 7.00%, 11/06/01 175 267
United Kingdom Treasury, 9.75%, 8/27/02 175 301
United Kingdom Treasury, 7.50%, 12/07/06 100 151
_____________________________________________________________________________
1,204
Corporate Bonds 2.2%
Deutsche Siedlungs Bank, 7.50%, 12/27/00 180 281
Swiss Bank Corporation Jersey, 8.75%, 6/20/05 200 317
_____________________________________________________________________________
598
_____________________________________________________________________________
Total United Kingdom (Cost $1,748) 1,802
UNITED STATES 29.3%
Government Bonds 25.7%
Central Bank of Philippines FLIRB,
FRN, 5.00%, 6/01/08 USD 115 104
Government of Poland Discount FRN,
6.438%, 10/27/24 250 233
Republic of Argentina, BOCON PRE 2,
FRN, 5.422%, 4/01/01 270 309
Republic of Argentina, FRB, 6.313%, 3/31/05 99 77
Republic of Argentina Par, FRN, 5.25%, 3/31/23 250 137
Republic of Brazil (Class C), 8.00%, 4/15/14 271 167
Republic of Brazil IDU, FRN, 6.375%, 1/01/01 116 109
Republic of Panama, FRN, 6.629%, 5/10/02 138 129
Republic of Venezuela DCB, FRN, 6.625%, 12/18/07 250 177
U.S. Treasury Bonds, 7.125%, 2/15/23 630 636
U.S. Treasury Bonds, 6.25%, 8/15/23 80 $ 73
U.S. Treasury Notes, 6.875%, 2/28/97 500 504
U.S. Treasury Notes, 5.875%, 8/15/98 1,500 1,491
U.S. Treasury Notes, 6.75%, 6/30/99 1,365 1,381
U.S. Treasury Notes, 6.50%, 5/31/01 200 200
U.S. Treasury Notes, 7.50%, 5/15/02 800 838
U.S. Treasury Notes, 7.25%, 8/15/04 590 610
_____________________________________________________________________________
7,175
Corporate Bonds 0.1%
Ce Casecnan Water & Energy, 11.95%, 11/15/10 40 41
_____________________________________________________________________________
41
Short-term Investments 3.5%
Investments in Commercial Paper through a joint account,
5.49-5.60%, 7/01/96 980 980
_____________________________________________________________________________
980
_____________________________________________________________________________
Total United States (Cost $8,128) 8,196
Total Investments in Securities
101.9% of Net Assets (Cost $28,207) $28,465
Forward Currency Exchange Contracts
In thousands
Unrealized
Counterparty SettlementDeliver Receive Gain (Loss)
Chase Manhattan7/08/96 FRF 1,000 USD 191 $ (3)
Chase Manhattan7/12/96 SEK 1,911 NLG 484 (4)
Chase Manhattan7/12/96 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 Manhattan7/12/96 USD 200 DEM 303 (1)
Citibank 7/17/96 ESP 114,486 USD 882 (12)
Chase Manhattan7/24/96 DKK 2,948 JPY 54,151 (7)
Chase Manhattan7/24/96 GBP 351 JPY 58,065 (11)
Chase Manhattan7/24/96 IEP 229 JPY 39,135 (7)
Chase Manhattan7/24/96 NLG 1,047 JPY 66,179 (8)
Chase Manhattan7/24/96 USD 744 JPY 80,000 (10)
Chase Manhattan8/08/96 DEM 1,244 USD 815 (5)
Net unrealized gain (loss) on open forward
currency exchange contracts (79)
Other Assets Less Liabilities (450)
_____________________________________________________________________________
NET ASSETS $27,936
_____________________________________________________________________________
NET ASSET VALUE PER SHARE $ 9.96
_____________________________________________________________________________
! Listed by currency denomination
AUD Australian dollar
CAD Canadian dollar
DEM German deutschemark
DKK Danish krone
ESP Spanish peseta
FRF French franc
GBP British sterling
IEP Irish punt
ITL Italian lira
JPY Japanese yen
NLG Dutch guilder
SEK Swedish krona
USD U.S. dollar
DCB Debt conversion bond
FLIRB Front loaded interest reduction bond
FRB Floating rate bond
FRN Floating rate note
IDU Interest due bond
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Government Bond Fund
Unaudited June 30, 1996
Statement of Assets and Liabilities
In thousands
Assets
Investments in securities, at value (cost $28,207) $ 28,465
Other assets 1,870
Total assets 30,335
Liabilities
Payable for investment securities purchased 2,127
Other liabilities 272
Total liabilities 2,399
NET ASSETS $ 27,936
Net Assets Consist of:
Accumulated net investment income- net of distributions$ 37
Accumulated net realized gain/loss - net of distributions(565)
Net unrealized gain (loss) 192
Paid-in-capital applicable to 2,803,742 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 28,272
NET ASSETS $ 27,936
NET ASSET VALUE PER SHARE $ 9.96
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Income Funds
Unaudited
Statement of Operations
In thousands
Short-Term Global
GlobalGovernment
Income Fund Bond Fund
6 Months 6 Months
Ended Ended
6/30/96 6/30/96
Investment Income
Interest income $ 1,305 $ 971
Expenses
Custody and accounting 70 63
Investment management 49 33
Shareholder servicing 39 37
Registration 14 17
Legal and audit 11 11
Prospectus and shareholder reports 3 3
Directors 3 3
Miscellaneous 6 2
Total expenses 195 169
Net investment income 1,110 802
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 64 32
Foreign currency transactions 974 172
Net realized gain (loss) 1,038 204
Change in net unrealized gain or loss on
Securities (652) (990)
Other assets and liabilities
denominated in foreign currencies (271) (45)
Change in net unrealized gain or loss (923) (1,035)
Net realized and unrealized gain (loss) 115 (831)
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 1,225 $ (29)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Income Funds
Unaudited
Statement of Changes in Net Assets
In thousands
Short-Term GlobalGlobal Government
Income Fund Bond Fund
6 Months Year 6 Months Year
Ended Ended Ended Ended
6/30/9612/31/95 6/30/9612/31/95
Increase (Decrease) in Net Assets
Operations
Net investment
income $ 1,110 $ 2,893 $ 802 $ 1,876
Net realized gain
(loss) 1,038 (2,134) 204 1,122
Change in net
unrealized
gain or loss (923) 2,778 (1,035) 2,299
Increase (decrease)
in net assets
from operations 1,225 3,537 (29) 5,297
Distributions to shareholders
Net investment income(1,110)(1,006) (802) (1,866)
Tax return of capital - (1,851) - -
Decrease in net assets
from distributions (1,110) (2,857) (802) (1,866)
Capital share transactions*
Shares sold 4,158 5,521 4,346 5,061
Distributions
reinvested 794 2,035 645 1,369
Shares redeemed (8,489)(24,549) (4,431)(18,170)
Increase (decrease)
in net assets from
capital share
transactions (3,537)(16,993) 560 (11,740)
Net Assets
Increase (decrease)
during period (3,422)(16,313) (271) (8,309)
Beginning of period 40,061 56,374 28,207 36,516
End of period $36,639 $40,061 $27,936 $28,207
*Share information
Shares sold 932 1,258 431 512
Distributions
reinvested 178 463 64 139
Shares redeeemed (1,902) (5,597) (441) (1,862)
Increase (decrease)
in shares outstanding (792) (3,876) 54 (1,211)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Global Income Funds
Unaudited June 30, 1996
Notes to Financial Statements
Note 1 - Significant Accounting Policies
T. Rowe Price International Funds, Inc., (the corporation) is registered under
the Investment Company Act of 1940. The Short-Term Global Income Fund (the
Short-Term Fund) and the Global Government Bond Fund (the Government Fund),
nondiversified, open-end management investment companies, are two of the
portfolios established by the corporation and commenced operations on June 30,
1992 and December 28, 1990, respectively.
Valuation Debt securities are generally traded in the over-the-counter market
and are valued at a price deemed best to reflect fair value as quoted by
dealers who make markets in these securities or by an independent pricing
service.
For purposes of determining each fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of
each fund, as authorized by the Board of Directors.
Currency Translation Assets and liabilities are translated into U.S. dollars
at the prevailing exchange rate at the end of the reporting period. Purchases
and sales of securities and income and expenses are translated into U.S.
dollars at the prevailing exchange rate on the dates of such transactions. The
effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and
losses.
Premiums and Discounts Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis. Distributions to shareholders are
recorded by each fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax regulations
and may differ from those determined in accordance with generally accepted
accounting principles. Unrealized gains and losses on forward currency
exchange contracts are included in Other assets and Other liabilities,
respectively, and in Change in net unrealized gain or loss in the accompanying
financial statements.
Note 2 - Investment Transactions
Consistent with their investment objectives, the funds engage in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of each fund are
described more fully in each fund's prospectus and Statement of Additional
Information.
Emerging Markets At June 30, 1996, each fund held investments in securities
of companies located in emerging markets or issued by governments of emerging
market countries. Future economic or political developments could adversely
affect the liquidity or value, or both, of such securities.
Forward Currency Exchange Contracts At June 30, 1996, each fund was a party
to forward currency exchange contracts under which it is obligated to exchange
currencies at specified future dates and exchange rates. Risks arise from the
possible inability of counterparties to meet the terms of their agreements and
from movements in currency values.
Commercial Paper Joint Account Each fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy each fund's criteria as to
quality, yield, and liquidity.
Other Purchases and sales of portfolio securities, other than short-term and
U.S. government securities, for the six months ended ended June 30, 1996, were
as follows:
Short-Term Government
Fund Fund
Purchases $29,574,00 0$27,662,000
Sales 31,578,000 27,275,000
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since each fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income. The Short-Term Fund has unused realized capital loss
carryforwards for federal income tax purposes of $1,089,000, of which $56,000
expire in 2000, $93,000 in 2001, and $940,000 thereafter through 2003. The
Government Fund has unused realized capital loss carryforwards for federal
income tax purposes of $583,000, all of which expire in 2002. Each fund
intends to retain gains realized in future periods that may be offset by
available capital loss carryforwards.
At June 30, 1996, the aggregate cost of investments for the Short-Term and
Government funds for federal income tax and financial reporting purposes was
$39,650,000 and $28,207,000, respectively. Net unrealized gain (loss) on
investments was as follows:
Short-Term Government
Fund Fund
Appreciated
investments $410,000 $517,000
Depreciated
investments (318,000) (259,000)
Net unrealized
gain (loss) $92,000 $258,000
Note 4 - Related Party Transactions
Each fund is managed by Rowe Price-Fleming International, Inc. (the manager),
which is owned by T. Rowe Price Associates, Inc. (Price Associates), Robert
Fleming Holdings Limited, and Jardine Fleming Holdings Limited under a joint
venture agreement.
The investment management agreement between each fund and the manager provides
for an annual investment management fee, of which $7,000 and $5,000 was
payable at June 30, 1996 by the Short-Term Fund and Government Fund,
respectively. The fee is computed daily and paid monthly, and consists of an
individual fund fee equal to 0.25% of average daily net assets for the
Short-Term Fund and 0.35% of average daily net assets for the Government Fund,
and a group fee. The group fee is based on the combined assets of certain
mutual funds sponsored by the manager or Price Associates (the group). The
group fee rate ranges from 0.48% for the first $1 billion of assets to 0.305%
for assets in excess of $50 billion. At June 30, 1996, and for the six months
then ended, the effective annual group fee rate was 0.33% and 0.34%,
respectively. Each fund pays a pro rata share of the group fee based on the
ratio of its net assets to those of the group.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through December 31, 1997, for the Short-Term
Fund and through December 31, 1996, for the Government Fund which would cause
each fund's ratio of expenses to average net assets to exceed 1.00% and 1.20%,
respectively. Thereafter, through December 31, 1999, for the Short-Term Fund
and December 31, 1998, for the Government Fund, each fund is required to
reimburse the manager for these expenses, provided that average net assets
have grown or expenses have declined sufficiently to allow reimbursement
without causing each fund's ratio of expenses to average net assets to exceed
1.00% and 1.20%, respectively. Pursuant to these agreements, $65,000 and
63,000 of management fees were not accrued by the Short-Term and Government
funds for the six months ended June 30, 1996. Pursuant to a previous
agreement, $259,000 of unaccrued Short-Term Fund fees from prior periods
remain subject to reimbursement through December 31, 1997. Pursuant to
previous agreements, $242,000 of unaccrued Government Fund fees from prior
periods remain subject to reimbursement through December 31, 1996. An
additional $153,000 in unaccrued Government Fund fees remains subject to
reimbursement through December 31, 1998.
In addition, each fund has entered into agreements with Price Associates and
two wholly owned subsidiaries of Price Associates, pursuant to which each fund
receives certain other services. Price Associates computes the daily share
price and maintains the financial records of each fund. T. Rowe Price
Services, Inc., is each fund's transfer and dividend disbursing agent and
provides shareholder and administrative services to the funds. T. Rowe Price
Retirement Plan Services, Inc., provides subaccounting and recordkeeping
services for certain retirement accounts invested in each fund. The Short-Term
and Government funds incurred expenses pursuant to these related party
agreements totaling approximately $87,000 and $80,000, respectively, for the
six months ended June 30, 1996, of which $16,000 and $15,000, respectively,
were payable at period-end.
T. Rowe Price Shareholder Services
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety
of information and services - at no extra cost.
Knowledgeable Service Representatives
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
Account Services
Checking Available on most fixed income funds.
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(registered trademark) and T.
Rowe Price OnLine.
Discount Brokerage*
Individual Securities Stocks, bonds, options, precious metals, and other
securities at a savings over regular commission rates.
Investment Information
Combined Statement An overview of your T. Rowe Price accounts.
Shareholder Reports Fund managers' reviews of their strategies and results.
The T. Rowe Price Report A quarterly investment newsletter discussing markets
and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Discount Brokerage is a division of T. Rowe Price Investment
Services, Inc. Member NASD/SIPC.
T. Rowe Price Mutual Funds
Stock Funds
Domestic
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
OTC
Science & Technology
Small-Cap Value*
Spectrum Growth
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Bond Funds
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Government Bond
International Bond
Short-Term Global Income
Money Market
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
Blended Asset
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
T. Rowe Price No-Load Variable Annuity
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
* Closed to new investors.
For yield, price, last transaction, and current balance, 24 hours, 7 days a
week, call: 1-800-638-2587 toll free
For assistance with your existing fund account, call: Shareholder Service
Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Global Income
Funds.
Invest With Confidence(registered trademark)
T. Rowe Price
T. Rowe Price Investment Services, Inc., DistributorRPTPGBF 6/30/96
Chart 1 - Geographic Diversification - Short-Term Global Income Fund -
geographic pie chart showing Europe 60%, U.S. 32%, Other and Reserves 8%.
Chart 2 - Geographic Diversification - Global Government Bond Fund -
geographic diversification pie chart showing Europe 58%, U.S. 29%, Japan 5%,
Canada 5%, Other and Reserves 3%.
Chart 3 - Short-Term Global Income Fund - A line chart showing the cumulative
growth of $10,000 invested in the Short-Term Global Income Fund from inception
compared with $10,000 invested in a broad-based index over the same period.
Chart 4 - Global Government Bond Fund - A line chart showing the cumulative
growth of $10,000 invested in the Global Government Bond Fund from inception
compared with $10,000 invested in a broad-based index over the same period.
