T. Rowe Price
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Semiannual Report
Foreign Bond Funds
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June 30, 2000
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REPORT HIGHLIGHTS
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FOREIGN BOND FUNDS
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* Prices of high-quality developed country bonds were flat in the first half
of 2000, though long-term U.S. Treasuries rose. The euro continued to
decline.
* Emerging market bonds once again delivered strong returns, spurred by
improved global growth.
* The International Bond and Global Bond Funds declined during the period,
primarily due to weak currencies, while the Emerging Markets Bond Fund
posted a healthy gain.
* Sustainable global growth bodes well for foreign bonds, though the prospect
of more rate hikes, mainly in Europe, poses a near-term challenge.
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UPDATES AVAILABLE
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For updates on T. Rowe Price funds following the end of each calendar
quarter, please see our Web site at www.troweprice.com.
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FELLOW SHAREHOLDERS
-------------------
Bond markets around the world were volatile once again in the first half of
2000. When the Y2K bug proved a nonevent as the new year commenced, bond
investors found themselves in the path of an onrushing freight train: the
seemingly unstoppable U.S. economy. Growth was also healthy overseas, and
central banks around the world increased short-term interest rates. Bond prices
in developed markets were generally little changed to lower, and returns to U.S.
investors were undermined by the declining euro.
MARKET ENVIRONMENT
------------------
DEVELOPED MARKETS PERFORMANCE
-----------------------------
In Local In U.S.
6 Months ended 6/30/00 Currency Dollars
---------------------- -------- -------
Australia 6.59% -2.20%
France 2.41 -2.07
Germany 2.75 -1.74
Italy 2.44 -2.03
Japan 0.68 -2.61
Spain 2.54 -1.94
United Kingdom 4.26 -2.07
United States 5.55 5.55
Source: J. P. Morgan.
With the U.S. economy stronger than expected for longer than expected, the
Federal Reserve resumed its rate hike program, increasing the federal funds
target rate three times by a total of one percentage point. The last move -- on
May 16 -- was the most aggressive, at a half point. For much of the period,
concern focused on how much harder the Fed would have to slam on the brakes to
keep the economy safely on the tracks. In the midst of a record-shattering
nine-year expansion, GDP growth had accelerated well beyond a rate the Fed
considers sustainable. Oil prices had risen significantly, and the U.S. labor
market was tighter than at any time in the past 30 years. In late May, the U.S.
locomotive finally began to lose steam as a series of economic reports confirmed
a slackening pace of growth.
Early in the first half, the Fed's job had been complicated somewhat by a
sharp decline in 30-year Treasury yields. The powerful economic engine had
thrown off so much extra tax revenue that the Treasury slashed its borrowing and
began buying back long-term bonds. Investors concerned about a "shortage" of
30-year Treasuries bid up their prices, causing the U.S. yield curve to invert
sharply -- that is, short- and intermediate-term rates rose well above long-term
rates. The decline in 30-year Treasury yields opened a chasm between government
and corporate yields. In contrast to the reduced government borrowing,
corporations have been heavy borrowers. As a result the yield advantage of AA
corporate bonds over Treasuries doubled from 60 basis points to a generous 120
basis points (100 basis points equal one percent).
<PAGE>
EMERGING MARKETS PERFORMANCE
----------------------------
In U.S.
6 Months Ended 6/30/00 Dollars
---------------------- -------
Emerging Markets Bond Index Plus 8.10%
Brady Indexes (by issuer): *
Argentina 1.89
Brazil 4.43
Mexico 7.88
Poland 3.30
Venezuela 7.48
* 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.
Source: J.P. Morgan.
Though Europe remained well behind the U.S. in the economic cycle, the
European Central Bank (ECB) raised official short-term rates 1.25 percentage
points -- even more than its counterpart across the pond. The ECB felt compelled
to bring rates back to more normal levels as the European economy gathered
steam. The decline of the euro for much of the period also had the effect of
offsetting previous ECB rate hikes. Despite the rate increases, bond markets
held up better in the first half than in 1999, as European government coffers
also benefited from economic growth. Sweden and the U.K. joined the U.S. in
paying down national debt. All three were among the best-performing government
bond markets in local terms, joined by Australia and Canada. As the table on the
previous page shows, bond market per-formance around the world was not so bad in
local currency terms, but suffered greatly from translation into U.S. dollars as
most foreign currencies were weak.
As in the U.S., European markets had to absorb a large supply of
nongovernment debt. Consequently, the yield advantage of AA corporate bonds in
Europe also doubled, from 35 basis points to 70 basis points. High-yield
("junk") bonds did not fare well in either the U.S. or Europe.
In Japan, government borrowing increased to pay for further stimulus
measures to spur the economy. Japan's government deficit widened to a quite
large 8% of GDP during the period, though first-quarter economic growth was
strong and provided evidence of a long-awaited economic recovery. Nonetheless,
Japanese government bond yields failed to rise significantly because of the
ample liquidity provided by the zero interest rate policy, which encourages cash
to be recycled into higher-yielding government bonds. The much-feared outflow of
money from the huge pool of postal savings accounts proved to have little impact
on Japanese government bonds.
While improved global growth may be kryptonite for developed country
government bonds, it is a tonic for emerging market debt. The J.P. Morgan
Emerging Markets Bond Index Plus gained a healthy 8.10% in the first half, with
nearly all of the advance coming in the first quarter on the heels of positive
news, such as continued economic reforms and higher debt ratings. Mexico's debt
improved to investment-grade status early in the year, and performed solidly for
the half. But Russia stole the show with a 47% first-half surge (again, nearly
all of it in the first quarter). Russia's new president, Vladimir Putin, seems
intent on continuing economic reforms and restoring both order and credibility
with foreign investors. L ater in the first half, concern about how much higher
U.S. interest rates would have to rise, and then about a possible U.S. slowdown,
sapped some of emerging market bonds' strength.
U.S. economic strength, particularly early in the half, propelled the
dollar higher against most currencies. The yen was stable against the dollar
primarily due to optimism about prospects for restructuring and growth in Japan.
Encouraging signs from the euro zone economy were not enough to halt the euro's
slide until late in the first half, when indications of slower U.S. growth began
to emerge. In addition, later in the period, optimism about Japanese economic
growth waned. At this point, clear evidence of strong growth, particularly in
the laggard economies of France, Germany, and Italy, finally helped the euro
rebound 7% from its lows, though it still declined over the period as a whole.
Similarly, the Australian and Canadian dollars were weak for much of the half
before recovering somewhat later.
<PAGE>
GLOBAL BOND FUND
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PERFORMANCE COMPARISON
----------------------
Periods Ended 6/30/00 6 Months 12 Months
--------------------- -------- ---------
Global Bond Fund -1.14% 0.49%
J.P. Morgan Global Government
Bond Index (unhedged) 0.41 2.70
The very difficult environment for high-quality bonds in the first half of
1999 was followed by 12 months of treading water. The Global Bond Fund's
performance slightly trailed that of the index, as shown in the table, but both
were close to unchanged for the two periods. Rising short-term rates in Europe
and North America did not deter long-term bonds in those regions from posting
solid returns -- at least in local currency terms. As the yield curve in the
U.S., Canada, and Europe flattened (short rates rose, long rates fell), bond
fund performance was determined by positioning on the yield curve. A fund with a
long duration would have fared much better than one with a short to intermediate
focus. (Duration measures a bond fund's sensitivity to interest rates. For
example, the share price of a fund with a duration of six years will rise about
6% in response to a one-percentage-point decline in rates, and fall about 6% in
response to an equivalent increase in rates.)
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Global Bond Fund Portfolio Diversification chart.
Combined geographic diversification pie chart and net
currency exposure table. Pie chart has the following
wedges (in order): United States, 41%; Netherlands,
10%; France, 8%; United Kingdom, 7%; Canada, 6%;
Germany, 5%; Japan, 5%; Other and Reserves, 18%.
Net Currency Exposure:
----------------------
Euro 37.2%
U.S. dollar 32.7
Japanese yen 17.0
British pound 6.0
Canadian dollar 2.8
Danish krone 2.2
Greek drachma 2.0
Russian rouble 0.1
Total 100.0%
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Results were hurt by the poor performance of nongovernment bonds,
especially in the U.S., including mortgage-backed and corporate bonds. Our move
from a neutral to a longer duration in the U.S. market ahead of the Treasury
buyback program benefited the fund. An overweight position in emerging market
bonds also aided results. Underweighting Japanese bonds had little impact on
performance. Our European holdings performed slightly worse than those of the
benchmark, hurt by our allocations to Denmark and Poland and our underweighting
in the U.K. Nongovernment bonds in the euro zone and the U.K. also slightly
hampered performance.
Overall, weak foreign currencies detracted from results. However,
underweighting the weak Japanese yen aided results versus the index while
overweighting the euro did not, particularly early in the period.
Holdings of U.S. and Danish bonds were reduced while we significantly
boosted positions in Dutch, French, and, to a lesser extent, Japanese bonds.
Overall duration was little changed at 5.2 years. Average credit quality
remained high at AA+. (See the Portfolio Highlights table on page 11.)
<PAGE>
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IMPORTANT INFORMATION ABOUT THE GLOBAL BOND FUND
------------------------------------------------
On July 18, 2000, the Board of Directors of T. Rowe
Price International Funds, Inc. recommended a plan of
reorganization for the Global Bond Fund. Under the
reorganization, the assets of the fund would be merged
into the T. Rowe Price International Bond Fund. The
Global Bond Fund was closed to new investors on July
18.
If you hold shares in the Global Bond Fund at the close
of business August 25, 2000, the "record" date, you
will have the opportunity to vote on the reorganization
plan. Proxy materials and voting instructions will be
mailed in early September to shareholders of record,
and a special shareholder meeting will be held on
October 25, 2000. If the proposal is approved, the
transfer of assets will take place soon thereafter, and
you will then own shares with the same total value in
the International Bond Fund. The merger has no adverse
tax consequences for shareholders in the Global Bond
Fund.
Please note that the Emerging Markets Bond Fund is not
involved in the reorganization plan.
Detailed information about the proposed reorganization
is provided only by the proxy. If we can provide
additional information about the International Bond
Fund or any other T. Rowe Price fund, please give us a
call at 1-800-225-5132 or visit our Web site at
www.troweprice.com.
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INTERNATIONAL BOND FUND
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PERFORMANCE COMPARISON
----------------------
Periods Ended 6/30/00 6 Months 12 Months
--------------------- -------- ---------
International Bond Fund -3.27% -1.41%
J.P. Morgan Non-U.S. Dollar
Government Bond Index -1.89 1.53
High-quality bond returns were flat over the past year, in contrast to the
steep declines of the first half of 1999. The International Bond Fund produced
negative returns over both the 6- and 12-month periods ended June 30, 2000, and
lagged the index, as shown in the table. Short-term rates in North America and
Europe rose, but long-term bonds in those regions delivered solid returns in
local currency. As the yield curve in these markets flattened (meaning short
rates rose as long rates fell), duration, or yield-curve positioning, determined
performance. Long-duration funds performed much better than short- to
intermediate-duration funds. (Duration measures a bond fund's sensitivity to
interest rates. For example, the share price of a fund with a duration of six
years will rise about 6% in response to a one-percentage-point decline in rates,
and fall about 6% in response to an equivalent increase in rates.) Given this
environment, we chose a "barbell" strategy, which means we concentrated our
investments in short-term cash equivalents on the one hand and in long-term
bonds on the other. The two extremes cancel each other out, giving the portfolio
an overall duration comparable to the index, but positioning it to benefit from
a flattening yield curve, as described above. The cash equivalents (held in U.S.
dollars) protect the fund from rising short-term rates, while the long-term
bonds benefit from declining long-term yields.
The fund is run similarly to the Global Bond Fund, except that the
International Bond Fund, for the most part, does not invest in the U.S. or
attempt to hedge against currency risk. The U.S. exposure depicted in the pie
chart reflects, in addition to incidental positions, holdings of emerging-market
debt denominated in dollars and the relatively high cash position.
<PAGE>
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International Bond Portfolio Diversification chart.
Combined geographic diversification pie chart and net
currency exposure table. Pie chart has the following
wedges (in order): United States, 21%; Germany, 15%;
Japan, 10%; France, 9%; United Kingdom, 7%;
Netherlands, 5%; Canada, 5%; Other and Reserves, 28%.
Net Currency Exposure:
----------------------
Euro 49.8%
Japanese yen 24.3
British pound 7.9
Danish krone 6.0
Canadian dollar 3.7
U.S. dollar 2.9
Norwegian krone 2.5
Greek drachma 1.9
Australian dollar 0.8
Russian rouble 0.1
Swedish krona 0.1
Total 100.0%
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Nongovernment bonds fared poorly and this was a major factor behind the
fund's underperformance. However, our relatively high exposure to
emerging-market bonds was positive. Though we increased our allocation to Japan,
we remain underweight, but this had little impact on relative performance.
Allocations to Danish and Polish bonds, and underweighting the U.K., caused our
European position to underperform that of the index.
The weakness of the euro, pound, and yen hurt performance. Our decision to
overweight the euro, particularly early in the period, was negative, though
underweighting the yen aided results. Exposure to the euro, the pound, and the
Canadian dollar declined slightly during the period.
We slightly boosted holdings of Japanese, French, and Canadian bonds, while
reducing our allocation to U.K. bonds. Overall duration was little changed at
5.3 years. Average credit quality remained high at AA+. (See the Portfolio
Highlights table on page 11.)
EMERGING MARKETS BOND FUND
--------------------------
PERFORMANCE COMPARISON
----------------------
Periods Ended 6/30/00 6 Months 12 Months
--------------------- -------- ---------
Emerging Markets Bond Fund 7.91% 23.05%
J.P. Morgan Emerging Markets
Bond Index Plus 8.10 23.16
Your fund posted strong gains in the first half and in the 12 months ended
June 30, 2000. Performance was in line with the unmanaged J.P. Morgan Emerging
Markets Bond Index Plus for both periods, and the small difference can be
attributed to fund expenses, which the index does not incur. In addition to the
stronger global economy, two events drove emerging market bonds: political and
economic stabilization in Russia and the improvement of Mexico's debt rating to
investment grade. Rising oil prices also benefited the economies of exporting
nations, including Russia and Mexico.
Fiscal and economic reforms remain high on the agenda in developing
nations. Mexico benefited greatly from the upgrade of its debt rating and other
countries such as Brazil benefited from the possibility of an upgrade. Only in
parts of Asia (a small part of the emerging debt market) did the zeal for reform
appear to falter. Toward the end of the first half, the asset class was also
helped by increasing prospects of a soft landing for the U.S. economy, which
would reduce the need for further interest rate hikes by the Fed. With most
emerging nations still heavily indebted and with their economies or currencies
tied to the U.S., higher interest rates are often anathema to emerging market
bonds.
<PAGE>
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Emerging Market Geographic Diversification chart, Pie
chart with the following wedges (in order): Brazil,
19%; Mexico, 16%; Russia, 14%; Bulgaria, 8%; Argentina,
6%; United States, 5%; Venezuela, 4%; Other and
Reserves, 28%.
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The fund's relatively large allocations to Brazil, Bulgaria, Russia, and
Mexico aided results, as did our comparatively small commitments to poor
performers such as Argentina, Colombia, and the Philippines. Security selection
within Russia also boosted returns, as our decision to emphasize Soviet-era debt
over Russian eurobonds paid off. Our relatively large allocation to Nigeria
compared with the index hampered returns. Nigeria had benefited from rising oil
prices early in the half but political concerns sent bond prices lower in the
second quarter. We reduced holdings in Nigeria, the Ivory Coast, and Argentina
during the period and took profits in Bulgaria, while adding to positions in
Russia and Mexico in recognition of their improving fundamentals. Positions were
also adjusted to benefit from possible debt exchanges in Brazil and Argentina.
Heavily indebted countries with improving credit ratings will sometimes swap new
debt for old bonds to manage their finances more efficiently.
The fund continued to pursue a diversified approach given the volatility of
this asset class. Consequently, 21 countries are represented in the portfolio
compared with just 11 in the benchmark, which is heavily weighted toward large
Latin American countries. We also marginally increased interest-rate sensitivity
from a defensive stance to a more neutral posture versus the index. Average
credit was unchanged at BB+. (See the Portfolio Highlights table on page 12.)
OUTLOOK
-------
Leading economic indicators in the U.S. have continued to moderate, and
inflation data have been somewhat better than expected. Producer price inflation
has failed to accelerate, and it remains too early to conclude that a
significant upward trend in consumer price inflation is developing. Against this
background, the Fed took no action on interest rates at its June meeting, though
we expect another quarter-point hike at the August meeting. The likelihood is
rising that we are near a peak in short-term rates, and that the ultimate
outcome will be the proverbial soft landing for the economy rather than a hard
one. That said, the inflationary pressures built up over the last two or three
years of exceedingly strong growth -- manifested graphically in the 4%
unemployment rate -- still present a future inflation risk, and this will only
be eliminated by a period of subdued growth.
We expect the greatest improvements in economic growth to occur in the euro
zone over the next 12 months. Recent data point toward a 4.0% growth rate,
nearly double earlier expectations. Although the partial recovery in the euro
since mid-May has undoubtedly had the effect of tightening monetary conditions
in the euro zone, the ECB will need to continue raising short-term rates. An
additional half-point tightening over the next 12 months is likely. Since the
euro zone is clearly lagging the U.S. and U.K. in reducing government deficits
and new borrowing, and the peak in the region's economic cycle is projected to
considerably lag the U.S. peak, we are not as sanguine about the prospects for
intermediate- and long-term government bonds in the euro zone. We expect higher
yields, especially among intermediate maturities, and thus euro zone government
yields should rise closer to those of their U.S. counterparts.
After their sharp improvement around the turn of the year, Japan's leading
indicators have shown some signs of moderation recently. Growth of 2.0% is
expected for the remainder of the year. Nonetheless, there is a risk of higher
intermediate- and long-term yields and thus declining bond prices partly as a
result of increases in government borrowing.
Meanwhile, improved global growth and continued fiscal and economic reforms
have bolstered prospects for emerging market debt, particularly in Latin America
and Russia. Overall, an environment of sustainable economic growth without
significant inflation, and improved government fiscal balances and policies,
bodes well for international bond markets as we look toward 2001.
Respectfully submitted,
/s/
Peter B. Askew
Executive Vice President
July 26, 2000
<PAGE>
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ADVISOR SHARE CLASS CREATED
---------------------------
T. Rowe Price has introduced a new class of shares for
certain funds, including this one. The new Advisor
Class shares will be sold exclusively by financial
intermediaries, such as brokers and financial advisers,
and will enhance our ability to reach a new group of
investors through this expanding channel. Since the new
share class has a modest 12b-1 fee (a distribution fee
paid to the sales intermediary), its performance will
likely vary somewhat from your fund shares even though
both invest in the same portfolio.
We want to emphasize that the new class will have no
impact whatsoever on your investment in the fund or on
the returns provided to you by the fund. The daily net
asset value and expenses for the existing shares and
the Advisor Class shares are calculated separately. In
due course, you will see the Advisor Class share prices
listed in newspapers and other print and electronic
media. Certain expenses associated with the Advisor
Class shares will be itemized in financial statements
in your fund's shareholder reports.
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T. Rowe Price Foreign Bond Funds
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PORTFOLIO HIGHLIGHTS
--------------------
KEY STATISTICS
--------------
12/31/99 6/30/00
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GLOBAL BOND FUND
----------------
Price Per Share $9.29 $8.96
Dividends Per Share
For 6 months 0.21 0.22
For 12 months 0.42 0.43
Dividend Yield *
For 6 months 4.33% 4.98%
For 12 months 4.45 4.70
Weighted Average Maturity (years) 8.4 8.5
Weighted Average Effective Duration (years) 5.4 5.2
Weighted Average Quality ** AA+ AA+
International Bond Fund
Price Per Share $9.16 $8.66
Dividends Per Share
For 6 months 0.19 0.20
For 12 months 0.38 0.39
Dividend Yield *
For 6 months 4.01% 4.61%
For 12 months 4.10 4.34
Weighted Average Maturity (years) 7.2 7.8
Weighted Average Effective Duration (years) 5.2 5.3
Weighted Average Quality ** AA+ AA+
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<PAGE>
T. Rowe Price Foreign Bond Funds
--------------------------------
PORTFOLIO HIGHLIGHTS
--------------------
KEY STATISTICS
--------------
12/31/99 6/30/00
-------- -------
EMERGING MARKETS BOND FUND
--------------------------
Price Per Share $10.11 $10.41
Dividends Per Share
For 6 months 0.53 0.48
For 12 months 1.08 1.02
Dividend Yield *
For 6 months 11.45% 9.61%
For 12 months 12.34 10.79
Weighted Average Maturity (years) 13.3 14.1
Weighted Average Effective Duration (years) 4.6 4.2
Weighted Average Quality ** BB+ BB+
* Dividends earned and reinvested for the periods indicated are
annualized and divided by the fund's net asset value per share at the
end of the period.
** Based on T. Rowe Price research.
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T. Rowe Price Foreign Bond Funds
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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 benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
JP Morgan Global Government Global Bond
Bond index (unhedged) Fund
---------------------------- -----------
12/31/90 10000 10000
6/91 9911 9969
6/92 11911 11275
6/93 12988 12369
6/94 13503 12375
6/95 15860 13920
6/96 16185 14607
6/97 16910 15576
6/98 17901 16372
6/99 18552 16281
6/00 19053 16361
JP Morgan Non-U.S.Dollar Government International Bond
Bond index Fund
---------------------------- -----------
6/90 10000 10000
6/91 10833 10971
6/92 13929 13712
6/93 14715 15084
6/94 15960 15953
6/95 19494 18716
6/96 19589 19227
6/97 20122 20153
6/98 20577 20553
6/99 21497 20796
6/00 21826 20504
<PAGE>
JP Morgan Emerging Markets Emerging Bond
Bond index plus Fund
---------------------------- -----------
12/30/94 10000 10000
6/95 10937 10998
6/96 14638 13939
6/97 19475 19602
6/98 19745 19610
6/99 18902 16673
6/00 23279 20516
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 6/30/00 1 Year 5 Years 10 Years Inception Date
--------------------- ------ ------- -------- --------- ----
Global Bond Fund 0.49% 3.28% - 5.32% 12/31/90
International Bond Fund -1.41 1.84 7.44% 7.31 9/10/86
Emerging Markets Bond Fund 23.05 13.28 - 13.96 12/30/94
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
T. Rowe Price Global Bond Fund
------------------------------
Unaudited For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
--------------------
6 Months Year
Ended Ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 9.29 $10.51 $ 9.90 $10.35 $10.26 $ 9.22
--------------------------------------------------------------------------------
Investment activities
Net investment
income (loss) 0.22* 0.41* 0.53* 0.54* 0.56* 0.59*
Net realized and
unrealized gain (loss) (0.33) (1.10) 0.61 (0.39) 0.09 1.04
--------------------------------------------------------------------------------
Total from
investment activities (0.11) (0.69) 1.14 0.15 0.65 1.63
--------------------------------------------------------------------------------
Distributions
Net investment income (0.22) (0.32) (0.53) (0.49) (0.56) (0.59)
Net realized gain - (0.11) - (0.11) - -
Tax return of capital - (0.10) - - - -
--------------------------------------------------------------------------------
Total distributions (0.22) (0.53) (0.53) (0.60) (0.56) (0.59)
--------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 8.96 $ 9.29 $10.51 $ 9.90 $10.35 $ 10.26
Ratios/Supplemental Data
Total return** (1.14)%* (6.69)%* 11.93%* 1.61%* 6.59%* 18.13%*
--------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 1.00%+* 1.00%* 1.00%* 1.20%* 1.20%* 1.20%*
--------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 4.92%+* 4.23%* 5.29%* 5.38%* 5.48%* 6.08%*
--------------------------------------------------------------------------------
Portfolio turnover rate 152.4%+ 123.1% 136.2% 153.2% 262.6%++ 290.7%
--------------------------------------------------------------------------------
Net assets, end of
period (in thousands) $ 26,987 $32,336 $41,926 $44,069 $55,869 $ 28,207
--------------------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
* Excludes expenses in excess of a 1.20% voluntary expense limitation in
effect through 12/31/97 and a 1.00% voluntary expense limitation in effect
through 12/31/00.
+ Annualized
++ Excludes the effect of the acquisition of the Short-Term Global Income
Fund's assets.
The accompanying notes are an integral part of these financial statements.
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<PAGE>
T. Rowe Price International Bond Fund
-------------------------------------
Unaudited For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
--------------------
INTERNATIONAL BOND SHARES
-------------------------
6 Months Year
Ended Ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 9.16 $ 10.46 $ 9.58 $ 10.46 $ 10.46 $ 9.34
--------------------------------------------------------------------------------
Investment activities
Net investment
income (loss) 0.20 0.37 0.51 0.54 0.60 0.62
Net realized and
unrealized gain (loss) (0.50) (1.18) 0.88 (0.87) 0.11 1.24
--------------------------------------------------------------------------------
Total from
investment activities (0.30) (0.81) 1.39 (0.33) 0.71 1.86
--------------------------------------------------------------------------------
Distributions
Net investment income (0.20) (0.33) (0.51) (0.46) (0.60) (0.62)
Net realized gain - (0.11) - (0.09) (0.11) (0.12)
Tax return of capital - (0.05) - - - -
--------------------------------------------------------------------------------
Total distributions (0.20) (0.49) (0.51) (0.55) (0.71) (0.74)
--------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 8.66 $ 9.16 $ 10.46 $ 9.58 $ 10.46 $ 10.46
Ratios/Supplemental Data
Total return** (3.27%) (7.86)% 15.03% (3.17)% 7.13% 20.30%
--------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 0.91%+ 0.90% 0.88% 0.86% 0.87% 0.90%
--------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 4.57%+ 3.93% 5.19% 5.38% 5.86% 6.10%
--------------------------------------------------------------------------------
Portfolio turnover rate 148.8%+ 94.9% 128.9% 155.9% 234.0% 237.1%
--------------------------------------------------------------------------------
Net assets, end of
period (in millions) $ 709 $ 779 $ 926 $ 826 $ 969 $ 1,016
--------------------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
+ Annualized
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price International Bond Fund
-------------------------------------
Unaudited For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
--------------------
INTERNATIONAL BOND ADVISOR CLASS SHARES
---------------------------------------
3/31/00
Through
6/30/00
NET ASSET VALUE
Beginning of period $ 8.88
-------------------------------------------------------------------------------
Investment activities
Net investment income (loss) 0.11
Net realized and
unrealized gain (loss) (0.21)
-------------------------------------------------------------------------------
Total from
investment activities (0.10)
-------------------------------------------------------------------------------
Distributions
Net investment income (0.11)
-------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 8.67
<PAGE>
Ratios/Supplemental Data
Total return** (1.16)%
-------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.84%+
-------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 4.84%+
-------------------------------------------------------------------------------
Portfolio turnover rate 148.8%+
-------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 17
-------------------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
+ Annualized
The accompanying notes are an integral part of these financial statements.
================================================================================
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 Through
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period $ 10.11 $ 9.23 $ 13.71 $ 12.97 $ 10.67 $ 10.00
--------------------------------------------------------------------------------
Investment activities
Net investment
income (loss) 0.48 0.97 1.31* 1.16* 1.00* 1.03*
Net realized and
unrealized gain (loss) 0.30 0.99 (4.29) 0.97++ 2.72 1.38
--------------------------------------------------------------------------------
Total from
investment activities 0.78 1.96 (2.98) 2.13 3.72 2.41
--------------------------------------------------------------------------------
Distributions
Net investment income (0.48) (0.73) (1.31) (1.15) (1.01) (1.02)
Net realized gain - - (0.19) (0.24) (0.41) (0.72)
Tax return of capital - (0.35) - - - -
--------------------------------------------------------------------------------
Total distributions (0.48) (1.08) (1.50) (1.39) (1.42) (1.74)
--------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 10.41 $ 10.11 $ 9.23 $ 13.71 $ 12.97 $ 10.67
Ratios/Supplemental Data
Total return** 7.91% 22.97% (23.09)%* 16.83%* 36.77%* 25.81%*
--------------------------------------------------------------------------------
Ratio of total expenses
to average net assets 1.25%+ 1.25% 1.25%* 1.25%* 1.25%* 1.25%*
--------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 9.45%+ 10.56% 11.52%* 8.61%* 8.37%* 10.20%*
--------------------------------------------------------------------------------
Portfolio turnover rate 64.7%+ 54.0% 78.4% 87.6% 168.7% 273.5%
--------------------------------------------------------------------------------
Net assets, end of
period (in thousands) $ 169,693 $173,078$ 148,111 $113,419 $ 39,862 $ 9,989
--------------------------------------------------------------------------------
** Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
* Excludes expenses in excess of a 1.25% voluntary expense limitation in
effect through 12/31/00.
++ The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout
the period. This amount is inconsistent with the fund's aggregate gains and
losses because of the timing of sales and redemptions of fund shares in
relation to fluctuating market values for the investment portfolio.
+ Annualized
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Global Bond Fund
------------------------------
Unaudited June 30, 2000
PORTFOLIO OF INVESTMENTS Par/Shares Value
------------------------ ---------- -----
In thousands
BULGARIA 0.9%
Government Bonds 0.9%
National Republic of Bulgaria, FLIRB
STEP, 2.75%, 7/28/12 USD 330 $ 243
-------------------------------------------------------------------------------
Total Bulgaria (Cost $235) 243
-------------------------------------------------------------------------------
CANADA 5.7%
Government Bonds 4.5%
Government of Canada, 5.50%, 6/1/09 CAD 655 432
-------------------------------------------------------------------------------
Province of Ontario, 1.875%, 1/25/10 JPY 30,000 284
-------------------------------------------------------------------------------
Royal Bank of Canada, 6.82%, 5/26/04 USD 500 497
-------------------------------------------------------------------------------
1,213
-------------------------------------------------------------------------------
Short-term Investments 1.2%
J.P. Morgan, Fixed Deposit, 5.563%, 7/4/00 CAD 481 325
-------------------------------------------------------------------------------
325
-------------------------------------------------------------------------------
Total Canada (Cost $1,543) 1,538
-------------------------------------------------------------------------------
DENMARK 3.8%
Government Bonds 3.8%
Kingdom of Denmark
6.00%, 11/15/02 DKK 4,000 513
-------------------------------------------------------------------------------
8.00%, 3/15/06 3,700 523
-------------------------------------------------------------------------------
Total Denmark (Cost $1,180) 1,036
-------------------------------------------------------------------------------
FRANCE 8.5%
Government Bonds 8.5%
Bons du Tresor Annuel
4.00%, 4/25/09 EUR 235 203
-------------------------------------------------------------------------------
4.50%, 7/12/02 1,795 1,697
-------------------------------------------------------------------------------
Caisse d'Amort Dette Sociale, 6.50%, 3/11/02 USD 200 198
-------------------------------------------------------------------------------
Obligation Assimilable du Tresor, 5.50%, 4/25/29 EUR 205 192
-------------------------------------------------------------------------------
Total France (Cost $2,371) 2,290
-------------------------------------------------------------------------------
GERMANY 5.5%
Government Bonds 5.5%
Bundesrepublic
4.50%, 5/17/02 EUR 800 $ 757
-------------------------------------------------------------------------------
4.75%, 7/4/28 245 208
-------------------------------------------------------------------------------
6.00%, 1/4/07 250 248
-------------------------------------------------------------------------------
7.50%, 11/11/04 259 270
-------------------------------------------------------------------------------
Total Germany (Cost $1,527) 1,483
-------------------------------------------------------------------------------
GREECE 2.6%
Government Bonds 2.0%
Hellenic Republic, 6.50%, 1/11/14 GRD 180,000 523
-------------------------------------------------------------------------------
523
-------------------------------------------------------------------------------
<PAGE>
Corporate Bonds 0.6%
Public Power, 4.50%, 3/12/09 EUR 200 167
-------------------------------------------------------------------------------
167
-------------------------------------------------------------------------------
Total Greece (Cost $724) 690
-------------------------------------------------------------------------------
ITALY 1.6%
Government Bonds 1.6%
Buoni del Tesoro Poliennali
7.25%, 11/1/26 133 149
-------------------------------------------------------------------------------
9.00%, 10/1/03 269 284
-------------------------------------------------------------------------------
Total Italy (Cost $531) 433
-------------------------------------------------------------------------------
JAPAN 5.4%
Government Bonds 5.4%
Government of Japan
0.90%, 12/22/08 JPY 46,000 403
-------------------------------------------------------------------------------
1.80%, 6/21/10 70,000 665
-------------------------------------------------------------------------------
2.00%, 12/20/07 30,000 292
-------------------------------------------------------------------------------
2.40%, 3/20/20 10,000 99
-------------------------------------------------------------------------------
Total Japan (Cost $1,411) 1,459
-------------------------------------------------------------------------------
MEXICO 1.3%
Government Bonds 1.3%
United Mexican States, 11.50%, 5/15/26 USD 300 $ 362
-------------------------------------------------------------------------------
Total Mexico (Cost $335) 362
-------------------------------------------------------------------------------
NETHERLANDS 9.8%
Government Bonds 5.6%
Government of Netherlands
5.50%, 1/15/28 EUR 235 221
-------------------------------------------------------------------------------
5.75%, 1/15/04 1,326 1,290
-------------------------------------------------------------------------------
1,511
-------------------------------------------------------------------------------
Corporate Bonds 4.2%
Deutsche Telekom, 1.50%, 6/15/05 JPY 50,000 471
-------------------------------------------------------------------------------
Dresdner Finance, 6.50%, 1/29/04 USD 500 500
-------------------------------------------------------------------------------
Hermes Europe Railtel, 10.375%, 1/15/06 EUR 80 62
-------------------------------------------------------------------------------
IFCO Systems, 10.625%, 3/15/10 50 50
-------------------------------------------------------------------------------
United Pan-Europe Communications, 10.875%, 8/1/09 75 63
-------------------------------------------------------------------------------
1,146
-------------------------------------------------------------------------------
Total Netherlands (Cost $3,027) 2,657
-------------------------------------------------------------------------------
POLAND 1.2%
Government Bonds 1.2%
Republic of Poland
Par, STEP, 3.50%, 10/27/24 USD 400 241
-------------------------------------------------------------------------------
PDI, STEP, 6.00%, 10/27/14 100 89
-------------------------------------------------------------------------------
Total Poland (Cost $366) 330
-------------------------------------------------------------------------------
<PAGE>
RUSSIA 1.0%
Government Bonds 1.0%
Government of Russia
Participation Agreement, Lehman Brothers,
Russian roubles and OFZs, STEP
0.00% - 25.00%,12/15/01 - 1/21/04 RUB 1,451 35
-------------------------------------------------------------------------------
Russian Federation, 11.75%, 6/10/03 USD 85 $ 79
-------------------------------------------------------------------------------
Vnesheconombank
IAN, FRN, 7.938%, 12/15/15 * 220 68
-------------------------------------------------------------------------------
Principal Loans, FRN, 7.938%, 12/15/20 * 330 102
-------------------------------------------------------------------------------
Total Russia (Cost $447) 284
-------------------------------------------------------------------------------
SINGAPORE 0.8%
Corporate Bonds 0.8%
Development Bank of Singapore, 7.875%, 8/10/09 150 149
-------------------------------------------------------------------------------
Flextronics International, 9.75%, 7/1/10 EUR 75 73
-------------------------------------------------------------------------------
Total Singapore (Cost $222) 222
-------------------------------------------------------------------------------
SOUTH AFRICA 2.1%
Government Bonds 2.1%
Republic of South Africa, 13.00%, 8/31/10 ZAR 4,000 553
-------------------------------------------------------------------------------
Total South Africa (Cost $644) 553
-------------------------------------------------------------------------------
SOUTH KOREA 0.5%
Corporate Bonds 0.5%
Korea Development Bank, 1.875%, 2/13/02 JPY 15,000 142
-------------------------------------------------------------------------------
Total South Korea (Cost $125) 142
-------------------------------------------------------------------------------
SPAIN 0.6%
Government Bonds 0.6%
Bonos del Estado, 6.00%, 1/31/29 EUR 150 148
-------------------------------------------------------------------------------
Total Spain (Cost $205) 148
-------------------------------------------------------------------------------
SUPRANATIONAL 1.1%
Government Bonds 1.1%
European Investment Bank, 5.25%, 3/23/02 65,000 308
-------------------------------------------------------------------------------
Total Supranational (Cost $352) 308
-------------------------------------------------------------------------------
SWEDEN 1.0%
Government Bonds 1.0%
Kingdom of Sweden, 5.00%, 1/28/09 SEK 2,300 $ 256
-------------------------------------------------------------------------------
Total Sweden (Cost $257) 256
-------------------------------------------------------------------------------
TUNISIA 0.8%
Government Bonds 0.8%
Central Bank of Tunisia, 4.95%, 9/27/11 JPY 20,000 214
-------------------------------------------------------------------------------
Total Tunisia (Cost $165) 214
-------------------------------------------------------------------------------
TURKEY 0.3%
Government Bonds 0.3%
Republic of Turkey, 11.875%, 1/15/30 USD 75 80
-------------------------------------------------------------------------------
Total Turkey (Cost $80) 80
-------------------------------------------------------------------------------
<PAGE>
UNITED KINGDOM 5.0%
Government Bonds 1.3%
United Kingdom Treasury
4.25%, 6/7/32 GBP 50 74
-------------------------------------------------------------------------------
6.00%, 12/7/28 150 282
-------------------------------------------------------------------------------
356
-------------------------------------------------------------------------------
Corporate Bonds 3.7%
Abbey National Treasury, 5.25%, 1/21/04 155 224
-------------------------------------------------------------------------------
Colt Telecom, 8.875%, 11/30/07 EUR 160 78
-------------------------------------------------------------------------------
DONCASTERS, 8.125%, 5/1/09 GBP 50 73
-------------------------------------------------------------------------------
Energis, 9.50%, 6/15/09 25 37
-------------------------------------------------------------------------------
LCR Finance, 4.75%, 12/31/10 190 260
-------------------------------------------------------------------------------
Lloyds Bank, 5.625%, 7/15/49 EUR 200 172
-------------------------------------------------------------------------------
Orange, 7.625%, 8/1/08 100 99
-------------------------------------------------------------------------------
Telewest Communications, STEP, 0%, 4/15/09 GBP 67 52
-------------------------------------------------------------------------------
995
-------------------------------------------------------------------------------
Total United Kingdom (Cost $2,068) 1,351
-------------------------------------------------------------------------------
UNITED STATES 43.4%
Government Bonds 18.5%
Federal National Mortgage Assn., 6.25%, 11/15/02 USD 350 $ 345
-------------------------------------------------------------------------------
U.S. Treasury Bonds
6.375%, 8/15/27 1,150 1,183
-------------------------------------------------------------------------------
7.125%, 2/15/23 420 466
-------------------------------------------------------------------------------
7.25%, 5/15/16 1,000 1,100
-------------------------------------------------------------------------------
U.S. Treasury Notes
5.25%, 5/15/04 670 647
-------------------------------------------------------------------------------
6.00%, 8/15/00 - 8/15/04 1,250 1,243
-------------------------------------------------------------------------------
4,984
-------------------------------------------------------------------------------
Corporate Bonds 15.6%
3M, 5.00%, 10/15/01 EUR 500 241
-------------------------------------------------------------------------------
American Standard, 7.125%, 6/1/06 80 74
-------------------------------------------------------------------------------
Aramark Services, 6.75%, 8/1/04 USD 250 238
-------------------------------------------------------------------------------
Associates Corp., Sr. Notes, 6.903%, 5/8/03 500 500
-------------------------------------------------------------------------------
Capital One Financial, 7.125%, 8/1/08 150 135
-------------------------------------------------------------------------------
Caterpillar Financial Services, 6.691%, 8/1/02 500 501
-------------------------------------------------------------------------------
<PAGE>
Dura Operating, 9.00%, 5/1/09 EUR 28 26
-------------------------------------------------------------------------------
Hertz, 8.25%, 6/1/05 USD 300 306
-------------------------------------------------------------------------------
Huntsman ICI Chemicals, 10.125%, 7/1/09 EUR 60 59
-------------------------------------------------------------------------------
KFW International Finance, 5.50%, 6/18/04 360 527
-------------------------------------------------------------------------------
Metromedia Fiber Network, 10.00%, 12/15/09 43 40
-------------------------------------------------------------------------------
Newell, 6.35%, 7/15/08 USD 500 457
-------------------------------------------------------------------------------
Norfolk Southern, 7.35%, 5/15/07 250 242
-------------------------------------------------------------------------------
NTL, STEP, 0%, 4/1/08 GBP 80 74
-------------------------------------------------------------------------------
R&B Falcon, 6.75%, 4/15/05 USD 250 225
-------------------------------------------------------------------------------
SunAmerica Institutional Funding
5.125%, 4/15/08 EUR 750 347
-------------------------------------------------------------------------------
5.25%, 5/20/09 1,500 206
-------------------------------------------------------------------------------
4,198
-------------------------------------------------------------------------------
Money Market Funds 9.3%
Reserve Investment Fund, 6.68% # USD 2,504 2,504
-------------------------------------------------------------------------------
2,504
-------------------------------------------------------------------------------
Total United States (Cost $11,418) 11,686
-------------------------------------------------------------------------------
Total Investments in Securities
102.9% of Net Assets (Cost $29,233) $ 27,765
Forward Currency Exchange Contracts
In thousands
Counter- Unrealized
party Settlement Receive Deliver Gain (Loss)
--------------- ---------- --------------- ----------------- ------------
Chase Manhattan 7/7/00 EUR 4,252 USD 4,080 $ (19)
Chase Manhattan 7/7/00 SEK 1,811 USD 198 7
Chase Manhattan 7/7/00 USD 1,905 EUR 2,035 (39)
Chase Manhattan 7/7/00 USD 207 SEK 1,811 2
Chase Manhattan 7/13/00 USD 705 DKK 5,640 (17)
J.P. Morgan 7/14/00 USD 620 ZAR 4,108 15
Citibank 8/25/00 JPY 320,587 USD 3,070 (18)
Citibank 9/18/00 DKK 2,091 SEK 2,300 6
Net unrealized gain (loss) on open forward
currency exchange contracts (63)
Other Assets Less Liabilities (715)
NET ASSETS $ 26,987
# Seven-day yield
* Non-income producing
FLIRB Front loaded interest reduction bond
FRN Floating rate note
IAN Interest arrears note
PDI Past due interest bond
STEP Stepped coupon note for which the interest rate will adjust
on specified future date(s)
CAD Canadian dollar
DKK Danish krone
EUR Euro
GBP British pound
GRD Greek drachma
JPY Japanese yen
RUB Russian rouble
SEK Swedish krona
USD U.S. dollar
ZAR South African rand
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Global Bond Fund
------------------------------
Unaudited June 30, 2000
STATEMENT OF ASSETS AND LIABILITIES
----------------------------------- In thousands
ASSETS
Investments in securities, at value (cost $29,233) $ 27,765
Securities lending collateral 3,825
Other assets 1,121
Total assets 32,711
LIABILITIES
Payable for investment securities purchased 1,610
Obligation to return securities lending collateral 3,825
Other liabilities 289
Total liabilities 5,724
NET ASSETS $ 26,987
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (112)
Accumulated net realized gain/loss - net of distributions (2,338)
Net unrealized gain (loss) (1,535)
Paid-in-capital applicable to 3,012,921 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 30,972
NET ASSETS $ 26,987
NET ASSET VALUE PER SHARE $ 8.96
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price International Bond Fund
-------------------------------------
Unaudited June 30, 2000
PORTFOLIO OF INVESTMENTS Par/Shares Value
In thousands
AUSTRALIA 0.5%
Corporate Bonds 0.5%
Publishing & Broadcasting, 6.25%, 11/1/06 EUR 3,600 $ 3,419
--------------------------------------------------------------------------------
Total Australia (Cost $3,622) 3,419
--------------------------------------------------------------------------------
AUSTRIA 4.9%
Government Bonds 2.1%
Republic of Austria
4.50%, 9/28/05 JPY 600,000 6,627
--------------------------------------------------------------------------------
4.75%, 12/20/04 750,000 8,207
--------------------------------------------------------------------------------
14,834
--------------------------------------------------------------------------------
Short-Term Investments 2.8%
Citibank Fixed Deposit, 4.35%, 12/31/00 EUR 20,887 19,941
--------------------------------------------------------------------------------
19,941
--------------------------------------------------------------------------------
Total Austria (Cost $33,505) 34,775
--------------------------------------------------------------------------------
BULGARIA 0.9%
Government Bonds 0.9%
National Republic of Bulgaria
FLIRB, STEP, 2.75%, 7/28/12 USD 5,330 3,928
--------------------------------------------------------------------------------
IAB, FRN, 7.063%, 7/28/11 3,000 2,381
--------------------------------------------------------------------------------
Total Bulgaria (Cost $5,776) 6,309
--------------------------------------------------------------------------------
<PAGE>
CANADA 5.1%
Government Bonds 5.1%
Government of Canada
6.00%, 6/1/08 CAD 24,845 16,881
--------------------------------------------------------------------------------
9.75%, 6/1/21 9,750 9,558
--------------------------------------------------------------------------------
Province of Ontario, 1.875%, 1/25/10 JPY 1,000,000 9,453
--------------------------------------------------------------------------------
Total Canada (Cost $36,276) 35,892
--------------------------------------------------------------------------------
DENMARK 4.8%
Government Bonds 4.8%
Kingdom of Denmark
6.00%, 11/15/02 DKK 100,000 12,820
--------------------------------------------------------------------------------
8.00%, 3/15/06 150,000 21,230
--------------------------------------------------------------------------------
Total Denmark (Cost $34,376) 34,050
--------------------------------------------------------------------------------
FRANCE 8.5%
Government Bonds 8.5%
Bons du Tresor Annuel
4.00%, 4/25/09 EUR 3,400 $ 2,933
--------------------------------------------------------------------------------
4.50%, 7/12/02 45,737 43,237
--------------------------------------------------------------------------------
5.25%, 4/25/08 3,510 3,325
--------------------------------------------------------------------------------
5.50%, 4/25/29 11,630 10,907
--------------------------------------------------------------------------------
Total France (Cost $62,334) 60,402
--------------------------------------------------------------------------------
GERMANY 15.1%
Government Bonds 12.9%
Bundesrepublic
4.50%, 5/17/02 33,690 31,881
--------------------------------------------------------------------------------
4.75%, 7/4/28 8,500 7,207
--------------------------------------------------------------------------------
5.25%, 1/4/08 28,200 26,885
--------------------------------------------------------------------------------
6.00%, 1/4/07 17,030 16,909
--------------------------------------------------------------------------------
6.50%, 7/4/27 2,000 2,141
--------------------------------------------------------------------------------
7.50%, 11/11/04 6,400 6,653
--------------------------------------------------------------------------------
91,676
--------------------------------------------------------------------------------
Corporate Bonds 2.2%
Bank Nederlandse Gemeenten
5.25%, 10/1/01 14,300 6,981
--------------------------------------------------------------------------------
6.25%, 8/10/00 6,000 2,933
--------------------------------------------------------------------------------
International Finance, 5.75%, 7/11/00 11,000 5,371
--------------------------------------------------------------------------------
15,285
--------------------------------------------------------------------------------
Total Germany (Cost $109,792) 106,961
--------------------------------------------------------------------------------
GREECE 2.4%
Government Bonds 1.9%
Hellenic Republic, 6.50%, 1/11/14 GRD 4,600,000 13,364
--------------------------------------------------------------------------------
13,364
--------------------------------------------------------------------------------
Corporate Bonds 0.5%
Public Power, 4.50%, 3/12/09 EUR 4,200 3,511
--------------------------------------------------------------------------------
3,511
--------------------------------------------------------------------------------
Total Greece (Cost $17,600) 16,875
--------------------------------------------------------------------------------
<PAGE>
ITALY 4.4%
Government Bonds 4.4%
Buoni del Tesoro Poliennali
7.25%, 11/1/26 EUR 2,350 $ 2,631
--------------------------------------------------------------------------------
9.00%, 10/1/03 26,923 28,487
--------------------------------------------------------------------------------
Total Italy (Cost $39,831) 31,118
--------------------------------------------------------------------------------
JAPAN 9.9%
Government Bonds 9.9%
Government of Japan
0.90%, 12/22/08 JPY 3,200,000 28,076
--------------------------------------------------------------------------------
1.80%, 6/21/10 2,700,000 25,649
--------------------------------------------------------------------------------
2.00%, 12/20/07 1,200,000 11,691
--------------------------------------------------------------------------------
2.40%, 3/20/20 475,000 4,679
--------------------------------------------------------------------------------
Total Japan (Cost $66,561) 70,095
--------------------------------------------------------------------------------
LUXEMBOURG 0.1%
Corporate Bonds 0.1%
Carrier One, 13.25%, 2/15/09 EUR 780 763
--------------------------------------------------------------------------------
Total Luxembourg (Cost $813) 763
--------------------------------------------------------------------------------
MEXICO 1.4%
Government Bonds 1.4%
United Mexican States
Par (with attached value recovery rights)
3.85%, 12/31/19 JPY 200,000 1,828
--------------------------------------------------------------------------------
Par (Series W-A) (with attached value
recovery rights)
6.25%, 12/31/19 USD 250 208
--------------------------------------------------------------------------------
Par (Series W-B) (with attached value
recovery rights)
6.25%, 12/31/19 500 416
--------------------------------------------------------------------------------
11.50%, 5/15/26 6,365 7,678
--------------------------------------------------------------------------------
Total Mexico (Cost $9,229) 10,130
--------------------------------------------------------------------------------
NETHERLANDS 5.5%
Government Bonds 3.9%
Government of Netherlands, 5.75%, 1/15/04 EUR 28,530 $ 27,761
--------------------------------------------------------------------------------
27,761
--------------------------------------------------------------------------------
Corporate Bonds 1.6%
Hermes Europe Railtel, 10.375%, 1/15/06 1,910 1,486
--------------------------------------------------------------------------------
IFCO Systems, 10.625%, 3/15/10 1,175 1,172
--------------------------------------------------------------------------------
Tecnost International, 5.375%, 7/30/04 7,400 6,721
--------------------------------------------------------------------------------
United Pan-Europe Communications, 10.875%,8/1/09 2,000 1,671
--------------------------------------------------------------------------------
11,050
--------------------------------------------------------------------------------
Total Netherlands (Cost $44,686) 38,811
--------------------------------------------------------------------------------
POLAND 1.3%
Government Bonds 1.3%
Republic of Poland
Par, STEP, 3.50%, 10/27/24 USD 10,000 6,019
--------------------------------------------------------------------------------
PDI, 6.00%, 10/27/14 3,575 3,190
--------------------------------------------------------------------------------
Total Poland (Cost $10,100) 9,209
--------------------------------------------------------------------------------
<PAGE>
RUSSIA 0.8%
Government Bonds 0.8%
Government of Russia
Participation Agreement, Lehman Brothers,
Russian roubles and OFZs, STEP
0.00 - 25.00%, 12/15/01 - 1/21/04 RUB 38,701 866
--------------------------------------------------------------------------------
Russia Ministry of Finance, 11.75%, 6/10/03 USD 2,000 1,859
--------------------------------------------------------------------------------
Vnesheconombank
IAN, FRN, 7.938%, 12/15/15 * USD 5,721 1,777
--------------------------------------------------------------------------------
Principal Loans, FRN, 7.938%, 12/15/20 * 4,780 1,470
--------------------------------------------------------------------------------
Total Russia (Cost $8,996) 5,972
--------------------------------------------------------------------------------
SINGAPORE 0.3%
Corporate Bonds 0.3%
Flextronics, 9.75%, 7/1/10 EUR 2,000 1,957
--------------------------------------------------------------------------------
Total Singapore (Cost $1,941) 1,957
--------------------------------------------------------------------------------
SLOVENIA 0.3%
Government Bonds 0.3%
Republic of Slovenia, 5.375%, 5/27/05 EUR 2,200 $ 2,048
--------------------------------------------------------------------------------
Total Slovenia (Cost $2,482) 2,048
--------------------------------------------------------------------------------
SOUTH AFRICA 2.5%
Government Bonds 2.5%
Republic of South Africa, 13.00%, 8/31/10 ZAR 127,000 17,546
--------------------------------------------------------------------------------
Total South Africa (Cost $20,094) 17,546
--------------------------------------------------------------------------------
SOUTH KOREA 1.5%
Government Bonds 1.1%
Korea Development Bank
1.875%, 2/13/02 JPY 410,000 3,891
--------------------------------------------------------------------------------
2.56%, 6/26/01 400,000 3,816
--------------------------------------------------------------------------------
7,707
--------------------------------------------------------------------------------
Corporate Bonds 0.4%
Korea Industrial Leasing, 2.20%, 8/7/02 330,000 3,141
--------------------------------------------------------------------------------
3,141
--------------------------------------------------------------------------------
Total South Korea (Cost $9,251) 10,848
--------------------------------------------------------------------------------
SPAIN 3.0%
Government Bonds 3.0%
Bonos del Estado
6.00%, 1/31/29 EUR 7,513 7,379
--------------------------------------------------------------------------------
6.15%, 1/31/13 14,341 14,272
--------------------------------------------------------------------------------
Total Spain (Cost $29,146) 21,651
--------------------------------------------------------------------------------
SUPRANATIONAL 1.2%
Government Bonds 1.2%
European Investment Bank
2.125%, 9/20/07 JPY 500,000 4,954
--------------------------------------------------------------------------------
5.25%, 3/23/02 EUR 700,000 3,320
--------------------------------------------------------------------------------
Total Supranational (Cost $8,689) 8,274
--------------------------------------------------------------------------------
SWEDEN 1.3%
Government Bonds 1.3%
Kingdom of Sweden, 5.00%, 1/28/09 SEK 82,200 $ 9,141
--------------------------------------------------------------------------------
Total Sweden (Cost $9,192) 9,141
--------------------------------------------------------------------------------
<PAGE>
TUNISIA 0.6%
Government Bonds 0.6%
Central Bank of Tunisia, 4.95%, 9/27/11 JPY 400,000 4,274
--------------------------------------------------------------------------------
Total Tunisia (Cost $3,310) 4,274
--------------------------------------------------------------------------------
TURKEY 0.3%
Government Bonds 0.3%
Republic of Turkey, 11.875%, 1/15/30 USD 2,000 2,130
--------------------------------------------------------------------------------
Total Turkey (Cost $2,137) 2,130
--------------------------------------------------------------------------------
UNITED KINGDOM 7.1%
Government Bonds 2.1%
United Kingdom Treasury
4.25%, 6/7/32 GBP 4,500 6,693
--------------------------------------------------------------------------------
9.00%, 10/13/08 1,760 3,289
--------------------------------------------------------------------------------
6.00%, 12/7/28 2,770 5,199
--------------------------------------------------------------------------------
15,181
--------------------------------------------------------------------------------
Corporate Bonds 5.0%
Abbey National Treasury, 5.25%, 1/21/04 4,780 6,920
--------------------------------------------------------------------------------
Alliance & Leicester Building Society,
8.75%, 12/7/06 3,900 6,335
--------------------------------------------------------------------------------
Colt Telecom, 8.875%, 11/30/07 EUR 2,890 1,404
--------------------------------------------------------------------------------
DONCASTERS, 8.125%, 5/1/09 GBP 1,110 1,608
--------------------------------------------------------------------------------
Energis, 9.50%, 6/15/09 555 819
--------------------------------------------------------------------------------
Gallaher Group, 5.875%, 8/6/08 EUR 3,600 1,628
--------------------------------------------------------------------------------
LCR Finance, 4.75%, 12/31/10 GBP 2,700 3,694
--------------------------------------------------------------------------------
Lloyds Bank, 5.625%, 7/15/49 EUR 3,900 3,360
--------------------------------------------------------------------------------
Orange, 7.625%, 8/1/08 2,000 1,986
--------------------------------------------------------------------------------
Stagecoach Holdings, 6.00%, 11/24/04 1,850 1,599
--------------------------------------------------------------------------------
Standard Charter Bank, 5.375%, 5/6/09 4,000 3,467
--------------------------------------------------------------------------------
TDL Infomedia Group, 12.125%, 10/15/09 GBP 820 $ 1,250
--------------------------------------------------------------------------------
Telewest Communications, STEP, 0%, 4/15/09 1,610 1,255
--------------------------------------------------------------------------------
35,325
--------------------------------------------------------------------------------
Total United Kingdom (Cost $54,030) 50,506
--------------------------------------------------------------------------------
UNITED STATES 21.3%
Corporate Bonds 9.9%
3M, 5.00%, 10/15/01 EUR 8,350 4,023
--------------------------------------------------------------------------------
American Standard, 7.125%, 6/1/06 2,000 1,843
--------------------------------------------------------------------------------
Dura Operating, 9.00%, 5/1/09 750 694
--------------------------------------------------------------------------------
Huntsman ICI Chemicals, 10.125%, 7/1/09 1,600 1,581
--------------------------------------------------------------------------------
KFW International Finance
5.50%, 6/18/04 GBP 19,780 28,940
--------------------------------------------------------------------------------
6.75%, 6/20/05 EUR 9,616 9,666
--------------------------------------------------------------------------------
Level 3 Communications, 11.25%, 3/15/10 1,175 1,071
<PAGE>
--------------------------------------------------------------------------------
Metromedia Fiber Network, 10.00%, 12/15/09 1,047 965
--------------------------------------------------------------------------------
NTL, STEP, 0%, 4/1/08 GBP 1,930 1,796
--------------------------------------------------------------------------------
SunAmerica Institutional Funding
5.125%, 4/15/08 EUR 15,800 7,320
--------------------------------------------------------------------------------
5.25%, 5/20/09 32,600 4,466
--------------------------------------------------------------------------------
Toyota Motor Credit, 1.00%, 12/20/04 JPY 850,000 7,960
--------------------------------------------------------------------------------
70,325
--------------------------------------------------------------------------------
Money Market Funds 11.4%
Reserve Investment Fund, 6.68% # USD 80,973 80,973
--------------------------------------------------------------------------------
80,973
--------------------------------------------------------------------------------
Total United States (Cost $161,257) 151,298
--------------------------------------------------------------------------------
Total Investments in Securities
105.0% of Net Assets (Cost $785,026) $ 744,454
Forward Currency Exchange Contracts
In thousands
Counter- Unrealized
party Settlement Receive Deliver Gain (Loss)
--------------- ---------- ----------------- ---------------- ------------
Chase Manhattan 7/6/00 AUD 9,000 USD 5,359 $ 24
Chase Manhattan 7/7/00 EUR 34,377 USD 32,949 (114)
Chase Manhattan 7/7/00 USD 31,438 EUR 34,377 (1,397)
J.P. Morgan 7/14/00 USD 19,269 ZAR 127,777 463
Chase Manhattan 7/21/00 SEK 19,171 USD 2,224 (47)
J.P. Morgan 7/26/00 EUR 9,396 JPY 933,918 140
Chase Manhattan 7/26/00 JPY 404,734 DKK 30,218 (38)
Citibank 7/26/00 JPY 1,392,622 GBP 8,440 413
Citibank 8/25/00 JPY 8,414,565 USD 80,578 (471)
Citibank 9/18/00 DKK 86,383 SEK 95,000 252
J.P. Morgan 9/18/00 NOK 150,094 USD 17,500 (10)
Net unrealized gain (loss) on open forward
currency exchange contracts (785)
Other Assets Less Liabilities (34,885)
NET ASSETS $ 708,784
# Seven-day yield
* Non-income producing
FLIRB Front loaded interest reduction bond
FRN Floating rate bond
IAB Interest arrears bond
IAN Interest arrears note
PDI Past due interest bond
STEP Stepped coupon note for which the interest rate will adjust
on specified future date(s)
AUD Australian dollar
CAD Canadian dollar
CHF Swiss franc
DKK Danish krone
EUR Euro
GBP British pound
GRD Greek drachma
JPY Japanese yen
NOK Norwegian krone
RUB Russian rouble
SEK Swedish krona
USD U.S. dollar
ZAR South African rand
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price International Bond Fund
-------------------------------------
Unaudited June 30, 2000
STATEMENT OF ASSETS AND LIABILITIES
----------------------------------- In thousands
ASSETS
Investments in securities, at value (cost $785,026) $ 744,454
Securities lending collateral 201,948
Other assets 15,629
Total assets 962,031
LIABILITIES
Payable for investment securities purchased 44,390
Obligation to return securities lending collateral 201,948
Other liabilities 6,909
Total liabilities 253,247
NET ASSETS $ 708,784
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (2,621)
Accumulated net realized gain/loss - net of distributions (64,081)
Net unrealized gain (loss) (41,420)
Paid-in-capital applicable to 81,818,737 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 816,906
NET ASSETS $ 708,784
International Bond shares
($708,766,653/81,816,767 shares outstanding) $ 8.66
International Bond Advisor Class shares
($17,071/1,970 shares outstanding) $ 8.67
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price Emerging Markets Bond Fund
----------------------------------------
Unaudited June 30, 2000
PORTFOLIO OF INVESTMENTS Par/Shares Value
------------------------ ---------- -----
In thousands
ARGENTINA 5.7%
Government Bonds 3.3%
Rebublic of Argentina
FRB, 7.375%, 3/31/05 USD 2,160 $ 1,972
--------------------------------------------------------------------------------
11.375%, 3/15/10 3,000 2,738
--------------------------------------------------------------------------------
11.75%, 6/15/15 1,000 909
--------------------------------------------------------------------------------
STEP, 12.50%, 3/31/23 3,350 2,219
--------------------------------------------------------------------------------
7,838
--------------------------------------------------------------------------------
Corporate Bonds 1.1%
CEI Citicorp, 11.25%, 2/14/07 ARS 1,000 961
--------------------------------------------------------------------------------
CIA International Telecommunications,
10.375%, 8/1/04 1,000 840
--------------------------------------------------------------------------------
1,801
--------------------------------------------------------------------------------
Total Argentina (Cost $9,628) 9,639
--------------------------------------------------------------------------------
<PAGE>
BRAZIL 19.2%
Government Bonds 17.0%
Federative Republic of Brazil, 11.625%, 4/15/04 USD 2,550 2,578
--------------------------------------------------------------------------------
Republic of Brazil
Par, FRN, 6.00%, 4/15/24 4,750 3,107
--------------------------------------------------------------------------------
Discount, FRN, 7.375%, 4/15/24 2,000 1,582
--------------------------------------------------------------------------------
EI, FRN, 7.375%, 4/15/06 7,254 6,615
--------------------------------------------------------------------------------
DCB, FRN, 7.438%, 4/15/12 5,500 4,054
--------------------------------------------------------------------------------
(Class C), 8.00%, 4/15/14 8,620 6,341
--------------------------------------------------------------------------------
10.125%, 5/15/27 3,495 2,761
--------------------------------------------------------------------------------
14.50%, 10/15/09 1,627 1,733
--------------------------------------------------------------------------------
28,771
--------------------------------------------------------------------------------
Corporate Bonds 2.2%
Banco Nac De Desen Econo, 12.554%, 6/16/08 4,000 3,730
--------------------------------------------------------------------------------
3,730
--------------------------------------------------------------------------------
Total Brazil (Cost $30,890) 32,501
--------------------------------------------------------------------------------
BULGARIA 8.0%
Government Bonds 8.0%
National Republic of Bulgaria
LIRB, VR, 2.75%, 7/28/12 USD 8,520 6,278
--------------------------------------------------------------------------------
IAB, FRN, 7.063%, 7/28/11 5,900 4,683
--------------------------------------------------------------------------------
Discount (Series A), FRN, 7.063%, 7/28/24 3,325 2,635
--------------------------------------------------------------------------------
Total Bulgaria (Cost $12,426) 13,596
--------------------------------------------------------------------------------
COLOMBIA 1.7%
Government Bonds 1.7%
Republic of Columbia, 9.75%, 4/23/09 3,770 $ 2,969
--------------------------------------------------------------------------------
Total Colombia (Cost $3,370) 2,969
--------------------------------------------------------------------------------
ECUADOR 1.7%
Government Bonds 1.7%
Republic of Ecuador, Discount, FRN,
6.75%, 2/28/25 7,250 2,882
--------------------------------------------------------------------------------
Total Ecuador (Cost $3,642) 2,882
--------------------------------------------------------------------------------
GABON 1.8%
Government Bonds 1.8%
Republic of Gabon, Loan Participation, FRN,
6.688%, 1/4/04 5,090 3,054
--------------------------------------------------------------------------------
Total Gabon (Cost $3,632) 3,054
--------------------------------------------------------------------------------
INDONESIA 0.4%
Convertible Bonds 0.4%
APP Finance (VII) Mauritius, (144a),
3.50%, 4/30/03 1,000 735
--------------------------------------------------------------------------------
Total Indonesia (Cost $871) 735
--------------------------------------------------------------------------------
IVORY COAST 0.9%
Government Bonds 0.9%
Republic of Ivory Coast, PDI, STEP,
1.90%, 3/30/18 EUR 65,897 1,535
--------------------------------------------------------------------------------
Total Ivory Coast (Cost $3,217) 1,535
--------------------------------------------------------------------------------
<PAGE>
MEXICO 16.0%
Government Bonds 13.2%
United Mexican States
11.50%, 5/15/26 USD 10,724 12,936
--------------------------------------------------------------------------------
Par (Series W-A), 6.25%, 12/31/19
(with attached value recovery rights) 4,750 3,948
--------------------------------------------------------------------------------
Par (Series W-B), 6.25%, 12/31/19
(with attached value recovery rights) 6,650 5,528
--------------------------------------------------------------------------------
22,412
--------------------------------------------------------------------------------
Corporate Bonds 2.8%
Petroleos Mexicanos, 9.25%, 3/30/18 5,000 $ 4,769
--------------------------------------------------------------------------------
4,769
--------------------------------------------------------------------------------
Total Mexico (Cost $25,118) 27,181
--------------------------------------------------------------------------------
MOROCCO 1.6%
Government Bonds 1.6%
Kingdom of Morrocco Restructured Loan(TrancheA)
Loan Participation, FRN, 7.75%, 1/1/09 2,955 2,659
--------------------------------------------------------------------------------
Total Morocco (Cost $2,420) 2,659
--------------------------------------------------------------------------------
NETHERLANDS 1.3%
Corporate Bonds 1.3%
Cellco Finance, 15.00%, 8/1/05 2,000 2,150
--------------------------------------------------------------------------------
Total Netherlands (Cost $2,000) 2,150
--------------------------------------------------------------------------------
NIGERIA 3.5%
Government Bonds 3.5%
Central Bank of Nigeria
Promissory Notes, 3.115%, 1/5/10 6,300 1,703
--------------------------------------------------------------------------------
Par (Series WW), STEP, 6.25%, 11/15/20
(with attached payment adjustment warrants) 8,250 4,207
--------------------------------------------------------------------------------
Total Nigeria (Cost $7,516) 5,910
--------------------------------------------------------------------------------
PANAMA 2.9%
Government Bonds 2.9%
Republic of Panama, IRB, VR, 4.25%, 7/17/14 6,250 5,008
--------------------------------------------------------------------------------
Total Panama (Cost $5,075) 5,008
--------------------------------------------------------------------------------
PERU 2.6%
Government Bonds 2.6%
Republic of Peru, IRB (US Series), VR,
3.75%, 3/7/17 7,145 4,341
--------------------------------------------------------------------------------
Total Peru (Cost $4,010) 4,341
--------------------------------------------------------------------------------
PHILIPPINES 0.9%
Government Bonds 0.5%
Republic of Philippines, 8.875%, 4/15/08 1,000 $ 912
--------------------------------------------------------------------------------
912
--------------------------------------------------------------------------------
Corporate Bonds 0.4%
Bayan Telecommunications, 13.50%, 7/15/06 1,000 605
--------------------------------------------------------------------------------
605
--------------------------------------------------------------------------------
Total Philippines (Cost $1,928) 1,517
--------------------------------------------------------------------------------
<PAGE>
POLAND 2.8%
Government Bonds 2.8%
Republic of Poland
Par, STEP, 3.50%, 10/27/24 3,500 2,107
--------------------------------------------------------------------------------
PDI, STEP, 6.00%, 10/27/14 3,000 2,677
--------------------------------------------------------------------------------
Total Poland (Cost $5,047) 4,784
--------------------------------------------------------------------------------
RUSSIA 13.7%
Government Bonds 13.0%
City of St. Petersburg, 9.50%, 6/18/02 2,500 2,106
--------------------------------------------------------------------------------
Government of Russia
Participation Agreement, Lehman Brothers
Russian roubles and OFZs, STEP
0.00% - 25.00%, 12/15/01 - 1/21/04 RUB 37,140 831
--------------------------------------------------------------------------------
Russian Federation
10.00%, 6/26/07 USD 1,000 774
--------------------------------------------------------------------------------
11.75%, 6/10/03 1,465 1,362
--------------------------------------------------------------------------------
Vnesheconombank
IAN, FRN, 5.969%, 12/15/15 * 9,449 2,935
--------------------------------------------------------------------------------
Principal Loans, FRN, 5.969%, 12/15/20 * 45,370 13,951
--------------------------------------------------------------------------------
21,959
--------------------------------------------------------------------------------
Corporate Bonds 0.1%
Rossiyskiy Kredit Bank, 10.25%, 9/29/00 * 1,000 158
--------------------------------------------------------------------------------
158
--------------------------------------------------------------------------------
Convertible Bonds 0.6%
Lukinter Finance, 3.50%, 5/6/02 1,000 $ 1,027
--------------------------------------------------------------------------------
1,027
--------------------------------------------------------------------------------
Total Russia (Cost $17,988) 23,144
--------------------------------------------------------------------------------
SOUTH AFRICA 1.6%
Government Bonds 1.6%
Republic of South Africa, 13.00%, 8/31/10 20,000 2,763
--------------------------------------------------------------------------------
Total South Africa (Cost $3,121) 2,763
--------------------------------------------------------------------------------
THAILAND 0.0%
Warrants 0.0%
NSM Steel, Warrants, 2/1/08 * 633 1
--------------------------------------------------------------------------------
1
--------------------------------------------------------------------------------
Corporate Bonds 0.0%
NSM Steel, (144a), 12.25%, 2/1/08 * 1,000 10
--------------------------------------------------------------------------------
10
--------------------------------------------------------------------------------
Total Thailand (Cost $948) 11
--------------------------------------------------------------------------------
TURKEY 2.5%
Government Bonds 2.5%
Republic of Turkey, 11.875%, 1/15/30 4,000 4,260
--------------------------------------------------------------------------------
Total Turkey (Cost $4,145) 4,260
--------------------------------------------------------------------------------
<PAGE>
VENEZUELA 4.1%
Government Bonds 4.1%
Republic of Venezuela
DCB, FRN, 7.875%, 12/18/07 USD 7,679 6,241
--------------------------------------------------------------------------------
Discount, FRN,(Series X-B), 6.875%, 3/31/20 1,000 770
--------------------------------------------------------------------------------
Total Venezuela (Cost $6,728) 7,011
--------------------------------------------------------------------------------
UNITED STATES 4.6%
Money Market Funds 4.6%
Reserve Investment Fund, 6.68% # 7,840 7,840
--------------------------------------------------------------------------------
Total United States (Cost $7,840) 7,840
--------------------------------------------------------------------------------
Total Investments in Securities
97.5% of Net Assets (Cost $161,520) $ 165,491
Forward Currency Exchange Contracts
In thousands
Counter- Unrealized
party Settlement Receive Deliver Gain (Loss)
---------------- ---------- -------------- -------------- ------------
Chase Manhattan 7/7/00 EUR 1,000 USD 963 $ (8)
Citibank 7/7/00 EUR 1,000 USD 962 7
Net unrealized gain (loss) on open forward
currency exchange contracts (1)
Other Assets Less Liabilities 4,203
NET ASSETS $ 169,693
# Seven-day yield
* 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 period-end amounts
to .44% of net assets.
DCB Debt conversion bond
EI Eligible interest bond
FLIRB Front loaded interest reduction bond
FRB Floating rate bond
FRN Floating rate note
IAB Interest arrears bond
IAN Interest arrears note
IRB Interest reduction bond
PDI Past due interest bond
STEP Stepped coupon note for which the interest rate will adjust on
specified future date(s)
ARS Argentinean peso
USD U.S. dollar
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Emerging Markets Bond Fund
----------------------------------------
Unaudited June 30, 2000
STATEMENT OF ASSETS AND LIABILITIES
----------------------------------- In thousands
ASSETS
Investments in securities, at value (cost $161,520) $ 165,491
Securities lending collateral 13,000
Other assets 7,043
Total assets 185,534
LIABILITIES
Obligation to return securities lending collateral 13,000
Other liabilities 2,841
Total liabilities 15,841
NET ASSETS $ 169,693
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (1,545)
Accumulated net realized gain/loss - net of distributions (23,844)
Net unrealized gain (loss) 3,972
Paid-in-capital applicable to 16,304,842 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized 191,110
NET ASSETS $ 169,693
NET ASSET VALUE PER SHARE $ 10.41
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price Global Bond Fund
------------------------------
Unaudited
STATEMENT OF OPERATIONS
----------------------- In thousands
6 Months
Ended
6/30/00
Investment Income (Loss)
Income
Interest $ 862
Securities lending 1
-------------------------------------------------------------------------------
Total income 863
-------------------------------------------------------------------------------
Expenses
Custody and accounting 65
Shareholder servicing 44
Legal and audit 18
Registration 13
Prospectus and shareholder reports 4
Directors 4
Miscellaneous 2
Reimbursed by manager (4)
-------------------------------------------------------------------------------
Total expenses 146
-------------------------------------------------------------------------------
Net investment income (loss) 717
-------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (1,053)
Foreign currency transactions (387)
-------------------------------------------------------------------------------
Net realized gain (loss) (1,440)
-------------------------------------------------------------------------------
Change in net unrealized gain or loss
Securities 402
Other assets and liabilities
denominated in foreign currencies (123)
-------------------------------------------------------------------------------
Change in net unrealized gain or loss 279
-------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (1,161)
-------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ (444)
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price International Bond Fund
------------------------------------- Unaudited
STATEMENT OF OPERATIONS
----------------------- In thousands
6 Months
Ended
6/30/00
Investment Income (Loss)
Income
Interest $ 19,345
Securities lending 131
-------------------------------------------------------------------------------
Total income 19,476
-------------------------------------------------------------------------------
Expenses
Investment management 2,372
Shareholder servicing
International Bond shares 640
International Bond Advisor Class shares -
Custody and accounting 146
Prospectus and shareholder reports
International Bond shares 31
International Bond Advisor Class shares -
Legal and audit 24
Registration 13
Directors 4
Miscellaneous 3
-------------------------------------------------------------------------------
Total expenses 3,233
Expenses paid indirectly (4)
-------------------------------------------------------------------------------
Net expenses 3,229
-------------------------------------------------------------------------------
Net investment income (loss) 16,247
-------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (44,160)
Foreign currency transactions (6,201)
-------------------------------------------------------------------------------
Net realized gain (loss) (50,361)
-------------------------------------------------------------------------------
Change in net unrealized gain or loss
Securities 10,851
Other assets and liabilities
denominated in foreign currencies (1,221)
-------------------------------------------------------------------------------
Change in net unrealized gain or loss 9,630
-------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (40,731)
-------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ (24,484)
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Emerging Markets Bond Fund
---------------------------------------- Unaudited
STATEMENT OF OPERATIONS
----------------------- In thousands
6 Months
Ended
6/30/00
Investment Income (Loss)
Income
Interest $ 9,112
Securities lending 38
-------------------------------------------------------------------------------
Total income 9,150
-------------------------------------------------------------------------------
Expenses
Investment management 725
Shareholder servicing 216
Custody and accounting 84
Legal and audit 17
Registration 13
Prospectus and shareholder reports 8
Directors 4
Miscellaneous 2
-------------------------------------------------------------------------------
Total expenses 1,069
-------------------------------------------------------------------------------
Net investment income (loss) 8,081
-------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (755)
Foreign currency transactions 93
-------------------------------------------------------------------------------
Net realized gain (loss) (662)
-------------------------------------------------------------------------------
Change in net unrealized gain or loss
Securities 5,576
Other assets and liabilities
denominated in foreign currencies 22
-------------------------------------------------------------------------------
Change in net unrealized gain or loss 5,598
-------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 4,936
-------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 13,017
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price Global Bond Fund
------------------------------ Unaudited
STATEMENT OF CHANGES IN NET ASSETS
---------------------------------- In thousands
6 Months Year
Ended Ended
6/30/00 12/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 717 $ 1,535
Net realized gain (loss) (1,440) (1,471)
Change in net unrealized gain or loss 279 (2,854)
--------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (444) (2,790)
--------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (loss) (717) (1,219)
Net realized gain - (437)
Tax return of capital - (368)
--------------------------------------------------------------------------------
Decrease in net assets from distributions (717) (2,024)
--------------------------------------------------------------------------------
<PAGE>
Capital share transactions *
Shares sold 1,715 5,173
Distributions reinvested 551 1,576
Shares redeemed (6,454) (11,525)
--------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions (4,188) (4,776)
--------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period (5,349) (9,590)
Beginning of period 32,336 41,926
--------------------------------------------------------------------------------
End of period $ 26,987 $ 32,336
*Share information
Shares sold 190 539
Distributions reinvested 62 161
Shares redeemed (721) (1,206)
--------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (469) (506)
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price International Bond Fund
------------------------------ Unaudited
STATEMENT OF CHANGES IN NET ASSETS
---------------------------------- In thousands
6 Months Year
Ended Ended
6/30/00 12/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 16,247 $ 34,164
Net realized gain (loss) (50,361) (28,830)
Change in net unrealized gain or loss 9,630 (80,569)
-------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (24,484) (75,235)
-------------------------------------------------------------------------------
Distributions to shareholders
Net investment income
International Bond shares (16,247) (31,573)
Net realized gain
International Bond shares - (9,113)
Tax return of capital
International Bond shares - (4,316)
-------------------------------------------------------------------------------
Decrease in net assets from distributions (16,247) (45,002)
-------------------------------------------------------------------------------
Capital share transactions *
Shares sold
International Bond shares 74,764 200,275
International Bond Advisor Class shares 17 -
-------------------------------------------------------------------------------
Increase in net assets from shares sold 74,781 200,275
Distributions reinvested
International Bond shares 15,173 41,591
Shares redeemed
International Bond shares (119,111) (269,428)
-------------------------------------------------------------------------------
Increase (decrease) in net assets from
capital share transactions (29,157) (27,562)
-------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period (69,888) (147,799)
Beginning of period 778,672 926,471
-------------------------------------------------------------------------------
End of period $ 708,784 $ 778,672
*Share information
Shares sold
International Bond shares 8,630 20,529
International Bond Advisor Class shares 2 -
Distributions reinvested
International Bond shares 1,752 4,306
Shares redeemed
International Bond shares (13,576) (28,365)
-------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (3,192) (3,530)
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
6/30/00 12/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 8,081 $ 16,872
Net realized gain (loss) (662) (19,600)
Change in net unrealized gain or loss 5,598 36,561
-------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 13,017 33,833
-------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (8,098) (12,647)
Net realized gain - -
Tax return of capital - (6,021)
-------------------------------------------------------------------------------
Decrease in net assets from distributions (8,098) (18,668)
-------------------------------------------------------------------------------
Capital share transactions *
Shares sold 24,076 37,157
Distributions reinvested 7,356 17,017
Shares redeemed (39,736) (44,372)
-------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions (8,304) 9,802
-------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period (3,385) 24,967
Beginning of period 173,078 148,111
-------------------------------------------------------------------------------
End of period $ 169,693 $ 173,078
*Share information
Shares sold 2,325 3,989
Distributions reinvested 716 1,827
Shares redeemed (3,851) (4,756)
-------------------------------------------------------------------------------
Increase (decrease) in shares outstanding (810) 1,060
The accompanying notes are an integral part of these financial statements.
================================================================================
T. Rowe Price Foreign Bond Funds
--------------------------------
Unaudited June 30, 2000
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 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. The Global Fund seeks high current income
and, secondarily, capital appreciation and protection of principal by investing
primarily in high-quality foreign and U.S. government bonds. The International
Fund seeks high current income and capital appreciation by investing primarily
in high-quality, nondollar-denominated foreign bonds. The Emerging Markets Fund
seeks high income and capital appreciation by investing primarily in the
government and corporate debt securities of emerging nations. The International
Fund has two classes of sharesNInternational Bond, offered since September 10,
1986, and International Bond Advisor Class, first offered on March 31, 2000.
International Bond Advisor Class sells its shares only through financial
intermediaries, which it compensates for distribution and certain administrative
services under a Board-approved Rule 12b-1 plan. Each class has exclusive voting
rights on matters related solely to that class, separate voting rights on
matters that relate to both classes, and, in all other respects, the same rights
and obligations as the other class.
<PAGE>
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company industry;
these principles may require the use of estimates by fund management.
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.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
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 that 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.
Class Accounting The International Bond Advisor Class pays distribution and
administrative expenses, in the form of Rule 12b-1 fees, in an amount not
exceeding 0.25% of the class's average net assets. Shareholder servicing,
prospectus, and shareholder report expenses are charged directly to the class to
which they relate. Expenses common to both classes, investment income, and
realized and unrealized gains and losses are allocated to the classes based upon
the relative daily net assets of each class. Income distributions are declared
by each class on a daily basis, and paid monthly. Capital gain distributions are
declared and paid by the fund on an annual basis.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Distributions to shareholders are
recorded by each fund on the ex-dividend date. Income and capital gain
distributions are determined in accordance with federal income tax regulations
and may differ from those determined in accordance with generally accepted
accounting principles. Expenses paid indirectly reflect credits earned on daily
univested cash balances at the custodian and are used to reduce each fund's
custody charges. Unrealized gains and losses on forward currency exchange
contracts are included in Other assets and Other liabilities, respectively, and
in Change in net unrealized gain or loss in the accompanying financial
statements.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with their investment objectives, the funds engage in the
following practices to manage exposure to certain risks or enhance performance.
The investment objective, policies, program, and risk factors of each fund are
described more fully in each fund's prospectus and Statement of Additional
Information.
Emerging Markets At June 30, 2000, 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, 2000, 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.
<PAGE>
Forward Currency Exchange Contracts At June 30, 2000, the Global and
International Funds were 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.
Securities Lending Each fund lends its securities to approved brokers to
earn additional income and receives cash and U.S. government securities as
collateral against the loans. Cash collateral received is invested in a money
market pooled account by the fund's lending agent. Collateral is maintained over
the life of the loan in an amount not less than 100% of the value of loaned
securities. Although risk is mitigated by the collateral, the fund could
experience a delay in recovering its securities and a possible loss of income or
value if the borrower fails to return them. At June 30, 2000, the value of
loaned securities and aggregate collateral in the securities lending collateral
pool were as follows:
Global International Emerging Markets
Bond Fund Bond Fund Bond Fund
------ ------------- ----------------
Loaned securities $ 3,541,000 $ 189,070,000 $ 13,000,000
Collateral 3,825,000 201,948,000 13,000,000
Other Purchases and sales of portfolio securities, other than short-term
securities, for the six months ended June 30, 2000, were as follows:
Global International Emerging Markets
Bond Fund Bond Fund Bond Fund
------ ------------- ----------------
U.S. government securities
Purchases $ 3,620,000 $ - $ 540,000
Sales 6,477,000 - 761,000
Other securities
Purchases 17,082,000 497,650,000 52,102,000
Sales 18,645,000 566,390,000 60,386,000
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since each fund intends
to continue to qualify as a regulated investment company and distribute all of
its taxable income. As of December 31, 1999, the Global Fund had capital loss
car-ryforwards for federal income tax purposes of $384,000, all of which expires
in 2007. The International Fund had capital loss carryforwards for federal
income tax purposes of $5,681,000, all of which expires in 2007. The Emerging
Markets Fund had capital loss carryforwards for federal income tax purposes of
$22,163,000, of which $6,492,000 expires in 2006 and $15,671,000 expires in
2007. Each fund intends to retain gains realized in future periods that may be
offset by available capital loss carryforwards.
At June 30, 2000, the costs of investments for the Global, International,
and Emerging Markets Funds for federal income tax purposes was substantially the
same as for financial reporting and totaled $29,233,000, $785,026,000, and
$161,520,000, respectively. Net unrealized gain (loss) on investments was as
follows:
Global International Emerging Markets
Bond Fund Bond Fund Bond Fund
------ ------------- ----------------
Appreciated investments $ 317,000 $ 13,521,000 $ 14,917,000
Depreciated investments (1,785,000) (54,093,000) (10,946,000)
Net unrealized gain (loss) $ (1,468,000) $ (40,572,000) $ 3,971,000
<PAGE>
NOTE 4 - RELATED PARTY TRANSACTIONS
Each fund is managed by Rowe Price-Fleming International, Inc. (the
manager), which is owned by subsidiaries of T. Rowe Price Associates, Inc.
(Price Associates) and Robert Fleming Holdings Limited. Price Associates has
entered into an agreement with Fleming to purchase Fleming's interest in the
manager. The investment management agreement between each fund and the manager
provides for an annual investment management fee, of which $388,000, and
$121,000 were payable at June 30, 2000 by the International Bond 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 0.295% for assets in
excess of $120 billion. At June 30, 2000, and for the six months then ended, the
effective annual group fee rate was 0.32%. Each fund pays a pro-rata share of
the group fee based on the ratio of its net assets to those of the group.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through December 31, 2000, for the Global and
Emerging Markets Funds which would cause each fund's ratio of total expenses to
average net assets to exceed 1.00% and 1.25%, respectively. Thereafter through
December 31, 2002, for the Global and Emerging Markets Funds, 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 total expenses to average net assets to
exceed 1.00% and 1.25%, respectively. Pursuant to the Global Fund's agreement,
101,000 of management fees and other expenses were not accrued by the Global
Fund for the six months ended June 30, 2000, and $190,000 of management fees
remain unaccured from a prior period. Additionally, $248,000 from a previous
agreement remains subject to reimbursement through December 31, 2000. Pursuant
to a previous Emerging Markets Fund's agreement, $69,000 of unaccrued fees were
repaid by the fund during the six months ended June 30, 2000, and $23,000 of
unaccrued management fees from prior years remains subject to reimbursement
through December 31, 2000.
The manager has agreed to bear any expenses through December 31, 2001,
which would cause International Bond Advisor Class's ratio of total expenses to
average net assets to exceed 1.15%. Thereafter, through December 31, 2003,
International Bond Advisor Class is required to reimburse the manager for these
expenses, provided that its average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing its ratio total of
expenses to average net assets to exceed 1.15%.
In addition, each fund has entered into agreements with Price Associates
and two wholly owned subsidiaries of Price Associates, pursuant to which each
fund receives certain other services. Price Associates computes the daily share
price and maintains the financial records of each fund. T. Rowe Price Services,
Inc. is each fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the funds. T. Rowe Price Retirement
Plan Services, Inc., provides subaccounting and recordkeeping services for
certain retirement accounts invested in each fund. The Global, International,
and Emerging Markets Funds incurred expenses pursuant to these related party
agreements totaling approximately $87,000, $281,000, and $120,000, respectively,
for the six months ended June 30, 2000, of which $19,000, $77,000, and $25,000,
respectively, were payable at period-end.
Additionally, the International and Emerging Markets Funds are one of
several T. Rowe Price-sponsored mutual funds (underlying funds) in which the T.
Rowe Price Spectrum Funds (Spectrum) may invest. Spectrum does not invest in the
underlying funds for the purpose of exercising management or control. Expenses
associated with the operation of Spectrum are borne by each underlying fund to
the extent of estimated savings to it and in proportion to the average daily
value of its shares owned by Spectrum, pursuant to special servicing agreements
between and among Spectrum, the underlying funds, T. Rowe Price, and, in the
case of T. Rowe Price Spectrum International, Rowe Price-Fleming International.
Spectrum Income Fund held approximately 43.7% of the outstanding International
Bond shares and 53.1% of the outstanding shares of the Emerging Markets Fund at
June 30, 2000. Spectrum International Fund held approxi mately 2.9% of the
outstanding shares of the Emerging Markets Fund at June 30, 2000. For the six
months ended, the International Fund was allocated $365,000 of Spectrum
expenses, $50,000 of which was payable at period-end; the Emerging Markets Fund
was allocated $128,000 of Spectrum expenses, $23,000 of which was payable at
period-end.
<PAGE>
The funds may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve Funds
are offered as cash management options only to mutual funds and other accounts
managed by T. Rowe Price and its affiliates and are not available to the public.
The Reserve Funds pay no investment management fees. Distributions from the
Reserve Funds to the Global, International, and Emerging Markets Funds for the
six months ended June 30, 2000, totaled $67,000, $2,196,000 and $112,000,
respectively, and are reflected as interest income in the accompanying Statement
of Operations.
================================================================================
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*AccessRegistration 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.
Internet. T. Rowe Price Web site: www.troweprice.com
All the information and services available on Tele*Access
are available on our Web site, including transactions in
your fund and brokerage accounts (with preauthorized
access).
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.
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
----------------------------------
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.
BROKERAGE SERVICES*
-------------------
Investments Available You can trade stocks, bonds,
options, precious metals, and other securities at a savings
over full-service 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 type. Detail pages itemize
account transactions.
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 develop- ments and provides comprehensive performance
information for every T. Rowe Price fund.
Insights These are reports on mutual fund tax issues,
investment strategies, investment fundamentals, and
financial markets.
Detailed Investment Guides Our Asset Mix Worksheet,
College Planning Kit, Diversifying Overseas: A Guide to
International Investing, Retirees Financial Guide, and
Retirement Planning Kit (also available on disk or CD-ROM
for PC use) can help you determine and reach your investment
goals.
* T. Rowe Price Brokerage is a division of T.
Rowe Price Investment Services, Inc., Member
NASD/SIPC.
** Based on a July 2000 survey for
representative-assisted stock trades.
Services vary by firm, and commissions may
vary depending on size of order.
===========================================================================
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 500
<PAGE>
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total
Equity Market Index
Value
INTERNATIONAL/GLOBAL
Emerging Markets Stock
European Stock
Global Stock
International Discovery*
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
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 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 Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond *
Virginia Tax-Free Bond
INTERNATIONAL/GLOBAL
Emerging Markets Bond
Global Bond *
International Bond
<PAGE>
MONEY MARKET FUNDS
------------------
TAXABLE
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
TAX-FREE
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
---------------------
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
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.
+ Investments in the funds are not insured or guaranteed by the FDIC or
any other government agency. Although the funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the funds.
Please call for a prospectus, which contains complete information,
including fees and expenses. Read it carefully before investing.
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.
================================================================================
T. Rowe Price Advisory Services and Retirement Resources
--------------------------------------------------------------------------------
ADVISORY SERVICES, RETIREMENT RESOURCES
---------------------------------------
T. Rowe Price is your full-service retirement specialist. We have developed
unique advisory services that can help you meet the most difficult retirement
challenges. Our broad array of retirement plans is suitable for individuals, the
self-employed, small businesses, corporations, and nonprofit organizations. We
also provide recordkeeping, communications, and investment management services,
and our educational materials, self-help planning guides, and software tools are
recognized as among the industry's best. For information or to request
literature, call us at 1-800-638-5660, or visit our Web site at
WWW.TROWEPRICE.COM.
ADVISORY SERVICES
-----------------
T. ROWE PRICE RETIREMENT INCOME MANAGERsm helps retirees or those within
two years of retirement determine how much income they can take in retirement.
The program uses extensive statistical analysis and the input of financial
planning professionals to suggest an income plan that best meets your
objectives.
<PAGE>
T. ROWE PRICE ROLLOVER INVESTMENT SERVICE offers asset allocation advice to
those planning a major change in their qualified retirement plans, such as a
401(k) rollover from a previous employer or an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
-------------------------------------
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
PLANNING AND INFORMATIONAL GUIDES
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
INSIGHTS REPORTS
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
SOFTWARE PACKAGES
T. Rowe Price Retirement Planning
AnalyzerTM CD-ROM or diskette $19.95.
To order, please call 1-800-541-5760.
Also available on the Internet for $9.95.
T. Rowe Price Variable Annuity AnalyzerTM
CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. ROWE PRICE IMMEDIATE VARIABLE ANNUITY (INCOME ACCOUNT)
INVESTMENT KITS
We will be happy to send you one of our
easy-to-follow investment kits when you
are ready to invest in any T. Rowe Price
retirement vehicle, including IRAs,
qualified plans, small-business plans,
or our no-load variable annuities.
================================================================================
T. Rowe Price Insights Reports
------------------------------
THE FUNDAMENTALS OF INVESTING
-----------------------------
Whether you are unsure how to get started or are saving for a specific
goal, such as retirement or college, the T. Rowe Price Insights series can help
you make informed investment decisions. These reports, written in plain English
about fundamental investment topics, can be useful at every stage of your
investment journey. They cover a range of topics, from the basic, such as
getting started with mutual funds, to the more advanced, such as managing risk
through diversification or buying individual securities through a broker. To
request one or more Insights, call us at 1-800-638-5660.
INSIGHTS REPORTS
----------------
GENERAL INFORMATION
The ABCs of Giving
Back to Basics: The ABCs of Investing
The Challenge of Preparing for Retirement
Financial Planning After Retirement
Getting Started: Investing With Mutual Funds
The Roth IRA: A Review
Tax Information for Mutual Fund Investors
INVESTMENT STRATEGIES
Conservative Stock Investing
Dollar Cost Averaging
Equity Index Investing
Growth Stock Investing
Investing for Higher Yield
Managing Risk Through Diversification
The Power of Compounding
Value Investing
<PAGE>
TYPES OF SECURITIES
The Basics of International Stock Investing
The Basics of Tax-Free Investing
The Fundamentals of Fixed-Income Investing
Global Bond Investing
Investing in Common Stocks
Investing in Emerging Growth Stocks
Investing in Financial Services Stocks
Investing in Health Care Stocks
Investing in High-Yield Municipal Bonds
Investing in Money Market Securities
Investing in Mortgage-Backed Securities
Investing in Natural Resource Stocks
Investing in Science and Technology Stocks
Investing in Small-Company Stocks
Understanding Derivatives
Understanding High-Yield "Junk" Bonds
BROKERAGE INSIGHTS
Combining Individual Securities With Mutual Funds
Getting Started: An Introduction to Individual Securities
What You Should Know About Bonds
What You Should Know About Margin and Short-Selling
What You Should Know About Options
What You Should Know About Stocks
T. Rowe Price Insights are also available for reading or downloading on the
Internet at www.troweprice.com.
================================================================================
T. Rowe Price Brokerage
-----------------------
BROKERAGE SERVICES
------------------
T. Rowe Price Brokerage is a division of T. Rowe Price
Investment Services, Inc., Member NASD/SIPC.
T. Rowe Price Brokerage provides high-quality services
and financial tools you can use to manage your investments
effectively and conveniently. We also offer significant
commission savings over full-service brokerages on a wide
range of individual securities and other investments.*
Internet and Automated Services You can enter trades,
access quotes, and review account information 24 hours a
day, seven days a week, by telephone or computer. We offer a
flat-rate commission of $24.95 on stock trades placed
through our Internet-Trader service.**
Research Services To help you make informed investment
decisions, we offer access to several sources of data. You
can research your investments using our Online Research &
News Service, provided by Thomson Investors Network, which
includes company profiles, intraday and 12-month interactive
charting, and analysts' ratings and earnings estimates.
Using our Research On Call service, you can request reports
from Standard & Poor's, Vicker's, Lipper, and other
well-known research providers to be delivered by fax or by
mail.
Dividend Reinvestment Service This service helps keep
more of your money working for you. Cash dividends (of $10
or greater) from your eligible securities will be invested
automatically in additional shares of the same company, free
of charge. Most stocks listed on national securities
exchanges or Nasdaq are eligible for this service.
* Based on a July 2000 survey for
representative-assisted stock trades.
Services vary by firm, and commissions may
vary depending on size of order.
** $24.95 per trade for up to 1,000 shares plus
an additional $.02 for each share over 1,000
shares. Visit our Web site for a complete
commission schedule or call for rates on
representative-assisted and other
non-Internet trades.
<PAGE>
================================================================================
FOR FUND AND ACCOUNT INFORMATION
OR TO CONDUCT TRANSACTIONS,
24 HOURS, 7 DAYS A WEEK
By touch-tone telephone
TELE*ACCESS 1-800-638-2587
By Account Access on the Internet
WWW.TROWEPRICE.COM/ACCESS
FOR ASSISTANCE
WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132
TO OPEN A BROKERAGE ACCOUNT
OR OBTAIN INFORMATION, CALL:
1-800-638-5660
INTERNET ADDRESS:
www.troweprice.com
PLAN ACCOUNT LINES FOR RETIREMENT
PLAN PARTICIPANTS:
The appropriate 800 number appears
on your retirement account statement.
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 appropriate
to the fund or funds covered in this
report.
WALK-IN INVESTOR CENTERS:
For directions, call 1-800-225-5132
or visit our Web site
BALTIMORE AREA
DOWNTOWN
101 East Lombard Street
OWINGS MILLS
Three Financial Center
4515 Painters Mill Road
BOSTON AREA
386 Washington Street
Wellesley
COLORADO SPRINGS
4410 ArrowsWest Drive
LOS ANGELES AREA
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
TAMPA
4200 West Cypress Street
10th Floor
WASHINGTON, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Investment Services, Inc., Distributor. C15-051 6/30/00
