-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MFbtzu9clZrL59AKk9AK5bTC7KFxZa/6EOlGMtfmKx5syEL9VBec5GX+qUSwdj95 aYX39lQHA3MhFWY7FP3ohA== 0000950133-96-000086.txt : 19960207 0000950133-96-000086.hdr.sgml : 19960207 ACCESSION NUMBER: 0000950133-96-000086 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960206 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUNDS INC CENTRAL INDEX KEY: 0000313212 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 521175211 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02958 FILM NUMBER: 96511462 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 3015472000 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL TRUST DATE OF NAME CHANGE: 19900301 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUND INC DATE OF NAME CHANGE: 19890914 N-30D 1 GLOBAL INCOME FUNDS ANNUAL REPORT DATED 12/31/95. 1 - -------------------------------------------------------------------------------- ANNUAL REPORT - -------------------------------------------------------------------------------- FOR YIELD, PRICE, LAST TRANSACTION, AND CURRENT BALANCE, 24 HOURS, 7 DAYS A WEEK, CALL: 1-800-638-2587 toll free 625-7676 Baltimore area FOR ASSISTANCE WITH YOUR EXISTING FUND ACCOUNT, CALL: Shareholder Service Center 1-800-225-5132 toll free 625-6500 Baltimore area T. ROWE PRICE 100 East Pratt Street Baltimore, Maryland 21202 This report is authorized for distribution only to shareholders and to others who have received a copy of the prospectus of the T. Rowe Price Global Income Funds. [T.ROWE PRICE LOGO] STG/GGB ------------------------------------------------------------------- [T.ROWE PRICE LOGO] GLOBAL INCOME FUNDS DECEMBER 31, 1995 2 - -------------------------------------------------------------------------------- Fellow Shareholders The second half of 1995 saw a continuation of the trends of earlier in the year. Slow economic growth and low inflation were the catalysts behind rising bond prices and falling yields. Forecasts for both economic growth and inflation were lowered in most regions during the last six months. Stability filtered back into the emerging markets, allowing them to participate fully in the international bond rally. Currency markets were more stable in the second half, although the dollar rallied on a trade-weighted basis. However, this relative stability masked Japanese yen volatility. Having risen 17% against the U.S. dollar in the first half, the yen fell 20% in the second half in response to concerted efforts to rekindle the Japanese economy. The Mexican peso was again weaker, but this time without adversely affecting other emerging markets. Despite the fall in the Japanese currency, global bonds generated strong overall returns in the second half of 1995. MARKET ENVIRONMENT A succession of weak economic data in many major markets provided the backdrop for interest rate cuts. Interest rate-sensitive areas such as automobile sales, consumer durables, and housing starts indicated sluggish activity. Unemployment remained relatively stable in the U.S. but rose in Europe and Japan. In contrast to the first half, European bonds outperformed their U.S. and Japanese counterparts in local currency and dollar terms over the last six months. A downward revision in German inflation in September further assisted the rally. Much of the discussion in Europe centered on the timetable for Economic Monetary Union (EMU). Whether or not the required number of countries will qualify for EMU in 1999 is open to question. However, in order to participate, European countries will be forced to reduce high budget deficits and outstanding government debt. Implementing this fiscal tightening at a time of sluggish growth demands a loosening of monetary policy -- lower interest rates. Investor perceptions that this shift was required propelled European bonds higher at the end of the year. Japanese bonds posted double-digit returns in the first half but struggled to stay positive in the second half. Low nominal yields were not a problem for investors as inflation was running near zero. However, there was a major change in government policy around midyear as Japan sought to extract its economy from a deflationary environment. In addition to more public spending, the Japanese government in conjunction with the U.S. pursued a weaker yen policy. These measures caused Japanese bonds to underperform. Japan was the only major market to provide a negative return in the second half. - ------------------------------------------------------ Bond Market Performance
Total Returns 6 Months Ended 12/31/95 ------------------------------------- In Local Currency In U.S. Dollars ----------------- ---------------- Australia 8.66% 14.03% - ------------------------------------------------------ Belgium 8.30 4.72 Canada 8.04 8.83 - ------------------------------------------------------ Denmark 11.47 8.63 France 9.11 8.15 - ------------------------------------------------------ Germany 8.72 5.13 Ireland 11.54 9.21 - ------------------------------------------------------ Italy 12.06 15.63 Japan 1.05 -16.84 - ------------------------------------------------------ The Netherlands 9.49 5.89 Spain 12.97 12.76 - ------------------------------------------------------ Sweden 15.10 26.46 United Kingdom 10.28 7.63 - ------------------------------------------------------ United States 6.04 6.04
- ------------------------------------------------------ Source: J.P. Morgan. 3 In the currency arena, the yen, the Australian dollar, and British pound were the only major currencies to weaken against the U.S. dollar. Most European currencies gained between 8% and 12% over the year, except for the Italian lira, which was up 2%. The best currency performance came from the Swedish krona, up 12% for the year and 10% in the second half. Thus, the big currency story of the second half was yen weakness rather than dollar strength. The U.S. was the ninth best-performing market over the year and the thirteenth best during the second half of 1995. Short-term rates were cut twice amid concerns about the slowing U.S. economy. Although some weakness emerged because of the budget impasse, U.S. Treasuries still performed strongly in the final quarter. Canadian bonds outperformed their U.S. counterparts throughout the year and during the second half, although they suffered from an increase in volatility caused by the Quebec referendum on secession from the rest of Canada. However, the market grew calmer when the secession measure was narrowly defeated and investors focused again on the prevailing weakness of the Canadian economy. PORTFOLIO REVIEWS SHORT-TERM GLOBAL INCOME FUND Your fund provided positive returns over the year, outperforming its benchmark during the 6- and 12-month periods ended December 31, 1995. The economic background during the last six months proved constructive for the short-term instruments in which the fund invests. - ------------------------------------------------------ Performance Comparison
Periods Ended 12/31/95 6 Months 12 Months --------- ---------- Short-Term Global Income Fund 4.96% 8.34% Lipper Short World Multi-Market Income Funds Average 4.73 7.80
- ------------------------------------------------------ The fund benefited earlier in the year from minimal exposure to Latin American credits in the aftermath of the Mexican peso crisis. As the year progressed, we extended the weighted average maturity of the portfolio to take advantage of declining interest rates, which further helped performance. We concentrated our holdings during the first half in core European markets, including Germany, France, Belgium, and Austria, as the likelihood of German interest cuts increased. Later, we added positions in Spain, Italy, Australia, and Canada. During the second half of the year, we established small positions in U.S. dollar- denominated Mexican debt and assumed some currency exposure to Poland and the Czech Republic, which contributed positively to fund performance near year- end. EDGAR DESCRIPTION: GEOGRAPHICAL PIE CHART SHOWING EUROPE 61%, CANADA 14%, AUSTRALIA 2%, U.S. 20%, OTHER AND RESERVES 3%. GEOGRAPHICAL DIVERSIFICATION*
Short-Term Global Income Fund Based on Net-Assets as of 12/31/95. Europe 61% Canada 14% Australia 2% U.S. 20% Other and Reserves 3%
- -------------------------------------- * Based on currency denomination of the fund's securities. Does not include the effects of forward currency contracts and currency exposure from hybrid instruments. GLOBAL GOVERNMENT BOND FUND Your fund turned in a strong performance in the second half of 1995 and over the year as a whole, largely because of the continued appreciation of global bonds. Second half returns were good, even though the U.S. dollar was fairly stable during the last six months while foreign currency appreciation helped boost the earlier returns. 2 4 - ------------------------------------------------------ Performance Comparison
Periods Ended 12/31/95 6 Months 12 Months -------- --------- Global Government Bond Fund 5.10% 18.13% J.P. Morgan Global Government Bond Index (unhedged) 3.24 19.31 J.P. Morgan Global Government Bond Index (fully hedged) 7.36 17.90
- ------------------------------------------------------ Your fund outperformed its unhedged benchmark over the second half because of its underweighted allocation to Japanese bonds and currency. This underweighting hindered results to some extent during the first six months when Japanese bonds returned 8% in dollar terms. In addition, we also underweighted U.S. Treasuries, which did not do as well as foreign bonds. Our preference for the better-performing markets of Europe helped returns. Extensive exposure to all European bond maturities benefited the fund as rates fell across the yield curve. Your fund's small holdings in emerging market debt aided performance in the second half as those markets rebounded sharply from first quarter losses. OUTLOOK The strong performance of international bonds in 1995 justified the optimistic view we expressed in our last annual report. Our outlook for the first six months of 1996 remains positive. Continued efforts to reduce government spending in Europe should be rewarded with lower interest rates, especially as European economies are still growing sluggishly. Real yields (bond yields less inflation) are still attractive in Europe and not stretched as they were in late 1993. EDGAR DESCRIPTION: GEOGRAPHICAL DIVERSIFICATION PIE CHART SHOWING EUROPE 62%, U.S. 26%, JAPAN 5%, CANADA 4%, AUSTRALIA 3%. GEOGRAPHICAL DIVERSIFICATION*
Global Government Bond Based on Net Assets as of 12/31/95. Europe 62% U.S. 26% Japan 5% Canada 5% Australia 3%
- -------------------------------------- * Based on currency denomination of the fund's securities. Does not include the effects of forward currency contracts and exposure from hybrid instruments. However, we are nearing the end of this stage of the interest rate cycle, and the rallies in the U.S. and Japan may be cresting. Still, there is little reason to fear the kind of price reversal witnessed in the first part of 1994, since inflation is not a threat at present. Wage costs should remain under control for at least a while longer. One potential concern is the recent rise in commodity prices, but current levels of economic activity suggest that this should be only a short-term phenomenon. Recent currency market stability may continue, with perhaps some bonus given to the U.S. dollar if there is a positive outcome on the budget. Respectfully submitted, /s/ PETER B. ASKEW ------------------ Peter B. Askew Executive Vice President January 19, 1996 3 5 - -------------------------------------------------------------------------------- Portfolio Highlights T. Rowe Price Short-Term Global Income Fund / December 31, 1995 - ------------------------------------------------------ Key Statistics
Dividend Yield* Periods Ended 12/31/95 - ---------------------------- ---------------------- 6 Months 6.15% - --------------------------------------------------- 12 Months 6.43 Dividend Per Share - ---------------------------- 6 Months $0.13 - --------------------------------------------------- 12 Months** 0.27 Change in Price Per Share - ---------------------------- 6 Months (From $4.38 to $4.46) 0.08 - --------------------------------------------------- 12 Months (From $4.38 to $4.46) 0.08 - ---------------------------------------------------
- ------------------------------------------------------ * Dividends earned and reinvested for the periods indicated are annualized and divided by the average daily net asset values per share for the same period. Income return and principal value represent past performance and will vary. ** Includes $0.17 return of capital, which is a nontaxable distribution. The total amount of the fund's 1995 nontaxable distribution is reported in column 1d of Form 1099-DIV mailed in January; you should reduce the cost basis of your investment by this amount. Losses on foreign currency contracts offset a portion of the fund's taxable income. - ------------------------------------------------------ Maturity Diversification
Percent of Net Assets Range 12/31/95 6/30/95 12/31/94 - -------------------------- -------- ------- -------- Short-Term (0 to 1 year) 15% 28% 47% - ------------------------------------------------------ Short Intermediate- Term (1+ to 5 years) 84 60 48 Long Intermediate- Term (5+ to 10 years) 1 12 5 - ------------------------------------------------------ Long-Term (over 10 years) -- -- -- - ------------------------------------------------------ Weighted Average Maturity (years) 2.8 2.8 1.8 - ------------------------------------------------------
- ------------------------------------------------------ Quality Diversification
Percent of Net Assets RPFI Quality Rating* 12/31/95 6/30/95 12/31/94 - -------------------------- -------- ------- -------- 1 28% 29% 32% - ------------------------------------------------------ 2 48 39 42 3 16 28 14 - ------------------------------------------------------ 4 -- 1 6 5 and below 8 3 6 - ------------------------------------------------------ Weighted Average Quality 2.0 2.1 2.1 - ------------------------------------------------------
* On a scale of 1 to 10, with Grade 1 representing highest quality. Performance Comparison as of 12/31/95
Salomon Brothers Short-Term Global 1-3 Year Income Fund Treasury Index 6/1/92 $ 10,000 $ 10,000 Dec-92 9,978 10,300 Dec-93 10,763 10,855 Dec-94 10,449 10,913 Dec-95 11,321 12,084
Note: The Index return does not reflect expenses, which have been deducted from the fund's return. - ------------------------------------------------------ Average Annual Compound Total Return Periods Ended December 31, 1995
Since Inception 1 Year 6/30/92 - --------- ------------------ 8.34% 3.60%
- ------------------------------------------------------ Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. 4 6 - -------------------------------------------------------------------------------- Portfolio Highlights T. Rowe Price Global Government Bond Fund / December 31, 1995 - ------------------------------------------------------ Key Statistics
Dividend Yield* Periods Ended 12/31/95 - ---------------------------- ---------------------- 6 Months 6.10% - --------------------------------------------------- 12 Months 6.22 Dividend Per Share - ---------------------------- 6 Months $0.30 - --------------------------------------------------- 12 Months 0.59 Change in Price Per Share - ---------------------------- 6 Months (From $10.06 to $10.26) 0.20 - --------------------------------------------------- 12 Months (From $9.22 to $10.26) 1.04
- ------------------------------------------------------ * Dividends earned and reinvested for the periods indicated are annualized and divided by the average daily net asset values per share for the same period. Income return and principal value represent past performance and will vary. - ------------------------------------------------------ Maturity Diversification
Percent of Net Assets Range 12/31/95 6/30/95 12/31/94 - -------------------------- -------- ------- -------- Short-Term (0 to 1 year) 7% 19% 17% - ------------------------------------------------------ Short Intermediate- Term (1+ to 5 years) 43 20 25 Long Intermediate- Term (5+ to 10 years) 33 51 43 - ------------------------------------------------------ Long-Term (over 10 years) 17 10 15 - ------------------------------------------------------ Weighted Average Maturity (years) 7.9 7.7 7.7 - ------------------------------------------------------
- ------------------------------------------------------ Quality Diversification
Percent of Net Assets RPFI Quality Rating* 12/31/95 6/30/95 12/31/94 - -------------------------- -------- ------- -------- 1 55% 59% 53% - ------------------------------------------------------ 2 32 35 24 3 9 4 8 - ------------------------------------------------------ 4 -- -- 8 5 and below 4 2 7 - ------------------------------------------------------ Weighted Average Quality 1.7 1.5 1.9 - ------------------------------------------------------
* On a scale of 1 to 10, with Grade 1 representing highest quality. Performance Comparison as of 12/31/95
T. Rowe Price J.P. Morgan Global Government Global Government Bond Fund Bond Hedged Index 12/28/90 $ 10,000 $ 10,000 Dec-91 11,131 11,308 Dec-92 11,493 12,061 Dec-93 12,775 13,528 Dec-94 12,384 12,980 Dec-95 14,630 15,303
Note: The index return does not reflect expenses, which have been deducted from the fund's return. - ------------------------------------------------------ Average Annual Compound Total Return Periods Ended December 31, 1995
Since Inception 1 Year 5 Years 12/28/90 - --------- ----------- ------------------ 18.13% 7.91% 7.91%
- ------------------------------------------------------ Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. 5 7 - -------------------------------------------------------------------------------- Investment Records Per Share Data The following tables show the investment records of one share purchased at the original offering prices of $5.00 for the T. Rowe Price Short-Term Global Income Fund and $10.00 for the T. Rowe Price Global Government Bond Fund. Over the time periods covered in each table, interest rates have been volatile. The results shown should not be considered a representation of the dividend income or capital gain or loss which may be realized from an investment made in the funds today. - -------------------------------------------------------------------------------- T. Rowe Price Short-Term Global Income Fund
Year Capital With With Dividends Ended Net Asset Income Gain Dividends and Capital Gains 12/31 Value Dividends(2) Distributions(3) Reinvested Reinvested - ------ --------- ---------- ------------- ---------- ----------------- 1992(1) $4.78 $ 0.20 $0.0137 $ 4.97 $4.99 - ------------------------------------------------------------------------------------------ 1993 4.82 0.32 -- 5.37 5.38 1994 4.38 0.30 -- 5.21 5.22 - ------------------------------------------------------------------------------------------ 1995 4.46 0.27 -- 5.64 5.66 - ------------------------------------------------------------------------------------------ Total $ 1.09 $0.0137 - ------------------------------------------------------------------------------------------
(1) From inception 6/30/92 to 12/31/92. (2) Includes $0.24 return of capital in 1994 and $0.17 in 1995. (3) Includes short-term capital gain of $0.0137 in 1992. - -------------------------------------------------------------------------------- T. Rowe Price Global Government Bond Fund
Year Capital With With Dividends Ended Net Asset Income Gain Dividends and Capital Gains 12/31 Value Dividends(2) Distributions(3) Reinvested Reinvested - ------ --------- ---------- ------------- ---------- ----------------- 1991(1) $ 10.30 $ 0.77 -- $11.13 $ 11.13 - ------------------------------------------------------------------------------------------ 1992 9.85 0.76 $0.01 11.48 11.49 1993 10.08 0.56 0.28 12.42 12.77 - ------------------------------------------------------------------------------------------ 1994 9.22 0.54 0.02 12.02 12.38 1995 10.26 0.59 -- 14.20 14.63 - ------------------------------------------------------------------------------------------ Total $ 3.22 $0.31 - ------------------------------------------------------------------------------------------
(1) From inception 12/28/90 to 12/31/91. (2) Includes $0.03 return of capital in 1994. (3) Includes short-term capital gains of $0.07 in 1993. 6 8 - -------------------------------------------------------------------------------- Portfolio of Investments+ T. Rowe Price Short-Term Global Income Fund / December 31, 1995 (values in thousands)
Value -------- - ------------------------------------------------------ AUSTRALIA -- 1.8% GOVERNMENT BOND AUD 1,000,000 Commonwealth of Australia, 7.00%, 4/15/00.......... $ 726 - ------------------------------------------------------ BELGIUM -- 4.0% GOVERNMENT BONDS BEL 20,000,000 Obligation Lineaire, 7.00%, 4/29/99.......... 723 24,000,000 Obligation Lineaire, 7.75%, 12/22/00......... 892 TOTAL BELGIUM 1,615 - ------------------------------------------------------ CANADA -- 14.5% GOVERNMENT BONDS CAD 2,500,000 Government of Canada, 8.00%, 3/15/97.......... 1,879 1,000,000 Government of Canada, 6.25%, 2/1/98........... 737 2,750,000 Government of Canada, 7.75%, 9/1/99........... 2,106 1,500,000 Province of Alberta, 10.625%, 2/14/96........ 1,105 TOTAL CANADA 5,827 - ------------------------------------------------------ CZECH REPUBLIC -- 1.6% SHORT-TERM INVESTMENT CZK 16,900,000 Internationale Nederlanden Groep, Zero Coupon, 1/30/96................. 628 - ------------------------------------------------------ DENMARK -- 6.7% GOVERNMENT BONDS DKK 9,000,000 Kingdom of Denmark, 9.00%, 11/15/98................ 1,767 5,000,000 Kingdom of Denmark, 6.00%, 12/10/99................ 909 TOTAL DENMARK 2,676 - ------------------------------------------------------ EUROPEAN CURRENCY UNIT -- 3.4% GOVERNMENT BONDS XEU 650,000 European Economic Community, 8.625%, 12/15/97................ $ 882 375,000 United Kingdom Treasury, 8.00%, 1/23/96.......... 480 TOTAL EUROPEAN CURRENCY UNIT 1,362 - ------------------------------------------------------ FRANCE -- 15.7% GOVERNMENT BONDS FRF 5,000,000 Bons du Tresor Annuel, 7.25%, 8/12/97.......... 1,055 24,500,000 Bons du Tresor Annuel, 7.00%, 10/12/00......... 5,231 TOTAL FRANCE 6,286 - ------------------------------------------------------ GERMANY -- 3.9% GOVERNMENT BOND DEM 2,050,000 Treuhandanstalt, 7.00%, 11/25/99................ 1,551 - ------------------------------------------------------ IRELAND -- 4.2% GOVERNMENT BOND IEP 1,000,000 Republic of Ireland, 8.00%, 10/18/00......... 1,683 - ------------------------------------------------------ ITALY -- 5.4% GOVERNMENT BONDS ITL 1,000,000,000 Buoni del Tesoro Poliennali, 8.313%, 12/1/97................. 623 1,750,000,000 Buoni del Tesoro Poliennali, 8.313%, 12/1/99................. 1,078 750,000,000 Buoni del Tesoro Poliennali, 9.188%, 4/1/00.................. 476 TOTAL ITALY 2,177
7 9 - --------------------------------------------------------------------------------
Value -------- - ------------------------------------------------------ SPAIN -- 7.8% GOVERNMENT BONDS ESP 162,500,000 Bonos del Estado, 11.00%, 6/15/97................. $ 1,373 40,000,000 Bonos del Estado, 8.30%, 12/15/98................ 323 130,000,000 Bonos del Estado, 12.25%, 3/25/00................. 1,177 30,000,000 Bonos del Estado, 10.10%, 2/28/01................. 251 TOTAL SPAIN 3,124 - ------------------------------------------------------ UNITED KINGDOM -- 8.0% GOVERNMENT BOND GBP 500,000 United Kingdom Treasury, 6.00%, 8/10/99.......... 760 CORPORATE BONDS 800,000 Abbey National, 7.75%, 6/23/98................. 1,271 750,000 Alliance & Leicester, FRN, 6.813%, 1/19/98......... 1,164 2,435 TOTAL UNITED KINGDOM 3,195 - ------------------------------------------------------ UNITED STATES -- 25.9% GOVERNMENT BONDS USD 285,714 Banco Central de Brazil, FRN, 6.75%, 10/15/99.... 264 1,000,000 Province of Nova Scotia, FRN, 6.063%, 5/12/99.... 999 2,880,000 Republic of Argentina Bote 1, FRN, 5.891%, 5/31/96................. 286 500,000 United Mexican States, FRN, 11.188%, 7/21/97... 509 300,000 United States Treasury Notes, 6.50%, 9/30/96... 303 725,000 United States Treasury Notes, 5.875%, 8/15/98................. 736 3,097 CORPORATE BONDS 500,000 Commerzbank Overseas Finance, FRN, 5.75%, 11/30/98................ 499 417,000 Banco Nacional Desernvolv, 6.00%, 9/15/96.......... 413 USD 1,000,000 Indover Bank, FRN, 6.738%, 10/26/97................ $ 1,001 1,000,000 Landesbank Rheinland- Pfalz, FRN, 5.813%, 3/25/98................. 1,001 500,000 New Zealand Dairy Board, FRN, 6.063%, 4/5/99..... 501 3,415 HYBRID INSTRUMENTS 500,000 Bank of Scotland Treasury Services Singapore Dollar Linked Note, Zero Coupon, 5/3/96: Principal repayment value linked to the performance of the Singapore dollar........ 486 547,805 Morgan Guaranty Trust Polish Zloty Linked Note, 23.52%, 1/12/96: Principal repayment value linked to the performance of the Polish zloty............ 541 500,000 United Mexican States, FRN, 5.625%, 11/27/96: Redemption value (principal and interest) is based on the greater of a Mexican Cetes option or a U.S. LIBOR option. The Cetes option is indexed to the Cetes rate and the Mexican peso exchange rate. The U.S. LIBOR option is indexed to the 12 month U.S. LIBOR, with the principal repayment value equal to par...... 509 1,536 COMMERCIAL PAPER 1,000,000 Vermont American, 5.70%, 1/29/96................. 995 1,324,038 Investments in Commercial Paper through a joint account, 5.90 - 6.05%, 1/2/96.................. 1,324 2,319 TOTAL UNITED STATES 10,367 - ------------------------------------------------------
8 10 - --------------------------------------------------------------------------------
Value ----------- - ----------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 102.9% OF NET ASSETS (COST $40,473) $ 41,217 - ----------------------------------------------------------------------------------------------------------- FORWARD CURRENCY EXCHANGE CONTRACTS
Unrealized Counterparty Settlement Deliver Receive Gain (Loss) - ---------------- ---------- ------------------ ------------------ ----------- (in thousands) Chase Manhattan 1/8/96 ATS 6,839 FRF 3,350 $ 5 Chase Manhattan 1/8/96 ATS 9,747 USD 983 16 Chase Manhattan 1/8/96 BEL 12,335 DEM 600 (1) Chase Manhattan 1/8/96 BEL 20,822 USD 720 12 Chase Manhattan 1/8/96 DEM 3,730 USD 2,641 39 Citibank 1/8/96 FRF 25,472 USD 5,199 (4) Chase Manhattan 1/8/96 NLG 1,061 USD 673 11 Chase Manhattan 1/8/96 USD 1,641 ATS 16,586 6 Chase Manhattan 1/8/96 USD 659 NLG 1,061 2 Chase Manhattan 1/16/96 ESP 143,277 USD 1,163 (16) Citibank 1/16/96 ESP 29,533 USD 239 (4) Chase Manhattan 1/22/96 GBP 2,049 USD 3,189 9 Chase Manhattan 1/22/96 IEP 1,028 USD 1,653 7 Chase Manhattan 1/22/96 XEU 1,098 USD 1,431 27 Chase Manhattan 1/24/96 AUD 983 USD 735 6 UBS Phillips & Drew 1/24/96 CAD 7,552 USD 5,564 34 Chase Manhattan 1/26/96 JPY 8,656 USD 86 2 Citibank 1/30/96 DEM 576 USD 412 10 Chase Manhattan 2/12/96 DKK 20,022 USD 3,584 (26) Chase Manhattan 2/16/96 ESP 176,871 USD 1,432 (19) Chase Manhattan 2/16/96 ITL 3,562,613 USD 2,211 (18) ---
Net unrealized gain (loss) on open forward currency exchange contracts..... 98 OTHER ASSETS LESS LIABILITIES.............................................. (1,254) ----------- NET ASSETS................................................................. $ 40,061 ======== NET ASSET VALUE PER SHARE.................................................. $4.46 ===== - ----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 9 11 - -------------------------------------------------------------------------------- Portfolio of Investments+ T. Rowe Price Global Government Bond Fund / December 31, 1995 (values in thousands)
Value -------- - ------------------------------------------------------ AUSTRALIA -- 3.1% GOVERNMENT BONDS AUD 275,000 Commonwealth of Australia, 7.00%, 4/15/00.......... $ 200 950,000 Commonwealth of Australia, 7.50%, 7/15/05.......... 675 TOTAL AUSTRALIA 875 - ------------------------------------------------------ BELGIUM -- 6.6% GOVERNMENT BOND BEL 50,500,000 Obligation Lineaire, 7.75%, 12/22/00......... 1,878 - ------------------------------------------------------ CANADA -- 4.7% GOVERNMENT BONDS CAD 500,000 Government of Canada, 7.75%, 9/1/99........... 383 1,150,000 Government of Canada, 8.75%, 12/1/05.......... 942 TOTAL CANADA 1,325 - ------------------------------------------------------ CZECH REPUBLIC -- 0.9% SHORT-TERM INVESTMENT CZK 6,500,000 Internationale Nederlanden Groep, Zero Coupon, 1/30/96................. 242 - ------------------------------------------------------ DENMARK -- 5.6% GOVERNMENT BONDS DKK 2,500,000 Kingdom of Denmark, 9.00%, 11/15/98................ 491 3,000,000 Kingdom of Denmark, 9.00%, 11/15/00................ 601 2,500,000 Kingdom of Denmark, 8.00%, 3/15/06................. 475 TOTAL DENMARK 1,567 - ------------------------------------------------------ FRANCE -- 10.3% GOVERNMENT BONDS FRF 9,000,000 Bons du Tresor Annuel, 7.00%, 10/12/00......... $ 1,921 2,000,000 Obligation Assimilable du Tresor, 7.50%, 4/25/05................. 433 2,000,000 Obligation Assimilable du Tresor, Zero Coupon, 10/25/05................ 213 1,500,000 Obligation Assimilable du Tresor, 8.50%, 4/25/23................. 347 TOTAL FRANCE 2,914 - ------------------------------------------------------ GERMANY -- 15.6% GOVERNMENT BONDS DEM 1,810,000 Bundesrepublic, 6.50%, 7/15/03................. 1,314 1,000,000 Bundesobligation, 6.25%, 1/4/24.................. 651 400,000 Treuhandanstalt, 7.00%, 11/25/99................ 303 400,000 Treuhandanstalt, 6.875%, 6/11/03................. 296 1,400,000 Treuhandanstalt, 7.50%, 9/9/04.................. 1,072 3,636 SHORT-TERM INVESTMENT 1,086,284 Union Bank of Switzerland, Fixed Deposit, 3.90%, 1/4/96.................. 757 TOTAL GERMANY 4,393 - ------------------------------------------------------ IRELAND -- 2.1% GOVERNMENT BOND IEP 350,000 Republic of Ireland, 8.00%, 10/18/00......... 589 - ------------------------------------------------------ ITALY -- 7.4% GOVERNMENT BONDS ITL 1,150,000,000 Buoni del Tesoro Poliennali, 8.313%, 12/1/99................. 708
10 12 - --------------------------------------------------------------------------------
Value -------- ITL 1,600,000,000 Buoni del Tesoro Poliennali, 9.188%, 4/1/00.................. $ 1,016 600,000,000 Buoni del Tesoro Poliennali, 8.313%, 1/1/05.................. 355 TOTAL ITALY 2,079 - ------------------------------------------------------ JAPAN -- 5.2% GOVERNMENT BONDS JPY 30,000,000 Government of Japan, 5.50%, 3/20/02.......... 338 75,000,000 Government of Japan, 4.60%, 9/20/04.......... 808 1,146 CORPORATE BOND 30,000,000 Export Import Bank, 4.375%, 10/1/03......... 319 TOTAL JAPAN 1,465 - ------------------------------------------------------ NETHERLANDS -- 2.0% GOVERNMENT BOND NLG 765,000 Government of Netherlands, 8.25%, 2/15/07.......... 553 - ------------------------------------------------------ SOUTH AFRICA -- 0.5% GOVERNMENT BOND ZAR 550,000 Republic of South Africa, 12.00%, 2/28/05......... 134 - ------------------------------------------------------ SPAIN -- 7.8% GOVERNMENT BONDS ESP 70,000,000 Bonos del Estado, 8.30%, 12/15/98................ 565 110,000,000 Bonos del Estado, 12.25%, 3/25/00................. 996 20,000,000 Bonos del Estado, 10.10%, 2/28/01................. 167 40,000,000 Bonos del Estado, 10.90%, 8/30/03................. 351 15,000,000 Bonos del Estado, 10.00%, 2/28/05................. 125 TOTAL SPAIN 2,204 - ------------------------------------------------------ UNITED KINGDOM -- 3.8% GOVERNMENT BOND GBP 600,000 United Kingdom Treasury, 7.50%, 12/7/06.......... $ 936 SHORT-TERM INVESTMENT 95,808 J.P. Morgan, Fixed Deposit, 6.00-6.75%, 1/3/96.................. 149 TOTAL UNITED KINGDOM 1,085 - ------------------------------------------------------ UNITED STATES -- 26.1% GOVERNMENT BONDS USD 250,000 Government of Poland Discount, FRN, 6.875%, 10/27/24................ 189 100,000 Republic of Argentina Bocon Pro 2, FRN, 5.994%, 4/1/07.......... 77 112,000 Republic of Argentina Bote 10, FRN, 5.688%, 4/1/00.................. 67 250,000 Republic of Argentina Par, FRN, 5.00%, 3/31/23..... 143 265,302 Republic of Brazil (Class C), 8.00%, 4/15/14................. 152 332,500 Republic of Brazil, IDU, FRN, 6.688%, 1/1/01..... 287 150,000 Republic of Panama, FRN, 6.75%, 5/10/02.......... 128 880,000 United States Treasury Bonds, 7.125%, 2/15/23................. 1,006 80,000 United States Treasury Bonds, 6.25%, 8/15/23... 82 500,000 United States Treasury Notes, 6.875%, 2/28/97................. 509 500,000 United States Treasury Notes, 5.875%, 8/15/98................. 508 1,365,000 United States Treasury Notes, 6.75%, 6/30/99... 1,427 500,000 United States Treasury Notes, 7.50%, 5/15/02... 555 830,000 United States Treasury Notes, 7.25%, 8/15/04... 923 6,053
11 13 - --------------------------------------------------------------------------------
Value -------- HYBRID INSTRUMENTS USD 350,000 Bank of Scotland Treasury Services Singapore Dollar Linked Note, Zero Coupon, 5/3/96: Principal repayment value linked to the performance of the Singapore dollar........ $ 341 390,244 Morgan Guaranty Trust Polish Zloty Linked Note, 23.52%, 1/12/96: Principal repayment value linked to the performance of the Polish zloty............ 385 726 OPTION PURCHASED USD 1,000,000 *U.S. dollar Call/Japanese yen Put, expires 5/31/96................. $ 155 COMMERCIAL PAPER 436,832 Investments in Commercial Paper through a joint account, 5.90 - 6.05%, 1/2/96.................. 437 TOTAL UNITED STATES 7,371 - ------------------------------------------------------
12 14 - --------------------------------------------------------------------------------
Value ----------- - -------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 101.7% OF NET ASSETS (COST $27,426) $ 28,674 - -------------------------------------------------------------------------------------------------------- FORWARD CURRENCY EXCHANGE CONTRACTS
Unrealized Counterparty Settlement Deliver Receive Gain (Loss) - ---------------- ---------- ------------------ ---------------- ----------- (in thousands) Chase Manhattan 1/5/96 JPY 12,184 USD 120 $ 2 J.P. Morgan 1/5/96 USD 1,882 JPY 190,104 (39) Chase Manhattan 1/8/96 ATS 4,482 USD 440 (5) Chase Manhattan 1/8/96 BEL 23,653 USD 806 2 J.P. Morgan 1/8/96 DEM 698 USD 486 (1) Chase Manhattan 1/8/96 DEM 1,976 USD 1,393 15 Citibank 1/8/96 FRF 5,888 USD 1,186 (17) Chase Manhattan 1/8/96 NLG 388 USD 246 4 Chase Manhattan 1/8/96 USD 445 ATS 4,482 -- Chase Manhattan 1/8/96 USD 151 FRF 752 2 Chase Manhattan 1/8/96 USD 598 NLG 958 (1) Citibank 1/16/96 ESP 19,688 USD 159 (3) Chase Manhattan 1/16/96 ESP 107,672 USD 872 (14) Chase Manhattan 1/16/96 ITL 510,379 GBP 208 2 Chase Manhattan 1/16/96 USD 196 ESP 24,000 2 Chase Manhattan 1/22/96 BEL 10,000 USD 347 7 Chase Manhattan 1/22/96 IEP 205 USD 330 1 Chase Manhattan 1/24/96 AUD 536 USD 401 3 Chase Manhattan 1/24/96 CAD 818 USD 602 3 Citibank 1/24/96 ITL 1,118,498 JPY 70,599 (15) Chase Manhattan 1/24/96 JPY 10,931 ITL 175,000 3 Citibank 1/30/96 DEM 221 USD 158 4 J.P. Morgan 1/31/96 ZAR 502 USD 135 (1) ---
Net unrealized gain (loss) on open forward currency exchange contracts... (46) OTHER ASSETS LESS LIABILITIES............................................ (421) ----------- NET ASSETS............................................................... $ 28,207 ======== NET ASSET VALUE PER SHARE................................................ $10.26 ======== - --------------------------------------------------------------------------------------------------------
+ Listed by currency denomination * Non-income producing ATS Austrian schilling AUD Australian dollar BEL Belgian franc CAD Canadian dollar CZK Czech Republic coruna DEM German deutschemark DKK Danish krone ESP Spanish peseta FRF French franc GBP British sterling IEP Irish punt ITL Italian lira JPY Japanese yen NLG Dutch guilder USD U.S. dollar XEU European currency unit ZAR South African rand FRN Floating rate note IDU Interest due bond The accompanying notes are an integral part of these financial statements. 13 15 - -------------------------------------------------------------------------------- Statement of Assets and Liabilities T. Rowe Price Global Income Funds / December 31, 1995 (in thousands)
Short-Term Global Global Government Income Fund Bond Fund ----------------- ----------------- ASSETS Investments in securities, at value (cost $40,473 and $27,426)...................................................... $41,217 $28,674 Receivable for investment securities sold....................... -- 1,362 Interest receivable............................................. 900 649 Other assets.................................................... 403 825 ------------- ------------- Total assets.................................................... 42,520 31,510 ------------- ------------- LIABILITIES Payable for investment securities purchased..................... 1,957 3,001 Other liabilities............................................... 502 302 ------------- ------------- Total liabilities............................................... 2,459 3,303 ------------- ------------- NET ASSETS...................................................... $40,061 $28,207 ============= ============= NET ASSETS CONSIST OF: Accumulated net investment income -- net of distributions....... $ (218) $ 37 Accumulated net realized gain/loss -- net of distributions...... (1,212) (769) Net unrealized gain (loss)...................................... 816 1,227 Paid-in-capital applicable to 8,986,961 and 2,749,530 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized............ 40,675 27,712 ------------- ------------- NET ASSETS...................................................... $40,061 $28,207 ============= ============= NET ASSET VALUE PER SHARE....................................... $ 4.46 $ 10.26 ============= ============= - ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 14 16 - -------------------------------------------------------------------------------- Statement of Operations T. Rowe Price Global Income Funds / Year Ended December 31, 1995 (in thousands)
Short-Term Global Global Government Income Fund Bond Fund ----------------- ----------------- INVESTMENT INCOME Interest income................................................. $ 3,348 $ 2,246 ------- ------- Expenses Custody and accounting........................................ 145 131 Investment management......................................... 134 60 Shareholder servicing......................................... 91 80 Registration.................................................. 34 33 Legal and audit............................................... 22 25 Prospectus and shareholder reports............................ 9 27 Directors..................................................... 7 6 Miscellaneous................................................. 13 8 ------- ------- Total expenses................................................ 455 370 ------- ------- Net investment income........................................... 2,893 1,876 ------- ------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Securities.................................................... (1,763) 726 Futures....................................................... -- 8 Options....................................................... -- 6 Foreign currency transactions................................. (371) 382 ------- ------- Net realized gain (loss)...................................... (2,134) 1,122 ------- ------- Change in net unrealized gain or loss on: Securities.................................................... 2,636 2,173 Options....................................................... -- 121 Other assets and liabilities denominated in foreign currencies.................................................. 142 5 ------- ------- Change in net unrealized gain or loss......................... 2,778 2,299 ------- ------- Net realized and unrealized gain (loss)......................... 644 3,421 ------- ------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS............... $ 3,537 $ 5,297 ======= ======= - ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 15 17 - -------------------------------------------------------------------------------- Statement of Changes in Net Assets T. Rowe Price Global Income Funds (in thousands)
Short-Term Global Income Fund Global Government Bond Fund Year Ended December 31, Year Ended December 31, 1995 1994 1995 1994 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM Operations Net investment income............... $ 2,893 $ 5,365 $ 1,876 $ 2,440 Net realized gain (loss)............ (2,134) (8,334) 1,122 (2,353) Change in net unrealized gain or loss.............................. 2,778 164 2,299 (1,468) ------------ ------------ ------------ ------------ Increase (decrease) in net assets from operations................... 3,537 (2,805) 5,297 (1,381) ------------ ------------ ------------ ------------ Distributions to shareholders Net investment income............... (1,006) (1,030) (1,866) (2,291) Net realized gain................... -- -- -- (96) Tax return of capital............... (1,851) (4,335) -- (149) ------------ ------------ ------------ ------------ Decrease in net assets from distributions..................... (2,857) (5,365) (1,866) (2,536) ------------ ------------ ------------ ------------ Capital share transactions* Shares sold......................... 5,521 58,079 5,061 16,507 Distributions reinvested............ 2,035 4,367 1,369 1,804 Shares redeemed..................... (24,549) (95,020) (18,170) (26,636) ------------ ------------ ------------ ------------ Increase (decrease) in net assets from capital share transactions... (16,993) (32,574) (11,740) (8,325) ------------ ------------ ------------ ------------ Increase (decrease) in net assets..... (16,313) (40,744) (8,309) (12,242) NET ASSETS Beginning of period................... 56,374 97,118 36,516 48,758 ------------ ------------ ------------ ------------ End of period......................... $ 40,061 $ 56,374 $ 28,207 $ 36,516 ============ ============ ============ ============ - ------------------------------------------------------------------------------------------------------------- * Share information Shares sold......................... 1,258 12,427 512 1,708 Distributions reinvested............ 463 955 139 188 Shares redeemed..................... (5,597) (20,674) (1,862) (2,773) ------------ ------------ ------------ ------------ Increase (decrease) in shares outstanding....................... (3,876) (7,292) (1,211) (877) ============ ============ ============ ============
- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 16 18 - -------------------------------------------------------------------------------- Notes to Financial Statements T. Rowe Price Global Income Funds / December 31, 1995 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES T. Rowe Price International Funds, Inc., (the Corporation) is registered under the Investment Company Act of 1940. The Short-Term Global Income Fund (the Short-Term Fund) and the Global Government Bond Fund (the Government Fund), nondiversified, open-end management investment companies, are two of the portfolios established by the Corporation. A) Valuation - Debt securities are generally traded in the over-the-counter market and are valued at a price deemed best to reflect fair value as quoted by dealers who make markets in these securities or by an independent pricing service. Purchased options are valued at the latest bid price. For purposes of determining each fund's net asset value per share, the U.S. dollar value of all assets and liabilities initially expressed in foreign currencies is determined by using the mean of the bid and offer prices of such currencies against U.S. dollars quoted by a major bank. Assets and liabilities for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by or under the supervision of the officers of each fund, as authorized by the Board of Directors. B) 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. C) Premiums and Discounts - Premiums and discounts on debt securities are amortized for both financial reporting and tax purposes. D) Other - Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded by each fund on the ex-dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from those determined in accordance with generally accepted accounting principles. Unrealized gains and losses on forward currency exchange contracts are included in Other assets and Other liabilities, respectively, and in Change in net unrealized gain or loss in the accompanying financial statements. NOTE 2 - INVESTMENT TRANSACTIONS Consistent with their investment objectives, the funds engage in the following practices to manage exposure to certain risks or enhance performance. The investment objective, policies, program, and risk factors of each fund are described more fully in each fund's prospectus and Statement of Additional Information. A) Emerging Markets - At December 31, 1995, each fund held investments in securities issued by governments of emerging market countries and securities whose value is linked to the currencies of emerging market countries. Future economic or political developments could adversely affect the liquidity or value, or both, of such securities. B) Forward Currency Exchange Contracts - At December 31, 1995, each fund was a party to forward currency exchange contracts under which it is obligated to exchange currencies at specified future dates and exchange rates. Risks arise from the possible inability of counterparties to meet the terms of their agreements and from movements in currency values. 17 19 - -------------------------------------------------------------------------------- C) Options - Call and put options give the holder the right to purchase or sell, respectively, a security or currency at a specified price on a certain date. Risks arise from possible illiquidity of the options market and from movements in security or currency values. Options are reflected in the Government Fund's accompanying Portfolio of Investments at market value. D) Commercial Paper Joint Account - Each fund, and other affiliated funds, may transfer uninvested cash into a commercial paper joint account, the daily aggregate balance of which is invested in high-grade commercial paper. All securities purchased by the joint account satisfy each fund's criteria as to quality, yield, and liquidity. E) Other - Purchases and sales of U.S government securities and other portfolio securities, excluding short-term securities, for the year ended December 31, 1995, were as follows:
Short-Term Government Fund Fund ----------- ----------- U.S. Government Securities Purchases $ 8,786,000 $8,848,000 Sales 10,112,000 10,412,000 Other Securities Purchases 53,800,000 70,294,000 Sales 55,151,000 75,595,000
NOTE 3 - FEDERAL INCOME TAXES No provision for federal income taxes is required since each fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. The Short-Term Fund has unused realized capital loss carryforwards for federal income tax purposes of $1,089,000, of which $56,000 expire in 2000, $93,000 in 2001, and $940,000 thereafter through 2003. The Government Fund has unused realized capital loss carryforwards for federal income tax purposes of $583,000, all of which expire in 2002. Capital loss carryforwards utilized in 1995 amounted to $425,000. Each fund intends to retain gains realized in future periods that may be offset by available capital loss carryforwards. In order for each fund's capital accounts and distributions to shareholders to reflect the tax character of certain transactions, the following reclassifications were made during the year ended December 31, 1995. The results of operations and net assets were not affected by the reclassifications.
Short-Term Government Fund Fund ----------- ---------- Undistributed Net Investment Income $(1,836,000) $(142,000) Undistributed Net Realized Gain 1,834,000 516,000 Paid-in-Capital 2,000 (374,000)
At December 31, 1995, the aggregate cost of investments for the Short-Term and Government funds for federal income tax and financial reporting purposes was $40,473,000 and $27,426,000, respectively. Net unrealized gain (loss) on investments was as follows:
Short-Term Government Fund Fund ----------- ----------- Appreciated Investments $ 842,000 $1,323,000 Depreciated Investments (98,000) (75,000) ----------- ----------- Net Unrealized Gain (Loss) $ 744,000 $1,248,000 ============ ==========
NOTE 4 - RELATED PARTY TRANSACTIONS Each fund is managed by Rowe Price-Fleming International, Inc. (the Manager), which is owned by T. Rowe Price Associates, Inc. (Price Associates), Robert Fleming Holdings Limited, and Jardine Fleming Holdings Limited under a joint venture agreement. The investment management agreement between each fund and the Manager provides for an annual investment management fee, of which $10,000 and $7,000 was payable at December 31, 1995 by the Short-Term Fund and Government Fund, respectively. The fee is computed daily and paid monthly, and 18 20 - -------------------------------------------------------------------------------- consists of an Individual Fund Fee equal to 0.25% of average daily net assets for the Short-Term Fund and 0.35% of average daily net assets for the Government Fund, and a Group Fee. The Group Fee is based on the combined assets of certain mutual funds sponsored by the Manager or Price Associates (the Group). The Group Fee rate ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in excess of $34 billion. At December 31, 1995, and for the year then ended, the effective annual Group Fee rate was 0.34%. 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, 1995 for the Short-Term Fund and through December 31, 1996 for the Government Fund that would cause each fund's ratio of expenses to average net assets to exceed 1.00% and 1.20%, respectively. Thereafter through December 31, 1997 for the Short-Term Fund and December 31, 1998 for the Government Fund, each fund is required to reimburse the Manager for these expenses, provided that average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing each fund's ratio of expenses to average net assets to exceed 1.00% and 1.20%, respectively. Pursuant to these agreements, $134,000 and $153,000 of management fees were not accrued by the Short-Term and Government funds for the year ended December 31, 1995. Pursuant to the above agreement, $125,000 of unaccrued 1994 Short-Term Fund fees remain subject to reimbursement through December 31, 1997. Additionally, $295,000 of unaccrued 1992-1993 Short-Term Fund fees and expenses were permanently waived at December 31, 1995. Pursuant to a previous agreement, $242,000 of unaccrued 1993-1994 Government Fund fees remain subject to reimbursement through December 31, 1996. In addition, each fund has entered into agreements with Price Associates and two wholly owned subsidiaries of Price Associates, pursuant to which each fund receives certain other services. Price Associates computes the daily share price and maintains the financial records of each fund. T. Rowe Price Services, Inc., is each fund's transfer and dividend disbursing agent and provides shareholder and administrative services to the funds. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retirement accounts invested in each fund. The Short-Term and Government funds incurred expenses pursuant to these related party agreements totaling approximately $184,000 and $165,000, respectively, for the year ended December 31, 1995, of which $17,000 and $16,000, respectively, were payable at period- end. 19 21 - -------------------------------------------------------------------------------- Financial Highlights T. Rowe Price Short-Term Global Income Fund
For a share outstanding throughout each period ------------------------------------------------------ Year Ended December 31, June 30, 1992++ ------------------------------- to 1995 1994 1993 December 31, 1992 ------------------------------- ------------------ NET ASSET VALUE, BEGINNING OF PERIOD.............. $4.38 $4.82 $4.78 $5.00 ----- ----- ----- ----------- Investment activities Net investment income........................... 0.27* 0.30* 0.32* 0.20* Net realized and unrealized gain (loss)......... 0.08 (0.44) 0.04 (0.21) ----- ----- ----- ----------- Total from investment activities................ 0.35 (0.14) 0.36 (0.01) ----- ----- ----- ----------- Distributions Net investment income........................... (0.10) (0.06) (0.32) (0.20) Net realized gain............................... -- -- -- (0.01) Tax return of capital........................... (0.17) (0.24) -- -- ----- ----- ----- ----------- Total distributions............................. (0.27) (0.30) (0.32) (0.21) ----- ----- ----- ----------- NET ASSET VALUE, END OF PERIOD.................... $4.46 $4.38 $4.82 $4.78 ===== ===== ===== =========== - ---------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Total return...................................... 8.34%* (2.92)%* 7.87%* (0.22)%* Ratio of expenses to average net assets........... 1.00%* 1.00%* 1.00%* 1.00%+* Ratio of net investment income to average net assets.......................................... 6.36%* 6.59%* 6.74%* 7.92%+* Portfolio turnover rate........................... 167.4% 120.2% 92.9% 334.1%+ Net assets, end of period (in thousands).......... $40,061 $56,374 $97,118 $66,297 - ----------------------------------------------------------------------------------------------------------
+ Annualized. * Excludes expenses in excess of a 1.00% voluntary expense limitation in effect through December 31, 1995. ++ Commencement of operations. 20 22 - -------------------------------------------------------------------------------- Financial Highlights T. Rowe Price Global Government Bond Fund
For a share outstanding throughout each period ----------------------------------------------------------------- From Year Ended December 31, December 28, 1990++ ------------------------------------------- to 1995 1994 1993 1992 December 31,1991 ------------------------------------------- ------------------- NET ASSET VALUE, BEGINNING OF PERIOD.... $ 9.22 $10.08 $ 9.85 $10.30 $10.00 ------ ------ ------ ------ ------------ Investment activities Net investment income................. 0.59* 0.54* 0.56* 0.76* 0.77* Net realized and unrealized gain (loss).............................. 1.04 (0.84) 0.51 (0.44) 0.30 ------ ------ ------ ------ ------------ Total from investment activities...... 1.63 (0.30) 1.07 0.32 1.07 ------ ------ ------ ------ ------------ Distributions Net investment income................. (0.59) (0.51) (0.56) (0.76) (0.77) Net realized gain..................... -- (0.02) (0.28) (0.01) -- Tax return of capital................. -- (0.03) -- -- -- ------ ------ ------ ------ ------------ Total distributions................... (0.59) (0.56) (0.84) (0.77) (0.77) ------ ------ ------ ------ ------------ NET ASSET VALUE, END OF PERIOD.......... $10.26 $ 9.22 $10.08 $ 9.85 $10.30 ====== ====== ====== ====== ============ - ------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Total return............................ 18.13%* (3.06)%* 11.15%* 3.26%* 11.31%* Ratio of expenses to average net assets................................ 1.20%* 1.20%* 1.20%* 1.20%* 1.20%* Ratio of net investment income to average net assets.................... 6.08%* 5.57%* 5.57%* 7.51%* 8.07%* Portfolio turnover rate................. 290.7% 254.1% 134.0% 236.6% 93.6% Net assets, end of period (in thousands)............................ $28,207 $36,516 $48,758 $53,546 $39,775 - ------------------------------------------------------------------------------------------------------------
* Excludes expenses in excess of a 1.20% voluntary expense limitation in effect through December 31, 1996. ++ Commencement of operations. 21 23 - -------------------------------------------------------------------------------- Report of Independent Accountants To the Board of Directors of T. Rowe Price International Funds, Inc. and the Shareholders of T. Rowe Price Short-Term Global Income Fund and T. Rowe Price Global Government Bond Fund We have audited the accompanying statement of assets and liabilities of T. Rowe Price Short-Term Global Income Fund and T. Rowe Price Global Government Bond Fund, including the portfolio of investments, (two of the portfolios comprising the T. Rowe Price International Funds, Inc.) as of December 31, 1995, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights of the Short-Term Global Income Fund for each of the three years in the period then ended and for the period June 30, 1992 (commencement of operations) to December 31, 1992 and the Global Government Bond Fund for each of the four years in the period then ended and for the period December 28, 1990 (commencement of operations) to December 31, 1991. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of December 31, 1995, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights, referred to above, present fairly, in all material respects, the financial position of T. Rowe Price Short-Term Global Income Fund and T. Rowe Price Global Government Bond Fund as of December 31, 1995, the results of their operations, the changes in their net assets and financial highlights for each of the respective periods stated in the first paragraph in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Baltimore, Maryland January 18, 1996 22 24 - -------------------------------------------------------------------------------- Shareholder Services To help shareholders monitor their current investments and make decisions that accurately reflect their financial goals, T. Rowe Price offers a wide variety of information and services--at no extra cost. KNOWLEDGEABLE SERVICE REPRESENTATIVES BY PHONE--Shareholder service representatives are available from 8 a.m. to 10 p.m. Monday - Friday, and weekends from 8:30 a.m. to 5 p.m. ET. 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. While there, you can drop off applications or obtain prospectuses and other literature. AUTOMATED 24-HOUR SERVICES Tele*Access(R) (1-800-638-2587) provides information such as account balance, date and amount of your last transaction, latest dividend payment, and fund prices and yields. Additionally, you have the ability to request prospectuses, statements, account and tax forms; reorder checks; and initiate purchase, redemption, and exchange orders for identically registered accounts. PC*Access(R) provides the same information as Tele*Access, but on a personal computer via dial-up modem. ACCOUNT SERVICES Checking--Write checks for $500 or more on any money market and most bond fund accounts (except the High Yield Fund and Emerging Markets Bond Fund). 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 low, $50 minimum makes it easy to get started. Automatic Withdrawal--If you need money from your fund account on a regular basis, you can establish scheduled, automatic redemptions. Dividend and Capital Gains Payment Options--Reinvest all or some of your distributions, or take them in cash. We give you maximum flexibility and convenience. INVESTMENT INFORMATION Combined Statement--A comprehensive overview of your T. Rowe Price accounts. The summary page gives your earnings by tax category, provides total portfolio value, and lists your investments by type--stock, bond, and money market. Detail pages itemize account transactions by fund. Shareholder Reports--Portfolio managers review the performance of the funds in plain language and discuss T. Rowe Price's economic outlook. The T. Rowe Price Report--A quarterly newsletter with relevant articles on market trends, personal financial planning, and T. Rowe Price's economic perspective. Performance Update--A quarterly report reviewing recent market developments and providing comprehensive performance information for every T. Rowe Price fund. Insights--A library of information that includes reports on mutual fund tax issues, investment strategies, and financial markets. Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet, College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also available on disk for PC use), and Guide to Risk-Adjusted Performance can help you determine and reach your investment goals. DISCOUNT BROKERAGE You can trade stocks, bonds, options, precious metals, and other securities at a substantial savings over regular commission rates. Call a shareholder service representative for more information. 23 -----END PRIVACY-ENHANCED MESSAGE-----