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October 1, 1999
FUND PROFILE
T. ROWE PRICE
International Bond Fund
A worldwide income fund seeking high income and capital growth through foreign
fixed income securities.
This profile summarizes key information about the fund that is included in the
fund's prospectus. The fund's prospectus includes additional information about
the fund, including a more detailed description of the risks associated with
investing in the fund that you may want to consider before you invest. You may
obtain the prospectus and other information about the fund at no cost by calling
1-800-638-5660, or by visiting our Web site at www.troweprice.com.
TROWEPRICELOGO
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FUND PROFILE
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What is the fund's objective?
The fund seeks to provide high current income and capital appreciation by
investing in high-quality, nondollar-denominated government and corporate
bonds outside the U.S.
What is the fund's principal investment strategy?
The fund invests at least 65% of its total assets in high-quality foreign
bonds but may invest up to 20% of assets in below-investment-grade, high-risk
bonds including those in default or with the lowest rating. Up to 20% of
assets may be invested in dollar-denominated foreign bonds such as Brady and
other emerging market bonds.
Although the fund expects to maintain an intermediate-to-long weighted
average maturity, there are no maturity restrictions on the overall portfolio
or on individual securities. The fund has wide flexibility to purchase and
sell currencies and engage in hedging transactions. However, in the normal
course, it does not attempt to cushion the impact of foreign currency
fluctuations on the dollar. Therefore, the fund is likely to be heavily
exposed to foreign currencies.
Investment decisions are based on fundamental market factors, such as yield
differences among bonds as well as demand and supply factors, currency
trends, and credit quality. The fund generally invests in countries where the
combination of fixed income returns and currency exchange rates appears
attractive, or, if the currency trend is unfavorable, where Price-Fleming
believes the currency risk can be minimized through hedging. The fund sells
holdings for a variety of reasons, such as to adjust the portfolio's average
maturity or quality, to shift assets into higher-yielding securities, or to
alter geographic or currency exposure.
Further information about the fund's investments, including a review of
market conditions and fund strategies and their impact on performance, is
available in the annual and semiannual shareholder reports. To obtain free
copies of any of these documents, call 1-800-638-5660.
What are the main risks of investing in the fund?
The fund is subject to the usual risks of fixed income investing as well as
the special risks of international investing.
. Interest rate risk This risk refers to the decline in bond prices that
usually accompanies a rise in interest rates. Longer-maturity bonds typically
suffer greater declines than those with shorter maturities.
. Credit risk This is the chance that any fund holding could have its credit
rating downgraded, or that a bond issuer will default (the failure of an
issuer to make timely payments of interest or principal), potentially
reducing the fund's
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FUND PROFILE
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income level and share price. The risk of default is much greater for the
emerging market bonds in the fund's portfolio.
. Nondiversified risk Because it is nondiversified, the fund can invest more
of its assets in a fewer number of issuers than diversified funds. This could
result in greater potential losses than funds investing in a broader variety
of issues.
. Currency risk This is a decline in the value of a foreign currency versus
the U.S. dollar, which reduces the dollar value of securities denominated in
that currency. The overall impact on the fund's holdings can be significant
and long lasting, depending on the currencies represented in the portfolio,
how each one appreciates or depreciates in relation to the U.S. dollar, and
whether currency positions are hedged. Because the fund is normally heavily
exposed to foreign currencies, and does not attempt to hedge the impact of
these currencies on the dollar, changes in currency exchange rates are likely
to have a significant impact on the fund's performance. Currency trends are
unpredictable and to the extent the fund purchases and sells currencies, it
will also be subject to the risk that its trading strategies, including
efforts at hedging, will not be successful. Furthermore, hedging costs can be
significant and reduce fund net asset values and many emerging market
currencies can not be effectively hedged.
. Emerging market risk The fund's investments in emerging markets are subject
to abrupt and severe price declines. The economic and political structures of
developing nations, in most cases, do not compare favorably with the U.S. or
other developed countries in terms of wealth and stability, and their
financial markets often lack liquidity. Certain countries have legacies of
hyperinflation and currency devaluations versus the dollar (which adversely
affects returns to U.S. investors).
. Other risks of foreign investing Other risks of foreign investing result
from the varying stages of economic and political development of foreign
countries, the differing regulatory environments, trading days and accounting
standards of non-U.S. markets, and higher transaction costs. Acts of
government interfering in capital markets, such as capital or currency
controls, nationalization of companies or industries, expropriation of
assets, or imposition of punitive taxes would also have an adverse effect on
the fund.
. Derivatives risk To the extent the fund uses these instruments, it may be
exposed to additional volatility and potential losses.
. Year 2000 risk Companies, organizations, governmental entities, and markets
in which the fund invests will be affected by the Year 2000 problem. While at
this time the fund cannot predict the degree of impact, it is possible that
foreign markets will be less prepared than U.S. ones. The fund's return could
be adversely affected as a result.
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FUND PROFILE
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As with all mutual funds, there can be no guarantee the fund will achieve its
objective.
. The fund's share price may decline, so when you sell your shares, you may
lose money. An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
How can I tell if the fund is appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for the inherent risk of fixed income investing. If you are
willing to accept the special risks associated with international investing
and the general risks of investing in fixed income securities to achieve
current income and potential capital growth, this fund could be appropriate
for you.
The fund can be used in both regular and tax-deferred accounts, such as IRAs.
. The fund should not represent your complete investment program or be used
for short-term trading purposes.
How has the fund performed in the past?
The bar chart showing calendar year returns and the average annual total
return table indicate risk by illustrating how much returns can differ from
one year to the next. The fund's past performance is no guarantee of its
future returns.
The fund can also experience short-term performance swings, as shown by the
best and worst calendar quarter returns during the years depicted in the
chart.
LOGO
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FUND PROFILE
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<TABLE>
<CAPTION>
Calendar Year Total Returns
"89" "90" "91" "92" "93" "94" "95" "96" "97" "98"
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-3.19 16.05 17.75 2.40 20.00 -1.84 20.30 7.13 -3.17 15.03
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</TABLE>
Quarter ended Total return
Best quarter 3/31/95 12.51%
Worst quarter 3/31/89 -6.07%
<TABLE>
Table 1 Average Annual Total Returns
<CAPTION>
Periods ended September 30, 1999
1 year 5 years 10 years
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<S> <C> <C> <C>
International Bond Fund -0.76% 5.99% 8.56%
J.P. Morgan Non-U.S. Index Plus 0.90 7.08 ---
J.P. Morgan Non-U.S. Dollar Gov't.
Bond Index 0.27 6.93 8.86
Lipper International Income Funds -0.54 6.83 7.04
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</TABLE>
These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
What fees or expenses will I pay?
The fund is 100% no load. There are no fees or charges to buy or sell fund
shares, reinvest dividends, or exchange into other T. Rowe Price funds. There
are no 12b-1 fees.
<TABLE>
Table 2 Fees and Expenses of the Fund
<CAPTION>
Annual fund operating expenses
(expenses that are deducted from fund assets)
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<S> <C>
Management fee 0.67%/ // /
Other expenses 0.21%
Total annual fund operating 0.88%/ // /
expenses
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</TABLE>
Example. The following table gives you a rough idea of how expense ratios
may translate into dollars and helps you to compare the cost of investing in
this fund with that of other funds. Although your actual costs may be higher
or lower, the table shows how much you would pay if operating expenses remain
the same, you invest $10,000, you earn a 5% annual return, and you hold the
investment for the following periods:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
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<S> <C> <C> <C>
$90 $281 $488 $1,084
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</TABLE>
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Who manages the fund?
The fund is managed by Rowe Price-Fleming International, Inc., a joint
venture between T. Rowe Price Associates, Inc. and the London-based Fleming
Group. Established in 1979, Price-Fleming manages investments for individual
and institutional accounts, including 12 no-load mutual funds sold directly
to the public.
The fund has an Investment Advisory Group with day-to-day responsibility for
managing the funds. The advisory group consists of Peter Askew, who joined
Price-Fleming in 1988 and has been managing multicurrency fixed income
portfolios since 1976; Christopher Rothery, who joined Price-Fleming in 1994
and has been managing multicurrency fixed income portfolios since 1988; and
Michael Conelius, who joined T. Rowe Price in 1988 and Price-Fleming in 1995,
and has been managing investments since 1992.
Note: The following questions and answers about buying and selling shares and
services do not apply to employer-sponsored retirement plans. If you are a
participant in one of these plans, please call your plan's toll-free number for
additional information.
How can I purchase shares?
Fill out the New Account Form and return it with your check in the postpaid
envelope. The minimum initial purchase is $2,500 ($1,000 for IRAs and gifts
or transfers to minors). The minimum subsequent investment is $100 ($50 for
IRAs, gifts or transfers to minors, or Automatic Asset Builder). You can also
open an account by bank wire, by exchanging from another T. Rowe Price fund,
or by transferring assets from another financial institution.
How can I sell shares?
You may redeem or sell any portion of your account on any business day.
Simply write to us or call. You can also access your account at any time via
Tele*Access /(R)/ or our Web site. We offer convenient exchange among our
entire family of domestic and international funds. Restrictions may apply in
special circumstances, and some redemption requests need a signature
guarantee. A $5 fee is charged for wire redemptions under $5,000.
When will I receive income and capital gain distributions?
The fund distributes income monthly and net capital gains, if any, at
year-end. For regular accounts, income and short-term gains are taxable at
ordinary income rates, and long-term gains are taxable at the capital gains
rate.; Distributions are reinvested automatically in additional shares unless
you choose another option, such as receiving a check. Distributions paid to
IRAs and employer-sponsored retirement plans are automatically reinvested.
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What services are available?
A wide range, including but not limited to:
. retirement plans for individuals and large and small businesses;
. automated information and transaction services by telephone or computer;
. electronic transfers between fund and bank accounts;
. automatic investing and automatic exchange;
. brokerage services; and
. asset manager accounts.
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FUND PROFILE
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T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
www.troweprice.com
LOGO
RPS F76-035
T. Rowe Price Investment Services, Inc., Distributor
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