- --------------------------------------------------------------------------------
T. Rowe Price
- --------------------------------------------------------------------------------
SemiAnnual Report
Foreign Bond Funds
- --------------------------------------------------------------------------------
June 30, 1997
- --------------------------------------------------------------------------------
Report Highlights
================================================================================
Foreign Bond Funds
* Following a poor start, subdued inflation enabled foreign and U.S. bond
markets to recover in the second quarter. Emerging markets once again
posted impressive gains.
* Currency volatility was pronounced, with the Japanese yen rebounding after
a weak first quarter, and the dollar strengthening against European
currencies.
* Returns were strong for the Emerging Markets Bond Fund and weak for the
Global and International Bond Funds. All three funds outperformed their
benchmarks for the past six months.
* Economic improvement should continue in most regions, but competition could
keep inflation in check. We expect future returns to come primarily from
income and anticipate more stability in currency markets.
Fellow Shareholders
================================================================================
The year started on a negative note, as global bond markets struggled with
a rising U.S. dollar and prospects of higher short-term interest rates in the
U.S. to curb excessive economic growth. After the Federal Reserve raised the key
federal funds rate in March, bond markets steadied. In developed country
markets, currency translation undermined returns to U.S. investors for the
six-month period, although 12-month returns were respectable. Once again, credit
upgrades led to powerful returns for emerging market bonds.
<PAGE>
MARKET ENVIRONMENT
================================================================================
Evidence of above-trend economic growth led to concerns that the U.S.
Federal Reserve might raise the federal funds rate in the first half of 1997 to
ward off inflationary pressures. Indeed, the Fed raised the bellwether rate a
quarter-point in March prior to the announcement that first quarter GDP was up a
robust 5.9%. Despite forecasts for slower growth later in the year, fixed income
markets initially sold off in the belief that further monetary tightening was
likely.
================================================================================
Developed Markets Performance
- --------------------------------------------------------------------------------
In Local In U.S.
6 Months Ended 6/30/97 Currency Dollars
- --------------------------------------------------------------------------------
Australia ................................. 5.76% -0.24%
France .................................... 3.89 -8.01
Germany ................................... 3.37 -8.58
Italy ..................................... 5.09 -6.09
Japan ..................................... 2.11 3.57
Spain ..................................... 5.22 -6.94
United Kingdom ............................ 6.01 3.10
United States ............................. 2.78 2.78
Source: J.P. Morgan.
================================================================================
However, continuing moderate inflation was the catalyst for a U.S. bond
market rally during the past few months, which subsequently spilled over to
foreign markets. A string of benign commodity price reports also provided a
positive backdrop for global bonds. On the currency front, a combination of
strong growth and anticipated higher interest rates had underpinned the strong
U.S. dollar early in the year. But continued low inflation coupled with stronger
Japanese economic growth led to a reversal in the relative strengths of the yen
and dollar. Japan's economic resurgence was fueled by its export sector, which
prompted Japanese authorities to suggest a need for higher domestic rates and a
firmer yen. The yen's rebound was particularly powerful during the final six
weeks of the period.
<PAGE>
Within Europe, there were signs of a long-awaited economic recovery, much
of it due to the export sector, which benefited from weak local currencies
versus the dollar. An unexpected defeat for Chirac's party in France brought the
Socialists to power with their concerns about high unemployment. Subsequent
policies could lead to a relaxation of the fiscal restraints required for EMU
membership, making it easier for other countries to join. As a result, there
were significant rallies in Spanish and Italian bonds; inflation in both
countries recently fell to the low levels of the rest of Europe, leading to
lower interest rates. However, France's desire for a more stimulative fiscal
policy, combined with Germany's attempt to balance its own budget with creative
accounting techniques, put EMU fiscal credibility in question. Germany's
currency, in particular, has weakened, but European bond markets remained
strong.
================================================================================
Emerging Markets Performance
- --------------------------------------------------------------------------------
In U.S.
6 Months Ended 6/30/97 Dollars
- --------------------------------------------------------------------------------
Emerging Markets Bond Index Plus ............................. 10.27%
Brady Indexes (by issuer): *
Argentina .......................................... 11.55
Brazil ............................................. 11.46
Mexico ............................................. 9.11
Poland ............................................. 3.87
Venezuela .......................................... 8.55
* Brady bonds are restructured debt obligations of many emerging market
countries that enable these nations to repay loans while they implement
economic reforms. The bonds are denominated in U.S. dollars and have
extended maturities and lower interest rates than otherwise comparable
bonds.
Source: J.P. Morgan.
================================================================================
Similar to the situation in the U.S. market, a combination of strong
growth, tight monetary policy, and low inflation was a powerful elixir for the
British pound. Not even the Labour Party's victory over the Conservatives, who
had been in power for 18 years, could derail the pound's progress, which boosted
returns for U.S. investors.
Australasian bond markets also benefited from lower interest rates, as
governments throughout the region tried to bolster economic activity. Canada
raised short-term rates in the face of strong economic growth, and a fortunate
mix of good economic performance, low inflation, and higher rates helped
Canadian bonds keep pace with their U.S. counterparts.
<PAGE>
Emerging markets did not endure the same oscillations as the major markets
over the half year, except for poor performance in March. An accelerating global
economy, with low inflation and only modest upward pressure on interest rates,
is generally positive for emerging countries and their need to pursue structural
reforms. Consequently, the difference between the yields of most emerging market
bonds and those of developed nations narrowed. Notably, Bulgaria's bonds and
currency improved significantly during the period.
GLOBAL GOVERNMENT BOND FUND
================================================================================
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 6/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Global Government
Bond Fund -0.12% 6.63%
J.P. Morgan Global Government
Bond Index (unhedged) -1.09 4.48
================================================================================
Your fund experienced two distinct performance quarters. Because of the
U.S. dollar's strong start, the fund's first quarter was negative, as was the
case for most funds with nondollar-denominated currency allocations, because
appreciation failed to offset the strong dollar. In contrast, bond markets
enjoyed a better second quarter, helped by rebounds for the yen and pound.
[geographic diversification pie chart for Global Government Bond Fund
showing U.S. 39%, United Kingdom 11%, Italy 9%, Japan 6%, Germany 5%, Canada 5%,
Spain 4%, Other and Reserves 21%]
Returns for both the 6- and 12-month periods ended June 30 surpassed the
benchmark index due primarily to the fund's heav y exposure to the dollar and
the British pound and underweighting in weak European currencies such as the
deutschemark, Dutch guilder, and French franc. We increased our weighting in
Japanese bonds and the yen after a weak first quarter, which benefited
performance when the yen rose against the dollar later in the period. The fund's
holdings in emerging bond markets were also beneficial to performance, as were
our positions in Spain, Italy, Canada, and Australia.
We shortened the duration of the portfolio (duration is a measure of a
fund's price sensitivity to fluctuations in interest rates) to protect it
against a possible increase in interest rates in coming months. Real bond
yields, which are actual yields minus inflation, had been falling, and we did
not think they would go much lower. However, we are mindful that increasing
global competition has created an environment of low overall inflation, which
makes lower real yields more attractive than is usual at this advanced stage of
the economic cycle.
<PAGE>
The chart on page 3 shows the geographic diversification of the fund. For a
more detailed breakdown, see the portfolio listings following this letter.
INTERNATIONAL BOND FUND
================================================================================
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 6/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
International Bond Fund -2.43% 4.82%
J.P. Morgan Non-U.S. Dollar
Government Bond Index -3.41 2.72
================================================================================
The International Bond Fund is run similarly to the Global Government Bond
Fund except that it does not invest in U.S. securities. (The U.S. bond position
in the chart on page 5 reflects the fund's exposure to emerging market countries
whose bonds are denominated in U.S. dollars.)
International Bond Fund also experienced divergent performance during the
first and second quarters. Returns in the first quarter were hampered by the
strong dollar, while results in the second were boosted by the rebounding yen
and pound but were unable to offset earlier losses.
[geographic pie chart forInternational Bond Fund showing Japan 20%, United
Kingdom 15%, Germany 11%, Italy 10%, U.S. 8%, Spain 7%, Canada 6%, Other and
Reserves 23%]
Returns for the past 6- and 12-month periods outpaced the benchmark index
shown in the table, primarily as a result of fund exposure to the powerful
British pound and, to a lesser extent, to dollar-denominated bonds. We
maintained a relatively light allocation in European currencies, which
underperformed the U.S. dollar during the period. As in the Global Government
Bond Fund, we increased our weighting in Japanese bonds and benefited when the
yen rallied against the dollar during the past few months. Our positions in
emerging bond markets, as well as in the United Kingdom and Canada, helped
performance results.
When real bond yields declined globally, we shortened the duration of the
portfolio to protect it against a possible increase in interest rates later on.
That said, we seem to have entered a sustained period of moderate worldwide
inflation, which makes even relatively low real bond yields more attractive than
they normally are at this stage of the economic cycle.
EMERGING MARKETS BOND FUND
================================================================================
<PAGE>
================================================================================
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 6/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
Emerging Markets Bond Fund 13.92% 40.63%
J.P. Morgan Emerging Markets
Bond Index Plus 10.27 33.04
================================================================================
Once again, emerging market bonds were the star performers among
international fixed income securities. Latin American markets were especially
robust, but most other emerging regions made major contributions as well.
Your fund's returns for the most recent 6- and 12-month periods were
attractive both in absolute and relative terms, as measured against the J.P.
Morgan index shown in the performance table. Emerging Markets Bond Fund's total
return in excess of 40% for the full year was well ahead of the benchmark's.
[geographic diversification pie chart for Emerging Markets Bond Fund
showing Russia 15%, Brazil 13%, Venezuela 9%, Mexico 8%, Argentina 8%, Bulgaria
8%, Peru 5%, Other and Reserves 34%]
This outperformance was mostly attributable to the fund's overweighting in
Bulgaria, which benefited from the formation of a currency board to stabilize
both the currency and the overall economy. Bulgarian debt accounted for 8% of
net assets at the end of June. Several smaller markets including the Ivory
Coast, which is representative of your fund's diversified approach, also made a
positive contribution to strong performance. The bond markets of Peru and Russia
rebounded toward the end of the first half, reversing their disappointing starts
and helping to boost results. Russia remained the fund's largest country
allocation at 15% of assets, and Peru was a relatively large 5%.
We kept the duration of the fund somewhat shorter than that of the
benchmark index. This strategy hampered returns slightly, but the negative
impact was more than compensated for by our country allocation.
STRATEGY AND OUTLOOK
================================================================================
In our annual report, we mentioned that the European and dollar- bloc bond
markets were fairly valued, in our view, but that the latter might falter in the
face of tightening labor markets. This was true in the first quarter of 1997, so
the question of valuation once again comes to the fore as some economies are
still struggling to recover, while others, including the U.S., seek to temper
growth.
In the U.S., inflation appears to be modest. Consequently, a tight labor
market has not yet caused the Fed to tighten sharply. Evidence indicates that
economic activity abated in the second quarter and that a similar picture could
occur in the second half of 1997. However, the Fed is likely to err on the side
of caution, and a rate increase to guard against accelerating inflation is
possible during the second half.
<PAGE>
Within Europe, the EMU will remain the focus of discussion. Will the fiscal
criteria for membership be softened and, if so, how many countries will form the
starting lineup? Our belief is that the need for fiscal discipline will become
more urgent, and countries implementing the necessary long-term budget reforms
will be the ones to join the EMU in 1999. Thus, as European economies follow the
path to recovery, monetary policy could well remain accommodative in the face of
fiscal austerity, although there currently seems to be little room for further
cuts in short-term rates.
The exception is the U.K., whose economy is stronger than continental
Europe's. Further rate rises to restrain domestic demand are likely there. While
we do not expect an imminent rate increase in Japan, its economy is recovering
unevenly. Domestic demand is subdued but, unfathomably, the Bank of Japan
appears to believe that an official rate hike would stir the sluggish consumer
into action. Nevertheless, we believe the fragile nature of Japanese markets may
cause a delay in any rate increase until later this year.
As global economies begin to perform more evenly, the desire for a stronger
dollar should lessen significantly. While some European currencies may remain
soft primarily because of EMU uncertainties, we still foresee a less volatile
foreign exchange market in the second half of the year.
Going forward, we expect bond market performance to be driven more by
inflation expectations as economic growth picks up globally, but we anticipate
that increasing worldwide competition will keep inflation in check during the
foreseeable future. In many cases, yield levels are already low enough to
reflect this outlook, so we would expect bond returns to come primarily from
income rather than capital appreciation.
Emerging markets, denominated both in U.S. dollars and local currencies,
should benefit from credit rating improvements as their drive toward sound
economic management continues.
Your funds will remain cautious in their duration strategy, and we will
attempt to provide investors with attractive returns through our country
weightings in areas that appear to offer the best opportunities.
Respectfully submitted,
/s/
Peter B. Askew
Executive Vice President
July 18, 1997
<PAGE>
T. Rowe Price Foreign Bond Funds
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
Key statistics
12/31/96 6/30/97
Global Government Bond Fund
Price Per Share ..................................... $10.35 $9.99
Dividends Per Share
For 6 months .................................... 0.28 0.27
For 12 months ................................... 0.56 0.55
Dividend Yield *
For 6 months .................................... 5.42% 5.58%
For 12 months ................................... 5.66 5.57
Weighted Average Maturity (years) ................... 7.3 7.7
Weighted Average Effective Duration (years) ......... 4.3 4.0
Weighted Average Quality ** ......................... AA AA
International Bond Fund
Price Per Share ..................................... $10.46 $9.91
Dividends Per Share
For 6 months .................................... 0.29 0.27
For 12 months ................................... 0.60 0.56
Dividend Yield *
For 6 months .................................... 5.63% 5.61%
For 12 months ................................... 6.00 5.70
Weighted Average Maturity (years) ................... 7.4 7.8
Weighted Average Effective Duration (years) ......... 4.8 4.4
Weighted Average Quality ** ......................... AA AA
================================================================================
(continued on next page)
T. Rowe Price Foreign Bond Funds
================================================================================
Portfolio Highlights
- --------------------------------------------------------------------------------
Key statistics
12/31/96 6/30/97
Emerging Markets Bond Fund
Price Per Share $ ................................... 12.97 $14.21
Dividends Per Share
For 6 months .................................... 0.50 0.53
For 12 months ................................... 1.01 1.03
Dividend Yield *
For 6 months .................................... 8.10% 8.10%
For 12 months ................................... 9.05 8.27
Weighted Average Maturity (years) ................... 19.6 17.3
Weighted Average Effective Duration (years) ......... 5.3 5.8
Weighted Average Quality ** ......................... BB BB+
* 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 T. Rowe Price research.
================================================================================
<PAGE>
================================================================================
T. Rowe Price Foreign 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.
[Global Government Bond Fund SEC chart shown here]
[International Bond Fund SEC chart shown here]
[Emerging Markets Bond Fund SEC chart shown here]
================================================================================
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 6/30/97 1 Year 5 Years 10 Years Inception Date
- --------------------------------------------------------------------------------
Global Government Bond Fund 6.63% 6.68% - 7.06% 12/31/90
International Bond Fund 4.82 8.01 8.84% 9.26 9/10/86
Emerging Markets Bond Fund 40.63 - - 30.93 12/30/94
Investment return and principal value represent past performance and will
vary. Shares of the bond funds may be worth more or less at redemption than at
original purchase.
================================================================================
<PAGE>
<TABLE>
T. Rowe Price Global Government Bond Fund
====================================================================================================================================
Unaudited For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
6 Months Year
Ended Ended
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
NET ASSET VALUE
Beginning of period ............... $ 10.35 $ 10.26 $ 9.22 $ 10.08 $ 9.85 $ 10.30
Investment activities
Net investment income ......... 0.27* 0.56* 0.59* 0.54* 0.56* 0.76*
Net realized and
unrealized gain (loss) ........ (0.29) 0.09 1.04 (0.84) 0.51 (0.44)
Total from
investment activities ......... (0.02) 0.65 1.63 (0.30) 1.07 0.32
Distributions
Net investment income ......... (0.27) (0.56) (0.59) (0.51) (0.56) (0.76)
Net realized gain ............. (0.07) -- -- (0.02) (0.28) (0.01)
Tax return of capital ......... -- -- -- (0.03) -- --
Total distributions ........... (0.34) (0.56) (0.59) (0.56) (0.84) (0.77)
NET ASSET VALUE
End of period ..................... $ 9.99 $ 10.35 $ 10.26 $ 9.22 $ 10.08 $ 9.85
Ratios/Supplemental Data
Total return ...................... (0.12)%* 6.59%* 18.13%* (3.06)%* 11.15%* 3.26%*
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 ........................ 5.51%*+ 5.48%* 6.08%* 5.57%* 5.57%* 7.51%*
Portfolio turnover rate ........... 141.9%+ 262.6%~ 290.7% 254.1% 134.0% 236.6%
Net assets, end of period
(in thousands) .................... $ 50,039 $ 55,869 $ 28,207 $ 36,516 $ 48,758 $ 53,546
====================================================================================================================================
<FN>
* Excludes expenses in excess of a 1.20% voluntary expense limitation in effect through 12/31/98.
+ Annualized.
~ Excludes the effect of the acquisition of the Short-Term Fund's assets.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
T. Rowe Price International Bond Fund
====================================================================================================================================
Unaudited For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
6 Months Year
Ended Ended
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
NET ASSET VALUE
Beginning of period ............... $ 10.46 $ 10.46 $ 9.34 $ 10.34 $ 9.61 $ 10.35
Investment activities
Net investment income ......... 0.27 0.60 0.62 0.60 0.69 0.87
Net realized and
unrealized gain (loss) ........ (0.53) 0.11 1.24 (0.79) 1.18 (0.63)
Total from
investment activities ......... (0.26) 0.71 1.86 (0.19) 1.87 0.24
Distributions
Net investment income ......... (0.27) (0.60) (0.62) (0.60) (0.69) (0.83)
Net realized gain ............. (0.02) (0.11) (0.12) (0.21) (0.45) (0.15)
Total distributions ........... (0.29) (0.71) (0.74) (0.81) (1.14) (0.98)
NET ASSET VALUE
End of period ..................... $ 9.91 $ 10.46 $ 10.46 $ 9.34 $ 10.34 $ 9.61
Ratios/Supplemental Data
Total return ...................... (2.43)% 7.13% 20.30% (1.84)% 20.00% 2.39%
Ratio of expenses to
average net assets ................ 0.87%+ 0.87% 0.90% 0.98% 0.99% 1.08%
Ratio of net investment
income to average
net assets ........................ 5.54%+ 5.86% 6.10% 6.07% 6.58% 8.66%
Portfolio turnover rate ........... 146.4%+ 234.0% 237.1% 345.2% 395.7% 357.7%
Net assets, end of period
(in millions) ..................... $ 927 $ 969 $ 1,016 $ 738 $ 745 $ 514
====================================================================================================================================
<FN>
+ Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Emerging Markets Bond Fund
================================================================================
Unaudited For a share outstanding throughout each period
================================================================================
Financial Highlights
- --------------------------------------------------------------------------------
6 Months Year 12/30/94
Ended Ended to
6/30/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period ............. $ 12.97 $ 10.67 $ 10.00
Investment activities
Net investment income ....... 0.53* 1.00* 1.03*
Net realized and
unrealized gain (loss) ...... 1.24 2.72 1.38
Total from
investment activities ....... 1.77 3.72 2.41
Distributions
Net investment income ....... (0.53) (1.01) (1.02)
Net realized gain ........... -- (0.41) (0.72)
Total distributions ......... (0.53) (1.42) (1.74)
NET ASSET VALUE
End of period ................... $ 14.21 $ 12.97 $ 10.67
Ratios/Supplemental Data
Total return .................... 13.92%* 36.77%* 25.81%*
Ratio of expenses to
average net assets .............. 1.25%+* 1.25%* 1.25%*
Ratio of net investment
income to average
net assets ...................... 7.95%+* 8.37%* 10.20%*
Portfolio turnover rate ......... 71.8%+ 168.7% 273.5%
Net assets, end of period
(in thousands) .................. $ 73,368 $ 39,862 $ 9,989
================================================================================
* Excludes expenses in excess of a 1.25% voluntary expense limitation in
effect through 12/31/98.
+ Annualized.
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Global Government Bond Fund
================================================================================
Unaudited June 30, 1997
- --------------------------------------------------------------------------------
Portfolio of Investments + Par Value
- --------------------------------------------------------------------------------
In thousands
AUSTRALIA 3.3%
Government Bonds 3.3%
Commonwealth of Australia, 12.00%, 11/15/01 ............... AUD 880 $ 808
Commonwealth of Australia, 6.75%, 11/15/06 ................ 600 446
Federal National Mortgage Association, 6.50%, 7/10/02 ..... 520 393
Total Australia (Cost $1,635) ............................ 1,647
CANADA 4.5%
Government Bonds 4.5%
Government of Canada, 6.25%, 9/15/98 ...................... CAD 1,475 1,092
Government of Canada, 8.00%, 6/1/23 ....................... 980 805
Province of Alberta, 8.00%, 3/1/00 ........................ 450 349
Total Canada (Cost $2,285) ............................... 2,246
DENMARK 1.2%
Corporate Bonds 1.2%
Nykredit, 7.00%, 10/1/16 ................. DKK 1,960 302
Nykredit, 6.00%, 10/1/26 ................. 8 1
Nykredit, 7.00%, 10/1/29 ................. 2,200 319
Total Denmark (Cost $647) ............... 622
EUROPEAN CURRENCY UNIT 3.3%
Government Bonds 3.3%
European Bank for Reconstruction and Development
6.00%, 5/6/99 ................................ XEU 430 499
Republic of Portugal, 6.00%, 2/16/04 .................. 1,000 1,153
Total European Currency Unit (Cost $1,716) ........... 1,652
FRANCE 0.3%
Government Bonds 0.3%
Obligation Assimilable du Tresor
Principal Strip, 10/25/08 ............. FRF 1,500 132
Total France (Cost $140) ...................... 132
GERMANY 4.9%
Government Bonds 3.8%
Baden-Wuerttemberg Landesobligationen, 6.50%, 7/21/06 ... DEM 430 $ 259
Bundesobligation, 5.75%, 8/22/00 ........................ 2,070 1,245
Federal National Mortgage Association, 5.00%, 2/16/01 ... 1,160 680
2,184
<PAGE>
Corporate Bonds 1.1%
Minnesota Mining and Manufacturing, 5.00%, 10/15/01 ..... 500 292
292
Total Germany (Cost $2,811) ............................ 2,476
HUNGARY 0.7%
Government Bonds 0.7%
Government of Hungary, 23.50%, 11/6/97 ........... HUF 40,000 215
Government of Hungary, 24.00%, 3/21/98 ........... 25,000 137
Total Hungary (Cost $418) ....................... 352
ITALY 8.5%
Government Bonds 8.5%
Buoni del Tesoro Poliennali, 8.25%, 7/1/01 ........ ITL 4,500,000 2,833
Buoni del Tesoro Poliennali, 9.00%, 10/1/03 ....... 765,000 503
Buoni del Tesoro Poliennali, 9.50%, 1/1/05 ........ 550,000 373
Buoni del Tesoro Poliennali, 8.75%, 7/1/06 ........ 800,000 531
Total Italy (Cost $4,629) ........................ 4,240
JAPAN 6.3%
Government Bonds 4.3%
European Investment Bank, 3.00%, 9/20/06 ................ JPY 80,000 728
Government of Japan, 2.70%, 3/20/07 ..................... 80,000 705
International Bank for Reconstruction and Development
4.75%, 12/20/04 ................................ 50,000 510
Republic of Austria, 5.00%, 1/22/01 ..................... 25,000 244
2,187
Corporate Bonds 2.0%
Export Import Bank, 2.875%, 7/28/05 ................... 50,000 451
Japan Development Bank, 2.875%, 12/20/06 .............. 60,000 539
990
Total Japan (Cost $3,101) ............................ 3,177
NETHERLANDS 2.1%
Government Bonds 2.1%
Government of Netherlands, 7.50%, 11/15/99 ....... NLG 810 $447
Government of Netherlands, 9.00%, 1/15/01 ........ 1,000 587
Total Netherlands (Cost $1,133) ................. 1,034
NEW ZEALAND 2.5%
Government Bonds 2.5%
Government of New Zealand, 10.00%, 3/15/02 ....... NZD 1,660 1,271
Total New Zealand (Cost $1,277) ................. 1,271
PHILIPPINES 0.3%
Government Bonds 0.3%
Republic of Philippines, 12.50%, 4/25/01 .......... PHP 4,000 150
Total Philippines (Cost $148) .................... 150
<PAGE>
PORTUGAL 0.9%
Government Bonds 0.9%
Republic of Portugal, OT, 5.375%, 3/23/00 ........ PTE 80,000 456
Total Portugal (Cost $467) ...................... 456
SOUTH AFRICA 0.8%
Government Bonds 0.8%
Republic of South Africa, 12.00%, 2/28/05 ......... ZAR 2,050 403
Total South Africa (Cost $400) ................... 403
SPAIN 4.1%
Government Bonds 4.1%
Bonos del Estado, 7.90%, 2/28/02 .............. ESP 116,100 863
Bonos del Estado, 10.90%, 8/30/03 ............. 91,000 776
Bonos del Estado, 10.00%, 2/28/05 ............. 50,000 419
Total Spain (Cost $2,135) .................... 2,058
SWEDEN 0.5%
Government Bonds 0.5%
Kingdom of Sweden, 5.50%, 4/12/02 ............. SEK 2,000 $256
Total Sweden (Cost $260) ..................... 256
UNITED KINGDOM 11.1%
Government Bonds 4.2%
Federal National Mortgage Association, 6.875%, 6/7/02 ...... GBP 250 411
United Kingdom Treasury, 9.50%, 4/18/05 .................... 310 588
United Kingdom Treasury, 8.00%, 9/25/09 .................... 200 356
United Kingdom Treasury, 8.75%, 8/25/17 .................... 380 738
2,093
Corporate Bonds 6.9%
Alliance & Leicester Building Society, 8.75%, 12/7/06 ...... 200 350
Annington Finance, 7.75%, 10/2/11 .......................... 360 621
Bayerische Landesbank Girozentrale, 8.50%, 2/26/03 ......... 175 303
Guaranteed Export Finance, Zero Coupon, 9/29/00 ............ 420 554
Halifax Building Society, 8.75%, 7/10/06 ................... 300 531
Halifax Building Society, 9.375%, 5/15/21 .................. 180 342
National Power, 8.375%, 8/2/06 ............................. 300 515
Swiss Bank Corporation Jersey, 8.75%, 12/18/25 ............. 130 236
3,452
Total United Kingdom (Cost $5,329) ........................ 5,545
UNITED STATES 38.8%
Government Bonds 26.9%
Central Bank of Nicaragua, CENI Participation
Zero Coupon, 5/1/98 ........................... USD 100 92
City of Moscow, 9.50%, 5/31/00 ......................... 50 51
Federative Republic of Brazil (Class C), 8.00%, 4/15/14 448 361
Government of Poland, PDI, FRN, 4.00%, 10/27/14 ........ 100 85
Government of Russia, IAN (When/If Issue) .............. 100 76
<PAGE>
National Republic of Bulgaria, IAB, FRN
6.563%, 7/28/11 ............................... 100 72
National Republic of Bulgaria, FLIRB, STEP
2.25%, 7/28/12 ................................ 490 280
Republic of Argentina, BOCON PRE 2, FRN
5.695%, 4/1/01 ................................ USD 325 $ 393
Republic of Argentina, BOCON PRO 2, FRN
5.695%, 4/1/07 ................................ 125 148
Republic of Argentina, FRB, 6.75%, 3/31/05 ............. 267 251
Republic of Ecuador, PDI, FRN, 6.438%, 2/27/15 ......... 199 129
Republic of Kazakhstan, 9.25%, 12/20/99 ................ 70 71
Republic of Panama, FRN, 7.031%, 5/10/02 ............... 115 114
Republic of Peru, FLIRB (20 yr Series), STEP
3.25%, 3/7/17 ................................. 100 60
Republic of Peru, FLIRB (US Series), STEP
3.25%, 3/7/17 ................................. 245 147
Republic of Venezuela, DCB, FRN, 6.75%, 12/18/07 ....... 500 464
U.S. Treasury Bonds, 7.125%, 2/15/23 ................... 2,640 2,719
U.S. Treasury Notes, 5.875%, 8/15/98 ................... 3,500 3,499
U.S. Treasury Notes, 6.75%, 6/30/99 .................... 1,295 1,311
U.S. Treasury Notes, 7.50%, 5/15/02 .................... 1,100 1,151
U.S. Treasury Notes, 7.25%, 8/15/04 .................... 835 871
U.S. Treasury Notes, 6.50%, 10/15/06 ................... 400 398
Vnesheconombank Loan Participation, Nonperforming * .... 750 688
13,431
Corporate Bonds 4.1%
Banco Nacional de Comercio Exterior, 7.25%, 2/2/04 ......... 80 75
Coca Cola Femsa, 8.95%, 11/1/06 ............................ 100 102
Grupo Elektra, 12.75%, 5/15/01 ............................. 150 166
Landesbank Rheinland-Pfalz, FRN, 5.813%, 3/25/98 ........... 1,000 1,000
Poland Communications, (144a)
9.875%, 11/1/03 ................................... 180 180
The Money Store Asset Backed Notes (ClassNotes Trust)
Series 1996-I (Class A-7), FRN
5.858%, 3/15/01 ................................... 437 437
Tv Azteca, 10.50%, 2/15/07 ................................. 100 103
2,063
Hybrid Instruments 0.7%
ING Barings Philippine Peso Linked Note
Zero Coupon, 12/11/97:
Principal repayment value linked to the
performance of the Philippine peso ............... 100 95
ING Barings, Russian Ministry of Finance
GKO Pass-Through Note, Zero Coupon, 11/26/97:
Principal repayment value dependent upon
the performance of the Russian ruble .............. USD 250 229
324
<PAGE>
Commercial Paper 7.1%
GTE Funding, 5.57%, 7/16/97 ................................. 1,000 998
Investments in Commercial Paper through a Joint Account
6.05 - 6.20%, 7/1/97 ............................... 2,575 2,575
3,573
Total United States (Cost $18,994) ......................... 19,391
Total Investments in Securities
94.1% of Net Assets (Cost $47,525) .......................... $ 47,108
Forward Currency Exchange Contracts
In thousands
Counter- Unrealized
party Settlement Receive Deliver Gain (Loss)
- --------------- ------- ------------- --------------- -----------
Chase Manhattan 7/8/97 USD 645 NLG 1,253 $ 6
Chase Manhattan 7/8/97 NLG 982 USD 500 1
Chase Manhattan 7/11/97 USD 262 SEK 1,974 7
Chase Manhattan 7/16/97 USD 966 ITL 1,641,580 -
Chase Manhattan 7/21/97 USD 1,920 GBP 1,174 (34)
Morgan Guaranty 7/24/97 AUD 492 NZD 540 5
Chase Manhattan 7/24/97 JPY 108,602 AUD 1,272 (10)
Citibank 7/24/97 JPY 24,349 GBP 130 (3)
Morgan Guaranty 7/24/97 JPY 105,993 NZD 1,358 6
Chase Manhattan 7/24/97 JPY 140,000 USD 1,228 (2)
Chase Manhattan 7/28/97 USD 852 DKK 5,573 11
Citibank 10/1/97 NOK 3,577 DEM 850 -
-----
Net unrealized gain (loss) on open forward
currency exchange contracts ................................... (13)
Other Assets Less Liabilities ................................. $ 2,944
NET ASSETS . .................................................. $ 50,039
NET ASSET VALUE PER SHARE ..................................... $ 9.99
+ Listed by currency denomination
* Non-income producing
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at year-end amounts to
0.36% of net assets.
AUD Australian dollar
CAD Canadian dollar
DEM German deutschemark
DKK Danish krone
ESP Spanish peseta
FRF French franc
GBP British sterling
<PAGE>
HUF Hungarian florint
ITL Italian lira
JPY Japanese yen
NLG Dutch guilder
NOK Norwegian krone
NZD New Zealand dollar
PHP Philippine peso
PTE Portuguese escudo
SEK Swedish krona
USD U.S. dollar
XEU European currency unit
ZAR South African rand
BOCON Consolidation bonds
CENI Negotiable certificates
DCB Debt conversion bond
FLIRB Front loaded interest reduction bond
FRB Floating rate bond
FRN Floating rate note
GKO Russian treasury obligation
IAB Interest arrears bond
IAN Interest arrears note
OT Portuguese treasury obligation
PDI Past due interest
STEP Stepped coupon note for which the interest rate will adjust on specified
future dates.
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Global Government Bond Fund
================================================================================
Unaudited June 30, 1997
================================================================================
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value (cost $47,525) ............... $ 47,108
Other assets ..................................................... 5,432
Total assets ..................................................... 52,540
Liabilities
Total liabilities ................................................ 2,501
NET ASSETS ....................................................... $ 50,039
Net Assets Consist of:
Accumulated net investment income - net of distributions ......... $ 51
Accumulated net realized gain/loss - net of distributions ........ (976)
Net unrealized gain (loss) ....................................... (473)
Paid-in-capital applicable to 5,007,166 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized ............... 51,437
NET ASSETS ....................................................... $ 50,039
NET ASSET VALUE PER SHARE ........................................ $ 9.99
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price International Bond Fund
================================================================================
Unaudited June 30, 1997
================================================================================
Portfolio of Investments + Par Value
- --------------------------------------------------------------------------------
In thousands
AUSTRALIA 2.5%
Government Bonds 2.5%
Commonwealth of Australia, 12.00%, 11/15/01 ......... AUD 16,100 $14,788
Federal National Mortgage Association, 6.50%, 7/10/02 11,240 8,489
Total Australia (Cost $23,138) ..................... 23,277
CANADA 6.2%
Government Bonds 6.2%
Government of Canada, 6.25%, 9/15/98 ............... CAD 52,500 38,863
Government of Canada, 8.00%, 6/1/23 ................ 17,500 14,377
Province of Ontario, 8.25%, 12/1/05 ................ 5,000 4,085
Total Canada (Cost $56,995) ....................... 57,325
CZECH REPUBLIC 0.2%
Government Bonds 0.2%
European Investment Bank, 11.00%, 10/10/01 ......... CZK 82,000 2,396
Total Czech Republic (Cost $3,061)................. 2,396
DENMARK 1.7%
Corporate Bonds 1.7%
Nykredit, 7.00%, 10/1/16 ........................ DKK 61,421 9,458
Nykredit, 6.00%, 10/1/26 ........................ 165 23
Nykredit, 7.00%, 10/1/29 ........................ 41,900 6,074
Total Denmark (Cost $16,314) ................... 15,555
EUROPEAN CURRENCY UNIT 4.4%
Government Bonds 4.4%
European Bank for Reconstruction and Development
6.00%, 5/6/99 ................................... XEU 7,800 9,052
Obligation Assimilable du Tresor, 9.50%, 4/25/00 ......... 8,800 11,207
Republic of Portugal, 6.00%, 2/16/04 ..................... 17,500 20,172
Total European Currency Unit (Cost $41,710) ............. 40,431
FRANCE 2.0%
Government Bonds 2.0%
Obligation Assimilable du Tresor, 6.50%, 10/25/06....... FRF 40,000 7,289
Obligation Assimilable du Tresor
Principal Strip, 10/25/05 ..................... FRF 60,000 $ 6,504
Obligation Assimilable du Tresor
Principal Strip, 10/25/08 ..................... 60,000 5,270
Total France (Cost $19,910) ........................... 19,063
<PAGE>
GERMANY 11.4%
Government Bonds 6.7%
Baden-Wuerttemberg Landesobligationen
6.50%, 7/21/06 ................................ DEM 35,500 21,348
Bundesobligation, 5.75%, 8/22/00 ...................... 52,500 31,586
Bundesrepublic, 7.25%, 10/21/02 ....................... 13,450 8,572
Federal National Mortgage Association, 5.00%, 2/16/01 . 38,000 22,283
83,789
Corporate Bonds 4.7%
KFW International Finance, 6.75%, 6/20/05 ............. 28,000 17,255
Minnesota Mining and Manufacturing, 5.00%, 10/15/01 ... 8,350 4,881
22,136
Total Germany (Cost $119,491) ........................ 105,925
HUNGARY 0.6%
Government Bonds 0.6%
Government of Hungary, 23.50%, 11/6/97 ................ HUF 640,000 3,444
Government of Hungary, 24.00%, 3/21/98 ................ 430,000 2,354
Total Hungary (Cost $6,873) .......................... 5,798
ITALY 10.4%
Government Bonds 10.4%
Buoni del Tesoro Poliennali, 9.50%, 2/1/01 ...... ITL 40,000,000 25,942
Buoni del Tesoro Poliennali, 8.25%, 7/1/01 ...... 38,500,000 24,237
Buoni del Tesoro Poliennali, 9.00%, 10/1/03 ..... 34,675,000 22,805
Buoni del Tesoro Poliennali, 9.50%, 1/1/05 ...... 10,000,000 6,781
Buoni del Tesoro Poliennali, 8.75%, 7/1/06 ...... 25,000,000 16,585
Total Italy (Cost $103,254) .................... 96,350
JAPAN 20.0%
Government Bonds 9.2%
European Investment Bank, 3.00%, 9/20/06 ..... JPY 1,500,000 $13,644
Government of Japan, 2.70%, 3/20/07 .......... 1,560,000 13,744
International Bank for
Reconstruction and Development
4.75%, 12/20/04 ..................... 3,200,000 32,656
Republic of Austria, 5.00%, 1/22/01 .......... 1,000,000 9,772
Republic of Austria, 4.50%, 9/28/05 .......... 1,500,000 15,108
84,924
Corporate Bonds 5.6%
Export Import Bank, 4.375%, 10/1/03 ............... 2,870,000 28,297
Export Import Bank, 2.875%, 7/28/05 ............... 1,500,000 13,543
Japan Development Bank, 2.875%, 12/20/06 .......... 1,100,000 9,880
51,720
Short-term Investments 5.2%
Morgan Guaranty, Fixed Deposit, 0.375%, 7/1/97 ........ 5,570,098 48,596
48,596
Total Japan (Cost $191,029) .......................... 185,240
<PAGE>
NETHERLANDS 2.5%
Government Bonds 2.5%
Government of Netherlands, 7.50%, 11/15/99 ....... NLG 15,330 8,454
Government of Netherlands, 9.00%, 1/15/01 ........ 25,000 14,676
Total Netherlands (Cost $25,640) ................ 23,130
NEW ZEALAND 1.7%
Government Bonds 1.7%
Government of New Zealand, 10.00%, 3/15/02 ....... NZD 20,900 16,006
Total New Zealand (Cost $16,052) ................ 16,006
PHILIPPINES 0.3%
Government Bonds 0.3%
Republic of Philippines, 12.50%, 4/25/01 ....... PHP 84,000 3,156
Total Philippines (Cost $3,101) ............... 3,156
PORTUGAL 1.0%
Government Bonds 1.0%
Republic of Portugal, OT, 5.375%, 3/23/00 ..... PTE 1,570,000 $8,942
Total Portugal (Cost $9,161) ................. 8,942
SOUTH AFRICA 0.8%
Government Bonds 0.8%
Republic of South Africa, 12.00%, 2/28/05 ...... ZAR 35,800 7,037
Total South Africa (Cost $6,982) .............. 7,037
SPAIN 7.1%
Government Bonds 7.1%
Bonos del Estado, 7.90%, 2/28/02 ........... ESP 3,536,500 26,290
Bonos del Estado, 10.90%, 8/30/03 .......... 2,746,000 23,425
Bonos del Estado, 8.00%, 5/30/04 ........... 1,000,000 7,558
Bonos del Estado, 10.00%, 2/28/05 .......... 1,000,000 8,367
Total Spain (Cost $68,198) ................ 65,640
SWEDEN 1.0%
Government Bonds 1.0%
Kingdom of Sweden, 5.50%, 4/12/02 ........... SEK 72,000 9,212
Total Sweden (Cost $9,374) ................. 9,212
UNITED KINGDOM 15.0%
Government Bonds 5.3%
Federal National Mortgage Association, 6.875%, 6/7/02 ... GBP 6,400 10,519
Republic of Austria, 9.00%, 7/22/04 ..................... 4,000 7,241
United Kingdom Treasury, 8.00%, 9/25/09 ................. 5,460 9,703
United Kingdom Treasury, 8.00%, 12/7/15 ................. 5,000 9,058
United Kingdom Treasury, 8.75%, 8/25/17 ................. 6,330 12,294
48,815
<PAGE>
Corporate Bonds 9.7%
Alliance & Leicester Building Society, 8.75%, 12/7/06 8,500 14,870
Annington Finance, 7.75%, 10/2/11 .................... 2,500 4,314
Bank of Scotland, Perpetual Debenture
FRN, 8.375% ................................. 2,700 4,577
Guaranteed Export Finance, 10.625%, 9/15/01 .......... GBP 10,000 $ 18,464
Guaranteed Export Finance, Zero Coupon, 9/29/00 ...... 6,500 8,573
Halifax Building Society, 8.75%, 7/10/06 ............. 8,500 15,040
Halifax Building Society, 9.375%, 5/15/21 ............ 4,900 9,310
National Power, 8.375%, 8/2/06 ....................... 5,000 8,583
Swiss Bank Corporation Jersey, 8.75%, 12/18/25 ....... 3,700 6,719
90,450
Total United Kingdom (Cost $131,191) ................ 139,265
UNITED STATES 7.5%
Government Bonds 4.8%
Central Bank of Nicaragua, CENI Participation
Zero Coupon, 5/1/98 ........................... USD 1,400 1,287
City of Moscow, 9.50%, 5/31/00 ......................... 650 658
Federative Republic of Brazil (Class C), 8.00%, 4/15/14 5,883 4,732
Government of Poland, PDI, FRN, 4.00%, 10/27/14 ........ 1,500 1,283
Government of Russia, IAN (When/If Issue) .............. 1,000 764
National Republic of Bulgaria, IAB, FRN
6.563%, 7/28/11 ............................... 3,325 2,404
National Republic of Bulgaria, FLIRB, STEP
2.25%, 7/28/12 ................................ 2,700 1,542
Republic of Argentina, BOCON PRO 2, FRN
5.695%, 4/1/07 ................................ 2,474 2,567
Republic of Argentina, BOCON PRE 2, FRN
5.695%, 4/1/01 ................................ 5,037 5,430
Republic of Argentina, FRB, 6.75%, 3/31/05 ............. 1,795 1,688
Republic of Ecuador, PDI, FRN, 6.438%, 2/27/15 ......... 2,153 1,390
Republic of Kazakhstan, 9.25%, 12/20/99 ................ 1,080 1,098
Republic of Peru, FLIRB (US Series), STEP
3.25%, 3/7/17 ................................. 4,500 2,706
Republic of Venezuela, DCB, FRN, 6.75%, 12/18/07 ....... 6,750 6,261
United Mexican States (Series A)
6.25%, 12/31/19 ............................... 750 582
Vnesheconombank Loan Participation, Nonperforming * .... 10,700 9,817
44,209
Corporate Bonds 0.9%
Banco Nacional de Comercio Exterior, 7.25%, 2/2/04 ...... 800 746
Central Bank of the Dominican Republic, Discount
6.875%, 8/30/24 ................................ USD 1,000 $ 810
Grupo Elektra, 12.75%, 5/15/01 .......................... 2,175 2,407
Poland Communications (144a), 9.875%, 11/1/03 ........... 3,930 3,925
7,888
<PAGE>
Hybrid Instruments 0.6%
ING Barings Philippine Peso Linked Note
Zero Coupon, 12/11/97:
Principal repayment value linked to the
performance of the Philippine peso ............... 1,915 1,896
ING Barings, Russian Ministry of Finance
GKO Pass-Through Note, Zero Coupon, 11/26/97:
Principal repayment value dependent upon
the performance of the Russian ruble .............. 3,822 3,902
5,798
Currency Options Purchased 0.0%
CAD Call/USD Put, expires 8/28/97 @ 1.35 .... 22,222 45
45
Commercial Paper 1.2%
Caisse des Depots et Consignations, 4(2)
5.53%, 7/9/97 ...................................... 4,994 4,994
Investments in Commercial Paper through a Joint Account
6.05 - 6.20%, 7/1/97 .............................. 6,424 6,424
11,418
Total United States (Cost $61,389) ........................ 69,358
Total Investments in Securities
96.3% of Net Assets (Cost $912,863) ........................ $893,106
Forward Currency Exchange Contracts
In thousands
Counter- Unrealized
party Settlement Receive Deliver Gain (Loss)
- ---------------- ---------- --------------- --------------- -----------
Citibank 7/8/97 DEM 16,568 USD 9,500 $ 5
Chase Manhattan 7/16/97 JPY 795,277 ITL 11,893,760 (39)
Citibank 7/21/97 FRF 182,123 GBP 19,141 (820)
Morgan Guaranty 7/24/97 AUD 9,282 NZD 10,193 97
Citibank 7/24/97 JPY 1,017,752 GBP 5,422 (111)
Morgan Guaranty 7/24/97 JPY 1,068,563 NZD 13,691 64
Citibank 10/1/97 NOK 67,326 DEM 16,000 2
------
Net unrealized gain (loss) on open forward
currency exchange contracts .................................. (802)
Other Assets Less Liabilities ................................ 34,685
NET ASSETS ................................................... $ 926,989
NET ASSET VALUE PER SHARE .................................... $ 9.91
<PAGE>
+ Listed by currency denomination
* Non-income producing
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors."
144a Security was purchased pursuant to Rule 144a under the Securities Actof
1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at year-end amounts to
0.44% of net assets.
AUD Australian dollar
CAD Canadian dollar
CZK Czech coruna
DEM German deutschemark
DKK Danish krone
ESP Spanish peseta
FRF French franc
GBP British sterling
HUF Hungarian florint
ITL Italian lira
JPY Japanese yen
NLG Dutch guilder
NOK Norwegian krone
NZD New Zealand dollar
PHP Philippine peso
PTE Portuguese escudo
SEK Swedish krona
USD U.S. dollar
XEU European currency unit
ZAR South African rand
BOCON Consolidation bond
CENI Negotiable Certificates
DCB Debt conversion bond
FLIRB Front loaded interest reduction bond
FRB Floating rate bond
FRN Floating rate note
GKO Russian treasury obligation
IAB Interest arrears bond
IAN Interest arrears note
OT Portuguese treasury obligation
PDI Past due interest
STEP Stepped coupon note for which the interest rate will adjust on specified
future dates
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price International Bond Fund
================================================================================
Unaudited June 30, 1997
================================================================================
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
Assets
Investment in securities, at value (cost $912,863) .............. $ 893,106
Other assets .................................................... 77,854
Total assets .................................................... 970,960
Liabilities
Total liabilities ............................................... 43,971
NET ASSETS ...................................................... $ 926,989
Net Assets Consist of:
Accumulated net investment income - net of distributions ........ $ 5,062
Accumulated net realized gain/loss - net of distributions ....... (8,555)
Net unrealized gain (loss) ...................................... (21,309)
Paid-in-capital applicable to 93,531,018 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized .............. 951,791
NET ASSETS ...................................................... $ 926,989
NET ASSET VALUE PER SHARE ....................................... $ 9.91
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Emerging Markets Bond Fund
================================================================================
Unaudited June 30, 1997
================================================================================
Portfolio of Investments + Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
ARGENTINA 8.3%
Government Bonds 8.3%
Republic of Argentina, BOCON PRO 2
FRN, 5.695%, 4/1/07 ......................... USD 1,500 $1,770
Republic of Argentina, FRB, 6.75%, 3/31/05 ........... 3,080 2,897
Republic of Argentina, Par, FRN, 5.50%, 3/31/23 ...... 2,000 1,388
Total Argentina (Cost $5,465) ....................... 6,055
BRAZIL 13.0%
Government Bonds 11.2%
Federative Republic of Brazil, 10.125%, 5/15/27 ............ 920 887
Federative Republic of Brazil (Class C), 8.00%, 4/15/14 .... 3,530 2,839
Federative Republic of Brazil, DCB
FRN, 6.398%, 4/15/12 .............................. 1,750 1,448
Federative Republic of Brazil, Discount
FRN, 6.875%, 4/15/24 .............................. 2,600 2,191
Federative Republic of Brazil ,Par, FRN, 5.25%, 4/15/24 .... 1,250 849
8,214
Corporate Bonds 1.8%
Brazil MYDFA Trust Certificates, FRN, 6.547%, 9/15/07 ...... 1,456 1,326
1,326
Total Brazil (Cost $8,624) ................................ 9,540
BULGARIA 7.9%
Government Bonds 7.9%
National Republic of Bulgaria, FLIRB
STEP, 2.25%, 7/28/12 ...................... 3,060 1,748
National Republic of Bulgaria, IAB
FRN, 6.562%, 7/28/11 ...................... 5,625 4,068
Total Bulgaria (Cost $4,382) ...................... 5,816
DOMINICAN REPUBLIC 1.4%
Corporate Bonds 1.4%
Central Bank of the Dominican Republic
Discount, 6.875%, 8/30/24 ................... 1,250 1,012
Total Dominican Republic (Cost $941) ................ 1,012
ECUADOR 3.2%
Government Bonds 3.2%
Republic of Ecuador, Discount, FRN, 6.438%, 2/28/25 ..... USD 1,750 $1,253
Republic of Ecuador, PDI, FRN, 6.438%, 2/27/15 .......... 1,684 1,088
Total Ecuador (Cost $2,155) ............................ 2,341
<PAGE>
GHANA 1.1%
Convertible Bonds 1.1%
Ashanti Capital, 5.50%, 3/15/03 .................... 1,000 825
Total Ghana (Cost $820) ........................... 825
IVORY COAST 2.9%
Government Bonds 2.9%
Ivory Coast Credit Refinancing Agreement
Nonperforming* ........................ 3,000 1,253
Ivory Coast Credit Refinancing Agreement
Nonperforming* ........................ FRF 11,000 884
Total Ivory Coast (Cost $1,491) ............... 2,137
KAZAKHSTAN 1.0%
Government Bonds 1.0%
Republic of Kazakhstan, 9.25%, 12/20/99 ............. USD 750 762
Total Kazakhstan (Cost $749) ....................... 762
MEXICO 8.4%
Government Bonds 4.5%
United Mexican States (Series A), 6.25%, 12/31/19 ........ 2,750 2,133
United Mexican States (Series B), 6.25%, 12/31/19 ........ 1,500 1,163
3,296
Corporate Bonds 3.9%
Aerovias de Mexico, 9.75%, 6/10/00 ..................... 500 497
Azteca Holdings, 11.00%, 6/15/02 ....................... 1,000 1,013
Coca Cola Femsa, 8.95%, 11/1/06 ........................ 400 408
Grupo Televisa, STEP, Zero Coupon, 05/15/08 ............ 750 524
Tv Azteca, 10.50%, 2/15/07 ............................. 400 412
2,854
Total Mexico (Cost $5,913) ............................ 6,150
MOROCCO 1.2%
Government Bonds 1.2%
Kingdom of Morocco Restructured Loan
(Tranche A), FRN, 6.813%, 1/1/09 ............ USD 1,000 $913
Total Morocco (Cost $877) ....................... 913
NICARAGUA 1.9%
Government Bonds 1.9%
Central Bank of Nicaragua
CENI Participation, Zero Coupon, 5/1/98 ........... 1,500 1,379
Total Nicaragua (Cost $1,374) ......................... 1,379
PANAMA 1.0%
Government Bonds 1.0%
Republic of Panama, 7.875%, 2/13/02 .................... 250 250
Republic of Panama, FRN, 7.031%, 5/10/02 ............... 500 495
Total Panama (Cost $743) .............................. 745
<PAGE>
PERU 4.9%
Government Bonds 4.9%
Republic of Peru, FLIRB (20 yr. Series)
STEP, 3.25%, 3/7/17 ......................... 900 541
Republic of Peru, FLIRB (US Series)
STEP, 3.25%, 3/7/17 ......................... 5,095 3,063
Total Peru (Cost $3,331) ............................ 3,604
PHILIPPINES 1.1%
Government Bonds 0.2%
Republic of Philippines, 12.50%, 4/25/01 ................ PHP 4,000 151
151
Hybrid Instruments 0.9%
ING Barings Philippine Peso Linked Note
Zero Coupon, 12/11/97:
Principal repayment value
linked to the performance of the Philippine peso ...... USD 650 616
616
Total Philippines (Cost $770) ............................ 767
POLAND 3.2%
Government Bonds 1.2%
Government of Poland, PDI, FRN, 4.00%, 10/27/14 ...... USD 1,000 $855
855
Corporate Bonds 2.0%
Poland Communications, (144a), 9.875%, 11/1/03 ....... 1,500 1,498
1,498
Total Poland (Cost $2,361) .......................... 2,353
RUSSIA 14.6%
Common Stocks 0.9%
Lukoil .......................................... ADR 8 638
638
Government Bonds 12.9%
City of Moscow, 9.50%, 5/31/00 ............................. 700 709
Government of Russia, IAN (When/If Issue) .................. 500 382
Government of Russia, Principal (When/If Issue) ............ 1,750 1,168
Russian Ministry of Finance, 10.00%, 6/26/07 ............... 500 499
Vnesheconombank Loan Participation, Nonperforming * ........ 7,350 6,744
9,502
Hybrid Instruments 0.8%
Lehman Brothers Russian Ministry of Finance
Zero Coupon, 12/10/97:
Principal repayment value
linked to the performance of the Russian ruble .. RUR 3,500,000 557
557
Total Russia (Cost $7,979) ......................... 10,697
<PAGE>
SOUTH AFRICA 1.9%
Government Bonds 1.9%
Republic of South Africa, 12.00%, 2/28/05 ........ ZAR 7,000 1,376
Total South Africa (Cost $1,365) ................ 1,376
UKRAINE 1.9%
Hybrid Instruments 1.9%
ING Barings Ukranian T- Bill Pass Through
Zero Coupon, 1/23/98:
Principal repayment value linked
to the performance of the Ukranian hryvna ...... USD 1,541 $1,388
Total Ukraine (Cost $1,247) ....................... 1,388
VENEZUELA 9.1%
Common Stocks 0.4%
Compania Anonima Nacional Telefonos
de Venezuela (Class D) ................. ADR 6 259
259
Government Bonds 8.7%
Republic of Venezuela, DCB, FRN, 6.75%, 12/18/07 ......... 3,250 3,015
Republic of Venezuela, Discount
(Series W-A), FRN, 6.813%, 3/31/20 .................. 1,000 886
Republic of Venezuela, Discount
(Series X-B), FRN, 6.813%, 3/31/20 .................. 1,500 1,329
Republic of Venezuela, Par
(Series W-A), FRN, 6.75%, 3/31/20 ................... 1,500 1,183
6,413
Total Venezuela (Cost $6,336) ........................... 6,672
UNITED STATES 10.0%
Commercial Paper 10.0%
Falcon Asset Securitization, 4(2), 5.55%, 7/22/97 ............ 2,000 1,994
Kingdom of Sweden, 5.56%, 7/11/97 ............................ 2,000 1,997
Yale University, 5.56%, 7/14/97 .............................. 2,000 1,996
Investments in Commercial Paper through a Joint Account,
6.05 - 6.20%, 7/1/97 ..................................... 1,372 1,372
Total United States (Cost $7,359) ........................... 7,359
Total Investments in Securities
98.0% of Net Assets (Cost $64,282) ........................... $ 71,891
Forward Currency Exchange Contracts
In thousands
Counter- Unrealized
party Settlement Receive Deliver Gain (Loss)
- --------------- ---------- ------------ ----------- -----------
Chase Manhattan 7/8/97 USD 690 DEM 1,192 $ 6
Chase Manhattan 7/8/97 USD 706 FRF 4,108 6
----------
<PAGE>
Net unrealized gain (loss) on open forward
currency exchange contracts .................................... 12
Other Assets Less Liabilities .................................. 1,465
NET ASSETS ..................................................... $ 73,368
NET ASSET VALUE PER SHARE ...................................... $ 14.21
+ Listed by country of issuance
* Non -income producing
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors."
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at year-end amounts to
2.04% of net assets.
FRF French franc
PHP Philippine peso USD U.S. dollar
ZAR South African rand
ADR American depository receipt
BOCON Consolidation bonds
CENI Negotiable certificates
DCB Debt conversion bond
FLIRB Front loaded interest reduction bond
FRB Floating rate bond
FRN Floating rate note
IAB Interest arrears bond
IAN Interest arrears note
MYDFA Multi-year deposit facility
PDI Past due interest
STEP Stepped coupon note for which the interest rate will adjust on specified
future dates.
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Emerging Markets Bond Fund
================================================================================
Unaudited June 30, 1997
================================================================================
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value (cost $64,282) ............... $71,891
Other assets ...................................................... 4,791
Total assets ...................................................... 76,682
Liabilities
Total liabilities ................................................. 3,314
NET ASSETS ........................................................ $73,368
Net Assets Consist of:
Accumulated net investment income - net of distributions .......... $ 27
Accumulated net realized gain/loss - net of distributions ......... 1,472
Net unrealized gain (loss) ........................................ 7,613
Paid-in-capital applicable to 5,162,883 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized ................ 64,256
NET ASSETS ........................................................ $73,368
NET ASSET VALUE PER SHARE ......................................... $ 14.21
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Foreign Bond Funds
================================================================================
Unaudited
================================================================================
Statement of Operations
================================================================================
In thousands
Global Emerging
Government International Markets
Bond Fund Bond Fund Bond Fund
- --------------------------------------------------------------------------------
6 Months 6 Month 6 Months
Ended Ended Ended
6/30/97 6/30/97 6/30/97
Investment Income
Income
Interest ............................... $ 1,710 $ 28,990 $2,496
Dividend ............................... -- -- 2
Total income ........................... 1,710 28,990 2,498
Expenses
Investment management .................. 124 3,061 119
Shareholder servicing .................. 76 582 97
Custody and accounting ................. 70 208 69
Registration ........................... 16 17 27
Legal and audit ........................ 11 10 8
Prospectus and shareholder reports ..... 3 43 10
Directors .............................. 3 4 3
Miscellaneous .......................... 3 6 6
Total expenses ......................... 306 3,931 339
Net investment income ...................... 1,404 25,059 2,159
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities ............................. (1,427) (19,969) 1,130
Foreign currency transactions .......... 602 3,272 77
Net realized gain (loss) ............... (825) (16,697) 1,207
Change in net unrealized gain or loss
Securities ............................. (880) (35,085) 3,431
Other assets and liabilities
denominated in foreign currencies ...... 172 3,657 24
Change in net unrealized gain or loss .. (708) (31,428) 3,455
Net realized and unrealized gain (loss) .... (1,533) (48,125) 4,662
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ..................... $ (129) $(23,066) $6,821
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Global Government Bond Fund
================================================================================
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/97 12/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income .............................. $ 1,404 $ 1,816
Net realized gain (loss) ........................... (825) 1,519
Change in net unrealized gain or loss .............. (708) (1,049)
Increase (decrease) in net assets from operations .. (129) 2,286
Distributions to shareholders
Net investment income .............................. (1,404) (1,816)
Net realized gain .................................. (370) -
Decrease in net assets from distributions .......... (1,774) (1,816)
Capital share transactions *
Shares sold ........................................ 4,048 7,679
Shares issued in connection with fund acquisition .. - 28,697
Distributions reinvested ........................... 1,435 1,470
Shares redeemed .................................... (9,410) (10,654)
Increase (decrease) in net assets from capital
share transactions ................................. (3,927) 27,192
Net Assets
Increase (decrease) during period ...................... (5,830) 27,662
Beginning of period .................................... 55,869 28,207
End of period .......................................... $ 50,039 $ 55,869
*Share information
Shares sold ........................................ 407 760
Shares issued in connection with fund acquisition .. - 2,794
Distributions reinvested ........................... 145 145
Shares redeemed .................................... (945) (1,048)
Increase (decrease) in shares outstanding .......... (393) 2,651
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price International Bond Fund
================================================================================
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/97 12/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income ........................... $ 25,059 $ 58,658
Net realized gain (loss) ........................ (16,697) 38,616
Change in net unrealized gain or loss ........... (31,428) (30,516)
Increase (decrease) in net assets from operations (23,066) 66,758
Distributions to shareholders
Net investment income ........................... (25,059) (58,657)
Net realized gain ............................... (1,825) (10,093)
Decrease in net assets from distributions ....... (26,884) (68,750)
Capital share transactions *
Shares sold ..................................... 185,254 267,050
Distributions reinvested ........................ 23,059 55,861
Shares redeemed ................................. (200,828) (367,131)
Increase (decrease) in net assets from capital
share transactions .............................. 7,485 (44,220)
Net Assets
Increase (decrease) during period ................... (42,465) (46,212)
Beginning of period ................................. 969,454 1,015,666
End of period ....................................... $926,989 $969,454
*Share information
Shares sold ..................................... 18,810 25,930
Distributions reinvested ........................ 2,345 5,422
Shares redeemed ................................. (20,329) (35,746)
Increase (decrease) in shares outstanding ....... 826 (4,394)
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Emerging Markets Bond Fund
================================================================================
Unaudited
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/97 12/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income .............................. $ 2,159 $ 1,780
Net realized gain (loss) ........................... 1,207 1,463
Change in net unrealized gain or loss .............. 3,455 3,649
Increase (decrease) in net assets from operations .. 6,821 6,892
Distributions to shareholders
Net investment income .............................. (2,152) (1,780)
Net realized gain .................................. - (1,196)
Decrease in net assets from distributions .......... (2,152) (2,976)
Capital share transactions *
Shares sold ........................................ 54,842 48,715
Distributions reinvested ........................... 1,732 2,374
Shares redeemed .................................... (27,737) (25,132)
Increase (decrease) in net assets from capital
share transactions ................................. 28,837 25,957
Net Assets
Increase (decrease) during period ...................... 33,506 29,873
Beginning of period .................................... 39,862 9,989
End of period .......................................... $ 73,368 $ 39,862
*Share information
Shares sold ........................................ 4,043 4,030
Distributions reinvested ........................... 127 191
Shares redeemed .................................... (2,080) (2,084)
Increase (decrease) in shares outstanding .......... 2,090 2,137
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
T. Rowe Price Foreign Bond Funds
================================================================================
Unaudited June 30, 1997
================================================================================
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 Global Government Bond Fund (the
Global Fund), the International Bond Fund (the International Fund), and the
Emerging Markets Bond Fund (the Emerging Markets Fund), nondiversified, open-end
management investment companies, are three of the portfolios established by the
corporation and commenced operations on December 31, 1990, September 10, 1986,
and December 30, 1994, 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. Purchased options are valued at the latest bid price.
Equity securities are valued at the last quoted sales price at the time the
valuations are made. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the primary
market for such security.
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.
<PAGE>
OTHER Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by 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, each fund engages 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, 1997, 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.
NONINVESTMENT-GRADE DEBT SECURITIES At June 30, 1997, each fund held
investments in noninvestment-grade debt securities, commonly referred to as
"high-yield" or "junk" bonds. A real or perceived economic downturn or higher
interest rates could adversely affect the liquidity or value, or both, of such
securities because such events could lessen the ability of issuers to make
principal and interest payments.
FORWARD CURRENCY EXCHANGE CONTRACTS At June 30, 1997, 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.
OPTIONS Call and put options give the holder the right to purchase or sell,
respectively, a security or currency at a specified price on a certain date.
Risks arise from possible illiquidity of the options market and from movements
in security or currency values. Options are reflected in the International
Fund's accompanying Portfolio of Investments at market value.
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.
<PAGE>
OTHER Purchases and sales of portfolio securities, other than short-term
and U.S. government securities, for the six months ended June 30, 1997, were as
follows:
================================================================================
Global Emerging
Government International Markets
Bond Fund Bond Fund Bond Fund
- --------------------------------------------------------------------------------
Purchases $30,846,000 $631,399,000 $38,448,000
Sales 35,664,000 694,457,000 17,318,000
================================================================================
Purchases and sales of U.S. government securities for the Global Fund
aggregated $3,445,000 and $6,620,000, respectively, for the six months ended
June 30, 1997.
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. As a result of the acquisition of the T. Rowe Price
Short-Term Global Income Fund, the Global Fund has unused realized capital loss
carryforwards for federal income tax purposes of $322,000, 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, 1997, the aggregate costs of investments for the Global,
International, and Emerging Markets Funds for federal income tax and financial
reporting purposes were $47,525,000, $912,863,000, and $64,282,000,
respectively. Net unrealized gain (loss) on investments was as follows:
================================================================================
Global Emerging
Government International Markets
Bond Fund Bond Fund Bond Fund
- --------------------------------------------------------------------------------
Appreciated investments $828,000 $19,186,000 $7,628,000
Depreciated investments (1,245,000) (38,943,000) (19,000)
Net unrealized gain (loss) $(417,000) $(19,757,000) $7,609,000
================================================================================
NOTE 4 - ACQUISITION
================================================================================
<PAGE>
On November 1, 1996, the Global Fund acquired substantially all of the
assets of T. Rowe Price Short-Term Global Income Fund (the Short-Term Fund)
pursuant to the Agreement and Plan of Reorganization dated September 6, 1996,
and approved by Short-Term Fund shareholders on October 30, 1996. The
acquisition was accomplished by a tax-free exchange of 2,794,000 shares of the
Global Fund, having a value of $28,697,000, for the 6,420,000 shares of the
Short-Term Fund outstanding at the merger date. The Short-Term Fund's net assets
at that date, which included $57,000 of unrealized appreciation, were combined
with those of the Global Fund, resulting in aggregate net assets of $57,482,000.
NOTE 5 - 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 $21,000, $512,000 and
$31,000 were payable at June 30, 1997 by the Global, International and Emerging
Markets Funds, respectively. The fee is computed daily and paid monthly, and
consists of an individual fund fee equal to 0.35% of average daily net assets
for the Global Fund, 0.35% of average daily net assets for the International
Fund, and 0.45% of average daily net assets for the Emerging Markets 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 0.30% for assets in
excess of $80 billion. At June 30, 1997, and for the six months then ended, the
effective annual group fee rate was 0.33%. 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 agreements, the manager is
required to bear any expenses through December 31, 1998 for the Global Fund and
Emerging Markets Fund, which would cause each fund's ratio of expenses to
average net assets to exceed 1.20% and 1.25%, respectively. Thereafter, through
December 31, 2000, 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 1.20% and 1.25%, respectively. Pursuant
to its agreement, $49,000 of management fees were not accrued by the Global Fund
for the six months ended June 30, 1997, and $262,000 of unaccrued fees from
prior years remain subject to reimbursement through December 31, 1998. Pursuant
to its agreement, $92,000 of management fees were not accrued by the Emerging
Markets Fund for the six months ended June 30, 1997. In addition, $357,000 of
unaccrued management fees and other expenses from prior years remain subject to
reimbursement through December 31, 1998.
<PAGE>
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. (TRPS) 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. Additionally, the
International Fund and the Emerging Markets Fund are two of several T. Rowe
Price mutual funds (the underlying funds) in which the T. Rowe Price Spectrum
Income and International Funds (Spectrum) invest. In accordance with an
agreement among Spectrum, the underlying funds, Price Associates, and TRPS,
expenses from the operation of Spectrum are borne by the underlying funds based
on each underlying fund's proportionate share of assets owned by Spectrum. The
Global, International, and Emerging Markets funds incurred expenses pursuant to
these related party agreements totaling approximately $113,000, $557,000 and
$126,000, respectively, for the six months ended June 30, 1997, of which
$22,000, $124,000, and $24,000, respectively, were payable at period-end.
================================================================================
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
- --------------------------------------------------------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE Shareholder service representatives are available from 8 a.m. to
10 p.m. ET Monday through Friday and from 8:30 a.m. to 5 p.m. ET on weekends.
Call 1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
IN PERSON Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. You can also
drop off applications or obtain prospectuses and other literature at these
centers.
AUTOMATED 24-HOUR SERVICES
TELE*ACCESS [REGISTRATION MARK] Call 1-800-638-2587 to obtain information
such as account balance, date and amount of your last transaction, latest
dividend payment, fund prices, and yields. Additionally, you have the ability to
request prospectuses, statements, and account and tax forms; to reorder checks;
and to initiate purchase, redemption, and exchange orders for identically
registered accounts.
T.ROWE PRICE ONLINE Through a personal computer via dial-up modem, you can
replicate all the services available on Tele*Access plus conduct transactions in
your Discount Brokerage and Variable Annuity accounts.
<PAGE>
Account Services
CHECKING Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield and Emerging Markets Bond Funds).
AUTOMATIC INVESTING Build your account over time by investing directly from
your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A $50 minimum
makes it easy to get started.
AUTOMATIC WITHDRAWAL If you need money from your fund account on a regular
basis, you can establish scheduled, automatic redemptions.
DIVIDEND AND CAPITAL GAINS PAYMENT Options Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
DISCOUNT BROKERAGE*
INVESTMENTS AVAILABLE You can trade stocks, bonds, options, precious
metals, and other securities at a savings over regular commission rates.
TO OPEN AN ACCOUNT Call a shareholder service representative for more
information.
Investment Information
COMBINED STATEMENT A comprehensive overview of your T. Rowe Price accounts
is provided. The summary page gives you earnings by tax category, provides total
portfolio value, and lists your investments by typeNstock, bond, and money
market. Detail pages itemize account transactions by fund.
SHAREHOLDER REPORTS Portfolio managers review the performance of the funds
in plain language and discuss T. Rowe Price's economic outlook.
T. ROWE PRICE REPORT This is a quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
PERFORMANCE UPDATE This quarterly report reviews recent market developments
and provides comprehensive performance information for every T. Rowe Price fund.
INSIGHTS This library of information includes reports on mutual fund tax
issues, investment strategies, and financial markets.
DETAILED INVESTMENT GUIDES Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Diversifying Overseas: A Guide to International Investing,
Retirees Financial Guide, and Retirement Planning Kit (also available on disk
for PC use) can help you determine and reach your investment goals.
* A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
<PAGE>
T. Rowe Price Mutual Funds
================================================================================
STOCK FUNDS
- --------------------------------------------------------------------------------
DOMESTIC
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
<PAGE>
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
Global Government Bond
Emerging Markets Bond
International Bond
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
<PAGE>
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
- --------------------------------------------------------------------------------
Balanced
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
** Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
For yield, price, last transaction,
current balance, or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access [Registration Mark]:
1-800-638-2587 toll free
<PAGE>
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
410-625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address: www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price Foreign Bond Funds.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor. C15-051 6/30/97
