ICI Letter to Korean Ministry of Strategy and Finance Regarding Treaty Eligibility Questions for U.S. Funds (pdf)

     15                   49   By Electronic Delivery April 13, 2012 Mr. Byung-Cheol Kim, Director Corporation Tax Division Ministry of Strategy and Finance Government Complex II, 88 Gwanmoonro Gwacheon City, Gyeonggi Province, 427-725 Korea RE: Clarification of Form U.S. Funds Should Use to Claim Treaty Relief Dear Sir: The Investment Company Institute (“ICI”)1 requests guidance clarifying that regulated investment companies (“RICs”) should claim at-source treaty relief by filing the form (No. 72-22) used by other foreign corporations. RICs, as discussed in detail in the attachment, are organized in the United States and treated as corporations for U.S. tax purposes. Form No. 72-2 is the appropriate form because RICs are persons, liable to tax in the United States as residents, and the beneficial owners of their income. As such, RICs are entitled to treaty relief in their own right. We request this clarification because of conflicting advice regarding which types of investment funds are to file Form No. 72-2 rather than Form No. 29-13 (Report of Overseas Investment Vehicle). A fund that is entitled to treaty relief in its own right, we submit, should file Form No. 72-2. A fund that may claim relief only to the extent that its investors are treaty-eligible, in contrast, should file Form No. 29-13. Because RICs are treaty-entitled, they should file Form No. 72-2. 1 The Investment Company Institute is the national association of U.S. investment companies, including mutual funds, closed-end funds, exchange-traded funds (“ETFs”), and unit investment trusts (“UITs”). ICI seeks to encourage adherence to high ethical standards, promote public understanding, and otherwise advance the interests of funds, their shareholders, directors, and advisers. Members of ICI manage total assets of $13.3 trillion and serve over 90 million shareholders. 2 Form No. 72-2, Application for Entitlement to Reduced Tax Rate on Domestic Sourced Income (for Foreign Corporation) ICI Letter on Clarification of Form U.S. Funds Should Use to Claim Treaty Relief April 13, 2012 Page 2 of 4 The Need for Administrable Rules for Claiming Treaty Relief The ICI supports administrable rules that allow publicly offered, regulated collective investment vehicles (“CIVs”) to receive the applicable withholding tax relief provided by Korea’s double tax treaties. The letter we submitted to you in January identified several clarifications that we believed would ensure that restrictions proposed would not be applied in ways that did not appear to be intended.3 Administrable rules are necessary for several reasons. Two of the most significant reasons are discussed below. First, CIVs generally have many thousands (often tens or hundreds or thousands) of investors; these investors may buy or sell CIV units on a daily basis. The most common type of CIV, known in the U.S. as a “mutual fund,” does not have a fixed number of units. Instead, an investor may purchase or redeem as many CIV units as the investor chooses from the CIV (either directly or through a nominee, such as a securities broker or a bank). Because both the number of CIV units held by a single investor, and the total number of CIV units outstanding, can change on a daily basis, the tracking of investor interests is challenging and, as discussed below, frequently is not handled at the CIV level. Second, shareholder information in most markets, including in the United States, often is not available to the CIV itself. Specifically, CIV investors very often acquire their CIV interests through intermediaries, such as banks or securities brokers, rather than directly from the CIV. In many cases, intermediaries may purchase and redeem CIV units through other (typically far larger) intermediaries that, in turn, are in direct contact with the CIV. This tiered-distribution structure adds to the complexity of acquiring customer-specific information about a CIV’s many thousands of investors. While, in a few countries, all customer information must be provided by these intermediaries to the CIV, the far more typical approach is for customer information to remain with the intermediary. The intermediary has a very strong commercial reason to keep confidential the identity of its customers; if its competitors, including the CIV and its manager, knew the customers’ identities, they could seek to deal directly with the customer (and effectively “take” the business from the intermediary). The Organization for Economic Cooperation and Development (“OECD”) has studied at length this need for administrable treaty-relief rules in the CIV context. Its findings have been published in two documents. First, the OECD’s Committee on Fiscal Affairs in April 2010 approved a report entitled “The Granting of Treaty Benefits with Respect to the Income of Collective Investment Vehicles” (the “CIV Report”).4 Second, later that year, the OECD released its 2010 3 See January 20, 2012 letter from ICI and ICI Global regarding Korean Treaty Relief for Offshore Investment Vehicles. 4 http://www.oecd.org/dataoecd/59/7/45359261.pdf. ICI Letter on Clarification of Form U.S. Funds Should Use to Claim Treaty Relief April 13, 2012 Page 3 of 4 Update to the Commentary on Article 1 of the Model Convention.5 This update included recommendations based upon the CIV Report. Both the CIV Report and the Update to the Commentary discuss factors that support providing certain types of CIVs with treaty benefits in their own right. RICs clearly satisfy the factors discussed in the CIV Report and the updated Commentary. The Draft Presidential Decree The draft Presidential Decree regarding Article 98-6 of the Korean Income Tax Law (“CITL”)6 appeared to provide the administrable rules we requested. Specifically, Paragraph 3 of Article 138-7 of the draft Presidential Decree provides that an offshore investment vehicle (“OIV”) that (1) satisfies the requirements for qualifying offshore collective investment vehicle (“OCIV”) status, (2) submits a “Confirmation report of OIV,” and (3) meets certain conditions, would not be required to file beneficial owner details. Form No. 29-13 Requires Considerable Details Form No. 29-13 (Report of Overseas Investment Vehicles) requires extensive information about a CIV’s investors. Specifically, Boxes 11-15 of the Form No. 29-13 require the following information about a CIV’s investors: • residence countries of its investors (Box 11); • amount (in units) of CIV held by residents of each country (Box 12); • percentage of total units held by the residents of each country (Box 13); • number of beneficial owners resident in each country (Box 14); and • the tax rate applied by type of income to the residents of each country (Box 15). Just about the only details not required by Form No. 29-13 are the names of the CIV’s investors. Form No. 29-13 also requires that this information be provided on a quarterly basis. Those CIVs with a large number of intermediaries (many of which may transact CIV share purchases and redemptions through tiered-distribution structures) will have a far more difficult time acquiring this information on a quarterly basis than they would have acquiring it on an annual basis. When a CIV can claim treaty benefits only on behalf of its investors – rather than in its own right – a government’s interest in having some information about the CIV’s investors is appropriate. 5 http://www.oecd.org/dataoecd/23/43/45689328.pdf. 6 This Decree was issued by MOSF Public Notice No. 2012-3 ( January 6, 2012). ICI Letter on Clarification of Form U.S. Funds Should Use to Claim Treaty Relief April 13, 2012 Page 4 of 4 In these situations, information like that required by Form No. 29-13 can provide the government with comfort that only the appropriate level of benefit is being claimed. It is essential, however, that the procedures for collecting the required information– including the specificity of the information collected, the frequency of collection, and the procedures for updating information that might not be collected with sufficient promptness – be administrable. Without administrable procedures, the benefits of bilaterally-negotiated tax treaties effectively will be denied to the residents of the treaty partners. RICs Should File Form No. 72-2 as a Foreign Corporation RICs, as discussed above and in the detailed attachment, are both treated as corporations for U.S. tax purposes and entitled to treaty relief in their own right. RICs are persons, liable to tax in the United States as residents, and the beneficial owners of their income. RICs, consequently, should claim treaty relief by filing Form No. 72-2. The detailed investor information required by Form No. 29-3 is not relevant to a RIC’s claim for treaty relief. Were a RIC required to collect that information, it could establish that the overwhelming portion of all RIC shares (generally over 99 percent) are held by U.S. persons. The administrative burden of collecting this information, however, is both considerable and unnecessary. RICs are foreign corporations that satisfy, in their own right, every requirement for treaty relief. Consequently, a RIC should file Form No. 72-2 as a foreign corporation and represent that it is an overseas investment vehicle that is recognized, under the Korea-U.S. treaty, as the beneficial owner of its income. * * * We respectfully request that the guidance we seek be issued promptly. RICs, their advisers, and their custodians will appreciate greatly the clarification that they are to file Form No. 72-2. Please feel free to contact me (at lawson@ici.org or 001-202-326-5832) if I can provide you with any additional information. Sincerely, Keith Lawson Senior Counsel – Tax Law Attachment 22 October 2012 By Electronic Delivery Mr. Seunghee Han Mr. Byung-Sik Jung, Director Assistant Commissioner for International Tax Division International Taxation Bureau Ministry of Strategy and Finance National Tax Services Government Complex II, 88 Gwanmoonro 86, Jongno 5-gil, Jongno-gu Gwacheon City, Gyeonggi Province, 427-725 Seoul Republic of Korea Republic of Korea RE: Administrative Obstacles Effectively Preventing CIVs from Receiving Tax Treaty Relief Dear Mr. Han and Mr. Jung: The asset management and banking associations signing this letter are writing to express our profound concerns with the administrative requirements now being imposed on non-Korean collective investment vehicles (“CIVs”) seeking to claim treaty benefits. Considerable confusion regarding these requirements has arisen as well; the lack of clear administrative guidance regarding the requirements’ application has resulted in CIVs receiving inconsistent information from different Korean subcustodians. The new requirements (and the resulting confusion) are so burdensome, we submit, that CIVs effectively are being denied the ability to claim treaty benefits (1) that they are entitled to receive directly or (2) for which they are making claims on behalf of their investors; these “indirect” claims are made only when the CIV is not treaty-entitled and the only practical approach for investors to receive benefits is indirectly, through the CIV. This letter describes our concerns and suggests possible approaches for addressing them. We would be pleased to follow up with you at your convenience. Background – OECD Report on Granting Treaty Benefits with Respect to Income of CIVs The difficulties faced by CIVs in receiving treaty benefits to which they or their investors are entitled were considered closely during an extensive consultation between governments (including the Korean government) and business at the Organization for Economic Cooperation and Development (“OECD”). The result of this extensive consultation was a report “The Granting of Treaty Benefits with Respect to the Income of Collective Investment Vehicles” (the “CIV Report”)1 that was approved by the OECD’s Committee on Fiscal Affairs in April 2010. The CIV Report’s recommendations then 1 http://www.oecd.org/dataoecd/59/7/45359261.pdf. Coalition Letter Re: Administrative Obstacles Effectively Preventing CIVs from Receiving Tax Treaty Relief 22 October 2012 Page 2 of 9 were included in the 2010 Update to the Commentary on Article 1 of the Model Convention (the “Model Convention Commentary”).2 This Report and the Model Convention Commentary inform our views regarding the paramount need for certainty regarding treaty eligibility and administrable rules for receiving treaty benefits to which the CIVs or their investors are entitled. CIV Background Before discussing the difficulties faced by CIVs in claiming treaty relief, it is useful first to review how CIVs operate, how they are distributed, who are their investors, and what are their investors’ rights with respect to CIVs’ income and assets. The CIVs with which we are concerned, and which are the subject of the CIV Report, are those funds that are widely held, hold a diversified portfolio of securities, and are subject to investor-protection laws in the country in which they are organized. CIVs typically are offered publicly through distributors with a local clientele. Many CIVs are registered for sale, and distributed, only in the country in which they are organized; these CIVs generally have essentially 100 percent “home-country” investors.3 Other CIVs are offered either regionally (such as throughout Europe) or globally; while these CIVs may have extensive distribution networks, the distributors of publicly-offered CIVs that operate within each country typically also have a local clientele. CIVs generally have many thousands (often tens or hundreds of thousands) of investors; these investors often buy or sell CIV interests either directly from the CIV sponsor or, more likely, from an unaffiliated distributor. CIV units acquired through unaffiliated distributors often are held in a nominee (or “street name”) account in the name of the distributor. As noted in the CIV Report, because the individual investor’s identity is proprietary information belonging to the distributor, CIVs often do not know the identity of the underlying owners of the CIV units.4 Nevertheless, as noted above, they often have very strong indications of the underlying owners’ tax residency because of the identity of the distributor through which the investment was made. A CIV’s investor base typically changes every day. In some cases, investor turnover can be high. In the case of a globally-distributed CIV, where the CIV units are more likely to be held both by treaty- 2 http://www.oecd.org/dataoecd/23/43/45689328.pdf 3 Paragraph 15 of the CIV Report explains the reasons why, in many cases, “essentially all of [a domestic CIV’s] investors are located in the same country.” 4 See Paragraph 18 of the CIV Report. Coalition Letter Re: Administrative Obstacles Effectively Preventing CIVs from Receiving Tax Treaty Relief 22 October 2012 Page 3 of 9 entitled persons and non-treaty-entitled persons, the portion of treaty-entitled investors is likely to change relatively slowly.5 A CIV does know precisely how many CIV units are outstanding on each day. Among other reasons, this information is necessary for a CIV to compute its daily “net asset value” (or “NAV”) – which is the price at which a single unit of the CIV will be purchased or sold. The NAV is calculated by determining the CIV’s gross assets, subtracting gross liabilities, and dividing by the number of shares outstanding. Because withholding taxes and treaty relief affect NAV, CIVs have a keen interest in certainty regarding their eligibility for treaty relief. A CIV investor typically has an undivided interest in the CIV’s assets. Because of the daily changes in a CIV’s investor base, however, income streams (such as a dividend received on 15 June) are not tracked to particular investors (such as those owning interests in the CIV on 15 June). Instead, when a CIV makes a distribution, the distribution is allocated pro rata to all of the investors in the CIV (based on the number of units owned as of the date of the distribution).6 Difficulties Faced by CIVs in Claiming Treaty Relief The CIV Report describes in detail the difficulties faced by CIVs claiming treaty relief. The difficulties are of two kinds. First, difficulties arise if a CIV is required to determine the tax residency of its investors too frequently or with too much precision. The reasons for these difficulties involve the daily changes in a CIV’s investor base and the intermediated structure through which CIV interests are distributed. Second, difficulties arise because of uncertainty regarding the extent to which certain CIVs may claim treaty benefits in their own right and when they must claim on behalf of their investors. The CIV Report discusses at length the specific requirements that a CIV must meet to claim treaty relief in its own right. These requirements – that the CIV be a person, that it be a resident of a contracting state, and that it be the beneficial owner of its income – are met by many CIVs.7 If a CIV does not satisfy these requirements, the only practical manner in which the CIV’s investors may receive treaty benefits is if the CIV makes a claim on their behalf. 5 See Paragraph 6.31 of the Commentary. 6 See Paragraph 20 of the CIV Report. 7 See Paragraph 36 of the CIV Report. Coalition Letter Re: Administrative Obstacles Effectively Preventing CIVs from Receiving Tax Treaty Relief 22 October 2012 Page 4 of 9 CIV-Specific Changes to the Model Convention Commentary To address these difficulties, the CIV Report proposes several changes, since adopted, to the Model Convention Commentary. Among other things, the Commentary suggests mutual agreements between countries regarding the treatment of a country’s CIVs. The Commentary also notes the difficulties in identifying investors on a frequent basis and suggests that “practical and reliable approaches” be accepted.8 Where a CIV industry is largely domestic, such as because tax rules provide strong disincentives for non-resident investment, the Commentary states that it may be appropriate to assume that the CIV is owned by the residents of the country in which it is established.9 Where a CIV is distributed globally, the Commentary suggests that investor information be required annually; if market conditions suggest high ownership turnover, this information could be required more frequently – although no more often than quarterly.10 The Present Situation in Korea is Extremely Problematic and Should Be Resolved Promptly Certainty and Administrable Rules are Essential Certainty regarding treaty eligibility and administrable rules for claiming relief, as discussed in the CIV Report, are of paramount importance to CIVs. Without this certainty, as noted above, a CIV may mis-price its units – resulting in purchasers and sellers paying or receiving too much or too little for their units. The present situation with Korean tax relief, at best, is uncertain. At worst, CIVs that may claim treaty benefits in their own right, and treaty-eligible investors in CIVs that must claim on behalf of their investors, effectively are being denied their bilaterally-negotiated treaty benefits. We encourage the Korean Ministry of Strategy and Finance (“MOSF”) and National Tax Service (“NTS”) to adopt the recommendations we make below. These recommendations are consistent with the OECD guidance that was developed with the participation of the Korean representatives to the OECD. 8 See Paragraph 6.29 of the Commentary. 9 See Paragraph 6.30 of the Commentary. 10 See Paragraph 6.31 of the Commentary. Coalition Letter Re: Administrative Obstacles Effectively Preventing CIVs from Receiving Tax Treaty Relief 22 October 2012 Page 5 of 9 The Presidential Decree and Form No. 29-13 The Presidential Decree regarding Article 98-6 of the Korean Income Tax Law (“CITL”)11 appeared to provide the administrable rules that CIVs need. Specifically, Paragraph 3 of Article 138-7 of the Presidential Decree provides that an offshore investment vehicle (“OIV”) that (1) satisfies the requirements for qualifying offshore collective investment vehicle (“OCIV”) status, (2) submits a “Confirmation report of OIV,” and (3) meets certain conditions, would not be required to file beneficial owner details. Despite the Presidential Decree’s helpful guidance, and contrary to the OECD’s Model Convention Commentary, we understand that no CIV may claim treaty benefits in its own right by filing Form No. 72-2 (Application for Entitlement to Reduced Tax Rate on Domestic Sourced Income (for Foreign Corporation)). Moreover, the form that all CIVs reportedly must use – Form No. 29-13 (Report of Overseas Investment Vehicles) – requires quarterly reporting of exhaustive information about a CIV’s investors, sparing a CIV with 100 or more investors only from having to directly name its investors. This quarterly reporting is inconsistent with the OECD recommendation that quarterly reporting be required only when investor turnover is high. Additionally, even if a fund has access to the detailed information required by Form No. 29-13, the requirement to provide reporting based on the end of the preceding quarter does not give such fund adequate time to compile data and prepare the Form. Proliferating Uncertainty Compounding the uncertainty surrounding claims for treaty benefits in Korea, our members now report that Korean brokers expect that CIVs selling shares of Korean companies to other non- residents file the overseas investment vehicle report on capital gain transactions. These forms are being requested based upon a misunderstanding of Korean law – under which these transactions are exempt from tax. In the absence of coherent guidance clarifying the law, forms are being requested when they are not needed and properly-filed forms (when required) are being rejected. The Korean market, we believe, is trending dangerously toward unnecessary and unadministrable tax reporting. The proliferating uncertainty is causing some investors to forego their treaty-entitled benefits; foreign investment in Korea may be affected negatively. 11 This Decree was issued by MOSF Public Notice No. 2012-3 (January 6, 2012). Coalition Letter Re: Administrative Obstacles Effectively Preventing CIVs from Receiving Tax Treaty Relief 22 October 2012 Page 6 of 9 Lack of Reclaim Procedure Further aggravating the situation, we understand that no market level procedure exists for CIVs, that are withheld upon at the statutory rates, to certify their treaty eligibility and subsequently apply for a reclaim or refund of the withheld taxes. The local custodians, in their capacity as withholding agents, are not authorized to file tax reclaims on behalf of non-resident investors. Pursuant to an existing procedure only the beneficial owners are able to file requisite Form Appendix VI 72-3 (Tax Refund Application by Foreign Corporation) or Form 29-14 (Tax Refund Application by Nonresident Individual) directly with the NTS. The lack of Tax Refund form designated for CIVs leaves them with the only recourse of filing a suit against the NTS for the overwithheld amounts. Both beneficial owners and CIVs are also required to engage Korean tax counsel in order to pursue the tax reclaim filing, thereby further increasing the cost and administrative burden of availing of treaty relief. If no refund procedure is available, the present situation is contrary to accepted international tax norms and exacerbates greatly the problems posed by the Presidential Decree and Form No. 29-13. Combined, these issues result in the effective denial of treaty benefits Korea owes to residents of a Contracting State. Recommendations 1. All CIVs treated as both Persons and Residents by the country in which they are organized (e.g., all CIVs treated as corporations for tax purposes and other non-fiscally-transparent CIVs) should file Form No. 72-2 to claim treaty benefits in their own right. 2. Any CIV that cannot claim treaty benefits in its own right (under our first recommendation above) should file Form No. 29-13 on an annual, rather than quarterly, basis. Additionally, to allow adequate time for gathering data and preparing the Form, such annual reporting should be due no sooner than one calendar quarter from the close of the year. 3. For purposes of the 100-investor rule for filing as a public CIV, another OIV investing in a CIV should not be treated as a single investor. Rather, the OIV should provide details regarding the number of its investors; the CIV should be permitted to rely upon these representations and any other information available to it, Under this proposal, the 100-investor rule would require detailed reporting only if there are fewer than 100 actual investors throughout the intermediated distribution structure.12 12 These issues were addressed in detail in a letter submitted by the Investment Company Institute and ICI Global (attached) on 20 January 2012. In the context of an OIV that offers its shares to insurance companies that in turn make the OIV available to individual investors through variable insurance products, for example, the OIV should be permitted to satisfy the 100-person requirement based upon the number of investors in the variable insurance products offered by the insurance companies that are invested in that OIV. Coalition Letter Re: Administrative Obstacles Effectively Preventing CIVs from Receiving Tax Treaty Relief 22 October 2012 Page 7 of 9 4. Guidance should be provided that the tax exemption for capital gain transactions between non- residents applies regardless of whether any of the non-residents is a CIV. Such guidance is needed promptly to reassure brokers that their foreign investors can trade their positions without incurring tax or reporting obligations. 5. A “quick refund” procedure should be reestablished. This procedure would allow treaty- entitled investors a grace period to provide documentation and would reduce unnecessary administrative burdens that would be placed on investors, custodians, and the Korean tax authorities by a lengthy reclaim process. 6. A tax reclaim process should be established for treaty-entitled investors that cannot provide required tax documentation before the income event (or the end of the grace period provided by our fifth recommendation). Conclusion Investor confidence in receiving tax treaty benefits that were understood to be available in Korea is eroding across the global funds industry. We believe that Korea’s present tax treaty administration issues must be addressed by positive guidance in short order to remedy the investor concerns regarding the tax treatment of their Korean capital markets investments. * * * Please feel free to contact the representatives at the associations signing this letter, at your convenience, for additional information. Sincerely, Association Française de la Gestion financière (AFG) Delphine Charles-Péronne, Directeur des Affaires Fiscales et Comptables d.charles-peronne@afg.asso.fr +33 (0)1 44 94 94 21 Association of Global Custodians (AGC) Mary Bennett, Partner at Baker & McKenzie and Counsel to the AGC mary.bennett@bakermckenzie.com 1-202-452-7045 Coalition Letter Re: Administrative Obstacles Effectively Preventing CIVs from Receiving Tax Treaty Relief 22 October 2012 Page 8 of 9 Association of the Luxembourg Fund Industry Camille Thommes, Director General camille.thommes@alfi.lu +352 22 30 26.1 Assogestioni Arianna Immacolato, Head of Taxation Arianna.immacolato@assogestioni.it 0039-06-68405901. British Bankers’ Association Sarah Wulff-Cochrane, Director sarah.wulff-cochrane@bba.org.uk +44 (0) 20 7216 8897 European Fund and Asset Management Association Peter De Proft, Director General Peter.DeProft@efama.org 322-548-3969 Financial Services Council Martin Codina, Director of Policy, Financial Services Council mcodina@ifsa.com.au +61 (0)2 9299 3022 ICI Global Keith Lawson, Senior Counsel – Tax Law lawson@ici.org 1-202-326-5832 Investment Company Institute Keith Lawson, Senior Counsel – Tax Law lawson@ici.org 1-202-326-5832 Investment Funds Institute of Canada James Carman, Senior Policy Advisor, Taxation jcarman@ific.ca 1-416-309-2323 Coalition Letter Re: Administrative Obstacles Effectively Preventing CIVs from Receiving Tax Treaty Relief 22 October 2012 Page 9 of 9 Investment Management Association Jorge Morley-Smith, Head of Taxation jmorley-smith@investmentuk.org +44 (0)20 7831 0898 Irish Funds Industry Association Pat Lardner, Chief Executive pat.lardner@irishfunds.ie 353-1-6753201 Attachment Proof #4 RPIBX PAIBX International Bond Fund International Bond Fund– Advisor Class ANNuAl REPORT December 31, 2012 T. Rowe PRICe The fund primarily invests in high-quality, nondollar-denominated fixed income securities for high current income and capital appreciation. Proof #4 REPORTS ON THE WEB Sign up for our E-mail Program, and you can begin to receive updated fund reports and prospectuses online rather than through the mail. Log in to your account at troweprice.com for more information. HIGHLIGHTS • International bond markets delivered modest overall gains for the year ended December 31, 2012, against a backdrop of accommodative central bank actions and gradual global economic improvement. • The International Bond Fund outpaced the Barclays Global Aggregate ex USD Bond Index but trailed its Lipper peer group average. • The low yields currently available in developed market debt appear expensive, and we prefer exposure to the more appealing valuations in developing markets. • We expect favorable returns over the coming months amid signs of stabilization in Europe, modest improvement in the U.S. and Japan, and better-than-expected economic data from China. T. Rowe Price International Bond Fund The views and opinions in this report were current as of December 31, 2012. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a fore- cast of the fund’s future investment intent. The report is certified under the Sarbanes-Oxley Act, which requires mutual funds and other public companies to affirm that, to the best of their knowledge, the informa- tion in their financial reports is fairly and accurately stated in all material respects. Proof #4 T. Rowe Price International Bond Fund Manager’s Letter 1 Fellow Shareholders International bonds generated sizable gains amid signs of stabilization in the eurozone, moderate economic growth in the U.S., and incremental improvements in China and other key emerging markets. Accommodative monetary policies from many of the world’s central banks and heightened investor appetite for higher- yielding assets also helped to support emerging markets debt. Government bonds in non-U.S. developed markets generated decent gains but underperformed emerging markets debt, which surged as investors sought more attractive yields. The International Bond Fund gained 4.67% and 6.10% for the 6- and 12-month periods ended December 31, 2012, respectively. (Returns for the fund’s Advisor Class varied slightly due to its different fee structure.) The fund outperformed the Barclays Global Aggregate ex USD Bond Index over both periods but lagged the Lipper International Income Funds Average. In aggregate, the fund’s currency selection, country selection, duration exposure, allocation to below investment-grade bonds, and sector and security selection helped results versus the Barclays benchmark for the year. Underweight allocations to peripheral European sovereign debt and underweight exposure to the British pound and Australian dollar weighed on returns. Total Return Periods Ended 12/31/12 6 Months 12 Months International Bond Fund 4.67% 6.10% International Bond Fund– Advisor Class 4.53 5.90 Barclays Global Aggregate ex USD Bond Index 3.29 4.09 Lipper International Income Funds Average 4.95 7.38 Performance Comparison Proof #4 2 MaRkET ENvIRONMENT Buoyed by positive economic and political developments, investor sentiment was decidedly upbeat through the first three months of 2012. The U.S. economic recovery was progressing nicely amid unex- pected strength in manufacturing and employment, the European Central Bank’s two long- term refinancing operations signaled progress on the eurozone debt crisis, and China’s economy seemed to be cooling in an orderly manner to more sustainable growth. Risk aversion returned in the spring, however, as signs of a weakening global economy sapped investor confidence. Much of Europe was mired in recession, and election results in Greece and France revealed widespread dis- content over fiscal austerity measures. Mixed economic data in the U.S., including persistently high unemployment, indicated that the previously resilient recovery was starting to falter, and the Chinese economic slowdown was sharper than expected. Investor sentiment rose again over the summer as central banks around the world took action to stimulate economic growth and suppress interest rates. In July, the European Central Bank pledged to do “whatever it takes” to save the euro, following up in September with a plan to purchase short-term government debt from troubled eurozone members. Key emerging markets, including China, South Africa, and Brazil, cut interest rates, and the U.S. Federal Reserve announced a third round of quantitative easing, bolstering demand for higher-yielding assets such as emerging markets debt. Optimism Total Return for 6 Months 12 Months Periods Ended In Local In U.S. In Local In U.S. 12/31/12 Currency Dollars Currency Dollars Barclays Global Aggregate ex USD Bond Index – 3.29% – 4.09% Japan 0.41% -7.35 1.74% -9.46 Germany 2.42 6.41 4.58 6.21 United Kingdom 0.77 4.43 2.91 7.63 Italy 11.03 15.34 20.52 22.40 United States 0.48 0.48 1.99 1.99 Spain 9.72 13.99 5.46 7.11 France 5.79 9.90 10.14 11.86 Source: Barclays. Developed Market Performance Proof #4 3 persisted over the year’s closing months amid stabilization in the eurozone, a continuation of accommodative monetary policies from the world’s central banks, and incremental improvements in key emerging economies. Government bonds in developed non-U.S. markets generated modest gains for the year in U.S. dollars, helped by the performance of European bonds and by a weaker dollar versus most developed markets currencies. Japanese bonds, however, declined in value as an expansion of the Bank of Japan’s asset purchase program helped to weaken the yen. Late in the year, Japan’s new prime minister pressured the central bank to agree to a higher inflation target and to implement a policy of unlimited monetary easing to stimulate the economy and weaken the currency. Faced with low nominal yields and, in many cases, negative real yields (nominal yields adjusted for inflation) on bonds in many developed markets, investors increasingly turned to the attractive yields available in emerging markets debt. In addition, money flows into the asset class continue to benefit from a long-term, structural transition as investors diversify their portfolios into the expanding emerging debt market. Emerging markets debt significantly outpaced bonds in the U.S. and other developed markets for the year. U.S. dollar-denominated debt marginally outperformed bonds denominated in local currencies, and emerging markets corporate debt lagged with smaller, though still strong, gains. PORTFOLIO REvIEW aND POSITIONING Currency selection boosted the fund’s annual performance for the year. A broad allocation to a number of emerging markets currencies, which are not included in the benchmark index, benefited results as many of Total Return for Periods Ended 12/31/12 6 Months 12 Months J.P. Morgan Emerging Markets Bond Index Global 10.32% 18.54% Mexico 5.66 11.72 Brazil 6.72 12.54 Poland 7.88 17.92 Malaysia 5.81 10.54 Russia 10.56 18.53 Source: J.P. Morgan. In U.S. dollars. Emerging Markets Performance Proof #4 4 these currencies strengthened against the U.S. dollar. An underweight allocation to the Japanese yen throughout the year also helped perfor- mance versus the benchmark as the currency weakened significantly toward the end of the year. Underweight alloca- tions to the British pound and the Australian dollar proved to be a slight drag on performance as these currencies unexpectedly strengthened against the U.S. dollar. Except for an overweight to the Norwegian krone, we maintain underweight allocations to most developed market currencies in favor of emerging markets currencies. Within emerging markets currencies, we decreased our non-benchmark exposure to the Indian rupee and have overweight allocations to the South Korean won and the Russian ruble. Country selection and duration positioning also benefited the fund’s annual results versus its benchmark. Bonds denominated in local currencies were strong contributors as lower inflation, stimulative monetary policies, credit quality upgrades, and large investor inflows supported returns. Local currency bonds from Mexico, Brazil, South Africa, and Poland were notable contributors. Cautious underweight positioning in peripheral European sovereign debt in the early part of the year detracted from annual results, particularly in the first quarter as the European Central Periods Ended 6/30/12 12/31/12 Weighted Average Maturity (years) 8.3 8.5 Weighted Average Effective Duration (years) 6.3 6.3 Source: T. Rowe Price. Portfolio Characteristics A 12% BB and Below 6% AAA 28% Cash and Equivalents 4% BBB 24% AA 26% Based on net assets as of 12/31/12. Source: Moody’s Investors Service; if Moody’s does not rate a security, then Standard & Poor’s (S&P) is used as a secondary source. When available, T. Rowe Price will use Fitch for securities that are not rated by Moody’s or S&P. Unrated securities totaled 0.44% of the portfolio at the end of the reporting period. Quality Diversification Proof #4 5 Bank’s long-term refinancing operations resulted in lower yields and higher prices for bonds in these markets. As a result of stabilization in the eurozone crisis, we brought our exposure to peripheral European debt in line with the benchmark during the third quarter, bringing our positioning in Europe to neutral versus the benchmark. We still see the current low nominal yields in developed markets and in some cases, negative real yields, as being overly rich. As a result, we generally have underweight allocations within developed markets bonds and prefer exposure to the more appealing valuations in developing markets. Exposure to below investment-grade bonds, which are not included in our benchmark, helped results. U.S. dollar-denominated emerging markets corporate bonds provided the largest single contributor to returns over the year, as risk assets saw steady, strong demand from yield-hungry investors. European high yield bonds also performed well in 2012. We maintained our allocation to European high yield bonds and slightly reduced our exposure to U.S. dollar-denominated emerging markets corporate bonds. Overall sector and security selection was positive for the year. A focus on investment-grade European corporate bonds generated very robust returns, while off-benchmark exposure to investment-grade U.S. dollar- and euro-denominated emerging markets sovereign and Spain 4% United States 4% Other and Reserves 36% Germany 15% Japan 19% France 4% Geographic Diversification United Kingdom 11% Italy 7% Based on net assets as of 12/31/12. Percentages reflect the issuing country of the fund’s securities and exclude the effect of forward currency contracts. Net Currency Exposure: Euro 38% Japanese Yen 27 British Pound Sterling 9 Canadian Dollar 5 Mexican Peso 3 Malaysian Ringgit 2 Norwegian Krone 2 South Korean Won 2 Proof #4 6 quasi-sovereign debt also added to returns. Our overweight allocation to European investment-grade corporate debt held steady, and we modestly reduced our exposure to investment-grade emerging markets sovereign and quasi-sovereign bonds. OUTLOOk Market volatility decreased markedly in the closing months of 2012, and we expect this to remain the case for the next few months. Several factors are contributing to this relative calm in markets, including the stabilization of European economic data, a politically favorable leadership transition in Japan, a partial resolution of the U.S. fiscal cliff challenge, and better-than-expected data from China. These improvements should continue to drive down bond yields in the higher-yielding peripheral regions of Europe. We expect that a continuation of loose monetary policy by the Federal Reserve should keep the dollar weak to the benefit of non-U.S. dollar currencies. The potential for inflationary policies by the newly elected government in Japan has already weakened the yen, and we anticipate that any further weakening will be at a slower pace. Emerging markets currencies continue to benefit from healthy inflows from foreign investors seeking better growth prospects and higher yields. In the absence of significant negative news, European corporate bonds across the investment- and sub- investment-grade spectrum should continue to see yields drifting down, and the yield spread relative to high-quality government bonds is likely to narrow. Below investment- grade corporate bonds in emerging markets offer a good level of interest with the potential for steady price appreciation as demand for higher-yielding assets remains high. EMERGING MARKETS CURRENCIES CONTINUE TO BENEFIT FROM hEALThY INFLOWS FROM FOREIGN INvESTORS SEEKING BETTER GROWTh PROSPECTS AND hIGhER YIELDS. Proof #4 7 In closing, we are pleased to announce that Chris Rothery was named co-portfolio manager of the International Bond Fund effective November 1, 2012. We are confident that Chris will continue to work hard to maximize opportunities for our shareholders, just as he has for the past 25 years. Respectfully submitted, Ian Kelson President of the International Fixed Income Division, co-portfolio manager, and cochairman of the fund’s Investment Advisory Committee Christopher J. Rothery Co-portfolio manager and cochairman of the fund’s Investment Advisory Committee January 28, 2013 The committee chairmen have day-to-day responsibility for the portfolio and work with committee members in developing and executing the fund’s investment program. Proof #4 8 T. Rowe Price International Bond Fund Risk of International Bond Investing Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets, including unpredictable changes in currency values. Investments in emerging markets are subject to abrupt and severe price declines and should be regarded as speculative. The economic and political structures of developing nations, in most cases, do not compare favorably with the U.S. or other developed countries in terms of wealth and stability, and their financial markets often lack liquidity. Some countries also have legacies of hyperinflation, currency devaluations, and governmental interference in markets. International investments are subject to currency risk, a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency. The overall impact on a fund’s holdings can be significant and long-lasting depending on the currencies represented in the portfolio, how each one appreciates or depreciates in relation to the U.S. dollar, and whether currency positions are hedged. Further, exchange rate movements are unpredictable, and it is not possible to effectively hedge the currency risks of many developing countries. Bonds are also subject to interest rate risk, the decline in bond prices that usually accompanies a rise in interest rates, and credit risk, the chance that any fund holding could have its credit rating downgraded or that a bond issuer will default (fail to make timely payments of interest or principal), potentially reducing the fund’s income level and share price. Glossary Barclays Global aggregate ex USD Bond Index: An unmanaged index that tracks an international basket of bonds that contains government, corporate, agency, and mortgage-related bonds. Duration: A measure of a bond’s or bond fund’s sensitivity to changes in interest rates. For example, a fund with a duration of six years would fall about 6% in response to a one-percentage-point rise in rates, and vice versa. J.P. Morgan Emerging Markets Bond Index Global: Tracks U.S. dollar government bonds of 31 foreign countries. Quasi-sovereign debt: Debt issued by a corporation and backed by the respective government, typically offering the higher yields of corporate debt with the added benefit of government support. Weighted average effective duration (years): A measure of a portfolio’s price sensitivity to changes in interest rates. Portfolios with longer weighted average effective durations are more sensitive to changes in interest rates than securities of shorter durations. Proof #4 9 T. Rowe Price International Bond Fund Glossary (continued) Weighted average maturity: A measure of a fund’s sensitivity to interest rates. In general, the longer the average maturity, the greater the fund’s sensitivity to interest rate changes. The weighted average maturity may take into account the interest rate readjustment dates for certain securities. Money funds must maintain a weighted average maturity of less than 60 days. Proof #4 10 T. Rowe Price International Bond Fund PRICE aND YIELD Periods Ended 6/30/12 12/31/12 International Bond Fund Price Per Share $9.76 $10.10 Dividends Per Share For 6 months 0.11 0.12 For 12 months 0.25 0.23 SEC Yield (30-Day) 1.76% 1.53% International Bond Fund–advisor Class Price Per Share $9.77 $10.11 Dividends Per Share For 6 months 0.10 0.10 For 12 months 0.21 0.20 SEC Yield (30-Day) 1.37% 1.24% 12-month dividends may not equal the combined 6-month figures due to rounding. Yields will vary and are not guaranteed. Portfolio Highlights Proof #4 11 T. Rowe Price International Bond Fund Performance and Expenses Barclays Global Aggregate ex USD Bond Index $18,861 International Bond Fund $18,164 As of 12/31/12 12/02 12/0812/0712/0612/0512/0412/03 12/1212/09 I N T E R N AT I O N A L B O N D F U N D Lipper International Income Funds Average $18,724 10,000 13,500 17,000 20,500 24,000 $27,500 Note: Performance for the Advisor Class will vary due to its differing fee structure. See returns table below. 12/10 12/11 Growth of $10,000 This chart shows the value of a hypothetical $10,000 investment in the 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. Periods Ended 12/31/12 1 Year 5 Years 10 Years International Bond Fund 6.10% 4.78% 6.15% International Bond Fund–Advisor Class 5.90 4.52 5.92 Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end performance, please contact a T. Rowe Price representative at 1-800-225-5132 or, for Advisor Class shares, 1-800-638-8790. The performance information shown does not reflect the deduction of a 2% redemption fee on shares held for 90 days or less; if it did, the performance would be lower. This table shows how the fund would have performed each year if its actual (or cumula- tive) returns had been earned at a constant rate. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. When assessing performance, investors should consider both short- and long-term returns. Average Annual Compound Total Return Proof #4 12 T. Rowe Price International Bond Fund International Bond Fund 0.83% International Bond Fund–Advisor Class 1.16 The expense ratio shown is as of the fund’s fiscal year ended 12/31/11. This number may vary from the expense ratio shown elsewhere in this report because it is based on a different time period and, if applicable, does not include fee or expense waivers. Expense Ratio Fund Expense Example As a mutual fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees or sales loads, and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the entire period. Please note that the International Bond Fund has two share classes: The original share class (Investor Class) charges no distribution and service (12b-1) fee, and the Advisor Class shares are offered only through unaffiliated brokers and other financial intermediaries and charge a 0.25% 12b-1 fee. Each share class is presented separately in the table. actual Expenses The first line of the following table (Actual) provides information about actual account values and expenses based on the fund’s actual returns. You may use the information on this line, together with your account balance, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The information on the second line of the table (hypothetical) is based on hypothetical account values and expenses derived from the fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the fund’s actual return). You may compare the ongoing costs of investing in the fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Proof #4 13 T. Rowe Price International Bond Fund Fund Expense Example (continued) Note: T. Rowe Price charges an annual account service fee of $20, generally for accounts with less than $10,000. The fee is waived for any investor whose T. Rowe Price mutual fund accounts total $50,000 or more; accounts electing to receive electronic delivery of account statements, transaction confirmations, prospectuses, and shareholder reports; or accounts of an investor who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $100,000). This fee is not included in the accompanying table. If you are subject to the fee, keep it in mind when you are estimating the ongoing expenses of investing in the fund and when comparing the expenses of this fund with other funds. You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs, such as redemption fees or sales loads. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. To the extent a fund charges transaction costs, however, the total cost of owning that fund is higher. Beginning Ending Expenses Paid Account value Account value During Period* 7/1/12 12/31/12 7/1/12 to 12/31/12 Investor Class Actual $1,000.00 $1,046.70 $4.27 hypothetical (assumes 5% return before expenses) 1,000.00 1,020.96 4.22 advisor Class Actual 1,000.00 1,045.30 5.60 hypothetical (assumes 5% return before expenses) 1,000.00 1,019.66 5.53 * Expenses are equal to the fund’s annualized expense ratio for the 6-month period, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (184), and divided by the days in the year (366) to reflect the half-year period. The annualized expense ratio of the Investor Class was 0.83%, and the Advisor Class was 1.09%. International Bond Fund Proof #4 14 T. Rowe Price International Bond Fund Financial Highlights For a share outstanding throughout each period The accompanying notes are an integral part of these financial statements. Investor Class Year Ended 12/31/12 12/31/11 12/31/10 12/31/09 12/31/08 NET ASSET VALUE Beginning of period $ 9.74 $ 9.95 $ 9.87 $ 9.57 $ 10.09 Investment activities Net investment income (1) 0.23 0.26 0.25 0.27 0.37 Net realized and unrealized gain (loss) 0.36 – 0.25 0.49 (0.19) Total from investment activities 0.59 0.26 0.50 0.76 0.18 Distributions Net investment income (0.23) (0.26) (0.25) (0.27) (0.37) Net realized gain – (0.21) (0.17) (0.19) (0.33) Total distributions (0.23) (0.47) (0.42) (0.46) (0.70) NET ASSET VALUE End of period $ 10.10 $ 9.74 $ 9.95 $ 9.87 $ 9.57 Ratios/Supplemental Data Total return(2) 6.10% 2.63% 5.17% 8.38% 1.77% Ratio of total expenses to average net assets 0.84% 0.83% 0.82% 0.82% 0.81% Ratio of net investment income to average net assets 2.31% 2.59% 2.50% 2.82% 3.70% Portfolio turnover rate 52.2% 35.7% 61.5% 57.6% 69.2% Net assets, end of period (in millions) $ 4,972 $ 4,776 $ 4,402 $ 3,423 $ 2,142 (1) Per share amounts calculated using average shares outstanding method. (2) 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 and payment of no redemption or account fees. Proof #4 15 T. Rowe Price International Bond Fund Financial Highlights For a share outstanding throughout each period The accompanying notes are an integral part of these financial statements. Advisor Class Year Ended 12/31/12 12/31/11 12/31/10 12/31/09 12/31/08 NET ASSET VALUE Beginning of period $ 9.74 $ 9.93 $ 9.85 $ 9.56 $ 10.07 Investment activities Net investment income (1) 0.20 0.23 0.21 0.24 0.34 Net realized and unrealized gain (loss) 0.36 0.02 0.25 0.48 (0.18) Total from investment activities 0.56 0.25 0.46 0.72 0.16 Distributions Net investment income (0.20) (0.23) (0.21) (0.24) (0.34) Net realized gain – (0.21) (0.17) (0.19) (0.33) Total distributions (0.20) (0.44) (0.38) (0.43) (0.67) Redemption fees added to paid-in capital 0.01 – – – – NET ASSET VALUE End of period $ 10.11 $ 9.74 $ 9.93 $ 9.85 $ 9.56 Ratios/Supplemental Data Total return(2) 5.90% 2.50% 4.85% 7.93% 1.57% Ratio of total expenses to average net assets 1.13% 1.16% 1.13% 1.15% 1.13% Ratio of net investment income to average net assets 2.02% 2.26% 2.19% 2.53% 3.40% Portfolio turnover rate 52.2% 35.7% 61.5% 57.6% 69.2% Net assets, end of period (in thousands) $ 283,273 $ 404,634 $ 529,400 $ 485,163 $ 431,987 (1) Per share amounts calculated using average shares outstanding method. (2) 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 and payment of no redemption or account fees. Proof #4 T. Rowe Price International Bond Fund December 31, 2012 Portfolio of Investments ‡ Par/Shares Value (Cost and value in $000s) 16 ARGENTINA 0.1% Corporate Bonds 0.1% Banco Galicia y Buenos Aires, 8.75%, 5/4/18 (USD) (1) 2,000,000 1,665 IRSA Inversiones y Representaciones 11.50%, 7/20/20 (USD) (1) 1,700,000 1,547 Total Argentina (Cost $3,958) 3,212 AUSTRALIA 0.8% Corporate Bonds 0.5% Australia & New Zealand Banking, 5.125%, 9/10/19 (EUR) 3,000,000 4,602 Australia & New Zealand Banking, FRN, 4.75%, 12/7/18 (GBP) 695,000 1,143 Commonwealth Bank of Australia, 3.625%, 10/14/14 (CAD) 1,250,000 1,291 Commonwealth Bank of Australia, 3.875%, 12/14/15 (GBP) 1,000,000 1,739 Commonwealth Bank of Australia, 5.50%, 8/6/19 (EUR) 2,050,000 3,190 National Australia Bank, 4.75%, 7/15/16 (EUR) 3,000,000 4,485 National Australia Bank, 5.375%, 12/8/14 (GBP) 1,000,000 1,748 St. George Bank, 6.50%, 6/24/13 (EUR) 200,000 272 Telstra, 6.125%, 8/6/14 (GBP) 400,000 698 Wesfarmers, 2.75%, 8/2/22 (EUR) 2,000,000 2,716 Westfield Financial, 5.50%, 6/27/17 (GBP) 450,000 828 Westpac Banking, 4.25%, 9/22/16 (EUR) 2,000,000 2,958 Westpac Banking, 5.00%, 10/21/19 (GBP) 1,000,000 1,879 27,549 Government Bonds 0.3% New South Wales Treasury, 6.00%, 3/1/22 13,804,000 16,515 16,515 Total Australia (Cost $41,348) 44,064 AUSTRIA 1.6% Government Bonds 1.6% Republic of Austria, 3.40%, 11/22/22 (1) 17,925,000 27,126 Republic of Austria, 4.85%, 3/15/26 (1) 15,367,000 26,703 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 17 Republic of Austria, 6.25%, 7/15/27 (1) 15,052,000 30,026 Total Austria (Cost $77,146) 83,855 BELGIUM 1.2% Corporate Bonds 0.2% Anheuser-Busch InBev, 6.50%, 6/23/17 (GBP) 1,394,000 2,729 Ontex, 7.50%, 4/15/18 (1) 3,342,000 4,698 Ontex, 7.50%, 4/15/18 325,000 457 7,884 Government Bonds 1.0% Kingdom of Belgium, 4.25%, 9/28/21 24,048,000 37,914 Kingdom of Belgium, 5.00%, 3/28/35 8,617,000 15,097 53,011 Total Belgium (Cost $54,534) 60,895 BERMUDA 0.1% Corporate Bonds 0.1% Bacardi, 7.75%, 4/9/14 (EUR) 3,500,000 5,014 Holcim Finance, 8.75%, 4/24/17 (GBP) 800,000 1,620 Total Bermuda (Cost $6,541) 6,634 BRAZIL 2.1% Corporate Bonds 1.0% Banco do Estado do Rio Grande do Sul 7.375%, 2/2/22 (USD) (1) 4,300,000 4,730 BFF International, 7.25%, 1/28/20 (USD) (1) 1,600,000 1,920 BFF International, Brasil Foods, 7.25%, 1/28/20 (USD) 1,000,000 1,200 BR Malls International Finance, 9.75%, 11/29/49 (USD) 3,050,000 3,081 Brasil Foods, 5.875%, 6/6/22 (USD) (1) 1,275,000 1,409 Centrais Electricas Brasileiras, 5.75%, 10/27/21 (USD) (1) 2,500,000 2,700 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 18 Cia de Saneamento Basico, 6.25%, 12/16/20 (USD) (1) 2,900,000 3,190 Gerdau Trade, 5.75%, 1/30/21 (USD) 3,000,000 3,315 Itau Unibanco, 5.65%, 3/19/22 (USD) (1) 3,000,000 3,161 Minerva Luxembourg, 12.25%, 2/10/22 (USD) (1) 2,100,000 2,525 Odebrecht Finance, 7.125%, 6/26/42 (USD) (1) 2,000,000 2,330 Petrobras International Finance, 4.25%, 10/2/23 (EUR) 3,000,000 4,183 Petrobras International Finance, 4.875%, 3/7/18 (EUR) 10,200,000 15,064 Voto-Votorantim, 5.25%, 4/28/17 (EUR) (1) 2,000,000 2,891 Votorantim Cimentos, 7.25%, 4/5/41 (USD) (1) 1,800,000 2,034 53,733 Government Bonds 1.1% Brazil Notas do Tesouro Nacional, 10.00%, 1/1/14 28,235,000 14,147 Brazil Notas do Tesouro Nacional, 10.00%, 1/1/21 8,466,000 4,361 Brazil Notas do Tesouro Nacional, 10.00%, 1/1/23 16,966,000 8,719 Brazil Notas do Tesouro Nacional, Inflation-Indexed 6.00%, 8/15/20 5,220,000 6,748 Brazil Notas do Tesouro Nacional, Inflation-Indexed 6.00%, 5/15/45 6,060,000 8,993 Brazil Notas do Tesouro Nacional, Inflation-Indexed 6.00%, 8/15/50 7,761,000 11,717 54,685 Total Brazil (Cost $102,739) 108,418 CANADA 3.7% Corporate Bonds 1.1% Bank of Montreal, FRN, 6.17%, 3/28/23 1,444,000 1,707 Bank of Nova Scotia, 2.74%, 12/1/16 1,105,000 1,135 Bell Canada, 5.00%, 2/15/17 (1) 1,494,000 1,652 Canadian Imperial Bank of Commerce, 2.65%, 11/8/16 1,155,000 1,182 Canadian Natural Resources, 4.95%, 6/1/15 1,494,000 1,607 Enbridge, 4.26%, 2/1/21 2,295,000 2,508 EnCana, 5.80%, 1/18/18 (1) 1,439,000 1,636 Greater Toronto Airport, 6.47%, 2/2/34 (1) 1,414,000 1,951 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 19 Hydro One, 5.36%, 5/20/36 1,170,000 1,451 Loblaw, 5.22%, 6/18/20 1,494,000 1,710 Rogers Communications, 5.38%, 11/4/19 2,088,000 2,400 Royal Bank of Canada, 4.35%, 6/15/20 1,990,000 2,109 Royal Bank of Canada, 4.625%, 1/22/19 (EUR) 17,025,000 26,636 Suncor Energy, 5.39%, 3/26/37 (1) 1,533,000 1,798 TELUS, 4.95%, 3/15/17 1,494,000 1,655 TELUS, 5.05%, 7/23/20 1,000,000 1,146 Thomson Reuters, 5.20%, 12/1/14 1,439,000 1,537 Toronto-Dominion Bank, FRN, 5.69%, 6/3/18 2,335,000 2,383 Transcanada Pipelines, 4.65%, 10/3/16 1,494,000 1,637 Wells Fargo Financial Canada, 2.774%, 2/9/17 3,040,000 3,106 60,946 Government Bonds 2.6% Government of Canada, 3.50%, 6/1/13 15,529,000 15,772 Government of Canada, 3.75%, 6/1/19 6,025,000 6,862 Government of Canada, 4.00%, 6/1/17 16,858,000 18,844 Government of Canada, 4.50%, 6/1/15 20,382,000 22,104 Province of British Columbia, 3.70%, 12/18/20 39,870,000 43,950 Province of Quebec, 5.00%, 12/1/38 22,647,000 28,157 135,689 Total Canada (Cost $184,759) 196,635 CHILE 0.1% Corporate Bonds 0.1% Banco del Estado - Chile, 3.875%, 2/8/22 (USD) (1) 2,500,000 2,663 Total Chile (Cost $2,461) 2,663 CHINA 0.3% Corporate Bonds 0.3% Central China Real Estate, 12.25%, 10/20/15 (USD) 1,500,000 1,673 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 20 China Shansui Cement, 8.50%, 5/25/16 (USD) (1) 3,000,000 3,255 Country Garden Holdings, 11.125%, 2/23/18 (USD) (1) 1,500,000 1,747 Country Garden Holdings, 11.125%, 2/23/18 (USD) 1,500,000 1,748 ENN Energy Holdings, 6.00%, 5/13/21 (USD) 2,000,000 2,309 KWG Property Holdings, 12.50%, 8/18/17 (USD) 1,000,000 1,155 KWG Property Holdings, 12.75%, 3/30/16 (USD) 1,000,000 1,140 Mega Advance Investments, 5.00%, 5/12/21 (USD) (1) 3,000,000 3,397 Tencent Holdings, 4.625%, 12/12/16 (USD) 1,500,000 1,619 Total China (Cost $15,475) 18,043 COLOMBIA 0.0% Corporate Bonds 0.0% BanColombia, 4.25%, 1/12/16 (USD) 1,500,000 1,575 Total Colombia (Cost $1,492) 1,575 CZECH REPUBLIC 0.6% Corporate Bonds 0.1% CEZ, 5.00%, 10/19/21 (EUR) 1,900,000 3,072 CEZ, 5.75%, 5/26/15 (EUR) 900,000 1,327 4,399 Government Bonds 0.5% Czech Republic, 3.625%, 4/14/21 (EUR) 19,955,000 29,693 29,693 Total Czech Republic (Cost $30,491) 34,092 DENMARK 0.7% Corporate Bonds 0.2% Carlsberg Breweries, 7.25%, 11/28/16 (GBP) 1,400,000 2,719 Danske Bank, 4.75%, 6/4/14 (EUR) 2,725,000 3,791 TDC, 3.50%, 2/23/15 (EUR) 2,500,000 3,478 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 21 TDC, 5.625%, 2/23/23 (GBP) 500,000 948 10,936 Government Bonds 0.5% Kingdom of Denmark, 3.00%, 11/15/21 123,670,000 25,457 Kingdom of Denmark, 7.00%, 11/10/24 11,236,000 3,240 28,697 Total Denmark (Cost $35,820) 39,633 FINLAND 0.2% Government Bonds 0.2% Republic of Finland, 3.375%, 4/15/20 8,776,000 13,446 Total Finland (Cost $12,155) 13,446 FRANCE 3.8% Corporate Bonds 3.4% Autoroutes du Sud de la France, 7.375%, 3/20/19 2,900,000 5,039 AXA, FRN, 5.25%, 4/16/40 3,200,000 4,414 BNP Paribas, 2.875%, 11/27/17 3,000,000 4,235 BNP Paribas, 3.75%, 11/25/20 2,500,000 3,702 BNP Paribas Home Loan, 3.75%, 4/20/20 3,600,000 5,478 Caisse d'Amortissement De La Dette Sociale, 2.50%, 10/25/22 20,360,000 27,916 Carrefour, 5.375%, 6/12/15 3,000,000 4,350 Casino Guichard Perrachon & Cie, 4.379%, 2/8/17 1,200,000 1,747 Casino Guichard Perrachon & Cie, 4.875%, 4/10/14 750,000 1,038 Electricite de France, 2.75%, 3/10/23 2,300,000 3,084 Electricite de France, 6.25%, 1/25/21 2,000,000 3,424 Electricite de France, 6.875%, 12/12/22 (GBP) 1,200,000 2,499 Eutelsat, 4.125%, 3/27/17 3,000,000 4,403 France Telecom, 8.00%, 12/20/17 (GBP) 697,000 1,417 GDF Suez, 2.625%, 7/20/22 4,000,000 5,409 GDF Suez, 6.125%, 2/11/21 (GBP) 800,000 1,595 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 22 HSBC Covered Bonds (France), 3.375%, 1/20/17 9,650,000 14,031 Lafarge, FRN, 6.75%, 12/16/19 3,500,000 5,231 Legrand, 4.25%, 2/24/17 3,000,000 4,431 Pernod-Ricard, 5.00%, 3/15/17 3,400,000 5,135 Pinault Printemps Redoute, 8.625%, 4/3/14 2,232,000 3,228 RCI Banque, 4.375%, 1/27/15 4,665,000 6,500 Rhodia, 7.00%, 5/15/18 2,500,000 3,671 Societe de Financement de l'Economie, 3.25%, 1/16/14 24,797,000 33,757 Societe Generale, 5.40%, 1/30/18 (GBP) 996,000 1,682 Societe Generale, 6.125%, 8/20/18 2,600,000 3,919 Total Capital, 3.875%, 12/14/18 (GBP) 398,000 720 Veolia Environnement, 5.125%, 5/24/22 1,866,000 2,937 Veolia Environnement, 5.375%, 5/28/18 1,619,000 2,519 Veolia Environnement, 6.75%, 4/24/19 595,000 998 VINCI, 3.375%, 3/30/20 2,000,000 2,840 Vivendi, 4.875%, 12/2/19 4,500,000 6,901 178,250 Government Bonds 0.4% Government of France, 4.00%, 10/25/38 13,302,000 20,888 20,888 Total France (Cost $188,423) 199,138 GEORGIA 0.0% Corporate Bonds 0.0% Bank of Georgia, 7.75%, 7/5/17 (USD) 600,000 612 Total Georgia (Cost $614) 612 GERMANY 14.7% Corporate Bonds 4.7% Allianz Finance II, FRN, 5.75%, 7/8/41 3,000,000 4,534 Allianz Finance II, FRN, 6.50%, 1/13/25 3,949,000 5,722 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 23 BASF, 5.875%, 3/31/17 (GBP) 800,000 1,527 Bayer, 5.625%, 5/23/18 (GBP) 1,000,000 1,929 BMW U.K. Capital, 5.00%, 10/2/17 (GBP) 498,000 918 Daimler International Finance, 3.50%, 6/6/19 (GBP) 500,000 852 Deutsche Telekom International Finance, 4.25%, 3/16/20 1,500,000 2,291 Deutsche Telekom International Finance, 6.00%, 1/20/17 2,237,000 3,501 Deutsche Telekom International Finance 7.375%, 12/4/19 (GBP) 400,000 839 E.ON International Finance, 5.50%, 1/19/16 3,080,000 4,621 E.ON International Finance, 6.00%, 10/30/19 (GBP) 2,100,000 4,175 Eurohypo, 3.875%, 11/21/13 7,545,000 10,272 Eurohypo, 3.875%, 11/21/16 11,066,000 16,310 HeidelbergCement Finance, 7.50%, 4/3/20 3,250,000 5,052 KfW, 4.375%, 7/4/18 21,084,000 33,242 KfW, 4.70%, 6/2/37 (CAD) 7,206,000 8,372 KfW, 5.50%, 12/7/15 (GBP) 18,747,000 34,611 KfW, 5.55%, 6/7/21 (GBP) 6,500,000 13,538 KfW International Finance, 6.00%, 8/20/20 (AUD) 58,463,000 68,186 Linde Finance, 6.50%, 1/29/16 (GBP) 1,000,000 1,872 MAN, 7.25%, 5/20/16 496,000 787 Merck Financial Services, 3.375%, 3/24/15 2,480,000 3,443 Merck Financial Services, 4.875%, 9/27/13 595,000 811 Schaeffler Finance, 8.75%, 2/15/19 (1) 2,425,000 3,697 Techem, 6.125%, 10/1/19 (1) 750,000 1,062 Unitymedia, 9.625%, 12/1/19 (1) 1,952,000 2,892 Unitymedia, 9.625%, 12/1/19 1,700,000 2,519 Volkswagen Leasing, 3.25%, 5/10/18 5,000,000 7,202 244,777 Government Bonds 10.0% Federal Republic of Germany, 1.75%, 7/4/22 29,100,000 40,089 Federal Republic of Germany, 2.50%, 1/4/21 12,674,000 18,686 Federal Republic of Germany, 3.50%, 1/4/16 20,748,000 30,252 Federal Republic of Germany, 3.75%, 1/4/15 21,448,000 30,450 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 24 Federal Republic of Germany, 4.00%, 1/4/37 87,529,000 157,069 Federal Republic of Germany, 4.50%, 1/4/13 189,700,000 250,402 526,948 Total Germany (Cost $733,564) 771,725 HONG KONG 0.2% Corporate Bonds 0.2% Hutchison Whampoa, 5.625%, 11/24/26 (GBP) 500,000 979 LS Finance 2017, 5.25%, 1/26/17 (USD) 2,000,000 2,164 Standard Chartered Bank, 5.875%, 9/26/17 (EUR) 3,400,000 5,251 Total Hong Kong (Cost $7,833) 8,394 HUNGARY 0.3% Government Bonds 0.3% Republic of Hungary, 6.50%, 6/24/19 2,508,210,000 11,765 Republic of Hungary, 6.75%, 2/24/17 730,480,000 3,427 Total Hungary (Cost $14,311) 15,192 ICELAND 0.3% Government Bonds 0.3% Republic of Iceland, 5.875%, 5/11/22 (USD) (1) 12,936,000 14,421 Total Iceland (Cost $12,880) 14,421 INDIA 0.1% Corporate Bonds 0.1% Reliance Holdings, 6.25%, 10/19/40 (USD) (1) 4,000,000 4,602 Total India (Cost $3,962) 4,602 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 25 INDONESIA 0.6% Corporate Bonds 0.1% PT Adaro Indonesia, 7.625%, 10/22/19 (USD) 2,500,000 2,800 2,800 Government Bonds 0.5% Republic of Indonesia, 7.00%, 5/15/22 48,748,000,000 5,748 Republic of Indonesia, 8.25%, 7/15/21 152,414,000,000 19,163 Republic of Indonesia, 8.25%, 6/15/32 15,457,000,000 1,962 26,873 Total Indonesia (Cost $28,125) 29,673 IRELAND 0.7% Corporate Bonds 0.2% Ardagh Packing Finance, 7.375%, 10/15/17 3,500,000 5,082 Rottapharm, 6.125%, 11/15/19 (1) 3,000,000 4,099 WPP 2008, 6.00%, 4/4/17 (GBP) 600,000 1,115 10,296 Government Bonds 0.5% Republic of Ireland, 5.50%, 10/18/17 19,166,000 27,608 27,608 Total Ireland (Cost $33,827) 37,904 ISRAEL 0.2% Government Bonds 0.2% Israel Fixed Bond, 5.50%, 2/28/17 33,448,000 10,052 Total Israel (Cost $9,437) 10,052 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 26 ITALY 6.6% Corporate Bonds 1.6% Atlantia, 4.50%, 2/8/19 2,500,000 3,584 Enel, 5.25%, 1/14/15 2,419,000 3,387 Enel, 6.25%, 6/20/19 (GBP) 900,000 1,591 Enel Finance International, 4.00%, 9/14/16 2,000,000 2,779 ENI, 3.50%, 1/29/18 4,000,000 5,766 ENI Finance International, 5.00%, 1/27/19 (GBP) 600,000 1,072 Fiat Industrial Finance Europe, 6.25%, 3/9/18 3,500,000 5,174 Finmeccanica Finance, 8.125%, 12/3/13 2,700,000 3,780 Intesa Sanpaolo, 4.00%, 11/8/18 8,600,000 11,597 Intesa Sanpaolo, 4.125%, 1/14/16 3,000,000 4,116 Lottomatica, 5.375%, 12/5/16 4,100,000 5,940 Snam, 5.00%, 1/18/19 3,500,000 5,236 Telecom Italia, 7.375%, 12/15/17 (GBP) 750,000 1,378 Telecom Italia, 8.25%, 3/21/16 2,200,000 3,431 UniCredit, 4.25%, 7/29/16 9,427,000 13,440 UniCredit, 4.375%, 9/11/15 4,500,000 6,234 Wind Acquisition, 11.75%, 7/15/17 (1) 1,900,000 2,627 Wind Acquisition, 11.75%, 7/15/17 2,000,000 2,765 83,897 Government Bonds 5.0% Italy Buoni Poliennali del Tesoro, 3.75%, 3/1/21 41,902,000 54,359 Italy Buoni Poliennali del Tesoro, 4.00%, 2/1/17 11,539,000 15,839 Italy Buoni Poliennali del Tesoro, 4.00%, 2/1/37 7,481,000 8,572 Italy Buoni Poliennali del Tesoro, 4.25%, 2/1/15 40,084,000 55,146 Italy Buoni Poliennali del Tesoro, 4.50%, 2/1/18 31,967,000 44,430 Italy Buoni Poliennali del Tesoro, 4.75%, 6/1/17 26,839,000 37,720 Italy Buoni Poliennali del Tesoro, 5.00%, 9/1/40 33,383,000 43,961 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 27 Italy Buoni Poliennali del Tesoro, 6.00%, 5/1/31 2,279,000 3,347 263,374 Total Italy (Cost $330,330) 347,271 JAMAICA 0.1% Corporate Bonds 0.1% Digicel Group, 8.25%, 9/30/20 (USD) (1) 1,800,000 1,989 Digicel Group, 10.50%, 4/15/18 (USD) (1) 1,350,000 1,515 Total Jamaica (Cost $3,268) 3,504 JAPAN 18.8% Government Bonds 18.8% Government of Japan, 1.00%, 12/20/21 6,305,050,000 74,687 Government of Japan, 1.10%, 6/20/21 10,278,650,000 123,250 Government of Japan, 1.30%, 9/20/19 4,891,800,000 59,849 Government of Japan, 1.30%, 6/20/20 8,335,950,000 101,847 Government of Japan, 1.40%, 3/20/18 3,700,550,000 45,373 Government of Japan, 1.50%, 3/20/19 3,839,900,000 47,522 Government of Japan, 1.50%, 6/20/19 1,075,350,000 13,314 Government of Japan, 1.70%, 3/20/17 4,114,500,000 50,569 Government of Japan, 1.70%, 9/20/17 8,813,950,000 109,025 Government of Japan, 1.70%, 6/20/32 1,053,900,000 12,110 Government of Japan, 2.00%, 12/20/33 2,377,350,000 28,489 Government of Japan, 2.30%, 6/20/28 19,444,250,000 252,179 Government of Japan, 2.30%, 3/20/40 5,485,550,000 68,369 Total Japan (Cost $1,011,578) 986,583 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 28 KAZAKHSTAN 0.0% Corporate Bonds 0.0% HSBK Europe, 7.25%, 5/3/17 (USD) 1,000,000 1,099 Total Kazakhstan (Cost $1,002) 1,099 LUXEMBOURG 0.5% Corporate Bonds 0.5% Altice Financing, 8.00%, 12/15/19 (1) 1,500,000 2,094 Cirsa Finance Luxembourg, 8.75%, 5/15/18 5,500,000 7,160 Gategroup Finance, 6.75%, 3/1/19 (1) 1,200,000 1,679 Numericable Finance, 8.75%, 2/15/19 (1) 325,000 457 OXEA Finance, 9.625%, 7/15/17 3,000,813 4,372 Sunrise Communications, 7.00%, 12/31/17 (1) 3,500,000 5,012 Sunrise Communications, 7.00%, 12/31/17 500,000 716 Telenet Finance, 6.75%, 8/15/24 3,500,000 4,932 Total Luxembourg (Cost $25,556) 26,422 MALAYSIA 1.6% Government Bonds 1.6% Government of Malaysia, 3.70%, 5/15/13 28,550,000 9,358 Government of Malaysia, 4.16%, 7/15/21 58,966,000 20,160 Government of Malaysia, 4.232%, 6/30/31 7,860,000 2,697 Government of Malaysia, 4.378%, 11/29/19 129,719,000 44,942 Government of Malaysia, 4.498%, 4/15/30 22,162,000 7,879 Total Malaysia (Cost $83,694) 85,036 MEXICO 2.8% Corporate Bonds 0.8% America Movil, 4.125%, 10/25/19 (EUR) 3,580,000 5,454 CEMEX Finance, 9.50%, 12/14/16 (USD) (1) 3,500,000 3,824 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 29 CEMEX Finance, 9.625%, 12/14/17 (EUR) 4,000,000 5,729 Controladora Mabe, 7.875%, 10/28/19 (USD) (1) 2,500,000 2,906 Pemex Project Funding Master Trust, 5.50%, 2/24/25 (EUR) 8,782,000 13,371 Pemex Project Funding Master Trust, 6.375%, 8/5/16 (EUR) 2,479,000 3,804 Petroleos Mexicanos, 5.50%, 1/9/17 (EUR) 2,500,000 3,755 Petroleos Mexicanos, 7.50%, 12/18/13 (GBP) 1,573,000 2,705 Satelites Mexicanos, 9.50%, 5/15/17 (USD) 3,000,000 3,180 44,728 Government Bonds 2.0% Mexican Udibonos, Inflation-Indexed, 2.50%, 12/10/20 114,285,560 9,634 United Mexican States, 5.50%, 2/17/20 (EUR) 8,417,000 13,443 United Mexican States, 6.50%, 6/10/21 101,930,000 8,561 United Mexican States, 7.50%, 6/3/27 217,500,000 19,617 United Mexican States, 8.50%, 11/18/38 542,481,000 53,244 104,499 Total Mexico (Cost $141,037) 149,227 NETHERLANDS 1.7% Corporate Bonds 1.7% ABN Amro Bank, 6.375%, 4/27/21 3,500,000 5,239 Ahold Finance USA, 6.50%, 3/14/17 (GBP) 1,800,000 3,398 Akzo Nobel, 8.00%, 4/6/16 (GBP) 850,000 1,633 Bank Nederlandse Gemeenten, 2.50%, 1/18/16 8,031,000 11,250 Heineken, 3.50%, 3/19/24 2,425,000 3,480 Heineken, 7.125%, 4/7/14 3,081,000 4,389 Heineken, 7.25%, 3/10/15 (GBP) 1,489,000 2,705 Iberdola Finanzas, 4.625%, 4/7/17 2,500,000 3,595 ING Verzekering, 4.00%, 9/18/13 1,950,000 2,625 KBC Ifima, 3.875%, 3/31/15 4,150,000 5,782 Koninklijke, 5.75%, 3/18/16 (GBP) 2,420,000 4,360 Koninklijke, 7.50%, 2/4/19 2,500,000 4,193 Rabobank International, 4.00%, 1/11/22 2,000,000 3,022 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 30 Rabobank Nederland, 4.125%, 1/14/20 2,987,000 4,536 Rabobank Nederland, 4.25%, 1/16/17 3,457,000 5,121 RWE Finance, 6.375%, 6/3/13 (GBP) 595,000 986 RWE Finance, 6.50%, 4/20/21 (GBP) 1,250,000 2,539 RWE Finance, 6.625%, 1/31/19 5,200,000 8,852 UPCB Finance, 7.625%, 1/15/20 3,500,000 5,082 Ziggo Bond, 8.00%, 5/15/18 (1) 3,432,000 4,984 Total Netherlands (Cost $82,868) 87,771 NORWAY 0.5% Corporate Bonds 0.3% DnB NOR Bank, 3.875%, 6/29/20 (EUR) 2,100,000 3,164 DnB NOR Bank, 4.375%, 2/24/21 (EUR) 500,000 776 Nordea Hypotek, 3.50%, 1/18/17 (EUR) 6,080,000 8,909 12,849 Government Bonds 0.2% Kingdom of Norway, 4.25%, 5/19/17 59,524,000 11,952 11,952 Total Norway (Cost $23,335) 24,801 PERU 0.3% Corporate Bonds 0.2% Banco Credito del Peru, 5.375%, 9/16/20 (USD) (1) 3,750,000 4,190 Corp Lindley, 6.75%, 11/23/21 (USD) (1) 3,000,000 3,480 7,670 Government Bonds 0.1% Republic of Peru, 7.84%, 8/12/20 (1) 13,407,000 6,633 6,633 Total Peru (Cost $12,266) 14,303 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 31 PHILIPPINES 0.0% Government Bonds 0.0% Republic of Philippines, 3.90%, 11/26/22 65,000,000 1,644 Total Philippines (Cost $1,583) 1,644 POLAND 2.0% Corporate Bonds 0.3% Ciech Group Financing, 9.50%, 11/30/19 (EUR) (1) 2,100,000 3,046 Cyfrowy Polsat, 7.125%, 5/20/18 (EUR) 2,500,000 3,646 Eileme, 11.75%, 1/31/20 (EUR) (1) 1,700,000 2,636 TPSA Euro Finance, 6.00%, 5/22/14 (EUR) 3,000,000 4,234 TVN Finance, 10.75%, 11/15/17 (EUR) 3,250,000 4,762 18,324 Government Bonds 1.7% Republic of Poland, 3.75%, 1/19/23 (EUR) 9,586,000 13,678 Republic of Poland, 4.75%, 4/25/17 24,524,000 8,420 Republic of Poland, 5.00%, 10/24/13 55,906,000 18,342 Republic of Poland, 5.00%, 4/25/16 22,740,000 7,784 Republic of Poland, 5.50%, 4/25/15 46,865,000 15,942 Republic of Poland, 5.50%, 10/25/19 27,018,000 9,879 Republic of Poland, 5.75%, 9/23/22 33,552,000 12,717 86,762 Total Poland (Cost $97,978) 105,086 RUSSIA 1.1% Corporate Bonds 0.5% Alfa Bank, 7.875%, 9/25/17 (USD) 2,900,000 3,248 Alrosa Finance, 7.75%, 11/3/20 (USD) 2,800,000 3,262 GAZ Capital, 6.605%, 2/13/18 (EUR) 4,000,000 6,305 Metalloinvest Finance, 6.50%, 7/21/16 (USD) (1) 3,000,000 3,161 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 32 Rosneft International Finance, 4.199%, 3/6/22 (USD) (1) 415,000 423 Sberbank Capital, 5.717%, 6/16/21 (USD) 2,500,000 2,805 Severstal, 5.90%, 10/17/22 (USD) (1) 1,400,000 1,419 Severstal, 6.70%, 10/25/17 (USD) 100,000 110 TMK Capital, 7.75%, 1/27/18 (USD) 2,000,000 2,110 VimpelCom, 7.504%, 3/1/22 (USD) 2,300,000 2,642 VimpelCom, 7.748%, 2/2/21 (USD) 200,000 232 VTB Bank, 6.551%, 10/13/20 (USD) 3,000,000 3,345 29,062 Government Bonds 0.6% Russian Federation, 7.85%, 3/10/18 510,000,000 18,237 Russian Federation, FRN, 7.50%, 3/31/30 (USD) 10,365,625 13,334 31,571 Total Russia (Cost $55,749) 60,633 SOUTH AFRICA 1.2% Corporate Bonds 0.1% Sappi Papier, 6.625%, 4/15/18 (EUR) 3,500,000 4,990 4,990 Government Bonds 1.1% Republic of South Africa, 6.75%, 3/31/21 187,956,000 22,712 Republic of South Africa, 8.00%, 12/21/18 152,549,000 19,776 Republic of South Africa, 10.50%, 12/21/26 29,940,000 4,531 Republic of South Africa, 13.50%, 9/15/15 76,961,000 10,924 57,943 Total South Africa (Cost $61,450) 62,933 SOUTH KOREA 1.8% Corporate Bonds 0.1% Export-Import Bank of Korea, 4.625%, 2/20/17 (EUR) 1,236,000 1,831 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 33 Hyundai Capital Services, 3.50%, 9/13/17 (USD) (1) 1,530,000 1,617 3,448 Government Bonds 1.7% Korea Treasury Bond, 4.25%, 6/10/21 16,901,100,000 17,112 Korea Treasury Bond, 4.50%, 3/10/15 49,239,360,000 47,655 Korea Treasury Bond, 5.00%, 6/10/20 23,009,050,000 24,242 89,009 Total South Korea (Cost $80,426) 92,457 SPAIN 4.3% Corporate Bonds 2.1% Banco Bilbao Vizcaya Argentaria, 4.25%, 1/18/17 9,500,000 13,064 Banco Bilbao Vizcaya Argentaria, 4.875%, 1/23/14 3,000,000 4,058 Banco Santander, 4.625%, 1/20/16 19,500,000 27,071 Gas Natural Capital Markets, 4.125%, 1/26/18 2,700,000 3,778 Gas Natural Capital Markets, 5.25%, 7/9/14 1,800,000 2,504 Instituto de Credito Oficial, 4.375%, 5/20/19 10,660,000 13,600 Instituto de Credito Oficial, 4.625%, 1/31/17 3,500,000 4,652 Instituto de Credito Oficial, 6.00%, 3/8/21 9,992,000 13,552 Repsol International Finance, 4.75%, 2/16/17 3,200,000 4,610 Santander International Debt, 3.381%, 12/1/15 1,400,000 1,863 Santander International Debt, 3.50%, 3/10/15 4,450,000 5,944 Telefonica Emisiones, 3.661%, 9/18/17 3,500,000 4,814 Telefonica Emisiones, 4.75%, 2/7/17 3,500,000 5,017 Telefonica Emisiones, 5.375%, 2/2/18 (GBP) 1,900,000 3,261 107,788 Government Bonds 2.2% Kingdom of Spain, 4.10%, 7/30/18 21,314,000 27,597 Kingdom of Spain, 4.40%, 1/31/15 18,319,000 24,680 Kingdom of Spain, 4.60%, 7/30/19 33,593,000 44,254 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 34 Kingdom of Spain, 5.75%, 7/30/32 15,382,000 20,441 116,972 Total Spain (Cost $222,682) 224,760 SUPRANATIONAL 1.1% Corporate Bonds 1.1% European Investment Bank, 8.75%, 8/25/17 (GBP) 13,208,000 28,620 Inter-American Development Bank, 4.40%, 1/26/26 (CAD) 11,649,000 13,196 International Bank for Reconstruction & Development 3.875%, 5/20/19 (EUR) 12,023,000 18,824 Total Supranational (Cost $54,932) 60,640 SWEDEN 1.0% Corporate Bonds 0.8% Nordea Bank, 3.75%, 2/24/17 (EUR) 4,300,000 6,282 Nordea Bank, 3.875%, 12/15/15 (GBP) 1,000,000 1,738 Skandinaviska Enskilda Banken, 3.75%, 5/19/16 (EUR) 2,750,000 3,962 Skandinaviska Enskilda Banken, 6.625%, 7/9/14 (GBP) 1,000,000 1,748 Svenska Handelsbanken, 4.875%, 3/25/14 (EUR) 2,950,000 4,104 Svenska Handelsbanken, 5.50%, 5/26/16 (GBP) 2,800,000 5,130 Swedish Export Credit, 3.625%, 5/27/14 (EUR) 13,760,000 18,970 Verisure Holding, 8.75%, 9/1/18 (EUR) (1) 1,075,000 1,541 43,475 Government Bonds 0.2% Kingdom of Sweden, 3.75%, 8/12/17 45,945,000 7,946 7,946 Total Sweden (Cost $49,715) 51,421 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 35 SWITZERLAND 0.5% Corporate Bonds 0.5% Adecco, 4.75%, 4/13/18 (EUR) 3,000,000 4,399 Cloverie (Zurich), FRN, 7.50%, 7/24/39 (EUR) 4,200,000 6,788 Credit Suisse First Boston (London), 5.125%, 9/18/17 (EUR) 5,500,000 8,553 Matterhorn Mobile Holdings, 8.25%, 2/15/20 (EUR) 3,300,000 4,748 UBS (London), 6.00%, 4/18/18 (EUR) 1,500,000 2,443 UBS (London), 6.375%, 7/20/16 (GBP) 993,000 1,866 Total Switzerland (Cost $27,922) 28,797 TURKEY 0.9% Corporate Bonds 0.2% AkBank, 5.125%, 7/22/15 (USD) (1) 4,000,000 4,240 Anadolu Efes, 3.375%, 11/1/22 (USD) (1) 1,925,000 1,906 Eldorado Gold, 6.125%, 12/15/20 (USD) (1) 1,375,000 1,406 Turkiye Garanti Bankasi, 6.25%, 4/20/21 (USD) (1) 4,000,000 4,606 12,158 Government Bonds 0.7% Republic of Turkey, 6.25%, 9/26/22 (USD) 10,700,000 13,364 Republic of Turkey, 10.00%, 6/17/15 27,064,000 16,539 Republic of Turkey, Inflation-Indexed, 3.00%, 2/23/22 10,859,000 7,475 37,378 Total Turkey (Cost $48,807) 49,536 UKRAINE 0.2% Corporate Bonds 0.2% DTEK Finance, 9.50%, 4/28/15 (USD) 3,000,000 3,037 MHP, 10.25%, 4/29/15 (USD) 3,550,000 3,772 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 36 Mriya Agro Holding, 10.95%, 3/30/16 (USD) 3,000,000 3,060 Total Ukraine (Cost $9,625) 9,869 UNITED ARAB EMIRATES 0.3% Corporate Bonds 0.3% Atlantic Finance, STEP, 10.75%, 5/27/14 (USD) 1,400,000 1,533 DP World Sukuk, 6.25%, 7/2/17 (USD) 2,000,000 2,252 Dubai Electricity & Water, 7.375%, 10/21/20 (USD) (1) 4,000,000 4,940 IPIC, 5.875%, 3/14/21 (EUR) 3,000,000 4,829 Total United Arab Emirates (Cost $11,251) 13,554 UNITED KINGDOM 10.6% Corporate Bonds 5.4% Algeco Scotsman Global Finance, 9.00%, 10/15/18 (EUR) (1) 3,500,000 4,770 Anglo American Capital, 2.75%, 6/7/19 (EUR) 3,000,000 4,063 Aviva, 9.50%, 6/20/16 700,000 1,394 Aviva, FRN, 6.875%, 5/22/38 (EUR) 4,000,000 5,751 B.A.T. International Finance, 5.375%, 6/29/17 (EUR) 3,450,000 5,383 B.A.T. International Finance, 6.375%, 12/12/19 1,680,000 3,410 BAE Systems, 4.125%, 6/8/22 600,000 1,014 Barclays Bank, 4.00%, 10/7/19 (EUR) 18,450,000 28,603 Barclays Bank, 5.25%, 5/27/14 (EUR) 3,700,000 5,188 Barclays Bank, 5.75%, 8/17/21 1,200,000 2,346 Barclays Bank, 6.625%, 3/30/22 (EUR) 2,200,000 3,401 BG Energy Capital, 5.125%, 12/7/17 1,000,000 1,865 BP Capital Markets, 3.83%, 10/6/17 (EUR) 4,000,000 5,938 British Sky Broadcasting Finance, 5.75%, 10/20/17 2,100,000 3,961 British Telecommunications, 6.50%, 7/7/15 (EUR) 1,700,000 2,549 British Telecommunications, 8.625%, 3/26/20 1,700,000 3,746 Centrica, 5.125%, 12/10/14 1,000,000 1,740 Centrica, 7.00%, 9/19/18 600,000 1,221 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 37 Crown Newco, 7.00%, 2/15/18 1,800,000 3,099 Crown Newco 3, 7.00%, 2/15/18 (1) 1,700,000 2,927 Eastern Power Networks, 4.75%, 9/30/21 1,400,000 2,533 Experian Finance, 4.75%, 11/23/18 1,200,000 2,181 Experian Finance, 4.75%, 2/4/20 (EUR) 3,000,000 4,683 FCE Bank, 4.75%, 1/19/15 (EUR) 3,600,000 5,049 FCE Bank, 5.125%, 11/16/15 550,000 962 G4S, 7.75%, 5/13/19 1,200,000 2,396 Heathrow Funding, 4.60%, 2/15/20 (EUR) 3,500,000 5,239 Heathrow Funding, 5.225%, 2/15/25 2,600,000 4,869 HSBC Bank, 3.875%, 10/24/18 (EUR) 5,500,000 8,261 HSBC Bank Canada, 3.558%, 10/4/17 (CAD) 1,120,000 1,187 HSBC Holdings, 6.25%, 3/19/18 (EUR) 2,500,000 3,954 HSBC Holdings, FRN, 9.875%, 4/8/18 2,300,000 3,820 Imperial Tobacco Finance, 4.50%, 7/5/18 (EUR) 4,000,000 6,034 Imperial Tobacco Finance, 6.25%, 12/4/18 250,000 485 Imperial Tobacco Finance, 7.75%, 6/24/19 1,200,000 2,504 Intercontinental Hotels, 6.00%, 12/9/16 1,100,000 2,021 Kingfisher, 5.625%, 12/15/14 1,290,000 2,232 Legal & General Group, FRN, 4.00%, 6/8/25 (EUR) 3,800,000 4,990 Lloyds TSB Bank, 6.375%, 6/17/16 (EUR) 5,950,000 9,208 Lloyds TSB Bank, 6.50%, 3/24/20 (EUR) 2,600,000 3,910 Lloyds TSB Bank, 7.50%, 4/15/24 1,000,000 2,158 Lloyds TSB Bank, 7.625%, 4/22/25 1,000,000 1,875 Marks & Spencer, 5.625%, 3/24/14 1,389,000 2,355 MU Finance, 8.75%, 2/1/17 (1) 2,500,000 4,427 MU Finance, 8.75%, 2/1/17 500,000 885 National Express Group, 6.25%, 1/13/17 1,500,000 2,713 National Grid, 5.00%, 7/2/18 (EUR) 3,933,000 6,166 National Grid, 6.125%, 4/15/14 1,100,000 1,893 National Grid, 6.50%, 4/22/14 (EUR) 1,700,000 2,408 National Grid Gas, 6.00%, 6/7/17 350,000 671 Nationwide Building Society, 3.75%, 1/20/15 (EUR) 3,000,000 4,186 Nationwide Building Society, 4.375%, 2/28/22 (EUR) 9,300,000 15,003 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 38 Nationwide Building Society, 5.625%, 9/9/19 1,300,000 2,482 Nationwide Building Society, 6.75%, 7/22/20 (EUR) 3,000,000 4,622 Next, 5.875%, 10/12/16 1,200,000 2,197 Northumbrian Water Finance, 6.00%, 10/11/17 700,000 1,330 Odeon & UCI Finco, 9.00%, 8/1/18 5,700,000 9,599 R&R Ice Cream, 8.375%, 11/15/17 (EUR) 3,500,000 5,064 Reed Elsevier Investment, 5.625%, 10/20/16 500,000 917 Rentokil Initial, 5.75%, 3/31/16 1,500,000 2,640 Rolls-Royce, 6.75%, 4/30/19 1,000,000 2,033 Royal Bank of Scotland, 4.75%, 5/18/16 (EUR) 2,500,000 3,669 Royal Bank of Scotland, 5.375%, 9/30/19 (EUR) 3,500,000 5,512 Royal Bank of Scotland, 5.75%, 5/21/14 (EUR) 3,000,000 4,215 Royal Bank of Scotland, 6.375%, 4/29/14 1,000,000 1,725 Scottish Power U.K., 6.75%, 5/29/23 400,000 813 Scottish Power U.K., 8.375%, 2/20/17 794,000 1,567 Severn Trent Water Utilities, 5.25%, 3/11/16 (EUR) 2,435,000 3,638 Severn Trent Water Utilities, 6.00%, 1/22/18 900,000 1,719 Standard Chartered, 3.875%, 10/20/16 (EUR) 3,000,000 4,355 Standard Chartered, 6.50%, 4/28/14 800,000 1,389 Tesco, 6.125%, 2/24/22 2,500,000 4,921 The Co-operative Bank, 5.125%, 9/20/17 300,000 523 Vodafone Group, 8.125%, 11/26/18 1,700,000 3,648 282,205 Government Bonds 5.2% Government of the United Kingdom, 3.75%, 9/7/21 21,225,000 40,454 Government of the United Kingdom, 4.25%, 6/7/32 43,197,000 86,526 Government of the United Kingdom, 4.25%, 9/7/39 45,150,000 89,450 Government of the United Kingdom, 4.50%, 3/7/13 8,717,000 14,264 Government of the United Kingdom, 4.50%, 12/7/42 20,763,000 42,935 273,629 Total United Kingdom (Cost $503,288) 555,834 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 39 UNITED STATES 3.7% Corporate Bonds 3.7% American International Group, 6.797%, 11/15/17 (EUR) 2,500,000 3,940 AON Financial Services Luxembourg, 6.25%, 7/1/14 (EUR) 2,300,000 3,259 AT&T, 5.875%, 4/28/17 (GBP) 1,000,000 1,885 Bank of America, 4.625%, 2/18/14 (EUR) 1,587,000 2,177 Bank of America, 4.625%, 8/7/17 (EUR) 4,000,000 5,949 Bank of America, 4.75%, 4/3/17 (EUR) 3,500,000 5,203 Bank of America, 5.50%, 12/4/19 (GBP) 1,750,000 3,235 Caterpillar Financial Services, 2.63%, 6/1/17 (CAD) 1,000,000 1,022 Citigroup, 3.50%, 8/5/15 (EUR) 3,535,000 4,951 Citigroup, 5.00%, 8/2/19 (EUR) 2,688,000 4,173 Citigroup, 6.25%, 9/2/19 (GBP) 1,888,000 3,637 Citigroup, FRN, 0.851%, 5/31/17 (EUR) 1,750,000 2,142 Citigroup, FRN, 4.75%, 2/10/19 (EUR) 1,587,000 2,026 Citigroup Finance Canada, 6.75%, 9/22/14 (CAD) 996,000 1,078 CRH Finance U.K., 7.375%, 5/28/14 (EUR) 3,600,000 5,177 GE Capital Canada Funding, 5.73%, 10/22/37 (CAD) 1,693,000 2,104 GE Capital Euro Funding, 4.625%, 2/22/27 (EUR) 3,750,000 5,924 GE Capital Euro Funding, 5.25%, 5/18/15 (EUR) 5,554,000 8,075 GE Capital Euro Funding, 5.375%, 1/16/18 (EUR) 3,373,000 5,298 GE Capital Trust IV, FRN, 4.625%, 9/15/66 (EUR) 3,000,000 3,875 GE Capital UK Funding, 4.375%, 7/31/19 (GBP) 1,200,000 2,117 GE Capital UK Funding, 5.625%, 12/12/14 (GBP) 2,286,000 4,012 GE Capital UK. Funding, 5.625%, 4/25/19 (GBP) 1,300,000 2,438 GMAC International Finance, 7.50%, 4/21/15 (EUR) 3,600,000 5,204 Goldman Sachs, 4.50%, 1/30/17 (EUR) 6,000,000 8,691 Goldman Sachs, 5.125%, 10/16/14 (EUR) 4,150,000 5,851 Goldman Sachs, 6.125%, 2/14/17 (GBP) 1,195,000 2,193 Goldman Sachs, 6.375%, 5/2/18 (EUR) 591,000 939 IBM, 6.625%, 1/30/14 (EUR) 650,000 914 JPMorgan Chase, 4.25%, 1/25/17 (GBP) 1,000,000 1,760 JPMorgan Chase, 5.25%, 1/14/15 (EUR) 3,000,000 4,312 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 40 JPMorgan Chase, FRN, 4.375%, 11/12/19 (EUR) 2,800,000 3,696 Manpower, 4.50%, 6/22/18 (EUR) 2,000,000 2,914 Merrill Lynch, 4.45%, 1/31/14 (EUR) 3,081,000 4,209 MetLife, 5.25%, 6/29/20 (GBP) 1,000,000 1,882 MetLife Global Funding I, 4.625%, 5/16/17 (EUR) 2,300,000 3,478 Molson Coors International, 3.95%, 10/6/17 (CAD) 2,235,000 2,365 Mondelez International, 6.25%, 3/20/15 (EUR) 2,700,000 3,961 Mondelez International, 7.25%, 7/18/18 (GBP) 1,400,000 2,836 Morgan Stanley, 4.90%, 2/23/17 (CAD) 2,375,000 2,497 Morgan Stanley, 5.00%, 5/2/19 (EUR) 3,000,000 4,412 Morgan Stanley, 5.125%, 11/30/15 (GBP) 2,000,000 3,466 Morgan Stanley Dean Witter, 5.375%, 8/10/20 (EUR) 1,500,000 2,244 Morgan Stanley Dean Witter, 5.50%, 10/2/17 (EUR) 6,000,000 9,037 New York Life Funding, 5.125%, 2/3/15 (GBP) 1,500,000 2,624 New York Life Global Funding, 4.375%, 1/19/17 (EUR) 2,300,000 3,401 Pacific Life Funding, 5.125%, 1/20/15 (GBP) 2,683,000 4,597 PepsiCo, 2.50%, 11/1/22 (GBP) 150,000 242 Philip Morris International, 5.875%, 9/4/15 (EUR) 800,000 1,200 Principal Financial Global Funding II, 4.50%, 1/26/17 (EUR) 3,500,000 5,172 SLM Corporation, 4.75%, 3/17/14 (EUR) 4,000,000 5,412 Toyota Motor Credit, 4.00%, 12/7/17 (GBP) 500,000 898 Unitymedia, 7.50%, 3/15/19 (EUR) (1) 4,175,000 6,048 Wells Fargo, 2.625%, 8/16/22 (EUR) 1,500,000 2,050 Total United States (Cost $182,251) 192,202 SHORT-TERM INVESTMENTS 5.4% Money Market Funds 4.7% T. Rowe Price Reserve Investment Fund, 0.12% (2)(3) 249,146,219 249,146 249,146 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 41 U.S. Treasury Obligations 0.7% U.S. Treasury Notes, 0.625%, 2/28/13 (4) 36,374,000 36,402 36,402 Total Short-Term Investments (Cost $285,548) 285,548 Total Investments in Securities 99.4% of Net Assets (Cost $5,010,036) $ 5,225,809 ‡ Country classifications are generally based on MSCI categories or another unaffiliated third party data provider; securities are denominated in the currency of the country presented unless otherwise noted. (1) Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration only to qualified institutional buyers -- total value of such securities at period-end amounts to $258,030 and represents 4.9% of net assets. (2) Seven-day yield (3) Affiliated Companies (4) At December 31, 2012, all or a portion of this security is pledged as collateral and/or margin deposit to cover future funding obligations. AUD Australian Dollar BRL Brazilian Real CAD Canadian Dollar CHF Swiss Franc CLP Chilean Peso CNY China Renminbi CZK Czech Koruna DKK Danish Krone EUR Euro FRN Floating-Rate Note GBP British Pound HUF Hungarian Forint INR Indian Rupee JPY Japanese Yen KRW South Korean Won MXN Mexican Peso MYR Malaysian Ringgit NOK Norwegian Krone NZD New Zealand Dollar PLN Polish Zloty RUB Russian Ruble SEK Swedish Krona Proof #4 T. Rowe Price International Bond Fund 42 SGD Singapore Dollar STEP Stepped coupon bond for which the coupon rate of interest will adjust on specified future date(s) THB Thai Baht TRY Turkish Lira USD U.S. Dollar ZAR South African Rand Proof #4 T. Rowe Price International Bond Fund (Cost and value in $000s) 43 Notional Amount Market Value Upfront Premiums Paid/(Received) Unrealized Gain (Loss) SWAPS 0.0% Credit Default Swaps, Protection Bought 0.0% United Kingdom 0.0% JPMorgan Chase, Protection Bought (Relevant Credit: United Utilities, 6.875%, 8/15/28) Pay 1.00%, Receive upon credit default 6/20/17 (EUR) 4,000 (30) (49) 19 Total Credit Default Swaps, Protection Bought (49) 19 Total Swaps (49) 19 Proof #4 T. Rowe Price International Bond Fund Forward Currency Exchange Contracts 44 Counterparty Settlement Receive Deliver Unrealized Gain (Loss) Bank of America Merrill Lynch 2/15/13 CZK 195,639 USD 9,797 500 Bank of America Merrill Lynch 2/15/13 JPY 4,728,942 USD 57,788 (3,186) Bank of America Merrill Lynch 2/15/13 NOK 147,526 USD 26,218 284 Bank of America Merrill Lynch 2/15/13 NZD 14,764 USD 11,911 257 Bank of America Merrill Lynch 2/15/13 PLN 101,188 USD 30,746 1,801 Bank of America Merrill Lynch 2/15/13 USD 28,795 BRL 59,634 (170) Bank of America Merrill Lynch 2/15/13 USD 332,419 EUR 260,887 (12,066) Bank of America Merrill Lynch 2/15/13 USD 47,628 GBP 30,063 (1,203) Bank of America Merrill Lynch 2/15/13 USD 26,683 SEK 178,539 (744) Barclays Bank 2/15/13 USD 26,058 GBP 16,149 (172) Citibank 1/22/13 USD 25,359 INR 1,388,152 120 Citibank 2/15/13 CHF 60,277 USD 63,892 2,064 Citibank 2/15/13 MXN 863,212 USD 64,658 1,864 Credit Suisse 2/15/13 CLP 6,090,081 USD 12,525 122 Credit Suisse 2/15/13 TRY 5,287 USD 2,893 53 Credit Suisse 2/15/13 USD 9,162 JPY 750,546 495 Credit Suisse 2/15/13 USD 4,792 ZAR 43,171 (270) Deutsche Bank 1/17/13 USD 5,409 KRW 6,053,342 (240) Deutsche Bank 2/15/13 JPY 531,313 USD 6,468 (333) Deutsche Bank 2/15/13 USD 8,220 EUR 6,459 (309) Deutsche Bank 2/15/13 USD 5,213 JPY 413,323 440 Deutsche Bank 2/15/13 USD 52,042 PLN 172,203 (3,347) Deutsche Bank 3/18/13 INR 1,417,923 USD 25,212 308 Deutsche Bank 3/18/13 INR 1,402,439 USD 25,308 (67) (Amounts in 000s) Proof #4 T. Rowe Price International Bond Fund Forward Currency Exchange Contracts 45 (continued) Counterparty Settlement Receive Deliver Unrealized Gain (Loss) Goldman Sachs 1/22/13 INR 710,211 USD 13,029 (116) Goldman Sachs 2/15/13 EUR 36,602 USD 48,229 101 Goldman Sachs 2/15/13 JPY 1,966,264 USD 23,583 (880) Goldman Sachs 2/15/13 SEK 474,101 USD 69,703 3,127 Goldman Sachs 2/15/13 USD 66,684 AUD 64,385 36 Goldman Sachs 2/15/13 USD 3,321 EUR 2,610 (125) Goldman Sachs 3/18/13 USD 26,584 INR 1,429,953 848 HSBC Bank 1/17/13 USD 2,512 KRW 2,801,634 (102) HSBC Bank 1/22/13 INR 749,474 USD 13,895 (268) HSBC Bank 2/8/13 USD 26,574 CNY 167,175 (193) HSBC Bank 2/15/13 RUB 2,781,098 USD 86,839 3,521 HSBC Bank 2/15/13 USD 41,979 EUR 32,919 (1,489) HSBC Bank 2/15/13 USD 27,338 JPY 2,226,860 1,626 HSBC Bank 2/19/13 MYR 82,491 USD 26,774 113 JPMorgan Chase 1/17/13 KRW 2,850,221 USD 2,592 68 JPMorgan Chase 2/15/13 CAD 1,242 USD 1,246 1 JPMorgan Chase 2/15/13 DKK 3,710 USD 661 (4) JPMorgan Chase 2/15/13 EUR 14,696 USD 19,269 137 JPMorgan Chase 2/15/13 GBP 877 USD 1,403 21 JPMorgan Chase 2/15/13 GBP 768 USD 1,249 (1) JPMorgan Chase 2/15/13 HUF 180,946 USD 798 18 JPMorgan Chase 2/15/13 USD 1,820 AUD 1,759 - JPMorgan Chase 2/15/13 USD 12,888 EUR 10,103 (453) JPMorgan Chase 2/15/13 USD 5,692 GBP 3,578 (118) JPMorgan Chase 2/15/13 USD 17,232 JPY 1,486,031 73 JPMorgan Chase 2/15/13 USD 3,814 MXN 49,727 (18) JPMorgan Chase 2/15/13 USD 1,122 NOK 6,395 (27) JPMorgan Chase 2/15/13 USD 2,003 RUB 61,588 2 JPMorgan Chase 2/15/13 USD 3,898 ZAR 34,095 (100) JPMorgan Chase 3/18/13 USD 1,573 KRW 1,685,627 5 Morgan Stanley 2/15/13 CAD 41,033 USD 40,912 303 Morgan Stanley 2/15/13 JPY 16,526,077 USD 208,187 (17,371) Morgan Stanley 2/15/13 USD 10,048 EUR 7,597 17 Morgan Stanley 2/20/13 CNY 165,673 USD 26,366 132 Royal Bank of Canada 2/15/13 CAD 5,542 USD 5,530 36 Royal Bank of Canada 2/15/13 CAD 2,144 USD 2,169 (15) Royal Bank of Canada 2/15/13 USD 24,215 GBP 15,268 (585) (Amounts in 000s) Proof #4 T. Rowe Price International Bond Fund Forward Currency Exchange Contracts 46 (continued) Counterparty Settlement Receive Deliver Unrealized Gain (Loss) Royal Bank of Scotland 2/15/13 AUD 26,141 USD 27,457 (397) Royal Bank of Scotland 2/20/13 USD 26,342 CNY 165,673 (157) Standard Chartered 1/17/13 KRW 2,908,816 USD 2,681 33 Standard Chartered 2/8/13 CNY 167,175 USD 26,548 218 Standard Chartered 2/15/13 JPY 15,763,405 USD 197,072 (15,062) Standard Chartered 2/15/13 SGD 18,110 USD 14,799 25 Standard Chartered 2/15/13 THB 1,257,624 USD 40,802 209 Standard Chartered 3/18/13 KRW 28,685,943 USD 26,588 90 Standard Chartered 3/21/13 MYR 30,985 USD 10,086 (7) State Street 2/15/13 BRL 1,985 USD 932 32 State Street 2/15/13 DKK 33,775 USD 5,780 200 State Street 2/15/13 GBP 3,194 USD 5,153 36 State Street 2/15/13 JPY 3,123,982 USD 38,954 (2,883) State Street 2/15/13 USD 2,376 CAD 2,359 7 State Street 2/15/13 USD 5,598 CAD 5,586 (13) State Street 2/15/13 USD 3,815 DKK 21,849 (53) State Street 2/15/13 USD 2,953 EUR 2,269 (43) State Street 2/15/13 USD 3,189 GBP 1,990 (43) State Street 2/15/13 USD 2,698 JPY 222,253 132 State Street 2/15/13 USD 22,730 MXN 291,949 232 State Street 2/15/13 USD 1,313 MXN 17,068 (3) State Street 2/15/13 USD 2,455 RUB 76,808 (41) State Street 2/15/13 USD 882 TRY 1,590 (4) UBS Investment Bank 2/15/13 NOK 465,073 USD 80,567 2,982 Net unrealized gain (loss) on open forward currency exchange contracts $ (39,989) (Amounts in 000s) Proof #4 T. Rowe Price International Bond Fund 47 Short, 390 Government of Canada ten year contracts 3/13 $ (52,861) $ 113 Short, 968 U.S. Treasury ten year contracts 3/13 (128,532) 768 Short, 376 U.S. Treasury five year contracts 3/13 (46,780) 93 Net payments (receipts) of variation margin to date 0 Unrealized gain (loss) on futures contracts $ 974 Futures Contracts ($000s) Expiration Contract Value Unrealized Gain (Loss) Proof #4 T. Rowe Price International Bond Fund 48 The accompanying notes are an integral part of these financial statements. Affiliated Companies ($000s) The fund may invest in certain securities that are considered affiliated companies. As defined by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. Based on the fund’s relative ownership, the following securities were considered affiliated companies for all or some portion of the year ended December 31, 2012. Purchase and sales cost and investment income reflect all activity for the period then ended. Affiliate Purchase Cost Sales Cost Investment Income Value 12/31/12 Value 12/31/11 T. Rowe Price Reserve Investment Fund, 0.12% ¤ ¤ $ 173 $ 249,146 $ 43,881 Totals $ 173 $ 249,146 $ 43,881 ¤ Purchase and sale information not shown for cash management funds. Amounts reflected on the accompanying financial statements include the following amounts related to affiliated companies: Investment in securities, at cost $ 249,146 Dividend income 173 Interest income - Investment income $ 173 Realized gain (loss) on securities $ - Capital gain distributions from mutual funds $ - Proof #4 49 T. Rowe Price International Bond Fund December 31, 2012 ($000s, except shares and per share amounts) Statement of Assets and Liabilities Assets Investments in securities, at value (cost $5,010,036) $ 5,225,809 Interest receivable 83,734 Unrealized gain on forward currency exchange contracts 22,689 Foreign currency (cost $16,891) 16,785 Receivable for shares sold 6,839 Cash and currency deposits on futures contracts (including $976 of restricted cash) 1,628 Unrealized gain on futures contracts 974 Cash 20 Unrealized gain on swaps 19 Other assets 881 Total assets 5,359,378 Liabilities Unrealized loss on forward currency exchange contracts 62,678 Payable for shares redeemed 21,539 Payable for investment securities purchased 16,095 Investment management fees payable 2,908 Due to affiliates 350 Swap premiums received 49 Other liabilities 913 Total liabilities 104,532 NET ASSETS $ 5,254,846 Net Assets Consist of: Accumulated undistributed net realized gain $ 8,326 Net unrealized gain 178,384 Paid-in capital applicable to 520,297,668 shares of $0.01 par value capital stock outstanding; 4,500,000,000 shares of the Corporation authorized 5,068,136 NET ASSETS $ 5,254,846 Proof #4 50 T. Rowe Price International Bond Fund December 31, 2012 The accompanying notes are an integral part of these financial statements. Statement of Assets and Liabilities NET ASSET VALUE PER SHARE Investor Class ($4,971,573,454 / 492,280,948 shares outstanding) $ 10.10 Advisor Class ($283,272,986 / 28,016,720 shares outstanding) $ 10.11 Proof #4 T. Rowe Price International Bond Fund ($000s) Statement of Operations 51 Year Ended 12/31/12 Investment Income (Loss) Income Interest $ 161,207 Dividend 173 Other 324 Total income 161,704 Expenses Investment management 33,327 Shareholder servicing Investor Class $ 6,980 Advisor Class 565 7,545 Rule 12b-1 fees Advisor Class 831 Prospectus and shareholder reports Investor Class 664 Advisor Class 93 757 Custody and accounting 1,290 Registration 112 Legal and audit 57 Directors 38 Miscellaneous 31 Total expenses 43,988 Net investment income 117,716 Proof #4 T. Rowe Price International Bond Fund ($000s) Statement of Operations 52 The accompanying notes are an integral part of these financial statements. Year Ended 12/31/12 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities 28,703 Futures (12,161) Swaps 1,115 Foreign currency transactions 23,034 Net realized gain 40,691 Change in net unrealized gain (loss) Securities 194,663 Futures 3,091 Swaps (989) Other assets and liabilities denominated in foreign currencies (58,638) Change in net unrealized gain (loss) 138,127 Net realized and unrealized gain (loss) 178,818 INCREASE IN NET ASSETS FROM OPERATIONS $ 296,534 Proof #4 T. Rowe Price International Bond Fund ($000s) 53 Statement of Changes in Net Assets Year Ended 12/31/12 12/31/11 Increase (Decrease) in Net Assets Operations Net investment income $ 117,716 $ 136,613 Net realized gain 40,691 66,331 Change in net unrealized gain (loss) 138,127 (56,868) Increase in net assets from operations 296,534 146,076 Distributions to shareholders Net investment income Investor Class (111,036) (124,637) Advisor Class (6,725) (12,163) Net realized gain Investor Class – (100,972) Advisor Class – (8,716) Decrease in net assets from distributions (117,761) (246,488) Capital share transactions* Shares sold Investor Class 1,095,480 1,366,094 Advisor Class 125,944 235,892 Distributions reinvested Investor Class 103,945 207,940 Advisor Class 6,379 19,695 Shares redeemed Investor Class (1,171,136) (1,106,204) Advisor Class (265,737) (374,736) Redemption fees received 590 870 Increase (decrease) in net assets from capital share transactions (104,535) 349,551 Net Assets Increase during period 74,238 249,139 Beginning of period 5,180,608 4,931,469 End of period $ 5,254,846 $ 5,180,608 Undistributed net investment income – – Proof #4 T. Rowe Price International Bond Fund 54 The accompanying notes are an integral part of these financial statements. Statement of Changes in Net Assets (000s) Year Ended 12/31/12 12/31/11 *Share information Shares sold Investor Class 109,898 134,558 Advisor Class 12,730 23,313 Distributions reinvested Investor Class 10,429 20,865 Advisor Class 640 1,972 Shares redeemed Investor Class (118,349) (107,732) Advisor Class (26,884) (37,042) Increase (decrease) in shares outstanding (11,536) 35,934 Proof #4 55 T. Rowe Price International Bond Fund December 31, 2012 Notes to Financial Statements T. Rowe Price International Funds, Inc. (the corporation), is registered under the Investment Company Act of 1940 (the 1940 Act). The International Bond Fund (the fund) is a nondiversified, open-end management investment company established by the corporation. The fund seeks to provide high current income and capital appreciation by investing primarily in high-quality, nondollar- denominated bonds outside the U.S. The fund has two classes of shares: the International Bond Fund original share class, referred to in this report as the Investor Class, offered since September 10, 1986, and the International Bond Fund–Advisor Class (Advisor Class), offered since March 31, 2000. Advisor Class shares are sold only through unaffiliated brokers and other unaffiliated financial intermediaries that are compensated by the class for distribution, share- holder servicing, and/or 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. NOTE 1 - SIGNIFICaNT aCCOUNTING POLICIES Basis of Preparation The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), which require the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Premiums and discounts on debt securities are amortized for financial reporting purposes. Paydown gains and losses are recorded as an adjustment to interest income. Inflation adjustments to the principal amount of inflation-indexed bonds are reflected as interest income. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex- dividend date. Income tax-related interest and penalties, if incurred, would Proof #4 56 T. Rowe Price International Bond Fund be recorded as income tax expense. 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 on the ex-dividend date. Income distributions are declared by each class daily and paid monthly. Capital gain distributions, if any, are generally declared and paid by the fund annually. Currency Translation Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses. Class accounting The Advisor Class pays distribution, shareholder servicing, and/or certain administrative expenses in the form of Rule 12b-1 fees, in an amount not exceeding 0.25% of the class’s average daily net assets. Shareholder servicing, prospectus, and shareholder report expenses incurred by each class are charged directly to the class to which they relate. Expenses common to both classes and investment income are allocated to the classes based upon the relative daily net assets of each class’s settled shares; realized and unrealized gains and losses are allocated based upon the relative daily net assets of each class’s outstanding shares. Credits The fund earns credits on temporarily uninvested cash balances held at the custodian, which reduce the fund’s custody charges. Custody expense in the accompanying financial statements is presented before reduction for credits. Redemption Fees A 2% fee is assessed on redemptions of fund shares held for 90 days or less to deter short-term trading and to protect the interests of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund and are recorded as an increase to paid-in capital. The fees may cause the redemption price per share to differ from the net asset value per share. In-kind Redemptions In accordance with guidelines described in the fund’s prospectus, the fund may distribute portfolio securities rather than cash as payment for a redemption of fund shares (in-kind redemption). For financial Proof #4 57 T. Rowe Price International Bond Fund reporting purposes, the fund recognizes a gain on in-kind redemptions to the extent the value of the distributed securities on the date of redemption exceeds the cost of those securities; the fund recognizes a loss if cost exceeds value. Gains and losses realized on in-kind redemptions are not recognized for tax purposes and are reclassified from undistributed realized gain (loss) to paid-in capital. During the year ended December 31, 2012, the fund realized $750,000 of net loss on $10,784,000 of in-kind redemptions. New accounting Pronouncements In December 2011, the FASB issued amended guidance to enhance disclosure for offsetting assets and liabilities. The guidance is effective for fiscal years and interim periods beginning on or after January 1, 2013. Adoption will have no effect on the fund’s net assets or results of operations. NOTE 2 - vaLUaTION The fund’s financial instruments are reported at fair value as defined by GAAP. The fund determines the values of its assets and liabilities and computes each class’s net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. valuation Methods Debt securities are generally traded in the over-the-counter (OTC) market. Securities with remaining maturities of one year or more at the time of acquisition are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service, which considers the yield or price of bonds of comparable quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Securities with remaining maturities of less than one year at the time of acquisition generally use amortized cost in local currency to approximate fair value. However, if amortized cost is deemed not to reflect fair value or the fund holds a significant amount of such securities with remaining maturities of more than 60 days, the securities are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service. Investments in mutual funds are valued at the mutual fund’s closing net asset value per share on the day of valuation. Financial futures contracts are valued at closing settlement prices. Forward currency exchange contracts are valued using the prevailing forward exchange rate. Swaps are valued at prices furnished by independent swap dealers or by an independent pricing service. Proof #4 58 T. Rowe Price International Bond Fund Other investments, including restricted securities and private placements, and those financial instruments 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 the T. Rowe Price Valuation Committee, established by the fund’s Board of Directors (the Board). Subject to oversight by the Board, the Valuation Committee develops pricing-related policies and procedures and approves all fair-value determinations. The Valuation Committee regularly makes good faith judgments, using a wide variety of sources and information, to establish and adjust valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of private-equity instruments, the Valuation Committee considers a variety of factors, including the company’s business prospects, its financial performance, strategic events impacting the company, relevant valuations of similar companies, new rounds of financing, and any negotiated transactions of significant size between other investors in the company. Because any fair-value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions. valuation Inputs Various inputs are used to determine the value of the fund’s financial instruments. These inputs are summarized in the three broad levels listed below: Level 1 – quoted prices in active markets for identical financial instruments Level 2 – observable inputs other than Level 1 quoted prices (including, but not limited to, quoted prices for similar financial instruments, interest rates, prepayment speeds, and credit risk) Level 3 – unobservable inputs Observable inputs are those based on market data obtained from sources inde- pendent of the fund, and unobservable inputs reflect the fund’s own assumptions based on the best information available. The input levels are not necessarily an Proof #4 59 T. Rowe Price International Bond Fund indication of the risk or liquidity associated with financial instruments at that level. The following table summarizes the fund’s financial instruments, based on the inputs used to determine their values on December 31, 2012: ($000s) Level 1 Level 2 Level 3 Total value Quoted Prices Significant Observable Inputs Significant Unobservable Inputs assets Investments in Securities, except: $ — $ 4,940,261 $ — $ 4,940,261 Short-Term Investments 249,146 36,402 — 285,548 Total Securities 249,146 4,976,663 — 5,225,809 Futures Contracts 974 — — 974 Forward Currency Exchange Contracts — 22,689 — 22,689 Total $ 250,120 $ 4,999,352 $ — $ 5,249,472 Liabilities Swaps $ — $ 30 $ — $ 30 Forward Currency Exchange Contracts — 62,678 — 62,678 Total $ — $ 62,708 $ — $ 62,708 NOTE 3 - DERIvaTIvE INSTRUMENTS During the year ended December 31, 2012, the fund invested in derivative instruments. As defined by GAAP, a derivative is a financial instrument whose value is derived from an underlying security price, foreign exchange rate, interest rate, index of prices or rates, or other variable; it requires little or no initial investment and permits or requires net settlement. The fund invests in derivatives only if the expected risks and rewards are consistent with its investment objectives, policies, and overall risk profile, as described Proof #4 60 T. Rowe Price International Bond Fund in its prospectus and Statement of Additional Information. The fund may use derivatives for a variety of purposes, such as seeking to hedge against declines in principal value, increase yield, invest in an asset with greater efficiency and at a lower cost than is possible through direct investment, or to adjust portfolio duration and credit exposure. The risks associated with the use of derivatives are different from, and potentially much greater than, the risks associated with investing directly in the instruments on which the derivatives are based. Investments in derivatives can magnify returns positively or negatively; however, the fund at all times maintains sufficient cash reserves, liquid assets, or other SEC-permitted asset types to cover the settlement obligations under its open derivative contracts. The fund values its derivatives at fair value, as described below and in Note 2, and recognizes changes in fair value currently in its results of operations. Accordingly, the fund does not follow hedge accounting, even for deriva- tives employed as economic hedges. The fund does not offset the fair value of derivative instruments against the right to reclaim or obligation to return collateral. The following table summarizes the fair value of the fund’s deriva- tive instruments held as of December 31, 2012, and the related location on the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure: ($000s) Location on Statement of assets and Liabilities Fair value assets Interest rate derivatives Futures* $ 974 Foreign exchange derivatives Forwards 22,689 Total $ 23,663 Liabilities Foreign exchange derivatives Forwards $ 62,678 Credit derivatives Swaps 30 Total $ 62,708 * The fair value presented includes cumulative gain (loss) on open futures contracts; however, the value reflected on the accompanying Statement of Assets and Liabilities is only the unsettled variation margin receivable (payable) at that date. Proof #4 61 T. Rowe Price International Bond Fund Additionally, the amount of gains and losses on derivative instruments recognized in fund earnings during the year ended December 31, 2012, and the related location on the accompanying Statement of Operations is summa- rized in the following table by primary underlying risk exposure: ($000s) Location of Gain (Loss) on Statement of Operations Futures Foreign Currency Transactions Swaps Total Realized Gain (Loss) Interest rate derivatives $ (12,161) $ — $ 1,160 $ (11,001) Foreign exchange derivatives — 25,350 — 25,350 Credit derivatives — — (45) (45) Total $ (12,161) $ 25,350 $ 1,115 $ 14,304 Change in Unrealized Gain (Loss) Interest rate derivatives $ 3,091 $ – $ (1,008) $ 2,083 Foreign exchange derivatives — (65,288) — (65,288) Credit derivatives — — 19 19 Total $ 3,091 $ (65,288) $ (989) $ (63,186) Forward Currency Exchange Contracts The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. It uses forward currency exchange contracts (forwards) primarily to protect its non-U.S. dollar-denominated securities from adverse currency movements and to gain exposure to currencies for the purposes of risk management or enhanced return. A forward involves an obligation to purchase or sell a fixed amount of a specific currency on a future date at a price set at the time of the contract. Although certain forwards may be settled by exchanging only the net gain or loss on the contract, most forwards are settled with the exchange of the underlying currencies in accordance with the specified terms. Forwards are valued at the unrealized gain or loss on the contract, which reflects the net amount the fund either is entitled to receive or obligated to deliver, as measured by the difference between the forward exchange rates at the date of entry into the contract and the forward rates at the reporting date. Appreciated forwards are reflected as assets, and depreciated forwards are reflected as Proof #4 62 T. Rowe Price International Bond Fund liabilities on the accompanying Statement of Assets and Liabilities. Risks related to the use of forwards include the possible failure of counterparties to meet the terms of the agreements; that anticipated currency movements will not occur, thereby reducing the fund’s total return; and the potential for losses in excess of the fund’s initial investment. During the year ended December 31, 2012, the fund’s exposure to forwards, based on underlying notional amounts, was generally between 28% and 35% of net assets. Futures Contracts The fund is subject to interest rate risk in the normal course of pursuing its investment objectives and uses futures contracts to help manage such risk. The fund may enter into futures contracts to manage exposure to interest rate and yield curve movements, security prices, foreign currencies, credit quality, and mortgage prepayments; as an efficient means of adjusting exposure to all or part of a target market; to enhance income; as a cash management tool; and/or to adjust portfolio duration and credit exposure. A futures contract provides for the future sale by one party and purchase by another of a specified amount of a particular underlying financial instrument at an agreed-upon price, date, time, and place. The fund currently invests only in exchange-traded futures, which generally are standardized as to maturity date, underlying financial instrument, and other contract terms. The fund is required to deposit collateral with the broker in the form of cash or securities in an amount sufficient to cause the value of its account to equal a specified percentage of the aggregate value of the fund’s futures contracts with that broker (margin requirement). The margin requirement must then be maintained at the established level over the life of the contract and is restricted from withdrawal by the fund; however, any amounts in excess of the margin requirement may be withdrawn at the fund’s election. Fluctuations in the value of a futures contract reflect changes in the value of the underlying financial instrument and are recorded as unrealized gain or loss until the contract is closed. The value of a futures contract included in net assets is the cumulative amount of unrealized gain or loss; appreciated contracts are reflected as assets and depreciated contracts are reflected as liabilities on the accompanying Statement of Assets and Liabilities. In addition, cash and currencies held by the broker are reflected as deposits on futures contracts. Risks related to the use of futures contracts include possible illiquidity of the futures markets, contract prices that can be highly volatile and imperfectly correlated to movements in hedged security values and/or interest rates, and potential losses in excess of the fund’s initial investment. During the year ended December 31, 2012, the fund’s exposure to futures, based on underlying notional amounts, was generally between 3% and 5% of net assets. Proof #4 63 T. Rowe Price International Bond Fund Swaps The fund is subject to interest rate risk, and credit risk in the normal course of pursuing its investment objectives and uses swap contracts to help manage such risks. The fund may use swaps in an effort to manage exposure to changes in interest rates, inflation rates, and credit quality; to adjust overall exposure to certain markets; to enhance total return or protect the value of portfolio securities; to serve as a cash management tool; and/or to adjust port- folio duration and credit exposure. The value of a swap included in net assets is the unrealized gain or loss on the contract plus or minus any unamortized premiums paid or received, respectively. Appreciated swaps and premiums paid are reflected as assets, and depreciated swaps and premiums received are reflected as liabilities on the accompanying Statement of Assets and Liabilities. Net periodic receipts or payments required by swaps are accrued daily and are recorded as realized gain or loss for financial reporting purposes when settled; fluctuations in the fair value of swaps are reflected in the change in net unrealized gain or loss and are reclassified to realized gain or loss upon termination prior to maturity or cash settlement. Interest rate swaps are agreements to exchange cash flows based on the difference between specified interest rates applied to a notional principal amount for a specified period of time. Risks related to the use of interest rate swaps include the potential for unanticipated movements in interest and/or currency rates, the possible failure of a counterparty to perform in accordance with the terms of the swap agreements, potential government regulation that could adversely affect the fund’s swap investments, and potential losses in excess of the fund’s initial investment. Credit default swaps are agreements where one party (the protection buyer) agrees to make periodic payments to another party (the protection seller) in exchange for protection against specified credit events, such as certain defaults and bankruptcies related to an underlying credit instrument, or issuer or index of such instruments. Upon occurrence of a specified credit event, the protection seller is required to pay the buyer the difference between the notional amount of the swap and the value of the underlying credit, either in the form of a net cash settlement or by paying the gross notional amount and accepting delivery of the relevant underlying credit. For credit default swaps where the underlying credit is an index, a specified credit event may affect all or individual underlying securities included in the index and will be settled based upon the relative weighting of the affected underlying security(s) within the index. Risks related to the use of credit default swaps include the possible inability of the fund to accurately assess the current and future creditworthiness of underlying issuers, the possible failure of a counterparty to perform in accordance with the terms Proof #4 64 T. Rowe Price International Bond Fund of the swap agreements, potential government regulation that could adversely affect the fund’s swap investments, and potential losses in excess of the fund’s initial investment. During the year ended December 31, 2012, the fund’s exposure to swaps, based on underlying notional amounts, was generally less than 1% of net assets. NOTE 4 - OTHER INvESTMENT TRaNSaCTIONS Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks and/or to enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund’s prospectus and Statement of Additional Information. Emerging Markets At December 31, 2012, approximately 19% of the fund’s net assets were invested, either directly or through investments in T. Rowe Price institutional funds, in securities of companies located in emerging markets, securities issued by governments of emerging market countries, and/or securities denominated in or linked to the currencies of emerging market countries. Emerging market securities are often subject to greater price volatility, less liquidity, and higher rates of inflation than U.S. securities. In addition, emerging markets may be subject to greater political, economic, and social uncertainty, and differing regulatory environments that may potentially impact the fund’s ability to buy or sell certain securities or repatriate proceeds to U.S. dollars. Restricted Securities The fund may invest in securities that are subject to legal or contractual restrictions on resale. Prompt sale of such securities at an acceptable price may be difficult and may involve substantial delays and additional costs. Counterparty Risk and Collateral The fund has entered into collateral agree- ments with certain counterparties to mitigate counterparty risk associated with certain over-the-counter (OTC) financial instruments, including swaps, forward currency exchange contracts, TBA purchase commitments, and OTC options (collectively, covered OTC instruments). Subject to certain minimum exposure requirements (which typically range from $100,000 to $500,000), collateral requirements generally are determined and transfers made based on the net aggregate unrealized gain or loss on all OTC instruments covered by a particular collateral agreement with a specified counterparty. At any point in time, the fund’s risk of loss from counterparty credit risk on covered OTC instruments is the aggregate unrealized gain on appreciated covered OTC instruments in Proof #4 65 T. Rowe Price International Bond Fund excess of collateral, if any, pledged by the counterparty to the fund. Further, in accordance with the terms of the relevant agreements, counterparties to certain OTC instruments may be able to terminate the contracts prior to maturity upon the occurrence of certain stated events, such as a decline in net assets above a certain percentage or a failure by the fund to perform its obligations under the contract. Upon termination, all transactions would typically be liquidated and a net amount would be owed by or payable to the fund. Counterparty risk related to exchange-traded futures and options contracts is minimal because the exchange’s clearinghouse provides protection against counterparty defaults. Generally, for exchange-traded derivatives such as futures and options, each broker, in its sole discretion, may change margin requirements applicable to the fund. Collateral can be in the form of cash or debt securities issued by the U.S. government or related agencies. For OTC instruments, collateral both pledged by the fund to a counterparty and pledged by a counterparty to the fund, is held in a segregated account by a third-party agent. For exchange-traded instruments, margin posted by the fund is held by the broker. Cash posted by the fund as collateral or to meet margin requirements is reflected as restricted cash in the accompanying financial statements and securities posted by the fund are so noted in the accompanying Portfolio of Investments; both remain in the fund’s assets. Collateral pledged by counterparties is not included in the fund’s assets because the fund does not obtain effective control over those assets. As of December 31, 2012, securities valued at $34,234,000 had been posted by the fund to counterparties for covered OTC instruments. As of December 31, 2012, collateral pledged by counterparties to the fund for covered OTC instruments consisted of securities valued at $11,219,000. As of December 31, 2012, cash of $1,628,000 had been posted by the fund to the broker for exchange- traded derivatives. Other Purchases and sales of portfolio securities other than short-term securities aggregated $2,531,980,000 and $2,775,617,000, respectively, for the year ended December 31, 2012. NOTE 5 - FEDERaL INCOME TaxES No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Distributions determined in accordance with federal income Proof #4 66 T. Rowe Price International Bond Fund tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences. The fund files U.S. federal, state, and local tax returns as required. The fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended to six years in certain circumstances. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes. Reclassifications to paid-in capital relate primarily to redemptions in kind. Reclassifications between income and gain relate primarily to per-share rounding of distributions. For the year ended December 31, 2012, the following reclassifi- cations were recorded to reflect tax character (there was no impact on results of operations or net assets): Undistributed net investment income $ 45 Undistributed net realized gain 756 Paid-in capital (801) ($000s) Distributions during the years ended December 31, 2012 and December 31, 2011, totaled $117,761,000 and $246,488,000, respectively, and were characterized as ordinary income for tax purposes. At December 31, 2012, the tax-basis cost of investments and components of net assets were as follows: Cost of investments $ 5,027,675 Unrealized appreciation $ 296,508 Unrealized depreciation (95,227) Net unrealized appreciation (depreciation) 201,281 Undistributed long-term capital gain 15,027 Late-year ordinary loss deferrals (29,598) Paid-in capital 5,068,136 Net assets $ 5,254,846 ($000s) Proof #4 67 T. Rowe Price International Bond Fund The difference between book-basis and tax-basis net unrealized appreciation (depreciation) is attributable to the deferral of losses from wash sales and certain derivative contracts, and the realization of gains/losses on certain open derivative contracts for tax purposes. The fund intends to retain realized gains to the extent of available capital loss carryforwards. Net realized capital losses may be carried forward indefinitely to offset future realized capital gains. During the year ended December 31, 2012, the fund utilized $28,378,000 of capital loss carryforwards. In accordance with federal tax laws applicable to investment companies, specified net losses realized between November 1 and December 31, are not recognized for tax purposes until the subsequent year (late-year ordinary loss deferrals); however, such losses are recognized for financial reporting purposes in the year realized. NOTE 6 - RELaTED PaRTY TRaNSaCTIONS The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). Price Associates has entered into a subadvisory agreement with T. Rowe Price International Ltd, a wholly owned subsidiary of Price Associates, to provide investment advisory services to the fund; the subadvisory agreement provides that Price Associates may pay the subadvisor up to 60% of the management fee that Price Associates receives from the fund. The investment management agreement between the fund and Price Associates provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.35% of the fund’s average daily net assets, and a group fee. The group fee rate is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.28% for assets in excess of $300 billion. The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. At December 31, 2012, the effective annual group fee rate was 0.30%. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share prices and provides certain other administrative services to the fund. T. Rowe Price Services, Inc., provides shareholder and administrative services in its capacity as the fund’s transfer Proof #4 68 T. Rowe Price International Bond Fund and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retirement accounts invested in the Investor Class. For the year ended December 31, 2012, expenses incurred pursuant to these service agreements were $173,000 for Price Associates; $793,000 for T. Rowe Price Services, Inc.; and $54,000 for T. Rowe Price Retirement Plan Services, Inc. The total amount payable at period-end pursuant to these service agreements is reflected as Due to Affiliates in the accompanying financial statements. The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum Funds) and T. Rowe Price Retirement Funds (Retirement Funds) may invest. Neither the Spectrum Funds nor the Retirement Funds invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to separate special servicing agreements, expenses associated with the operation of the Spectrum and Retirement Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum and Retirement Funds, respectively. Expenses allocated under these agreements are reflected as shareholder servicing expenses in the accompanying financial statements. For the year ended December 31, 2012, the fund was allocated $981,000 of Spectrum Funds’ expenses and $2,227,000 of Retirement Funds’ expenses. Of these amounts, $1,919,000 related to services provided by Price. The amount payable at period-end pursuant to this agreement is reflected as Due to Affiliates in the accompanying financial statements. At December 31, 2012, approximately 15% of the outstanding shares of the Investor Class were held by the Spectrum Funds and 29% were held by the Retirement Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the T. Rowe Price Reserve Investment Funds), open-end management investment companies managed by Price Associates and considered affiliates of the fund. The T. Rowe Price Reserve Investment Funds are offered as cash management options to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates and are not available for direct purchase by members of the public. The T. Rowe Price Reserve Investment Funds pay no investment management fees. Proof #4 69 T. Rowe Price International Bond Fund Report of Independent Registered Public Accounting Firm To the Board of Directors of T. Rowe Price International Funds, Inc. and Shareholders of T. Rowe Price International Bond Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of T. Rowe Price International Bond Fund (one of the portfolios comprising T. Rowe Price International Funds, Inc., hereafter referred to as the “Fund”) at December 31, 2012, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2012 by correspondence with the custodian and brokers, and confirmation of the underlying funds by correspondence with the transfer agent, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland February 15, 2013 Proof #4 70 T. Rowe Price International Bond Fund Tax Information (Unaudited) for the Tax Year Ended 12/31/12 We are providing this information as required by the Internal Revenue Code. The amounts shown may differ from those elsewhere in this report because of differences between tax and financial reporting requirements. The fund’s distributions to shareholders included $45,000 from short-term capital gains. A description of the policies and procedures used by T. Rowe Price funds and portfolios to determine how to vote proxies relating to portfolio securities is available in each fund’s Statement of Additional Information, which you may request by calling 1-800-225-5132 or by accessing the SEC’s website, sec.gov. The description of our proxy voting policies and procedures is also available on our website, troweprice.com. To access it, click on the words “Our Company” at the top of our corporate homepage. Then, when the next page appears, click on the words “Proxy voting Policies” on the left side of the page. Each fund’s most recent annual proxy voting record is available on our website and through the SEC’s website. To access it through our website, follow the directions above, then click on the words “Proxy voting Records” on the right side of the Proxy voting Policies page. Information on Proxy Voting Policies, Procedures, and Records The fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available electronically on the SEC’s website (sec.gov); hard copies may be reviewed and copied at the SEC’s Public Reference Room, 100 F St. N.E., Washington, DC 20549. For more information on the Public Reference Room, call 1-800-SEC-0330. How to Obtain Quarterly Portfolio Holdings Proof #4 71 T. Rowe Price International Bond Fund About the Fund’s Directors and Officers Your fund is overseen by a Board of Directors (Board) that meets regularly to review a wide variety of matters affecting the fund, including performance, investment programs, compliance matters, advisory fees and expenses, service providers, and other business affairs. The Board elects the fund’s officers, who are listed in the final table. At least 75% of the Board’s members are independent of T. Rowe Price Associates, Inc. (T. Rowe Price), and its affiliates; “inside” or “interested” directors are employees or officers of T. Rowe Price. The business address of each director and officer is 100 East Pratt Street, Baltimore, Maryland 21202. The Statement of Additional Information includes additional information about the fund directors and is available without charge by calling a T. Rowe Price representative at 1-800-638-5660. Independent Directors Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen] Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years William R. Brody (1944) 2009 [142] President and Trustee, Salk Institute for Biological Studies (2009 to present); Director, Novartis, Inc. (2009 to present); Director, IBM (2007 to present); President and Trustee, Johns hopkins University (1996 to 2009); Chairman of Executive Committee and Trustee, Johns hopkins health System (1996 to 2009) Anthony W. Deering (1945) 1991 [142] Chairman, Exeter Capital, LLC, a private investment firm (2004 to present); Director, Under Armour (2008 to present); Director, vornado Real Estate Investment Trust (2004 to present); Director and Member of the Advisory Board, Deutsche Bank North America (2004 to present); Director, Mercantile Bankshares (2002 to 2007) Donald W. Dick, Jr. (1943) 1988 [142] Principal, EuroCapital Partners, LLC, an acquisition and management advisory firm (1995 to present) Robert J. Gerrard, Jr. (1952) 2012 [90] Chairman of Compensation Committee and Director, Syniverse holdings, Inc. (2008 to 2011); Executive vice President and General Counsel, Scripps Networks, LLC (1997 to 2009); Advisory Board Member, Pipeline Crisis/Winning Strategies (1997 to present) Karen N. horn (1943) 2003 [142] Senior Managing Director, Brock Capital Group, an advisory and investment banking firm (2004 to present); Director, Eli Lilly and Company (1987 to present); Director, Simon Property Group (2004 to present); Director, Norfolk Southern (2008 to present); Director, Fannie Mae (2006 to 2008) *Each independent director serves until retirement, resignation, or election of a successor. Proof #4 72 T. Rowe Price International Bond Fund Independent Directors (continued) Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen] Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years Theo C. Rodgers (1941) 2006 [142] President, A&R Development Corporation (1977 to present) Cecilia E. Rouse, Ph.D. (1963) 2012 [90] Professor and Researcher, Princeton University (1992 to present); Director, MDRC (2011 to present); Member, National Academy of Education (2010 to present); Research Associate, National Bureau of Economic Research’s Labor Studies Program (1998 to 2009 and 2011 to present); Member, President’s Council of Economic Advisors (2009 to 2011); Member, The MacArthur Foundation Network on the Transition to Adulthood and Public Policy (2000 to 2008); Member, National Advisory Committee for the Robert Wood Johnson Foundation’s Scholars in health Policy Research Program (2008); Director and Member, National Economic Association (2006 to 2008); Member, Association of Public Policy Analysis and Management Policy Council (2006 to 2008); Member, hamilton Project’s Advisory Board at The Brookings Institute (2006 to 2008); Chair of Committee on the Status of Minority Groups in the Economic Profession, American Economic Association (2006 to 2008) John G. Schreiber (1946) 2001 [142] Owner/President, Centaur Capital Partners, Inc., a real estate investment company (1991 to present); Cofounder and Partner, Blackstone Real Estate Advisors, L.P. (1992 to present); Director, General Growth Properties, Inc. (2010 to present) Mark R. Tercek (1957) 2009 [142] President and Chief Executive Officer, The Nature Conservancy (2008 to present); Managing Director, The Goldman Sachs Group, Inc. (1984 to 2008) *Each independent director serves until retirement, resignation, or election of a successor. Proof #4 73 T. Rowe Price International Bond Fund Inside Directors Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen] Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years Edward C. Bernard (1956) 2006 [142] Director and vice President, T. Rowe Price; vice Chairman of the Board, Director, and vice President, T. Rowe Price Group, Inc.; Chairman of the Board, Director, and President, T. Rowe Price Investment Services, Inc.; Chairman of the Board and Director, T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Savings Bank, and T. Rowe Price Services, Inc.; Chairman of the Board, Chief Executive Officer, and Director, T. Rowe Price International; Chief Executive Officer, Chairman of the Board, Director, and President, T. Rowe Price Trust Company; Chairman of the Board, all funds Brian C. Rogers, CFA, CIC (1955) 2006 [75] Chief Investment Officer, Director, and vice President, T. Rowe Price; Chairman of the Board, Chief Investment Officer, Director, and vice President, T. Rowe Price Group, Inc.; vice President, T. Rowe Price Trust Company *Each inside director serves until retirement, resignation, or election of a successor. Officers Name (Year of Birth) Position Held With International Funds Principal Occupation(s) Ulle Adamson, CFA (1979) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Roy h. Adkins (1970) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly employee, African Development Bank (to 2008) Christopher D. Alderson (1962) President Director and President–International Equity, T. Rowe Price International; Company’s Representative, Director, and vice President, Price hong Kong; Director and vice President, Price Singapore; vice President, T. Rowe Price Group, Inc. Syed h. Ali (1970) vice President vice President, Price Singapore and T. Rowe Price Group, Inc.; formerly Research Analyst, Credit Suisse Securities (to 2010) Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. Proof #4 74 T. Rowe Price International Bond Fund Officers (continued) Name (Year of Birth) Position Held With International Funds Principal Occupation(s) Paulina Amieva (1981) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly student, harvard Business School (to 2008) Sheena L. Barbosa (1983) vice President Employee, T. Rowe Price Peter J. Bates, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Oliver D.M. Bell, IMC (1969) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly head of Global Emerging Markets Research, Pictet Asset Management Ltd. (to 2011), and Portfolio Manager of Africa and Middle East portfolios and other emerging markets strategies, Pictet Asset Management Ltd. (to 2009) R. Scott Berg, CFA (1972) Executive vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Brian J. Brennan, CFA (1964) vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company Ryan N. Burgess, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Sheldon Chan (1981) vice President vice President, Price hong Kong; formerly Associate Director, hSBC (hong Kong) (to 2011) Tak Yiu Cheng, CFA, CPA (1974) vice President vice President, Price hong Kong and T. Rowe Price Group, Inc.; formerly Analyst, CLS, BNP Paribas, and Deutsche Bank (to 2008) Carolyn hoi Che Chu (1974) vice President vice President, Price hong Kong and T. Rowe Price Group, Inc.; formerly Director, Bank of America Merrill Lynch and Co-head of credit and convertibles research team in hong Kong (to 2010) Archibald Ciganer Albeniz, CFA (1976) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. Proof #4 75 T. Rowe Price International Bond Fund Officers (continued) Name (Year of Birth) Position Held With International Funds Principal Occupation(s) Richard N. Clattenburg, CFA (1979) Executive vice President vice President, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International Michael J. Conelius, CFA (1964) Executive vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company Jose Costa Buck (1972) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Richard de los Reyes (1975) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Michael Della vedova (1969) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly Cofounder and Partner, Four Quarter Capital (to 2009) Jessie Q. Ding (1981) vice President vice President, Price hong Kong; formerly asso- ciate, TPG Capital (to 2008) Shawn T. Driscoll (1975) vice President vice President, T. Rowe Price Group, Inc. Bridget A. Ebner (1970) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Mark J.T. Edwards (1957) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International David J. Eiswert, CFA (1972) Executive vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International henry M. Ellenbogen (1973) vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Roger L. Fiery III, CPA (1959) vice President vice President, Price hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company Mark S. Finn, CFA, CPA (1963) vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Melissa C. Gallagher (1974) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly European Pharmaceuticals and Biotech Analyst, Bear Stearns International Ltd. (to 2008) Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. Proof #4 76 T. Rowe Price International Bond Fund Officers (continued) Name (Year of Birth) Position Held With International Funds Principal Occupation(s) John R. Gilner (1961) Chief Compliance Officer Chief Compliance Officer and vice President, T. Rowe Price; vice President, T. Rowe Price Group, Inc., and T. Rowe Price Investment Services, Inc. Gregory S. Golczewski (1966) vice President vice President, T. Rowe Price and T. Rowe Price Trust Company vishnu vardhan Gopal (1979) vice President vice President, Price hong Kong Benjamin Griffiths, CFA (1977) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International M. Campbell Gunn (1956) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Gregory K. hinkle, CPA (1958) Treasurer vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Leigh Innes, CFA (1976) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Randal S. Jenneke (1971) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly Senior Portfolio Manager, Australian Equities (to 2010) Kris h. Jenner, M.D., D.Phil. (1962) vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International Yoichiro Kai (1973) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly Japanese Financial/Real Estate Sector Analyst/Portfolio Manager, Citadel Investment Group, Asia Limited (to 2009) Jai Kapadia (1982) vice President Employee, T. Rowe Price; formerly student, MIT Sloan School of Management (to 2011); Associate Analyst, Sirios Capital Management (to 2009) Andrew J. Keirle (1974) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Ian D. Kelson (1956) Executive vice President President–International Fixed Income, T. Rowe Price International; vice President, T. Rowe Price and T. Rowe Price Group, Inc. Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. Proof #4 77 T. Rowe Price International Bond Fund Officers (continued) Name (Year of Birth) Position Held With International Funds Principal Occupation(s) Christopher J. Kushlis, CFA (1976) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Mark J. Lawrence (1970) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly Equity Fund Manager, Citi (London) (to 2008) David M. Lee, CFA (1962) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Patricia B. Lippert (1953) Secretary Assistant vice President, T. Rowe Price and T. Rowe Price Investment Services, Inc. Christopher C. Loop, CFA (1966) vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International Anh Lu (1968) Executive vice President vice President, Price hong Kong and T. Rowe Price Group, Inc. Sebastien Mallet (1974) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Daniel Martino, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Jonathan h.W. Matthews, CFA (1975) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly Analyst, Pioneer Investments (to 2008) Susanta Mazumdar (1968) Executive vice President vice President, Price Singapore and T. Rowe Price Group, Inc. Raymond A. Mills, Ph.D., CFA (1960) Executive vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company Eric C. Moffett (1974) vice President vice President, Price hong Kong and T. Rowe Price Group, Inc. Samy B. Muaddi, CFA (1984) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Joshua Nelson (1977) Executive vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Philip A. Nestico (1976) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. Proof #4 78 T. Rowe Price International Bond Fund Officers (continued) Name (Year of Birth) Position Held With International Funds Principal Occupation(s) Sridhar Nishtala (1975) vice President vice President, Price Singapore and T. Rowe Price Group, Inc. Jason Nogueira, CFA (1974) Executive vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. David Oestreicher (1967) vice President Director, vice President, and Secretary, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; vice President and Secretary, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International; vice President, Price hong Kong and Price Singapore Michael D. Oh, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Kenneth A. Orchard (1975) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly vice President, Moody’s Investors Service (to 2010) Paul T. O’Sullivan (1973) vice President vice President, T. Rowe Price International hiroaki Owaki, CFA (1962) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Gonzalo Pángaro, CFA (1968) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Timothy E. Parker, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. Craig J. Pennington, CFA (1971) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly Global Energy Analyst, Insight Investment (to 2010); Senior Trader, Brevan howard (to 2008) Austin Powell, CFA (1969) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Frederick A. Rizzo (1969) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Christopher J. Rothery (1963) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. Proof #4 79 T. Rowe Price International Bond Fund Officers (continued) Name (Year of Birth) Position Held With International Funds Principal Occupation(s) Naoto Saito (1980) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly Analyst, hBK Capital Management (to 2008) Federico Santilli, CFA (1974) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Sebastian Schrott (1977) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Deborah D. Seidel (1962) vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Services, Inc. Francisco Sersale (1980) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Amitabh Shah (1980) vice President vice President, T. Rowe Price International Jeneiv Shah, CFA (1980) vice President Employee, T. Rowe Price; formerly Analyst, Mirae Asset Global Investments (to 2010) Robert W. Sharps, CFA, CPA (1971) vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company John C.A. Sherman (1969) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Robert W. Smith (1961) Executive vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Eunbin Song, CFA (1980) vice President vice President, Price Singapore; formerly Equity Research Analyst, Samsung Securities (to 2008); student, Columbia Business School (to 2010) David A. Stanley (1963) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Jonty Starbuck, Ph.D. (1975) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Miki Takeyama (1970) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Ju Yen Tan (1972) vice President vice President, T. Rowe Price Group, Inc. and T. Rowe Price International Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. Proof #4 80 T. Rowe Price International Bond Fund Officers (continued) Name (Year of Birth) Position Held With International Funds Principal Occupation(s) Sin Dee Tan, CFA (1979) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International; formerly student, London Business School (to 2008) Dean Tenerelli (1964) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Jean Pierre Thibaud (1982) vice President Employee, T. Rowe Price; formerly student, harvard Business School (to 2011); Senior Associate, MBA Lazard (to 2009) Siby Thomas (1979) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc.; formerly student, University of Chicago Graduate School of Business (to 2009) Justin Thomson (1968) Executive vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Mitchell J.K. Todd (1974) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Eric L. veiel, CFA (1972) vice President vice President, T. Rowe Price and T. Rowe Price Group, Inc. verena E. Wachnitz, CFA (1978) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International David J. Wallack (1960) vice President vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Julie L. Waples (1970) vice President vice President, T. Rowe Price hiroshi Watanabe, CFA (1975) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Christopher S. Whitehouse (1972) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Clive M. Williams (1966) vice President vice President, Price hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International J. howard Woodward, CFA (1974) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. Proof #4 81 T. Rowe Price International Bond Fund Officers (continued) Name (Year of Birth) Position Held With International Funds Principal Occupation(s) Marta Yago (1977) vice President vice President, T. Rowe Price Group, Inc., and T. Rowe Price International Ernest C. Yeung, CFA (1979) vice President vice President, Price hong Kong and T. Rowe Price Group, Inc. Alison Mei Ling Yip (1966) vice President vice President, Price hong Kong and T. Rowe Price Group, Inc. Christopher Yip, CFA (1975) vice President vice President, Price hong Kong and T. Rowe Price Group, Inc. Wenli Zheng (1979) vice President vice President, Price hong Kong and T. Rowe Price Group, Inc.; formerly student, University of Chicago Graduate School of Business (to 2008) Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. Proof #4 82 T. Rowe Price Investment Services and Information Investment Services and Information kNOWLEDGEaBLE CUSTOMER SERvICE On the Web at troweprice.com. By Phone at 1-800-225-5132. Available Monday through Friday from 8 a.m. until 10 p.m. ET and Saturday from 8:30 a.m. until 5 p.m. ET. In Person at a T. Rowe Price Investor Center. Please visit the website at troweprice.com/investorcenter or call 1-800-225-5132 to locate a center near you. aCCOUNT SERvICES Account Access. Through the T. Rowe Price website at troweprice.com and via phone through Tele*Access®. Automatic Investing. From your bank account or paycheck. Automatic Withdrawal. Scheduled, periodic redemptions. IRA Rebalancing. Automatically rebalance to ensure that your accounts reflect your desired asset allocations. BROkERaGE SERvICES‡ Trade stocks, mutual funds, ETFs, bonds, options, CDs, precious metals, and more at competitive commissions. INvESTMENT INFORMaTION Consolidated Statement. Overview of all of your T. Rowe Price mutual fund and Brokerage accounts. Shareholder Reports. Manager reviews of their strategies and results. T. Rowe Price Report. Quarterly investment newsletter. T. Rowe Price Investor. Quarterly publication of insightful financial articles. Investment Guides. International Investing Guide, Guide to Bond Funds, Investors Portfolio Review, Retirement Savings Guide, and Retirement Readiness Guide. FINaNCIaL INTERMEDIaRIES aND aDvISORS By Phone at 1-877-804-2315. Contact us Monday through Friday from 8:30 a.m. until 6 p.m. ET. By Mail: T. Rowe Price, Financial Institution Services, P.O. Box 89000, Baltimore, MD 21289-4232. CUSTOMERS WHO TRaDE THROUGH a FINaNCIaL INTERMEDIaRY Please contact your intermediary or financial professional for assistance. ‡ Options trading involves additional risk and is not suitable for all investors. Brokerage services offered by T. Rowe Price Investment Services, Inc., member FINRA/SIPC. This page contains supplementary information that is not part of the shareholder report. Proof #4 83 T. Rowe Price Web Services troweprice.com LOG IN aND MaNaGE YOUR INvESTMENTS ONLINE troweprice.com/access Manage your account by checking balances with up-to-date statements, tracking and analyzing your portfolio, and/or granting View Access to others as you see fit. Perform transactions at your convenience. Buy, sell, or exchange shares securely, quickly, and easily. You can also set up automatic investing and add a bank account to move money easily. Update your preferences by confirming your contact information and verifying your beneficiaries so your assets can be distributed as you wish. ONLINE SERvICING troweprice.com/paperless Enroll to receive your transaction confirmations, investor statements, prospec- tuses, and shareholder reports online instead of by U.S. mail. 1 You will receive an e-mail with a link to our website informing you that your document is available to view online, print, or download. Join our E-mail Program to receive market and fund information by e-mail. Receive timely market reports, performance of T. Rowe Price mutual funds, invest- ment and market insights from T. Rowe Price managers, and more. INvESTMENT GUIDaNCE aND TOOLS troweprice.com/planningtools Morningstar® Portfolio Manager enables you to track, rebalance, and analyze your portfolio. Morningstar Portfolio X-Ray® is a comprehensive tool that provides an in-depth examination of your exposure to different sectors, stock types, sub-asset classes, and global diversification. Portfolio Growth Tracker allows you to track the historical growth of your mutual fund investments over time. The analysis consists of three components: Activity Summary, Asset Allocation, and Net Investment versus Market Value. Retirement Income Calculator. FINaNCIaL INTERMEDIaRIES aND aDvISORS troweprice.com/financialintermediaries This secure site is designed for professional financial intermediaries and advisors. Financial professionals may access daily prices and historical performance of mutual funds; view market research, manager commentary, and sales ideas; and access literature and forms. For U.S. technical assistance, call 1-888-358-8490 or e-mail us at onlinehelp@troweprice.com. For non-U.S. technical assistance, call +1 (410) 345 4400 or contact us via e-mail. This page contains supplementary information that is not part of the shareholder report. 1 By signing up for paperless services, you may qualify for the account service fee waiver. visit us at troweprice.com/feesandminimums to find out more. Proof #4 84 T. Rowe Price Planning Tools and Services T. Rowe Price Retirement Services T. Rowe Price offers unique retirement services that can help you meet a broad variety of planning challenges. Our retirement tools are suitable for individuals, the self-employed, small businesses, cor porations, and nonprofit organizations. For more information, call 1-800-IRA-5000 or visit our website at troweprice.com/retirement. INvESTMENT aCCOUNTS Rollover IRAs. Whether you’ve changed jobs, experienced a job loss, or retired, it’s important to make a smart decision regarding your old 401(k). Call toll-free 1-800-IRA-5000. Our rollover specialists can open your account over the phone and handle most of the paperwork for you. They’ll even contact your former employer to help move your money. Roth IRAs. A Roth IRA offers tax-free withdrawals and a flexible distribution schedule. Open your account at troweprice.com/ira or call 1-800-IRA-5000. Traditional IRAs. Traditional IRA contributions may be tax-deductible, with no taxes due until withdrawal. Open your account at troweprice.com/ira or call 1-800-IRA-5000. Small Business Retirement Plans. If you’re self-employed or run a small business or professional practice, T. Rowe Price can help you establish a cost-effective retire- ment plan that’s easy to set up and maintain. 403(b) Custodial Accounts. For those employed by a nonprofit or tax-exempt organization such as a school, church, or hospital, T. Rowe Price offers an effective, low-cost way to save for retirement. INvESTMENT GUIDaNCE T. Rowe Price Advisory Planning Services offers a wide range of services that provide expert advice based on your individual needs and financial goals, including consultations with an advisory counselor. Please contact one of our specialists at 1-888-744-0270 to determine the most appropriate service to fit your needs.* * Services offered by T. Rowe Price Advisory Services, Inc., a federally registered investment adviser. There may be costs associated with these services. This page contains supplementary information that is not part of the shareholder report. Proof #4 85 T. Rowe Price College Planning This page contains supplementary information that is not part of the shareholder report. College Planning With the costs of college steadily increasing, it’s critical to plan early. Our college planning information and college savings products can help you meet your educational investment goals. For more information, visit our website at troweprice.com/college, where you will find the College Investment Calculator, an interactive tool that can help you determine how much you should save, estimate future tuition costs, and review college savings options. In a few easy steps, the calculator provides you with information and a plan of action. To speak with a college planning specialist, please call 1-800-638-5660. College Savings Plans (529 Plans). To help families prepare for college education costs, T. Rowe Price manages three 529 plans that are open to all U.S. residents. Any earnings on contributions are tax-deferred, and distributions are exempt from federal income taxes when used for qualified educational expenses. Also, these plans offer high contribution limits and affordable systematic investing. T. Rowe Price manages the T. Rowe Price College Savings Plan, a national 529 plan offered by the Education Trust of Alaska; the Maryland College Investment Plan; and the University of Alaska College Savings Plan. The Maryland College Investment Plan offers certain potential benefits for Maryland residents, and the University of Alaska College Savings Plan offers potential benefits for Alaska residents. Earnings on a distribution not used for qualified expenses may be subject to income taxes and a 10% federal penalty. Please note that the availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors, as applicable. Please visit our website or call 1-800-638-5660 to obtain the applicable plan disclosure document, which includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Please consider, before invest- ing, whether your or your beneficiary’s home state offers any state tax or other benefits that are only available for investments in that state’s plan. T. Rowe Price Investment Services, Inc., Distributor/Underwriter. Proof #4 129418 F76-050 2/13 For more information about T. Rowe Price funds or services, please contact us directly at 1-800-225-5132. Request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Investments in the money market 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. * T. Rowe Price Advisor and R Classes may be available for these funds. T. Rowe Price Advisor and R Classes are offered only through financial intermediaries. For more information about T. Rowe Price Advisor and R Classes, contact your financial professional or call T. Rowe Price at 1-877-804-2315. ‡ Closed to new investors except for a direct rollover from a retirement plan into a T. Rowe Price IRA invested in this fund. ˆ The Retirement Funds are inclusive of the Retirement 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, and Income Funds. §Subject to certain exceptions, the fund will be closed to new investors effective April 30, 2012. STOCk FUNDS Domestic Blue Chip Growth* Capital Appreciation* Capital Opportunity* Diversified Mid-Cap Growth Diversified Small-Cap Growth Dividend Growth* Equity Income* Equity Index 500 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 Equity Total Equity Market Index U.S. Large-Cap Core* Value* aSSET aLLOCaTION FUNDS Balanced Personal Strategy Balanced Personal Strategy Growth Personal Strategy Income Real Assets Retirement Funds*ˆ BOND FUNDS Domestic Taxable Corporate Income Floating Rate* GNMA High Yield*§ Inflation Protected Bond New Income* Short-Term Bond* Spectrum Income Strategic Income* Summit GNMA Ultra Short-Term Bond U.S. Bond Enhanced Index U.S. Treasury Intermediate U.S. Treasury Long-Term Domestic Tax-Free California Tax-Free Bond 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 Short-Intermediate* Virginia Tax-Free Bond MONEY MaRkET FUNDS Taxable Prime Reserve Summit Cash Reserves U.S. Treasury Money MONEY MaRkET FUNDS (cont.) Tax-Free California Tax-Free Money Maryland Tax-Free Money New York Tax-Free Money Summit Municipal Money Market Tax-Exempt Money INTERNaTIONaL/GLOBaL FUNDS Stock Africa & Middle East Emerging Europe Emerging Markets Stock European Stock Global Infrastructure* Global Large-Cap Stock* Global Real Estate* Global Stock* Global Technology International Discovery International Equity Index International Growth & Income* International Stock* Japan Latin America New Asia Overseas Stock Spectrum International Bond Emerging Markets Bond Emerging Markets Corporate Bond* Emerging Markets Local Currency Bond* International Bond* T. Rowe Price Investment Services, Inc. 100 East Pratt Street Baltimore, MD 21202 This page contains supplementary information that is not part of the shareholder report. T. Rowe Price Mutual Funds PROSPECTUS T. Rowe Price PREMX TRECX PRELX RPIBX Emerging Markets Bond Fund Emerging Markets Corporate Bond Fund Emerging Markets Local Currency Bond Fund International Bond Fund May 1, 2013 A choice of four different international bond funds for investors seeking to diversify beyond U.S. borders. The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents 1 SUMMARY Emerging Markets Bond Fund 1 Emerging Markets Corporate Bond Fund 7 Emerging Markets Local Currency Bond Fund 12 International Bond Fund 19 2 INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS Pricing Shares and Receiving Sale Proceeds 25 Useful Information on Distributions and Taxes 30 Transaction Procedures and Special Requirements 36 Account Service Fee 40 3 MORE ABOUT THE FUNDS Organization and Management 42 More Information About the Funds and Their Investment Risks 46 Investment Policies and Practices 52 Disclosure of Fund Portfolio Information 65 Financial Highlights 66 4 INVESTING WITH T. ROWE PRICE Account Requirements and Transaction Information 71 Opening a New Account 72 Purchasing Additional Shares 75 Exchanging and Redeeming Shares 76 Rights Reserved by the Funds 78 Information About Your Services 79 T. Rowe Price Brokerage 81 Investment Information 82 T. Rowe Price Privacy Policy 83 Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the Federal Deposit Insurance Corporation, Federal Reserve, or any other government agency, and are subject to investment risks, including possible loss of the principal amount invested. SUMMARY T. Rowe Price Emerging Markets Bond Fund Investment Objective The fund seeks to provide high income and capital appreciation. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.75% Distribution and service (12b-1) fees 0.00% Other expenses 0.19% Total annual fund operating expenses 0.94% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $96 $300 $520 $1,155 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the T. ROWE PRICE 2 most recent fiscal year, the fund’s portfolio turnover rate was 40.7% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% (and potentially all) of its net assets (including any borrowings for investment purposes) in debt securities of emerging market governments or companies located in emerging market countries. Fund holdings may be denominated in U.S. dollars or non-U.S. dollar currencies, including emerging market currencies. The extent, if any, to which the fund attempts to cushion the impact of foreign currency fluctuations on the dollar depends on market conditions. Fund holdings may include the lowest-rated bonds, including those in default, and there are no overall limits on the fund’s investments that are rated below investment-grade (BB or lower, or an equivalent rating), also known as “junk” bonds). Although the fund expects to maintain an intermediate- to long-term weighted average maturity, there are no maturity restrictions on the overall portfolio or on individual securities. Security selection relies heavily on research, which analyzes political and economic trends as well as creditworthiness. The fund tends to favor bonds it expects will be upgraded. The fund sells holdings for a variety of reasons, such as to adjust its average maturity or credit quality, to shift assets into and out of higher-yielding securities, or to alter geographic or currency exposure. The fund is “nondiversified,” meaning it may invest a greater portion of its assets in fewer issuers than is permissible for a “diversified” fund. While most assets will be invested in bonds, the fund may enter into forward currency exchange contracts in keeping with the fund’s objectives. Forward currency exchange contracts would primarily be used to help protect the fund’s holdings from unfavorable changes in foreign currency exchange rates, although other currency hedging techniques may be used from time to time. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. International investing risk Investing in the securities of non-U.S. issuers involves special risks not typically associated with investing in U.S. securities. International securities tend to be more volatile and less liquid than investments in U.S. securities and may lose value because of adverse political, social, or economic developments SUMMARY 3 overseas. In addition, international investments may be subject to regulatory and accounting standards that differ from those of the U.S. Emerging markets risk The risks of international investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in international developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on international investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Currency risk Because the fund may invest in securities issued in foreign currencies, the fund is subject to the risk that it could experience losses based solely on the weakness of foreign currencies versus the U.S. dollar and changes in the exchange rates between such currencies and the U.S. dollar. Any attempts at currency hedging may not be successful and could cause the fund to lose money. Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation. The risk of default is much greater for emerging market bonds and securities rated as below investment-grade (“junk” bonds). The fund is exposed to greater credit risk than other bond funds because companies and governments in emerging markets are usually not as strong financially and are more susceptible to economic downturns. Junk bonds should be considered speculative as they carry greater risks of default and erratic price swings due to real or perceived changes in the credit quality of the issuer. Interest rate risk This risk refers to the chance that interest rates will increase, causing a decline in bond prices. (Bond prices and interest rates usually move in opposite directions.) Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk. Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price. Nondiversification risk As a nondiversified fund, the fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor performance by a single issuer could adversely affect fund performance more than if the fund were invested in a larger number of issuers. The fund’s share price can be expected to fluctuate more than that of a comparable diversified fund. Derivatives risk To the extent the fund uses forward currency exchange contracts, it is exposed to greater volatility and losses in comparison to investing directly in foreign bonds. Forward currency exchange contracts are also subject to the risks that anticipated currency movements will not be accurately predicted, a counterparty will T. ROWE PRICE 4 fail to perform in accordance with the terms of the agreement, and the chance that potential government regulation could negatively affect the fund’s investments in such instruments. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. Calendar Year Returns Emerging Markets Bond Fund Best Quarter 6/30/09 13.89% Worst Quarter 12/31/08 -11.39% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 19.62 3.47 13.29 34.93 -17.71 5.81 11.43 17.26 14.83 26.05 -40 -30 -20 -10 0 10 20 30 40 50% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. SUMMARY 5 Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years Emerging Markets Bond Fund Returns before taxes 19.62 % 9.26 % 12.03 % Returns after taxes on distributions 17.07 6.64 9.47 Returns after taxes on distributions and sale of fund shares 12.94 6.37 9.13 J.P. Morgan Emerging Markets Bond Index Global (reflects no deduction for fees, expenses, or taxes) 18.54 10.47 11.56 Lipper Emerging Markets Debt Funds Average 18.56 9.42 11.60 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Michael J. Conelius Chairman of Investment Advisory Committee 1994 1988 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. T. ROWE PRICE 6 Tax Information The fund declares dividends daily and pays them on the first business day of each month. Any capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information. SUMMARY T. Rowe Price Emerging Markets Corporate Bond Fund Investment Objective The fund seeks to provide high current income and, secondarily, capital appreciation. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.80% Distribution and service (12b-1) fees 0.00% Other expenses 1.54% Total annual fund operating expenses 2.34% Fee waiver/expense reimbursement 1.19% b Total annual fund operating expenses after fee waiver/expense reimbursement 1.15% b a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. b T. Rowe Price Associates, Inc. has agreed (through April 30, 2015) to waive its fees and/or bear any expenses (excluding interest, taxes, brokerage, extraordinary expenses, and acquired fund fees) that would cause the fund’s ratio of expenses to average daily net assets to exceed 1.15%. Termination of the agreement would require approval by the fund’s Board of Directors. Fees waived and expenses paid under this agreement are subject to reimbursement to T. Rowe Price Associates, Inc. by the fund whenever the fund’s expense ratio is below 1.15%. However, no reimbursement will be made more than three years after the waiver or payment, or if it would result in the expense ratio exceeding 1.15% (excluding interest, taxes, brokerage, extraordinary expenses, and acquired fund fees). Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment T. ROWE PRICE 8 has a 5% return each year, the fund’s operating expenses remain the same, and the expense limitation currently in place is not renewed. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $117 $495 $1,027 $2,486 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. For the period of May 24, 2012, through December 31, 2012, the fund’s portfolio turnover rate was 26.5% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in bonds that are issued by companies that are located or listed in, or conduct the predominant part of their business activities in, the emerging market countries of Latin America, Asia, Europe, Africa, and the Middle East. While it is expected that the securities held by the fund will primarily be U.S. dollar- denominated, the fund may also hold securities denominated in emerging market currencies and other non-U.S. currencies. The fund does not generally attempt to cushion the impact of non-U.S. currency fluctuations against the U.S. dollar. Although the fund expects to generally maintain an intermediate-term weighted average maturity (between three and ten years), there are no maturity restrictions on the overall portfolio or on individual securities purchased by the fund. Most of the fund’s investments are expected to be rated below investment-grade (BB or lower, or an equivalent rating) by a major credit rating agency or by T. Rowe Price. However, the fund may purchase bonds of any credit quality and there are no overall limits on the fund’s holdings that are unrated or rated below investment-grade. Investments in below investment-grade corporate bonds, also known as “junk” bonds, should be considered speculative. The fund may sell holdings for a variety of reasons, such as to alter geographic or currency exposure, to adjust its average maturity, duration, or credit quality, or to shift assets into or out of higher-yielding securities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: SUMMARY 9 Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. International investing risk Investing in the securities of non-U.S. issuers involves special risks not typically associated with investing in U.S. securities. International securities tend to be more volatile and less liquid than investments in U.S. securities and may lose value because of adverse political, social, or economic developments overseas. In addition, international investments may be subject to regulatory and accounting standards that differ from those of the U.S. Emerging markets risk The risks of international investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in international developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on international investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Currency risk Although the fund primarily invests in U.S. dollar-denominated bonds of emerging markets issuers, the fund may invest in securities issued in foreign currencies and is therefore subject to the risk that it could experience losses based solely on the weakness of those foreign currencies versus the U.S. dollar and changes in the exchange rates between such currencies and the U.S. dollar. Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation. The risk of default is much greater for emerging market bonds and securities rated as below investment-grade (“junk” bonds). The fund is exposed to greater credit risk than other bond funds because companies and governments in emerging markets are usually not as strong financially and are more susceptible to economic downturns. Junk bonds should be considered speculative as they carry greater risks of default and erratic price swings due to real or perceived changes in the credit quality of the issuer. Interest rate risk This risk refers to the chance that interest rates will increase, causing a decline in bond prices. (Bond prices and interest rates usually move in opposite directions.) Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk. Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price. T. ROWE PRICE 10 Performance Because the fund commenced operations in 2012, there is no historical performance information shown here. Performance history will be presented after the fund has been in operation for one full calendar year. Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Michael J. Conelius Chairman of Investment Advisory Committee 2012 1988 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information The fund declares dividends daily and pays them on the first business day of each month. Any capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary SUMMARY 11 and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information. SUMMARY T. Rowe Price Emerging Markets Local Currency Bond Fund Investment Objective The fund seeks to provide high income and capital appreciation. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.75% Distribution and service (12b-1) fees 0.00% Other expenses 0.90% Total annual fund operating expenses 1.65% Fee waiver/expense reimbursement 0.55% b Total annual fund operating expenses after fee waiver/expense reimbursement 1.10% b a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. b T. Rowe Price Associates, Inc. has agreed (through April 30, 2014) to waive its fees and/or bear any expenses (excluding interest, taxes, brokerage, extraordinary expenses, and acquired fund fees) that would cause the fund’s ratio of expenses to average daily net assets to exceed 1.10%. Termination of the agreement would require approval by the fund’s Board of Directors. Fees waived and expenses paid under this agreement are subject to reimbursement to T. Rowe Price Associates, Inc. by the fund whenever the fund’s expense ratio is below 1.10%. However, no reimbursement will be made more than three years after the waiver or payment, or if it would result in the expense ratio exceeding 1.10% (excluding interest, taxes, brokerage, extraordinary expenses, and acquired fund fees). Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment SUMMARY 13 has a 5% return each year, the fund’s operating expenses remain the same, and the expense limitation currently in place is not renewed. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $112 $467 $845 $1,908 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 82.3% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies Under normal conditions, at least 80% of the fund’s net assets (including any borrowings for investment purposes) will be invested in bonds that are denominated in emerging markets currencies, and in derivative instruments that provide investment exposure to such securities. Emerging market bonds include fixed rate and floating rate bonds that are issued by governments, government agencies, and supranational organizations of, and corporate issuers located in or conducting the predominant part of their business activities in, the emerging market countries of Latin America, Asia, Europe, Africa, and the Middle East. Investment decisions are based on fundamental research as well as market factors, such as yield and credit quality differences among bonds as well as supply and demand trends and currency values. The fund generally invests in securities where the combination of fixed-income returns and currency exchange rates appears attractive or, if the currency trend is unfavorable, where we believe the currency risk can be minimized through hedging. The fund may purchase bonds of any credit quality and there are no overall limits on the fund’s investments in bonds that are unrated or rated below investment-grade (also known as “junk” bonds). While the fund expects normally to maintain a weighted average maturity of at least 3 years, there are no maturity restrictions on the overall portfolio or on individual securities purchased by the fund. Through the use of currency derivative instruments such as forward currency exchange contracts, currency swaps, foreign currency options, and currency futures, the fund has wide flexibility to purchase and sell currencies independently of whether the fund owns bonds in those currencies and to engage in currency hedging transactions. The fund’s currency positions will vary with its outlook on the strength or weakness of the U.S. dollar compared to foreign currencies and the relative value of various foreign currencies to one another. Currency hedging into the U.S. dollar is permitted, but not required, and the fund will be heavily exposed to foreign T. ROWE PRICE 14 currencies. The fund’s overall net short positions in currencies (including the U.S. dollar) are limited to 10% of its net assets. A short position in a currency allows the fund to sell a currency in excess of the value of its holdings denominated in that currency or sell a currency even if it does not hold any assets denominated in the currency. In addition, the fund may use interest rate swaps and futures in order to take long or short positions with respect to its exposure to a particular country, subject to the investment restrictions applicable to futures and swaps. The fund is “nondiversified,” meaning it may invest a greater portion of its assets in fewer issuers than is permissible for a “diversified” fund. The fund may sell holdings for a variety of reasons, such as to alter geographic or currency exposure, to adjust its average maturity, duration, or credit quality, or to shift assets into or out of higher-yielding securities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. International investing risk Investing in the securities of non-U.S. issuers involves special risks not typically associated with investing in U.S. securities. International securities tend to be more volatile and less liquid than investments in U.S. securities and may lose value because of adverse political, social, or economic developments overseas. In addition, international investments may be subject to regulatory and accounting standards that differ from those of the U.S. Emerging markets risk The risks of international investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in international developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on international investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Currency risk Because the fund’s emphasis is on investing in securities denominated in the currencies of emerging market countries, the fund is subject to the significant risk that it could experience losses based solely on the weakness of foreign currencies versus the U.S. dollar and changes in the exchange rates between such currencies and the U.S. dollar. SUMMARY 15 Hedging risk The fund’s attempts at hedging and taking long and short positions in currencies may not be successful and could cause the fund to lose money or fail to get the benefit of a gain on a hedged position. If currency values and exchange rates do not move in the anticipated direction, the fund could be in a worse position than if it had not entered into such transactions. Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation. The risk of default is much greater for emerging market bonds and securities rated as below investment-grade (“junk” bonds). The fund is exposed to greater credit risk than other bond funds because companies and governments in emerging markets are usually not as strong financially and are more susceptible to economic downturns. Junk bonds should be considered speculative as they carry greater risks of default and erratic price swings due to real or perceived changes in the credit quality of the issuer. Interest rate risk This risk refers to the chance that interest rates will increase, causing a decline in bond prices. (Bond prices and interest rates usually move in opposite directions.) Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk. The monetary policies of emerging markets countries tend to make the impact and likelihood of local interest rate changes more difficult to predict. Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price. Nondiversification risk As a nondiversified fund, the fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor performance by a single issuer could adversely affect fund performance more than if the fund were invested in a larger number of issuers. The fund’s share price can be expected to fluctuate more than that of a comparable diversified fund. Derivatives risk To the extent the fund uses forward currency exchange contracts, swaps, options, or futures, it is exposed to additional volatility in comparison to investing directly in bonds and other debt securities. These instruments can be illiquid and difficult to value, may involve leverage so that small changes produce disproportionate losses for the fund, and instruments not traded on an exchange are subject to the risk that a counterparty to the transaction will fail to meet its obligations under the derivatives contract. The fund’s principal use of derivatives involves the risk that anticipated changes in currency values, currency exchange rates, or interest rate movements will not be accurately predicted, which could significantly harm the fund’s performance, and the chance that regulatory developments could negatively affect the fund’s investments in such instruments. Taking a short position in a particular currency could cause the fund to lose money if the currency appreciates in value. T. ROWE PRICE 16 Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the year depicted. Calendar Year Return Emerging Markets Local Currency Bond Fund Best Quarter 3/31/12 8.92% Worst Quarter 6/30/12 -1.34% ’12 Quarter Ended Total Return 17.69 0 3 6 9 12 15 18 21 24 27% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. SUMMARY 17 Average Annual Total Returns Periods ended December 31, 2012 Since inception 1 Year (5/26/11) Emerging Markets Local Currency Bond Fund Returns before taxes 17.69 % 4.83 % Returns after taxes on distributions 16.39 3.74 Returns after taxes on distributions and sale of fund shares 11.46 3.44 J.P. Morgan GBI - EM Global Diversified (reflects no deduction for fees, expenses, or taxes) 16.76 5.88 Lipper Emerging Markets Local Debt Funds Average 16.13 4.06 * * Since 5/31/11. Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Andrew J. Keirle Chairman of Investment Advisory Committee 2011 2005 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares T. ROWE PRICE 18 through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information The fund declares dividends daily and pays them on the first business day of each month. Any capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information. SUMMARY T. Rowe Price International Bond Fund Investment Objective The fund seeks to provide high current income and capital appreciation by investing primarily in high-quality, nondollar-denominated bonds outside the U.S. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.65% Distribution and service (12b-1) fees 0.00% Other expenses 0.19% Total annual fund operating expenses 0.84% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $86 $268 $466 $1,037 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual T. ROWE PRICE 20 fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 52.2% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies Normally, the fund will invest at least 80% of its net assets (including any borrowings for investment purposes) in foreign bonds and 65% of its net assets in foreign bonds that are rated within the three highest credit categories (i.e., A- or equivalent, or better), as determined by at least one major credit rating agency or, if unrated, deemed to be of comparable quality by T. Rowe Price. If a bond is split-rated (i.e., assigned different ratings by different credit rating agencies), the higher rating will be used. The fund may invest up to 20% of its total assets in “junk” bonds that have received a below investment-grade rating (i.e., BB or equivalent, or lower) from each of the rating agencies that has assigned a rating to the bond (or, if unrated, deemed to be below investment-grade quality by T. Rowe Price), including those in default or with the lowest rating. Up to 20% of total assets may be invested in U.S. dollar-denominated foreign bonds, such as Brady bonds and other emerging markets bonds. Although the fund expects to maintain an intermediate- to long-term weighted average maturity, there are no maturity restrictions on the overall portfolio or on individual securities. The fund has wide flexibility to purchase and sell currencies and engage in hedging transactions. However, we normally do not attempt to cushion the impact of foreign currency fluctuations on the U.S. dollar. Therefore, the fund is likely to be heavily exposed to the risk of bonds denominated in foreign currencies. Investment decisions are based on fundamental market factors, such as yield and credit quality differences among bonds as well as supply and demand trends and currency values. The fund generally invests in securities where the combination of fixed-income returns and currency exchange rates appears attractive or, if the currency trend is unfavorable, where we believe the currency risk can be minimized through hedging. The fund sells holdings for a variety of reasons, such as to adjust the portfolio’s average maturity or credit quality, to shift assets into and out of higher-yielding securities, or to alter geographic or currency exposure. The fund is “nondiversified,” meaning it may invest a greater portion of its assets in fewer issuers than is permissible for a “diversified” fund. While most assets will be invested in bonds, the fund may enter into forward currency exchange contracts in keeping with the fund’s objectives. Forward currency exchange contracts would primarily be used to help protect the fund’s holdings from unfavorable changes in foreign currency exchange rates, although other currency hedging techniques may be used from time to time. SUMMARY 21 Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. International investing risk Investing in the securities of non-U.S. issuers involves special risks not typically associated with investing in U.S. securities. International securities tend to be more volatile and less liquid than investments in U.S. securities and may lose value because of adverse political, social, or economic developments overseas. In addition, international investments may be subject to regulatory and accounting standards that differ from those of the U.S. Emerging markets risk The risks of international investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in international developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on international investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Currency risk Because the fund generally invests in securities issued in foreign currencies, the fund is subject to the risk that it could experience losses based solely on the weakness of foreign currencies versus the U.S. dollar and changes in the exchange rates between such currencies and the U.S. dollar. Any attempts at currency hedging may not be successful and could cause the fund to lose money. Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation. The fund’s overall credit risk is increased to the extent the fund invests in emerging markets bonds or bonds rated below investment-grade. Such investments carry a higher risk of default and should be considered speculative. Interest rate risk This risk refers to the chance that interest rates will increase, causing a decline in bond prices. (Bond prices and interest rates usually move in opposite directions.) Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk. Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price. T. ROWE PRICE 22 Nondiversification risk As a nondiversified fund, the fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor performance by a single issuer could adversely affect fund performance more than if the fund were invested in a larger number of issuers. The fund’s share price can be expected to fluctuate more than that of a comparable diversified fund. Derivatives risk To the extent the fund uses forward currency exchange contracts, it is exposed to greater volatility and losses in comparison to investing directly in foreign bonds. Forward currency exchange contracts are also subject to the risks that anticipated currency movements will not be accurately predicted, a counterparty will fail to perform in accordance with the terms of the agreement, and the chance that potential government regulation could negatively affect the fund’s investments in such instruments. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. Calendar Year Returns International Bond Fund Best Quarter 9/30/10 10.91% Worst Quarter 9/30/08 -6.30% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 6.10 2.63 5.17 8.38 1.77 10.05 7.55 -8.18 11.40 18.77 -15 -10 -5 0 5 10 15 20 25 30% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns SUMMARY 23 depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years International Bond Fund Returns before taxes 6.10 % 4.78 % 6.15 % Returns after taxes on distributions 5.26 3.10 4.44 Returns after taxes on distributions and sale of fund shares 3.95 3.08 4.34 Barclays Global Aggregate ex USD Bond Index (reflects no deduction for fees, expenses, or taxes) 4.09 5.06 6.55 Lipper International Income Funds Average 7.38 5.99 6.33 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Ian D. Kelson Co-Chairman of Investment Advisory Committee 2001 2000 Christopher J. Rothery Co-Chairman of Investment Advisory Committee 2012 1994 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 T. ROWE PRICE 24 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information The fund declares dividends daily and pays them on the first business day of each month. Any capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information. INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 2 As a T. Rowe Price shareholder, you will want to know about the following policies and procedures that apply to the T. Rowe Price family of funds. PRICING SH ARES AND RECEIVING SALE PROCEEDS How and When Shares Are Priced The share price, also called the “net asset value,” for the funds is calculated at the close of the New York Stock Exchange (normally 4 p.m. ET) each day that the exchange is open for business. To calculate the net asset value, the fund’s assets are valued and totaled; liabilities are subtracted; and the balance, called net assets, is divided by the number of shares outstanding. Market values are used to price portfolio holdings for which market quotations are readily available. Market values represent the prices at which securities actually trade or evaluations based on the judgment of the fund’s pricing services. If a market value for a security is not available or normal valuation procedures are deemed to be inappropriate, the fund will make a good faith effort to assign a fair value to the security by taking into account various factors that have been approved by the fund’s Board of Directors/Trustees. This value may differ from the value the fund receives upon sale of the securities. Amortized cost is used to price securities held by money funds and certain other debt securities held by a fund. Investments in other mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Non-U.S. equity securities are valued on the basis of their most recent closing market prices at 4 p.m. ET except under the circumstances described below. Most foreign markets close before 4 p.m. ET. For securities primarily traded in the Far East, for example, the most recent closing prices may be as much as 15 hours old at 4 p.m. ET. If a fund determines that developments between the close of a foreign market and the close of the New York Stock Exchange will, in its judgment, materially affect the value of some or all of the fund’s securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether to make these adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The fund may also fair value certain securities or a group of securities in other situations—for example, when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices and to value most fixed income securities. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. T. ROWE PRICE 26 As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day’s opening prices in the same markets, and adjusted prices. The fund also evaluates a variety of factors when assigning fair values to private placements and other restricted securities. Other mutual funds may adjust the prices of their securities by different amounts or assign different fair values than the fair value that the fund assigns to the same security. The various ways you can buy, sell, and exchange shares are explained at the end of this prospectus and on the New Account form. These procedures may differ for institutional and employer-sponsored retirement accounts or if you hold your account through an intermediary. How Your Purchase, Sale, or Exchange Price Is Determined If your request is received by T. Rowe Price in correct form by the close of the New York Stock Exchange (normally 4 p.m. ET), your transaction will be priced at that business day’s net asset value. If your request is received by T. Rowe Price after the close of the New York Stock Exchange, your transaction will be priced at the next business day’s net asset value. The funds generally do not accept orders that request a particular day or price for a transaction or any other special conditions. Fund shares may be purchased through various third-party intermediaries, including banks, brokers, and investment advisers. Where authorized by a fund, orders will be priced at the net asset value next computed after receipt by the intermediary. Contact your intermediary for trade deadlines and the applicable policies for purchasing, selling, or exchanging your shares, as well as initial and subsequent investment minimums. The intermediary may charge a fee for its services. When authorized by the fund, certain financial institutions or retirement plans purchasing fund shares on behalf of customers or plan participants through T. Rowe Price Financial Institution Services or T. Rowe Price Retirement Plan Services may place a purchase order unaccompanied by payment. Payment for these shares must be received by the time designated by the fund (not to exceed the period established for settlement under applicable regulations). If payment is not received by this time, the order may be canceled. The financial institution or retirement plan is responsible for any costs or losses incurred by the fund or T. Rowe Price if payment is delayed or not received. Note: The time at which transactions and shares are priced and the time until which orders are accepted may be changed in case of an emergency or if the New York Stock Exchange closes at a time other than 4 p.m. ET. In the event of an emergency closing, a fund’s shareholders will receive the next share price calculated by the fund. There may be times when you are unable to contact us by telephone or access your account online due to extreme market activity, the unavailability of the T. Rowe Price website, or other circumstances. Should this occur, your order must still be placed INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 27 and accepted by T. Rowe Price prior to the time the New York Stock Exchange closes to be priced at that business day’s net asset value. Under certain conditions, a money fund may accept and process purchase and redemption orders beyond the close of the New York Stock Exchange on days that the New York Stock Exchange closes early and does not reopen, and may accept orders on a business day that the New York Stock Exchange is unexpectedly closed. How You Can Receive the Proceeds From a Sale When filling out the New Account form, you may wish to give yourself the widest range of options for receiving proceeds from a sale. If your request is received in correct form by T. Rowe Price on a business day prior to the close of the New York Stock Exchange, proceeds are usually sent on the next business day. Proceeds can be mailed to you by check or sent electronically to your bank account by Automated Clearing House transfer or bank wire. Automated Clearing House is an automated method of initiating payments from, and receiving payments in, your financial institution account. Proceeds sent by Automated Clearing House transfer are usually credited to your account the second business day after the sale and there are typically no fees associated with such payments. Proceeds sent by bank wire are usually credited to your account the next business day after the sale, although your financial institution may charge an incoming wire fee. Exception Under certain circumstances, and when deemed to be in a fund’s best interest, your proceeds may not be sent for up to seven calendar days after we receive your redemption request. Under certain limited circumstances, the Board of Directors/Trustees of a money fund may elect to suspend redemptions and postpone payment of redemption proceeds in order to facilitate an orderly liquidation of the money fund. If for some reason we cannot accept your request to sell shares, we will contact you. Contingent Redemption Fee Short-term trading can disrupt a fund’s investment program and create additional costs for long-term shareholders. For these reasons, certain T. Rowe Price funds, listed in the following table, assess a fee on redemptions (including exchanges out of a fund), which reduces the proceeds from such redemptions by the amounts indicated: T. Rowe Price Funds With Redemption Fees Fund Redemption fee Holding period Africa & Middle East 2% 90 days or less Diversified Small-Cap Growth 1% 90 days or less Emerging Europe 2% 90 days or less Emerging Markets Bond 2% 90 days or less T. ROWE PRICE 28 T. Rowe Price Funds With Redemption Fees Fund Redemption fee Holding period Emerging Markets Corporate Bond 2% 90 days or less Emerging Markets Local Currency Bond 2% 90 days or less Emerging Markets Stock 2% 90 days or less Equity Index 500 0.5% 90 days or less European Stock 2% 90 days or less Extended Equity Market Index 0.5% 90 days or less Floating Rate 2% 90 days or less Global Infrastructure 2% 90 days or less Global Large-Cap Stock 2% 90 days or less Global Real Estate 2% 90 days or less Global Stock 2% 90 days or less High Yield 2% 90 days or less International Bond 2% 90 days or less International Discovery 2% 90 days or less International Equity Index 2% 90 days or less International Growth & Income 2% 90 days or less International Stock 2% 90 days or less Japan 2% 90 days or less Latin America 2% 90 days or less New Asia 2% 90 days or less Overseas Stock 2% 90 days or less Real Assets 2% 90 days or less Real Estate 1% 90 days or less Small-Cap Value 1% 90 days or less Spectrum International 2% 90 days or less Tax-Efficient Equity 1% less than 365 days Tax-Free High Yield 2% 90 days or less Total Equity Market Index 0.5% 90 days or less U.S. Bond Enhanced Index 0.5% 90 days or less Redemption fees are paid to a fund to deter short-term trading, offset costs, and protect the fund’s long-term shareholders. Subject to the exceptions described on the following pages, all persons holding shares of a T. Rowe Price fund that imposes a redemption fee are subject to the fee, whether the person is holding shares directly with a T. Rowe Price fund; through a retirement plan for which T. Rowe Price serves as recordkeeper; or indirectly through an intermediary (such as a broker, bank, or INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 29 investment adviser), recordkeeper for retirement plan participants, or other third party. Computation of Holding Period When an investor sells shares of a fund that assesses a redemption fee, T. Rowe Price will use the “first-in, first-out” method to determine the holding period for the shares sold. Under this method, the date of redemption or exchange will be compared with the earliest purchase date of shares held in the account. The day after the date of your purchase is considered Day 1 for purposes of computing the holding period. For a fund with a 365-day holding period, a redemption fee will be charged on shares sold before the end of the required holding period. For funds with a 90-day holding period, a redemption fee will be charged on shares sold on or before the end of the required holding period. For example, if you redeem your shares on or before the 90th day from the date of purchase, you will be assessed the redemption fee. If you purchase shares through an intermediary, consult your intermediary to determine how the holding period will be applied. Transactions Not Subject to Redemption Fees The T. Rowe Price funds will not assess a redemption fee with respect to certain transactions. As of the date of this prospectus, the following shares of T. Rowe Price funds will not be subject to redemption fees: • Shares redeemed through an automated, systematic withdrawal plan; • Shares redeemed through or used to establish certain rebalancing, asset allocation, wrap, and advisory programs, as well as non-T. Rowe Price fund-of-funds products, if approved in writing by T. Rowe Price; • Shares purchased through the reinvestment of dividends or capital gain distributions;* • Shares converted from one share class to another share class of the same fund;* • Shares redeemed automatically by a fund to pay fund fees or shareholder account fees (e.g., for failure to meet account minimums); • Shares purchased by rollover or changes of account registration within the same fund;* • Shares redeemed to return an excess contribution from a retirement account; • Shares of T. Rowe Price funds purchased by another T. Rowe Price fund and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that other shareholders of the investing T. Rowe Price fund are still subject to the policy); • Shares that are redeemed in-kind; • Shares transferred to T. Rowe Price or a third-party intermediary acting as a service provider when the age of the shares cannot be determined systematically;* and • Shares redeemed in retirement plans or other products that restrict trading to no more frequently than once per quarter, if approved in writing by T. Rowe Price. * Subsequent exchanges of these shares into funds that assess redemption fees will subject such shares to the fee. T. ROWE PRICE 30 Redemption Fees on Shares Held in Retirement Plans If shares are held in a retirement plan, redemption fees generally will be assessed on shares redeemed by exchange only if they were originally purchased by exchange. However, redemption fees may apply to transactions other than exchanges depending on how shares of the plan are held at T. Rowe Price or how the fees are applied by your plan’s recordkeeper. To determine which of your transactions are subject to redemption fees, you should contact T. Rowe Price or your plan recordkeeper. Omnibus Accounts If your shares are held through an intermediary in an omnibus account, T. Rowe Price relies on the intermediary to assess the redemption fee on underlying shareholder accounts. T. Rowe Price seeks to identify intermediaries establishing omnibus accounts and to enter into agreements requiring the intermediary to assess the redemption fees. There are no assurances that T. Rowe Price will be successful in identifying all intermediaries or that the intermediaries will properly assess the fees. Certain intermediaries may not apply the exemptions previously listed to the redemption fee policy; all redemptions by persons trading through such intermediaries may be subject to the fee. Certain intermediaries may exempt transactions not listed from redemption fees, if approved by T. Rowe Price. Persons redeeming shares through an intermediary should check with their respective intermediary to determine which transactions are subject to the fees. USEFUL INFORMATION ON DISTRIBUTIONS AND TAX ES Each fund intends to qualify to be treated each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. In order to qualify, a fund must satisfy certain income, diversification, and distribution requirements. A regulated investment company is not subject to U.S. federal income tax at the portfolio level on income and gains from investments that are distributed to shareholders. However, if a fund were to fail to qualify as a regulated investment company and was ineligible to or otherwise did not cure such failure, the result would be fund-level taxation and, consequently, a reduction in income available for distribution to the fund’s shareholders. To the extent possible, all net investment income and realized capital gains are distributed to shareholders. Dividends and Other Distributions Dividend and capital gain distributions are reinvested in additional fund shares in your account unless you select another option. Reinvesting distributions results in compounding, which allows you to receive dividends and capital gain distributions on an increasing number of shares. INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 31 Distributions not reinvested are paid by check or transmitted to your bank account via Automated Clearing House. If the U.S. Postal Service cannot deliver your check, or if your check remains uncashed for six months, the fund reserves the right to reinvest your distribution check in your account at the net asset value on the day of the reinvestment and to reinvest all subsequent distributions in shares of the fund. Interest will not accrue on amounts represented by uncashed distributions or redemption checks. The following table provides details on dividend payments: Dividend Payment Schedule Fund Dividends Money funds • Purchases received by T. Rowe Price by noon ET via wire begin to earn dividends on that day. Other shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. • Declared daily and paid on the first business day of each month. Bond funds • Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. • Declared daily and paid on the first business day of each month. These stock funds only: • Balanced • Dividend Growth • Equity Income • Equity Index 500 • Global Real Estate • Growth & Income • Personal Strategy Balanced • Personal Strategy Income • Real Estate • Declared and paid quarterly, if any, in March, June, September, and December. • Must be a shareholder on the dividend record date. Other stock funds • Declared and paid annually, if any, generally in December. • Must be a shareholder on the dividend record date. Retirement and Spectrum Funds: • Retirement Income and Spectrum Income • Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. • Declared daily and paid on the first business day of each month. • All others • Declared and paid annually, if any, generally in December. • Must be a shareholder on the dividend record date. Bond and money fund shares earn dividends through the date of redemption (except for wire redemptions from money funds prior to noon ET, which earn dividends through the calendar day prior to the date of redemption). Shares redeemed on a Friday or prior to a holiday will continue to earn dividends until the next business T. ROWE PRICE 32 day. Generally, if you redeem all of your bond or money fund shares at any time during the month, you will also receive all dividends earned through the date of redemption in the same check. When you redeem only a portion of your bond or money fund shares, all dividends accrued on those shares will be reinvested, or paid in cash, on the next dividend payment date. The funds do not pay dividends in fractional cents. Any dividend amount earned for a particular day on all shares held that is one-half of one cent or greater (for example, $0.016) will be rounded up to the next whole cent ($0.02), and any amount that is less than one-half of one cent (for example, $0.014) will be rounded down to the nearest whole cent ($0.01). Please note that if the dividend payable on all shares held is less than one-half of one cent for a particular day, no dividend will be earned for that day. If you purchase and sell your shares through an intermediary, consult your intermediary to determine when your shares begin and stop accruing dividends; the information previously described may vary. Capital Gain Payments A capital gain or loss is the difference between the purchase and sale price of a security. If a fund has net capital gains for the year (after subtracting any capital losses), they are usually declared and paid in December to shareholders of record on a specified date that month. If a second distribution is necessary, it is paid the following year. Capital gain payments are not expected from money funds, which are managed to maintain a constant share price. Tax Information In most cases, you will be provided information for your tax filing needs no later than mid-February. If you invest in the fund through a tax-deferred account, such as an individual retirement account, you will not be subject to tax on dividends and distributions from the fund or the sale of fund shares if those amounts remain in the tax-deferred account. You may receive a Form 1099-R or other Internal Revenue Service forms, as applicable, if any portion of the account is distributed to you. If you invest in the fund through a taxable account, you generally will be subject to tax when: • You sell fund shares, including an exchange from one fund to another. • The fund makes dividend or capital gain distributions. Additional information about the taxation of dividends for certain T. Rowe Price funds is listed below: Tax-Free and Municipal Funds • Regular monthly dividends (including those from the state-specific tax-free funds) are expected to be exempt from federal income taxes. INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 33 Tax-Free and Municipal Funds • Exemption is not guaranteed, since the fund has the right under certain conditions to invest in nonexempt securities. • A fund may hold Build America Bonds or other qualified tax credit bonds. Investments in these bonds will result in taxable interest income, although the federal income tax on such interest income may be fully or partially offset by the specified tax credits that are available to the bondholders. A fund may elect to pass through to the shareholders taxable interest income and any corresponding tax credits. Any available tax credits—which are also included in federal taxable income—generally can be used to offset federal regular income tax and alternative minimum tax, but those tax credits generally are not refundable. • Tax-exempt dividends paid to Social Security recipients may increase the portion of benefits that is subject to tax. • For state-specific funds, the monthly dividends you receive are expected to be exempt from state and local income tax of that particular state. For other funds, a small portion of your income dividend may be exempt from state and local income taxes. • If a fund invests in certain “private activity” bonds that are not exempt from the alternative minimum tax, shareholders who are subject to the alternative minimum tax must include income generated by those bonds in their alternative minimum tax calculation. Private activity bonds issued in 2009 and 2010, and refunding bonds issued in 2009 and 2010 to refund private activity bonds that were issued from the beginning of 2004 to the end of 2008, are exempt from the alternative minimum tax. The portion of a fund’s income dividend that should be included in your alternative minimum tax calculation, if any, will be reported to you in January on Form 1099-DIV. For individual shareholders, a portion of ordinary dividends representing “qualified dividend income” received by the fund may be subject to tax at the lower rates applicable to long-term capital gains rather than ordinary income. You may report it as “qualified dividend income” in computing your taxes, provided you have held the fund shares on which the dividend was paid for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Ordinary dividends that do not qualify for this lower rate are generally taxable at the investor’s marginal income tax rate. This includes the portion of ordinary dividends derived from interest, short-term capital gains, distributions from nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan. Little, if any, of the ordinary dividends paid by the Global Real Estate Fund, Real Estate Fund, or the bond and money funds is expected to qualify for this lower rate. For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for dividends received by corporations to the extent the fund’s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the international stock funds or the bond and money funds is expected to qualify for this deduction. Beginning in 2013, a 3.8% net investment income tax is imposed on net investment income, including interest, dividends, and capital gains, of U.S. individuals with income exceeding $200,000 (or $250,000 if married filing jointly) and of estates and trusts. T. ROWE PRICE 34 Taxes on Fund Redemptions When you sell shares in any fund, you may realize a gain or loss. An exchange from one fund to another in a taxable account is also a sale for tax purposes. T. Rowe Price will make available to you Form 1099-B, if applicable, no later than mid-February, indicating the date and amount of each sale you made in the fund during the prior year. This information will also be reported to the Internal Revenue Service. For most new accounts or those opened by exchange in 1984 or later, we will provide you with the gain or loss on the shares you sold during the year based on the average cost single category method. You may calculate the cost basis using other methods acceptable to the Internal Revenue Service, such as specific identification. If you hold your fund through an intermediary, the intermediary is responsible for providing you with any necessary tax forms. You should contact your intermediary for the tax information that will be sent to you and reported to the Internal Revenue Service. For mutual fund shares acquired after 2011, new tax regulations require us to report the cost basis information to you and the Internal Revenue Service on Form 1099-B using a cost basis method selected by you or, in the absence of such selected method, our default method if you acquire your shares directly from us. Our default method is average cost. If you acquire your fund shares through an intermediary after 2011, you should check with your intermediary regarding the applicable cost basis method. You should, however, note that the cost basis information reported to you may not always be the same as what you should report on your tax return because the rules applicable to the determination of cost basis on Form 1099-B may be different from the rules applicable to the determination of cost basis for reporting on your tax return. Therefore, you should save your transaction records to make sure the information reported on your tax return is accurate. To help you maintain accurate records, T. Rowe Price will make available to you a confirmation promptly following each transaction you make (except for systematic purchases and systematic redemptions) and a year-end statement detailing all of your transactions in each fund account during the year. If you hold your fund through an intermediary, the intermediary is responsible for providing you with transaction confirmations and statements. Taxes on Fund Distributions T. Rowe Price (or your intermediary) will make available to you, as applicable, no later than mid-February, a Form 1099-DIV, or other Internal Revenue Service forms, as required, indicating the tax status of any income dividends, dividends exempt from federal income taxes, and capital gain distributions made to you. This information will be reported to the Internal Revenue Service. Taxable distributions are generally taxable to you in the year in which they are paid. Your bond or money fund dividends for each calendar year will include dividends accrued up to the first INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 35 business day of the next calendar year. You will be sent any additional information you need to determine your taxes on fund distributions, such as the portion of your dividends, if any, that may be exempt from state and local income taxes. Dividends from tax-free funds are generally expected to be tax-exempt. The tax treatment of a capital gain distribution is determined by how long the fund held the portfolio securities, not how long you held the shares in the fund. Short- term (one year or less) capital gain distributions are taxable at the same rate as ordinary income, and gains on securities held for more than one year are taxed at the lower rates applicable to long-term capital gains. If you realized a loss on the sale or exchange of fund shares that you held for six months or less, your short-term capital loss must be reclassified as a long-term capital loss to the extent of any long-term capital gain distributions received during the period you held the shares. For funds investing in foreign securities, distributions resulting from the sale of certain foreign currencies, currency contracts, and the foreign currency portion of gains on debt securities are taxed as ordinary income. Net foreign currency losses may cause monthly or quarterly dividends to be reclassified as returns of capital. If the fund qualifies and elects to pass through nonrefundable foreign income taxes paid to foreign governments during the year, your portion of such taxes will be reported to you as taxable income. However, you may be able to claim an offsetting credit or deduction on your tax return for those amounts. There can be no assurance that a fund will meet the requirements to pass through foreign income taxes paid. Taxable distributions are subject to tax whether reinvested in additional shares or received in cash. If a fund holds Build America Bonds or other qualified tax credit bonds and elects to pass through the corresponding interest income and any available tax credits, you will need to report both the interest income and any such tax credits as taxable income. You may be able to claim the tax credits on your federal tax return as an offset to your income tax (including alternative minimum tax) liability, but the tax credits generally are not refundable. There is no assurance, however, that a fund will elect to pass through the income and credits. The following table provides additional details on distributions for certain funds: Taxes on Fund Distributions Tax-Free and Municipal Funds • Gains realized on the sale of market discount bonds with maturities beyond one year may be treated as ordinary income and cannot be offset by other capital losses. • Payments received or gains realized on certain derivative transactions may result in taxable ordinary income or capital gains. • To the extent the fund makes such investments, the likelihood of a taxable distribution will be increased. T. ROWE PRICE 36 Taxes on Fund Distributions Inflation Protected Bond Fund • Inflation adjustments on Treasury inflation-protected securities that exceed deflation adjustments for the year will be distributed as a short-term capital gain resulting in ordinary income. • In computing the distribution amount, the fund cannot reduce inflation adjustments by short- or long-term capital losses from the sales of securities. • Net deflation adjustments for a year may result in all or a portion of dividends paid earlier in the year being treated as a return of capital. Retirement and Spectrum Funds • Distributions by the underlying funds and changes in asset allocations may result in taxable distributions of ordinary income or capital gains. Tax Consequences of Hedging Entering into certain transactions involving options, futures, swaps, and forward currency exchange contracts may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in a fund being required to distribute gains on such transactions even though it did not close the contracts during the year or receive cash to pay such distributions. The fund may not be able to reduce its distributions for losses on such transactions to the extent of unrealized gains in offsetting positions. Tax Effect of Buying Shares Before an Income Dividend or Capital Gain Distribution If you buy shares shortly before or on the record date—the date that establishes you as the person to receive the upcoming distribution—you may receive a portion of the money you just invested in the form of a taxable distribution. Therefore, you may wish to find out a fund’s record date before investing. In addition, a fund’s share price may, at any time, reflect undistributed capital gains or income and unrealized appreciation, which may result in future taxable distributions. Such distributions can occur even in a year when the fund has a negative return. TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS Following these procedures helps assure timely and accurate transactions. Purchase Conditions Nonpayment If you pay with a check or Automated Clearing House transfer that does not clear or if your payment is not received in a timely manner, your purchase may be canceled. You will be responsible for any losses or expenses incurred by the fund or transfer agent, and the fund can redeem shares you own in this or another identically registered T. Rowe Price account as reimbursement. The funds and their agents have the right to reject or cancel any purchase, exchange, or redemption due to nonpayment. INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 37 U.S. Dollars All purchases must be paid for in U.S. dollars; checks must be drawn on U.S. banks. Sale (Redemption) Conditions Holds on Immediate Redemptions: 10-Day Hold If you sell shares that you just purchased and paid for by check or Automated Clearing House transfer, the fund will process your redemption but generally will delay sending you the proceeds for up to 10 calendar days to allow the check or transfer to clear. If, during the clearing period, we receive a check drawn against your newly purchased shares, it will be returned marked “uncollected.” (The 10-day hold does not apply to purchases paid for by bank wire or automatic purchases through your paycheck.) Telephone and Online Account Transactions You may access your account and conduct transactions using the telephone or the T. Rowe Price website. The T. Rowe Price funds and their agents use reasonable procedures to verify the identity of the shareholder. If these procedures are followed, the funds and their agents are not liable for any losses that may occur from acting on unauthorized instructions. A confirmation is sent promptly after a transaction. Please review it carefully and contact T. Rowe Price immediately about any transaction you believe to be unauthorized. Telephone conversations are recorded. Large Redemptions Large redemptions can adversely affect a portfolio manager’s ability to implement a fund’s investment strategy by causing the premature sale of securities. Therefore, the fund reserves the right (without prior notice) to pay all or part of redemption proceeds with securities from the fund’s portfolio rather than in cash (“redemption in-kind”). If this occurs, the securities will be selected by the fund in its absolute discretion, and the redeeming shareholder or account will be responsible for disposing of the securities and bearing any associated costs. Excessive and Short-Term Trading Policy Excessive transactions and short-term trading can be harmful to fund shareholders in various ways, such as disrupting a fund’s portfolio management strategies, increasing a fund’s trading costs, and negatively affecting its performance. Short-term traders in funds that invest in foreign securities may seek to take advantage of developments overseas that could lead to an anticipated difference between the price of the funds’ shares and price movements in foreign markets. While there is no assurance that T. Rowe Price can prevent all excessive and short-term trading, the Boards of Directors/Trustees of the T. Rowe Price funds have adopted the following trading limits that are designed to deter such activity and protect the funds’ shareholders. The funds may revise their trading limits and procedures at any time as the Boards of Directors/Trustees deem necessary or appropriate to better detect short-term trading that may adversely affect the funds, to comply with applicable regulatory requirements, or to impose additional or alternative restrictions. Subject to certain exceptions, each T. Rowe Price fund restricts a shareholder’s purchases (including through exchanges) into a fund account for a period of T. ROWE PRICE 38 30 calendar days after the shareholder has redeemed or exchanged out of that same fund account (the “30-Day Purchase Block”). The calendar day after the date of redemption is considered Day 1 for purposes of computing the period before another purchase may be made. General Exceptions As of the date of this prospectus, the following types of transactions generally are not subject to the 30-Day Purchase Block: • Shares purchased or redeemed in money funds and ultra short-term bond funds; • Shares purchased or redeemed through a systematic purchase or withdrawal plan; • Checkwriting redemptions from bond and money funds; • Shares purchased through the reinvestment of dividends or capital gain distributions; • Shares redeemed automatically by a fund to pay fund fees or shareholder account fees; • Transfers and changes of account registration within the same fund; • Shares purchased by asset transfer or direct rollover; • Shares purchased or redeemed through IRA conversions and recharacterizations; • Shares redeemed to return an excess contribution from a retirement account; • Transactions in Section 529 college savings plans; • Shares converted from one share class to another share class in the same fund; and • Shares of T. Rowe Price funds that are purchased by another T. Rowe Price fund, including shares purchased by T. Rowe Price fund-of-funds products, and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that shareholders of the investing T. Rowe Price fund are still subject to the policy). Transactions in certain rebalancing, asset allocation, wrap programs, and other advisory programs, as well as non-T. Rowe Price fund-of-funds products, may also be exempt from the 30-Day Purchase Block, subject to prior written approval by T. Rowe Price. In addition to restricting transactions in accordance with the 30-Day Purchase Block, T. Rowe Price may, in its discretion, reject (or instruct an intermediary to reject) any purchase or exchange into a fund from a person (which includes individuals and entities) whose trading activity could disrupt the management of the fund or dilute the value of the fund’s shares, including trading by persons acting collectively (e.g., following the advice of a newsletter). Such persons may be barred, without prior notice, from further purchases of T. Rowe Price funds for a period longer than 30 calendar days or permanently. Intermediary Accounts If you invest in T. Rowe Price funds through an intermediary, you should review the intermediary’s materials carefully or consult with the intermediary directly to determine the trading policy that will apply to your trades in the funds as well as any other rules or conditions on transactions that may apply. If INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 39 T. Rowe Price is unable to identify a transaction placed through an intermediary as exempt from the excessive trading policy, the 30-Day Purchase Block may apply. Intermediaries may maintain their underlying accounts directly with the fund, although they often establish an omnibus account (one account with the fund that represents multiple underlying shareholder accounts) on behalf of their customers. When intermediaries establish omnibus accounts in the T. Rowe Price funds, T. Rowe Price is not able to monitor the trading activity of the underlying shareholders. However, T. Rowe Price monitors aggregate trading activity at the intermediary (omnibus account) level in an attempt to identify activity that indicates potential excessive or short-term trading. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary and may request personal identifying information and transaction histories for some or all underlying shareholders (including plan participants, if applicable). If T. Rowe Price believes that excessive or short-term trading has occurred, it will instruct the intermediary to impose restrictions to discourage such practices and take appropriate action with respect to the underlying shareholder, including restricting purchases for 30 calendar days or longer. There is no assurance that T. Rowe Price will be able to properly enforce its excessive trading policies for omnibus accounts. Because T. Rowe Price generally relies on intermediaries to provide information and impose restrictions for omnibus accounts, its ability to monitor and deter excessive trading will be dependent upon the intermediaries’ timely performance of their responsibilities. T. Rowe Price may allow an intermediary or other third party to maintain restrictions on trading in the T. Rowe Price funds that differ from the 30-Day Purchase Block. An alternative excessive trading policy would be acceptable to T. Rowe Price if it believes that the policy would provide sufficient protection to the T. Rowe Price funds and their shareholders that is consistent with the excessive trading policy adopted by the funds’ Boards of Directors/Trustees. Retirement Plan Accounts If shares are held in a retirement plan, generally the 30-Day Purchase Block applies only to shares redeemed by a participant-directed exchange to another fund. However, the 30-Day Purchase Block may apply to transactions other than exchanges depending on how shares of the plan are held at T. Rowe Price or the excessive trading policy applied by your plan’s recordkeeper. An alternative excessive trading policy may apply to the T. Rowe Price funds where a retirement plan has its own policy deemed acceptable to T. Rowe Price. You should contact T. Rowe Price or your plan recordkeeper to determine which of your transactions are subject to the funds’ 30-Day Purchase Block or an alternative policy. There is no guarantee that T. Rowe Price will be able to identify or prevent all excessive or short-term trades or trading practices. Keeping Your Account Open Due to the relatively high cost to a fund of maintaining small accounts, we ask you to maintain an account balance of at least $1,000 ($10,000 for Summit Funds). If, for T. ROWE PRICE 40 any reason, your balance is below this amount for three months or longer, we have the right to redeem your account at the then-current net asset value after giving you 60 days to increase your balance. This could result in a taxable gain. Signature Guarantees A Medallion signature guarantee is designed to protect you and the T. Rowe Price funds from fraud by verifying your signature. You may need to have your signature guaranteed in certain situations, such as: • Written requests: (1) to redeem over $100,000 or (2) to wire redemption proceeds when prior bank account authorization is not on file. • Remitting redemption proceeds to any person, address, or bank account not on record. • Transferring redemption proceeds to a T. Rowe Price fund account with a different registration (name or ownership) from yours. • Establishing certain services after the account is opened. The signature guarantee must be obtained from a financial institution that is a participant in a Medallion signature guarantee program. You can obtain a Medallion signature guarantee from most banks, savings institutions, broker-dealers, and other guarantors acceptable to T. Rowe Price. When obtaining a Medallion signature guarantee, please discuss with the guarantor the dollar amount of your proposed transaction. It is important that the level of coverage provided by the guarantor’s stamp covers the dollar amount of the transaction or it may be rejected. We cannot accept guarantees from notaries public or organizations that do not provide reimbursement in the case of fraud. ACCOUNT SERVICE FEE In an effort to help offset the disproportionately high costs incurred by the funds in connection with servicing lower-balance accounts, an annual $20 account service fee (paid to T. Rowe Price Services, Inc., or one of its affiliates) is charged to certain fund accounts with a balance below $10,000. The determination of whether a fund account is subject to the account service fee is based on account balances and services selected for accounts as of the last business day of August. The fee will be charged to an account with a balance below $10,000 for any reason, including market fluctuation and recent redemptions. The fee, which is automatically deducted from an account by redeeming fund shares, is typically charged to accounts in early September each calendar year. The account service fee generally does not apply to fund accounts that are held through an intermediary, participant accounts in employer-sponsored retirement plans for which T. Rowe Price Retirement Plan Services provides recordkeeping INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 41 services, or money funds that are used as a T. Rowe Price Brokerage sweep account. Regardless of a particular fund account’s balance on the last business day of August, the account service fee is automatically waived for accounts that satisfy any of the following conditions: • Any accounts for which the shareholder has elected to receive electronic delivery of all of the following: account statements, transaction confirmations, and prospectuses and shareholder reports; • Any accounts of a shareholder with at least $50,000 in total assets with T. Rowe Price (for this purpose, total assets includes investments in T. Rowe Price mutual funds, except for those held through a retirement plan for which T. Rowe Price Retirement Plan Services provides recordkeeping services; T. Rowe Price Brokerage; and T. Rowe Price variable annuities); or • Any accounts of a shareholder who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $100,000—visit troweprice.com or call 1-800-537-1098 for more information). T. Rowe Price reserves the right to authorize additional waivers for other types of accounts or to modify the conditions for assessment of the account service fee. Fund shares held in a T. Rowe Price individual retirement account, Education Savings Account, or small business retirement plan account (including certain 403(b) plan accounts) are subject to the account service fee and may be subject to additional administrative fees when distributing all fund shares from such accounts. MORE ABOUT THE FUNDS 3 ORGANIZATION AND MANAGEMENT How are the funds organized? T. Rowe Price International Funds, Inc. (the “corporation”) was incorporated in Maryland in 1979. Currently, the corporation consists of 18 series, each representing a separate pool of assets with different objectives and investment policies. Each is an “open-end management investment company,” or mutual fund. Mutual funds pool money received from shareholders and invest it to try to achieve specified objectives. Shareholders have benefitted from T. Rowe Price’s investment management experience since 1937. What is meant by “shares”? As with all mutual funds, investors purchase shares when they put money in a fund. These shares are part of a fund’s authorized capital stock, but share certificates are not issued. Each share and fractional share entitles the shareholder to: • Receive a proportional interest in income and capital gain distributions. • Cast one vote per share on certain fund matters, including the election of fund directors/trustees, changes in fundamental policies, or approval of changes in the fund’s management contract. Do T. Rowe Price funds have annual shareholder meetings? The funds are not required to hold annual meetings and, to avoid unnecessary costs to fund shareholders, do not do so except when certain matters, such as a change in fundamental policies, must be decided. In addition, shareholders representing at least 10% of all eligible votes may call a special meeting for the purpose of voting on the removal of any fund director or trustee. If a meeting is held and you cannot attend, you can vote by proxy. Before the meeting, the fund will send or make available to you proxy materials that explain the issues to be decided and include instructions on voting by mail or telephone or on the Internet. Who runs the funds? General Oversight Each fund is governed by a Board of Directors that meets regularly to review fund investments, performance, expenses, and other business affairs. The Board elects the funds’ officers. At least 75% of Board members are independent of T. Rowe Price and its affiliates (the “Firm”). MORE ABOUT THE FUNDS 43 All decisions regarding the purchase and sale of fund investments are made by T. Rowe Price or an affiliated investment adviser–specifically by the funds’ portfolio managers. Investment Adviser T. Rowe Price is each fund’s investment adviser and oversees the selection of each fund’s investments and management of each fund’s portfolio. T. Rowe Price is a SEC- registered investment adviser that provides investment management services to individual and institutional investors, and sponsors and serves as adviser and sub- adviser to registered investment companies, institutional separate accounts, and common trust funds. The address for T. Rowe Price is 100 East Pratt Street, Baltimore, Maryland 21202. As of December 31, 2012, the Firm managed approximately $577 billion for more than 10 million individual and institutional investor accounts. With respect to the Emerging Markets Local Currency Bond Fund and International Bond Fund, T. Rowe Price has entered into a sub-advisory agreement with T. Rowe Price International under which T. Rowe Price International is authorized to trade securities and make discretionary investment decisions on behalf of the fund. T. Rowe Price International is an investment adviser registered or licensed with the SEC, United Kingdom Financial Conduct Authority, Financial Services Agency of Japan, and other non-U.S. regulatory authorities. T. Rowe Price International sponsors and serves as adviser to foreign collective investment schemes and provides investment management services to investment companies and other institutional investors. T. Rowe Price International is headquartered in London and has several branch offices around the world. T. Rowe Price International is a direct subsidiary of T. Rowe Price and its address is 60 Queen Victoria Street, London EC4N 4TZ, United Kingdom. Portfolio Management T. Rowe Price has established an Investment Advisory Committee with respect to each fund. The committee chairman has day-to-day responsibility for managing the fund’s portfolio and works with the committee in developing and executing each fund’s investment program. The members of each advisory committee are listed below, along with information that provides the year that the chairman first joined the Firm and the chairman’s specific business experience during the past five years (although the chairman may have had portfolio management responsibilities for a longer period). The Statement of Additional Information provides additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers, and the portfolio managers’ ownership of fund shares. Emerging Markets Bond Fund Michael J. Conelius, Chairman, Roy Adkins, Peter I. Botoucharov, Carolyn Hoi Che Chu, Bridget A. Ebner, Richard Hall, Andrew J. Keirle, Ian D. Kelson, Christopher J. Kushlis, Christopher C. Loop, Michael D. Oh, Kenneth A. Orchard, and Christopher J. Rothery. Mr. Conelius has been chairman of the committee since 2001, but has been managing the fund since the fund’s inception T. ROWE PRICE 44 in 1994. He joined the Firm in 1988 and his investment experience dates from that time. He has served as a portfolio manager with the Firm throughout the past five years. Emerging Markets Corporate Bond Fund Michael J. Conelius, Chairman, Roy H. Adkins, Peter I. Botoucharov, Sheldon Chan, Carolyn Hoi Che Chu, Bridget A. Ebner, Richard Hall, Andrew J. Keirle, Ian D. Kelson, Christopher J. Kushlis, Christopher C. Loop, Samy B Muaddi, Michael D. Oh, Kenneth A. Orchard, and Siby Thomas. Mr. Conelius has been chairman of the committee since the fund’s inception in 2012. He joined the Firm in 1988 and his investment experience dates from that time. He has served as a portfolio manager with the Firm throughout the past five years. Emerging Markets Local Currency Bond Fund Andrew J. Keirle, Chairman, Roy H. Adkins, Peter I. Botoucharov, Michael J. Conelius, Richard Hall, Ian D. Kelson, Christopher J. Kushlis, Michael D. Oh, Kenneth A. Orchard, Christopher J. Rothery, and Ju Yen Tan. Mr. Keirle was appointed co-chairman of the committee when the fund incepted in 2011 and became sole chairman in 2012. Mr. Keirle joined the Firm in 2005 and his investment experience dates from 1996. During the past five years, he has served as a portfolio manager for various global fixed income strategies managed by the Firm. International Bond Fund Ian D. Kelson and Christopher J. Rothery, Co-chairmen, Brian J. Brennan, Michael J. Conelius, Michael Della Vedova, Andrew J. Keirle, Kenneth A. Orchard, David Stanley, Ju Yen Tan, and J. Howard Woodward. Mr. Kelson has been chairman of the committee since 2001. He joined the Firm in 2000 and his investment experience dates from 1981. He has served as a portfolio manager with the Firm throughout the past five years. Mr. Rothery became co- chairman of the committee in 2012. Mr. Rothery joined the Firm in 1994 and his investment experience dates from 1986. During the past five years, he has served as a portfolio manager for various global fixed income strategies managed by the Firm. The Management Fee This fee has two parts–an “individual fund fee,” which reflects a fund’s particular characteristics, and a “group fee.” The group fee, which is designed to reflect the benefits of the shared resources of the T. Rowe Price investment management complex, is calculated daily based on the combined net assets of all T. Rowe Price funds (except the Spectrum Funds, Retirement Funds, TRP Reserve Investment Funds, and any index or private label mutual funds). The group fee schedule (in the following table) is graduated, declining as the asset total rises, so shareholders benefit from the overall growth in mutual fund assets. MORE ABOUT THE FUNDS 45 Group Fee Schedule 0.334%* First $50 billion 0.305% Next $30 billion 0.300% Next $40 billion 0.295% Next $40 billion 0.290% Next $60 billion 0.285% Next $80 billion 0.280% Next $100 billion 0.275% Thereafter * Represents a blended group fee rate containing various breakpoints. Each fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. On December 31, 2012, the annual group fee rate was 0.30%. The individual fund fees, also applied to the funds’ average daily net assets, are as follows: Emerging Markets Bond Fund and Emerging Markets Local Currency Bond Fund, 0.45%; Emerging Markets Corporate Bond Fund, 0.50%, and International Bond Fund, 0.35%. The expenses shown in the fee table in Section 1 are generally based on a fund’s prior fiscal year. In periods of market volatility, assets may decline significantly, causing total annual fund operating expenses to become higher than the numbers shown in the fee table. A discussion about the factors considered by the Board and its conclusions in approving each fund’s investment management contract with T. Rowe Price appears in each fund’s semiannual report to shareholders for the period ended June 30. Fund Operations and Shareholder Services T. Rowe Price provides accounting services to the T. Rowe Price funds. T. Rowe Price Services, Inc. acts as the transfer and dividend disbursing agent and provides shareholder and administrative services to the funds. T. Rowe Price Retirement Plan Services, Inc., provides recordkeeping, sub-transfer agency, and administrative services for certain types of retirement plans investing in the funds. These companies receive compensation from the funds for their services. The funds may also pay third- party intermediaries for performing shareholder and administrative services for underlying shareholders in omnibus accounts. Certain funds also serve as underlying funds in which certain fund-of-funds products, the T. Rowe Price Spectrum and/or Retirement Funds, invest. Subject to approval by each fund’s Board of Directors, each fund bears a proportional share of the operating expenses of the fund-of-funds products. All of the fees discussed above are included in the fees and expenses table under “Other expenses” and in the funds’ financial statements. T. ROWE PRICE 46 MORE INFORMATION ABOUT THE FUNDS AND THEIR INVESTMENT RISKS Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. The funds are more suitable for investors with long-term financial goals. The funds may be appropriate if you seek diversification for your equity or domestic fixed income investments and can accept the risks that accompany foreign bond investing, including the potentially greater volatility associated with emerging markets. Your decision should take into account whether you have any other foreign bond investments. If not, you may want to consider the International Bond Fund to gain broader exposure to opportunities abroad. The Emerging Markets Bond Fund, Emerging Markets Corporate Bond Fund, or Emerging Markets Local Currency Bond Fund may be an appropriate part of your overall investment strategy if you are supplementing existing holdings that focus on developed foreign markets and can accept the potentially greater volatility of investing in emerging markets, including the increased currency risk associated with the Emerging Markets Local Currency Bond Fund. The fund or funds you select should not represent your complete investment program or be used for short-term purposes. Buying foreign bonds can be difficult and costly for the individual investor, and gaining access to many foreign markets can be complicated. Few investors have the time, the expertise, or the resources to evaluate foreign markets effectively on their own. The professional management, broad diversification, and relative simplicity of mutual funds make them an attractive, low-cost vehicle for this type of investing. Interest rates vary from country to country depending on local economic conditions and monetary and fiscal policies. By investing in foreign bond markets, investors can benefit from potentially higher yields than U.S. bond markets provide. Therefore, diversifying internationally across various countries can help reduce portfolio volatility and smooth out returns. The funds’ security selection relies heavily on in-depth research that analyzes various factors such as the creditworthiness of particular issuers, shifts in country fundamentals, political and economic trends, anticipated currency movements, and the risk adjusted attractiveness of various countries. While the International Bond Fund focuses its investments in non-U.S. dollar-denominated, investment-grade bonds of issuers in developed markets, the Emerging Markets Bond Fund, Emerging Markets Corporate Bond Fund, and Emerging Markets Local Currency Bond Fund focus their investments on issuers in emerging markets. The Emerging Markets Bond Fund has wide flexibility to choose among bonds issued in local currencies or the U.S. dollar, and to choose among corporate and sovereign issuers. The Emerging Markets Local Currency Bond Fund may diversify its investments between corporate and sovereign issuers but tends to invest more in sovereign bonds, whereas the Emerging Markets Corporate Bond Fund focuses its investments almost entirely on MORE ABOUT THE FUNDS 47 corporate issuers. Furthermore, the Emerging Markets Local Currency Bond Fund focuses its investments on bonds and other debt instruments that are denominated in the local currency of the issuer, which enables investors to get exposure both to local interest rates and to the currencies of emerging markets. Investments in bonds issued in foreign currencies may afford investors a potential hedge against weakness in the U.S. dollar, although investments by the Emerging Markets Local Currency Bond Fund and International Bond Fund will be significantly affected by changes in the exchange rates between the U.S. dollar and the currencies in which the funds’ holdings are denominated and traded. The funds ordinarily invest in the securities of at least three countries; however, they may invest in the securities of one country, including the U.S., for temporary defensive purposes. While the use of forward currency exchange contracts is not a principal investment strategy of the Emerging Markets Corporate Bond Fund, each of the funds may enter into forward currency exchange contracts in an effort to hedge against an expected decline in the value of currencies in which its portfolio holdings are denominated, to increase exposure to a particular foreign currency or to shift the fund’s foreign currency exposure from one country to another, or to enhance the fund’s returns. In an effort to achieve these same goals, the Emerging Markets Local Currency Bond Fund may also enter into currency swaps, purchase and write options on currencies, and purchase and sell currency futures contracts and related options thereon, as well as use interest rate swaps and futures contracts to adjust its country exposure. Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. The risk profiles of foreign bond funds vary with the types of bonds they purchase, their degree of currency exposure, and whether they invest in developed markets, emerging markets, or both. Of the funds, the emerging markets funds tend to be more risky, with the Emerging Markets Local Currency Bond Fund having the higher potential for share price volatility resulting from currency fluctuations. As with any mutual fund, there is no guarantee the funds will achieve their objectives. The funds’ share price fluctuates, which means you could lose money when you sell your shares of the funds. Some particular risks affecting the funds include the following: Currency risk This is the risk of a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that foreign currency. The overall impact on a fund’s holdings can be significant and long- lasting depending on the currencies represented in the portfolio, how each currency appreciates or depreciates in relation to the U.S. dollar, and whether currency positions are hedged. Foreign currency exchange rates may fluctuate significantly over short periods of time, particularly with respect to emerging markets currencies. Currency exchange rates can also be affected unpredictably by intervention by U.S. or foreign governments or central banks, or by currency controls or political T. ROWE PRICE 48 developments. Because the Emerging Markets Local Currency Bond Fund and International Bond Fund are normally heavily exposed to foreign currencies and do not attempt to hedge the impact of these currencies on the U.S. dollar, changes in currency exchange rates are likely to have a significant impact on the funds’ performance. Many bonds held in the Emerging Markets Bond Fund and Emerging Markets Corporate Bond Fund may be denominated in U.S. dollars to improve their marketability, but this does not protect them from substantial price declines in the face of political and economic turmoil. Currency trends are unpredictable, and to the extent each fund purchases and sells currencies, it will also be subject to the risk that its trading strategies, including efforts at hedging, will not succeed. Furthermore, hedging and trading costs can be significant and reduce fund net asset value, and many emerging market currencies cannot be effectively hedged. Other risks of foreign investing Risks can result from varying stages of economic and political development, differing regulatory environments, trading days and accounting standards, uncertain tax laws, and higher transaction costs of non-U.S. markets. Investments outside the U.S. could be subject to governmental actions such as capital or currency controls, nationalization of a company or industry, expropriation of assets, or imposition of high taxes. A trading market may close without warning for extended time periods, preventing a fund from buying or selling securities in that market. Emerging market risk Investments in emerging markets, which generally include Africa, parts of Europe and much of Asia, the Middle East, and Central and South America, are subject to the risk of abrupt and severe price declines. The economic and political structures of emerging market countries, in most cases, do not compare favorably with the U.S. or other developed countries in terms of wealth and stability, and their financial markets often lack liquidity. These economies are less developed and can be overly reliant on particular industries and more vulnerable to the ebb and flow of international trade, trade barriers, and other protectionist or retaliatory measures. Certain countries have legacies and periodic episodes of hyperinflation and currency devaluations, particularly Russia and many Latin American nations, and more recently many Asian countries. Governments in many emerging market countries participate to a significant degree in their economies and securities markets. Foreign investments may be restricted and subject to greater government control, including repatriation of sales proceeds. Some countries have histories of instability and upheaval that could cause their governments to act in a detrimental or hostile manner toward private enterprise or foreign investment. Investments in countries or regions that have recently begun moving away from central planning and state- owned industries toward free markets should be regarded as speculative. While some countries have made progress in economic growth, liberalization, fiscal discipline, and political and social stability, there is no assurance these trends will continue. Significant risks, such as war and terrorism, currently affect some emerging market countries. Fund performance will likely be hurt by exposure to nations in the MORE ABOUT THE FUNDS 49 midst of hyperinflation, currency devaluation, trade disagreements, sudden political upheaval, or interventionist government policies. The volatility of emerging markets may be heightened by the actions (such as significant buying or selling) of a few major investors. For example, substantial decreases in cash flows of mutual funds investing in these markets could significantly affect local securities prices and, therefore, cause fund share prices to decline. All of these factors make investing in such countries significantly riskier than in other countries and any one of these could cause a fund’s share price to decline. Credit risk This is the risk that an issuer of a debt security or counterparty to an over-the-counter derivative held by a fund will default (fail to make scheduled payments), potentially reducing the fund’s income and share price. This risk is increased when a portfolio security is downgraded or the perceived creditworthiness of an issuer or counterparty deteriorates. The risk of default is much greater for emerging market bonds and securities rated as below investment-grade. Companies and governments issuing lower-rated bonds are not as strong financially as those with higher credit ratings, and their bonds are often viewed as speculative investments. Such issuers are more vulnerable to real or perceived business setbacks and to changes in the economy, such as a recession, that might impair their ability to make timely interest and principal payments. Certain emerging markets governments and corporations have in the past defaulted on payment of interest and principal on debt they have issued. As a result, your portfolio managers rely heavily on proprietary T. Rowe Price and T. Rowe Price International research when selecting these investments. Liquidity risk This is the risk that a fund may not be able to sell a holding in a timely manner at a desired price. Sectors of the bond market can experience sudden downturns in trading activity. During periods of reduced market liquidity, the spread between the price at which a security can be bought and the price at which it can be sold can widen, and the fund may not be able to sell a holding readily at a price that reflects what the fund believes it should be worth. Less liquid securities can also become more difficult to value. Emerging market bonds are generally less liquid than higher-quality bonds issued by companies and governments in developed countries. Consequently, large purchases or sales of certain high-yield, emerging market debt issues may cause significant changes in their prices. Because many of these bonds do not trade frequently, when they do trade, their prices may be substantially higher or lower than had been expected. A lack of liquidity also means that more subjectivity will be used in establishing the fair value of the securities. Interest rate risk This is the risk that interest rates will increase, causing a decline in bond prices. (Bond prices and interest rates usually move in opposite directions.) Prices fall because the bonds and notes in the fund’s portfolio become less attractive to other investors when securities with higher yields become available. Generally, the T. ROWE PRICE 50 longer the maturity of a security or the longer a bond fund’s weighted average maturity, the greater its interest rate risk. Because the Emerging Markets Bond Fund, Emerging Markets Corporate Bond Fund, and International Bond Fund expect to maintain an intermediate- or long-term weighted average maturity, they should carry more interest rate risk than the Emerging Markets Local Currency Bond Fund and other funds that invest in shorter-term securities, although changes in the local interest rates of emerging market countries tend to be more erratic than changes in interest rates of the U.S. and developed market countries. Other factors The major factor influencing prices of high-quality bonds is changes in interest rate levels; but this is only one of several factors affecting prices of lower- quality bonds. Because the credit quality of the issuer is lower, such bonds are more sensitive to developments affecting the issuer’s underlying fundamentals (for example, changes in financial condition or a particular country’s general economy). In addition, the entire bond market in an emerging market can experience sudden and sharp price swings due to a variety of factors, including changes in economic forecasts, stock market activity, large or sustained sales by institutional investors, a high-profile default, a political upheaval of some kind, or just a change in the market’s psychology. This type of volatility is usually associated more with stocks than bonds, but investors in lower-quality bonds should also anticipate it. Since mutual funds can be a major source of demand in certain markets, substantial cash flows into and out of these funds can affect high-yield and emerging market bond prices. If, for example, a significant number of funds were to sell bonds to meet shareholder redemptions, both bond prices and a fund’s share price could fall more than underlying fundamentals might justify. Nondiversification risk Because each fund (other than Emerging Markets Corporate Bond Fund) is nondiversified, the fund can invest more of its assets in a smaller number of issuers than diversified funds. Concentrating investments could result in greater potential losses than for funds investing in a broader variety of issuers. Derivatives risk To the extent a fund enters into forward currency exchange contracts, it is exposed to additional volatility and losses in excess of the fund’s initial investment, the risk that anticipated currency movements will not be accurately predicted, and the risk that the other party to the transaction will not fulfill its contractual obligation. If currency values and exchange rates move in a direction not predicted by the investment adviser, the fund could be in a worse position than if it had not entered into such transactions. Any attempts at hedging currencies may not be successful and could cause the fund to lose money or fail to get the benefit of a gain on a hedged position. To the extent the Emerging Markets Local Currency Bond Fund also uses swaps, options, and futures involving currencies, it is similarly exposed to additional volatility and losses greater than direct investments in the contract’s underlying assets and the risk that anticipated currency movements will not be accurately predicted. These instruments may be less liquid and difficult to price. MORE ABOUT THE FUNDS 51 Any efforts at buying or selling currencies could result in significant losses for a fund and, if the fund takes a short position in a particular currency, it will lose money if the currency appreciates in value. Further, if the fund’s foreign currency transactions are intended to hedge the currency risk associated with investing in foreign securities and minimize the risk of loss that would result from a decline in the value of the hedged currency, these transactions also may limit any potential gain that might result should the value of such currency increase. The Emerging Markets Local Currency Bond Fund’s use of interest rate swaps and futures involve the risk that interest rate movements will not be accurately predicted. Interest rates and yield curves vary from country to country depending on local economic conditions and monetary and fiscal policies, and interest rate changes and their impact tend to be more difficult to predict for emerging market countries. Efforts to reduce risk Consistent with each fund’s objective, the portfolio manager uses various tools to try to reduce risk and increase total return, including: • Thorough credit research by our own analysts. • Analysis of industry, country, and regional fundamentals. • Adjusting fund duration to try to reduce the drop in the fund’s price when interest rates rise or to benefit from the rise in price when rates fall. • Management of the impact of foreign currency changes on the fund’s portfolio. Other strategies may be employed that are not considered part of a fund’s principal investment strategies. For instance, the Emerging Markets Bond Fund, Emerging Markets Corporate Bond Fund, and International Bond Fund may also use futures and swaps, although these funds would primarily use such instruments to manage interest rate exposure, adjust portfolio duration, or as a tool to help manage cash flows into and out of the fund. Each fund may also use credit default swaps in an effort to manage overall credit quality or to protect the value of certain portfolio holdings. For the Emerging Markets Corporate Bond Fund, any forward currency exchange contracts would typically be used to settle trades in a foreign currency, although they could be used to help protect the fund’s holdings from unfavorable changes in currency exchange rates. To the extent a fund invests in futures, swaps, or credit default swaps, it could be exposed to additional volatility and the risk that anticipated changes in interest rates or the creditworthiness of an issuer, or the likelihood of a particular credit event, will not be accurately predicted. From time to time, the funds may use other derivatives that are consistent with their investment program. A derivative involves risks different from, and possibly greater than, the risks associated with investing directly in the assets on which the derivative is based. Derivatives can be highly volatile, illiquid, and difficult to value, and changes in the value of a derivative may not properly correlate with changes in the value of the underlying asset, reference rate, or index. A fund could be exposed to significant losses if it is unable to close a derivatives position due to the lack of a liquid T. ROWE PRICE 52 secondary trading market. Derivatives involve the risk that a counterparty to the derivatives agreement will fail to make required payments or comply with the terms of the agreement. There is also the possibility that limitations or trading restrictions may be imposed by an exchange or government regulation, which could adversely impact the value and liquidity of a derivatives contract subject to such regulation. Recent legislation calls for a new regulatory framework for the derivatives markets. The full extent and impact of new regulations are not certain at this time. New regulations have made the use of derivatives by funds more costly, may limit the availability of certain types of derivatives, and may otherwise adversely affect the value or performance of derivatives used by funds. The Statement of Additional Information contains more detailed information about each fund and its investments, operations, and expenses. INVESTMENT POLICIES AND PRACTICES This section takes a detailed look at some of the types of fund securities and the various kinds of investment practices that may be used in day-to-day portfolio management. Fund investments are subject to further restrictions and risks described in the Statement of Additional Information. Shareholder approval is required to substantively change fund objectives. Shareholder approval is also required to change certain investment restrictions noted in the following section as “fundamental policies.” Portfolio managers also follow certain “operating policies” that can be changed without shareholder approval. Shareholders will receive at least 60 days’ prior notice of a change in a fund’s policy requiring it to normally invest at least 80% of net assets in 1) bonds of issuers in emerging markets countries (Emerging Markets Bond); 2) corporate bonds of issuers in emerging market countries (Emerging Markets Corporate Bond); 3) bonds denominated in emerging markets currencies (Emerging Markets Local Currency Bond); and 4) foreign bonds (International Bond). Fund holdings of certain kinds of investments cannot exceed maximum percentages of total assets, which are set forth in this prospectus. For instance, fund investments in certain derivatives are limited to 10% of total assets. While these restrictions provide a useful level of detail about fund investments, investors should not view them as an accurate gauge of the potential risk of such investments. For example, in a given period, a 5% investment in derivatives could have significantly more of an impact on a fund’s share price than its weighting in the portfolio. The net effect of a particular investment depends on its volatility and the size of its overall return in relation to the performance of all other fund investments. MORE ABOUT THE FUNDS 53 Certain investment restrictions, such as a required minimum or maximum investment in a particular type of security, are measured at the time a fund purchases a security. The status, market value, maturity, credit quality, or other characteristics of a fund’s securities may change after they are purchased, and this may cause the amount of a fund’s assets invested in such securities to exceed the stated maximum restriction or fall below the stated minimum restriction. If any of these changes occur, it would not be considered a violation of the investment restriction and will not require the sale of an investment if it was proper at the time it was made (this exception does not apply to a fund’s borrowing policy). However, purchases by a fund during the time it is above or below the stated percentage restriction would be made in compliance with applicable restrictions. For purposes of determining whether a particular country is considered a developed market or an emerging market, the funds consider a country to be an emerging market if it is either included in a JP Morgan emerging market bond index or not included in the International Monetary Fund’s listing of advanced economies. For purposes of determining whether a fund invests at least 80% of its net assets in a particular type of security, the funds use the country assigned to a security by Bloomberg or another unaffiliated third-party data provider. Changes in fund holdings, fund performance, and the contribution of various investments to fund performance are discussed in the shareholder reports. Portfolio managers have considerable discretion in choosing investment strategies and selecting securities they believe will help achieve fund objectives. Types of Portfolio Securities In seeking to meet their investment objectives, fund investments may be made in any type of security or instrument (including certain potentially high-risk derivatives described in this section) whose investment characteristics are consistent with their investment programs. The following pages describe various types of fund holdings and investment management practices. Diversification As a fundamental policy, the Emerging Markets Corporate Bond Fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the fund’s total assets would be invested in securities of a single issuer or more than 10% of the outstanding voting securities of the issuer would be held by the fund. These limitations do not apply to the fund’s purchase of securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities. Nondiversified Status–Emerging Markets Bond, Emerging Markets Local Currency Bond, and International Bond Funds Each fund is registered as a nondiversified mutual fund. Therefore, each fund is able to invest more than 5% of its assets in the securities of individual foreign governments and may invest a greater portion of its assets in a single issuer than a diversified fund. Since each fund is a nondiversified investment company and is T. ROWE PRICE 54 permitted to invest a greater proportion of its assets in the securities of a smaller number of issuers, the funds may be subject to greater credit risk with respect to their portfolio securities and greater volatility with respect to their share prices than an investment company that is more broadly diversified. However, each fund intends to qualify as a regulated investment company for purposes of the Internal Revenue Code. This requires each fund to limit its investments so that, at the end of each fiscal quarter, with respect to 50% of its total assets, no more than 5% of its assets is invested in the securities of a single issuer, and not more than 10% of the voting securities of any issuer are held by each fund. With respect to the remaining 50% of fund assets, no more than 25% may be invested in a single issuer. Debt Securities The funds’ investments may be in fixed-rate and floating rate debt securities and may include, but shall not be limited to: (1) debt obligations issued or guaranteed by: (a) a foreign sovereign government or one of its agencies, authorities, instrumentalities, or political subdivisions, including a foreign state, province, or municipality, and (b) supranational organizations such as the World Bank, Asian Development Bank, European Investment Bank, and European Economic Community; (2) debt obligations: (a) of foreign banks and bank holding companies, and (b) of domestic banks and corporations issued in non-U.S. dollar denominations; and (3) foreign corporate debt securities, asset-backed securities, and commercial paper. Such securities may take a variety of forms including those issued in the local currency of the issuer, U.S. dollar-denominated bonds, Eurobonds, and Euro- denominated bonds. Normally, the Emerging Markets Corporate Bond Fund will invest substantially all of its assets in bonds issued by emerging markets corporations, the Emerging Markets Local Currency Bond Fund will invest substantially all of its assets in bonds denominated in the local currency of the issuer, and the International Bond Fund will only purchase non-U.S. dollardenominated bonds (other than Brady and other emerging market bonds). The funds may from time to time purchase securities on a when-issued basis, invest in repurchase agreements, and purchase bonds convertible into equities. The Emerging Markets Bond Fund and International Bond Fund generally will not invest more than 5% of its assets in any individual corporate issuer, provided that (1) a fund may place assets in bank deposits or other short-term bank instruments with a maturity of up to 30 days provided that (a) the bank has a short-term credit rating of A1+ (or, if unrated, the equivalent as determined by T. Rowe Price or T. Rowe Price International) and (b) a fund will not maintain more than 10% of its total assets with any single bank; and (2) a fund may maintain more than 5% of its total assets, including cash and currencies, in custodial accounts or deposits of the fund’s custodian or sub-custodians. MORE ABOUT THE FUNDS 55 The Emerging Markets Bond Fund may also invest in: such dollar-denominated fixed-income securities as (1) debt obligations issued or guaranteed by the U.S. government or its agencies or instrumentalities; (2) domestic corporate debt securities; (3) domestic commercial paper, including commercial paper indexed to certain specific foreign currency exchange rates; (4) debt obligations of domestic banks and bank holding companies; and (5) collateralized mortgage obligations or asset-backed bonds. Concentration of Investments (Emerging Markets Bond Fund and Emerging Markets Local Currency Bond Fund) From time to time, each fund may invest more than 25% of its total assets in the securities of foreign governmental and corporate entities located in the same country. However, the fund will not invest more than 25% of its total assets in the securities of any single foreign governmental issuer or in two or more such issuers subject to a common, explicit guarantee. Brady Bonds Brady bonds, named after former U.S. Secretary of the Treasury Nicholas Brady, are used as a means of restructuring the external debt burden of a government in certain emerging markets. A Brady bond is created when an outstanding commercial bank loan to a government or private entity is exchanged for a new bond in connection with a debt restructuring plan. Brady bonds may be collateralized or uncollateralized and issued in various currencies (although typically in the U.S. dollar). They are often fully collateralized as to principal in U.S. Treasury zero coupon bonds. However, even with this collateralization feature, Brady bonds are often considered speculative, below investment-grade investments because the timely payment of interest is the responsibility of the issuing party (for example, a Latin American country) and the value of the bonds can fluctuate significantly based on the issuer’s ability or perceived ability to make these payments. Finally, some Brady bonds may be structured with floating rate or low fixed-rate coupons. Below Investment-Grade Bonds The price and yield of lower-quality (high yield, high-risk) bonds, commonly referred to as “junk” bonds and below investment-grade emerging market bonds, can be expected to fluctuate more than the price and yield of higher-quality bonds. Investment-grade bonds are those rated from the highest quality (AAA or equivalent) to medium quality (BBB or equivalent), and below investment-grade bonds are those rated BB (or equivalent) and lower. Below investment-grade bonds are considered speculative with respect to the issuer’s continuing ability to meet principal and interest payments since their issuers are more vulnerable to financial setbacks and recession than more creditworthy issuers. Even BBB rated bonds may have speculative elements as well. The values of below investment-grade bonds often fluctuate more in response to political, regulatory, or economic developments than higher quality bonds. Successful investment in lower- medium- and low-quality bonds involves greater investment risk and is highly dependent on careful credit analysis. Operating policies The International Bond Fund may invest up to 20% of total assets in below investment-grade (“junk”) bonds. For the Emerging Markets Bond Fund, T. ROWE PRICE 56 Emerging Markets Corporate Bond, and Emerging Markets Local Currency Bond Fund, there is no limit on the fund’s investments in securities that are rated below investment grade. While each fund intends to invest primarily in debt securities, it may invest in convertible bonds or equity securities. While some countries or companies may be regarded as favorable investments, pure bond opportunities may be unattractive or limited due to insufficient supply, or legal or technical restrictions. In such cases, the fund may consider equity securities or convertible bonds to gain exposure to such markets. Preferred Stocks Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after bonds and before common stocks in its claim on income for dividend payments and on assets should the company be liquidated. After other claims are satisfied, common stockholders participate in company profits on a pro-rata basis; profits may be paid out in dividends or reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a company’s stock price, so common stocks generally have the greatest appreciation and depreciation potential of all corporate securities. Unlike common stock, preferred stock does not ordinarily carry voting rights. While most preferred stocks pay a dividend, a fund may decide to purchase preferred stock where the issuer has omitted, or is in danger of omitting, payment of its dividend. Convertible Securities and Warrants Investments may be made in debt or preferred equity securities that are convertible into, or exchangeable for, equity securities at specified times in the future and according to a certain exchange ratio. Convertible bonds are typically callable by the issuer, which could in effect force conversion before the holder would otherwise choose. Traditionally, convertible securities have paid dividends or interest at rates higher than common stocks but lower than nonconvertible securities. They generally participate in the appreciation or depreciation of the underlying stock into which they are convertible, but to a lesser degree than common stock. Some convertible securities combine higher or lower current income with options and other features. Warrants are options to buy, directly from the issuer, a stated number of shares of common stock at a specified price anytime during the life of the warrants (generally, two or more years). Warrants can be highly volatile, have no voting rights, and pay no dividends. Operating policies The Emerging Markets Corporate Bond Fund and International Bond Fund may invest up to 5% of total assets, and the Emerging Markets Bond Fund and Emerging Markets Local Currency Bond Fund may invest up to 10% of total assets, in preferred stocks and securities that are convertible into, or which carry warrants for common stocks or other equity securities. Under normal conditions, the funds do not expect to directly purchase common stocks. Any shares of common MORE ABOUT THE FUNDS 57 stock that are received through a reorganization, restructuring, exercise, exchange, conversion, or similar action will be sold within a reasonable timeframe taking into consideration market conditions and any legal restrictions. Loan Participations and Assignments Large loans to corporations or governments, including governments of less developed countries, may be shared or syndicated among several lenders, usually banks. Each fund could participate in such syndicates, or could buy part of a loan, becoming a direct lender. Each fund may acquire loans as an assignment from another lender that holds a direct interest in the loan or as a participation interest in another lender’s portion of the loan. Participations and assignments involve special types of risk, including limited marketability and the risks of being considered a lender. If a fund purchases a participation, it may only be able to enforce its rights through the lender, and it may assume the credit risk of the lender in addition to the borrower. With assignments, the fund’s rights against the borrower may be more limited than those held by the original lender. The funds may also make investments in a company through the purchase or execution of a privately negotiated note representing the equivalent of a loan. Operating policies The Emerging Markets Bond Fund and Emerging Markets Local Currency Bond Fund may not invest more than 20% of total assets, and the Emerging Markets Corporate Bond Fund and International Bond Fund may not invest more than 5% of total assets, in loan participations and assignments. Derivatives and Leverage A derivative is a financial instrument whose value is derived from an underlying security such as a stock or bond or from a market benchmark, such as an interest rate index. Many types of investments representing a wide range of risks and potential rewards may be considered derivatives, including conventional instruments such as futures and options, as well as other potentially more complex investments such as swaps and structured notes. The use of derivatives can involve leverage. Leverage has the effect of magnifying returns, positively or negatively. The effect on returns will depend on the extent to which an investment is leveraged. For example, an investment of $1, leveraged at 2 to 1, would have the effect of an investment of $2. Leverage ratios can be higher or lower with a corresponding effect on returns. The funds may use derivatives in certain situations to help accomplish any or all of the following: to hedge against a decline in principal value, to increase yield, to manage exposure to changes in interest or currency exchange rates, to invest in eligible asset classes with greater efficiency and at a lower cost than is possible through direct investment, or to adjust portfolio duration or credit risk exposure. Operating policy The Emerging Markets Local Currency Bond Fund’s overall net short positions in bond markets will not exceed 10% of the fund’s net assets. Derivatives that may be used include the following as well as others that combine the risk characteristics and features of futures, options, and swaps: T. ROWE PRICE 58 Futures and Options Futures, a type of potentially high-risk derivative, are often used to manage or hedge risk because they enable the investor to buy or sell an asset in the future at an agreed-upon price. Options, another type of potentially high-risk derivative, give the investor the right (when the investor purchases the option), or the obligation (when the investor “writes” or sells the option), to buy or sell an asset at a predetermined price in the future. Futures and options contracts may be bought or sold for any number of reasons, including to manage exposure to changes in interest rates, bond prices, foreign currencies, and credit quality; as an efficient means of increasing or decreasing a fund’s exposure to certain markets; in an effort to enhance income; to protect the value of portfolio securities; and to serve as a cash management tool. Call or put options may be purchased or sold on securities, futures, financial indexes, and foreign currencies. Futures contracts and options may not always be successful hedges; their prices can be highly volatile; using them could lower a fund’s total return; and the potential loss from the use of futures can exceed a fund’s initial investment in such contracts. Operating policies Initial margin deposits on futures and premiums on options used for non-hedging purposes will not exceed 5% of a fund’s net asset value. The total market value of securities covering call or put options may not exceed 25% of total assets. No more than 5% of total assets will be committed to premiums when purchasing call or put options. Swaps Fund investments may be made in interest rate, index, total return, credit default, and other types of swap agreements, as well as options on swaps, commonly referred to as “swaptions,” and interest rate swap futures, which are instruments that provide a way to gain swap exposure and the benefits of futures in one contract. All of these agreements are considered derivatives and, in certain cases, high-risk derivatives. Interest rate, index, and total return swaps are two-party contracts under which a fund and a counterparty, such as a broker or dealer, agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or indexes. Credit default swaps are agreements where one party (the protection buyer) will make periodic payments to another party (the protection seller) in exchange for protection against specified credit events, such as defaults and bankruptcies related to an issuer or underlying credit instrument. Swap futures are futures contracts on interest rate swaps that enable purchasers to cash settle at a future date at the price determined by a specific benchmark rate at the end of a fixed period. Swaps, swaptions, and swap futures can be used for a variety of purposes, including to manage a fund’s overall exposure to changes in interest or foreign currency exchange rates and credit quality; as an efficient means of adjusting a fund’s exposure to certain markets; in an effort to enhance income or total return or protect the value of portfolio securities; to serve as a cash management tool; and to adjust portfolio duration or credit risk exposure. There are risks in the use of swaps and related instruments. Swaps could result in losses if interest or foreign currency exchange rates or credit quality changes are not MORE ABOUT THE FUNDS 59 correctly anticipated by a fund. Total return swaps could result in losses if the reference index, security, or investments do not perform as anticipated. Credit default swaps can increase a fund’s exposure to credit risk and could result in losses if evaluation of the creditworthiness of the counterparty, or of the company or government on which the credit default swap is based, is incorrect. The use of swaps, swaptions, and swap futures may not always be successful. Using them could lower a fund’s total return, their prices can be highly volatile, and the potential loss from the use of swaps can exceed a fund’s initial investment in such instruments. Also, the other party to a swap agreement could default on its obligations or refuse to cash out a fund’s investment at a reasonable price, which could turn an expected gain into a loss. Although there should not be any counterparty risk associated with investments in interest rate swap futures, a fund could experience delays and/or losses associated with the bankruptcy of a broker through which the fund engaged in the transaction. Operating policies A swap agreement with any single counterparty will not be entered into if the net amount owed or to be received under existing contracts with that party would exceed 5% of total assets or if the net amount owed or to be received by a fund under all outstanding swap agreements will exceed 10% of total assets. For swaptions, the total market value of securities covering call or put options may not exceed 25% of total assets. No more than 5% of total assets will be committed to premiums when purchasing call or put swaptions. Hybrid Instruments These instruments (a type of potentially high-risk derivative) can combine the characteristics of securities, futures, and options. For example, the principal amount or interest rate of a hybrid could be tied (positively or negatively) to the price of some commodity, currency, security, or securities index or another interest rate (each a “benchmark”). Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, and increased total return. Hybrids may or may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar- denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes the fund to the credit risk of the issuer of the hybrid. These risks may cause significant fluctuations in the net asset value of the fund. Hybrids can have volatile prices and limited liquidity, and their use may not be successful. T. ROWE PRICE 60 Operating policy Fund investments in hybrid instruments are limited to 10% of total assets. Currency Derivatives Each fund may engage in foreign currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market at the time or through forward currency exchange contracts, which are contracts between two counterparties to exchange one currency for another on a future date at a specified exchange rate. In addition to foreign currency forwards, futures, swaps, and options on foreign currencies may also be used to protect a fund’s foreign securities from adverse currency movements relative to the U.S. dollar, as well as to gain exposure to currencies and markets expected to increase or decrease in value relative to other currencies or securities. Each fund may attempt to hedge its exposure to potentially unfavorable currency changes. Forward currency contracts will be used primarily to adjust the foreign exchange exposure of the fund with a view to protecting the portfolio from adverse currency movements, based on T. Rowe Price’s outlook. However, forward currency contracts can also be used in an effort to benefit from a currency believed to be appreciating in value versus other currencies. The funds may invest in foreign currencies directly without holding any foreign securities denominated in those currencies. Forward currency contracts involve special risks, including, but not limited to, the potential for significant volatility in currency markets, and the risk that in certain markets, particularly emerging markets, it is not possible to engage in effective foreign currency hedging. In addition, such transactions involve the risk that currency movements will not occur as anticipated by T. Rowe Price, which could reduce a fund’s total return. The funds might enter into foreign currency transactions under the following circumstances: Lock In When the fund desires to lock in the U.S. dollar price on the purchase or sale of a security denominated in a foreign currency. Cross Hedge If a particular currency is expected to decrease in value relative to another currency, the fund may sell the currency expected to decrease and purchase a currency that is expected to increase against the currency sold. The fund’s cross hedging transactions may involve currencies in which the fund’s holdings are denominated. However, the fund is not required to own securities in the particular currency being purchased or sold. Operating policy The International Bond Fund does not normally commit more than 50% of its assets to cross-hedging. Direct Hedge If the fund seeks to eliminate substantially all of the risk of owning a particular currency or believes the portfolio could benefit from price appreciation in a given country’s bonds but did not want to hold the currency, it could employ a direct hedge back into the U.S. dollar. In either case, a fund would enter into a forward MORE ABOUT THE FUNDS 61 contract to sell the currency in which a portfolio security is denominated and purchase U.S. dollars at an exchange rate established at the time it initiated the contract. The cost of the direct hedge transaction may offset most, if not all, of the yield advantage offered by the foreign security, but the fund would hope to benefit from an increase (if any) in the value of the bond. Proxy Hedge In certain circumstances, a different currency may be substituted for the currency in which the investment is denominated, as part of a strategy known as proxy hedging. In this case, the fund, having purchased a security, will sell a currency whose value is believed to be closely linked to the currency in which the security is denominated. This type of hedging entails greater risk than a direct hedge because it is dependent on a stable relationship between the two currencies paired as proxies, and that relationship may not always be maintained. The fund may also use these instruments to create a synthetic bond, which is issued in one currency with the currency component transformed into another currency. Generally, the Emerging Markets Local Currency Bond Fund and International Bond Fund seek to maintain little net exposure to the U.S. dollar. Thus, any U.S. dollar investments, including any hedges into the U.S. dollar, will normally be offset by hedges out of the U.S. dollar. Operating policy The Emerging Markets Local Currency Bond Fund’s overall net short positions in currencies will not exceed 10% of the fund’s net assets. Costs of Hedging When the fund purchases a foreign bond with a higher interest rate than is available on U.S. bonds of a similar maturity, the additional yield on the foreign bond could be substantially lessened if the fund were to enter into a direct hedge by selling the foreign currency and purchasing the U.S. dollar. This is what is known as the “cost” of hedging. A proxy hedge, which is less costly than a direct hedge, may attempt to reduce this cost through an indirect hedge back to the U.S. dollar. It is important to note that hedging costs are treated as capital transactions and are not, therefore, deducted from a fund’s dividend distribution and are not reflected in its yield. Instead, such costs will, over time, be reflected in a fund’s net asset value per share and total return. Hedging may result in the application of the mark-to- market and straddle provisions of the Internal Revenue Code. These provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the funds and could affect whether dividends paid by the funds are classified as capital gains or ordinary income. Investments in Other Investment Companies A fund may invest in other investment companies, including open-end funds, closed- end funds, and exchange-traded funds. A fund may purchase the securities of another investment company to temporarily gain exposure to a portion of the market while awaiting purchase of securities or as T. ROWE PRICE 62 an efficient means of gaining exposure to a particular asset class. The fund might also purchase shares of another investment company to gain exposure to the securities in the investment company’s portfolio at times when the fund may not be able to buy those securities directly. Any investment in another investment company would be consistent with the fund’s objective and investment program. The risks of owning another investment company are generally similar to the risks of investing directly in the securities in which that investment company invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the fund’s performance. In addition, because closed-end funds and exchange-traded funds trade on a secondary market, their shares may trade at a premium or discount to the actual net asset value of their portfolio securities and their shares may have greater volatility because of the potential lack of liquidity. As a shareholder of an investment company not sponsored by T. Rowe Price, the fund must pay its pro-rata share of that investment company’s fees and expenses. The fund’s investments in non-T. Rowe Price investment companies are subject to the limits that apply to investments in other funds under the Investment Company Act of 1940 or under any applicable exemptive order. A fund may also invest in certain other T. Rowe Price funds as a means of gaining efficient and cost-effective exposure to certain asset classes, provided the investment is consistent with the fund’s investment program and policies. Such an investment could allow the fund to obtain the benefits of a more diversified portfolio than might otherwise be available through direct investments in the asset class, and will subject the fund to the risks associated with the particular asset class. Examples of asset classes in which other T. Rowe Price mutual funds concentrate their investments include high yield bonds, floating rate loans, international bonds, emerging market bonds, and emerging market stocks. If the fund invests in another T. Rowe Price fund, the management fee paid by the fund will be reduced to ensure that the fund does not incur duplicate management fees as a result of its investment. Illiquid Securities Some fund holdings may be considered illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold in the ordinary course of business within seven days at approximately the prices at which they are valued. The determination of liquidity involves a variety of factors. Illiquid securities may include private placements that are sold directly to a small number of investors, usually institutions. Unlike public offerings, such securities are not registered with the SEC. Although certain of these securities may be readily sold, for example under Rule 144A of the Securities Act of 1933, others may have resale restrictions and can be illiquid. The sale of illiquid securities may involve substantial delays and additional costs, and a fund may only be able to sell such securities at prices substantially less than what it believes they are worth. MORE ABOUT THE FUNDS 63 Operating policy Fund investments in illiquid securities are limited to 15% of net assets. Types of Investment Management Practices Reserve Position A certain portion of fund assets will be held in reserves. Fund reserve positions can consist of: 1) shares of a T. Rowe Price internal money fund or short-term bond fund; 2) short-term, high-quality U.S. and foreign dollar-denominated money market securities, including repurchase agreements; and 3) U.S. dollar or non-U.S. dollar currencies. For temporary, defensive purposes, there is no limit on a fund’s holdings in reserves. If a fund has significant holdings in reserves, it could compromise the fund’s ability to achieve its objectives. The reserve position provides flexibility in meeting redemptions, paying expenses and managing cash flows into a fund, and can serve as a short-term defense during periods of unusual market volatility. Non-U.S. dollar reserves are subject to currency risk. When-Issued Securities and Forwards A fund may purchase securities on a when-issued or delayed delivery basis or may purchase or sell securities on a forward commitment basis. The price of these securities is fixed at the time of the commitment to buy, but delivery and payment take place after the customary settlement period for that type of security (often a month or more later). During the interim period, the price and yield of the securities can fluctuate, and typically no interest accrues to the purchaser. At the time of delivery, the market value of the securities may be more or less than the purchase or sale price. To the extent the fund remains fully or almost fully invested (in securities with a remaining maturity of more than one year) at the same time it purchases these securities, there will be greater fluctuations in the fund’s net asset value than if the fund did not purchase them. Borrowing Money and Transferring Assets A fund may borrow from banks, other persons, and other T. Rowe Price funds for temporary emergency purposes to facilitate redemption requests, or for other purposes consistent with fund policies as set forth in this prospectus. Such borrowings may be collateralized with fund assets, subject to restrictions. Fundamental policy Borrowings may not exceed 331/3% of total assets. Operating policy A fund will not transfer portfolio securities as collateral except as necessary in connection with permissible borrowings or investments, and then such transfers may not exceed 331/3% of total assets. A fund will not purchase additional securities when borrowings exceed 5% of total assets. Lending of Portfolio Securities A fund may lend its securities to broker-dealers, other institutions, or other persons to earn additional income. Risks include the potential insolvency of the broker-dealer or other borrower that could result in delays in recovering securities and capital T. ROWE PRICE 64 losses. Additionally, losses could result from the reinvestment of collateral received on loaned securities in investments that default or do not perform as well as expected. Fundamental policy The value of loaned securities may not exceed 331/3% of total assets. Credit Quality Considerations The credit quality of many fund holdings is evaluated by rating agencies such as Moody’s Investors Service, Inc. (Moody’s), Standard & Poor’s Corporation (S&P), and Fitch Ratings (Fitch) on the basis of the issuer’s ability to meet all required interest and principal payments. The highest ratings are assigned to issuers perceived to have the lowest credit risks. T. Rowe Price research analysts also evaluate fund holdings, including those rated by outside agencies. Other things being equal, lower- rated bonds and other debt obligations have higher yields due to greater credit risk. High-yield bonds, also called “junk” bonds, are those rated below BBB. Credit quality ratings are not guarantees. They are estimates of an issuer’s financial strength and ability to make interest and principal payments as they come due. Ratings can change at any time due to real or perceived changes in an issuer’s credit or financial fundamentals. The following table shows the rating scale used by the major rating agencies. T. Rowe Price considers publicly available ratings but emphasizes its own credit analysis when selecting investments. MORE ABOUT THE FUNDS 65 Ratings of Corporate Debt Securities Moody’s S & P Fitch Definition Long Term Aaa AAA AAA Highest quality Aa AA AA High quality A A A Upper-medium grade Baa BBB BBB Medium grade Ba BB BB Speculative B B B Highly speculative Caa CCC CCC Vulnerable to default Ca CC CC Default is imminent C C C Probably in default Moody’s S&P Fitch Commercial Paper P-1 Superior quality A-1+ A-1 Extremely strong quality Strong quality F-1+ F-1 Exceptionally strong quality Very strong quality P-2 Strong quality A-2 Satisfactory quality F-2 Good credit quality P-3 Acceptable quality A-3 B C Adequate quality Speculative quality Doubtful quality F-3 Fair credit quality Portfolio Turnover Turnover is an indication of frequency of trading. A fund will not generally trade in securities for short-term profits, but when circumstances warrant, securities may be purchased and sold without regard to the length of time held. Each time a fund purchases or sells a security, it incurs a cost. This cost is reflected in its net asset value but not in its operating expenses. The higher the turnover rate, the higher the transaction costs and the greater the impact on a fund’s total return. Higher turnover can also increase the possibility of taxable capital gain distributions. The funds’ portfolio turnover rates are shown in the Financial Highlights table. DISCLOSURE OF FUND PORTFOLIO INFORMATION Each T. Rowe Price fund’s portfolio holdings are disclosed on a regular basis in its semiannual and annual shareholder reports, and on Form N-Q, which is filed with the SEC within 60 days of the fund’s first and third fiscal quarter-end. The money funds also file detailed month-end portfolio holdings information with the SEC each month. Such information will be made available to the public 60 days after the end of the month to which the information pertains. In addition, the funds disclose their calendar quarter-end portfolio holdings on troweprice.com 15 calendar days after each quarter. Under certain conditions, up to 5% of a fund’s holdings may be T. ROWE PRICE 66 included in this portfolio list without being individually identified. Generally, securities would not be individually identified if they are being actively bought or sold and it is determined that the quarter-end disclosure of the holding could be harmful to the fund. A security will not be excluded for these purposes from a fund’s quarter-end holdings disclosure for more than one year. Money funds also disclose their month-end portfolio holdings on troweprice.com five business days after each month. The quarter-end portfolio holdings will remain on the website for one year and the month-end money fund portfolio holdings will remain on the website for six months. Each fund also discloses its 10 largest holdings on troweprice.com on the seventh business day after each month-end. These holdings are listed in alphabetical order along with the aggregate percentage of the fund’s total assets that these 10 holdings represent. Each monthly top 10 list will remain on the website for six months. A description of T. Rowe Price’s policies and procedures with respect to the disclosure of portfolio information is in the Statement of Additional Information. F INANCIAL HIGHLIGH TS The Financial Highlights table, which provides information about each fund’s financial history, is based on a single share outstanding throughout the periods shown. Each fund’s section of the table is part of the fund’s financial statements, which are included in its annual report and are incorporated by reference into the Statement of Additional Information (available upon request). The total returns in the table represent the rate that an investor would have earned or lost on an investment in the fund (assuming reinvestment of all dividends and distributions and no payment of any applicable account or redemption fees). The financial statements in the annual reports were audited by the funds’ independent registered public accounting firm, PricewaterhouseCoopers LLP. MORE ABOUT THE FUNDS 67 Financial Highlights Year ended December 31 Emerging Markets Bond Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $13.46 $10.11 $12.54 $13.28 $12.74 Income From Investment Operations Net investment income* 1.02 0.93 0.88 0.88 0.79 Net gains or losses on securities (both realized and unrealized) (3.26) 2.46 0.74 (0.43) 1.65 Total from investment operations (2.24) 3.39 1.62 0.45 2.44 Less Distributions Dividends (from net investment income) (1.04) (0.67) (0.86 ) (0.89) (0.77) Distributions (from capital gains) (0.07) — (0.02 ) (0.10) (0.19) Returns of capital — (0.29) — — — Total distributions (1.11) (0.96) (0.88 ) (0.99) (0.96) Net asset value, end of period $10.11 $12.54 $13.28 $12.74 $14.22 Total return (17.71)% 34.93% 13.29 % 3.47% 19.62% Ratios/Supplemental Data Net assets, end of period (in millions) $544 $1,833 $2,658 $3,087 $4,024 Ratio of expenses to average net assets 0.98% 0.97% 0.95 % 0.94% 0.94% Ratio of net income to average net assets 8.33% 7.95% 6.73 % 6.72% 5.83% Portfolio turnover rate 57.1% 37.0% 35.3 % 50.1% 40.7% * Per share amounts calculated using average shares outstanding method. T. ROWE PRICE 68 Financial Highlights Emerging Markets Corporate Bond Fund 5/24/12* through 12/31/12 Net asset value, beginning of period $10.00 Income From Investment Operations Net investment incomea 0.28b Net gains or losses on securities (both realized and unrealized) 0.93 Total from investment operations 1.21 Less Distributions Dividends (from net investment income) (0.28) Distributions (from capital gains) (0.02) Total distributions (0.30) Net asset value, end of period $10.91 Total return 12.20%b Ratios/Supplemental Data Net assets, end of period (in thousands) $34,726 Ratio of expenses to average net assets 1.15%b,c Ratio of net income to average net assets 4.37%b,c Portfolio turnover rate 26.5% * Inception date. a Per share amounts calculated using average shares outstanding method. b Excludes expenses in excess of a 1.15% contractual expense limitation in effect through April 30, 2015. c Annualized. MORE ABOUT THE FUNDS 69 Financial Highlights Year ended December 31 Emerging Markets Local Currency Bond Fund 5/26/11* through 12/31/11 2012 Net asset value, beginning of period $10.00 $8.89 Income From Investment Operations Net investment income a 0.30b 0.49b Net gains or losses on securities (both realized and unrealized) (1.12) 1.05 Total from investment operations (0.82) 1.54 Less Distributions Dividends (from net investment income) (0.15) (0.30) Distributions (from capital gains) — (0.01) Returns of capital (0.14) (0.18) Total distributions (0.29) (0.49) Net asset value, end of period $8.89 $9.94 Total return (8.36)%b 17.69%b Ratios/Supplemental Data Net assets, end of period (in millions) $40,498 $58,0362 Ratio of expenses to average net assets 1.10%b,c 1.10%b Ratio of net income to average net assets 5.13%b,c 5.17%b Portfolio turnover rate 49.6% 82.3% * Inception date. a Per share amounts calculated using average shares outstanding method. b Excludes expenses in excess of a 1.10% contractual expense limitation in effect through April 30, 2014. c Annualized. T. ROWE PRICE 70 Financial Highlights Year ended December 31 International Bond Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $10.09 $9.57 $9.87 $9.95 $9.74 Income From Investment Operations Net investment income* 0.37 0.27 0.25 0.26 0.23 Net gains or losses on securities (both realized and unrealized) (0.19) 0.49 0.25 — 0.36 Total from investment operations 0.18 0.76 0.50 0.26 0.59 Less Distributions Dividends (from net investment income) (0.37) (0.27) (0.25 ) (0.26) (0.23) Distributions (from capital gains) (0.33) (0.19) (0.17 ) (0.21) — Returns of capital — — — — — Total distributions (0.70) (0.46) (0.42 ) (0.47) (0.23) Net asset value, end of period $9.57 $9.87 $9.95 $9.74 $10.10 Total return 1.77% 8.38% 5.17 % 2.63% 6.10% Ratios/Supplemental Data Net assets, end of period (in millions) $2,142 $3,423 $4,402 $4,776 $4,972 Ratio of expenses to average net assets 0.81% 0.82% 0.82 % 0.83% 0.84% Ratio of net income to average net assets 3.70% 2.82% 2.50 % 2.59% 2.31% Portfolio turnover rate 69.2% 57.6% 61.5 % 35.7% 52.2% * Per share amounts calculated using average shares outstanding method. INVESTING WITH T. ROWE PRICE 4 ACCOUNT REQUIREMENTS AND TRANSACTION INFORMATION If you are purchasing fund shares through a third-party intermediary, contact the intermediary for information regarding its policies on purchasing, exchanging, and redeeming fund shares, as well as initial and subsequent investment minimums. Tax Identification Number We must have your correct Social Security number or employer identification number on a signed New Account form or W-9 Form. Otherwise, federal law requires the funds to withhold a percentage of your dividends, capital gain distributions, and redemptions and may subject you to an Internal Revenue Service fine. If this information is not received within 60 days after your account is established, your account may be redeemed at the fund’s then-current net asset value. Transaction Confirmations We send immediate confirmations for most of your fund transactions. However, certain transactions, such as systematic purchases, dividend reinvestments, checkwriting redemptions for money funds, and transactions in money funds used as a T. Rowe Price Brokerage sweep account, do not receive an immediate transaction confirmation but are reported on your account statement. Please review transaction confirmations and account statements as soon as you receive them and promptly report any discrepancies to Shareholder Services by calling 1-800-225-5132. Employer-Sponsored Retirement Plans and Institutional Accounts T. Rowe Price Trust Company 1-800-492-7670 Transaction procedures in the following sections may not apply to employer-sponsored retirement plans and institutional accounts. For procedures regarding employer-sponsored retirement plans, please call T. Rowe Price Trust Company or consult your plan administrator. For institutional account procedures, please call your designated account manager or service representative. T. ROWE PRICE 72 We do not accept third-party checks for initial purchases; however, we do accept third-party checks for subsequent purchases. In addition, T. Rowe Price does not accept purchases by cash, traveler’s checks, or credit card checks. OPENING A NEW ACCOUNT $2,500 minimum initial investment; $1,000 for retirement accounts and Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts ($25,000 minimum initial investment for Summit Funds only) Important Information About Opening an Account Pursuant to federal law, all financial institutions must obtain, verify, and record information that identifies each person or entity that opens an account. This information is needed not only for the account owner and any other person who opens the account, but also for any person who has authority to act on behalf of the account. When you open an account, you will be asked for the name, residential street address, date of birth, and Social Security number or employer identification number for each account owner and person(s) opening an account on behalf of others, such as custodians, agents, trustees, or other authorized signers. Corporate and other institutional accounts require documents showing the existence of the entity (such as articles of incorporation or partnership agreements) to open an account. Certain other fiduciary accounts (such as trusts or power of attorney arrangements) require documentation, which may include an original or certified copy of the trust agreement or power of attorney to open an account. For more information, call Investor Services at 1-800-638-5660. We will use this information to verify the identity of the person(s)/entity opening the account. We will not be able to open your account until we receive all of this information. If we are unable to verify your identity, we are authorized to take any action permitted by law. (See Rights Reserved by the Funds.) INVESTING WITH T. ROWE PRICE 73 The funds are generally available only to investors residing in the United States. In addition, purchases in state tax-free funds are limited to investors living in states where the fund is available for sale. The address of record on your account must be located in one of these states, or you will be restricted from purchasing fund shares. Contact Investor Services for more information. Account Registration If you own other T. Rowe Price funds, you should consider registering any new account identically to your existing accounts so you can exchange shares among them easily. (The name(s) of the account owner(s) and the account type must be identical.) For joint accounts or other types of accounts owned or controlled by more than one party, either owner/party has complete authority to act on behalf of all and give instructions concerning the account without notice to the other party. T. Rowe Price may, in its sole discretion, require written authorization from all owners/parties to act on the account for certain transactions (for example, to transfer ownership). By Mail Please make your check payable to T. Rowe Price Funds (otherwise it may be returned), and send your check, together with the New Account form, to the appropriate address below: via U.S. Postal Service T. Rowe Price Account Services P.O. Box 17300 Baltimore, MD 21297-1300 via private carriers/overnight services T. Rowe Price Account Services Mail Code 17300 4515 Painters Mill Road Owings Mills, MD 21117-4903 Note: Please use the correct address to avoid a delay in opening your new account. By Wire Visit us online at troweprice.com or call Investor Services for an account number and wire transfer instructions. T. ROWE PRICE 74 In order to obtain an account number, you must supply the name, date of birth, Social Security number or employer identification number, and residential or business street address for each owner on the account. Complete a New Account form and mail it to one of the appropriate T. Rowe Price addresses listed under By Mail. Note: Although the purchase will be made, services may not be established and Internal Revenue Service penalty withholding may occur until we receive a signed New Account form. Online You can open a new mutual fund account online. Go to troweprice.com/newaccount to choose the type of account you wish to open. To open an account electronically, you must be a U.S. citizen residing in the U.S. or a resident alien and not subject to Internal Revenue Service backup withholding. Additionally, you must provide consent to receive certain documents electronically. You will have the option of providing your bank account information that will enable you to make electronic funds transfers to and from your bank account. To set up this banking service online, additional steps will be taken to verify your identity. By Exchange Visit us online at troweprice.com (see Automated Services under Information About Your Services) or call Shareholder Services. The new account will have the same registration as the account from which you are exchanging. Services for the new account may be carried over by telephone request if they are preauthorized on the existing account. For limitations on exchanging, please see Transaction Procedures and Special Requirements—Excessive and Short-Term Trading. In Person Drop off your New Account form at any Investor Center location listed on the back cover and obtain a receipt. INVESTING WITH T. ROWE PRICE 75 PURCH ASING ADDITIONAL SH ARES $100 minimum per fund account for all additional purchases, including those made through Automatic Asset Builder (all funds except Summit Funds); $100 minimum per fund account for additional purchases through Automatic Asset Builder and $1,000 for all other additional purchases (Summit Funds) By Automated Clearing House Visit us online at troweprice.com or call Shareholder Services if you have established electronic transfers using the Automated Clearing House system. By Wire Go to troweprice.com or call Shareholder Services for wire transfer instructions. T. Rowe Price must receive the wire by the close of the New York Stock Exchange (normally 4 p.m. ET) to receive that day’s share price. There is no assurance that you will receive the share price for the same day you initiated the wire from your financial institution. By Mail 1. Make your check payable to T. Rowe Price Funds (otherwise it may be returned). 2. Mail the check to us at the following address with either a fund reinvestment slip or a note indicating the fund you want to purchase and your fund account number. 3. Please use the correct address to avoid a delay in processing your transaction and remember to provide your account number and the fund name on the memo line of your check. via U.S. Postal Service T. Rowe Price Account Services P.O. Box 17300 Baltimore, MD 21297-1300 (To send mail directly to T. Rowe Price via private carriers and overnight services, see previous section.) Your transaction will receive the share price for the business day that the request is received by T. Rowe Price prior to the close of the New York Stock Exchange (normally 4 p.m. ET) (not the day the request is received at the P.O. box). By Automatic Asset Builder Fill out the Automatic Asset Builder section on the New Account form or Shareholder Services form. T. ROWE PRICE 76 EXCH ANGING AND REDEEMING SHARES Exchange Service You can move money from one account to an existing, identically registered account or open a new identically registered account. For taxable accounts, an exchange from one fund to another is considered a sale and purchase for tax purposes. (Exchanges into a state tax-free fund are limited to investors living in states where the fund is available.) For exchange policies, please see Transaction Procedures and Special Requirements—Excessive and Short-Term Trading Policy. Redemptions Redemption proceeds can be mailed to your account address, sent by Automated Clearing House transfer to your bank, or wired to your bank (provided your bank information is already on file). Redemption proceeds of less than $5,000 sent by wire are subject to a $5 fee paid to the fund. Please note that large purchase and redemption requests initiated through automated services, including the National Securities Clearing Corporation, may be rejected and, in such instances, the transaction must be placed by contacting a service representative. If you request to redeem a specific dollar amount, and the market value of your account is less than the amount of your request, your redemption will not be processed, and you will need to submit a new redemption request in proper form. If you change your address on an account, proceeds will not be mailed to the new address for 15 calendar days after the address change, unless we receive a signature guaranteed letter of instruction. Some of the T. Rowe Price funds may impose a redemption fee. Check the fund’s prospectus under Contingent Redemption Fee in Pricing Shares and Receiving Sale Proceeds. The fee is paid to the fund. For redemptions by check or electronic transfer, please see Information About Your Services. INVESTING WITH T. ROWE PRICE 77 Online Visit us online at troweprice.com. Customers with Account Access (our secure self-service Web platform for individual investors) can electronically exchange shares between identically registered T. Rowe Price accounts and electronically redeem shares from their mutual fund accounts. By Phone You can call Shareholder Services at 1-800-225-5132 to place your transaction. If you find our phones busy during unusually volatile markets, please consider placing your order online through troweprice.com. By Mail For each account involved, provide the account name and number, fund name, and exchange or redemption amount. For exchanges, be sure to specify any fund you are exchanging out of and the fund or funds you are exchanging into. T. Rowe Price may require a signature guarantee of all registered owners (see Transaction Procedures and Special Requirements— Signature Guarantees). Please use one of the following addresses: For nonretirement and individual retirement accounts: via U.S. Postal Service T. Rowe Price Account Services P.O. Box 17302 Baltimore, MD 21297-1302 via private carriers/overnight services T. Rowe Price Account Services Mail Code 17302 4515 Painters Mill Road Owings Mills, MD 21117-4903 For employer-sponsored retirement accounts: via U.S. Postal Service T. Rowe Price Trust Company P.O. Box 17479 Baltimore, MD 21297-1479 via private carriers/overnight services T. Rowe Price Trust Company Mail Code 17479 4515 Painters Mill Road Owings Mills, MD 21117-4903 T. ROWE PRICE 78 For requests that are not sent via private carriers or overnight services, your transaction will receive the share price for the business day that the request is received by T. Rowe Price prior to the close of the New York Stock Exchange (normally 4 p.m. ET) (not the day the request is received at the P.O. box). Requests for redemptions from employer-sponsored retirement accounts may be required to be in writing; please call T. Rowe Price Trust Company or your plan administrator for instructions. Individual retirement account distributions may be requested in writing or by telephone; please call Shareholder Services to obtain an Individual Retirement Account Distribution form or an Individual Retirement Account Shareholder Services form to authorize the telephone redemption service. RIGHTS RESERVED BY THE FUNDS T. Rowe Price funds and their agents, in their sole discretion, reserve the following rights: (1) to waive or lower investment minimums; (2) to accept initial purchases by telephone; (3) to refuse any purchase or exchange order; (4) to cancel or rescind any purchase or exchange order placed through an intermediary, no later than the business day after the order is received by the intermediary (including, but not limited to, orders deemed to result in excessive trading, market timing, or 5% ownership); (5) to cease offering fund shares at any time to all or certain groups of investors; (6) to freeze any account and suspend account services when notice has been received of a dispute regarding the ownership of the account or a legal claim against an account or if there is reason to believe a fraudulent transaction may occur; (7) to otherwise modify the conditions of purchase and modify or terminate any services at any time; (8) to waive any wire, small account, maintenance, or fiduciary fees charged to a group of shareholders; (9) to act on instructions reasonably believed to be genuine; (10) to involuntarily redeem an account at the net asset value calculated the day the account is INVESTING WITH T. ROWE PRICE 79 redeemed, in cases of threatening conduct, suspected fraudulent or illegal activity, or if the fund or its agent is unable, through its procedures, to verify the identity of the person(s) or entity opening an account; and (11) for money funds, to suspend redemptions and postpone the payment of proceeds to facilitate an orderly liquidation of the fund. INFORMATION ABOUT YOUR SERVICES Shareholder Services 1-800-225-5132 Investor Services 1-800-638-5660 Many services are available to you as a shareholder; some you receive automatically, and others you must authorize or request on the New Account form. By signing up for services on the New Account form, you avoid having to complete a separate form at a later time and obtain a signature guarantee. This section discusses some of the services currently offered. Retirement Plans We offer a wide range of plans for individuals, institutions, and large and small businesses: Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP-IRAs, 401(k)s, and 403(b)(7)s. For information on individual retirement accounts or our no-load variable annuity (for existing variable annuity contract holders), call Investor Services. For information on all other retirement plans, please call 1-800-492-7670. Investing for College Expenses We can help you save for future college expenses on a tax-advantaged basis. 529 Plans T. Rowe Price manages three 529 plans that are available directly to investors: the T. Rowe Price College Savings Plan (a national plan sponsored by the Education Trust of Alaska), the Maryland College Investment Plan, and the University of Alaska College Savings Plan. Account earnings are federal income tax-free when used for qualified expenses. For more information on the T. Rowe Price College Savings Plan (national plan), call 1-800-369-3641; Maryland College Investment Plan, call 1-888-4-MD-GRAD; and University of Alaska College Savings Plan, call 1-866-277-1005. T. ROWE PRICE 80 Automated Services Online Account Access You can sign up online to conduct account transactions through our website at troweprice.com. Tele*AccessSM 1-800-638-2587 24-hour service via a toll-free number enables you to access information on fund performance, prices, distributions, account balances, and your latest transactions. Plan Account Line 1-800-401-3279 This 24-hour service is similar to Tele*AccessSM but is designed specifically to meet the needs of retirement plan investors. By Telephone and In Person Purchase, redeem, or exchange shares by calling one of our service representatives or by visiting one of our Investor Center locations listed on the back cover. Electronic Transfers By Automated Clearing House This free service allows you to move as little as $100 or as much as $250,000 between your bank account and fund account using the Automated Clearing House system. Enter instructions via your personal computer or call Shareholder Services. By Wire Electronic transfers can be conducted via bank wire. There is a $5 fee for wire redemptions under $5,000, and your bank may charge for incoming or outgoing wire transfers regardless of size. Checkwriting (Not available for equity funds or the Emerging Markets Bond, Emerging Markets Corporate Bond, Emerging Markets Local Currency Bond, Floating Rate, High Yield, International Bond, or U.S. Bond Enhanced Index Funds.) You may write an unlimited number of free checks on any money fund and most bond funds, with a minimum of $500 per check. Keep in mind, however, that a check results in a redemption; a check written on a bond fund will create a taxable event that you and we must report to the Internal Revenue Service. INVESTING WITH T. ROWE PRICE 81 Automatic Investing Automatic Asset Builder You can instruct us to automatically transfer money from your bank account, or you can instruct your employer to send all or a portion of your paycheck to the fund or funds you designate. Each systematic purchase must be at least $100 per fund account to be eligible for the Automatic Asset Builder service. Minimum initial purchase requirements will still apply. Automatic Exchange You can set up systematic investments from one fund account into another, such as from a money fund into a stock fund. T . ROWE PRICE BROKERAGE To Open an Account 1-800-638-5660 For Existing Brokerage Customers 1-800-225-7720 Investments available through our Brokerage service include stocks, options, bonds, and other securities at commission savings over full-service brokers.* We also provide a wide range of services, including: Automated Telephone and Computer Services You can enter stock and option orders, access quotes, and review account information around the clock by phone with Tele-Trader or via the Internet with Account Access-Brokerage. Investor Information A variety of informative reports, such as our Brokerage Insights series, as well as access to online research tools, can help you better evaluate economic trends and investment opportunities. Dividend Reinvestment Service If you elect to participate in this service, the cash dividends from the eligible securities held in your account will automatically be reinvested in additional shares of the same securities free of charge. Most securities listed on national securities exchanges or NASDAQ are eligible for this service. *Services vary by firm. T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services, Inc., Member FINRA/SIPC. T. ROWE PRICE 82 INVESTMENT INFORMATION To help you monitor your investments and make decisions that accurately reflect your financial goals, T. Rowe Price offers a wide variety of information in addition to account statements. Most of this information is also available on our website at troweprice.com. If your account has no activity in it for a certain period of time, T. Rowe Price may be required to transfer your account to the appropriate state under its abandoned property laws. A note on mailing procedures: If two or more members of a household own the same fund, we economize on fund expenses by sending only one fund report and prospectus. If you need additional copies or do not want your mailings to be “householded,” please call Shareholder Services at 1-800-225-5132 or write to us at P.O. Box 17630, Baltimore, MD 21297-1630. Shareholder Reports Fund managers’ annual and semiannual reviews of their strategies and performance. The T. Rowe Price Report A quarterly investment newsletter discussing markets and financial strategies and including the Performance Update, a review of all T. Rowe Price fund results. Insights Educational reports on investment strategies and financial markets. Investment Guides Funds Guide, International Investing Guide, Required Minimum Distribution (RMD) Guide, and Retirement Savings Guide. INVESTING WITH T. ROWE PRICE 83 T . ROWE PRICE PRIVACY POLICY In the course of doing business with T. Rowe Price, you share personal and financial information with us. We treat this information as confidential and recognize the importance of protecting access to it. You may provide information when communicating or transacting business with us in writing, electronically, or by phone. For instance, information may come from applications, requests for forms or literature, and your transactions and account positions with us. On occasion, such information may come from consumer reporting agencies and those providing services to us. We do not sell information about current or former customers to any third parties, and we do not disclose it to third parties unless necessary to process a transaction, service an account, or as otherwise permitted by law. We may share information within the T. Rowe Price family of companies in the course of providing or offering products and services to best meet your investing needs. We may also share that information with companies that perform administrative or marketing services for T. Rowe Price, with a research firm we have hired, or with a business partner, such as a bank or insurance company with which we are developing or offering investment products. When we enter into such a relationship, our contracts restrict the companies’ use of our customer information, prohibiting them from sharing or using it for any purposes other than those for which they were hired. We maintain physical, electronic, and procedural safeguards to protect your personal information. Within T. Rowe Price, access to such information is limited to those who need it to perform their jobs, such as servicing your accounts, resolving problems, or informing you of new products or services. Finally, our Code of Ethics, which applies to all employees, restricts the use of customer information and requires that it be held in strict confidence. This Privacy Policy applies to the following T. Rowe Price family of companies: T. Rowe Price Associates, Inc.; T. Rowe Price Advisory Services, Inc.; T. Rowe Price Investment Services, Inc.; T. Rowe Price Savings Bank; T. Rowe Price Trust Company; and the T. Rowe Price Funds. To help you achieve your financial goals, T. Rowe Price offers a wide range of stock, bond, and money market investments, as well as convenient services and informative reports. For mutual fund or T. Rowe Price Brokerage information Investor Services 1-800-638-5660 For existing accounts Shareholder Services 1-800-225-5132 For the hearing impaired 1-800-367-0763 For performance, prices, or account information Tele*AccessSM 24 hours, 7 days 1-800-638-2587 Internet address troweprice.com Plan Account Line For retirement plan investors: The appropriate 800 number appears on your retirement account statement. T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, MD 21202 1940 Act File No. 811-2958 C02-040 5/1/13 Investor Centers For directions, call 1-800-225-5132 or visit our website Baltimore Area Downtown 105 East Lombard Street Owings Mills Three Financial Center 4515 Painters Mill Road Colorado Springs 2260 Briargate Parkway Tampa 4211 W. Boy Scout Boulevard 8th Floor Washington, D.C. Area Downtown 1000 Connecticut Avenue, N.W. Suite A-100 Tysons Corner 1600 Tysons Boulevard Suite 150 McLean, Virginia A Statement of Additional Information for the T. Rowe Price family of funds, which includes additional information about the funds, has been filed with the SEC and is incorporated by reference into this prospectus. Further information about fund investments, including a review of market conditions and the manager’s recent investment strategies and their impact on performance during the past fiscal year, is available in the annual and semiannual shareholder reports. To obtain free copies of any of these documents, or for shareholder inquiries, call 1-800-638-5660. These documents and updated performance information are available through troweprice.com. Fund information and Statements of Additional Information are also available from the Public Reference Room of the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-551-8090. Fund reports and other fund information are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the Public Reference Room, Washington, D.C. 20549-1520. Proof #4 RPIBX PAIBX International Bond Fund International Bond Fund– Advisor Class SEMIANNuAl REPORT June 30, 2012 T. Rowe PRICe The fund primarily invests in high-quality, nondollar-denominated fixed income securities for high current income and capital appreciation. Proof #4 REPORTS ON THE WEB Sign up for our E-mail Program, and you can begin to receive updated fund reports and prospectuses online rather than through the mail. Log in to your account at troweprice.com for more information. HIGHLIGHTS • International bond markets delivered modestly positive returns in a volatile six-month period ended June 30, 2012. • The International Bond Fund outpaced the Barclays Global Aggregate ex USD Bond Index but trailed its Lipper peer group average. • The fund’s below investment-grade bonds, currency selection, and sector and security selection all aided performance, but country and duration positioning detracted. • Developed markets will continue to struggle with burdensome debt issues and sluggish economic growth, but healthy fiscal positions and solid growth should continue to support demand for emerging markets bonds. T. Rowe Price International Bond Fund The views and opinions in this report were current as of June 30, 2012. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a fore- cast of the fund’s future investment intent. The report is certified under the Sarbanes-Oxley Act, which requires mutual funds and other public companies to affirm that, to the best of their knowledge, the informa- tion in their financial reports is fairly and accurately stated in all material respects. Proof #4 T. Rowe Price International Bond Fund Manager’s Letter 1 Fellow Shareholders Investors’ appetite for risk seemed to wax and wane with each news cycle over the past six months, reflecting concerns about the European debt crisis, a slowing recovery in the U.S., and the pace of China’s economic slowdown. Government bonds in developed non-U.S. markets generated modest gains but underperformed emerging market debt as investors sought more attractive yields. The International Bond Fund returned 1.36% for the six months ended June 30, 2012, out pacing the Barclays Global Aggregate ex USD Bond Index but trailing its Lipper peer group average. (Returns for the fund’s Advisor Class shares varied slightly due to their different fee structure.) The fund’s below investment-grade bonds, currency selection, and sector and security selection all aided perfor- mance, but country and duration positioning detracted from results. MaRkET ENvIRONMENT The first half of 2012 was a tale of two periods. Investor sentiment was decidedly upbeat through the first three months of the year, buoyed by positive economic and political developments. The U.S. economic recovery was progressing nicely amid unexpected strength in manufacturing and employment. The European Central Bank’s two long-term refinancing operations (LTROs) signaled that Continental policy makers were making progress in addressing the eurozone’s long- running debt crisis, while China’s economy seemed to be cooling to more sustainable growth rates in an orderly  slowdown. Six-Month Period Ended 6/30/12 Total Return International Bond Fund 1.36% International Bond Fund–Advisor Class 1.31 Barclays Global Aggregate ex USD Bond Index 0.77 Lipper International Income Funds Average 2.27 Performance Comparison Proof #4 2 Risk aversion returned in the second quarter, however, amid signs of a weakening global econo my. Much of Europe remained mired in recession, and election results in Greece and France revealed wide- spread discontent over fiscal austerity measures that further weakened many of the region’s economies. Mixed economic data in the U.S., including persis- tently high unemploy- ment, indicated that the previously resilient recovery was starting to falter. China’s economy slowed more than expected, with commodity-intensive fixed-asset investment lagging last year’s growth and consumer spending starting to struggle. Government bonds in developed non-U.S. markets generated modest gains in U.S. dollar terms in the last six months. Peripheral European markets performed exceptionally well in the first quarter, helped by bank purchases of sovereign debt using LTRO funds. Some of the gains were eroded during the second quarter amid rising government bond yields, especially in Italy and Spain. European investment-grade corporate bonds produced strong returns thanks to one of the best first quarters on record. While Germany and other highly rated bond markets produced solid returns in local currency terms, returns in dollar terms were trimmed by a stronger dollar versus the euro and other major currencies. Bonds in emerging markets fared considerably better than government bonds in developed markets as yield-hungry investors sought opportu- nities. Lower global growth prospects have eased inflationary concerns in emerging markets, and the favorable fiscal positioning of many emerging market sovereign issuers stands in contrast to the budget and funding challenges faced by a number of developed market govern- ments. U.S. dollar-denominated bonds performed somewhat better than local currency bonds, as weakness among emerging markets currencies reduced local bond returns in dollar terms. Total Return In Local In U.S. Six-Month Period Ended 6/30/12 Currency Dollars Barclays Global Aggregate ex USD Bond Index – 0.77% Japan 1.33% -2.29 Germany 2.10 -0.19 United Kingdom 2.12 3.07 Canada 1.77 1.65 United States 1.51 1.51 France 4.11 1.78 Italy 8.56 6.12 Source: Barclays. Developed Markets Performance Proof #4 3 The U.S. dollar strength- ened against most currencies over the period as investors sought higher-quality assets. The euro weakened amid the ongoing eurozone sove reign debt crisis, losing value against the dollar and the yen. A correction in commodity prices, which was driven by China’s slowing economy and reduced global demand, contributed to the depreciation of currencies like the Brazilian real and the South African rand. Within Asia, the currencies of high-quality sovereign issuers such as South Korea and Malaysia managed to stem the pressure of depreciation, while the Indian rupee declined. PORTFOLIO REvIEW aND POSITIONING Allocations to below investment-grade bonds were the fund’s largest performance contributors over the period. Positions in European high yield and U.S. dollar- denominated emerging markets corporate bonds were particularly beneficial, due primarily to improved investor sentiment in the first quarter of the year. Given our expectations for continued volatility within European markets, we reduced overall portfolio risk by decreasing our allocation to European high yield bonds but maintained our exposure to U.S. dollar-denominated below investment-grade emerging markets corporate bonds. Currency selection also boosted performance over the six-month period. A broad allocation to a basket of emerging markets currencies and an overweight allocation to the Mexican peso were the largest contributors. Underweight exposure to the euro, which depreciated significantly over the period, also helped performance. An underweight Six-Month Period Ended 6/30/12 Total Return J.P. Morgan Emerging Markets Bond Index Global 7.45% Mexico 5.74 Poland 9.31 South Africa 6.93 Brazil 5.46 Malaysia 4.47 Source: JPMorgan. In U.S. dollars. Emerging Markets Performance Periods Ended 12/31/11 6/30/12 Weighted Average Maturity (years) 8.1 8.3 Weighted Average Effective Duration (years) 6.2 6.3 Source: T. Rowe Price. Portfolio Characteristics Proof #4 4 allocation to the British pound relative to the euro and overweight allocations to the Brazilian real also weighed modestly on results. In general, we have underweight or neutral allocations to most deve- loped market currencies in favor of emerging markets, except for over- weight allocations to the Canadian dollar and Norwegian krone. We decreased exposure to several developed market currencies, including the euro, the Australian dollar, the British pound, and the Japanese yen. We continue to favor southeast Asian and Latin American currencies, specifically the South Korean won, Malaysian ringgit, and Mexican peso. We reduced our alloca- tions to the Brazilian real and Russian ruble, moving from overweight to neutral positions, and reduced an overweight allocation to the won. We increased our existing overweight exposure to the Chinese renminbi and moved to an overweight position in the Hong Kong dollar. Sector and security selection also benefited returns. Our overweight allocation to European investment-grade corporate bonds added strongly to relative returns on the heels of exceptional first-quarter performance. Allocations to investment-grade U.S. dollar-denominated emerging markets sovereign and quasi-sovereign bonds, which are not included in the benchmark, also contributed to results. We made no significant changes to our allocation here and still believe that these bonds are supported by positive fundamentals. We reduced our overweight allocation to European investment-grade corporate bonds on strength. Country selection and duration positioning detracted modestly from returns versus the benchmark. Our underweight allocations to peripheral European bonds, particularly those from Spain and Italy, detracted after strong performance in the first quarter of the year and A 17% AA 26% BB and Below 4% AAA 36% Cash and Equivalents 2% BBB 15% Based on net assets as of 6/30/12. Source: Moody’s Investors Service; if Moody’s does not rate a security, then Standard & Poor’s (S&P) is used as a secondary source. When available, T. Rowe Price will use Fitch for securities that are not rated by Moody’s or S&P. Unrated securities totaled 0.44% of the portfolio at the end of the reporting period. Quality Diversification Proof #4 5 again in June. Overweight allocations to Mexican, Brazilian, and South African government bonds were positive and helped to offset some of the negative impact. Off-benchmark allocations to emerging markets bonds denominated in local currencies also helped. We believe that low nominal yields and, in some regions, negative real (inflation- adjusted) yields are likely to persist for some time. As a result, we are maintaining an overall underweight duration position relative to the benchmark, which means that the fund is less sensitive to interest rate fluctuations versus the benchmark. We opened an overweight position in Polish and South African government bonds and trimmed our Mexican overweight exposure. We remain underweight to peri- pheral European countries, with no exposure to Ireland and significant underweight allocations to Italy and Spain. OUTLOOk The European debt crisis should continue to dominate headlines in the near future. Plans to create greater fiscal unity and centralized banking regulation, which were unveiled at the last European Union policy summit in late June, were greeted with optimism by investors. Although these latest measures were clearly seen as significant steps toward eventual resolution of the crisis, what remains to be seen is exactly how these plans will be implemented. A full resolution of the Continent’s profound debt troubles will be a slow process accompa- nied by significant market volatility, and investors and markets will be monitoring the situation closely. United States 4% Canada 4% Other and Reserves 33% Italy 3% Geographic Diversification France 4% Germany 20% United Kingdom 10% Japan 22% Based on net assets as of 6/30/12. Percentages reflect the issuing country of the fund’s securities and exclude the effect of forward currency contracts. Net Currency Exposure: Euro 34% Japanese Yen 33 British Pound Sterling 9 Canadian Dollar 7 Mexican Peso 3 Malaysian Ringgit 2 Korean Won 2 Chinese Renminbi 1 Proof #4 6 We expect little change in yields on European investment-grade corporate bonds, and returns are likely to be driven by attractive coupon rates. Below investment-grade debt continues to offer attractive valuations and will likely remain stable at current yield levels for some time. Yields on emerging markets sovereign bonds are somewhat lower than in previous periods due to robust foreign demand and muted inflation expectations, which have resulted in lower interest rates. Developed market currencies are likely to move closely with the U.S. dollar, perhaps with the exception of the Japanese yen. We continue to hold emerging markets local bonds and currencies as portfolio diversifiers, offering the potential for significant appreciation as investors move capital from slower-growing, lower-yielding developed market debt into markets that offer better growth prospects and higher yields. Effective security selection is becoming increasingly important as the international bond market grows in size, complexity, and maturity. We believe that the extended reach of T. Rowe Price’s global credit and equity research platforms, combined with our emphasis on cross- functional collaboration, gives our portfolio managers a critical edge in evaluating opportunities and risks in the global bond market. Respectfully submitted, Ian Kelson President of the International Fixed Income Division, portfolio manager of the International Bond Fund, and chairman of the fund’s Investment Advisory Committee July 23, 2012 The committee chairman has day-to-day responsibility for the portfolio and works with committee members in developing and executing the fund’s investment program. ThE EUROPEAN DEBT CRISIS ShOULD CONTINUE TO DOMINATE hEADLINES IN ThE NEAR FUTURE. Proof #4 7 T. Rowe Price International Bond Fund Risk of International Bond Investing Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets, including unpredictable changes in currency values. Investments in emerging markets are subject to abrupt and severe price declines and should be regarded as speculative. The economic and political structures of developing nations, in most cases, do not compare favorably with the U.S. or other developed countries in terms of wealth and stability, and their financial markets often lack liquidity. Some countries also have legacies of hyperinflation, currency devaluations, and governmental interference in markets. International investments are subject to currency risk, a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denomi- nated in that currency. The overall impact on a fund’s holdings can be significant and long-lasting depending on the currencies represented in the portfolio, how each one appreciates or depreciates in relation to the U.S. dollar, and whether currency positions are hedged. Further, exchange rate movements are unpredictable and it is not possible to effectively hedge the currency risks of many developing countries. Bonds are also subject to interest rate risk, the decline in bond prices that usually accompanies a rise in interest rates, and credit risk, the chance that any fund holding could have its credit rating downgraded or that a bond issuer will default (fail to make timely payments of interest or principal), potentially reducing the fund’s income level and share price. Glossary Barclays Global aggregate ex USD Bond Index: An unmanaged index that tracks an international basket of bonds that contains government, corporate, agency, and mortgage-related bonds. Duration: A measure of a bond fund’s sensitivity to changes in interest rates. For example, a fund with a duration of five years would fall about 5% in response to a one-percentage- point rise in rates, and vice versa. J.P. Morgan Emerging Markets Bond Index Global: Tracks U.S. dollar government bonds of 31 foreign countries. Quasi-sovereign debt: Debt issued by a corporation and backed by the respective govern ment, typically offering the higher yields of corporate debt with the added benefit of government support. Proof #4 8 T. Rowe Price International Bond Fund Glossary (continued) Weighted average effective duration (years): A measure of a portfolio’s price sensitivity to changes in interest rates. Portfolios with longer weighted average effective durations are more sensitive to changes in interest rates than securities of shorter durations. Weighted average maturity: A measure of a fund’s sensitivity to interest rates. In general, the longer the average maturity, the greater the fund’s sensitivity to interest rate changes. The weighted average maturity may take into account the interest rate readjustment dates for certain securities. Money funds must maintain a weighted average maturity of less than 60 days. Proof #4 9 T. Rowe Price International Bond Fund PRICE aND YIELD Periods Ended 12/31/11 6/30/12 International Bond Fund Price Per Share $9.74 $9.76 Dividends Per Share For 6 months 0.13 0.11 For 12 months 0.26 0.25 SEC Yield (30-Day) 2.16% 1.76% International Bond Fund–advisor Class Price Per Share $9.74 $9.77 Dividends Per Share For 6 months 0.12 0.10 For 12 months 0.23 0.21 SEC Yield (30-Day) 1.82% 1.37% 12-month dividends may not equal the combined 6-month figures due to rounding. Yields will vary and are not guaranteed. Portfolio Highlights Proof #4 T. Rowe Price International Bond Fund Performance and Expenses 10 Barclays Global Aggregate ex USD Bond Index $19,941 International Bond Fund $18,971 As of 6/30/12 6/02 6/086/076/066/056/046/03 6/126/09 I N T E R N AT I O N A L B O N D F U N D Lipper International Income Funds Average $19,208 10,000 13,500 17,000 20,500 24,000 $27,500 Note: Performance for the Advisor Class will vary due to its differing fee structure. See returns table below. 6/10 6/11 Growth of $10,000 This chart shows the value of a hypothetical $10,000 investment in the 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. Periods Ended 6/30/12 1 Year 5 Years 10 Years International Bond Fund -1.45% 5.80% 6.61% International Bond Fund–Advisor Class -1.59 5.54 6.39 Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end performance, please contact a T. Rowe Price representative at 1-800-225-5132 or, for Advisor Class shares, 1-800-638-8790. The performance information shown does not reflect the deduction of a 2% redemption fee on shares held for 90 days or less; if it did, the performance would be lower. This table shows how the fund would have performed each year if its actual (or cumula- tive) returns had been earned at a constant rate. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. When assessing performance, investors should consider both short- and long-term returns. Average Annual Compound Total Return Proof #4 11 T. Rowe Price International Bond Fund International Bond Fund 0.83% International Bond Fund–Advisor Class 1.16 The expense ratio shown is as of the fund’s fiscal year ended 12/31/11. This number may vary from the expense ratio shown elsewhere in this report because it is based on a different time period and, if applicable, does not include fee or expense waivers. Expense Ratio Fund Expense Example As a mutual fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees or sales loads, and (2) ongoing costs, including management fees, distri- bution and service (12b-1) fees, and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to com- pare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the entire period. Please note that the International Bond Fund has two share classes: The original share class (Investor Class) charges no distribution and service (12b-1) fee, and the Advisor Class shares are offered only through unaffiliated brokers and other financial intermediaries and charge a 0.25% 12b-1 fee. Each share class is presented separately in the table. actual Expenses The first line of the following table (Actual) provides information about actual account values and expenses based on the fund’s actual returns. You may use the information on this line, together with your account balance, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The information on the second line of the table (hypothetical) is based on hypothetical account values and expenses derived from the fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the fund’s actual return). You may compare the ongoing costs of investing in the fund with other funds by contrasting this 5% hypo- thetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Proof #4 12 T. Rowe Price International Bond Fund Fund Expense Example (continued) Note: T. Rowe Price charges an annual account service fee of $20, generally for accounts with less than $10,000. The fee is waived for any investor whose T. Rowe Price mutual fund accounts total $50,000 or more; accounts electing to receive electronic delivery of account statements, transaction confirmations, prospectuses, and shareholder reports; or accounts of an investor who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $100,000). This fee is not included in the accompanying table. If you are subject to the fee, keep it in mind when you are estimating the ongoing expenses of investing in the fund and when comparing the expenses of this fund with other funds. You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs, such as redemption fees or sales loads. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. To the extent a fund charges transaction costs, however, the total cost of owning that fund is higher. Beginning Ending Expenses Paid Account Value Account Value During Period* 1/1/12 6/30/12 1/1/12 to 6/30/12 Investor Class Actual $1,000.00 $1,013.60 $4.26 hypothetical (assumes 5% return before expenses) 1,000.00 1,020.64 4.27 advisor Class Actual 1,000.00 1,013.10 5.81 hypothetical (assumes 5% return before expenses) 1,000.00 1,019.10 5.82 * Expenses are equal to the fund’s annualized expense ratio for the 6-month period, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182), and divided by the days in the year (366) to reflect the half-year period. The annualized expense ratio of the Investor Class was 0.85%, and the Advisor Class was 1.16%. International Bond Fund Proof #4 13 T. Rowe Price International Bond Fund Unaudited Financial Highlights For a share outstanding throughout each period The accompanying notes are an integral part of these financial statements. Investor Class 6 Months Ended 6/30/12 Year Ended 12/31/11 12/31/10 12/31/09 12/31/08 12/31/07 NET ASSET VALUE Beginning of period $ 9.74 $ 9.95 $ 9.87 $ 9.57 $ 10.09 $ 9.69 Investment activities Net investment income (1) 0.11 0.26 0.25 0.27 0.37 0.35 Net realized and unrealized gain (loss) 0.02 – 0.25 0.49 (0.19) 0.60 Total from investment activities 0.13 0.26 0.50 0.76 0.18 0.95 Distributions Net investment income (0.11) (0.26) (0.25) (0.27) (0.37) (0.35) Net realized gain – (0.21) (0.17) (0.19) (0.33) (0.20) Total distributions (0.11) (0.47) (0.42) (0.46) (0.70) (0.55) NET ASSET VALUE End of period $ 9.76 $ 9.74 $ 9.95 $ 9.87 $ 9.57 $ 10.09 Ratios/Supplemental Data Total return(2) 1.36% 2.63% 5.17% 8.38% 1.77% 10.05% Ratio of total expenses to average net assets 0.85% (3) 0.83% 0.82% 0.82% 0.81% 0.82% Ratio of net investment income to average net assets 2.34% (3) 2.59% 2.50% 2.82% 3.70% 3.57% Portfolio turnover rate 25.6% 35.7% 61.5% 57.6% 69.2% 78.4% Net assets, end of period (in millions) $ 4,636 $ 4,776 $ 4,402 $ 3,423 $ 2,142 $ 2,366 (1) Per share amounts calculated using average shares outstanding method. (2) 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 and payment of no redemption or account fees. Total return is not annualized for periods less than one year. (3) Annualized Proof #4 14 T. Rowe Price International Bond Fund Unaudited Financial Highlights For a share outstanding throughout each period The accompanying notes are an integral part of these financial statements. Advisor Class 6 Months Ended 6/30/12 Year Ended 12/31/11 12/31/10 12/31/09 12/31/08 12/31/07 NET ASSET VALUE Beginning of period $ 9.74 $ 9.93 $ 9.85 $ 9.56 $ 10.07 $ 9.67 Investment activities Net investment income (1) 0.10 0.23 0.21 0.24 0.34 0.32 Net realized and unrealized gain (loss) 0.03 0.02 0.25 0.48 (0.18) 0.61 Total from investment activities 0.13 0.25 0.46 0.72 0.16 0.93 Distributions Net investment income (0.10) (0.23) (0.21) (0.24) (0.34) (0.33) Net realized gain – (0.21) (0.17) (0.19) (0.33) (0.20) Total distributions (0.10) (0.44) (0.38) (0.43) (0.67) (0.53) NET ASSET VALUE End of period $ 9.77 $ 9.74 $ 9.93 $ 9.85 $ 9.56 $ 10.07 Ratios/Supplemental Data Total return(2) 1.31% 2.50% 4.85% 7.93% 1.57% 9.82% Ratio of total expenses to average net assets 1.16% (3) 1.16% 1.13% 1.15% 1.13% 1.09% Ratio of net investment income to average net assets 2.02% (3) 2.26% 2.19% 2.53% 3.40% 3.33% Portfolio turnover rate 25.6% 35.7% 61.5% 57.6% 69.2% 78.4% Net assets, end of period (in thousands) $ 310,577 $ 404,634 $ 529,400 $ 485,163 $ 431,963 $ 461,694 (1) Per share amounts calculated using average shares outstanding method. (2) 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 and payment of no redemption or account fees. Total return is not annualized for periods less than one year. (3) Annualized Proof #4 T. Rowe Price International Bond Fund Unaudited June 30, 2012 Par/Shares Value (Cost and value in $000s) 15 Portfolio of Investments ‡ ARGENTINA 0.1% Corporate Bonds 0.1% Banco Galicia y Buenos Air, 8.75%, 5/4/18 (USD) (1) 2,000,000 1,450 IRSA Inversiones y Representaciones 11.50%, 7/20/20 (USD) (1) 1,700,000 1,354 Total Argentina (Cost $3,970) 2,804 AUSTRALIA 0.6% Corporate Bonds 0.4% Australia & New Zealand Banking, FRN, 4.75%, 12/7/18 (GBP) 695,000 1,086 Commonwealth Bank of Australia, 3.625%, 10/14/14 (CAD) 1,250,000 1,252 Commonwealth Bank of Australia, 3.875%, 12/14/15 (GBP) 1,000,000 1,673 Commonwealth Bank of Australia, 5.50%, 8/6/19 (EUR) 2,050,000 2,788 National Australia Bank, 4.75%, 7/15/16 (EUR) 3,000,000 4,198 National Australia Bank, 5.375%, 12/8/14 (GBP) 1,000,000 1,699 St. George Bank, 6.50%, 6/24/13 (EUR) 200,000 266 Telstra, 6.125%, 8/6/14 (GBP) 400,000 681 Westfield Financial, 5.50%, 6/27/17 (GBP) 450,000 774 Westpac Banking, 4.25%, 9/22/16 (EUR) 2,000,000 2,762 Westpac Banking, 5.00%, 10/21/19 (GBP) 1,000,000 1,717 18,896 Government Bonds 0.2% New South Wales Treasury, 6.00%, 3/1/22 9,068,000 10,649 10,649 Total Australia (Cost $28,830) 29,545 AUSTRIA 0.6% Corporate Bonds 0.1% Telekom Finanzmanagement, 6.375%, 1/29/16 1,469,000 2,106 2,106 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 16 Government Bonds 0.5% Republic of Austria, 6.25%, 7/15/27 15,052,000 26,748 26,748 Total Austria (Cost $28,414) 28,854 BELGIUM 0.6% Corporate Bonds 0.1% Anheuser-Busch InBev, 6.50%, 6/23/17 (GBP) 1,394,000 2,593 Ontex, 7.50%, 4/15/18 (1) 3,342,000 4,060 Ontex, 7.50%, 4/15/18 325,000 395 7,048 Government Bonds 0.5% Kingdom of Belgium, 4.25%, 9/28/21 9,495,000 13,169 Kingdom of Belgium, 5.00%, 9/28/12 7,417,000 9,489 22,658 Total Belgium (Cost $31,715) 29,706 BERMUDA 0.1% Corporate Bonds 0.1% Bacardi, 7.75%, 4/9/14 (EUR) 3,500,000 4,903 Holcim Finance, 8.75%, 4/24/17 (GBP) 800,000 1,500 Total Bermuda (Cost $6,631) 6,403 BRAZIL 1.7% Corporate Bonds 0.7% Banco do Estado do Rio Grande do Sul 7.375%, 2/2/22 (USD) (1) 4,300,000 4,429 BFF International, 7.25%, 1/28/20 (USD) (1) 1,600,000 1,820 BFF International, Brasil Foods, 7.25%, 1/28/20 (USD) 1,000,000 1,138 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 17 BR Malls International Finance, 9.75%, 11/29/49 (USD) 3,050,000 3,111 BRF - Brasil Foods, 5.875%, 6/6/22 (USD) (1) 1,275,000 1,316 Centrais Electricas Brasileiras, 5.75%, 10/27/21 (USD) (1) 2,500,000 2,745 Cia de Saneamento Basico do Estado de Sao Paulo 6.25%, 12/16/20 (USD) (1) 2,900,000 3,088 Itau Unibanco, 5.65%, 3/19/22 (USD) (1) 3,000,000 3,019 Minerva Luxembourg, 12.25%, 2/10/22 (USD) (1) 2,100,000 2,194 Odebrecht Finance, 6.00%, 4/5/23 (USD) (1) 2,000,000 2,117 Telemar Norte Leste, 5.125%, 12/15/17 (EUR) 3,520,000 4,587 Voto-Votorantim, 5.25%, 4/28/17 (EUR) (1) 2,000,000 2,670 Votorantim Cimentos, 7.25%, 4/5/41 (USD) (1) 1,800,000 1,818 34,052 Government Bonds 1.0% Brazil Notas do Tesouro Nacional, 6.00%, 8/15/20 5,220,000 6,127 Brazil Notas do Tesouro Nacional, 6.00%, 5/15/45 6,060,000 7,833 Brazil Notas do Tesouro Nacional, 6.00%, 8/15/50 7,761,000 10,053 Brazil Notas do Tesouro Nacional, 10.00%, 1/1/21 17,524,000 8,751 Brazil Notas do Tesouro Nacional, 10.00%, 1/1/23 32,966,000 16,243 49,007 Total Brazil (Cost $84,017) 83,059 CANADA 3.8% Corporate Bonds 1.1% Bank of Montreal, FRN, 6.17%, 3/28/23 1,444,000 1,657 Bank of Nova Scotia, 2.74%, 12/1/16 1,105,000 1,097 Bell Canada, 5.00%, 2/15/17 (1) 1,494,000 1,599 Canadian Imperial Bank of Commerce, 2.65%, 11/8/16 1,155,000 1,144 Canadian Natural Resources, 4.95%, 6/1/15 1,494,000 1,585 Enbridge, 4.26%, 2/1/21 2,295,000 2,458 EnCana, 5.80%, 1/18/18 (1) 1,439,000 1,578 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 18 Greater Toronto Airport, 6.47%, 2/2/34 (1) 1,414,000 1,893 Hydro One, 5.36%, 5/20/36 1,170,000 1,419 Loblaw, 5.22%, 6/18/20 1,494,000 1,656 Rogers Communications, 5.38%, 11/4/19 1,588,000 1,758 Royal Bank of Canada, 4.35%, 6/15/20 1,990,000 2,049 Royal Bank of Canada, 4.625%, 1/22/18 (EUR) 17,025,000 24,775 Suncor Energy, 5.39%, 3/26/37 (1) 1,533,000 1,730 Telus, 4.95%, 3/15/17 1,494,000 1,608 Thomson Reuters, 5.20%, 12/1/14 1,439,000 1,522 Toronto-Dominion Bank, FRN, 5.69%, 6/3/18 2,335,000 2,372 Transcanada Pipelines, 4.65%, 10/3/16 1,494,000 1,612 Wells Fargo Financial Canada, 2.774%, 2/9/17 3,040,000 2,982 56,494 Government Bonds 2.7% Government of Canada, 3.50%, 6/1/13 15,529,000 15,593 Government of Canada, 4.00%, 6/1/17 10,142,000 11,214 Government of Canada, 4.50%, 6/1/15 20,382,000 21,910 Government of Canada, 5.00%, 6/1/37 13,989,000 20,524 Province of British Columbia, 3.70%, 12/18/20 33,821,000 36,467 Province of Quebec, 5.00%, 12/1/38 22,114,000 26,725 132,433 Total Canada (Cost $179,305) 188,927 CAYMAN ISLANDS 0.1% Corporate Bonds 0.1% New York Life Funding, 5.125%, 2/3/15 (GBP) 1,500,000 2,537 Total Cayman Islands (Cost $2,442) 2,537 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 19 CHILE 0.1% Corporate Bonds 0.1% Banco del Estado - Chile, 3.875%, 2/8/22 (USD) (1) 2,500,000 2,557 Total Chile (Cost $2,459) 2,557 CHINA 0.5% Corporate Bonds 0.5% Central China Real Estate, 12.25%, 10/20/15 (USD) 1,500,000 1,569 China Shansui Cement, 8.50%, 5/25/16 (USD) (1) 3,000,000 2,962 CNOOC Finance, 3.875%, 5/2/22 (USD) (1) 1,325,000 1,374 Country Garden Holdings, 11.125%, 2/23/18 (USD) (1) 1,500,000 1,534 Country Garden Holdings, 11.125%, 2/23/18 (USD) 1,500,000 1,534 ENN Energy Holdings, 6.00%, 5/13/21 (USD) 2,000,000 2,016 KWG Property Holding, 12.50%, 8/18/17 (USD) 1,000,000 974 KWG Property Holding, 12.75%, 3/30/16 (USD) 1,000,000 996 Mega Advance Investments, 5.00%, 5/12/21 (USD) (1) 3,000,000 3,217 Tencent Holdings, 4.625%, 12/12/16 (USD) (1) 4,000,000 4,140 Tencent Holdings, 4.625%, 12/12/16 (USD) 1,500,000 1,552 West China Cement, 7.50%, 1/25/16 (USD) 1,900,000 1,719 Total China (Cost $22,400) 23,587 COLOMBIA 0.0% Corporate Bonds 0.0% BanColombia, 4.25%, 1/12/16 (USD) 1,500,000 1,564 Total Colombia (Cost $1,491) 1,564 CZECH REPUBLIC 0.7% Corporate Bonds 0.2% CEZ, 5.00%, 10/19/21 (EUR) 1,900,000 2,758 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 20 CEZ, 5.75%, 5/26/15 (EUR) 900,000 1,273 New World Resources, 7.875%, 5/1/18 (EUR) 900,000 1,091 New World Resources, 7.875%, 5/1/18 (EUR) (1) 3,132,000 3,795 8,917 Government Bonds 0.5% Czech Republic, 3.625%, 4/14/21 (EUR) 19,955,000 26,700 26,700 Total Czech Republic (Cost $35,629) 35,617 DENMARK 0.6% Corporate Bonds 0.2% Carlsberg Breweries, 7.25%, 11/28/16 (GBP) 1,400,000 2,586 Danske Bank, 4.75%, 6/4/14 (EUR) 2,725,000 3,624 TDC, 3.50%, 2/23/15 (EUR) 2,500,000 3,327 TDC, 5.625%, 2/23/23 (GBP) 500,000 892 10,429 Government Bonds 0.4% Kingdom of Denmark, 5.00%, 11/15/13 83,050,000 15,125 Kingdom of Denmark, 7.00%, 11/10/24 11,236,000 3,032 18,157 Total Denmark (Cost $26,478) 28,586 FINLAND 0.3% Government Bonds 0.3% Republic of Finland, 3.375%, 4/15/20 8,776,000 12,383 Total Finland (Cost $12,202) 12,383 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 21 FRANCE 3.5% Corporate Bonds 2.7% Alcatel-Lucent, 6.375%, 4/7/14 3,500,000 4,496 Autoroutes du Sud de la France, 7.375%, 3/20/19 2,900,000 4,581 AXA, FRN, 5.25%, 4/16/40 3,200,000 3,239 BNP Paribas Home Loan, 3.75%, 4/20/20 3,600,000 4,937 Carrefour, 5.375%, 6/12/15 3,000,000 4,116 Casino Guichard Perrachon & Cie, 4.379%, 2/8/17 1,200,000 1,590 Casino Guichard Perrachon & Cie, 4.875%, 4/10/14 750,000 996 Casino Guichard Perrachon & Cie, 6.375%, 4/4/13 1,900,000 2,490 Compagnie de Saint-Gobain, 4.00%, 10/8/18 3,500,000 4,628 Electricite de France, 6.25%, 1/25/21 2,000,000 3,116 Electricite de France, 6.875%, 12/12/22 (GBP) 1,200,000 2,315 Eutelsat, 4.125%, 3/27/17 3,000,000 4,029 France Telecom, 8.00%, 12/20/17 (GBP) 697,000 1,359 GDF Suez, 5.625%, 1/18/16 2,934,000 4,244 GDF Suez, 6.125%, 2/11/21 (GBP) 400,000 744 HSBC Covered Bonds (France), 3.375%, 1/20/17 9,650,000 13,018 Legrand, 4.25%, 2/24/17 3,000,000 4,107 Pernod-Ricard, 5.00%, 3/15/17 3,400,000 4,698 Pinault Printemps Redoute, 8.625%, 4/3/14 2,232,000 3,167 RCI Banque, 4.375%, 1/27/15 4,665,000 6,040 Rhodia, 7.00%, 5/15/18 2,500,000 3,528 Societe de Financement de l'Economie, 3.25%, 1/16/14 (2) 24,797,000 32,601 Societe Generale, 5.25%, 3/28/13 2,900,000 3,772 Societe Generale, 5.40%, 1/30/18 (GBP) 996,000 1,421 Societe Generale, 6.125%, 8/20/18 2,600,000 3,238 Total Capital, 3.875%, 12/14/18 (GBP) 398,000 685 Veolia Environnement, 5.125%, 5/24/22 1,866,000 2,631 Veolia Environnement, 5.375%, 5/28/18 1,619,000 2,327 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 22 Veolia Environnement, 6.75%, 4/24/19 595,000 916 Vivendi, 4.875%, 12/2/19 4,500,000 6,105 135,134 Government Bonds 0.8% Republic of France, 4.00%, 10/25/38 13,184,000 17,927 Republic of France, 5.50%, 4/25/29 9,312,000 15,033 Republic of France, 5.75%, 10/25/32 4,161,000 7,031 39,991 Total France (Cost $181,183) 175,125 GERMANY 19.8% Corporate Bonds 4.3% Allianz Finance, FRN, 6.50%, 1/13/25 3,949,000 5,196 BASF, 5.875%, 3/31/17 (GBP) 800,000 1,473 Bayer, 5.625%, 5/23/18 (GBP) 1,000,000 1,839 BMW U.K. Capital, 5.00%, 10/2/17 (GBP) 498,000 874 Daimler, 3.50%, 6/6/19 (GBP) 500,000 804 Deutsche Bank, 5.125%, 1/31/13 2,240,000 2,880 Deutsche Telekom International Finance, 6.00%, 1/20/17 2,237,000 3,316 Deutsche Telekom International Finance 7.125%, 9/26/12 (GBP) 1,494,000 2,369 E.ON International Finance, 5.50%, 1/19/16 3,080,000 4,433 E.ON International Finance, 6.00%, 10/30/19 (GBP) 2,100,000 3,969 Eurohypo, 3.875%, 11/21/13 7,545,000 9,956 Eurohypo, 3.875%, 11/21/16 11,066,000 15,171 KFW, 4.375%, 7/4/18 21,084,000 31,226 KFW, 4.70%, 6/2/37 (CAD) 7,206,000 8,069 KFW, 5.50%, 12/7/15 (GBP) 18,747,000 33,629 KFW, 6.00%, 8/20/20 (AUD) 58,463,000 66,147 Linde Finance, 6.50%, 1/29/16 (GBP) 1,000,000 1,833 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 23 MAN, 7.25%, 5/20/16 496,000 757 Merck Financial Services, 3.375%, 3/24/15 2,480,000 3,311 Merck Financial Services, 4.875%, 9/27/13 595,000 789 Schaeffler Finance, 8.75%, 2/15/19 (1) 2,425,000 3,226 UnityMedia, 9.625%, 12/1/19 1,700,000 2,342 UnityMedia, 9.625%, 12/1/19 (1) 1,952,000 2,688 Volkswagen Leasing, 3.25%, 5/10/18 5,000,000 6,689 212,986 Government Bonds 15.5% Bundesobligation, 4.25%, 10/12/12 47,634,000 60,970 Federal Republic of Germany, 1.75%, 7/4/22 9,952,000 12,785 Federal Republic of Germany, 2.50%, 1/4/21 31,877,000 44,130 Federal Republic of Germany, 3.50%, 1/4/16 121,529,000 170,870 Federal Republic of Germany, 3.75%, 1/4/15 31,000,000 42,729 Federal Republic of Germany, 4.00%, 1/4/37 74,861,000 124,412 Federal Republic of Germany, 4.50%, 1/4/13 189,700,000 245,484 Federal Republic of Germany, 5.00%, 7/4/12 49,782,000 63,005 764,385 Total Germany (Cost $995,423) 977,371 HONG KONG 0.3% Corporate Bonds 0.3% LS Finance, 5.25%, 1/26/17 (USD) 2,000,000 2,066 Standard Chartered, 3.875%, 10/20/16 (EUR) 3,000,000 4,063 Standard Chartered, 5.875%, 9/26/17 (EUR) 4,300,000 5,886 Standard Chartered Bank, 6.50%, 4/28/14 (GBP) 800,000 1,361 Total Hong Kong (Cost $13,727) 13,376 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 24 HUNGARY 0.3% Government Bonds 0.3% Republic of Hungary, 6.50%, 6/24/19 2,508,210,000 10,458 Republic of Hungary, 6.75%, 2/24/17 730,480,000 3,129 Total Hungary (Cost $14,239) 13,587 ICELAND 0.3% Government Bonds 0.3% Republic of Iceland, 5.875%, 5/11/22 (USD) (1) 12,936,000 12,632 Total Iceland (Cost $12,878) 12,632 INDIA 0.1% Corporate Bonds 0.1% Reliance Holdings, 6.25%, 10/19/40 (USD) (1) 4,000,000 3,764 Total India (Cost $3,962) 3,764 INDONESIA 0.5% Corporate Bonds 0.1% PT Adaro Indonesia, 7.625%, 10/22/19 (USD) 2,500,000 2,675 2,675 Government Bonds 0.4% Republic of Indonesia, 7.00%, 5/15/22 26,503,000,000 3,006 Republic of Indonesia, 8.25%, 7/15/21 152,414,000,000 18,576 21,582 Total Indonesia (Cost $23,753) 24,257 IRELAND 0.1% Corporate Bonds 0.1% GE Capital UK Funding, 5.625%, 12/12/14 (GBP) 2,286,000 3,887 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 25 GE Capital UK Funding, 5.625%, 4/25/19 (GBP) 1,300,000 2,278 WPP 2008, 6.00%, 4/4/17 (GBP) 400,000 706 Total Ireland (Cost $7,161) 6,871 ISRAEL 0.2% Government Bonds 0.2% Israel Fixed Bond, 5.50%, 2/28/17 32,728,000 9,237 Total Israel (Cost $9,305) 9,237 ITALY 3.1% Corporate Bonds 1.0% Enel, 5.25%, 1/14/15 2,419,000 3,122 ENI, 3.50%, 1/29/18 2,500,000 3,167 ENI Finance International, 5.00%, 1/27/19 (GBP) 600,000 999 Finmeccanica Finance, 8.125%, 12/3/13 2,700,000 3,616 Intesa Sanpaolo, 4.00%, 11/8/18 8,600,000 9,881 Lottomatica, 5.375%, 12/5/16 4,100,000 5,276 Telecom Italia, 7.375%, 12/15/17 (GBP) 750,000 1,159 Telecom Italia, 7.875%, 1/22/14 2,500,000 3,339 Telecom Italia, 8.25%, 3/21/16 2,200,000 3,047 UniCredito, 4.25%, 7/29/16 9,025,000 11,465 Wind Acquisition, 11.75%, 7/15/17 2,000,000 2,037 Wind Acquisition, 11.75%, 7/15/17 (1) 1,900,000 1,936 49,044 Government Bonds 2.1% Italy Buoni Poliennali del Tesoro, 3.75%, 3/1/21 39,031,000 43,810 Italy Buoni Poliennali del Tesoro, 4.00%, 2/1/37 7,481,000 7,246 Italy Buoni Poliennali del Tesoro, 4.50%, 2/1/18 19,137,000 23,395 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 26 Italy Buoni Poliennali del Tesoro, 5.00%, 9/1/40 30,102,000 32,220 106,671 Total Italy (Cost $177,049) 155,715 JAMAICA 0.1% Corporate Bonds 0.1% Digicel, 8.875%, 1/15/15 (USD) 2,600,000 2,639 Digicel, 10.50%, 4/15/18 (USD) (1) 1,850,000 1,931 Total Jamaica (Cost $4,570) 4,570 JAPAN 22.0% Government Bonds 22.0% Government of Japan, 0.50%, 12/20/15 6,922,300,000 87,763 Government of Japan, 1.00%, 12/20/21 3,732,250,000 47,632 Government of Japan, 1.10%, 6/20/21 10,278,650,000 132,922 Government of Japan, 1.30%, 6/20/20 11,198,000,000 148,056 Government of Japan, 1.40%, 3/20/18 3,700,550,000 49,229 Government of Japan, 1.50%, 3/20/19 3,839,900,000 51,561 Government of Japan, 1.50%, 6/20/19 1,075,350,000 14,445 Government of Japan, 1.70%, 9/20/16 1,101,000,000 14,667 Government of Japan, 1.70%, 3/20/17 3,327,000,000 44,558 Government of Japan, 1.70%, 9/20/17 8,404,800,000 113,138 Government of Japan, 1.90%, 3/20/25 702,800,000 9,607 Government of Japan, 2.00%, 12/20/33 2,174,050,000 28,542 Government of Japan, 2.30%, 6/20/28 19,966,850,000 281,462 Government of Japan, 2.30%, 3/20/40 4,815,000,000 65,673 Total Japan (Cost $1,016,528) 1,089,255 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 27 KAZAKHSTAN 0.1% Corporate Bonds 0.1% HSBK Europe, 7.25%, 5/3/17 (USD) 1,000,000 1,000 Kazkommertsbank, 8.50%, 5/11/18 (USD) (1) 2,000,000 1,710 Total Kazakhstan (Cost $2,991) 2,710 LITHUANIA 0.3% Government Bonds 0.3% Republic of Lithuania, 5.125%, 9/14/17 (USD) (1) 6,967,000 7,385 Republic of Lithuania, 6.75%, 1/15/15 (USD) 5,112,000 5,547 Total Lithuania (Cost $12,100) 12,932 LUXEMBOURG 0.3% Corporate Bonds 0.3% Arcelormittal, 9.375%, 6/3/16 2,100,000 3,094 Cirsa Finance Luxembourg, 8.75%, 5/15/18 5,500,000 5,673 Gategroup Finance, 6.75%, 3/1/19 (1) 1,200,000 1,515 Sunrise Communications, 7.00%, 12/31/17 500,000 677 Sunrise Communications, 7.00%, 12/31/17 (1) 3,500,000 4,739 Total Luxembourg (Cost $17,621) 15,698 MACAU 0.0% Corporate Bonds 0.0% MCE Finance, 10.25%, 5/15/18 (USD) 2,000,000 2,275 Total Macau (Cost $2,262) 2,275 MALAYSIA 1.4% Government Bonds 1.4% Malaysian Government, 3.70%, 5/15/13 28,550,000 9,047 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 28 Malaysian Government, 4.16%, 7/15/21 37,999,000 12,590 Malaysian Government, 4.378%, 11/29/19 129,719,000 43,381 Malaysian Government, 4.498%, 4/15/30 14,640,000 4,959 Total Malaysia (Cost $71,376) 69,977 MEXICO 2.8% Corporate Bonds 0.9% America Movil, 4.125%, 10/25/19 (EUR) 3,580,000 4,926 CEMEX Finance, 9.50%, 12/14/16 (USD) (1) 3,500,000 3,430 Controladora Mabe, 7.875%, 10/28/19 (USD) (1) 2,500,000 2,625 Pemex Project Funding Master Trust, 6.25%, 8/5/13 (EUR) 2,678,000 3,575 Pemex Project Funding Master Trust, 6.375%, 8/5/16 (EUR) 2,479,000 3,578 Petroleos Mexicanos, 5.50%, 1/9/17 (EUR) 2,500,000 3,518 Petroleos Mexicanos, 5.50%, 1/21/21 (USD) 12,674,000 14,385 Petroleos Mexicanos, 7.50%, 12/18/13 (GBP) 1,573,000 2,647 Satmex Escrow, 9.50%, 5/15/17 (USD) 3,000,000 3,165 41,849 Government Bonds 1.9% Mexican Udibonos, Inflation-Indexed, 2.50%, 12/10/20 248,142,078 20,045 United Mexican States, 6.50%, 6/10/21 71,023,000 5,785 United Mexican States, 7.50%, 6/3/27 217,500,000 18,552 United Mexican States, 8.50%, 12/13/18 291,850,000 26,020 United Mexican States, 8.50%, 11/18/38 274,408,000 24,990 95,392 Total Mexico (Cost $132,206) 137,241 NETHERLANDS 2.7% Corporate Bonds 1.3% Ahold Finance USA, 6.50%, 3/14/17 (GBP) 1,687,000 3,030 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 29 Akzo Nobel, 8.00%, 4/6/16 (GBP) 850,000 1,581 Bank Nederlandse Gemeenten, 2.50%, 1/18/16 8,031,000 10,601 Heineken, 7.125%, 4/7/14 3,081,000 4,288 Heineken, 7.25%, 3/10/15 (GBP) 1,489,000 2,634 ING Verzekering, 4.00%, 9/18/13 1,950,000 2,518 KBC IFIMA, 3.875%, 3/31/15 4,150,000 5,276 Koninklijke, 5.75%, 3/18/16 (GBP) 2,420,000 4,185 Koninklijke, 7.50%, 2/4/19 2,500,000 3,939 Rabobank Nederland, 4.125%, 1/14/20 2,987,000 4,077 Rabobank Nederland, 4.25%, 1/16/17 3,457,000 4,764 RWE Finance, 6.375%, 6/3/13 (GBP) 595,000 973 RWE Finance, 6.50%, 4/20/21 (GBP) 850,000 1,623 RWE Finance, 6.625%, 1/31/19 5,200,000 8,247 UPCB Finance, 7.625%, 1/15/20 3,500,000 4,684 Ziggo Bond, 8.00%, 5/15/18 (1) 3,432,000 4,712 67,132 Government Bonds 1.4% Kingdom of the Netherlands, 3.50%, 7/15/20 27,877,000 39,634 Kingdom of the Netherlands, 5.50%, 1/15/28 16,292,000 28,477 68,111 Total Netherlands (Cost $133,436) 135,243 NIGERIA 0.1% Corporate Bonds 0.1% Afren, 11.50%, 2/1/16 (USD) 3,800,000 4,075 Total Nigeria (Cost $3,912) 4,075 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 30 NORWAY 0.2% Corporate Bonds 0.2% DnB NOR Bank, 3.875%, 6/29/20 (EUR) 2,100,000 2,825 DnB Nor Bank, 4.375%, 2/24/21 (EUR) 500,000 691 Nordea Hypotek, 3.50%, 1/18/17 (EUR) 6,080,000 8,380 Total Norway (Cost $12,173) 11,896 PERU 0.2% Corporate Bonds 0.1% Banco Credito del Peru, 5.375%, 9/16/20 (USD) (1) 3,750,000 3,909 Corp Lindley, 6.75%, 11/23/21 (USD) (1) 3,000,000 3,255 7,164 Government Bonds 0.1% Republic of Peru, 7.84%, 8/12/20 (1) 10,604,000 4,727 4,727 Total Peru (Cost $11,046) 11,891 POLAND 2.3% Corporate Bonds 0.3% Cyfrowy Polsat, 7.125%, 5/20/18 (EUR) 2,500,000 3,251 Eileme, 11.75%, 1/31/20 (EUR) (1) 1,700,000 2,216 TPSA Euro Finance, 6.00%, 5/22/14 (EUR) 3,000,000 4,090 TVN Finance, 10.75%, 11/15/17 (EUR) 3,250,000 4,318 13,875 Government Bonds 2.0% Republic of Poland, 5.00%, 10/24/13 55,906,000 16,858 Republic of Poland, 5.00%, 4/25/16 22,740,000 6,918 Republic of Poland, 5.50%, 4/25/15 46,865,000 14,400 Republic of Poland, 5.50%, 10/25/19 92,814,000 28,848 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 31 Republic of Poland, 5.75%, 10/25/21 74,268,000 23,319 Republic of Poland, 5.75%, 9/23/22 27,696,000 8,677 99,020 Total Poland (Cost $117,082) 112,895 RUSSIA 1.0% Corporate Bonds 0.4% Alfa Bank, 7.875%, 9/25/17 (USD) 2,900,000 2,933 Alrosa Finance, 7.75%, 11/3/20 (USD) 2,800,000 2,946 GAZ Capital, 6.605%, 2/13/18 (EUR) 4,000,000 5,739 Metalloinvest Finance, 6.50%, 7/21/16 (USD) (1) 3,000,000 2,993 Promsvyazbank Finance, 6.20%, 4/25/14 (USD) 2,000,000 1,963 Sberbank Capital, 5.717%, 6/16/21 (USD) 2,500,000 2,555 TMK Capital, 7.75%, 1/27/18 (USD) 2,000,000 1,910 VimpelCom, 7.504%, 3/1/22 (USD) 2,300,000 2,166 VimpelCom, 7.748%, 2/2/21 (USD) 200,000 194 23,399 Government Bonds 0.6% Russia, FRN, 7.50%, 3/31/30 (USD) 9,743,720 11,722 Russian Federation, 7.85%, 3/10/18 510,000,000 16,637 28,359 Total Russia (Cost $51,897) 51,758 SOUTH AFRICA 2.3% Corporate Bonds 0.4% Eskom Holdings, 5.75%, 1/26/21 (USD) (1) 12,537,000 13,775 Standard Bank, 8.125%, 12/2/19 (USD) 3,000,000 3,277 17,052 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 32 Government Bonds 1.9% Republic of South Africa, 6.75%, 3/31/21 325,655,000 38,507 Republic of South Africa, 8.00%, 12/21/18 336,196,000 43,553 Republic of South Africa, 10.50%, 12/21/26 12,245,000 1,824 Republic of South Africa, 13.50%, 9/15/15 76,961,000 11,432 95,316 Total South Africa (Cost $111,865) 112,368 SOUTH KOREA 1.6% Corporate Bonds 0.1% Export-Import Bank of Korea, 4.625%, 2/20/17 (EUR) 900,000 1,227 Hyundai Capital America, 4.00%, 6/8/17 (USD) 4,000,000 4,145 Hyundai Capital Services, 3.50%, 9/13/17 (USD) (1) 1,530,000 1,546 6,918 Government Bonds 1.5% Korea Treasury Bond, 4.25%, 6/10/21 8,250,860,000 7,565 Korea Treasury Bond, 4.50%, 3/10/15 49,239,360,000 44,315 Korea Treasury Bond, 5.00%, 6/10/20 23,009,050,000 22,091 73,971 Total South Korea (Cost $75,903) 80,889 SPAIN 2.3% Corporate Bonds 1.1% Banco Bilbao Vizcaya Argentaria, 3.00%, 10/9/14 9,550,000 11,485 Banco Bilbao Vizcaya Argentaria, 4.875%, 1/23/14 3,000,000 3,722 Banco Santander, 4.625%, 1/20/16 19,500,000 24,044 Gas Natural Capital Markets, 4.125%, 1/26/18 2,700,000 2,947 Gas Natural Capital Markets, 5.25%, 7/9/14 2,800,000 3,507 Repsol International Finance, 4.75%, 2/16/17 2,250,000 2,713 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 33 Telefonica Emisiones, 3.661%, 9/18/17 3,500,000 3,773 Telefonica Emisiones, 4.75%, 2/7/17 3,500,000 4,049 Telefonica Emisiones, 5.375%, 2/2/18 (GBP) 1,000,000 1,414 57,654 Government Bonds 1.2% Kingdom of Spain, 4.10%, 7/30/18 5,514,000 6,350 Kingdom of Spain, 4.60%, 7/30/19 31,542,000 36,648 Kingdom of Spain, 5.75%, 7/30/32 13,603,000 14,953 57,951 Total Spain (Cost $136,523) 115,605 SUPRANATIONAL 2.3% Corporate Bonds 2.3% European Investment Bank, 8.75%, 8/25/17 (GBP) 13,208,000 27,158 Inter-American Development Bank, 4.40%, 1/26/26 (CAD) 11,649,000 12,945 International Bank for Reconstruction & Development 3.875%, 5/20/19 (EUR) 50,037,000 72,985 Total Supranational (Cost $110,924) 113,088 SWEDEN 1.0% Corporate Bonds 0.9% Nordea Bank, 3.75%, 2/24/17 (EUR) 4,300,000 5,813 Nordea Bank, 3.875%, 12/15/15 (GBP) 1,000,000 1,665 Securitas, 6.50%, 4/2/13 (EUR) 2,350,000 3,085 Skandinaviska Enskilda Banken, 3.75%, 5/19/16 (EUR) 2,750,000 3,694 Skandinaviska Enskilda Banken, 6.625%, 7/9/14 (GBP) 1,000,000 1,702 Svenska Handelsbanken, 4.875%, 3/25/14 (EUR) 2,950,000 3,975 Svenska Handelsbanken, 5.50%, 5/26/16 (GBP) 2,800,000 4,867 Swedish Export Credit, 3.625%, 5/27/14 (EUR) 13,760,000 18,219 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 34 Verisure Holding, 8.75%, 9/1/18 (EUR) (1) 1,075,000 1,306 44,326 Government Bonds 0.1% Kingdom of Sweden, 3.75%, 8/12/17 45,945,000 7,462 7,462 Total Sweden (Cost $53,186) 51,788 SWITZERLAND 0.5% Corporate Bonds 0.5% Adecco, 4.75%, 4/13/18 (EUR) 3,000,000 4,013 Cloverie, FRN, 7.50%, 7/24/39 (EUR) 4,200,000 5,738 Credit Suisse First Boston (London), 5.125%, 9/18/17 (EUR) 5,500,000 7,888 Credit Suisse First Boston (London), 6.125%, 8/5/13 (EUR) 2,000,000 2,664 Credit Suisse Group Finance (Guernsey), 6.375%, 6/7/13 (EUR) 1,921,000 2,527 UBS (London), 6.25%, 9/3/13 (EUR) 1,984,000 2,650 UBS (London), 6.375%, 7/20/16 (GBP) 993,000 1,734 Total Switzerland (Cost $29,295) 27,214 TURKEY 0.6% Corporate Bonds 0.2% Akbank, 5.125%, 7/22/15 (USD) (1) 4,000,000 4,095 Turkiye Garanti Bankasi, 6.25%, 4/20/21 (USD) (1) 4,000,000 4,100 8,195 Government Bonds 0.4% Republic of Turkey, 10.00%, 6/17/15 27,064,000 15,548 Republic of Turkey, 10.50%, 1/15/20 10,166,000 6,192 21,740 Total Turkey (Cost $31,694) 29,935 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 35 UKRAINE 0.2% Corporate Bonds 0.2% Avangardco Investments, 10.00%, 10/29/15 (USD) 3,000,000 2,395 DTEK Finance, 9.50%, 4/28/15 (USD) 3,000,000 2,925 MHP, 10.25%, 4/29/15 (USD) 3,550,000 3,439 Mriya Agro Holding, 10.95%, 3/30/16 (USD) 3,000,000 2,573 Total Ukraine (Cost $12,538) 11,332 UNITED ARAB EMIRATES 0.2% Corporate Bonds 0.2% DP World Sukuk, 6.25%, 7/2/17 (USD) 2,000,000 2,170 Dubai Electricity & Water, 7.375%, 10/21/20 (USD) (1) 4,000,000 4,400 IPIC GMTN, 5.875%, 3/14/21 (EUR) 3,000,000 4,173 Total United Arab Emirates (Cost $9,694) 10,743 UNITED KINGDOM 10.2% Corporate Bonds 4.8% Aviva, FRN, 6.875%, 5/22/38 (EUR) 4,000,000 4,441 B.A.T. International Finance, 5.375%, 6/29/17 (EUR) 3,450,000 5,044 B.A.T. International Finance, 6.375%, 12/12/19 1,095,000 2,091 BAA Funding, 4.60%, 2/15/18 (EUR) 3,500,000 4,699 BAA Funding, 5.225%, 2/15/25 2,400,000 4,046 Barclays Bank, 4.00%, 10/7/19 (EUR) 18,450,000 25,890 Barclays Bank, 5.25%, 5/27/14 (EUR) 3,700,000 4,997 Barclays Bank, 5.75%, 8/17/21 2,400,000 4,162 Barclays Bank, 6.00%, 1/14/21 (EUR) 3,500,000 4,073 BG Energy Capital, 5.125%, 12/7/17 1,000,000 1,788 BG Energy Capital, 5.875%, 11/13/12 737,000 1,172 BP Capital Markets, 3.83%, 10/6/17 (EUR) 4,000,000 5,501 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 36 British Sky Broadcasting Finance, 5.75%, 10/20/17 2,100,000 3,737 British Telecommunications, 6.50%, 7/7/15 (EUR) 1,700,000 2,449 British Telecommunications, 8.625%, 3/26/20 1,593,000 3,289 Centrica, 5.125%, 12/10/14 1,000,000 1,698 Crown Newco, 7.00%, 2/15/18 1,800,000 2,734 Crown Newco, 7.00%, 2/15/18 (1) 1,700,000 2,583 Eastern Power Networks, 4.75%, 9/30/21 1,200,000 2,047 Experian Fiance, 4.75%, 2/4/20 (EUR) 3,000,000 4,368 Experian Finance, 4.75%, 11/23/18 1,000,000 1,732 FCE Bank, 4.75%, 1/19/15 (EUR) 3,600,000 4,818 G4S, 7.75%, 5/13/19 1,200,000 2,317 HSBC Bank, 3.875%, 10/24/18 (EUR) 5,500,000 7,621 HSBC Bank Canada, 3.558%, 10/4/17 (CAD) 1,120,000 1,139 HSBC Holdings, 6.25%, 3/19/18 (EUR) 2,500,000 3,459 HSBC Holdings, FRN, 9.875%, 4/8/18 2,300,000 3,793 Imperial Tobacco Finance, 4.50%, 7/5/18 (EUR) 4,000,000 5,501 Intercontinental Hotels, 6.00%, 12/9/16 1,100,000 1,903 Kingfisher, 5.625%, 12/15/14 1,290,000 2,146 Legal & General Group, FRN, 4.00%, 6/8/25 (EUR) 3,800,000 4,328 Lloyds TSB Bank, 6.375%, 6/17/16 (EUR) 5,950,000 8,400 Lloyds TSB Bank, 6.50%, 3/24/20 (EUR) 6,950,000 7,562 Lloyds TSB Bank, 7.50%, 4/15/24 1,000,000 1,838 Marks & Spencer, 5.625%, 3/24/14 1,389,000 2,298 MU Finance, 8.75%, 2/1/17 (1) 2,500,000 4,209 MU Finance, 8.75%, 2/1/17 500,000 842 National Express Group, 6.25%, 1/13/17 1,200,000 2,023 National Grid, 5.00%, 7/2/18 (EUR) 3,933,000 5,747 National Grid, 6.125%, 4/15/14 1,100,000 1,852 National Grid, 6.50%, 4/22/14 (EUR) 1,700,000 2,351 Nationwide Building Society, 3.75%, 1/20/15 (EUR) 3,000,000 3,930 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 37 Nationwide Building Society, 4.375%, 2/28/22 (EUR) 9,300,000 13,299 Nationwide Building Society, 5.625%, 9/9/19 1,300,000 2,228 Nationwide Building Society, 6.75%, 7/22/20 (EUR) 3,000,000 3,564 Next, 5.875%, 10/12/16 1,200,000 2,065 Northumbrian Water Fin., 6.00%, 10/11/17 400,000 730 Odeon & UCI Finco, 9.00%, 8/1/18 3,000,000 4,510 Rentokil Initial, 5.75%, 3/31/16 1,500,000 2,480 Rolls-Royce, 6.75%, 4/30/19 1,000,000 1,950 Royal Bank of Scotland, 4.75%, 5/18/16 (EUR) 2,500,000 3,335 Royal Bank of Scotland, 5.25%, 5/15/13 (EUR) 2,300,000 2,989 Royal Bank of Scotland, 5.375%, 9/30/19 (EUR) 3,500,000 4,743 Royal Bank of Scotland, 5.75%, 5/21/14 (EUR) 3,000,000 4,026 Royal Bank of Scotland, 6.375%, 4/29/14 1,000,000 1,659 Scottish Power, 8.375%, 2/20/17 794,000 1,505 Severn Trent Water Utilities, 5.25%, 3/11/16 (EUR) 2,435,000 3,473 Severn Trent Water Utilities, 6.00%, 1/22/18 700,000 1,280 Tesco, 6.125%, 2/24/22 2,500,000 4,590 Virgin Media Finance, 8.875%, 10/15/19 2,500,000 4,366 Vodafone Group, 8.125%, 11/26/18 1,300,000 2,673 236,083 Government Bonds 5.4% Government of the United Kingdom, 3.75%, 9/7/21 24,287,000 44,774 Government of the United Kingdom, 4.25%, 6/7/32 47,999,000 92,658 Government of the United Kingdom, 4.25%, 9/7/39 58,136,000 112,070 Government of the United Kingdom, 4.50%, 3/7/13 8,717,000 14,040 Government of the United Kingdom, 4.50%, 3/7/19 1,758,000 3,346 266,888 Total United Kingdom (Cost $473,267) 502,971 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 38 UNITED STATES 3.4% Corporate Bonds 3.4% American International Group, 6.797%, 11/15/17 (EUR) 2,500,000 3,488 AON Financial Services Luxembourg, 6.25%, 7/1/14 (EUR) 2,300,000 3,121 AT&T, 5.875%, 4/28/17 (GBP) 1,000,000 1,807 Bank of America, 4.625%, 2/18/14 (EUR) 1,587,000 2,060 Bank of America, 4.625%, 8/7/17 (EUR) 4,000,000 5,211 Bank of America, 4.75%, 4/3/17 (EUR) 3,500,000 4,586 Bank of America, 5.50%, 12/4/19 (GBP) 1,750,000 2,808 Citigroup, 3.50%, 8/5/15 (EUR) 3,535,000 4,577 Citigroup, 5.00%, 8/2/19 (EUR) 2,688,000 3,539 Citigroup, 6.25%, 9/2/19 (GBP) 1,888,000 3,230 Citigroup, 6.40%, 3/27/13 (EUR) 3,240,000 4,241 Citigroup, FRN, 1.116%, 5/31/17 (EUR) 1,750,000 1,791 Citigroup, FRN, 4.75%, 2/10/19 (EUR) 1,587,000 1,733 Citigroup Finance Canada, 6.75%, 9/22/14 (CAD) 996,000 1,051 CRH Finance, 7.375%, 5/28/14 (EUR) 3,600,000 5,012 GE Capital Canada Funding, 5.73%, 10/22/37 (CAD) 1,693,000 1,863 GE Capital Euro Funding, 4.625%, 2/22/27 (EUR) 3,750,000 5,148 GE Capital Euro Funding, 5.25%, 5/18/15 (EUR) 5,554,000 7,678 GE Capital Euro Funding, 5.375%, 1/16/18 (EUR) 3,373,000 4,847 GE Capital Trust IV, FRN, 4.625%, 9/15/66 (EUR) 3,000,000 3,260 GMAC International Finance, 7.50%, 4/21/15 (EUR) 3,600,000 4,738 Goldman Sachs, 4.50%, 1/30/17 (EUR) 6,000,000 7,794 Goldman Sachs, 5.125%, 10/16/14 (EUR) 4,150,000 5,486 Goldman Sachs, 6.125%, 2/14/17 (GBP) 1,195,000 1,982 Goldman Sachs, 6.375%, 5/2/18 (EUR) 591,000 830 IBM, 6.625%, 1/30/14 (EUR) 650,000 898 JPMorgan Chase, 4.25%, 1/25/17 (GBP) 1,000,000 1,657 JPMorgan Chase, 4.375%, 1/30/14 (EUR) 4,100,000 5,410 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 39 JPMorgan Chase, 5.25%, 1/14/15 (EUR) 3,000,000 4,124 JPMorgan Chase, FRN, 4.375%, 11/12/19 (EUR) 2,800,000 3,345 Kraft Food, 6.25%, 3/20/15 (EUR) 2,700,000 3,840 Kraft Foods, 7.25%, 7/18/18 (GBP) 1,400,000 2,693 Manpower, 4.75%, 6/14/13 (EUR) 1,600,000 2,063 Merrill Lynch, 4.45%, 1/31/14 (EUR) 3,081,000 3,972 Met Life Global Funding I, 4.625%, 5/16/17 (EUR) 2,300,000 3,173 Molson Coors International, 3.95%, 10/6/17 (CAD) 2,235,000 2,266 Morgan Stanley, 4.90%, 2/23/17 (CAD) 2,375,000 2,284 Morgan Stanley, 5.00%, 5/2/19 (EUR) 3,000,000 3,796 Morgan Stanley, 5.125%, 11/30/15 (GBP) 2,000,000 3,197 Morgan Stanley, 5.375%, 8/10/20 (EUR) 1,500,000 1,877 Morgan Stanley, 5.50%, 10/2/17 (EUR) 6,000,000 7,769 New York Life Global Funding, 4.375%, 1/19/17 (EUR) 2,300,000 3,176 Pacific Life Funding, 5.125%, 1/20/15 (GBP) 2,683,000 4,418 Philip Morris International, 5.875%, 9/4/15 (EUR) 800,000 1,152 Principal Financial Global Funding II, 4.50%, 1/26/17 (EUR) 3,500,000 4,530 SLM Corporation, 4.75%, 3/17/14 (EUR) 4,000,000 4,946 Toyota Motor Credit, 4.00%, 12/7/17 (GBP) 500,000 856 UnityMedia, 7.50%, 3/15/19 (EUR) (1) 4,175,000 5,548 Total United States (Cost $176,816) 168,871 SHORT-TERM INVESTMENTS 3.0% Money Market Funds 2.7% T. Rowe Price Reserve Investment Fund, 0.16% (3)(4) 132,992,060 132,992 132,992 Proof #4 T. Rowe Price International Bond Fund Par/Shares Value (Cost and value in $000s) 40 U.S. Treasury Obligations 0.3% U.S. Treasury Notes, 0.625%, 7/31/12 (5) 13,800,000 13,806 13,806 Total Short-Term Investments (Cost $146,798) 146,798 Total Investments in Securities 99.1% of Net Assets (Cost $4,862,366) $ 4,902,082 ‡ Country classifications are generally based on MSCI categories or another unaffiliated third party data provider; securities are denominated in the currency of the country presented unless otherwise noted. (1) Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration only to qualified institutional buyers -- total value of such securities at period-end amounts to $169,414 and represents 3.4% of net assets. (2) Security issued under the Federal Deposit Insurance Corporation Temporary Liquidity Guarantee Program. (3) Seven-day yield (4) Affiliated Companies (5) At June 30, 2012, all or a portion of this security is pledged as collateral and/or margin deposit to cover future funding obligations. AUD Australian Dollar BRL Brazilian Real CAD Canadian Dollar CHF Swiss Franc CLP Chilean Peso CNY China Renminbi CZK Czech Koruna DKK Danish Krone EUR Euro FRN Floating-Rate Note GBP British Pound HKD Hong Kong Dollar HUF Hungarian Forint JPY Japanese Yen KRW South Korean Won MXN Mexican Peso MYR Malaysian Ringgit NOK Norwegian Krone PLN Polish Zloty Proof #4 T. Rowe Price International Bond Fund 41 RUB Russian Ruble SEK Swedish Krona SGD Singapore Dollar THB Thai Baht TRY Turkish Lira USD U.S. Dollar ZAR South African Rand Proof #4 T. Rowe Price International Bond Fund 42 Notional Amount Market Value Upfront Premiums Paid/(Received) Unrealized Gain (Loss) SWAPS 0.0% Credit Default Swaps, Protection Bought 0.0% United Kingdom 0.0% JPMorgan Chase, Protection Bought (Relevant Credit: United Utilities, 6.875%, 8/15/28) Pay 1.00%, Receive upon credit default 6/20/17 (EUR) 4,000 (39) (55) 16 Total Credit Default Swaps, Protection Bought (55) 16 Total Swaps (55) 16 ($000s, except market price) Proof #4 T. Rowe Price International Bond Fund Forward Currency Exchange Contracts 43 (Amounts in 000s) Counterparty Settlement Receive Deliver Unrealized Gain (Loss) Bank of America Merrill Lynch 8/16/12 USD 44,827 JPY 3,527,272 673 Barclays Bank 8/16/12 AUD 12,497 USD 12,294 444 Barclays Bank 8/16/12 CNY 83,604 USD 13,218 (87) Barclays Bank 8/16/12 GBP 664 USD 1,047 (7) Barclays Bank 8/16/12 HUF 303,234 USD 1,282 53 Barclays Bank 8/16/12 MXN 379,222 USD 27,541 766 Barclays Bank 8/16/12 TRY 6,451 USD 3,488 45 Barclays Bank 8/16/12 USD 32,538 AUD 32,321 (407) Barclays Bank 8/16/12 USD 12,730 BRL 25,935 (70) Barclays Bank 8/16/12 USD 13,468 EUR 10,572 84 Barclays Bank 8/16/12 USD 16,236 JPY 1,297,571 (7) Barclays Bank 8/16/12 USD 53,558 PLN 181,681 (683) Barclays Bank 8/16/12 USD 443 SGD 563 (1) Barclays Bank 8/16/12 USD 1,372 TRY 2,562 (31) Citibank 7/17/12 KRW 48,265,428 USD 42,040 60 Citibank 8/16/12 CZK 206,342 USD 10,420 (189) Citibank 8/16/12 JPY 37,749,642 USD 473,288 (744) Citibank 8/16/12 MXN 146,714 USD 10,337 615 Citibank 8/16/12 USD 6,241 BRL 12,389 127 Citibank 8/16/12 USD 17,356 MXN 239,372 (512) Credit Suisse 8/16/12 CLP 5,026,398 USD 10,140 (162) Credit Suisse 8/16/12 USD 29,024 EUR 22,602 410 Credit Suisse 8/16/12 USD 19,222 EUR 15,303 (151) Credit Suisse 8/16/12 USD 1,667 JPY 131,444 22 Deutsche Bank 8/16/12 EUR 19,077 USD 24,040 111 Deutsche Bank 8/16/12 GBP 3,376 USD 5,184 103 Deutsche Bank 8/16/12 HUF 227,668 USD 985 17 Deutsche Bank 8/16/12 NOK 381,587 USD 64,148 (102) Deutsche Bank 8/16/12 USD 224,489 EUR 173,282 5,117 Deutsche Bank 8/16/12 USD 3,255 NOK 19,684 (49) Goldman Sachs 8/16/12 GBP 4,304 USD 6,750 (10) Goldman Sachs 8/16/12 USD 5,053 CAD 5,156 (7) Goldman Sachs 8/16/12 USD 8,164 EUR 6,431 23 Goldman Sachs 8/16/12 USD 17,075 JPY 1,361,612 31 Goldman Sachs 8/16/12 USD 12,198 RUB 385,701 382 Goldman Sachs 8/16/12 USD 6,320 ZAR 52,505 (61) JPMorgan Chase 7/17/12 USD 1,571 KRW 1,798,481 2 JPMorgan Chase 7/17/12 USD 1,409 KRW 1,631,904 (14) JPMorgan Chase 8/16/12 BRL 9,876 USD 4,839 35 JPMorgan Chase 8/16/12 CAD 708 USD 693 2 Proof #4 T. Rowe Price International Bond Fund 44 (Amounts in 000s) Forward Currency Exchange Contracts (continued) Counterparty Settlement Receive Deliver Unrealized Gain (Loss) JPMorgan Chase 8/16/12 CLP 1,554,027 USD 3,052 33 JPMorgan Chase 8/16/12 DKK 6,416 USD 1,104 (11) JPMorgan Chase 8/16/12 EUR 23,944 USD 30,071 241 JPMorgan Chase 8/16/12 EUR 41,380 USD 52,415 (28) JPMorgan Chase 8/16/12 GBP 9,052 USD 14,055 120 JPMorgan Chase 8/16/12 GBP 1,749 USD 2,750 (11) JPMorgan Chase 8/16/12 HUF 121,545 USD 526 9 JPMorgan Chase 8/16/12 JPY 1,620,522 USD 20,514 (229) JPMorgan Chase 8/16/12 MXN 11,558 USD 832 31 JPMorgan Chase 8/16/12 NOK 4,629 USD 775 2 JPMorgan Chase 8/16/12 PLN 6,466 USD 1,881 50 JPMorgan Chase 8/16/12 RUB 541,035 USD 17,727 (1,153) JPMorgan Chase 8/16/12 THB 148,151 USD 4,683 (32) JPMorgan Chase 8/16/12 TRY 1,353 USD 740 1 JPMorgan Chase 8/16/12 USD 3,393 AUD 3,435 (108) JPMorgan Chase 8/16/12 USD 89 CAD 91 (1) JPMorgan Chase 8/16/12 USD 937 CHF 886 3 JPMorgan Chase 8/16/12 USD 1,445 CNY 9,173 4 JPMorgan Chase 8/16/12 USD 214,778 EUR 167,064 3,278 JPMorgan Chase 8/16/12 USD 14,632 EUR 11,625 (84) JPMorgan Chase 8/16/12 USD 2,842 GBP 1,803 18 JPMorgan Chase 8/16/12 USD 5,635 JPY 444,771 67 JPMorgan Chase 8/16/12 USD 11,243 MXN 158,134 (561) JPMorgan Chase 8/16/12 USD 2,169 PLN 7,374 (33) JPMorgan Chase 8/16/12 USD 16,781 ZAR 141,630 (431) JPMorgan Chase 8/16/12 ZAR 17,712 USD 2,047 106 Morgan Stanley 8/16/12 DKK 68,995 USD 11,924 (166) Morgan Stanley 8/16/12 SEK 317,993 USD 45,095 800 Morgan Stanley 8/16/12 USD 10,094 BRL 21,021 (280) Morgan Stanley 8/16/12 USD 1,956 CAD 2,005 (11) Morgan Stanley 8/16/12 USD 20,133 EUR 15,786 148 Morgan Stanley 8/16/12 USD 4,485 EUR 3,573 (39) Morgan Stanley 8/16/12 USD 6,714 GBP 4,255 50 Morgan Stanley 8/16/12 USD 1,070 GBP 686 (4) Morgan Stanley 8/16/12 USD 1,459 HKD 11,321 (1) Morgan Stanley 8/16/12 USD 15,004 JPY 1,193,216 68 Morgan Stanley 8/16/12 USD 5,815 JPY 466,546 (25) Morgan Stanley 8/16/12 USD 2,070 MXN 28,488 (57) Morgan Stanley 8/16/12 USD 1,635 PLN 5,592 (34) Morgan Stanley 8/16/12 USD 26,431 ZAR 222,837 (649) Royal Bank of Canada 8/16/12 CAD 20,605 USD 19,993 226 Proof #4 T. Rowe Price International Bond Fund 45 (Amounts in 000s) Forward Currency Exchange Contracts (continued) Counterparty Settlement Receive Deliver Unrealized Gain (Loss) Royal Bank of Canada 8/16/12 CAD 134,144 USD 133,583 (1,952) Royal Bank of Canada 8/16/12 CHF 60,003 USD 64,190 (905) Royal Bank of Canada 8/16/12 EUR 10,009 USD 12,532 139 Royal Bank of Canada 8/16/12 USD 7,266 CAD 7,445 (40) Royal Bank of Scotland 8/16/12 USD 71,723 GBP 44,650 1,802 Royal Bank of Scotland 8/16/12 USD 32,658 GBP 20,961 (166) Royal Bank of Scotland 8/16/12 USD 988 NOK 5,872 2 Royal Bank of Scotland 8/16/12 USD 826 SEK 5,769 (7) Standard Chartered 7/17/12 KRW 14,771,366 USD 12,894 (10) Standard Chartered 7/17/12 USD 24,659 KRW 28,832,536 (490) Standard Chartered 8/16/12 CNY 323,043 USD 51,024 (286) Standard Chartered 8/16/12 HKD 494,698 USD 63,725 50 Standard Chartered 8/16/12 JPY 2,929,158 USD 36,749 (83) Standard Chartered 8/16/12 SGD 17,042 USD 13,554 (100) Standard Chartered 8/16/12 THB 1,021,591 USD 32,414 (342) Standard Chartered 9/24/12 MYR 122,899 USD 38,726 (215) State Street 8/16/12 CAD 2,546 USD 2,454 44 State Street 8/16/12 MXN 378,394 USD 27,074 1,171 State Street 8/16/12 USD 5,276 AUD 5,474 (303) State Street 8/16/12 USD 658 CAD 674 (3) State Street 8/16/12 USD 12,336 EUR 9,972 (288) State Street 8/16/12 USD 2,907 GBP 1,889 (52) State Street 8/16/12 USD 8,643 MXN 124,416 (644) Net unrealized gain (loss) on open forward currency exchange contracts $ 4,457 Proof #4 T. Rowe Price International Bond Fund 46 Futures Contracts ($000s) Expiration Contract Value Unrealized Gain (Loss) Short, 522 Government of Canada ten year contracts 9/12 $ (70,986) $ (804) Short, 483 U.S. Treasury five year contracts 9/12 (59,877) (107) Short, 1,046 U.S. Treasury ten year contracts 9/12 (139,510) (649) Net payments (receipts) of variation margin to date 0 Unrealized gain (loss) on open futures contracts $ (1,560) Proof #4 T. Rowe Price International Bond Fund 47 The accompanying notes are an integral part of these financial statements. Affiliated Companies ($000s) The fund may invest in certain securities that are considered affiliated companies. As defined by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. Based on the fund’s relative ownership, the following securities were considered affiliated companies for all or some portion of the six months ended June 30, 2012. Purchase and sales cost and investment income reflect all activity for the period then ended. Affiliate Purchase Cost Sales Cost Investment Income Value 6/30/12 Value 12/31/11 T. Rowe Price Reserve Investment Fund, 0.16% ¤ ¤ $ 66 $ 132,992 $ 43,881 Totals $ 66 $ 132.992 $ 43,881 ¤ Purchase and sale information not shown for cash management funds. Amounts reflected on the accompanying financial statements include the following amounts related to affiliated companies: Investment in securities, at cost $ 132,992 Dividend income 66 Interest income - Investment income $ 66 Realized gain (loss) on securities $ - Capital gain distributions from mutual funds $ - Proof #4 48 T. Rowe Price International Bond Fund Unaudited June 30, 2012 ($000s, except shares and per share amounts) Statement of Assets and Liabilities Assets Investments in securities, at value (cost $4,862,366) $ 4,902,082 Interest receivable 71,452 Unrealized gain on forward currency exchange contracts 17,585 Foreign currency (cost $12,284) 12,415 Receivable for shares sold 11,490 Receivable for investment securities sold 6,886 Cash deposits on futures contracts (including $4,223 of restricted cash) 5,221 Cash 20 Unrealized gain on swaps 16 Other assets 10,148 Total assets 5,037,315 Liabilities Payable for investment securities purchased 56,659 Unrealized loss on forward currency exchange contracts 13,128 Payable for shares redeemed 5,486 Investment management fees payable 2,653 Unrealized loss on futures contracts 1,560 Due to affiliates 375 Swap premiums received 55 Other liabilities 10,389 Total liabilities 90,305 NET ASSETS $ 4,947,010 Net Assets Consist of: Overdistributed net investment income $ (63) Accumulated undistributed net realized loss (25,299) Net unrealized gain 41,156 Paid-in capital applicable to 506,995,686 shares of $0.01 par value capital stock outstanding; 4,500,000,000 shares of the Corporation authorized 4,931,216 NET ASSETS $ 4,947,010 Proof #4 49 T. Rowe Price International Bond Fund Unaudited June 30, 2012 The accompanying notes are an integral part of these financial statements. Statement of Assets and Liabilities NET ASSET VALUE PER SHARE Investor Class ($4,636,433,341 / 475,192,515 shares outstanding) $ 9.76 Advisor Class ($310,577,132 / 31,803,171 shares outstanding) $ 9.77 Proof #4 T. Rowe Price International Bond Fund Unaudited ($000s) Statement of Operations 50 6 Months Ended 6/30/12 Investment Income (Loss) Income Interest $ 81,289 Dividend 66 Other 246 Total income 81,601 Expenses Investment management 16,649 Shareholder servicing Investor Class $ 3,600 Advisor Class 358 3,958 Rule 12b-1 fees Advisor Class 453 Prospectus and shareholder reports Investor Class 349 Advisor Class 56 405 Custody and accounting 720 Registration 55 Legal and audit 26 Directors 18 Miscellaneous 15 Total expenses 22,299 Net investment income 59,302 Proof #4 T. Rowe Price International Bond Fund Unaudited ($000s) Statement of Operations 51 The accompanying notes are an integral part of these financial statements. 6 Months Ended 6/30/12 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities 4,795 Futures (8,485) Swaps 1,134 Foreign currency transactions 10,378 Net realized gain 7,822 Change in net unrealized gain (loss) Securities 18,606 Futures 557 Swaps (992) Other assets and liabilities denominated in foreign currencies (17,272) Change in net unrealized gain 899 Net realized and unrealized gain 8,721 INCREASE IN NET ASSETS FROM OPERATIONS $ 68,023 Proof #4 T. Rowe Price International Bond Fund Unaudited ($000s) 52 Statement of Changes in Net Assets 6 Months Ended 6/30/12 Year Ended 12/31/11 Increase (Decrease) in Net Assets Operations Net investment income $ 59,302 $ 136,613 Net realized gain 7,822 66,331 Change in net unrealized gain (loss) 899 (56,868) Increase in net assets from operations 68,023 146,076 Distributions to shareholders Net investment income Investor Class (55,702) (124,637) Advisor Class (3,663) (12,163) Net realized gain Investor Class – (100,972) Advisor Class – (8,716) Decrease in net assets from distributions (59,365) (246,488) Capital share transactions* Shares sold Investor Class 488,609 1,366,094 Advisor Class 88,711 235,892 Distributions reinvested Investor Class 51,438 207,940 Advisor Class 3,413 19,695 Shares redeemed Investor Class (687,153) (1,106,204) Advisor Class (187,714) (374,736) Redemption fees received 440 870 Increase (decrease) in net assets from capital share transactions (242,256) 349,551 Net Assets Increase (decrease) during period (233,598) 249,139 Beginning of period 5,180,608 4,931,469 End of period $ 4,947,010 $ 5,180,608 Undistributed (overdistributed) net investment income (63) – Proof #4 T. Rowe Price International Bond Fund Unaudited 53 The accompanying notes are an integral part of these financial statements. Statement of Changes in Net Assets (000s) 6 Months Ended 6/30/12 Year Ended 12/31/11 *Share information Shares sold Investor Class 49,736 134,558 Advisor Class 9,024 23,313 Distributions reinvested Investor Class 5,212 20,865 Advisor Class 345 1,972 Shares redeemed Investor Class (70,058) (107,732) Advisor Class (19,097) (37,042) Increase (decrease) in shares outstanding (24,838) 35,934 Proof #4 54 T. Rowe Price International Bond Fund Unaudited June 30, 2012 Notes to Financial Statements T. Rowe Price International Funds, Inc. (the corporation), is registered under the Investment Company Act of 1940 (the 1940 Act). The International Bond Fund (the fund) is a nondiversified, open-end management investment com- pany established by the corporation. The fund seeks to provide high current income and capital appreciation by investing primarily in high-quality, nondollar-denominated bonds outside the U.S. The fund has two classes of shares: the International Bond Fund original share class, referred to in this report as the Investor Class, offered since September 10, 1986, and the International Bond Fund–Advisor Class (Advisor Class), offered since March 31, 2000. Advisor Class shares are sold only through unaffiliated brokers and other unaffiliated financial intermediaries that are compensated by the class for distribution, share- holder servicing, and/or 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. NOTE 1 - SIGNIFICaNT aCCOUNTING POLICIES Basis of Preparation The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), which require the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Premiums and discounts on debt securities are amortized for financial reporting purposes. Paydown gains and losses are recorded as an adjustment to interest income. Inflation adjustments to the principal amount of inflation-indexed bonds are reflected as interest income. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Income tax-related interest and penalties, if incurred, would be recorded as income tax expense. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Proof #4 55 T. Rowe Price International Bond Fund Distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared by each class daily and paid monthly. Capital gain distributions, if any, are generally declared and paid by the fund annually. Currency Translation Assets, including investments, and liabilities denomi- nated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses. Class accounting The Advisor Class pays distribution, shareholder servicing, and/or certain administrative expenses in the form of Rule 12b-1 fees, in an amount not exceeding 0.25% of the class’s average daily net assets. Shareholder servicing, prospectus, and shareholder report expenses incurred by each class are charged directly to the class to which they relate. Expenses common to both classes and investment income are allocated to the classes based upon the rela- tive daily net assets of each class’s settled shares; realized and unrealized gains and losses are allocated based upon the relative daily net assets of each class’s outstanding shares. Credits The fund earns credits on temporarily uninvested cash balances held at the custodian, which reduce the fund’s custody charges. Custody expense in the accompanying financial statements is presented before reduction for credits. Redemption Fees A 2% fee is assessed on redemptions of fund shares held for 90 days or less to deter short-term trading and to protect the interests of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund and are recorded as an increase to paid-in capital. The fees may cause the redemption price per share to differ from the net asset value per share. In-kind Redemptions In accordance with guidelines described in the fund’s prospectus, the fund may distribute portfolio securities rather than cash as payment for a redemption of fund shares (in-kind redemption). For finan- cial reporting purposes, the fund recognizes a gain on in-kind redemptions to the extent the value of the distributed securities on the date of redemp- tion exceeds the cost of those securities. Gains and losses realized on in-kind Proof #4 56 T. Rowe Price International Bond Fund redemptions are not recognized for tax purposes and are reclassified from undistributed realized gain (loss) to paid-in capital. During the six months ended June 30, 2012, the fund realized $750,000 of net loss on $10,784,000 of in-kind redemptions. New accounting Pronouncements In May 2011, the Financial Accounting Standards Board (FASB) issued amended guidance to align fair value measure- ment and disclosure requirements in U.S. GAAP with International Financial Reporting Standards. The guidance is effective for fiscal years and interim periods beginning on or after December 15, 2011. Adoption had no effect on net assets or results of operations. In December 2011, the FASB issued amended guidance to enhance disclosure for offsetting assets and liabilities. The guidance is effective for fiscal years and interim periods beginning on or after January 1, 2013. Adoption will have no effect on the fund’s net assets or results of operations. NOTE 2 - vaLUaTION The fund’s financial instruments are reported at fair value as defined by GAAP. The fund determines the values of its assets and liabilities and computes each class’s net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. valuation Methods Debt securities are generally traded in the over-the-counter (OTC) market. Securities with remaining maturities of one year or more at the time of acquisition are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service, which considers the yield or price of bonds of comparable quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Securities with remaining maturities of less than one year at the time of acquisition gener- ally use amortized cost in local currency to approximate fair value. However, if amortized cost is deemed not to reflect fair value or the fund holds a significant amount of such securities with remaining maturities of more than 60 days, the securities are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service. Proof #4 57 T. Rowe Price International Bond Fund Investments in mutual funds are valued at the mutual fund’s closing net asset value per share on the day of valuation. Financial futures contracts are valued at closing settlement prices. Forward currency exchange contracts are valued using the prevailing forward exchange rate. Swaps are valued at prices furnished by independent swap dealers or by an independent pricing service. Other investments, including restricted securities and private placements, and those financial instruments 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 the T. Rowe Price Valuation Committee, established by the fund’s Board of Directors (the Board). Subject to oversight by the Board, the Valuation Committee develops pricing-related policies and procedures and approves all fair-value determinations. The Valuation Committee regularly makes good faith judgments, using a wide variety of sources and information, to establish and adjust valuations of certain securi- ties as events occur and circumstances warrant. For instance, in determining the fair value of private-equity instruments, the Valuation Committee considers a variety of factors, including the company’s business prospects, its financial performance, strategic events impacting the company, relevant valuations of similar companies, new rounds of financing, and any negotiated transactions of significant size between other investors in the company. Because any fair-value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions. valuation Inputs Various inputs are used to determine the value of the fund’s financial instruments. These inputs are summarized in the three broad levels listed below: Level 1 – quoted prices in active markets for identical financial instruments Level 2 – observable inputs other than Level 1 quoted prices (including, but not limited to, quoted prices for similar financial instruments, interest rates, prepayment speeds, and credit risk) Level 3 – unobservable inputs Proof #4 58 T. Rowe Price International Bond Fund Observable inputs are those based on market data obtained from sources inde- pendent of the fund, and unobservable inputs reflect the fund’s own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level. The following table summarizes the fund’s financial instruments, based on the inputs used to determine their values on June 30, 2012: ($000s) Level 1 Level 2 Level 3 Total value Quoted Prices Significant Observable Inputs Significant Unobservable Inputs assets Investments in Securities, except: $ — $ 4,769,090 $ — $ 4,769,090 Short-Term Investments 132,992 — — 132,992 Total Securities 132,992 4,769,090 — 4,902,082 Forward Currency Exchange Contracts — 17,585 — 17,585 Total $ 132,992 $ 4,786,675 $ — $ 4,919,667 Liabilities Swaps $ — $ 39 $ — $ 39 Forward Currency Exchange Contracts — 13,128 — 13,128 Futures Contracts 1,560 — — 1,560 Total $ 1,560 $ 13,167 $ — $ 14,727 NOTE 3 - DERIvaTIvE INSTRUMENTS During the six months ended June 30, 2012, the fund invested in derivative instruments. As defined by GAAP, a derivative is a financial instrument whose value is derived from an underlying security price, foreign exchange rate, interest rate, index of prices or rates, or other variable; it requires little or no initial invest- ment and permits or requires net settlement. The fund invests in derivatives only if the expected risks and rewards are consistent with its investment objectives, Proof #4 59 T. Rowe Price International Bond Fund policies, and overall risk profile, as described in its prospectus and Statement of Additional Information. The fund may use derivatives for a variety of purposes, such as seeking to hedge against declines in principal value, increase yield, invest in an asset with greater efficiency and at a lower cost than is possible through direct investment, or to adjust portfolio duration and credit exposure. The risks associated with the use of derivatives are different from, and potentially much greater than, the risks associated with investing directly in the instruments on which the derivatives are based. Investments in derivatives can magnify returns positively or negatively; however, the fund at all times maintains sufficient cash reserves, liquid assets, or other SEC-permitted asset types to cover the settlement obligations under its open derivative contracts. The fund values its derivatives at fair value, as described below and in Note 2, and recognizes changes in fair value currently in its results of operations. Accordingly, the fund does not follow hedge accounting, even for derivatives employed as economic hedges. The fund does not offset the fair value of deriva- tive instruments against the right to reclaim or obligation to return collateral. The following table summarizes the fair value of the fund’s derivative instru- ments held as of June 30, 2012, and the related location on the accompanying Statement of Assets and Liabilities, presented by primary underlying risk  exposure: ($000s) Location on Statement of assets and Liabilities Fair value assets Foreign exchange derivatives Forwards $ 17,585 Total $ 17,585 Liabilities Interest rate derivatives Futures $ 1,560 Foreign exchange derivatives Forwards 13,128 Credit derivatives Swaps, Premiums Received 39 Total $ 14,727 Proof #4 60 T. Rowe Price International Bond Fund Additionally, the amount of gains and losses on derivative instruments recog- nized in fund earnings during the six months ended June 30, 2012, and the related location on the accompanying Statement of Operations is summarized in the following table by primary underlying risk exposure: ($000s) Location of Gain (Loss) on Statement of Operations Futures Foreign Currency Transactions Swaps Total Realized Gain (Loss) Interest rate derivatives $ (8,485) $ — $ 1,158 $ (7,327) Foreign exchange derivatives — 13,243 — 13,243 Credit derivatives — — (24) (24) Total $ (8,485) $ 13,243 $ 1,134 $ 5,892 Change in Unrealized Gain (Loss) Interest rate derivatives $ 557 $ — $ (1,007) $ (450) Foreign exchange derivatives — (20,842) — (20,842) Credit derivatives — — 15 15 Total $ 557 $ (20,842) $ (992) $ (21,277) Forward Currency Exchange Contracts The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. It uses forward currency exchange contracts (forwards) primarily to protect its non-U.S. dollar-denominated holdings from adverse currency movements and to gain exposure to currencies for the purposes of risk management or enhanced return. A forward involves an obligation to purchase or sell a fixed amount of a specific currency on a future date at a price set at the time of the contract. Although certain forwards may be settled by exchanging only the net gain or loss on the contract, most forwards are settled with the exchange of the underlying currencies in accordance with the specified terms. Forwards are valued at the unrealized gain or loss on the contract, which reflects the net amount the fund either is entitled to receive or obligated to deliver, as measured by the difference between the forward exchange rates at the date of entry into the contract and the forward rates at the reporting date. Appreciated Proof #4 61 T. Rowe Price International Bond Fund forwards are reflected as assets, and depreciated forwards are reflected as liabili- ties on the accompanying Statement of Assets and Liabilities. Risks related to the use of forwards include the possible failure of counterparties to meet the terms of the agreements; that anticipated currency movements will not occur, thereby reducing the fund’s total return; and the potential for losses in excess of the fund’s initial investment. During the six months ended June 30, 2012, the fund’s exposure to forwards, based on underlying notional amounts, was generally between 28% and 35% of net assets. Futures Contracts The fund is subject to interest rate risk in the normal course of pursuing its investment objectives and uses futures contracts to help manage such risk. The fund may enter into futures contracts to manage exposure to interest rate and yield curve movements, security prices, foreign currencies, credit quality, and mortgage prepayments; as an efficient means of adjusting exposure to all or part of a target market; to enhance income; as a cash management tool; and/or to adjust portfolio duration and credit exposure. A futures contract provides for the future sale by one party and purchase by another of a specified amount of a particular underlying financial instrument at an agreed-upon price, date, time, and place. The fund currently invests only in exchange-traded futures, which generally are standardized as to maturity date, underlying financial instrument, and other contract terms. The fund is required to deposit with the broker cash or securities in an amount sufficient to cause the value of its account to equal a specified percentage of the aggregate value of the fund’s futures contracts with that broker (margin requirement). The margin requirement must then be maintained at the established level over the life of the contract and is restricted from withdrawal by the fund; however, any amounts in excess of the margin requirement may be withdrawn at the fund’s election. Fluctuations in the value of a futures contract reflect changes in the value of the underlying financial instrument and are recorded as unrealized gain or loss until the contract is closed. The value of a futures contract included in net assets is the cumulative amount of unrealized gain or loss; appreciated contracts are reflected as assets and depreciated contracts are reflected as liabilities on the accompanying Statement of Assets and Liabilities. In addition, cash and currencies held by the broker are reflected as deposits on futures contracts. Risks related to the use of futures contracts include possible illiquidity of the futures markets, contract prices that can be highly volatile and imperfectly correlated to movements in hedged security values and/or interest rates, and potential losses in excess of the fund’s initial investment. During the six months ended June 30, 2012, the fund’s exposure to futures, based on underlying notional amounts, was generally between 4% and 5% of net assets. Proof #4 62 T. Rowe Price International Bond Fund Swaps The fund is subject to interest rate risk, credit risk, and inflation risk in the normal course of pursuing its investment objectives and uses swap contracts to help manage such risks. The fund may use swaps in an effort to manage exposure to changes in interest rates, inflation rates, and credit quality; to adjust overall exposure to certain markets; to enhance total return or protect the value of portfolio securities; to serve as a cash management tool; and/or to adjust portfolio duration and credit exposure. The value of a swap included in net assets is the unrealized gain or loss on the contract plus or minus any unamortized premiums paid or received, respectively. Appreciated swaps and premiums paid are reflected as assets, and depreciated swaps and premiums received are reflected as liabilities on the accompanying Statement of Assets and Liabilities. Net periodic receipts or payments required by swaps are accrued daily and are recorded as realized gain or loss for financial reporting purposes when settled; fluctuations in the fair value of swaps are reflected in the change in net unrealized gain or loss and are reclassified to realized gain or loss upon termination prior to maturity or cash settlement. Interest rate swaps are agreements to exchange cash flows based on the dif- ference between specified interest rates applied to a notional principal amount for a specified period of time. Risks related to the use of interest rate swaps include the potential for unanticipated movements in interest and/or currency rates, the possible failure of a counterparty to perform in accordance with the terms of the swap agreements, potential government regulation that could adversely affect the fund’s swap investments, and potential losses in excess of the fund’s initial investment. Credit default swaps are agreements where one party (the protection buyer) agrees to make periodic payments to another party (the protection seller) in exchange for protection against specified credit events, such as certain defaults and bankruptcies related to an underlying credit instrument, or issuer or index of such instruments. Upon occurrence of a specified credit event, the protection seller is required to pay the buyer the difference between the notional amount of the swap and the value of the underlying credit, either in the form of a net cash settlement or by paying the gross notional amount and accepting delivery of the relevant underlying credit. For credit default swaps where the underlying credit is an index, a specified credit event may affect all or individual under- lying securities included in the index and will be settled based upon the relative weighting of the affected underlying security(s) within the index. Risks related to the use of credit default swaps include the possible inability of the fund to accurately assess the current and future creditworthiness of underlying issuers, Proof #4 63 T. Rowe Price International Bond Fund the possible failure of a counterparty to perform in accordance with the terms of the swap agreements, potential government regulation that could adversely affect the fund’s swap investments, and potential losses in excess of the fund’s initial investment. During the six months ended June 30, 2012, the fund’s exposure to swaps, based on underlying notional amounts, was generally less than 1% of net assets. NOTE 4 - OTHER INvESTMENT TRaNSaCTIONS Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks and/or to enhance perfor- mance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund’s prospectus and Statement of Additional Information. Emerging Markets At June 30, 2012, approximately 20% of the fund’s net assets were invested, either directly or through investments in T. Rowe Price institu- tional funds, in securities of companies located in emerging markets, securities issued by governments of emerging market countries, and/or securities denomi- nated in or linked to the currencies of emerging market countries. Emerging market securities are often subject to greater price volatility, less liquidity, and higher rates of inflation than U.S. securities. In addition, emerging markets may be subject to greater political, economic, and social uncertainty, and differing regulatory environments that may potentially impact the fund’s ability to buy or sell certain securities or repatriate proceeds to U.S. dollars. Restricted Securities The fund may invest in securities that are subject to legal or contractual restrictions on resale. Prompt sale of such securities at an acceptable price may be difficult and may involve substantial delays and additional costs. Counterparty Risk and Collateral The fund has entered into collateral agree- ments with certain counterparties to mitigate counterparty risk associated with certain over-the-counter (OTC) financial instruments, including swaps, forward currency exchange contracts, TBA purchase commitments, and OTC options (collectively, covered OTC instruments). Subject to certain minimum exposure requirements (which typically range from $100,000 to $500,000), collateral requirements generally are determined and transfers made based on the net aggregate unrealized gain or loss on all OTC instruments covered by a Proof #4 64 T. Rowe Price International Bond Fund particular collateral agreement with a specified counterparty. Collateral, both pledged by the fund to a counterparty and pledged by a counterparty to the fund, is held in a segregated account by a third-party agent and can be in the form of cash or debt securities issued by the U.S. government or related agen- cies. Securities posted as collateral by the fund to a counterparty are so noted in the accompanying Portfolio of Investments and remain in the fund’s assets. As of June 30, 2012, no collateral had been posted by the fund to counterparties for covered OTC instruments. Collateral pledged by counterparties to the fund is not included in the fund’s assets because the fund does not obtain effective control over those assets. As of June 30, 2012, collateral pledged by counter- parties to the fund for covered OTC instruments consisted of securities valued at $14,462,000. At any point in time, the fund’s risk of loss from counterparty credit risk on covered OTC instruments is the aggregate unrealized gain on appreciated covered OTC instruments in excess of collateral, if any, pledged by the counter- party to the fund. In accordance with the terms of the relevant derivatives agreements, counterparties to OTC derivatives may be able to terminate deriva- tive contracts prior to maturity after the occurrence of certain stated events, such as a decline in net assets above a certain percentage or a failure by the fund to perform its obligations under the contract. Upon termination, all transactions would typically be liquidated and a net amount would be owed by or payable to the fund. Counterparty risk related to exchange-traded futures and options contracts is minimal because the exchange’s clearinghouse provides protection against counterparty defaults. Generally, for exchange-traded derivatives such as futures and options, each broker, in its sole discretion, may change margin requirements applicable to the fund. As of June 30, 2012, cash of $4,223,000 had been posted by the fund to the broker for exchange-traded derivatives. Other Purchases and sales of portfolio securities other than short-term secu- rities aggregated $1,244,185,000 and $1,488,189,000, respectively, for the six months ended June 30, 2012. NOTE 5 - FEDERaL INCOME TaxES No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Distributions determined in accordance with federal income tax regulations may differ in amount or character from net investment income Proof #4 65 T. Rowe Price International Bond Fund and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences. The amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year-end; accordingly, tax-basis balances have not been determined as of the date of this report. The fund intends to retain realized gains to the extent of available capital loss carryforwards. Net realized capital losses may be carried forward indefinitely to offset future realized capital gains. As of December 31, 2011, the fund had $28,378,000 of available capital loss carryforwards. At June 30, 2012, the cost of investments for federal income tax purposes was $4,868,472,000. Net unrealized gain aggregated $35,050,000 at period-end, of which $197,564,000 related to appreciated investments and $162,514,000 related to depreciated investments. NOTE 6 - RELaTED PaRTY TRaNSaCTIONS The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). Price Associates has entered into a subadvisory agreement T. Rowe Price International Ltd, a wholly owned subsidiary of Price Associates, to provide investment advisory services to the fund; the subadvisory agreement provides that Price Associates may pay the subadvisor up to 60% of the management fee that Price Associates receives from the fund. The investment management agreement between the fund and Price Associates provides for an annual invest- ment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.35% of the fund’s average daily net assets, and a group fee. The group fee rate is calculated based on the com- bined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1  billion of assets to 0.28% for assets in excess of $300 billion. The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. At June 30, 2012, the effective annual group fee rate was 0.30%. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share prices and provides certain other Proof #4 66 T. Rowe Price International Bond Fund administrative services to the fund. T. Rowe Price Services, Inc., provides shareholder and administrative services in its capacity as the fund’s transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides sub accounting and recordkeeping services for certain retirement accounts invested in the Investor Class. For the six months ended June 30, 2012, expenses incurred pursuant to these service agreements were $87,000 for Price Associates; $421,000 for T. Rowe Price Services, Inc.; and $29,000 for T. Rowe Price Retirement Plan Services, Inc. The total amount payable at period-end pursuant to these service agreements is reflected as Due to Affiliates in the accompanying financial statements. The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum Funds) and T. Rowe Price Retirement Funds (Retirement Funds) may invest. Neither the Spectrum Funds nor the Retirement Funds invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to separate special servicing agreements, expenses associated with the operation of the Spectrum and Retirement Funds are borne by each under lying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum and Retirement Funds, respectively. Expenses allocated under these agreements are reflected as shareholder servicing expenses in the accompanying financial statements. For the six months ended June 30, 2012, the fund was allocated $508,000 of Spectrum Funds’ expenses and $1,085,000 of Retirement Funds’ expenses. Of these amounts, $943,000 related to services provided by Price. The amount payable at period-end pursuant to this agreement is reflected as Due to Affiliates in the accompanying financial statements. At June 30, 2012, approximately 13% of the outstanding shares of the Investor Class were held by the Spectrum Funds and 24% were held by the Retirement Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the T. Rowe Price Reserve Investment Funds), open-end management investment companies managed by Price Associates and considered affiliates of the fund. The T. Rowe Price Reserve Investment Funds are offered as cash management options to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates and are not available for direct purchase by members of the public. The T. Rowe Price Reserve Investment Funds pay no investment management fees. Proof #4 67 T. Rowe Price International Bond Fund Information on Proxy Voting Policies, Procedures, and Records A description of the policies and procedures used by T. Rowe Price funds and portfolios to determine how to vote proxies relating to portfolio securities is available in each fund’s Statement of Additional Information, which you may request by calling 1-800-225-5132 or by accessing the SEC’s website, sec.gov. The description of our proxy voting policies and procedures is also available on our website, troweprice.com. To access it, click on the words “Our Company” at the top of our corporate homepage. Then, when the next page appears, click on the words “Proxy Voting Policies” on the left side of the page. Each fund’s most recent annual proxy voting record is available on our website and through the SEC’s website. To access it through our website, follow the directions above, then click on the words “Proxy Voting Records” on the right side of the Proxy Voting Policies page. How to Obtain Quarterly Portfolio Holdings The fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available electronically on the SEC’s website (sec.gov); hard copies may be reviewed and copied at the SEC’s Public Reference Room, 100 F St. N.E., Washington, DC 20549. For more information on the Public Reference Room, call 1-800-SEC-0330. Proof #4 68 T. Rowe Price International Bond Fund Approval of Investment Management Agreement and Subadvisory Agreement On March 6, 2012, the fund’s Board of Directors (Board), including a majority of the fund’s independent directors, approved the continuation of the investment management agreement (Advisory Contract) between the fund and its investment advisor, T. Rowe Price Associates, Inc. (Advisor), as well as the continuation of the investment subadvisory agreement (Subadvisory Contract) that the Advisor has entered into with T. Rowe Price International Ltd (Subadvisor) on behalf of the fund. In connection with its deliberations, the Board requested, and the Advisor provided, such information as the Board (with advice from independent legal counsel) deemed reasonably necessary. The Board considered a variety of factors in connection with its review of the Advisory Contract and Subadvisory Contract, also taking into account information provided by the Advisor during the course of the year, as discussed below: Services Provided by the advisor and Subadvisor The Board considered the nature, quality, and extent of the services provided to the fund by the Advisor and Subadvisor. These services included, but were not limited to, directing the fund’s investments in accordance with its investment program and the overall manage- ment of the fund’s portfolio, as well as a variety of related activities such as financial, investment operations, and administrative services; compliance; maintaining the fund’s records and registrations; and shareholder communications. The Board also reviewed the background and experience of the Advisor’s and Subadvisor’s senior management teams and investment personnel involved in the management of the fund, as well as the Advisor’s compliance record. The Board concluded that it was satisfied with the nature, quality, and extent of the services provided by the Advisor and Subadvisor. Investment Performance of the Fund The Board reviewed the fund’s average annual total returns over the three-month and 1-, 3-, 5-, and 10-year periods, as well as the fund’s year-by-year returns, and compared these returns with a wide variety of previously agreed upon comparable performance measures and market data, including those supplied by Lipper and Morningstar, which are indepen- dent providers of mutual fund data. On the basis of this evaluation and the Board’s ongoing review of investment results, and factoring in the relative market conditions during certain of the performance periods, the Board concluded that the fund’s performance was satisfactory. Costs, Benefits, Profits, and Economies of Scale The Board reviewed detailed information regarding the revenues received by the Advisor under the Advisory Contract and other benefits that the Advisor (and its affiliates, including the Subadvisor) may have realized from its relationship with the fund, including any research received under “soft dollar” agreements and commission-sharing arrangements with broker-dealers. The Board considered that the Advisor and Subadvisor may receive some benefit from soft-dollar arrangements pursuant to which research is received from Proof #4 69 T. Rowe Price International Bond Fund Approval of Investment Management Agreement and Subadvisory Agreement (continued) broker-dealers that execute the applicable fund’s portfolio transactions. The Board received information on the estimated costs incurred and profits realized by the Advisor from managing T. Rowe Price mutual funds. The Board also reviewed estimates of the profits realized from managing the fund in particular, and the Board concluded that the Advisor’s profits were reasonable in light of the services provided to the fund. The Board also considered whether the fund benefits under the fee levels set forth in the Advisory Contract from any economies of scale realized by the Advisor. Under the Advisory Contract, the fund pays a fee to the Advisor for investment management services com- posed of two components—a group fee rate based on the combined average net assets of most of the T. Rowe Price mutual funds (including the fund) that declines at certain asset levels and an individual fund fee rate based on the fund’s average daily net assets—and the fund pays its own expenses of operations. Under the Subadvisory Contract, the Advisor may pay the Subadvisor up to 60% of the advisory fee that the Advisor receives from the fund. The Board concluded that the advisory fee structure for the fund continued to provide for a reasonable sharing of benefits from any economies of scale with the fund’s investors. Fees The Board was provided with information regarding industry trends in management fees and expenses and the Board reviewed the fund’s management fee rate, operating expenses, and total expense ratio for the Investor Class and Advisor Class in comparison with fees and expenses of other comparable funds based on information and data supplied by Lipper. The information provided to the Board indicated that the fund’s management fee rate was above the median for certain groups of comparable funds but below the median for other groups of comparable funds. The information also indicated that the fund’s total expense ratio for the Investor Class was above the median for certain groups of comparable funds but below the median for other groups of comparable funds, and the total expense ratio for the Advisor Class was above the median for certain groups of comparable funds but at or below the median for other groups of comparable funds. The Board also reviewed the fee schedules for institutional accounts and private accounts with similar mandates that are advised or subadvised by the Advisor and its affiliates. Management provided the Board with information about the Advisor’s responsibilities and services provided to institutional account clients, including information about how the requirements and economics of the institutional business are fundamentally different from those of the mutual fund business. The Board considered information showing that the mutual fund business is generally more complex from a business and compli- ance perspective than the institutional business and that the Advisor generally performs significant additional services and assumes greater risk in managing the fund and other T. Rowe Price mutual funds than it does for institutional account clients. Proof #4 70 T. Rowe Price International Bond Fund Approval of Investment Management Agreement and Subadvisory Agreement (continued) On the basis of the information provided and the factors considered, the Board concluded that the fees paid by the fund under the Advisory Contract are reasonable. approval of the advisory Contract and Subadvisory Contract As noted, the Board approved the continuation of the Advisory Contract and Subadvisory Contract. No single factor was considered in isolation or to be determinative to the deci- sion. Rather, the Board concluded, in light of a weighting and balancing of all factors considered, that it was in the best interests of the fund and its shareholders for the Board to approve the continuation of the Advisory Contract and Subadvisory Contract (including the fees to be charged for services thereunder). The independent directors were advised throughout the process by independent legal counsel. Proof #4 71 T. Rowe Price Investment Services and Information Investment Services and Information kNOWLEDGEaBLE CUSTOMER SERvICE On the Web at troweprice.com. By Phone at 1-800-225-5132. Available Monday through Friday from 8 a.m. until 10 p.m. ET and Saturday from 8:30 a.m. until 5 p.m. ET. In Person at a T. Rowe Price Investor Center. Please visit the website at troweprice.com/investorcenter or call 1-800-225-5132 to locate a center near you. aCCOUNT SERvICES Account Access. Through the T. Rowe Price website at troweprice.com and via phone through Tele*Access®. Automatic Investing. From your bank account or paycheck. Automatic Withdrawal. Scheduled, periodic redemptions. IRA Rebalancing. Automatically rebalance to ensure that your accounts reflect your desired asset allocations. BROkERaGE SERvICES‡ Trade stocks, mutual funds, ETFs, bonds, options, CDs, precious metals, and more at competitive commissions. INvESTMENT INFORMaTION Consolidated Statement. Overview of all of your T. Rowe Price mutual fund and Brokerage accounts. Shareholder Reports. Manager reviews of their strategies and results. T. Rowe Price Report. Quarterly investment newsletter. T. Rowe Price Investor. Quarterly publication of insightful financial articles. Investment Guides. International Investing Guide, Guide to Bond Funds, Investors Portfolio Review, Retirement Savings Guide, and Retirement Readiness Guide. FINaNCIaL INTERMEDIaRIES aND aDvISORS By Phone at 1-877-804-2315. Contact us Monday through Friday from 8:30 a.m. until 6 p.m. ET. By Mail: T. Rowe Price, Financial Institution Services, P.O. Box 89000, Baltimore, MD 21289-4232. CUSTOMERS WHO TRaDE THROUGH a FINaNCIaL INTERMEDIaRY Please contact your intermediary or financial professional for assistance. ‡ Options trading involves additional risk and is not suitable for all investors. Brokerage services offered by T. Rowe Price Investment Services, Inc., member FINRA/SIPC. This page contains supplementary information that is not part of the shareholder report. Proof #4 72 T. Rowe Price Web Services troweprice.com LOG IN aND MaNaGE YOUR INvESTMENTS ONLINE troweprice.com/access Manage your account by checking balances with up-to-date statements, tracking and analyzing your portfolio, and/or granting View Access to others as you see fit. Perform transactions at your convenience. Buy, sell, or exchange shares securely, quickly, and easily. You can also set up automatic investing and add a bank account to move money easily. Update your preferences by confirming your contact information and verifying your beneficiaries so your assets can be distributed as you wish. ONLINE SERvICING troweprice.com/paperless Enroll to receive your transaction confirmations, investor statements, prospec- tuses, and shareholder reports online instead of by U.S. mail. 1 You will receive an e-mail with a link to our website informing you that your document is available to view online, print, or download. Join our E-mail Program to receive market and fund information by e-mail. Receive timely market reports, performance of T. Rowe Price mutual funds, invest- ment and market insights from T. Rowe Price managers, and more. INvESTMENT GUIDaNCE aND TOOLS troweprice.com/planningtools Morningstar® Portfolio Manager enables you to track, rebalance, and analyze your portfolio. Morningstar Portfolio X-Ray® is a comprehensive tool that provides an in-depth examination of your exposure to different sectors, stock types, sub-asset classes, and global diversification. Portfolio Growth Tracker allows you to track the historical growth of your mutual fund investments over time. The analysis consists of three components: Activity Summary, Asset Allocation, and Net Investment versus Market Value. Retirement Income Calculator. FINaNCIaL INTERMEDIaRIES aND aDvISORS troweprice.com/financialintermediaries This secure site is designed for professional financial intermediaries and advisors. Financial professionals may access daily prices and historical performance of mutual funds; view market research, manager commentary, and sales ideas; and access literature and forms. For U.S. technical assistance, call 1-888-358-8490 or e-mail us at onlinehelp@troweprice.com. For non-U.S. technical assistance, call +1 (410) 345 4400 or contact us via e-mail. This page contains supplementary information that is not part of the shareholder report. 1 By signing up for paperless services, you may qualify for the account service fee waiver. Visit us at troweprice.com/feesandminimums to find out more. Proof #4 73 T. Rowe Price Planning Tools and Services T. Rowe Price Retirement Services T. Rowe Price offers unique retirement services that can help you meet a broad variety of planning challenges. Our retirement tools are suitable for individuals, the self-employed, small businesses, cor porations, and nonprofit organizations. For more information, call 1-800-IRA-5000 or visit our website at troweprice.com/retirement. INvESTMENT aCCOUNTS Rollover IRAs. Whether you’ve changed jobs, experienced a job loss, or retired, it’s important to make a smart decision regarding your old 401(k). Call toll-free 1-800-IRA-5000. Our rollover specialists can open your account over the phone and handle most of the paperwork for you. They’ll even contact your former employer to help move your money. Roth IRAs. A Roth IRA offers tax-free withdrawals and a flexible distribution schedule. Open your account at troweprice.com/ira or call 1-800-IRA-5000. Traditional IRAs. Traditional IRA contributions may be tax-deductible, with no taxes due until withdrawal. Open your account at troweprice.com/ira or call 1-800-IRA-5000. Small Business Retirement Plans. If you’re self-employed or run a small business or professional practice, T. Rowe Price can help you establish a cost-effective retire- ment plan that’s easy to set up and maintain. 403(b) Custodial Accounts. For those employed by a nonprofit or tax-exempt organization such as a school, church, or hospital, T. Rowe Price offers an effective, low-cost way to save for retirement. INvESTMENT GUIDaNCE T. Rowe Price Advisory Planning Services offers a wide range of services that provide expert advice based on your individual needs and financial goals, including consultations with an advisory counselor. Please contact one of our specialists at 1-888-744-0270 to determine the most appropriate service to fit your needs.* This page contains supplementary information that is not part of the shareholder report. Proof #4 74 T. Rowe Price College Planning This page contains supplementary information that is not part of the shareholder report. College Planning With the costs of college steadily increasing, it’s critical to plan early. Our college planning information and college savings products can help you meet your educational investment goals. For more information, visit our website at troweprice.com/college, where you will find the College Investment Calculator, an interactive tool that can help you determine how much you should save, estimate future tuition costs, and review college savings options. In a few easy steps, the calculator provides you with information and a plan of action. To speak with a college planning specialist, please call 1-800-638-5660. College Savings Plans (529 Plans). To help families prepare for college education costs, T. Rowe Price manages three 529 plans that are open to all U.S. residents. Any earnings on contributions are tax-deferred, and distributions are exempt from federal income taxes when used for qualified educational expenses. Also, these plans offer high contribution limits and affordable systematic investing. T. Rowe Price manages the T. Rowe Price College Savings Plan, a national 529 plan offered by the Education Trust of Alaska; the Maryland College Investment Plan; and the University of Alaska College Savings Plan. The Maryland College Investment Plan offers certain potential benefits for Maryland residents, and the University of Alaska College Savings Plan offers potential benefits for Alaska residents. Earnings on a distribution not used for qualified expenses may be subject to income taxes and a 10% federal penalty. Please note that the availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors, as applicable. Please visit our website or call 1-800-638-5660 to obtain the applicable plan disclosure document, which includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Please consider, before invest- ing, whether your or your beneficiary’s home state offers any state tax or other benefits that are only available for investments in that state’s plan. T. Rowe Price Investment Services, Inc., Distributor/Underwriter. Proof #4 75 1T. Rowe Price Savings Bank is a member of the FDIC and offers CD products. Other T. Rowe Price affiliates, including T. Rowe Price Investment Services, Inc., are separate entities. While the Savings Bank’s CDs are FDIC-insured, all other products offered by T. Rowe Price affiliates are not FDIC-insured and are not deposits of or guaranteed by the Savings Bank. Such products are subject to investment risk, including possible loss of the principal amount invested. 2 Please read the Traditional and Roth IRA Summary & Agreement before investing. 3IRA CDs available from 6 months to 60 months. 4Available for accounts of $5,000 or more that have terms of 91 days or longer. T. Rowe Price Savings Bank Savings Bank Now there’s a way to get more than great rates from your next CD. T. Rowe Price Savings Bank gives you the benefits of FDIC insurance and predictable interest payments, plus world-class service from a name you trust.1 You can use a Savings Bank CD account to expand your investment mix and help to reduce your portfolio’s overall risk. For accounts of $5,000 or more that have terms of 91 days or longer, interest can remain on deposit or be transferred to an account you have elsewhere. T. Rowe Price Savings Bank offers: •  FDIC insurance  •  Competitive APYs •  Low minimum deposit of $1,000 for Classic CDs •  Higher rates with Mini-Jumbo and Jumbo CDs •  Smart Ladder CDs® •  IRAs2 •  Terms from 30 days to 60 months 3 •  Flexible options to invest interest payments 4 •  Annual statements •  Automatic renewal feature Smart Ladder CDs Opening CDs that mature at different times can help to hedge against sharp swings in interest rates. This approach, known as CD laddering, generally lets you lock in higher rates with the longer-maturity CDs if rates fall. However, if rates rise again in the next few years, you’ll have money available to invest from CDs with upcoming maturities. Smart Ladder CDs offer a convenient way to create a CD ladder. With a minimum deposit of $25,000 and a single application, we’ll set up your CD ladder, manage the annual renewals, and offer you the highest current interest rates based on your total minimum deposit and applicable terms. This page contains supplementary information that is not part of the shareholder report. Proof #4 76 The T. Rowe Price Program for Charitable Giving is an independent, nonprofit corporation founded by T. Rowe Price to assist individuals with planning and managing their charitable giving. The Program has contracted with various T. Rowe Price companies to provide operational, recordkeeping, and investment management services to the Program. T. Rowe Price Charitable Giving The T. Rowe Price Program for Charitable Givingsm Simplify your giving. The Program for Charitable Giving is a donor-advised fund (a public charity) that provides a simple way to support your favorite charities while achieving attractive tax savings. The Program lets you do all your charitable giving through one convenient account. Our donor relations specialists take care of the administrative details, so you spend less time writing checks and keeping records. Lock in your charitable deduction now. You can establish a Program account with a minimum contribution of $10,000 or more. Your contributions are fully deductible (up to allowable IRS limits) in the tax year when they are made. Donation amounts above IRS limits can be carried over and deducted in future years. The Program also makes it easy to contribute long-term appreciated securities. You simply transfer the securities in kind to your Program account. You can deduct the full market value and do not have to pay capital gains taxes. Recommend grants to support your favorite charities. Once your account is established, you have the flexibility to recommend grants to your favorite charities whenever you like—this year or in the future. The Program confirms that your charity qualifies for a grant and is in good standing with the IRS. Benefit from the investment expertise of T. Rowe Price. You advise how your account’s balance is invested among six professionally managed investment pools. This means your donations have the potential to grow over time and produce additional funds for your charities. All investment pools are subject to market risk, including possible loss of principal. Save with low fees. The Program’s administrative fees are among the lowest in the industry, and there is no minimum annual fee. Since you also will save with low investment management fees, there is the potential for more money to be available for your charities. It’s easy to start giving more efficiently with the Program. You can call a donor relations specialist at 1-800-690-0438 to learn more about the Program, receive printed information, or get help to open your Program account. You also will find everything you need to open an account online at ProgramForGiving.org. This page contains supplementary information that is not part of the shareholder report. Proof #4 This page intentionally left blank. Proof #4 122105 F76-051 8/12 T. Rowe Price Mutual Funds For more information about T. Rowe Price funds or services, please contact us directly at 1-800-225-5132. Request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Investments in the money market 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. * T. Rowe Price Advisor and R Classes may be available for these funds. T. Rowe Price Advisor and R Classes are offered only through financial intermediaries. For more information about T. Rowe Price Advisor and R Classes, contact your financial professional or call T. Rowe Price at 1-877-804-2315. ‡ Closed to new investors except for a direct rollover from a retirement plan into a T. Rowe Price IRA invested in this fund. ˆ The Retirement Funds are inclusive of the Retirement 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, and Income Funds. §Subject to certain exceptions, the fund will be closed to new investors effective April 30, 2012. STOCk FUNDS Domestic Blue Chip Growth* Capital Appreciation* Capital Opportunity* Diversified Mid-Cap Growth Diversified Small-Cap Growth Dividend Growth* Equity Income* Equity Index 500 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 Equity Total Equity Market Index U.S. Large-Cap Core* Value* aSSET aLLOCaTION FUNDS Balanced Personal Strategy Balanced Personal Strategy Growth Personal Strategy Income Real Assets Retirement Funds*ˆ BOND FUNDS Domestic Taxable Corporate Income Floating Rate* GNMA High Yield*§ Inflation Protected Bond New Income* Short-Term Bond* Spectrum Income Strategic Income* Summit GNMA U.S. Bond Enhanced Index U.S. Treasury Intermediate U.S. Treasury Long-Term Domestic Tax-Free California Tax-Free Bond 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 Short-Intermediate* Virginia Tax-Free Bond MONEY MaRkET FUNDS Taxable Prime Reserve Summit Cash Reserves U.S. Treasury Money MONEY MaRkET FUNDS (cont.) Tax-Free California Tax-Free Money Maryland Tax-Free Money New York Tax-Free Money Summit Municipal Money Market Tax-Exempt Money INTERNaTIONaL/GLOBaL FUNDS Stock Africa & Middle East Emerging Europe Emerging Markets Stock European Stock Global Infrastructure* Global Large-Cap Stock* Global Real Estate* Global Stock* Global Technology International Discovery International Equity Index International Growth & Income* International Stock* Japan Latin America New Asia Overseas Stock Spectrum International Bond Emerging Markets Bond Emerging Markets Corporate Bond* Emerging Markets Local Currency Bond* International Bond* T. Rowe Price Investment Services, Inc. 100 East Pratt Street Baltimore, MD 21202 This page contains supplementary information that is not part of the shareholder report. SUMMARY PROSPECTUS RPIBX May 1, 2013 T. Rowe Price International Bond Fund A fund seeking high income and capital appreciation through investments primarily in high-quality foreign bonds. Before you invest, you may want to review the fund’s prospectus, which contains more information about the fund and its risks. You can find the fund’s prospectus and other information about the fund online at troweprice.com/prospectus. You can also get this information at no cost by calling 1-800-225-5132 or by sending an e-mail request to info@troweprice.com. This Summary Prospectus incorporates by reference the fund’s prospectus, dated May 1, 2013, and Statement of Additional Information, dated May 1, 2013. The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. SUMMARY 1 Investment Objective The fund seeks to provide high current income and capital appreciation by investing primarily in high-quality, nondollar-denominated bonds outside the U.S. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.65% Distribution and service (12b-1) fees 0.00% Other expenses 0.19% Total annual fund operating expenses 0.84% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $86 $268 $466 $1,037 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the T. ROWE PRICE 2 most recent fiscal year, the fund’s portfolio turnover rate was 52.2% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies Normally, the fund will invest at least 80% of its net assets (including any borrowings for investment purposes) in foreign bonds and 65% of its net assets in foreign bonds that are rated within the three highest credit categories (i.e., A- or equivalent, or better), as determined by at least one major credit rating agency or, if unrated, deemed to be of comparable quality by T. Rowe Price. If a bond is split-rated (i.e., assigned different ratings by different credit rating agencies), the higher rating will be used. The fund may invest up to 20% of its total assets in “junk” bonds that have received a below investment-grade rating (i.e., BB or equivalent, or lower) from each of the rating agencies that has assigned a rating to the bond (or, if unrated, deemed to be below investment-grade quality by T. Rowe Price), including those in default or with the lowest rating. Up to 20% of total assets may be invested in U.S. dollar-denominated foreign bonds, such as Brady bonds and other emerging markets bonds. Although the fund expects to maintain an intermediate- to long-term weighted average maturity, there are no maturity restrictions on the overall portfolio or on individual securities. The fund has wide flexibility to purchase and sell currencies and engage in hedging transactions. However, we normally do not attempt to cushion the impact of foreign currency fluctuations on the U.S. dollar. Therefore, the fund is likely to be heavily exposed to the risk of bonds denominated in foreign currencies. Investment decisions are based on fundamental market factors, such as yield and credit quality differences among bonds as well as supply and demand trends and currency values. The fund generally invests in securities where the combination of fixed-income returns and currency exchange rates appears attractive or, if the currency trend is unfavorable, where we believe the currency risk can be minimized through hedging. The fund sells holdings for a variety of reasons, such as to adjust the portfolio’s average maturity or credit quality, to shift assets into and out of higher-yielding securities, or to alter geographic or currency exposure. The fund is “nondiversified,” meaning it may invest a greater portion of its assets in fewer issuers than is permissible for a “diversified” fund. While most assets will be invested in bonds, the fund may enter into forward currency exchange contracts in keeping with the fund’s objectives. Forward currency exchange contracts would primarily be used to help protect the fund’s holdings from unfavorable changes in foreign currency exchange rates, although other currency hedging techniques may be used from time to time. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose SUMMARY 3 money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. International investing risk Investing in the securities of non-U.S. issuers involves special risks not typically associated with investing in U.S. securities. International securities tend to be more volatile and less liquid than investments in U.S. securities and may lose value because of adverse political, social, or economic developments overseas. In addition, international investments may be subject to regulatory and accounting standards that differ from those of the U.S. Emerging markets risk The risks of international investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in international developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on international investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Currency risk Because the fund generally invests in securities issued in foreign currencies, the fund is subject to the risk that it could experience losses based solely on the weakness of foreign currencies versus the U.S. dollar and changes in the exchange rates between such currencies and the U.S. dollar. Any attempts at currency hedging may not be successful and could cause the fund to lose money. Credit risk This is the risk that an issuer of a debt security could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation. The fund’s overall credit risk is increased to the extent the fund invests in emerging markets bonds or bonds rated below investment-grade. Such investments carry a higher risk of default and should be considered speculative. Interest rate risk This risk refers to the chance that interest rates will increase, causing a decline in bond prices. (Bond prices and interest rates usually move in opposite directions.) Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk. Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price. Nondiversification risk As a nondiversified fund, the fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a T. ROWE PRICE 4 diversified fund. As a result, poor performance by a single issuer could adversely affect fund performance more than if the fund were invested in a larger number of issuers. The fund’s share price can be expected to fluctuate more than that of a comparable diversified fund. Derivatives risk To the extent the fund uses forward currency exchange contracts, it is exposed to greater volatility and losses in comparison to investing directly in foreign bonds. Forward currency exchange contracts are also subject to the risks that anticipated currency movements will not be accurately predicted, a counterparty will fail to perform in accordance with the terms of the agreement, and the chance that potential government regulation could negatively affect the fund’s investments in such instruments. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. Calendar Year Returns International Bond Fund Best Quarter 9/30/10 10.91% Worst Quarter 9/30/08 -6.30% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 6.10 2.63 5.17 8.38 1.77 10.05 7.55 -8.18 11.40 18.77 -15 -10 -5 0 5 10 15 20 25 30% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax SUMMARY 5 returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years International Bond Fund Returns before taxes 6.10 % 4.78 % 6.15 % Returns after taxes on distributions 5.26 3.10 4.44 Returns after taxes on distributions and sale of fund shares 3.95 3.08 4.34 Barclays Global Aggregate ex USD Bond Index (reflects no deduction for fees, expenses, or taxes) 4.09 5.06 6.55 Lipper International Income Funds Average 7.38 5.99 6.33 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Ian D. Kelson Co-Chairman of Investment Advisory Committee 2001 2000 Christopher J. Rothery Co-Chairman of Investment Advisory Committee 2012 1994 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at T. ROWE PRICE 6 troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information The fund declares dividends daily and pays them on the first business day of each month. Any capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information. T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, MD 21202 F76-045 5/1/13 October 31, 2012 PRASX ANNuAl REPORT T. ROwe PRice New Asia Fund The fund invests in growth companies located in the Asia ex-Japan region. REPORTS ON THE WEB Sign up for our E-mail Program, and you can begin to receive updated fund reports and prospectuses online rather than through the mail. Log in to your account at troweprice.com for more information. HIGHLIGHTS • Asian stock markets rose modestly over the past year as gains racked up in the first half offset subsequent weakness stemming from slowing global growth. Corporate earnings declined as growth across Asia slowed in 2012 from the preceding two years. • The New Asia Fund advanced for the six and 12 months ended October 31, 2012, exceeding its benchmark index and Lipper peer group average over both periods. • We anticipate that Europe’s debt crisis, China’s economic health, and the pace of the U.S. recovery will shape investor sentiment and demand for Asian stocks in the near term. However, we have high confidence in Asia’s long-term growth outlook as incomes and living standards improve over time. T. Rowe Price New Asia Fund The views and opinions in this report were current as of October 31, 2012. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a fore- cast of the fund’s future investment intent. The report is certified under the Sarbanes-Oxley Act, which requires mutual funds and other public companies to affirm that, to the best of their knowledge, the informa- tion in their financial reports is fairly and accurately stated in all material respects. T. Rowe Price New Asia Fund Manager’s Letter 1 Fellow Shareholders Asian stock markets advanced for the year ended October 31, 2012, as gains in the first half outweighed declines in subsequent months as the global economic outlook deteriorated. China’s economy weakened faster than many investors had expected, while India struggled with high inflation and slowing growth. Europe’s ongoing debt crisis and a patchy U.S. recovery weighed on the trade-driven economies of South Korea and Taiwan. However, sentiment improved toward the end of our reporting period after many central banks took steps to stimulate growth, and economic indicators worldwide finally showed signs of a recovery. The New Asia Fund returned 1.88% and 9.98% for the six and 12 months ended October 31, 2012, respectively. The fund’s performance widely surpassed that of its benchmark, the MSCI All Country Asia ex Japan Index, and the Lipper Pacific Ex Japan Funds Average over the 12-month period. For the year, stock selection led by South Korea, Thailand, Singapore, and Indonesia drove most of the outperformance, while country allocations also lifted relative returns. From a sector viewpoint, materials, industrials and business services, and consumer staples were the top contributors to relative results. In terms of absolute performance, financials was the top contributor, while consumer discretionary stocks detracted the most. China remains the fund’s largest country position, but we significantly reduced our exposure. We maintained our overweight to India and added to Total Return Periods Ended 10/31/12 6 Months 12 Months New Asia Fund 1.88% 9.98% MSCI All Country Asia ex Japan Index 1.72 6.77 Lipper Pacific Ex Japan Funds Average 0.48 6.32 Performance Comparison 2our holdings in Southeast Asia. Our sector allocations continue to reflect our preference for areas driven by domestic consumption, with consumer discretionary, information technology, and consumer staples representing our top three overweight sectors. MaRkET ENvIRONMENT Since our last report at the end of April, worries about Europe’s inability to solve its debt crisis and uncertainty about the strength of the U.S. recovery continued to dictate the direction of financial markets. Against this volatile backdrop, two events in September drove global stock markets sharply higher: first, the European Central Bank’s announcement that it would make unlimited purchases of short-term bonds issued by troubled euro members, subject to certain conditions; and second, the U.S. Federal Reserve’s announcement of its latest round of quantitative easing and the extension of its low interest rate policy. Country performance varied widely across the region. For the year, China’s market rose even as its economy decelerated due to slumping overseas demand and a drop in fixed asset investment spending. In response, China’s government reduced its official annual growth target, cut interest rates twice over the summer, and stepped up infrastructure spending. The stimulus efforts finally appeared to have paid off, as data released in October showed that some pockets of China’s economy picked up. India, the region’s second-largest market, declined and was the year’s worst performer. India struggled with a host of problems, including high inflation, widening budget and trade deficits, currency weakness, and political paralysis that has impeded reforms. Rising inflation kept India’s central bank from cutting interest rates even as many other central banks loosened policy over the period. Periods Ended 10/31/12 Total Return (In U.S. Dollar Terms) 6 Months 12 Months Thailand -0.19% 24.19% Hong Kong 7.73 16.34 Malaysia 4.85 12.19 Singapore 3.88 11.93 China 1.29 8.23 South Korea -2.65 3.60 Taiwan -0.83 1.43 India 5.45 -4.73 Source: RIMES Online, using MSCI indexes. Market Performance 3However, India announced a series of reforms in September aimed at reviving growth and luring overseas investment, including allowing more foreign investment in retailing and other industries. South Korea and Taiwan, whose economies depend heavily on external demand, eked out slim gains for the year even as weakness in Europe and the U.S. weighed on global trade. Taiwan repeatedly cut its 2012 growth forecast, while South Korea’s economy nearly ground to a halt in the third quarter, spurring its central bank to cut interest rates in October for the second time this year. Thailand and the Philippines were the year’s best performers, surging roughly 24% and 32%, respectively. Thailand’s economy is benefiting from surging domestic consumption and investment driven by government spending after devastating floods hit the country in October 2011. Stocks in the Philippines have benefited from strong investor inflows as economic growth quickened over the past year, raising hopes that the country is entering a period of sustained investment. PORTfOLIO REvIEW Developed asia Developed Asia encompasses the more mature markets of Hong Kong, Singapore, South Korea, and Taiwan. Since the global financial crisis of late 2008, our exposure to these markets has risen to roughly 45% of the fund at period-end, though we are underweight these areas compared with the benchmark. Developed Asia is home to several Asian companies like Samsung Electronics and Hyundai Motor that are gaining global market share in their respective industries, but also Western companies that are listed on Asian exchanges and derive an important portion of their revenue from the region, such as French personal care products company L’OCCITANE and luggage maker Samsonite. Several businesses with excellent management teams, solid balance sheets, and diversified earnings sources that are well placed to navigate a volatile environment are based in developed Asia, including Jardine Matheson, a diversified pan-Asian group whose businesses include real estate development, financial services, and luxury hotels. (Please refer to the portfolio of investments for a complete list of holdings and the amount each represents in the portfolio.) Our developed Asia holdings lifted relative performance for the year. South Korea was the top contributor to relative returns thanks to strong stock selection led by Samsung Electronics. Shares of Samsung surged over the period as the company posted a string of record 4quarterly profits due to strong sales of its Galaxy mobile phones. We have a high level of conviction in Samsung as more people upgrade to smartphones and prices rebound for certain kinds of memory chips that Samsung produces. In Taiwan, our holdings in custom chip maker Taiwan Semiconductor ranked among the fund’s biggest contributors as it benefited from the worldwide boom in mobile devices. We have a high level of confidence in the company and think it has many years of solid growth as smartphones and other mobile gadgets become more widespread and feature more complex applications. In Singapore, oil services and utilities business SembCorp Industries benefited from growing global demand for drilling equipment while conglomerate Fraser & Neave, whose businesses include soft drinks and real estate, received an unsolicited takeover offer in September, leading us to eliminate the position after a strong run in the shares. Southeast asia Our stock selection in Thailand, Indonesia, and the Philippines contributed strongly to relative performance. Stable political leader- ship and sound macroeconomic policies in recent years have improved the investment climate in these countries; as a result, interest rates and the cost of doing business have declined, raising expectations that Southeast Asia is on the cusp of an investment upswing for the first time since the 1997 regional currency crisis. Indonesia was an early beneficiary of this virtuous cycle, and we have trimmed our positions there due to the risk that a decline in commodity prices could pressure the country’s resource-heavy economy. However, we have added to our holdings in Thailand and the Philippines, where the cycle appears to be in its early stages. Thailand produced several of the fund’s biggest contributors, including CP ALL, which runs the 7-Eleven chain, and Kasikornbank, one of the country’s top lenders. Reconstruction spending following last year’s floods has lifted Thailand’s economy, while a 40% increase in the minimum wage starting in April has fueled domestic demand. In the Philippines, real estate company Ayala Land performed well as it expanded its land bank and benefited from rising property prices. Geographic Diversification South Korea 16% China 22% Other and Reserves 16% Hong Kong 12% India 11% Taiwan 11% Singapore 6% Thailand 6% Based on net assets as of 10/31/12. 5India and China Asia’s economic superpowers suffered slowdowns over the past year. India detracted from relative returns due to a combination of stock selection and an overweight to the country, the year’s worst performer. We are encouraged by the reforms India’s government announced in September but remain guarded about how successfully they will be implemented. Despite our caution about the near-term outlook in India, it is home to many world-class businesses with superior growth prospects, and our country exposure increased over the year. Software services company Wipro and mobile phone operator Bharti Airtel led decliners in India. Wipro shares tumbled in July after it reported surprisingly weak earnings as corporate spending on technology slowed, while shares of Bharti sank to a multiyear low in August amid disappointing earnings, numerous broker downgrades, and heightened competition worries. Bharti has posted profit declines for well over a year, but its business in Africa is showing solid growth, its domestic market share appears to be stabilizing, and we forecast a turnaround in its profitability in the coming months. We took advantage of the declines to build our positions in both companies, which rank among our biggest Indian holdings. China was the biggest detractor from relative performance. Many of the fund’s biggest detractors were Chinese holdings that fared poorly for company-specific reasons. New Oriental Education & Technology, a language teaching and test preparation group, led decliners. Its shares fell sharply in July after disclosing that the Securities and Exchange Commission (SEC) was investigating the company over its financial statements. However, our research team has followed New Oriental for several years, and we maintained confidence in the company. The SEC recently said it had no objection to the company’s accounting, and its stock price has begun to recover; however, we are closely monitoring our position as competition heats up in the education sector. Baidu, China’s leading Internet search engine, was another major detractor. Baidu shares declined amid concerns about rising competition, weaker advertising spending, and how it would sustain revenue growth as more customers migrate to mobile devices. Despite these near-term concerns, we believe that Baidu’s superior technology, well-known brand, and valuable proprietary content will sustain strong long-term growth in China, where online marketing is an under-penetrated industry. We added to our position in Baidu, one of the fund’s biggest holdings. 6Recent news about China has focused on its slowing economy, and many analysts have predicted a “hard landing.” However, the current slowdown comes as no surprise to us. China has long signaled its intention to rebalance the drivers of its economy, and we are opti- mistic that China will engineer a gradual deceleration as it shifts to an economy driven by domestic consumption from one driven by exports and fixed asset investment. This transition will take many years and inevitably produce some periods of uneven economic and stock market performance. One aspect of China’s economy that we are monitoring is the country’s debt level, which has grown rapidly in recent years fueled by the rise of informal lending, or “shadow banking.” Given that conventional banks have become involved in unregulated financing, the informal lending surge has raised worries that bankruptcies in the private sector could lead to a rise in nonperforming loans that could threaten China’s formal banking system. China’s rising indebtedness is one of many challenges that face its next generation of leaders, who assume power in March 2013. Just how reform-minded the new leadership will be is a matter of great interest for investors, but we do not anticipate any major reforms in the near term. We eliminated positions in companies whose stock valuations appear to have peaked, such as consumer products maker Hengan International and utilities group Beijing Enterprises; we also sold out of companies whose fundamentals appeared to reflect the slowing economy, including commercial bank Percent of Net Assets 4/30/12 10/31/12 Information Technology 22.3% 22.0% Financials 21.9 21.5 Consumer Discretionary 12.0 13.7 Industrials and Business Services 9.5 9.2 Consumer Staples 8.2 9.0 Telecommunication Services 3.9 6.4 Utilities 5.7 5.8 Materials 5.5 5.6 Energy 4.8 2.9 Health Care 2.1 1.4 Other and Reserves 4.1 2.5 Total 100.0% 100.0% Historical weightings reflect current industry/sector classifications. Sector Diversification 7ICBC and coal producer China Shenhua Energy. As a result, we moved to an underweight in China at the end of October from an overweight a year ago. Our sector exposures stayed largely unchanged. Information tech nology, financials, and consumer discretionary accounted for the largest sector allocations at the end of the period. We remain underweight in financials except in Southeast Asia, where loan growth is accelerating. We continue to favor areas driven by domestic consumption such as consumer staples and discretionary stocks, which should see solid long-term growth as Asia’s middle class grows in size and wealth. We have lately increased our exposure to the consumer discretionary sector. Many discretionary stocks, particularly in China, fell after reporting disappointing earnings growth this year, and we are finding opportunities to buy good growth companies at attractive prices. OuTLOOk We believe that economic growth across Asia will stabilize in 2013, and earnings expectations have been reset at more reasonable levels. However, we anticipate that financial markets will remain somewhat volatile in the near term and that events in Europe, the pace of the U.S. recovery, and the extent of China’s slowdown will continue to impact investor demand for Asian stocks. Recent signs have been encouraging: At the close of our reporting period, the U.S. housing and jobs markets were strengthening, and various indicators showed China’s economy picked up in September, raising speculation that the downturn starting last spring is close to bottoming out. Still, the fun- damental problems facing the eurozone remain: large budget deficits, high debt levels, and macroeconomic imbalances between members. Resolving these issues will require fiscal consolidation and deleveraging over several years and could continue to dampen investor sentiment. We are optimistic about the long-term growth outlook in Asia. Across the region, disposable incomes and consumption are growing strongly, and the middle class continues to expand in size and wealth. We believe these trends will drive strong and sustainable growth over WE CONTINUE TO FAvOR AREAS DRIvEN By DOMESTIC CONSUMPTION SUCH AS CONSUMER STAPLES AND DISCRETIONARy STOCKS, WHICH SHOULD SEE SOLID LONg-TERM gROWTH AS ASIA’S MIDDLE CLASS gROWS… 8time, particularly for industries driven by domestic demand. We have taken advantage of recent volatility to sharpen our bets and buy high-quality names at reasonable prices, and we continue to seek opportunities in Asian companies offering the best combination of risk and reward. In a challenging market environment, we believe that our skills in selecting such stocks will help deliver solid performance. Thank you for investing with T. Rowe Price. Respectfully submitted, Anh Lu Portfolio manager and chairman of the fund’s Investment Advisory Committee November 15, 2012 The committee chairman has day-to-day responsibility for managing the portfolio and works with committee members in developing and executing its investment program. 9T. Rowe Price New Asia Fund Risks of International Investing Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. Funds investing in a single country or in a limited geographic region tend to be riskier than more diversified funds. Risks can result from varying stages of economic and political development; differing regulatory environments, trading days, and accounting standards; and higher transaction costs of non-U.S. markets. Non-U.S. investments are also subject to currency risk, or a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency. Glossary Lipper averages: The averages of available mutual fund performance returns for specified time periods in categories defined by Lipper Inc. MSCI all Country asia ex Japan Index: An index that measures equity market performance of developed and emerging countries in Asia, excluding Japan. 10 T. Rowe Price New Asia Fund TWENTY-fIvE LaRGEST HOLDINGS Percent of Net Assets 10/31/12 Samsung Electronics, South Korea 6.4% Taiwan Semiconductor, Taiwan 3.2 Hyundai Motor, South Korea 2.5 CNOOC, China 2.2 Baidu, China 2.1 Jardine Matheson, Hong Kong 2.0 Taiwan Cement, Taiwan 2.0 Kasikornbank, Thailand 2.0 CIMB group, Malaysia 1.9 AIA group, Hong Kong 1.9 Bharti Airtel, India 1.8 Singapore Telecommunications, Singapore 1.7 Infosys Technologies, India 1.7 Swire Pacific, Hong Kong 1.6 Oversea-Chinese Banking, Singapore 1.6 Siam Cement, Thailand 1.5 AMOREPACIFIC, South Korea 1.5 SembCorp Industries, Singapore 1.5 XL Axiata, Indonesia 1.5 China Merchants Holdings International, China 1.4 China Unicom Hong Kong, China 1.4 ENN Energy Holdings, China 1.4 Wipro, India 1.4 Quanta Computer, Taiwan 1.4 President Chain Store, Taiwan 1.4 Total 49.0% Note: The information shown does not reflect any exchange-traded funds (ETFs), cash reserves, or collateral for securities lending that may be held in the portfolio. Portfolio Highlights 11 T. Rowe Price New Asia Fund Performance and Expenses MSCI All Country Asia ex Japan Index $37,593 New Asia Fund $50,515 As of 10/31/12 10/02 10/0810/0710/0610/0510/0410/03 10/1210/09 N E W A S I A F U N D Lipper Pacific Ex Japan Funds Average $36,392 10,000 30,000 50,000 70,000 90,000 $110,000 Note: Xxxxx. 10/10 10/11 Growth of $10,000 This chart shows the value of a hypothetical $10,000 investment in the 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. Periods Ended 10/31/12 1 year 5 years 10 years New Asia Fund 9.98% -1.68% 17.58% This table shows how the fund would have performed each year if its actual (or cumula- tive) returns for the periods shown had been earned at a constant rate. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results. Average Annual Compound Total Return 12 T. Rowe Price New Asia Fund Fund Expense Example As a mutual fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees or sales loads, and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the entire period. actual Expenses The first line of the following table (Actual) provides information about actual account values and expenses based on the fund’s actual returns. you may use the information on this line, together with your account balance, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The information on the second line of the table (Hypothetical) is based on hypothetical account values and expenses derived from the fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the fund’s actual return). you may compare the ongoing costs of investing in the fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Note: T. Rowe Price charges an annual account service fee of $20, generally for accounts with less than $10,000. The fee is waived for any investor whose T. Rowe Price mutual fund accounts total $50,000 or more; accounts electing to receive electronic delivery of account statements, transaction confirmations, prospectuses, and shareholder reports; or accounts of an investor who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $100,000). This fee is not included in the accompanying table. If you are subject to the fee, keep it in mind when you are estimating the ongoing expenses of investing in the fund and when comparing the expenses of this fund with other funds. you should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs, such as redemption fees or sales loads. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. To the extent a fund charges transaction costs, however, the total cost of owning that fund is higher. 13 T. Rowe Price New Asia Fund Beginning Ending Expenses Paid Account value Account value During Period* 5/1/12 10/31/12 5/1/12 to 10/31/12 Actual $1,000.00 $1,018.80 $4.77 Hypothetical (assumes 5% return before expenses) 1,000.00 1,020.41 4.77 * Expenses are equal to the fund’s annualized expense ratio for the 6-month period (0.94%), multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (184), and divided by the days in the year (366) to reflect the half-year period. New Asia Fund Fund Expense Example (continued) 14 T. Rowe Price New Asia Fund Periods Ended 9/30/12 1 year 5 years 10 years New Asia Fund 22.87% 1.04% 18.17% Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end performance, please visit our website (troweprice.com) or contact a T. Rowe Price representative at 1-800-225-5132. The performance information shown does not reflect the deduction of a 2% redemption fee on shares held for 90 days or less. If it did, the performance would be lower. This table provides returns through the most recent calendar quarter-end rather than through the end of the fund’s fiscal period. It shows how the fund would have performed each year if its actual (or cumulative) returns for the periods shown had been earned at a constant rate. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. When assessing performance, investors should consider both short- and long-term returns. Quarter-End Returns New Asia Fund 0.96% The expense ratio shown is as of the fund’s fiscal year ended 10/31/11. This number may vary from the expense ratio shown elsewhere in this report because it is based on a different time period and, if applicable, does not include fee or expense waivers. Expense Ratio 15 T. Rowe Price New Asia Fund Financial Highlights For a share outstanding throughout each period The accompanying notes are an integral part of these financial statements. Year Ended 10/31/12 10/31/11 10/31/10 10/31/09 10/31/08 NET ASSET VALUE Beginning of period $ 17.91 $ 19.31 $ 14.39 $ 8.01 $ 25.16 Investment activities Net investment income (1) 0.18 0.20 0.10 0.09 0.39 Net realized and unrealized gain (loss) 1.05 (1.36) 4.94 6.69 (15.61) Total from investment activities 1.23 (1.16) 5.04 6.78 (15.22) Distributions Net investment income (0.15) (0.09) (0.08) (0.40) (0.19) Net realized gain (2.73) (0.15) (0.04) – (1.75) Total distributions (2.88) (0.24) (0.12) (0.40) (1.94) Redemption fees added to paid-in capital (1) – – – – 0.01 NET ASSET VALUE End of period $ 16.26 $ 17.91 $ 19.31 $ 14.39 $ 8.01 Ratios/Supplemental Data Total return(2) 9.98% (6.07)% 35.20% 88.57% (65.12)% Ratio of total expenses to average net assets 0.95% 0.96% 0.96% 1.01% 0.96% Ratio of net investment income to average net assets 1.15% 1.07% 0.61% 0.83% 2.35% Portfolio turnover rate 41.1% 68.1% 49.4% 59.6% 55.4% Net assets, end of period (in millions) $ 4,518 $ 4,122 $ 5,261 $ 3,619 $ 1,828 (1) Per share amounts calculated using average shares outstanding method. (2) 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 and payment of no redemption or account fees. T. Rowe Price New Asia Fund October 31, 2012 Portfolio of Investments ‡ Shares/$ Par Value (Cost and value in $000s) 16 CHINA 21.6% Common Stocks 20.8% Ajisen China Holdings (HKD) (1) 11,491,000 7,903 AutoNavi, ADR (USD) (2) 735,000 7,886 Baidu, ADR (USD) (2) 882,300 94,071 China Foods (HKD) (1) 22,774,000 23,068 China Longyuan Power, H Shares (HKD) (1) 48,871,000 31,908 China Merchants Holdings International (HKD) 19,460,000 64,531 China Oilfield Services, H Shares (HKD) 15,294,000 28,930 China Resources Power Holdings (HKD) (1) 28,150,000 60,586 China Unicom Hong Kong (HKD) (1) 39,286,000 64,378 CNOOC (HKD) 48,378,000 100,376 Dah Chong Hong Holdings (HKD) (1) 24,406,000 23,052 Dongfeng Motor, H Shares (HKD) (1) 36,818,000 45,606 ENN Energy Holdings (HKD) 15,178,000 63,160 Kingboard Laminates Holding (HKD) 37,890,000 16,134 New Oriental Education & Technology, ADR (USD) (1) 2,782,300 46,910 Parkson Retail (HKD) (1) 50,450,500 42,638 Shanghai Pharmaceuticals Holding, H Shares (HKD) 16,929,500 31,412 Sina (USD) (2) 591,500 32,314 Tencent Holdings (HKD) 1,636,500 57,984 Wumart Stores, H Shares (HKD) (1) 21,492,250 38,214 Zhejiang Expressway, H Shares (HKD) 43,830,000 32,010 Zhongsheng Group Holdings (HKD) (1) 20,559,500 26,581 939,652 Common Stocks - China A shares 0.8% China Vanke 28,948,146 38,615 38,615 Total China (Cost $906,701) 978,267 HONG KONG 11.4% Common Stocks 11.4% AIA Group 21,698,800 85,815 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 17 Cheung Kong Holdings 3,917,000 57,870 Jardine Matheson (USD) 1,502,800 92,572 L'OCCITANE (1) 17,063,250 53,171 Li & Fung 29,214,000 49,004 Samsonite International 25,067,100 52,075 Swire Pacific, Class A 6,072,000 72,276 Trinity 7,884,000 5,524 VTech Holdings 2,769,000 32,888 Yue Yuen Industrial 3,440,000 11,829 Total Hong Kong (Cost $456,997) 513,024 INDIA 11.2% Common Stocks 11.2% Ambuja Cements 6,476,832 24,381 Bharti Airtel 16,579,396 83,213 Cipla 3,129,531 21,228 Container Corporation of India 1,765,329 32,837 Emami 2,159,846 22,905 Gail India 6,859,459 44,495 HDFC Bank 3,966,473 46,555 Infosys 1,704,317 74,927 Oberoi Realty 5,211,430 26,496 Phoenix Mills (3) 7,537,325 28,079 Ultratech Cement 1,063,555 39,437 Wipro 9,488,854 61,683 Total India (Cost $554,453) 506,236 INDONESIA 4.1% Common Stocks 4.1% AKR Corporindo 58,783,000 27,234 Astra International 52,779,000 44,235 Indofood Sukses Makmur 75,940,500 45,066 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 18 XL Axiata 95,607,000 68,184 Total Indonesia (Cost $106,727) 184,719 MALAYSIA 4.5% Common Stocks 4.5% Astro Malaysia Holdings (2) 38,328,600 34,101 CIMB Group Holdings Berhad 34,364,770 86,081 Genting 10,487,100 30,470 IJM 12,132,500 19,955 Malayan Cement 9,920,700 31,755 Total Malaysia (Cost $150,462) 202,362 PHILIPPINES 3.8% Common Stocks 3.8% Ayala 2,170,100 23,337 Ayala Land 104,716,600 59,863 Energy Development 370,923,300 60,057 Metropolitan Bank & Trust 12,770,475 29,450 Total Philippines (Cost $117,041) 172,707 SINGAPORE 6.3% Common Stocks 6.3% Capitamall Trust, REIT 27,734,000 47,974 Oversea-Chinese Banking 9,422,000 70,291 SembCorp Industries 15,352,000 68,466 Singapore Telecommunications 28,471,000 75,157 Venture 3,695,000 23,173 Total Singapore (Cost $242,439) 285,061 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 19 SOUTH KOREA 16.2% Common Stocks 15.6% AmorePacific 60,265 68,521 GS Retail (2) 720,790 21,083 Hana Tour Service (3) 587,129 33,055 Hyundai 552,698 113,773 Hyundai Department Store 10,522 1,307 Hyundai Mobis 199,196 50,776 KEPCO Plant Service & Engineering 499,904 27,503 KT&G 346,765 26,422 Samsung Electronics 219,026 263,088 Samsung Engineering 390,661 51,045 Samsung Fire & Marine 216,193 47,279 Shinhan Financial Group 40,171 1,379 705,231 Preferred Stocks 0.6% Samsung Electronics 34,277 24,892 24,892 Total South Korea (Cost $550,642) 730,123 TAIWAN 11.3% Common Stocks 11.3% Chinatrust Financial Holding 72,966,615 40,214 Chroma Ate 14,027,000 26,698 Farglory Land Development 9,080,000 15,262 Pegatron (2) 17,863,000 22,564 President Chain Store 12,412,000 61,396 Quanta Computer 26,961,000 61,652 Siliconware Precision Industries 49,262,000 48,060 Taiwan Cement 68,961,538 88,408 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 20 Taiwan Semiconductor 48,024,574 145,820 Total Taiwan (Cost $465,171) 510,074 THAILAND 6.1% Common Stocks 6.1% Bumrungrad Hospital 5,041,200 12,459 CP ALL 37,106,600 48,124 Kasikornbank, NVDR 15,096,100 88,163 Siam Cement, NVDR 5,665,500 69,132 Siam Commercial Bank 11,441,100 60,098 Total Thailand (Cost $192,931) 277,976 UNITED KINGDOM 1.0% Common Stocks 1.0% Standard Chartered (HKD) 1,878,400 44,839 Total United Kingdom (Cost $46,444) 44,839 SHORT-TERM INVESTMENTS 2.1% Money Market Funds 2.1% T. Rowe Price Reserve Investment Fund, 0.13% (3)(4) 96,846,000 96,846 Total Short-Term Investments (Cost $96,846) 96,846 SECURITIES LENDING COLLATERAL 0.8% Investments in a Pooled Account through Securities Lending Program with JPMorgan Chase Bank 0.8% Money Market Funds 0.7% T. Rowe Price Reserve Investment Fund, 0.13% (3)(4) 30,301,901 30,302 30,302 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 21 Repurchase Agreements 0.1% Credit Suisse, Tri-Party, Dated 10/31/12, 0.27%, Delivery Value of $2,990,685 on 11/1/12, Collateralized by U.S. Government securities, 0.00% - 4.625%, 2/15/40 - 5/15/40, valued at $3,050,476 2,990,663 2,991 Merrill Lynch Pierce Fenner & Smith, Tri-Party, Dated 10/31/12 0.28%, Delivery Value of $2,651,437 on 11/1/12 Collateralized by U.S. Government securities, 0.25% - 0.50% 8/15/14 - 9/15/15, valued at $2,704,445 2,651,416 2,651 5,642 Total Investments through Securities Lending Program with JPMorgan Chase Bank 35,944 Total Securities Lending Collateral (Cost $35,944) 35,944 Total Investments in Securities 100.4% of Net Assets (Cost $3,922,798) $ 4,538,178 ‡ Country classifications are generally based on MSCI categories or another unaffiliated third party data provider; securities are denominated in the currency of the country presented unless otherwise noted. (1) All or a portion of this security is on loan at October 31, 2012. See Note 3. (2) Non-income producing (3) Affiliated Companies (4) Seven-day yield ADR American Depository Receipts HKD Hong Kong Dollar NVDR Non-Voting Depository Receipt REIT Real Estate Investment Trust USD U.S. Dollar T. Rowe Price New Asia Fund 22 The accompanying notes are an integral part of these financial statements. Affiliated Companies ($000s) The fund may invest in certain securities that are considered affiliated companies. As defined by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. Based on the fund’s relative ownership, the following securities were considered affiliated companies for all or some portion of the year ended October 31, 2012. Purchase and sales cost and investment income reflect all activity for the period then ended. Affiliate Purchase Cost Sales Cost Investment Income Value 10/31/12 Value 10/31/11 Hana Tour Service $ 3,117 $ 5,156 $ 396 $ 33,055 $ 20,385 Phoenix Mills — 1,085 272 28,079 31,470 T. Rowe Price Reserve Investment Fund, 0.13% ¤ ¤ 150^ 127,148 295,961 Totals $ 818 $ 188,282 $ 347,816 ¤ Purchase and sale information not shown for cash management funds. ^ Excludes earnings on securities lending collateral invested in the T. Rowe Price Reserve Investment Fund, which are subject to rebates and fees as described in Note 3. Amounts reflected on the accompanying financial statements include the following amounts related to affiliated companies: Investment in securities, at cost $ 216,565 Dividend income 818 Interest income — ---------------- Investment income $ 818 Realized gain (loss) on securities $ (109) Capital gain distributions from mutual funds $ — - 23 T. Rowe Price New Asia Fund October 31, 2012 The accompanying notes are an integral part of these financial statements. ($000s, except shares and per share amounts) Statement of Assets and Liabilities Assets Investments in securities, at value (cost $3,922,798) $ 4,538,178 Receivable for investment securities sold 24,167 Receivable for shares sold 3,628 Cash 2,716 Dividends and interest receivable 2,168 Foreign currency (cost $1,092) 1,114 Other assets 24,603 Total assets 4,596,574 Liabilities Obligation to return securities lending collateral 35,944 Payable for shares redeemed 11,854 Payable for investment securities purchased 4,521 Investment management fees payable 3,094 Due to affiliates 443 Other liabilities 22,640 Total liabilities 78,496 NET ASSETS $ 4,518,078 Net Assets Consist of: Undistributed net investment income $ 43,149 Accumulated undistributed net realized gain 28,640 Net unrealized gain 615,260 Paid-in capital applicable to 277,848,686 shares of $0.01 par value capital stock outstanding; 4,500,000,000 shares of the Corporation authorized 3,831,029 NET ASSETS $ 4,518,078 NET ASSET VALUE PER SHARE $ 16.26 T. Rowe Price New Asia Fund ($000s) Statement of Operations 24 The accompanying notes are an integral part of these financial statements. Year Ended 10/31/12 Investment Income (Loss) Income Dividend (net of foreign taxes of $8,628) $ 85,862 Securities lending 248 Interest 4 Total income 86,114 Expenses Investment management 32,852 Shareholder servicing 4,485 Prospectus and shareholder reports 320 Custody and accounting 968 Registration 25 Legal and audit 91 Directors 30 Miscellaneous 135 Total expenses 38,906 Net investment income 47,208 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities 62,386 Foreign currency transactions (1,917) Net realized gain 60,469 Change in net unrealized gain (loss) Securities 279,132 Other assets and liabilities denominated in foreign currencies (10) Change in net unrealized gain (loss) 279,122 Net realized and unrealized gain (loss) 339,591 INCREASE IN NET ASSETS FROM OPERATIONS $ 386,799 T. Rowe Price New Asia Fund ($000s) 25 The accompanying notes are an integral part of these financial statements. Statement of Changes in Net Assets Year Ended 10/31/12 10/31/11 Increase (Decrease) in Net Assets Operations Net investment income $ 47,208 $ 48,917 Net realized gain 60,469 877,803 Change in net unrealized gain (loss) 279,122 (1,223,705) Increase (decrease) in net assets from operations 386,799 (296,985) Distributions to shareholders Net investment income (33,272) (24,428) Net realized gain (605,575) (40,715) Decrease in net assets from distributions (638,847) (65,143) Capital share transactions* Shares sold 963,557 610,430 Distributions reinvested 517,690 49,622 Shares redeemed (833,312) (1,437,594) Redemption fees received 308 585 Increase (decrease) in net assets from capital share transactions 648,243 (776,957) Net Assets Increase (decrease) during period 396,195 (1,139,085) Beginning of period 4,121,883 5,260,968 End of period $ 4,518,078 $ 4,121,883 Undistributed net investment income 43,149 28,563 *Share information Shares sold 63,107 32,717 Distributions reinvested 38,009 2,640 Shares redeemed (53,462) (77,561) Increase (decrease) in shares outstanding 47,654 (42,204) 26 T. Rowe Price New Asia Fund October 31, 2012 Notes to Financial Statements T. Rowe Price International Funds, Inc. (the corporation), is registered under the Investment Company Act of 1940 (the 1940 Act). The New Asia Fund (the fund) is a nondiversified, open-end management investment company established by the corporation. The fund commenced operations on September 28, 1990. The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located (or with primary operations) in Asia (excluding Japan). NOTE 1 - SIGNIfICaNT aCCOuNTING POLICIES Basis of Preparation The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), which require the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Premiums and discounts on debt securities are amortized for financial reporting purposes. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Income tax-related interest and penalties, if incurred, would be recorded as income tax expense. 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 on the ex-dividend date. Income distributions are declared and paid annually. Capital gain distributions, if any, are generally declared and paid by the fund annually. Currency Translation Assets, including investments, and liabilities denomi- nated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses. 27 T. Rowe Price New Asia Fund Credits The fund earns credits on temporarily uninvested cash balances held at the custodian, which reduce the fund’s custody charges. Custody expense in the accompanying financial statements is presented before reduction for credits. Redemption fees A 2% fee is assessed on redemptions of fund shares held for 90 days or less to deter short-term trading and to protect the interests of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund and are recorded as an increase to paid-in capital. The fees may cause the redemption price per share to differ from the net asset value per share. New accounting Pronouncements In May 2011, the Financial Accounting Standards Board (FASB) issued amended guidance to align fair value measure- ment and disclosure requirements in U.S. GAAP with International Financial Reporting Standards. The guidance is effective for fiscal years and interim periods beginning on or after December 15, 2011. Adoption had no effect on net assets or results of operations. In December 2011, the FASB issued amended guidance to enhance disclosure for offsetting assets and liabilities. The guidance is effective for fiscal years and interim periods beginning on or after January 1, 2013. Adoption will have no effect on the fund’s net assets or results of operations. NOTE 2 - vaLuaTION The fund’s financial instruments are reported at fair value as defined by GAAP. The fund determines the values of its assets and liabilities and computes its net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. valuation Methods Equity securities listed or regularly traded on a securities exchange or in the over-the-counter (OTC) market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made, except for OTC Bulletin Board securities, which are valued at the mean of the latest bid and asked prices. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and asked prices for domestic securities and the last quoted sale price for international securities. Debt securities with remaining maturities of less than one year at the time of acquisition generally use amortized cost in local 28 T. Rowe Price New Asia Fund currency to approximate fair value. However, if amortized cost is deemed not to reflect fair value or the fund holds a significant amount of such securities with remaining maturities of more than 60 days, the securities are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service. Investments in mutual funds are valued at the mutual fund’s closing net asset value per share on the day of valuation. Other investments, including restricted securities and private placements, and those financial instruments 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 the T. Rowe Price Valuation Committee, established by the fund’s Board of Directors (the Board). Subject to oversight by the Board, the Valuation Committee develops pricing-related policies and procedures and approves all fair-value determinations. The Valuation Committee regularly makes good faith judgments, using a wide variety of sources and information, to establish and adjust valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of private- equity instruments, the Valuation Committee considers a variety of factors, including the company’s business prospects, its financial performance, strategic events impacting the company, relevant valuations of similar companies, new rounds of financing, and any negotiated transactions of significant size between other investors in the company. Because any fair-value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions. For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted under the circumstances described below. If the fund determines that developments between the close of a foreign market and the close of the NYSE will, in its judgment, materially affect the value of some or all of its portfolio securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of the close of the NYSE. In deciding whether it is necessary to adjust closing prices to reflect fair value, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instru- ments trading in U.S. markets that represent foreign securities and baskets of foreign securities. A fund may also fair value securities in other situations, such as when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with closing prices and information to evaluate and/or adjust those prices. The fund cannot predict how often it will use closing prices and how often it will determine it necessary to adjust 29 T. Rowe Price New Asia Fund those prices to reflect fair value. As a means of evaluating its security valuation process, the fund routinely compares closing prices, the next day’s opening prices in the same markets, and adjusted prices. Additionally, trading in the underlying securities of the fund may take place in various foreign markets on certain days when the fund is not open for business and does not calculate a net asset value. As a result, net asset values may be significantly affected on days when shareholders cannot make transactions. valuation Inputs Various inputs are used to determine the value of the fund’s financial instruments. These inputs are summarized in the three broad levels listed below: Level 1 – quoted prices in active markets for identical financial instruments Level 2 – observable inputs other than Level 1 quoted prices (including, but not limited to, quoted prices for similar financial instruments, interest rates, prepayment speeds, and credit risk) Level 3 – unobservable inputs Observable inputs are those based on market data obtained from sources inde- pendent of the fund, and unobservable inputs reflect the fund’s own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level. For example, non-U.S. equity securities actively traded in foreign markets generally are reflected in Level 2 despite the availability of closing prices because the fund evaluates and determines whether those closing prices reflect fair value at the close of the NYSE or require adjustment, as described above. The following table summarizes the fund’s financial instruments, based on the inputs used to determine their values on October 31, 2012: ($000s) Level 1 Level 2 Level 3 Total value Quoted Prices Significant Observable Inputs Significant unobservable Inputs Investments in Securities, except: $ — $ 3,427,121 $ — $ 3,427,121 China 181,181 797,086 — 978,267 Short-Term Investments 96,846 — — 96,846 Securities Lending Collateral 30,302 5,642 — 35,944 Total $ 308,329 $ 4,229,849 $ — $ 4,538,178 30 T. Rowe Price New Asia Fund NOTE 3 - OTHER INvESTMENT TRaNSaCTIONS Consistent with its investment objective, the fund engages in the following prac- tices to manage exposure to certain risks and/or to enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund’s prospectus and Statement of Additional Information. Emerging Markets At October 31, 2012, approximately 79% of the fund’s net assets were invested, either directly or through investments in T. Rowe Price institutional funds, in securities of companies located in emerging markets, securities issued by governments of emerging market countries, and/or securities denominated in or linked to the currencies of emerging market countries. Emerging market securities are often subject to greater price volatility, less liquidity, and higher rates of inflation than U.S. securities. In addition, emerging markets may be subject to greater political, economic, and social uncertainty, and differing regulatory environments that may potentially impact the fund’s ability to buy or sell certain securities or repatriate proceeds to U.S. dollars. Repurchase agreements All repurchase agreements are fully collateralized by U.S. government securities. Collateral is in the possession of the fund’s custodian or, for tri-party agreements, the custodian designated by the agreement. Collateral is evaluated daily to ensure that its market value exceeds the delivery value of the repurchase agreements at maturity. Although risk is mitigated by the collateral, the fund could experience a delay in recovering its value and a possible loss of income or value if the counterparty fails to perform in accordance with the terms of the agreement. China a shares During the year ended October 31, 2012, the fund invested in certain Chinese equity securities (A shares) available only to local Chinese investors and Qualified Foreign Institutional Investors (QFII). The fund gains access to the A-share market through T. Rowe Price Associates, Inc., which serves as the registered QFII for all participating T. Rowe Price-sponsored products (each a participating account). Investment decisions related to A shares are specific to each participating account, and each account bears the resultant economic and tax consequences of its holdings and transactions in A shares. The fund is subject to certain restrictions and administrative processes relating to its ability to repatriate cash balances, investment proceeds, and earnings associated with its A shares and may incur substantial delays in gaining access to its assets or a loss of value in the event of noncompliance with applicable Chinese rules or requirements. Current Chinese tax law is unclear whether capital gains realized on the fund’s investments in A shares will be subject to tax. Because management believes it more likely than not that Chinese capital 31 T. Rowe Price New Asia Fund gains tax ultimately will not be imposed, there are no accrued taxes reflected in the accompanying financial statements. Securities Lending The fund lends its securities to approved brokers to earn additional income. It receives as collateral cash and U.S. government securities valued at 102% to 105% of the value of the securities on loan. Collateral is main- tained over the life of the loan in an amount not less than the value of loaned securities as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the fund the next business day. Cash collateral is invested by the fund’s lending agent(s) in accordance with investment guidelines approved by management. 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 the securities or if collateral investments decline in value. Securities lending revenue recognized by the fund consists of earnings on invested collateral and borrowing fees, net of any rebates to the borrower and compensation to the lending agent. In accordance with GAAP, investments made with cash collateral are reflected in the accompanying financial statements, but collateral received in the form of securities is not. At October 31, 2012, the value of loaned securities was $34,081,000; the value of cash collateral investments was $35,944,000. Other Purchases and sales of portfolio securities other than short-term securities aggregated $1,821,202,000 and $1,637,040,000, respectively, for the year ended October 31, 2012. NOTE 4 - fEDERaL INCOME TaxES No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Distributions determined in accordance with federal income tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences. The fund files U.S. federal, state, and local tax returns as required. The fund’s tax returns are subject to examination by the relevant tax authorities until expi- ration of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended to six years in certain circumstances. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes. 32 T. Rowe Price New Asia Fund Reclassifications to paid-in capital relate primarily to a tax practice that treats a portion of the proceeds from each redemption of capital shares as a distribution of taxable net investment income and/or realized capital gain. Reclassifications between income and gain relate primarily to the character of foreign capital gains taxes. For the year ended October 31, 2012, the following reclassifications were recorded to reflect tax character (there was no impact on results of operations or net assets): Undistributed net investment income $ 649 Undistributed net realized gain (8,739) Paid-in capital 8,090 ($000s) Distributions during the years ended October 31, 2012 and October 31, 2011, were characterized for tax purposes as follows: ($000s) October 31, 2012 2011 Ordinary income $ 33,272 $ 65,143 Long-term capital gain 605,575 — Total distributions $ 638,847 $ 65,143 At October 31, 2012 the tax-basis cost of investments and components of net assets were as follows: Cost of investments $ 3,954,665 Unrealized appreciation $ 856,515 Unrealized depreciation (273,122) Net unrealized appreciation (depreciation) 583,393 Undistributed ordinary income 45,805 Undistributed long-term capital gain 57,851 Paid-in capital 3,831,029 Net assets $ 4,518,078 ($000s) 33 T. Rowe Price New Asia Fund The difference between book-basis and tax-basis net unrealized appreciation (depreciation) is attributable to the deferral of losses from wash sales, the realization of gains/losses on passive foreign investment companies for tax purposes. NOTE 5 - fOREIGN TaxES The fund is subject to foreign income taxes imposed by certain countries in which it invests. Acquisition of certain foreign currencies related to security transactions are also subject to tax. Additionally, capital gains realized by the fund upon disposition of securities issued in or by certain foreign countries are subject to capital gains tax imposed by those countries. All taxes are computed in accordance with the applicable foreign tax law, and, to the extent permitted, capital losses are used to offset capital gains. Taxes attributable to income are accrued by the fund as a reduction of income. Taxes incurred on the purchase of foreign currencies are recorded as realized loss on foreign currency transactions. Current and deferred tax expense attributable to net capital gains is reflected as a component of realized and/or change in unrealized gain/loss on securities in the accompanying financial statements. At October 31, 2012, the fund had no deferred tax liability attributable to foreign securities and $4,648,000 of foreign capital loss carryforwards, that expire in 2020. NOTE 6 - RELaTED PaRTY TRaNSaCTIONS The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). Price Associates has entered into a subadvisory agreements with T. Rowe Price International Ltd and T. Rowe Price Hong Kong Limited, wholly owned subsidiaries of Price Associates, to provide investment advisory services to the fund; the subadvisory agreements provide that Price Associates may pay the subadvisors up to 60% of the management fee that Price Associates receives from the fund. The investment management agreement between the fund and Price Associates provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.50% of the fund’s average daily net assets, and a group fee. The group fee rate is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee 34 T. Rowe Price New Asia Fund schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.28% for assets in excess of $300 billion. The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. At October 31, 2012, the effective annual group fee rate was 0.30%. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share price and provides certain other administrative services to the fund. T. Rowe Price Services, Inc., provides shareholder and administrative services in its capacity as the fund’s trans- fer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retire- ment accounts invested in the fund. For the year ended October 31, 2012, expenses incurred pursuant to these service agreements were $149,000 for Price Associates; $1,726,000 for T. Rowe Price Services, Inc.; and $160,000 for T. Rowe Price Retirement Plan Services, Inc. The total amount payable at period-end pursuant to these service agreements is reflected as Due to Affiliates in the accompanying financial statements. The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum Funds) may invest. The Spectrum Funds do not invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to a special servicing agreement, expenses associated with the operation of the Spectrum Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum Funds. Expenses allocated under this agreement are reflected as shareholder servicing expense in the accompanying financial statements. For the year ended October 31, 2012, the fund was allocated $112,000 of Spectrum Funds’ expenses, of which $76,000 related to services provided by Price. The amount payable at period-end pursuant to this agreement is reflected as Due to Affiliates in the accompanying financial statements. Additionally, redemption fees received by the Spectrum Funds are allocated to each underlying Price fund in proportion to the average daily value of its shares owned by the Spectrum Funds. $4,000 of redemption fees reflected in the accompanying financial statements were received from the Spectrum Funds. Redemption fees received from the Spectrum Funds are recorded as an increase to paid-in capital. At October 31, 2012, approximately 2% of the outstanding shares of the fund were held by the Spectrum Funds. 35 T. Rowe Price New Asia Fund The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the T. Rowe Price Reserve Investment Funds), open-end management investment companies managed by Price Associates and considered affiliates of the fund. The T. Rowe Price Reserve Investment Funds are offered as cash management options to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates and are not available for direct purchase by members of the public. The T. Rowe Price Reserve Investment Funds pay no investment management fees. 36 T. Rowe Price New Asia Fund Report of Independent Registered Public Accounting Firm To the Board of Directors of T. Rowe Price International funds, Inc. and Shareholders of T. Rowe Price New asia fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of T. Rowe Price New Asia Fund (one of the portfolios comprising T. Rowe Price International Funds, Inc., hereafter referred to as the “Fund”) at October 31, 2012, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial high- lights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2012 by correspondence with the custodian and brokers, and confirmation of the underlying funds by correspondence with the transfer agent, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland December 14, 2012 37 T. Rowe Price New Asia Fund Tax Information (Unaudited) for the Tax Year Ended 10/31/12 We are providing this information as required by the Internal Revenue Code. The amounts shown may differ from those elsewhere in this report because of differences between tax and financial reporting requirements. The fund’s distributions to shareholders included: • $3,864,000 from short-term capital gains, • $610,010,000 from long-term capital gains, subject to the 15% rate gains category. For taxable non-corporate shareholders, $33,341,000 of the fund’s income represents qualified dividend income subject to the 15% rate category. The fund will pass through foreign source income of $61,620,000 and foreign taxes paid of $8,128,000. A description of the policies and procedures used by T. Rowe Price funds and portfolios to determine how to vote proxies relating to portfolio securities is available in each fund’s Statement of Additional Information, which you may request by calling 1-800-225-5132 or by accessing the SEC’s website, sec.gov. The description of our proxy voting policies and procedures is also available on our website, troweprice.com. To access it, click on the words “Our Company” at the top of our corporate homepage. Then, when the next page appears, click on the words “Proxy voting Policies” on the left side of the page. Each fund’s most recent annual proxy voting record is available on our website and through the SEC’s website. To access it through our website, follow the directions above, then click on the words “Proxy voting Records” on the right side of the Proxy voting Policies page. Information on Proxy Voting Policies, Procedures, and Records The fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available electronically on the SEC’s website (sec.gov); hard copies may be reviewed and copied at the SEC’s Public Reference Room, 100 F St. N.E., Washington, DC 20549. For more information on the Public Reference Room, call 1-800-SEC-0330. How to Obtain Quarterly Portfolio Holdings 38 T. Rowe Price New Asia Fund About the Fund’s Directors and Officers your fund is overseen by a Board of Directors (Board) that meets regularly to review a wide variety of matters affecting the fund, including performance, investment programs, compliance matters, advisory fees and expenses, service providers, and other business affairs. The Board elects the fund’s officers, who are listed in the final table. At least 75% of the Board’s members are independent of T. Rowe Price Associates, Inc. (T. Rowe Price), and its affiliates; “inside” or “interested” directors are employees or officers of T. Rowe Price. The business address of each director and officer is 100 East Pratt Street, Baltimore, Maryland 21202. The Statement of Additional Information includes additional information about the fund directors and is available without charge by calling a T. Rowe Price representative at 1-800-638-5660. Independent Directors Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen] Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past five Years William R. Brody (1944) 2009 [138] President and Trustee, Salk Institute for Biological Studies (2009 to present); Director, Novartis, Inc. (2009 to present); Director, IBM (2007 to present); President and Trustee, Johns Hopkins University (1996 to 2009); Chairman of Executive Committee and Trustee, Johns Hopkins Health System (1996 to 2009) Jeremiah E. Casey (1940) 2006 [138] Retired Anthony W. Deering (1945) 1991 [138] Chairman, Exeter Capital, LLC, a private investment firm (2004 to present); Director, Under Armour (2008 to present); Director, vornado Real Estate Investment Trust (2004 to present); Director and Member of the Advisory Board, Deutsche Bank North America (2004 to present); Director, Mercantile Bankshares (2002 to 2007) Donald W. Dick, Jr. (1943) 1988 [138] Principal, EuroCapital Partners, LLC, an acquisition and management advisory firm (1995 to present) Robert J. gerrard, Jr. (1952) 2012 [90] Chairman of Compensation Committee and Director, Syniverse Holdings, Inc. (2008 to 2011); Executive vice President and general Counsel, Scripps Networks, LLC (1997 to 2009); Advisory Board Member, Pipeline Crisis/Winning Strategies (1997 to present) *Each independent director serves until retirement, resignation, or election of a successor. 39 T. Rowe Price New Asia Fund Independent Directors (continued) Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen] Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past five Years Karen N. Horn (1943) 2003 [138] Senior Managing Director, Brock Capital group, an advisory and investment banking firm (2004 to present); Director, Eli Lilly and Company (1987 to present); Director, Simon Property group (2004 to present); Director, Norfolk Southern (2008 to present); Director, Fannie Mae (2006 to 2008) Theo C. Rodgers (1941) 2006 [138] President, A&R Development Corporation (1977 to present) Cecilia E. Rouse, Ph.D. (1963) 2012 [90] Professor and Researcher, Princeton University (1992 to present); Director, MDRC (2011 to present); Member, National Academy of Education (2010 to present); Research Associate, National Bureau of Economic Research’s Labor Studies Program (1998 to 2009 and 2011 to present); Member, President’s Council of Economic Advisors (2009 to 2011); Member, The MacArthur Foundation Network on the Transition to Adulthood and Public Policy (2000 to 2008); Member, National Advisory Committee for the Robert Wood Johnson Foundation’s Scholars in Health Policy Research Program (2008); Director and Member, National Economic Association (2006 to 2008); Member, Association of Public Policy Analysis and Management Policy Council (2006 to 2008); Member, Hamilton Project’s Advisory Board at The Brookings Institute (2006 to 2008); Chair of Committee on the Status of Minority groups in the Economic Profession, American Economic Association (2006 to 2008) John g. Schreiber (1946) 2001 [138] Owner/President, Centaur Capital Partners, Inc., a real estate investment company (1991 to present); Cofounder and Partner, Blackstone Real Estate Advisors, L.P. (1992 to present); Director, general growth Properties, Inc. (2010 to present) Mark R. Tercek (1957) 2009 [138] President and Chief Executive Officer, The Nature Conservancy (2008 to present); Managing Director, The goldman Sachs group, Inc. (1984 to 2008) *Each independent director serves until retirement, resignation, or election of a successor. 40 T. Rowe Price New Asia Fund Inside Directors Name (Year of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen] Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past five Years Edward C. Bernard (1956) 2006 [138] Director and vice President, T. Rowe Price; vice Chairman of the Board, Director, and vice President, T. Rowe Price group, Inc.; Chairman of the Board, Director, and President, T. Rowe Price Investment Services, Inc.; Chairman of the Board and Director, T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Savings Bank, and T. Rowe Price Services, Inc.; Chairman of the Board, Chief Executive Officer, and Director, T. Rowe Price International; Chief Executive Officer, Chairman of the Board, Director, and President, T. Rowe Price Trust Company; Chairman of the Board, all funds Brian C. Rogers, CFA, CIC (1955) 2006 [75] Chief Investment Officer, Director, and vice President, T. Rowe Price; Chairman of the Board, Chief Investment Officer, Director, and vice President, T. Rowe Price group, Inc.; vice President, T. Rowe Price Trust Company *Each inside director serves until retirement, resignation, or election of a successor. Officers Name (Year of Birth) Position Held With International funds Principal Occupation(s) Ulle Adamson, CFA (1979) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Roy H. Adkins (1970) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc.; formerly employee, African Development Bank (to 2008) Christopher D. Alderson (1962) President Director and President–International Equity, T. Rowe Price International; Company’s Representative, Director, and vice President, Price Hong Kong; Director and vice President, Price Singapore; vice President, T. Rowe Price group, Inc. Syed H. Ali (1970) vice President vice President, Price Singapore and T. Rowe Price group, Inc.; formerly Research Analyst, Credit Suisse Securities (to 2010) Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. 41 T. Rowe Price New Asia Fund Officers (continued) Name (Year of Birth) Position Held With International funds Principal Occupation(s) Paulina Amieva (1981) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly student, Harvard Business School (to 2008) Sheena L. Barbosa (1983) vice President Employee, T. Rowe Price Peter J. Bates, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Oliver D.M. Bell, IMC (1969) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly Head of global Emerging Markets Research, Pictet Asset Management Ltd. (to 2011), and Portfolio Manager of Africa and Middle East portfolios and other emerging markets strategies, Pictet Asset Management Ltd. (to 2009) R. Scott Berg, CFA (1972) Executive vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Brian J. Brennan, CFA (1964) vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company Ryan N. Burgess, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Sheldon Chan (1981) vice President vice President, Price Hong Kong; formerly Associate Director, HSBC (Hong Kong) (to 2011) Tak yiu Cheng, CFA, CPA (1974) vice President vice President, Price Hong Kong and T. Rowe Price group, Inc.; formerly Analyst, CLS, BNP Paribas, and Deutsche Bank (to 2008) Carolyn Hoi Che Chu (1974) vice President vice President, Price Hong Kong and T. Rowe Price group, Inc.; formerly Director, Bank of America Merrill Lynch and Co-head of credit and convertibles research team in Hong Kong (to 2010) Archibald Ciganer Albeniz, CFA (1976) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Richard N. Clattenburg, CFA (1979) Executive vice President vice President, Price Singapore, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price International Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. 42 T. Rowe Price New Asia Fund Officers (continued) Name (Year of Birth) Position Held With International funds Principal Occupation(s) Michael J. Conelius, CFA (1964) Executive vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company Jose Costa Buck (1972) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Richard de los Reyes (1975) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Michael Della vedova (1969) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly Cofounder and Partner, Four Quarter Capital (to 2009) Jessie Q. Ding (1981) vice President vice President, Price Hong Kong; formerly asso- ciate, TPg Capital (to 2008) Shawn T. Driscoll (1975) vice President vice President, T. Rowe Price group, Inc. Bridget A. Ebner (1970) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Mark J.T. Edwards (1957) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International David J. Eiswert, CFA (1972) Executive vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price International Henry M. Ellenbogen (1973) vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price Trust Company Roger L. Fiery III, CPA (1959) vice President vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company Mark S. Finn, CFA, CPA (1963) vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price Trust Company Melissa C. gallagher (1974) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly European Pharmaceuticals and Biotech Analyst, Bear Stearns International Ltd. (to 2008) Robert N. gensler (1957) Executive vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price International Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. 43 T. Rowe Price New Asia Fund Officers (continued) Name (Year of Birth) Position Held With International funds Principal Occupation(s) John R. gilner (1961) Chief Compliance Officer Chief Compliance Officer and vice President, T. Rowe Price; vice President, T. Rowe Price group, Inc., and T. Rowe Price Investment Services, Inc. gregory S. golczewski (1966) vice President vice President, T. Rowe Price and T. Rowe Price Trust Company vishnu vardhan gopal (1979) vice President vice President, Price Hong Kong Benjamin griffiths, CFA (1977) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International M. Campbell gunn (1956) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International gregory K. Hinkle, CPA (1958) Treasurer vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price Trust Company Leigh Innes, CFA (1976) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Randal S. Jenneke (1971) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly Senior Portfolio Manager, Australian Equities (to 2010) Kris H. Jenner, M.D., D.Phil. (1962) vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price International yoichiro Kai (1973) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly Japanese Financial/Real Estate Sector Analyst/Portfolio Manager, Citadel Investment group, Asia Limited (to 2009) Jai Kapadia (1982) vice President Employee, T. Rowe Price; formerly student, MIT Sloan School of Management (to 2011); Associate Analyst, Sirios Capital Management (to 2009) Andrew J. Keirle (1974) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Ian D. Kelson (1956) Executive vice President President–International Fixed Income, T. Rowe Price International; vice President, T. Rowe Price and T. Rowe Price group, Inc. Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. 44 T. Rowe Price New Asia Fund Officers (continued) Name (Year of Birth) Position Held With International funds Principal Occupation(s) Christopher J. Kushlis, CFA (1976) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Mark J. Lawrence (1970) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly Equity Fund Manager, Citi (London) (to 2008) David M. Lee, CFA (1962) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Patricia B. Lippert (1953) Secretary Assistant vice President, T. Rowe Price and T. Rowe Price Investment Services, Inc. Christopher C. Loop, CFA (1966) vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price International Anh Lu (1968) Executive vice President vice President, Price Hong Kong and T. Rowe Price group, Inc. Sebastien Mallet (1974) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Daniel Martino, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Jonathan H.W. Matthews, CFA (1975) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly Analyst, Pioneer Investments (to 2008) Susanta Mazumdar (1968) Executive vice President vice President, Price Singapore and T. Rowe Price group, Inc. Raymond A. Mills, Ph.D., CFA (1960) Executive vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., T. Rowe Price International, and T. Rowe Price Trust Company Eric C. Moffett (1974) vice President vice President, Price Hong Kong and T. Rowe Price group, Inc. Samy B. Muaddi, CFA (1984) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Joshua Nelson (1977) Executive vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Philip A. Nestico (1976) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. 45 T. Rowe Price New Asia Fund Officers (continued) Name (Year of Birth) Position Held With International funds Principal Occupation(s) Sridhar Nishtala (1975) vice President vice President, Price Singapore and T. Rowe Price group, Inc. Jason Nogueira, CFA (1974) Executive vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. David Oestreicher (1967) vice President Director, vice President, and Secretary, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; vice President and Secretary, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price International; vice President, Price Hong Kong and Price Singapore Michael D. Oh, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Kenneth A. Orchard (1975) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly vice President, Moody’s Investors Service (to 2010) Paul T. O’Sullivan (1973) vice President vice President, T. Rowe Price International Hiroaki Owaki, CFA (1962) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International gonzalo Pángaro, CFA (1968) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Timothy E. Parker, CFA (1974) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. Craig J. Pennington, CFA (1971) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly global Energy Analyst, Insight Investment (to 2010); Senior Trader, Brevan Howard (to 2008) Austin Powell, CFA (1969) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Frederick A. Rizzo (1969) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Christopher J. Rothery (1963) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. 46 T. Rowe Price New Asia Fund Officers (continued) Name (Year of Birth) Position Held With International funds Principal Occupation(s) Naoto Saito (1980) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly Analyst, HBK Capital Management (to 2008) Federico Santilli, CFA (1974) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Sebastian Schrott (1977) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Deborah D. Seidel (1962) vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Services, Inc. Francisco Sersale (1980) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Amitabh Shah (1980) vice President vice President, T. Rowe Price International Jeneiv Shah, CFA (1980) vice President Employee, T. Rowe Price; formerly Analyst, Mirae Asset global Investments (to 2010) Robert W. Sharps, CFA, CPA (1971) vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price Trust Company John C.A. Sherman (1969) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Robert W. Smith (1961) Executive vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price Trust Company Eunbin Song, CFA (1980) vice President vice President, Price Singapore; formerly Equity Research Analyst, Samsung Securities (to 2008); student, Columbia Business School (to 2010) David A. Stanley (1963) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Jonty Starbuck, Ph.D. (1975) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Miki Takeyama (1970) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Ju yen Tan (1972) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. 47 T. Rowe Price New Asia Fund Officers (continued) Name (Year of Birth) Position Held With International funds Principal Occupation(s) Sin Dee Tan, CFA (1979) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International; formerly student, London Business School (to 2008) Dean Tenerelli (1964) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Jean Pierre Thibaud (1982) vice President Employee, T. Rowe Price; formerly student, Harvard Business School (to 2011); Senior Associate, MBA Lazard (to 2009) Siby Thomas (1979) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc.; formerly student, University of Chicago graduate School of Business (to 2009) Justin Thomson (1968) Executive vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Mitchell J.K. Todd (1974) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Eric L. veiel, CFA (1972) vice President vice President, T. Rowe Price and T. Rowe Price group, Inc. verena E. Wachnitz, CFA (1978) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International David J. Wallack (1960) vice President vice President, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price Trust Company Julie L. Waples (1970) vice President vice President, T. Rowe Price Hiroshi Watanabe, CFA (1975) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Christopher S. Whitehouse (1972) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Clive M. Williams (1966) vice President vice President, Price Hong Kong, Price Singapore, T. Rowe Price, T. Rowe Price group, Inc., and T. Rowe Price International Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. 48 T. Rowe Price New Asia Fund Officers (continued) Name (Year of Birth) Position Held With International funds Principal Occupation(s) J. Howard Woodward, CFA (1974) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Marta yago (1977) vice President vice President, T. Rowe Price group, Inc., and T. Rowe Price International Ernest C. yeung, CFA (1979) vice President vice President, Price Hong Kong and T. Rowe Price group, Inc. Alison Mei Ling yip (1966) vice President vice President, Price Hong Kong and T. Rowe Price group, Inc. Christopher yip, CFA (1975) vice President vice President, Price Hong Kong and T. Rowe Price group, Inc. Wenli Zheng (1979) vice President vice President, Price Hong Kong and T. Rowe Price group, Inc.; formerly student, University of Chicago graduate School of Business (to 2008) Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least 5 years. 49 T. Rowe Price Investment Services and Information Investment Services and Information kNOWLEDGEaBLE CuSTOMER SERvICE On the Web at troweprice.com. By Phone at 1-800-225-5132. Available Monday through Friday from 8 a.m. until 10 p.m. ET and Saturday from 8:30 a.m. until 5 p.m. ET. In Person at a T. Rowe Price Investor Center. Please visit the website at troweprice.com/investorcenter or call 1-800-225-5132 to locate a center near you. aCCOuNT SERvICES Account Access. Through the T. Rowe Price website at troweprice.com and via phone through Tele*Access®. Automatic Investing. From your bank account or paycheck. Automatic Withdrawal. Scheduled, periodic redemptions. IRA Rebalancing. Automatically rebalance to ensure that your accounts reflect your desired asset allocations. BROkERaGE SERvICES‡ Trade stocks, mutual funds, ETFs, bonds, options, CDs, precious metals, and more at competitive commissions. INvESTMENT INfORMaTION Consolidated Statement. Overview of all of your T. Rowe Price mutual fund and Brokerage accounts. Shareholder Reports. Manager reviews of their strategies and results. T. Rowe Price Report. Quarterly investment newsletter. T. Rowe Price Investor. Quarterly publication of insightful financial articles. Investment Guides. International Investing Guide, Guide to Bond Funds, Investors Portfolio Review, Retirement Savings Guide, and Retirement Readiness Guide. fINaNCIaL INTERMEDIaRIES aND aDvISORS By Phone at 1-877-804-2315. Contact us Monday through Friday from 8:30 a.m. until 6 p.m. ET. By Mail: T. Rowe Price, Financial Institution Services, P.O. Box 89000, Baltimore, MD 21289-4232. CuSTOMERS WHO TRaDE THROuGH a fINaNCIaL INTERMEDIaRY Please contact your intermediary or financial professional for assistance. ‡ Options trading involves additional risk and is not suitable for all investors. Brokerage services offered by T. Rowe Price Investment Services, Inc., member FINRA/SIPC. This page contains supplementary information that is not part of the shareholder report. 50 T. Rowe Price Web Services troweprice.com LOG IN aND MaNaGE YOuR INvESTMENTS ONLINE troweprice.com/access Manage your account by checking balances with up-to-date statements, tracking and analyzing your portfolio, and/or granting View Access to others as you see fit. Perform transactions at your convenience. Buy, sell, or exchange shares securely, quickly, and easily. You can also set up automatic investing and add a bank account to move money easily. Update your preferences by confirming your contact information and verifying your beneficiaries so your assets can be distributed as you wish. ONLINE SERvICING troweprice.com/paperless Enroll to receive your transaction confirmations, investor statements, prospec- tuses, and shareholder reports online instead of by U.S. mail. 1 You will receive an e-mail with a link to our website informing you that your document is available to view online, print, or download. Join our E-mail Program to receive market and fund information by e-mail. Receive timely market reports, performance of T. Rowe Price mutual funds, invest- ment and market insights from T. Rowe Price managers, and more. INvESTMENT GuIDaNCE aND TOOLS troweprice.com/planningtools Morningstar® Portfolio Manager enables you to track, rebalance, and analyze your portfolio. Morningstar Portfolio X-Ray® is a comprehensive tool that provides an in-depth examination of your exposure to different sectors, stock types, sub-asset classes, and global diversification. Portfolio Growth Tracker allows you to track the historical growth of your mutual fund investments over time. The analysis consists of three components: Activity Summary, Asset Allocation, and Net Investment versus Market Value. Retirement Income Calculator. fINaNCIaL INTERMEDIaRIES aND aDvISORS troweprice.com/financialintermediaries This secure site is designed for professional financial intermediaries and advisors. Financial professionals may access daily prices and historical performance of mutual funds; view market research, manager commentary, and sales ideas; and access literature and forms. For U.S. technical assistance, call 1-888-358-8490 or e-mail us at onlinehelp@troweprice.com. For non-U.S. technical assistance, call +1 (410) 345 4400 or contact us via e-mail. This page contains supplementary information that is not part of the shareholder report. 1 By signing up for paperless services, you may qualify for the account service fee waiver. visit us at troweprice.com/feesandminimums to find out more. 51 T. Rowe Price Planning Tools and Services T. Rowe Price Retirement Services T. Rowe Price offers unique retirement services that can help you meet a broad variety of planning challenges. Our retirement tools are suitable for individuals, the self-employed, small businesses, cor porations, and nonprofit organizations. For more information, call 1-800-IRA-5000 or visit our website at troweprice.com/retirement. INvESTMENT aCCOuNTS Rollover IRAs. Whether you’ve changed jobs, experienced a job loss, or retired, it’s important to make a smart decision regarding your old 401(k). Call toll-free 1-800-IRA-5000. Our rollover specialists can open your account over the phone and handle most of the paperwork for you. They’ll even contact your former employer to help move your money. Roth IRAs. A Roth IRA offers tax-free withdrawals and a flexible distribution schedule. Open your account at troweprice.com/ira or call 1-800-IRA-5000. Traditional IRAs. Traditional IRA contributions may be tax-deductible, with no taxes due until withdrawal. Open your account at troweprice.com/ira or call 1-800-IRA-5000. Small Business Retirement Plans. If you’re self-employed or run a small business or professional practice, T. Rowe Price can help you establish a cost-effective retire- ment plan that’s easy to set up and maintain. 403(b) Custodial Accounts. For those employed by a nonprofit or tax-exempt organization such as a school, church, or hospital, T. Rowe Price offers an effective, low-cost way to save for retirement. INvESTMENT GuIDaNCE T. Rowe Price Advisory Planning Services offers a wide range of services that provide expert advice based on your individual needs and financial goals, including consultations with an advisory counselor. Please contact one of our specialists at 1-888-744-0270 to determine the most appropriate service to fit your needs.* * Services offered by T. Rowe Price Advisory Services, Inc., a federally registered investment adviser. There may be costs associated with these services. This page contains supplementary information that is not part of the shareholder report. 52 T. Rowe Price College Planning This page contains supplementary information that is not part of the shareholder report. College Planning With the costs of college steadily increasing, it’s critical to plan early. Our college planning information and college savings products can help you meet your educational investment goals. For more information, visit our website at troweprice.com/college, where you will find the College Investment Calculator, an interactive tool that can help you determine how much you should save, estimate future tuition costs, and review college savings options. In a few easy steps, the calculator provides you with information and a plan of action. To speak with a college planning specialist, please call 1-800-638-5660. College Savings Plans (529 Plans). To help families prepare for college education costs, T. Rowe Price manages three 529 plans that are open to all U.S. residents. Any earnings on contributions are tax-deferred, and distributions are exempt from federal income taxes when used for qualified educational expenses. Also, these plans offer high contribution limits and affordable systematic investing. T. Rowe Price manages the T. Rowe Price College Savings Plan, a national 529 plan offered by the Education Trust of Alaska; the Maryland College Investment Plan; and the University of Alaska College Savings Plan. The Maryland College Investment Plan offers certain potential benefits for Maryland residents, and the University of Alaska College Savings Plan offers potential benefits for Alaska residents. Earnings on a distribution not used for qualified expenses may be subject to income taxes and a 10% federal penalty. Please note that the availability of tax or other benefits may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors, as applicable. Please visit our website or call 1-800-638-5660 to obtain the applicable plan disclosure document, which includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Please consider, before invest- ing, whether your or your beneficiary’s home state offers any state tax or other benefits that are only available for investments in that state’s plan. T. Rowe Price Investment Services, Inc., Distributor/Underwriter. 53 T. Rowe Price Advisory Planning Services Advisory Planning Services If you are looking for professional investment advisory services with a personal touch, T. Rowe Price can help you make informed investing decisions and take control of your financial future. You will work one-on-one with an experienced advisory counselor who, after discussing your situation with you and analyzing the financial infor mation you provide, will recommend a strategy that meets your individual goals and preferences.* * Services offered by T. Rowe Price Advisory Services, Inc., a federally registered investment adviser. There may be costs associated with these services. This page contains supplementary information that is not part of the shareholder report. 126682 F39-050 12/12 T. Rowe Price Mutual Funds For more information about T. Rowe Price funds or services, please contact us directly at 1-800-225-5132. Request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Investments in the money market 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. * T. Rowe Price Advisor and R Classes may be available for these funds. T. Rowe Price Advisor and R Classes are offered only through financial intermediaries. For more information about T. Rowe Price Advisor and R Classes, contact your financial professional or call T. Rowe Price at 1-877-804-2315. ‡ Closed to new investors except for a direct rollover from a retirement plan into a T. Rowe Price IRA invested in this fund. ˆ The Retirement Funds are inclusive of the Retirement 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, and Income Funds. §Subject to certain exceptions, the fund will be closed to new investors effective April 30, 2012. STOCk fuNDS Domestic Blue Chip Growth* Capital Appreciation* Capital Opportunity* Diversified Mid-Cap Growth Diversified Small-Cap Growth Dividend Growth* Equity Income* Equity Index 500 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 Equity Total Equity Market Index U.S. Large-Cap Core* Value* aSSET aLLOCaTION fuNDS Balanced Personal Strategy Balanced Personal Strategy Growth Personal Strategy Income Real Assets Retirement Funds*ˆ BOND fuNDS Domestic Taxable Corporate Income Floating Rate* GNMA High Yield*§ Inflation Protected Bond New Income* Short-Term Bond* Spectrum Income Strategic Income* Summit GNMA Ultra Short-Term Bond U.S. Bond Enhanced Index U.S. Treasury Intermediate U.S. Treasury Long-Term Domestic Tax-free California Tax-Free Bond 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 Short-Intermediate* Virginia Tax-Free Bond MONEY MaRkET fuNDS Taxable Prime Reserve Summit Cash Reserves U.S. Treasury Money MONEY MaRkET fuNDS (cont.) Tax-free California Tax-Free Money Maryland Tax-Free Money New York Tax-Free Money Summit Municipal Money Market Tax-Exempt Money INTERNaTIONaL/GLOBaL fuNDS Stock Africa & Middle East Emerging Europe Emerging Markets Stock European Stock Global Infrastructure* Global Large-Cap Stock* Global Real Estate* Global Stock* Global Technology International Discovery International Equity Index International Growth & Income* International Stock* Japan Latin America New Asia Overseas Stock Spectrum International Bond Emerging Markets Bond Emerging Markets Corporate Bond* Emerging Markets Local Currency Bond* International Bond* T. Rowe Price Investment Services, Inc. 100 East Pratt Street Baltimore, MD 21202 This page contains supplementary information that is not part of the shareholder report. PROSPECTUS T. Rowe Price TRAMX TREMX PRMSX PRESX PRIDX TRIGX PRITX PRJPX PRLAX PRASX TROSX Africa & Middle East Fund Emerging Europe Fund Emerging Markets Stock Fund European Stock Fund International Discovery Fund International Growth & Income Fund International Stock Fund Japan Fund Latin America Fund New Asia Fund Overseas Stock Fund March 1, 2013 A choice of international and regional stock funds for investors seeking long-term capital growth by diversifying beyond U.S. borders. The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents 1 SUMMARY Africa & Middle East Fund 1 Emerging Europe Fund 8 Emerging Markets Stock Fund 14 European Stock Fund 20 International Discovery Fund 25 International Growth & Income Fund 30 International Stock Fund 35 Japan Fund 40 Latin America Fund 45 New Asia Fund 51 Overseas Stock Fund 57 2 INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS Pricing Shares and Receiving Sale Proceeds 62 Useful Information on Distributions and Taxes 67 Transaction Procedures and Special Requirements 73 Account Service Fee 77 3 MORE ABOUT THE FUNDS Organization and Management 79 More Information About the Funds and Their Investment Risks 84 Investment Policies and Practices 89 Disclosure of Fund Portfolio Information 96 Financial Highlights 97 4 INVESTING WITH T. ROWE PRICE Account Requirements and Transaction Information 109 Opening a New Account 110 Purchasing Additional Shares 113 Exchanging and Redeeming Shares 114 Rights Reserved by the Funds 116 Information About Your Services 117 T. Rowe Price Brokerage 119 Investment Information 120 T. Rowe Price Privacy Policy 121 Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the Federal Deposit Insurance Corporation, Federal Reserve, or any other government agency, and are subject to investment risks, including possible loss of the principal amount invested. SUMMARY T. Rowe Price Africa & Middle East Fund Investment Objective The fund seeks long-term growth of capital by investing primarily in the common stocks of companies located (or with primary operations) in Africa and the Middle East. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 1.05% Distribution and service (12b-1) fees 0.00% Other expenses 0.47% Total annual fund operating expenses 1.52% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $155 $480 $829 $1,813 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund T. ROWE PRICE 2 shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 65.0% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in African and Middle Eastern companies. The fund may purchase the stocks of companies of any size. The fund expects to make substantially all of its investments in common stocks, and participation notes (P-notes) linked to common stocks, of companies located (or with primary operations) in the countries listed below, as well as others as their markets develop: • Primary Emphasis: Bahrain, Egypt, Jordan, Kenya, Kuwait, Lebanon, Morocco, Nigeria, Oman, Qatar, Saudi Arabia, South Africa, and United Arab Emirates. • Others: Algeria, Angola, Botswana, Ghana, Ivory Coast, Mauritius, Mozambique, Namibia, Niger Republic, Rwanda, Senegal, Syria, Tanzania, Tunisia, Uganda, Zambia, and Zimbabwe. The fund is “nondiversified,” meaning it may invest a greater portion of assets in a single company and own more of the company’s voting securities than is permissible for a “diversified” fund. The fund’s portfolio is expected to be composed of investments in about 30 to 60 different companies, although the number could vary depending on market conditions. While most assets will be invested directly in common stocks, the fund may gain exposure to common stocks by purchasing P-notes that offer a return linked to a particular underlying common stock. P-notes are primarily used to invest indirectly in certain stocks that trade in a market that restricts foreign investors, such as the fund, from investing directly in that market. The fund may make substantial investments (at times more than 25% of total assets) in telecommunications and banking companies in various African and Middle Eastern countries. While the fund invests with an awareness of the outlook for industry sectors and individual countries within the region, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall prospects. Security selection reflects a growth style. The fund relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value. SUMMARY 3 In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. Emerging markets risk The risks of foreign investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in foreign developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on foreign investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. T. ROWE PRICE 4 P-note risks To the extent the fund invests in P-notes, it is subject to certain risks in addition to the risks normally associated with a direct investment in the underlying foreign securities the P-note seeks to replicate. As the purchaser of a P-note, the fund is relying on the creditworthiness of the counterparty issuing the P-note and does not have the same rights under a P-note as it would as a shareholder of the underlying issuer. Therefore, if a counterparty becomes insolvent, the fund could lose the total value of its investment in the P-note. In addition, there is no assurance that there will be a trading market for a P-note or that the trading price of a P-note will equal the value of the underlying security. Geographic concentration risk Because the fund concentrates its investments in a particular geographic region, the fund’s performance is closely tied to the social, political, and economic conditions within that region. Political developments and changes in regulatory, tax, or economic policy in particular countries within the region could significantly affect the markets in those countries as well as the entire region. As a result, the fund is likely to be more volatile than more geographically diverse international funds. Many African and Middle Eastern countries have histories of dictatorships, political and military unrest, and financial troubles, and their markets should be considered extremely volatile even when compared to those of other emerging market countries. Many of these countries tend to be highly reliant on the exportation of oil and other commodities so their economies can be significantly impacted by fluctuations in commodity prices and the global demand for certain commodities. In addition, because the fund may invest significantly in telecommunications and banking companies within the region, the fund is also more susceptible to developments affecting these industries. Nondiversification risk As a nondiversified fund, the fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor performance by a single issuer could adversely affect fund performance more than if the fund were invested in a larger number of issuers. The fund’s share price can be expected to fluctuate more than that of a comparable diversified fund. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s growth approach to investing could cause it to underperform other stock funds that employ a different investment style. Growth stocks tend to be more volatile than certain other types of stocks and their prices usually fluctuate more dramatically than the overall stock market. A stock with growth characteristics can have sharp price declines due to decreases in current or expected earnings and may lack dividends that can help cushion its share price in a declining market. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one SUMMARY 5 year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. Calendar Year Returns Africa & Middle East Fund Best Quarter 6/30/09 28.02% Worst Quarter 12/31/08 -37.91% ’10 ’09 ’08 ’12 ’11 Quarter Ended Total Return 19.90 -16.10 17.21 22.08 -53.32 -78 -65 -52 -39 -26 -13 0 13 26 39% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. T. ROWE PRICE 6 Average Annual Total Returns Periods ended December 31, 2012 Since inception 1 Year 5 Years (9/4/07) Africa & Middle East Fund Returns before taxes 19.90 % -7.65 % -2.65 % Returns after taxes on distributions 19.09 -8.26 -3.26 Returns after taxes on distributions and sale of fund shares 13.35 -6.55 -2.46 S&P Emerging/Frontier ME & Africa BMI ex IL (reflects no deduction for fees, expenses, or taxes) 15.44 -2.94 0.54 Combined Index Portfolio (reflects no deduction for fees, expenses, or taxes) a 15.44 -1.50 1.60 Lipper Emerging Markets Funds Average 18.23 -2.36 -1.61 * * Since 9/30/07. a Combined Index Portfolio is an unmanaged linked performance portfolio composed of: 100% S&P IFCG Africa & Middle East Index (excluding Saudi Arabia and Israel) through 6/30/09 (prior to 9/1/08, the index excluded Kuwait); 100% MSCI Arabian Markets & Africa Index from 7/1/09 through 9/29/10; and 100% S&P Emerging/Frontier ME & Africa BMI ex IL from 9/30/10 forward. Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Oliver D.M. Bell Chairman of Investment Advisory Committee 2011 2011 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): SUMMARY 7 Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price Emerging Europe Fund Investment Objective The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located (or with primary operations) in the emerging market countries of Europe. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 1.05% Distribution and service (12b-1) fees 0.00% Other expenses 0.50% Total annual fund operating expenses 1.55% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $158 $490 $845 $1,845 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund SUMMARY 9 shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 10.9% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in the emerging markets of Europe, including Eastern Europe and the former Soviet Union. The fund may purchase the stocks of companies of any size. The fund expects to make substantially all of its investments in common stocks of companies located (or with primary operations) in the emerging market countries listed below (others may be added): • Primary Emphasis: Czech Republic, Hungary, Kazakhstan, Poland, Russia, Turkey, and Ukraine. • Others: Bulgaria, Croatia, Estonia, Georgia, Latvia, Lithuania, Romania, Slovakia, and Slovenia. The fund is “nondiversified,” meaning it may invest a greater portion of assets in a single company and own more of the company’s voting securities than is permissible for a “diversified” fund. While the fund invests with an awareness of the outlook for industry sectors and individual countries within the region, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall prospects. Security selection reflects a growth style. The fund relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose T. ROWE PRICE 10 money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. Emerging markets risk The risks of foreign investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in foreign developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on foreign investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Geographic concentration risk Because the fund concentrates its investments in a particular geographic region, the fund’s performance is closely tied to the social, political, and economic conditions within that region. Political developments and changes in regulatory, tax, or economic policy in particular countries within the region could significantly affect the markets in those countries as well as the entire region. As a result, the fund is likely to be more volatile than more geographically diverse international funds. The European financial markets have been experiencing increased volatility due to concerns over rising government debt levels of several European countries and these events may continue to significantly affect both developed and emerging countries throughout Europe. Emerging European countries continue to be susceptible to political turmoil as their economies continue to develop. In addition, the fund typically invests a large portion of its assets in companies located or with primary SUMMARY 11 operations in Russia. The fund’s heavy exposure to one country subjects the fund to a higher degree of risk, in comparison to similar regional funds investing across emerging Europe, that adverse developments in a single country will have a significant impact on its performance. The Russian economy is susceptible to declines in the production and sales of oil, government intervention, and corruption. Investing in Russia also involves risks relating to the settlement and ownership rights associated with holding Russian securities. Nondiversification risk As a nondiversified fund, the fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor performance by a single issuer could adversely affect fund performance more than if the fund were invested in a larger number of issuers. The fund’s share price can be expected to fluctuate more than that of a comparable diversified fund. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s growth approach to investing could cause it to underperform other stock funds that employ a different investment style. Growth stocks tend to be more volatile than certain other types of stocks and their prices usually fluctuate more dramatically than the overall stock market. A stock with growth characteristics can have sharp price declines due to decreases in current or expected earnings and may lack dividends that can help cushion its share price in a declining market. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The performance for certain periods shown reflects the performance of the fund while it was named the T. Rowe Price Emerging Europe & Mediterranean Fund. The T. Rowe Price Emerging Europe & Mediterranean Fund was renamed the T. Rowe Price Emerging Europe Fund on March 1, 2012. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. T. ROWE PRICE 12 Calendar Year Returns Emerging Europe Fund Best Quarter 6/30/09 58.82% Worst Quarter 12/31/08 -55.04% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 25.24 -33.16 33.48 125.13 -75.85 27.91 34.74 59.00 30.01 69.22 -140 -105 -70 -35 0 35 70 105 140 175% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years Emerging Europe Fund Returns before taxes 25.24 % -9.48 % 13.86 % Returns after taxes on distributions 25.38 -9.68 13.52 Returns after taxes on distributions and sale of fund shares 16.85 -7.79 12.71 MSCI Emerging Markets Europe Index (reflects no deduction for fees, expenses, or taxes) 25.12 -7.71 15.38 Lipper Emerging Markets Funds Average 18.23 -2.36 15.34 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) SUMMARY 13 Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser S. Leigh Innes Chairman of Investment Advisory Committee 2007 2002 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price Emerging Markets Stock Fund Investment Objective The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located (or with primary operations) in emerging markets. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 1.05% Distribution and service (12b-1) fees 0.00% Other expenses 0.22% Total annual fund operating expenses 1.27% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $129 $403 $697 $1,534 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund SUMMARY 15 shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 24.1% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in emerging market companies. The fund may purchase the stocks of companies of any size. The fund expects to make substantially all of its investments in common stocks of companies located (or with primary operations) in emerging markets in Latin America, Asia, Europe, Africa, and the Middle East. The fund considers the following countries to be emerging markets (others may be added): • Asia: China, India, Indonesia, Malaysia, Pakistan, Philippines, South Korea, Sri Lanka, Taiwan, Thailand, and Vietnam. • Latin America: Argentina, Belize, Brazil, Chile, Colombia, Mexico, Panama, Peru, and Venezuela. • Europe: Croatia, Czech Republic, Estonia, Hungary, Kazakhstan, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, Turkey, and Ukraine. • Africa and the Middle East: Bahrain, Botswana, Egypt, Jordan, Kenya, Kuwait, Lebanon, Mauritius, Morocco, Nigeria, Oman, Qatar, Saudi Arabia, South Africa, Tunisia, United Arab Emirates, and Zimbabwe. While the fund invests with an awareness of the global economic backdrop and the outlook for industry sectors and individual countries, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall prospects. Security selection reflects a growth style. The fund relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. T. ROWE PRICE 16 The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. Emerging markets risk The risks of foreign investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in foreign developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on foreign investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s growth approach to investing could cause it to underperform other stock funds that employ a different investment style. Growth stocks tend to be more volatile than certain other types of stocks and their prices usually fluctuate more dramatically than the overall stock market. A stock with growth characteristics can have sharp price declines due to decreases in current or expected earnings and may lack dividends that can help cushion its share price in a declining market. SUMMARY 17 Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. Calendar Year Returns Emerging Markets Stock Fund Best Quarter 6/30/09 42.05% Worst Quarter 12/31/08 -34.23% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 20.03 -18.84 18.75 85.07 -60.54 42.92 32.01 38.77 26.98 52.30 -96 -72 -48 -24 0 24 48 72 96 120% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. T. ROWE PRICE 18 Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years Emerging Markets Stock Fund Returns before taxes 20.03 % -3.32 % 15.64 % Returns after taxes on distributions 20.13 -3.35 15.37 Returns after taxes on distributions and sale of fund shares 13.31 -2.70 14.31 MSCI Emerging Markets Index (reflects no deduction for fees, expenses, or taxes) 18.63 -0.61 16.88 Lipper Emerging Markets Funds Average 18.23 -2.36 15.34 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Gonzalo Pangaro Chairman of Investment Advisory Committee 2008 1998 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. SUMMARY 19 Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price European Stock Fund Investment Objective The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located (or with primary operations) in Europe. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.80% Distribution and service (12b-1) fees 0.00% Other expenses 0.20% Total annual fund operating expenses 1.00% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $102 $318 $552 $1,225 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual SUMMARY 21 fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 41.6% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in European companies. Under normal conditions, at least five countries will be represented in the fund’s portfolio. The fund may purchase the stocks of companies of any size. The fund expects to make substantially all of its investments in common stocks of companies located (or with primary operations) in the countries listed below, as well as others as their markets develop: • Primary Emphasis: Austria, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and United Kingdom. • Others: Belgium, Czech Republic, Estonia, Hungary, Kazakhstan, Poland, Romania, Russia, and Turkey. While the fund invests with an awareness of the outlook for industry sectors and individual countries within the region, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall prospects. The fund seeks to purchase the stocks of companies with quality management and strong cash flows, and does not emphasize either a growth or value bias in selecting investments. Securities will be selected that in the investment adviser’s view have the most favorable combination of company fundamentals, earnings potential, and relative valuation. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: T. ROWE PRICE 22 Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. These risks are heightened for the fund’s investments in emerging markets. Geographic concentration risk Because the fund concentrates its investments in a particular geographic region, the fund’s performance is closely tied to the social, political, and economic conditions within that region. Political developments and changes in regulatory, tax, or economic policy in particular countries within the region could significantly affect the markets in those countries as well as the entire region. As a result, the fund is likely to be more volatile than more geographically diverse international funds. The European financial markets have been experiencing increased volatility due to concerns over rising government debt levels of several European countries and these events may continue to significantly affect all of Europe. European economies could be significantly affected by rising unemployment, tight fiscal and monetary controls imposed on member countries of the European Economic and Monetary Union, and uncertainty surrounding the euro. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. SUMMARY 23 Calendar Year Returns European Stock Fund Best Quarter 6/30/09 25.21% Worst Quarter 9/30/11 -23.47% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 23.25 -9.30 8.76 34.40 -43.35 15.36 31.56 8.94 16.42 36.57 -70 -56 -42 -28 -14 0 14 28 42 56% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years European Stock Fund Returns before taxes 23.25 % -1.53 % 9.30 % Returns after taxes on distributions 23.19 -1.83 8.18 Returns after taxes on distributions and sale of fund shares 15.82 -1.27 8.05 MSCI Europe Index (reflects no deduction for fees, expenses, or taxes) 19.93 -3.72 8.97 Lipper European Region Funds Average 22.25 -3.77 9.29 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) T. ROWE PRICE 24 Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Dean Tenerelli Chairman of Investment Advisory Committee 2005 2000 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price International Discovery Fund Investment Objective The fund seeks long-term growth of capital through investments primarily in the common stocks of rapidly growing, small- to medium-sized companies outside the U.S. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 1.05% Distribution and service (12b-1) fees 0.00% Other expenses 0.18% Total annual fund operating expenses 1.23% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $125 $390 $676 $1,489 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund T. ROWE PRICE 26 shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 40.2% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund expects to invest substantially all of its assets outside the U.S. and to diversify broadly among developed and emerging countries throughout the world. The fund will emphasize investing in small- to medium-sized companies. Depending on market conditions, the fund’s portfolio should be composed of investments in at least 10 countries and 100 different companies. Normally, at least 80% of the fund’s net assets (including any borrowings for investment purposes) will be invested in stocks. While the fund invests with an awareness of the global economic backdrop and the outlook for industry sectors and individual countries, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall prospects. Security selection reflects a growth style. The fund relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies SUMMARY 27 employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. These risks are heightened for the fund’s investments in emerging markets. Small- and mid-cap stock risk Because the fund invests primarily in small- and medium-sized companies, its share price could be more volatile than a fund that invests only in large companies. Small- and medium-sized companies often have less experienced management, narrower product lines, more limited financial resources, and less publicly available information than larger companies. Smaller companies may have limited trading markets and tend to be more sensitive to changes in overall economic conditions. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s growth approach to investing could cause it to underperform other stock funds that employ a different investment style. Growth stocks tend to be more volatile than certain other types of stocks and their prices usually fluctuate more dramatically than the overall stock market. A stock with growth characteristics can have sharp price declines due to decreases in current or expected earnings and may lack dividends that can help cushion its share price in a declining market. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. T. ROWE PRICE 28 Calendar Year Returns International Discovery Fund Best Quarter 6/30/09 36.97% Worst Quarter 12/31/08 -25.11% 76 95%5738190-19-38-57-76 ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 26.00 -14.08 20.47 55.69 -49.93 16.57 27.65 27.89 23.76 65.29 In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years International Discovery Fund Returns before taxes 26.00 % 0.33 % 14.75 % Returns after taxes on distributions 25.48 0.13 14.16 Returns after taxes on distributions and sale of fund shares 17.23 0.26 13.26 S&P Global ex-U.S. Small Cap Index (reflects no deduction for fees, expenses, or taxes) 20.35 -0.78 13.20 MSCI EAFE Small Cap Index (reflects no deduction for fees, expenses, or taxes) 20.42 -0.51 12.34 Lipper International Small/Mid-Cap Growth Funds Average 21.29 -0.71 12.71 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. SUMMARY 29 Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Investment Sub-advisers T. Rowe Price International Ltd (T. Rowe Price International) and T. Rowe Price Hong Kong Limited (Price Hong Kong) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Justin Thomson Chairman of Investment Advisory Committee 1998 1998 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price International Growth & Income Fund Investment Objective The fund seeks long-term growth of capital and reasonable income through investments primarily in the common stocks of well-established, dividend-paying, non-U.S. companies. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.65% Distribution and service (12b-1) fees 0.00% Other expenses 0.22% Total annual fund operating expenses 0.87% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $89 $278 $482 $1,073 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund SUMMARY 31 shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 29.9% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund expects to invest substantially all of its assets outside the U.S. and to diversify broadly, primarily among the world’s developed countries. The fund will invest primarily (at least 65% of total assets) in the stocks of large, dividend-paying, well-established companies that have favorable prospects for capital appreciation. Investments in emerging markets will be modest and limited to more mature developing countries. The fund takes a value-oriented approach to investing by searching for attractively valued companies with the potential for improving earnings over time. Country and sector allocations are driven primarily by security selection and secondarily by an assessment of top-down, fundamental prospects. The fund relies on a global research team to identify companies that appear to be undervalued by various measures and may be temporarily out of favor but have good prospects for capital appreciation or dividend growth. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • low valuation on various earnings, book value, sales, and cash flow metrics, in absolute terms and/or relative to the company’s peers or its own historical norm; • low valuation relative to a company’s growth potential; • companies that may benefit from restructuring activity or other turnaround opportunities; • a sound balance sheet and other positive financial characteristics; and • above-average dividend yield and/or the potential to grow dividends. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. T. ROWE PRICE 32 Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. These risks are heightened for the fund’s investments in emerging markets. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s value approach to investing could cause it to underperform other stock funds that employ a different investment style. The intrinsic value of a stock with value characteristics may not be fully recognized by the market for a long time or a stock judged to be undervalued may actually be appropriately priced at a low level. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. SUMMARY 33 Calendar Year Returns International Growth & Income Fund Best Quarter 6/30/09 26.64% Worst Quarter 12/31/08 -21.75% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 39.48 23.10 15.75 29.92 8.71 -44.90 34.39 10.49 -10.80 15.38 -68 -51 -34 -17 0 17 34 51 68 85% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years International Growth & Income Fund Returns before taxes 15.38 % -3.38 % 8.98 % Returns after taxes on distributions 14.93 -3.83 8.42 Returns after taxes on distributions and sale of fund shares 10.55 -2.93 7.89 MSCI EAFE Index (reflects no deduction for fees, expenses, or taxes) 17.90 -3.21 8.70 Lipper International Multi-Cap Value Funds Average 17.54 -4.07 8.09 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) T. ROWE PRICE 34 Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Jonathan H.W. Matthews Chairman of Investment Advisory Committee 2010 2008 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price International Stock Fund Investment Objective The fund seeks long-term growth of capital through investments primarily in the common stocks of established, non-U.S. companies. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.65% Distribution and service (12b-1) fees 0.00% Other expenses 0.20% Total annual fund operating expenses 0.85% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $87 $271 $471 $1,049 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual T. ROWE PRICE 36 fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 33.5% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund expects to invest substantially all of its assets in stocks outside the U.S. and to diversify broadly among developed and emerging countries throughout the world. The fund may purchase the stocks of companies of any size, but its focus will typically be on large-sized companies and, to a lesser extent, medium-sized companies. Normally, at least 80% of the fund’s net assets (including any borrowings for investment purposes) will be invested in stocks. While the fund invests with an awareness of the global economic backdrop and the outlook for industry sectors and individual countries, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall prospects. Security selection reflects a growth style. The fund relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. SUMMARY 37 Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. These risks are heightened for the fund’s investments in emerging markets. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s growth approach to investing could cause it to underperform other stock funds that employ a different investment style. Growth stocks tend to be more volatile than certain other types of stocks and their prices usually fluctuate more dramatically than the overall stock market. A stock with growth characteristics can have sharp price declines due to decreases in current or expected earnings and may lack dividends that can help cushion its share price in a declining market. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. T. ROWE PRICE 38 Calendar Year Returns International Stock Fund Best Quarter 6/30/09 32.64% Worst Quarter 12/31/08 -26.02% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 18.72 -12.33 14.48 52.20 -48.02 13.43 19.26 16.27 13.89 31.28 -72 -54 -36 -18 0 18 36 54 72 90% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years International Stock Fund Returns before taxes 18.72 % -1.17 % 8.29 % Returns after taxes on distributions 18.57 -1.36 7.78 Returns after taxes on distributions and sale of fund shares 12.56 -0.97 7.29 MSCI All Country World Index ex USA (reflects no deduction for fees, expenses, or taxes) 17.39 -2.44 10.22 Lipper International Multi-Cap Growth Funds Average 18.03 -3.04 8.71 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) SUMMARY 39 Investment Sub-advisers T. Rowe Price International Ltd (T. Rowe Price International) and T. Rowe Price Singapore Private Ltd. (Price Singapore) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Robert W. Smith Chairman of Investment Advisory Committee 2007 1992 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price Japan Fund Investment Objective The fund seeks long-term growth of capital through investments in common stocks of companies located (or with primary operations) in Japan. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.80% Distribution and service (12b-1) fees 0.00% Other expenses 0.34% Total annual fund operating expenses 1.14% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $116 $362 $628 $1,386 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual SUMMARY 41 fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 55.1% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in companies located (or with primary operations) in Japan. The fund may purchase the stocks of companies of any size and expects to make its investments across a wide range of Japanese industries and companies. While the fund invests with an awareness of the outlook for industry sectors within the country, bottom-up stock selection is the focus of our decision-making. Security selection reflects a growth style. The fund relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may T. ROWE PRICE 42 decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments may be subject to regulatory and accounting standards that differ from those of the U.S. Geographic concentration risk Because the fund concentrates its investments in a particular country, the fund’s performance is closely tied to the social, political, and economic conditions of that country. As a result, the fund is likely to be more volatile than more geographically diverse international funds. The Japanese economy has in the past been negatively affected at times by government intervention and protectionism, an unstable financial services sector, a heavy reliance on international trade, and natural disasters. Some of these factors, as well as other adverse political developments, increases in government debt, and changes to fiscal, monetary, or trade policies, may affect the Japanese markets and significantly harm the fund’s performance. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s growth approach to investing could cause it to underperform other stock funds that employ a different investment style. Growth stocks tend to be more volatile than certain other types of stocks and their prices usually fluctuate more dramatically than the overall stock market. A stock with growth characteristics can have sharp price declines due to decreases in current or expected earnings and may lack dividends that can help cushion its share price in a declining market. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. SUMMARY 43 Calendar Year Returns Japan Fund Best Quarter 9/30/03 24.33% Worst Quarter 3/31/09 -21.61% 48 60%3624120-12-24-36-48 ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 10.69 -8.39 14.22 0.84 -31.42 -5.52 -5.66 40.04 16.83 44.14 In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years Japan Fund Returns before taxes 10.69 % -4.34 % 5.35 % Returns after taxes on distributions 10.65 -4.36 5.33 Returns after taxes on distributions and sale of fund shares 7.34 -3.55 4.77 TOPIX Index (reflects no deduction for fees, expenses, or taxes) 7.54 -3.51 5.12 MSCI Japan Index (reflects no deduction for fees, expenses, or taxes) 8.36 -4.11 5.06 Lipper Japanese Funds Average 7.38 -2.12 4.24 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. T. ROWE PRICE 44 Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser M. Campbell Gunn Chairman of Investment Advisory Committee 2003 2002 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price Latin America Fund Investment Objective The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located (or with primary operations) in Latin America. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 1.05% Distribution and service (12b-1) fees 0.00% Other expenses 0.19% Total annual fund operating expenses 1.24% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $126 $393 $681 $1,500 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual T. ROWE PRICE 46 fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 16.7% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in Latin American companies. Under normal conditions, at least four countries will be represented in the fund’s portfolio. The fund may purchase the stocks of companies of any size. The fund expects to make substantially all of its investments in common stocks of companies located (or with primary operations) in the countries listed below, as well as others as their markets develop: • Primary Emphasis: Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela. • Others: Belize, Ecuador, and Guatemala. The fund is “nondiversified,” meaning it may invest a greater portion of assets in a single company and own more of the company’s voting securities than is permissible for a “diversified” fund. The fund may make substantial investments (at times more than 25% of total assets) in telecommunications and banking companies in various Latin American countries. While the fund invests with an awareness of the outlook for industry sectors and individual countries within the region, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall prospects. Security selection reflects a growth style. The fund relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. SUMMARY 47 Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. Emerging markets risk The risks of foreign investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in foreign developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on foreign investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Geographic concentration risk Because the fund concentrates its investments in a particular geographic region, the fund’s performance is closely tied to the social, political, and economic conditions within that region. Political developments and changes in regulatory, tax, or economic policy in particular countries within the region could significantly affect the markets in those countries as well as the entire region. As a result, the fund is likely to be more volatile than more geographically diverse international funds. Many Latin American countries have histories of inflation, government overspending, political instability, and extreme currency fluctuations. Many of these countries tend to be highly reliant on the exportation of commodities so their economies may be significantly impacted by fluctuations in commodity prices and the global demand T. ROWE PRICE 48 for certain commodities. Because the fund may invest significantly in telecommunications and banking companies within the region, the fund is also more susceptible to developments affecting these industries. In addition, the fund typically invests a large portion of its assets in companies located or with primary operations in Brazil. The fund’s heavy exposure to one country subjects the fund to a higher degree of risk, in comparison to similar regional funds investing across Latin America, that adverse developments in a single country will have a significant impact on its performance. The Brazilian economy, like many Latin American economies, is susceptible to inflation, monetary tightening and other governmental controls, and slowing growth in its primary export markets. Nondiversification risk As a nondiversified fund, the fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor performance by a single issuer could adversely affect fund performance more than if the fund were invested in a larger number of issuers. The fund’s share price can be expected to fluctuate more than that of a comparable diversified fund. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s growth approach to investing could cause it to underperform other stock funds that employ a different investment style. Growth stocks tend to be more volatile than certain other types of stocks and their prices usually fluctuate more dramatically than the overall stock market. A stock with growth characteristics can have sharp price declines due to decreases in current or expected earnings and may lack dividends that can help cushion its share price in a declining market. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. SUMMARY 49 Calendar Year Returns Latin America Fund Best Quarter 6/30/09 46.25% Worst Quarter 12/31/08 -36.35% 132 165%9966330-33-66-99-132 ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 10.30 -25.17 18.49 114.36 -55.70 48.93 51.24 60.05 38.35 57.92 In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years Latin America Fund Returns before taxes 10.30 % -1.47 % 22.02 % Returns after taxes on distributions 8.53 -2.05 21.54 Returns after taxes on distributions and sale of fund shares 9.17 -1.14 20.40 MSCI Emerging Markets Latin America Index (reflects no deduction for fees, expenses, or taxes) 8.90 0.13 23.01 Lipper Latin American Funds Average 11.26 -0.84 20.80 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) T. ROWE PRICE 50 Investment Sub-adviser T. Rowe Price International Ltd (T. Rowe Price International) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Jose Costa Buck Chairman of Investment Advisory Committee 2008 2000 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price New Asia Fund Investment Objective The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located (or with primary operations) in Asia (excluding Japan). Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.80% Distribution and service (12b-1) fees 0.00% Other expenses 0.15% Total annual fund operating expenses 0.95% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $97 $303 $525 $1,166 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund T. ROWE PRICE 52 shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 41.1% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in Asian companies (excluding Japanese companies). The fund may purchase the stocks of companies of any size. The fund expects to make substantially all of its investments in common stocks of companies located (or with primary operations) in the countries listed below, as well as others as their markets develop: • Primary Emphasis: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Thailand. • Others: Pakistan, Sri Lanka, and Vietnam. The fund is “nondiversified,” meaning it may invest a greater portion of assets in a single company and own more of the company’s voting securities than is permissible for a “diversified” fund. While the fund invests with an awareness of the outlook for industry sectors and individual countries within the region, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall prospects. Security selection reflects a growth style. The fund relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose SUMMARY 53 money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. Emerging markets risk The risks of foreign investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in foreign developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on foreign investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Geographic concentration risk Because the fund concentrates its investments in a particular geographic region, the fund’s performance is closely tied to the social, political, and economic conditions within that region. Political developments and changes in regulatory, tax, or economic policy in particular countries within the region could significantly affect the markets in those countries as well as the entire region. As a result, the fund is likely to be more volatile than more geographically diverse international funds. Many Asian economies have at various times been negatively affected by inflation, an over-reliance on international trade, political and social instability, and less developed financial systems and securities trading markets. Trade restrictions, unexpected decreases in exports, changes in government policies, or natural disasters could have a significant impact on companies doing business in Asia. T. ROWE PRICE 54 Nondiversification risk As a nondiversified fund, the fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor performance by a single issuer could adversely affect fund performance more than if the fund were invested in a larger number of issuers. The fund’s share price can be expected to fluctuate more than that of a comparable diversified fund. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s growth approach to investing could cause it to underperform other stock funds that employ a different investment style. Growth stocks tend to be more volatile than certain other types of stocks and their prices usually fluctuate more dramatically than the overall stock market. A stock with growth characteristics can have sharp price declines due to decreases in current or expected earnings and may lack dividends that can help cushion its share price in a declining market. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. Calendar Year Returns New Asia Fund Best Quarter 6/30/09 55.24% Worst Quarter 3/31/08 -22.80% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 53.54 18.60 26.43 36.12 66.38 -60.99 102.76 20.35 -12.14 23.69 -116 -87 -58 -29 0 29 58 87 116 145% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income SUMMARY 55 tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years New Asia Fund Returns before taxes 23.69 % 0.68 % 18.36 % Returns after taxes on distributions 23.30 0.00 17.51 Returns after taxes on distributions and sale of fund shares 16.00 0.52 16.66 MSCI All Country Asia ex Japan Index (reflects no deduction for fees, expenses, or taxes) 22.70 0.12 14.95 Lipper Pacific Ex Japan Funds Average 22.06 -0.19 14.18 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Investment Sub-advisers T. Rowe Price International Ltd (T. Rowe Price International) and T. Rowe Price Hong Kong Limited (Price Hong Kong) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Anh Lu Chairman of Investment Advisory Committee 2009 2001 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at T. ROWE PRICE 56 troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. SUMMARY T. Rowe Price Overseas Stock Fund Investment Objective The fund seeks long-term growth of capital through investments in the common stocks of non-U.S. companies. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.65% Distribution and service (12b-1) fees 0.00% Other expenses 0.22% Total annual fund operating expenses 0.87% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $89 $278 $482 $1,073 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual T. ROWE PRICE 58 fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 13.6% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund expects to invest substantially all of its assets outside the U.S. and to diversify broadly among developed and, to a lesser extent, emerging countries throughout the world. The fund normally invests at least 80% of its net assets (including any borrowings for investment purposes) in non-U.S. stocks and at least 65% of its net assets in stocks of large-cap companies. The fund takes a core approach to investing, which provides some exposure to both growth and value styles of investing. The fund relies on a global research team to search for particularly promising stocks throughout developed and, to a lesser extent, emerging markets. Securities will be selected that in our view have the most favorable combination of company fundamentals and valuation. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • attractive business niche with potential for earnings growth; • attractive valuation relative to the company’s peers or its own historical norm; • barriers to entry in its business; • seasoned management; • healthy balance sheet; and • potential to grow dividends or conduct share repurchases. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. SUMMARY 59 Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. These risks are heightened for the fund’s investments in emerging markets. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. Because the fund holds stocks with both growth and value characteristics, it could underperform other stock funds that take a strictly growth or value approach to investing when one style is currently in favor. Growth stocks tend to be more volatile than the overall stock market and can have sharp price declines as a result of earnings disappointments. Value stocks carry the risk that the market will not recognize their intrinsic value or that they are actually appropriately priced at a low level. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. Calendar Year Returns Overseas Stock Fund Best Quarter 6/30/09 26.79% Worst Quarter 12/31/08 -21.65% 68 85%5134170-17-34-51-68 ’10 ’09 ’08 ’07 ’12 ’11 Quarter Ended Total Return 18.59 -10.12 10.57 36.70 -45.06 9.43 T. ROWE PRICE 60 In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 Since inception 1 Year 5 Years (12/29/06) Overseas Stock Fund Returns before taxes 18.59 % -2.41 % -0.53 % Returns after taxes on distributions 18.20 -2.65 -0.75 Returns after taxes on distributions and sale of fund shares 12.55 -1.99 -0.39 MSCI EAFE Index (reflects no deduction for fees, expenses, or taxes) 17.90 -3.21 -0.88 Lipper International Large-Cap Core Funds Average 18.03 -3.45 -1.04 * * Since 12/31/06. Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Raymond A. Mills, Ph.D. Chairman of Investment Advisory Committee 2006 1997 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 SUMMARY 61 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 2 As a T. Rowe Price shareholder, you will want to know about the following policies and procedures that apply to the T. Rowe Price family of funds. PRICING SH ARES AND RECEIVING SALE PROCEEDS How and When Shares Are Priced The share price, also called the “net asset value,” for the funds is calculated at the close of the New York Stock Exchange (normally 4 p.m. ET) each day that the exchange is open for business. To calculate the net asset value, the fund’s assets are valued and totaled; liabilities are subtracted; and the balance, called net assets, is divided by the number of shares outstanding. Market values are used to price portfolio holdings for which market quotations are readily available. Market values represent the prices at which securities actually trade or evaluations based on the judgment of the fund’s pricing services. If a market value for a security is not available or normal valuation procedures are deemed to be inappropriate, the fund will make a good faith effort to assign a fair value to the security by taking into account various factors that have been approved by the fund’s Board of Directors/Trustees. This value may differ from the value the fund receives upon sale of the securities. Amortized cost is used to price securities held by money funds and certain other debt securities held by a fund. Investments in other mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Non-U.S. equity securities are valued on the basis of their most recent closing market prices at 4 p.m. ET except under the circumstances described below. Most foreign markets close before 4 p.m. ET. For securities primarily traded in the Far East, for example, the most recent closing prices may be as much as 15 hours old at 4 p.m. ET. If a fund determines that developments between the close of a foreign market and the close of the New York Stock Exchange will, in its judgment, materially affect the value of some or all of the fund’s securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of 4 p.m. ET. In deciding whether to make these adjustments, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The fund may also fair value certain securities or a group of securities in other situations—for example, when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with closing market prices and information used for adjusting those prices and to value most fixed income securities. The fund cannot predict how often it will use closing prices and how often it will adjust those prices. INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 63 As a means of evaluating its fair value process, the fund routinely compares closing market prices, the next day’s opening prices in the same markets, and adjusted prices. The fund also evaluates a variety of factors when assigning fair values to private placements and other restricted securities. Other mutual funds may adjust the prices of their securities by different amounts or assign different fair values than the fair value that the fund assigns to the same security. The various ways you can buy, sell, and exchange shares are explained at the end of this prospectus and on the New Account form. These procedures may differ for institutional and employer-sponsored retirement accounts or if you hold your account through an intermediary. How Your Purchase, Sale, or Exchange Price Is Determined If your request is received by T. Rowe Price in correct form by the close of the New York Stock Exchange (normally 4 p.m. ET), your transaction will be priced at that business day’s net asset value. If your request is received by T. Rowe Price after the close of the New York Stock Exchange, your transaction will be priced at the next business day’s net asset value. The funds generally do not accept orders that request a particular day or price for a transaction or any other special conditions. Fund shares may be purchased through various third-party intermediaries, including banks, brokers, and investment advisers. Where authorized by a fund, orders will be priced at the net asset value next computed after receipt by the intermediary. Contact your intermediary for trade deadlines and the applicable policies for purchasing, selling, or exchanging your shares, as well as initial and subsequent investment minimums. The intermediary may charge a fee for its services. When authorized by the fund, certain financial institutions or retirement plans purchasing fund shares on behalf of customers or plan participants through T. Rowe Price Financial Institution Services or T. Rowe Price Retirement Plan Services may place a purchase order unaccompanied by payment. Payment for these shares must be received by the time designated by the fund (not to exceed the period established for settlement under applicable regulations). If payment is not received by this time, the order may be canceled. The financial institution or retirement plan is responsible for any costs or losses incurred by the fund or T. Rowe Price if payment is delayed or not received. Note: The time at which transactions and shares are priced and the time until which orders are accepted may be changed in case of an emergency or if the New York Stock Exchange closes at a time other than 4 p.m. ET. In the event of an emergency closing, a fund’s shareholders will receive the next share price calculated by the fund. There may be times when you are unable to contact us by telephone or access your account online due to extreme market activity, the unavailability of the T. Rowe Price website, or other circumstances. Should this occur, your order must still be placed T. ROWE PRICE 64 and accepted by T. Rowe Price prior to the time the New York Stock Exchange closes to be priced at that business day’s net asset value. Under certain conditions, a money fund may accept and process purchase and redemption orders beyond the close of the New York Stock Exchange on days that the New York Stock Exchange closes early and does not reopen, and may accept orders on a business day that the New York Stock Exchange is unexpectedly closed. How You Can Receive the Proceeds From a Sale When filling out the New Account form, you may wish to give yourself the widest range of options for receiving proceeds from a sale. If your request is received in correct form by T. Rowe Price on a business day prior to the close of the New York Stock Exchange, proceeds are usually sent on the next business day. Proceeds can be mailed to you by check or sent electronically to your bank account by Automated Clearing House transfer or bank wire. Automated Clearing House is an automated method of initiating payments from, and receiving payments in, your financial institution account. Proceeds sent by Automated Clearing House transfer are usually credited to your account the second business day after the sale and there are typically no fees associated with such payments. Proceeds sent by bank wire are usually credited to your account the next business day after the sale, although your financial institution may charge an incoming wire fee. Exception Under certain circumstances, and when deemed to be in a fund’s best interest, your proceeds may not be sent for up to seven calendar days after we receive your redemption request. Under certain limited circumstances, the Board of Directors/Trustees of a money fund may elect to suspend redemptions and postpone payment of redemption proceeds in order to facilitate an orderly liquidation of the money fund. If for some reason we cannot accept your request to sell shares, we will contact you. Contingent Redemption Fee Short-term trading can disrupt a fund’s investment program and create additional costs for long-term shareholders. For these reasons, certain T. Rowe Price funds, listed in the following table, assess a fee on redemptions (including exchanges out of a fund), which reduces the proceeds from such redemptions by the amounts indicated: T. Rowe Price Funds With Redemption Fees Fund Redemption fee Holding period Africa & Middle East 2% 90 days or less Diversified Small-Cap Growth 1% 90 days or less Emerging Europe 2% 90 days or less Emerging Markets Bond 2% 90 days or less INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 65 T. Rowe Price Funds With Redemption Fees Fund Redemption fee Holding period Emerging Markets Corporate Bond 2% 90 days or less Emerging Markets Local Currency Bond 2% 90 days or less Emerging Markets Stock 2% 90 days or less Equity Index 500 0.5% 90 days or less European Stock 2% 90 days or less Extended Equity Market Index 0.5% 90 days or less Floating Rate 2% 90 days or less Global Infrastructure 2% 90 days or less Global Large-Cap Stock 2% 90 days or less Global Real Estate 2% 90 days or less Global Stock 2% 90 days or less High Yield 2% 90 days or less International Bond 2% 90 days or less International Discovery 2% 90 days or less International Equity Index 2% 90 days or less International Growth & Income 2% 90 days or less International Stock 2% 90 days or less Japan 2% 90 days or less Latin America 2% 90 days or less New Asia 2% 90 days or less Overseas Stock 2% 90 days or less Real Assets 2% 90 days or less Real Estate 1% 90 days or less Small-Cap Value 1% 90 days or less Spectrum International 2% 90 days or less Tax-Efficient Equity 1% less than 365 days Tax-Free High Yield 2% 90 days or less Total Equity Market Index 0.5% 90 days or less U.S. Bond Enhanced Index 0.5% 90 days or less Redemption fees are paid to a fund to deter short-term trading, offset costs, and protect the fund’s long-term shareholders. Subject to the exceptions described on the following pages, all persons holding shares of a T. Rowe Price fund that imposes a redemption fee are subject to the fee, whether the person is holding shares directly with a T. Rowe Price fund; through a retirement plan for which T. Rowe Price serves as recordkeeper; or indirectly through an intermediary (such as a broker, bank, or T. ROWE PRICE 66 investment adviser), recordkeeper for retirement plan participants, or other third party. Computation of Holding Period When an investor sells shares of a fund that assesses a redemption fee, T. Rowe Price will use the “first-in, first-out” method to determine the holding period for the shares sold. Under this method, the date of redemption or exchange will be compared with the earliest purchase date of shares held in the account. The day after the date of your purchase is considered Day 1 for purposes of computing the holding period. For a fund with a 365-day holding period, a redemption fee will be charged on shares sold before the end of the required holding period. For funds with a 90-day holding period, a redemption fee will be charged on shares sold on or before the end of the required holding period. For example, if you redeem your shares on or before the 90th day from the date of purchase, you will be assessed the redemption fee. If you purchase shares through an intermediary, consult your intermediary to determine how the holding period will be applied. Transactions Not Subject to Redemption Fees The T. Rowe Price funds will not assess a redemption fee with respect to certain transactions. As of the date of this prospectus, the following shares of T. Rowe Price funds will not be subject to redemption fees: • Shares redeemed through an automated, systematic withdrawal plan; • Shares redeemed through or used to establish certain rebalancing, asset allocation, wrap, and advisory programs, as well as non-T. Rowe Price fund-of-funds products, if approved in writing by T. Rowe Price; • Shares purchased through the reinvestment of dividends or capital gain distributions;* • Shares converted from one share class to another share class of the same fund;* • Shares redeemed automatically by a fund to pay fund fees or shareholder account fees (e.g., for failure to meet account minimums); • Shares purchased by rollover or changes of account registration within the same fund;* • Shares redeemed to return an excess contribution from a retirement account; • Shares of T. Rowe Price funds purchased by another T. Rowe Price fund and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that other shareholders of the investing T. Rowe Price fund are still subject to the policy); • Shares that are redeemed in-kind; • Shares transferred to T. Rowe Price or a third-party intermediary acting as a service provider when the age of the shares cannot be determined systematically;* and • Shares redeemed in retirement plans or other products that restrict trading to no more frequently than once per quarter, if approved in writing by T. Rowe Price. * Subsequent exchanges of these shares into funds that assess redemption fees will subject such shares to the fee. INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 67 Redemption Fees on Shares Held in Retirement Plans If shares are held in a retirement plan, redemption fees generally will be assessed on shares redeemed by exchange only if they were originally purchased by exchange. However, redemption fees may apply to transactions other than exchanges depending on how shares of the plan are held at T. Rowe Price or how the fees are applied by your plan’s recordkeeper. To determine which of your transactions are subject to redemption fees, you should contact T. Rowe Price or your plan recordkeeper. Omnibus Accounts If your shares are held through an intermediary in an omnibus account, T. Rowe Price relies on the intermediary to assess the redemption fee on underlying shareholder accounts. T. Rowe Price seeks to identify intermediaries establishing omnibus accounts and to enter into agreements requiring the intermediary to assess the redemption fees. There are no assurances that T. Rowe Price will be successful in identifying all intermediaries or that the intermediaries will properly assess the fees. Certain intermediaries may not apply the exemptions previously listed to the redemption fee policy; all redemptions by persons trading through such intermediaries may be subject to the fee. Certain intermediaries may exempt transactions not listed from redemption fees, if approved by T. Rowe Price. Persons redeeming shares through an intermediary should check with their respective intermediary to determine which transactions are subject to the fees. USEFUL INFORMATION ON DISTRIBUTIONS AND TAX ES Each fund intends to qualify to be treated each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. In order to qualify, a fund must satisfy certain income, diversification, and distribution requirements. A regulated investment company is not subject to U.S. federal income tax at the portfolio level on income and gains from investments that are distributed to shareholders. However, if a fund were to fail to qualify as a regulated investment company and was ineligible to or otherwise did not cure such failure, the result would be fund-level taxation and, consequently, a reduction in income available for distribution to the fund’s shareholders. To the extent possible, all net investment income and realized capital gains are distributed to shareholders. Dividends and Other Distributions Dividend and capital gain distributions are reinvested in additional fund shares in your account unless you select another option. Reinvesting distributions results in compounding, which allows you to receive dividends and capital gain distributions on an increasing number of shares. T. ROWE PRICE 68 Distributions not reinvested are paid by check or transmitted to your bank account via Automated Clearing House. If the U.S. Postal Service cannot deliver your check, or if your check remains uncashed for six months, the fund reserves the right to reinvest your distribution check in your account at the net asset value on the day of the reinvestment and to reinvest all subsequent distributions in shares of the fund. Interest will not accrue on amounts represented by uncashed distributions or redemption checks. The following table provides details on dividend payments: Dividend Payment Schedule Fund Dividends Money funds • Purchases received by T. Rowe Price by noon ET via wire begin to earn dividends on that day. Other shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. • Declared daily and paid on the first business day of each month. Bond funds • Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. • Declared daily and paid on the first business day of each month. These stock funds only: • Balanced • Dividend Growth • Equity Income • Equity Index 500 • Global Real Estate • Growth & Income • Personal Strategy Balanced • Personal Strategy Income • Real Estate • Declared and paid quarterly, if any, in March, June, September, and December. • Must be a shareholder on the dividend record date. Other stock funds • Declared and paid annually, if any, generally in December. • Must be a shareholder on the dividend record date. Retirement and Spectrum Funds: • Retirement Income and Spectrum Income • Shares normally begin to earn dividends on the business day after payment is received by T. Rowe Price. • Declared daily and paid on the first business day of each month. • All others • Declared and paid annually, if any, generally in December. • Must be a shareholder on the dividend record date. Bond and money fund shares earn dividends through the date of redemption (except for wire redemptions from money funds prior to noon ET, which earn dividends through the calendar day prior to the date of redemption). Shares redeemed on a Friday or prior to a holiday will continue to earn dividends until the next business INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 69 day. Generally, if you redeem all of your bond or money fund shares at any time during the month, you will also receive all dividends earned through the date of redemption in the same check. When you redeem only a portion of your bond or money fund shares, all dividends accrued on those shares will be reinvested, or paid in cash, on the next dividend payment date. The funds do not pay dividends in fractional cents. Any dividend amount earned for a particular day on all shares held that is one-half of one cent or greater (for example, $0.016) will be rounded up to the next whole cent ($0.02), and any amount that is less than one-half of one cent (for example, $0.014) will be rounded down to the nearest whole cent ($0.01). Please note that if the dividend payable on all shares held is less than one-half of one cent for a particular day, no dividend will be earned for that day. If you purchase and sell your shares through an intermediary, consult your intermediary to determine when your shares begin and stop accruing dividends; the information previously described may vary. Capital Gain Payments A capital gain or loss is the difference between the purchase and sale price of a security. If a fund has net capital gains for the year (after subtracting any capital losses), they are usually declared and paid in December to shareholders of record on a specified date that month. If a second distribution is necessary, it is paid the following year. Capital gain payments are not expected from money funds, which are managed to maintain a constant share price. Tax Information In most cases, you will be provided information for your tax filing needs no later than mid-February. If you invest in the fund through a tax-deferred account, such as an individual retirement account, you will not be subject to tax on dividends and distributions from the fund or the sale of fund shares if those amounts remain in the tax-deferred account. You may receive a Form 1099-R or other Internal Revenue Service forms, as applicable, if any portion of the account is distributed to you. If you invest in the fund through a taxable account, you generally will be subject to tax when: • You sell fund shares, including an exchange from one fund to another. • The fund makes dividend or capital gain distributions. Additional information about the taxation of dividends for certain T. Rowe Price funds is listed below: Tax-Free and Municipal Funds • Regular monthly dividends (including those from the state-specific tax-free funds) are expected to be exempt from federal income taxes. T. ROWE PRICE 70 Tax-Free and Municipal Funds • Exemption is not guaranteed, since the fund has the right under certain conditions to invest in nonexempt securities. • A fund may hold Build America Bonds or other qualified tax credit bonds. Investments in these bonds will result in taxable interest income, although the federal income tax on such interest income may be fully or partially offset by the specified tax credits that are available to the bondholders. A fund may elect to pass through to the shareholders taxable interest income and any corresponding tax credits. Any available tax credits—which are also included in federal taxable income—generally can be used to offset federal regular income tax and alternative minimum tax, but those tax credits generally are not refundable. • Tax-exempt dividends paid to Social Security recipients may increase the portion of benefits that is subject to tax. • For state-specific funds, the monthly dividends you receive are expected to be exempt from state and local income tax of that particular state. For other funds, a small portion of your income dividend may be exempt from state and local income taxes. • If a fund invests in certain “private activity” bonds that are not exempt from the alternative minimum tax, shareholders who are subject to the alternative minimum tax must include income generated by those bonds in their alternative minimum tax calculation. Private activity bonds issued in 2009 and 2010, and refunding bonds issued in 2009 and 2010 to refund private activity bonds that were issued from the beginning of 2004 to the end of 2008, are exempt from the alternative minimum tax. The portion of a fund’s income dividend that should be included in your alternative minimum tax calculation, if any, will be reported to you in January on Form 1099-DIV. For individual shareholders, a portion of ordinary dividends representing “qualified dividend income” received by the fund may be subject to tax at the lower rates applicable to long-term capital gains rather than ordinary income. You may report it as “qualified dividend income” in computing your taxes, provided you have held the fund shares on which the dividend was paid for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Ordinary dividends that do not qualify for this lower rate are generally taxable at the investor’s marginal income tax rate. This includes the portion of ordinary dividends derived from interest, short-term capital gains, distributions from nonqualified foreign corporations, and dividends received by the fund from stocks that were on loan. Little, if any, of the ordinary dividends paid by the Global Real Estate Fund, Real Estate Fund, or the bond and money funds is expected to qualify for this lower rate. For corporate shareholders, a portion of ordinary dividends may be eligible for the 70% deduction for dividends received by corporations to the extent the fund’s income consists of dividends paid by U.S. corporations. Little, if any, of the ordinary dividends paid by the international stock funds or the bond and money funds is expected to qualify for this deduction. Beginning in 2013, a 3.8% Medicare contribution tax is imposed on net investment income, including interest, dividends, and capital gains, of U.S. individuals with income exceeding $200,000 (or $250,000 if married filing jointly) and of estates and trusts. INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 71 Taxes on Fund Redemptions When you sell shares in any fund, you may realize a gain or loss. An exchange from one fund to another is also a sale for tax purposes. T. Rowe Price will make available to you Form 1099-B, if applicable, no later than mid-February, indicating the date and amount of each sale you made in the fund during the prior year. This information will also be reported to the Internal Revenue Service. For most new accounts or those opened by exchange in 1984 or later, we will provide you with the gain or loss on the shares you sold during the year based on the average cost single category method. You may calculate the cost basis using other methods acceptable to the Internal Revenue Service, such as specific identification. If you hold your fund through an intermediary, the intermediary is responsible for providing you with any necessary tax forms. You should contact your intermediary for the tax information that will be sent to you and reported to the Internal Revenue Service. For mutual fund shares acquired after 2011, new tax regulations require us to report the cost basis information to you and the Internal Revenue Service on Form 1099-B using a cost basis method selected by you or, in the absence of such selected method, our default method if you acquire your shares directly from us. Our default method is average cost. If you acquire your fund shares through an intermediary after 2011, you should check with your intermediary regarding the applicable cost basis method. You should, however, note that the cost basis information reported to you may not always be the same as what you should report on your tax return because the rules applicable to the determination of cost basis on Form 1099-B may be different from the rules applicable to the determination of cost basis for reporting on your tax return. Therefore, you should save your transaction records to make sure the information reported on your tax return is accurate. To help you maintain accurate records, T. Rowe Price will make available to you a confirmation promptly following each transaction you make (except for systematic purchases and systematic redemptions) and a year-end statement detailing all of your transactions in each fund account during the year. If you hold your fund through an intermediary, the intermediary is responsible for providing you with transaction confirmations and statements. Taxes on Fund Distributions T. Rowe Price (or your intermediary) will make available to you, as applicable, no later than mid-February, a Form 1099-DIV, or other Internal Revenue Service forms, as required, indicating the tax status of any income dividends, dividends exempt from federal income taxes, and capital gain distributions made to you. This information will be reported to the Internal Revenue Service. Taxable distributions are generally taxable to you in the year in which they are paid. Your bond or money fund dividends for each calendar year will include dividends accrued up to the first T. ROWE PRICE 72 business day of the next calendar year. You will be sent any additional information you need to determine your taxes on fund distributions, such as the portion of your dividends, if any, that may be exempt from state and local income taxes. Dividends from tax-free funds are generally expected to be tax-exempt. The tax treatment of a capital gain distribution is determined by how long the fund held the portfolio securities, not how long you held the shares in the fund. Short- term (one year or less) capital gain distributions are taxable at the same rate as ordinary income, and gains on securities held for more than one year are taxed at the lower rates applicable to long-term capital gains. If you realized a loss on the sale or exchange of fund shares that you held for six months or less, your short-term capital loss must be reclassified as a long-term capital loss to the extent of any long-term capital gain distributions received during the period you held the shares. For funds investing in foreign securities, distributions resulting from the sale of certain foreign currencies, currency contracts, and the foreign currency portion of gains on debt securities are taxed as ordinary income. Net foreign currency losses may cause monthly or quarterly dividends to be reclassified as a return of capital. If the fund qualifies and elects to pass through nonrefundable foreign income taxes paid to foreign governments during the year, your portion of such taxes will be reported to you as taxable income. However, you may be able to claim an offsetting credit or deduction on your tax return for those amounts. There can be no assurance that a fund will meet the requirements to pass through foreign income taxes paid. Taxable distributions are subject to tax whether reinvested in additional shares or received in cash. If a fund holds Build America Bonds or other qualified tax credit bonds and elects to pass through the corresponding interest income and any available tax credits, you will need to report both the interest income and any such tax credits as taxable income. You may be able to claim the tax credits on your federal tax return as an offset to your income tax (including alternative minimum tax) liability, but the tax credits generally are not refundable. There is no assurance, however, that a fund will elect to pass through the income and credits. The following table provides additional details on distributions for certain funds: Taxes on Fund Distributions Tax-Free and Municipal Funds • Gains realized on the sale of market discount bonds with maturities beyond one year may be treated as ordinary income and cannot be offset by other capital losses. • Payments received or gains realized on certain derivative transactions may result in taxable ordinary income or capital gains. • To the extent the fund makes such investments, the likelihood of a taxable distribution will be increased. INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 73 Taxes on Fund Distributions Inflation Protected Bond Fund • Inflation adjustments on Treasury inflation-protected securities that exceed deflation adjustments for the year will be distributed as a short-term capital gain resulting in ordinary income. • In computing the distribution amount, the fund cannot reduce inflation adjustments by short- or long-term capital losses from the sales of securities. • Net deflation adjustments for a year may result in all or a portion of dividends paid earlier in the year being treated as a return of capital. Retirement and Spectrum Funds • Distributions by the underlying funds and changes in asset allocations may result in taxable distributions of ordinary income or capital gains. Tax Consequences of Hedging Entering into certain options, futures, swaps, and forward foreign exchange contracts and transactions may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in a fund being required to distribute gains on such transactions even though it did not close the contracts during the year or receive cash to pay such distributions. The fund may not be able to reduce its distributions for losses on such transactions to the extent of unrealized gains in offsetting positions. Tax Effect of Buying Shares Before an Income Dividend or Capital Gain Distribution If you buy shares shortly before or on the record date—the date that establishes you as the person to receive the upcoming distribution—you may receive a portion of the money you just invested in the form of a taxable distribution. Therefore, you may wish to find out a fund’s record date before investing. In addition, a fund’s share price may, at any time, reflect undistributed capital gains or income and unrealized appreciation, which may result in future taxable distributions. Such distributions can occur even in a year when the fund has a negative return. TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS Following these procedures helps assure timely and accurate transactions. Purchase Conditions Nonpayment If you pay with a check or Automated Clearing House transfer that does not clear or if your payment is not received in a timely manner, your purchase may be canceled. You will be responsible for any losses or expenses incurred by the fund or transfer agent, and the fund can redeem shares you own in this or another identically registered T. Rowe Price account as reimbursement. The funds and their agents have the right to reject or cancel any purchase, exchange, or redemption due to nonpayment. T. ROWE PRICE 74 U.S. Dollars All purchases must be paid for in U.S. dollars; checks must be drawn on U.S. banks. Sale (Redemption) Conditions Holds on Immediate Redemptions: 10-Day Hold If you sell shares that you just purchased and paid for by check or Automated Clearing House transfer, the fund will process your redemption but generally will delay sending you the proceeds for up to 10 calendar days to allow the check or transfer to clear. If, during the clearing period, we receive a check drawn against your newly purchased shares, it will be returned marked “uncollected.” (The 10-day hold does not apply to purchases paid for by bank wire or automatic purchases through your paycheck.) Telephone and Online Account Transactions You may access your account and conduct transactions using the telephone or the T. Rowe Price website. The T. Rowe Price funds and their agents use reasonable procedures to verify the identity of the shareholder. If these procedures are followed, the funds and their agents are not liable for any losses that may occur from acting on unauthorized instructions. A confirmation is sent promptly after a transaction. Please review it carefully and contact T. Rowe Price immediately about any transaction you believe to be unauthorized. Telephone conversations are recorded. Large Redemptions Large redemptions can adversely affect a portfolio manager’s ability to implement a fund’s investment strategy by causing the premature sale of securities. Therefore, the fund reserves the right (without prior notice) to pay all or part of redemption proceeds with securities from the fund’s portfolio rather than in cash (“redemption in-kind”). If this occurs, the securities will be selected by the fund in its absolute discretion, and the redeeming shareholder or account will be responsible for disposing of the securities and bearing any associated costs. Excessive and Short-Term Trading Policy Excessive transactions and short-term trading can be harmful to fund shareholders in various ways, such as disrupting a fund’s portfolio management strategies, increasing a fund’s trading costs, and negatively affecting its performance. Short-term traders in funds that invest in foreign securities may seek to take advantage of developments overseas that could lead to an anticipated difference between the price of the funds’ shares and price movements in foreign markets. While there is no assurance that T. Rowe Price can prevent all excessive and short-term trading, the Boards of Directors/Trustees of the T. Rowe Price funds have adopted the following trading limits that are designed to deter such activity and protect the funds’ shareholders. The funds may revise their trading limits and procedures at any time as the Boards of Directors/Trustees deem necessary or appropriate to better detect short-term trading that may adversely affect the funds, to comply with applicable regulatory requirements, or to impose additional or alternative restrictions. Subject to certain exceptions, each T. Rowe Price fund restricts a shareholder’s purchases (including through exchanges) into a fund account for a period of INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 75 30 calendar days after the shareholder has redeemed or exchanged out of that same fund account (the “30-Day Purchase Block”). The calendar day after the date of redemption is considered Day 1 for purposes of computing the period before another purchase may be made. General Exceptions As of the date of this prospectus, the following types of transactions generally are not subject to the 30-Day Purchase Block: • Shares purchased or redeemed in money funds and ultra short-term bond funds; • Shares purchased or redeemed through a systematic purchase or withdrawal plan; • Checkwriting redemptions from bond and money funds; • Shares purchased through the reinvestment of dividends or capital gain distributions; • Shares redeemed by the fund to pay fund fees or shareholder account fees; • Transfers and changes of account registration within the same fund; • Shares purchased by asset transfer or direct rollover; • Shares purchased or redeemed through IRA conversions and recharacterizations; • Shares redeemed to return an excess contribution from a retirement account; • Transactions in Section 529 college savings plans; • Shares converted from one share class to another share class in the same fund; and • Shares of T. Rowe Price funds that are purchased by another T. Rowe Price fund, including shares purchased by T. Rowe Price fund-of-funds products, and shares purchased by discretionary accounts managed by T. Rowe Price or one of its affiliates (please note that shareholders of the investing T. Rowe Price fund are still subject to the policy). Transactions in certain rebalancing, asset allocation, wrap programs, and other advisory programs, as well as non-T. Rowe Price fund-of-funds products, may also be exempt from the 30-Day Purchase Block, subject to prior written approval by T. Rowe Price. In addition to restricting transactions in accordance with the 30-Day Purchase Block, T. Rowe Price may, in its discretion, reject (or instruct an intermediary to reject) any purchase or exchange into a fund from a person (which includes individuals and entities) whose trading activity could disrupt the management of the fund or dilute the value of the fund’s shares, including trading by persons acting collectively (e.g., following the advice of a newsletter). Such persons may be barred, without prior notice, from further purchases of T. Rowe Price funds for a period longer than 30 calendar days or permanently. Intermediary Accounts If you invest in T. Rowe Price funds through an intermediary, you should review the intermediary’s materials carefully or consult with the intermediary directly to determine the trading policy that will apply to your trades in the funds as well as any other rules or conditions on transactions that may apply. If T. Rowe Price is unable to identify a transaction placed through an intermediary as exempt from the excessive trading policy, the 30-Day Purchase Block may apply. T. ROWE PRICE 76 Intermediaries may maintain their underlying accounts directly with the fund, although they often establish an omnibus account (one account with the fund that represents multiple underlying shareholder accounts) on behalf of their customers. When intermediaries establish omnibus accounts in the T. Rowe Price funds, T. Rowe Price is not able to monitor the trading activity of the underlying shareholders. However, T. Rowe Price monitors aggregate trading activity at the intermediary (omnibus account) level in an attempt to identify activity that indicates potential excessive or short-term trading. If it detects suspicious trading activity, T. Rowe Price contacts the intermediary and may request personal identifying information and transaction histories for some or all underlying shareholders (including plan participants, if applicable). If T. Rowe Price believes that excessive or short-term trading has occurred, it will instruct the intermediary to impose restrictions to discourage such practices and take appropriate action with respect to the underlying shareholder, including restricting purchases for 30 calendar days or longer. There is no assurance that T. Rowe Price will be able to properly enforce its excessive trading policies for omnibus accounts. Because T. Rowe Price generally relies on intermediaries to provide information and impose restrictions for omnibus accounts, its ability to monitor and deter excessive trading will be dependent upon the intermediaries’ timely performance of their responsibilities. T. Rowe Price may allow an intermediary or other third party to maintain restrictions on trading in the T. Rowe Price funds that differ from the 30-Day Purchase Block. An alternative excessive trading policy would be acceptable to T. Rowe Price if it believes that the policy would provide sufficient protection to the T. Rowe Price funds and their shareholders that is consistent with the excessive trading policy adopted by the funds’ Boards of Directors/Trustees. Retirement Plan Accounts If shares are held in a retirement plan, generally the 30-Day Purchase Block applies only to shares redeemed by a participant-directed exchange to another fund. However, the 30-Day Purchase Block may apply to transactions other than exchanges depending on how shares of the plan are held at T. Rowe Price or the excessive trading policy applied by your plan’s recordkeeper. An alternative excessive trading policy may apply to the T. Rowe Price funds where a retirement plan has its own policy deemed acceptable to T. Rowe Price. You should contact T. Rowe Price or your plan recordkeeper to determine which of your transactions are subject to the funds’ 30-Day Purchase Block or an alternative policy. There is no guarantee that T. Rowe Price will be able to identify or prevent all excessive or short-term trades or trading practices. Keeping Your Account Open Due to the relatively high cost to a fund of maintaining small accounts, we ask you to maintain an account balance of at least $1,000 ($10,000 for Summit Funds). If, for any reason, your balance is below this amount for three months or longer, we have INFORMATION ABOUT ACCOUNTS IN T. ROWE PRICE FUNDS 77 the right to redeem your account at the then-current net asset value after giving you 60 days to increase your balance. This could result in a taxable gain. Signature Guarantees A Medallion signature guarantee is designed to protect you and the T. Rowe Price funds from fraud by verifying your signature. You may need to have your signature guaranteed in certain situations, such as: • Written requests: (1) to redeem over $100,000 or (2) to wire redemption proceeds when prior bank account authorization is not on file. • Remitting redemption proceeds to any person, address, or bank account not on record. • Transferring redemption proceeds to a T. Rowe Price fund account with a different registration (name or ownership) from yours. • Establishing certain services after the account is opened. The signature guarantee must be obtained from a financial institution that is a participant in a Medallion signature guarantee program. You can obtain a Medallion signature guarantee from most banks, savings institutions, broker-dealers, and other guarantors acceptable to T. Rowe Price. When obtaining a Medallion signature guarantee, please discuss with the guarantor the dollar amount of your proposed transaction. It is important that the level of coverage provided by the guarantor’s stamp covers the dollar amount of the transaction or it may be rejected. We cannot accept guarantees from notaries public or organizations that do not provide reimbursement in the case of fraud. ACCOUNT SERVICE FEE In an effort to help offset the disproportionately high costs incurred by the funds in connection with servicing lower-balance accounts, an annual $20 account service fee (paid to T. Rowe Price Services, Inc., or one of its affiliates) is charged to certain fund accounts with a balance below $10,000. The determination of whether a fund account is subject to the account service fee is based on account balances and services selected for accounts as of the last business day of August. The fee will be charged to an account with a balance below $10,000 for any reason, including market fluctuation and recent redemptions. The fee, which is automatically deducted from an account by redeeming fund shares, is typically charged to accounts in early September each calendar year. The account service fee generally does not apply to fund accounts that are held through an intermediary, participant accounts in employer-sponsored retirement plans for which T. Rowe Price Retirement Plan Services provides recordkeeping services, or money funds that are used as a T. Rowe Price Brokerage sweep account. T. ROWE PRICE 78 Regardless of a particular fund account’s balance on the last business day of August, the account service fee is automatically waived for accounts that satisfy any of the following conditions: • Any accounts for which the shareholder has elected to receive electronic delivery of all of the following: account statements, transaction confirmations, and prospectuses and shareholder reports; • Any accounts of a shareholder with at least $50,000 in total assets with T. Rowe Price (for this purpose, total assets includes investments in T. Rowe Price mutual funds, except for those held through a retirement plan for which T. Rowe Price Retirement Plan Services provides recordkeeping services; T. Rowe Price Brokerage; and T. Rowe Price variable annuities); or • Any accounts of a shareholder who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $100,000—visit troweprice.com or call 1-800-537-1098 for more information). T. Rowe Price reserves the right to authorize additional waivers for other types of accounts or to modify the conditions for assessment of the account service fee. Fund shares held in a T. Rowe Price individual retirement account, Education Savings Account, or small business retirement plan account (including certain 403(b) plan accounts) are subject to the account service fee and may be subject to additional administrative fees when distributing all fund shares from such accounts. MORE ABOUT THE FUNDS 3 ORGANIZATION AND MANAGEMENT How are the funds organized? T. Rowe Price International Funds, Inc. (the “corporation”) was incorporated in Maryland in 1979. Currently, the corporation consists of 18 series, each representing a separate pool of assets with different objectives and investment policies. Each is an “open-end management investment company,” or mutual fund. Mutual funds pool money received from shareholders and invest it to try to achieve specified objectives. What is meant by “shares”? As with all mutual funds, investors purchase shares when they put money in a fund. These shares are part of a fund’s authorized capital stock, but share certificates are not issued. Each share and fractional share entitles the shareholder to: • Receive a proportional interest in income and capital gain distributions. • Cast one vote per share on certain fund matters, including the election of fund directors/trustees, changes in fundamental policies, or approval of changes in the fund’s management contract. Do T. Rowe Price funds have annual shareholder meetings? The funds are not required to hold annual meetings and, to avoid unnecessary costs to fund shareholders, do not do so except when certain matters, such as a change in fundamental policies, must be decided. In addition, shareholders representing at least 10% of all eligible votes may call a special meeting for the purpose of voting on the removal of any fund director or trustee. If a meeting is held and you cannot attend, you can vote by proxy. Before the meeting, the fund will send or make available to you proxy materials that explain the issues to be decided and include instructions on voting by mail or telephone or on the Internet. Who runs the funds? General Oversight Each fund is governed by a Board of Directors that meets regularly to review fund investments, performance, expenses, and other business affairs. The Board elects the fund’s officers. At least 75% of Board members are independent of T. Rowe Price and its affiliates (the “Firm”). All decisions regarding the purchase and sale of fund investments are made by T. Rowe Price or an affiliated investment adviser—specifically by each fund’s portfolio manager. T. ROWE PRICE 80 Investment Adviser T. Rowe Price is each fund’s investment adviser and oversees the selection of each fund’s investments and management of each fund’s portfolio. T. Rowe Price is a SEC- registered investment adviser that provides investment management services to individual and institutional investors, and sponsors and serves as adviser and sub- adviser to registered investment companies, institutional separate accounts, and common trust funds. The address for T. Rowe Price is 100 East Pratt Street, Baltimore, Maryland 21202. As of December 31, 2012, the Firm managed approximately $577 billion for more than 10 million individual and institutional investor accounts. With respect to each fund (other than the Overseas Stock Fund), T. Rowe Price has entered into a sub-advisory agreement with T. Rowe Price International under which T. Rowe Price International is authorized to trade securities and make discretionary investment decisions on behalf of each fund. With respect to the International Discovery and New Asia Funds, T. Rowe Price has also entered into a sub-advisory agreement with Price Hong Kong under which Price Hong Kong is authorized to trade securities and make discretionary investment decisions on behalf of each fund. With respect to the International Stock Fund, T. Rowe Price has also entered into a sub-advisory agreement with Price Singapore under which Price Singapore is authorized to facilitate securities trading and make limited discretionary investment decisions on behalf of the fund. T. Rowe Price International is an investment adviser registered or licensed with the SEC, United Kingdom Financial Services Authority, Financial Services Agency of Japan, and other non-U.S. regulatory authorities. T. Rowe Price International sponsors and serves as adviser to foreign collective investment schemes and provides investment management services to investment companies and other institutional investors. T. Rowe Price International is headquartered in London and has several branch offices around the world. T. Rowe Price International is a direct subsidiary of T. Rowe Price and its address is 60 Queen Victoria Street, London EC4N 4TZ, United Kingdom. Price Hong Kong is licensed with the Securities and Futures Commission of Hong Kong and is registered as an investment adviser with the SEC. Price Hong Kong serves as a sub-adviser to investment companies and provides investment management services for other clients who seek to primarily invest in the Asia-Pacific securities markets. Price Hong Kong is a subsidiary of T. Rowe Price and T. Rowe Price International, and its address is 1 Connaught Place, Room 2101-2120, Jardine House 21st Floor, Central Hong Kong. Price Singapore is licensed with the Monetary Authority of Singapore and is registered as an investment adviser with the SEC. Price Singapore serves as a sub-adviser to investment companies and foreign collective investment schemes and may provide investment management services to other institutional clients. Price Singapore is a direct subsidiary of T. Rowe Price International, and its address is No. 290 Orchard Road, #14-04 Paragon, Singapore 238859. MORE ABOUT THE FUNDS 81 Portfolio Management T. Rowe Price has established an Investment Advisory Committee with respect to each fund. The committee chairman has day-to-day responsibility for managing the fund’s portfolio and works with the committee in developing and executing each fund’s investment program. The members of each advisory committee are listed below, along with information that provides the year that the chairman first joined the Firm and the chairman’s specific business experience during the past five years (although the chairman may have had portfolio management responsibilities for a longer period). The Statement of Additional Information provides additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers, and the portfolio managers’ ownership of fund shares. Africa & Middle East Fund Oliver D.M. Bell, Chairman, Ulle Adamson, Christopher D. Alderson, Paulina Amieva, Malik Asif, S. Leigh Innes, Mark J. Lawrence, and Gonzalo Pangaro. Mr. Bell has been chairman of the committee since 2011. Mr. Bell joined the Firm in 2011 and his investment experience dates from 1997. Prior to joining the Firm in October 2011, Mr. Bell worked for Pictet Asset Management Ltd where he served as an emerging markets research manager (beginning in 1997), a portfolio manager for Africa and Middle East portfolios and other emerging markets strategies (beginning in 2000), and Head of Global Emerging Markets Research (beginning in 2009). Emerging Europe Fund S. Leigh Innes, Chairman, Ulle Adamson, Christopher D. Alderson, Gonzalo Pangaro, Craig J. Pennington, and Jeneiv Shah. Ms. Innes has been chairman of the committee since 2008, but has been managing the fund since 2007. She joined the Firm in 2002 and her investment experience dates from 1997. She has served as a portfolio manager with the Firm throughout the past five years. Emerging Markets Stock Fund Gonzalo Pangaro, Chairman, Christopher D. Alderson, Oliver D.M. Bell, Jose Costa Buck, Mark J.T. Edwards, S. Leigh Innes, and Anh Lu. Mr. Pangaro became co-chairman in 2008 and has been sole chairman since 2009. He joined the Firm in 1998 and his investment experience dates from 1991. He has served as a portfolio manager with the Firm throughout the past five years. European Stock Fund Dean Tenerelli, Chairman, Anh Lu, Gonzalo Pangaro, Craig J. Pennington, Frederick A. Rizzo, Federico Santilli, Sebastian Schrott, John C.A. Sherman, Justin Thomson, and Mitchell J.K. Todd. Mr. Tenerelli has been chairman of the committee since 2008, but has been involved in managing the fund since 2005. He joined the Firm in 2000 and his investment experience dates from 1991. He has served as a portfolio manager with the Firm throughout the past five years. International Discovery Fund Justin Thomson, Chairman, Tak Yiu Cheng, Henry M. Ellenbogen, Luis Fananas, Vishnu V. Gopal, Benjamin Griffiths, Tetsuji Inoue, Miki Takeyama, Sin Dee Tan, Verena E. Wachnitz, Hiroshi Watanabe, and Ernest C. Yeung. Mr. Thomson has been chairman of the committee since 2008, but has been involved in managing the fund since 1998. He joined the Firm in 1998 and his T. ROWE PRICE 82 investment experience dates from 1991. He has served as a portfolio manager with the Firm throughout the past five years. Hiroshi Watanabe is responsible for selecting the fund’s investments in Japan and Ernest C. Yeung is responsible for selecting the fund’s investments in Asia (excluding Japan). Mr. Watanabe joined the Firm in 2006 and his investment experience dates from that time. He has served as an equity analyst with the Firm throughout the past five years. Mr. Yeung joined the Firm in 2003 and his investment experience dates from 2001. During the past five years, he has served as an equity analyst and then a portfolio manager (beginning in 2009). International Growth & Income Fund Jonathan H.W. Matthews, Chairman, Richard de los Reyes, Sebastien Mallet, Raymond A. Mills, Paul T. O’Sullivan, Austin Powell, Frederick A. Rizzo, Jonty Starbuck, Verena E. Wachnitz, David J. Wallack, and Ernest C. Yeung. Mr. Matthews has been chairman of the committee since 2010. He joined the Firm in 2008 and his investment experience dates from 1998. Prior to managing the fund, he served as an investment analyst since joining the Firm. Prior to joining the Firm, he was an equity analyst and fund manager for Pioneer Investments (beginning in 2003). International Stock Fund Robert W. Smith, Chairman, R. Scott Berg, Richard N. Clattenburg, David J. Eiswert, M. Campbell Gunn, Gonzalo Pangaro, Sebastian Schrott, and Dean Tenerelli. Mr. Smith has been chairman of the committee since 2007. He joined the Firm in 1992 and his investment experience dates from 1987. He has served as a portfolio manager with the Firm throughout the past five years. Japan Fund M. Campbell Gunn, Chairman, Archibald Ciganer Albeniz, Richard N. Clattenburg, Melissa C. Gallagher, Tetsuji Inoue, Yoichiro Kai, Hiroaki Owaki, Austin Powell, Naoto Saito, Miki Takeyama, and Hiroshi Watanabe. Mr. Gunn has been chairman of the committee since 2008, but has been involved in managing the fund since 2003. He joined the Firm in 2002 and his investment experience dates from 1978. He has served as a portfolio manager with the Firm throughout the past five years. Latin America Fund Jose Costa Buck, Chairman, Paulina Amieva, Luis M. Baylac, Gonzalo Pangaro, Craig J. Pennington, Francisco Sersale, Jean-Pierre Thibaud, and Verena E. Wachnitz. Mr. Costa Buck has been chairman of the committee since 2008. He joined the Firm in 2000 and his investment experience dates from 1995. During the past five years, he has served as an investment analyst and then a portfolio manager (beginning in 2008). New Asia Fund Anh Lu, Chairman, Syed H. Ali, Sheena Barbosa, Tak Yiu Cheng, Jessie Q. Ding, Vishnu Gopal, Yoichiro Kai, Jai Kapadia, Aden Lau, Susanta Mazumdar, Jihong Min, Eric C. Moffett, Sridhar Nishtala, Eunbin Song, John Xie, Ernest C. Yeung, Alison M.L. Yip, Christopher Yip, and Wenli Zheng. Ms. Lu has been chairman of the committee since 2009. She joined the Firm in 2001 and her investment experience dates from 1995. She has served as a portfolio manager with the Firm throughout the past five years. MORE ABOUT THE FUNDS 83 Overseas Stock Fund Raymond A. Mills, Ph.D., Chairman, M. Campbell Gunn, Yoichiro Kai, Anh Lu, Jonathan H.W. Matthews, Sebastian Schrott, John C.A. Sherman, Robert W. Smith, Jonty Starbuck, and Christopher S. Whitehouse. Mr. Mills has been chairman of the committee since the fund’s inception in 2006. He joined the Firm in 1997 and his investment experience dates from that time. He has served as a portfolio manager with the Firm throughout the past five years. The Management Fee This fee has two parts–an “individual fund fee,” which reflects a fund’s particular characteristics, and a “group fee.” The group fee, which is designed to reflect the benefits of the shared resources of the T. Rowe Price investment management complex, is calculated daily based on the combined net assets of all T. Rowe Price funds (except the Spectrum Funds, Retirement Funds, TRP Reserve Investment Funds, and any index or private label mutual funds). The group fee schedule (in the following table) is graduated, declining as the asset total rises, so shareholders benefit from the overall growth in mutual fund assets. Group Fee Schedule 0.334%* First $50 billion 0.305% Next $30 billion 0.300% Next $40 billion 0.295% Next $40 billion 0.290% Next $60 billion 0.285% Next $80 billion 0.280% Thereafter * Represents a blended group fee rate containing various breakpoints. Each fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. On October 31, 2012, the annual group fee rate was 0.30%. The individual fund fees, also applied to the funds’ average daily net assets, are as follows: International Growth & Income, International Stock, and Overseas Stock Funds, 0.35%; European Stock, Japan, and New Asia Funds, 0.50%; Africa & Middle East, Emerging Europe, Emerging Markets Stock, International Discovery, and Latin America Funds, 0.75%. The expenses shown in the fee tables in Section 1 are generally based on a fund’s prior fiscal year. In periods of market volatility, assets may decline significantly, causing total annual fund operating expenses to become higher than the numbers shown in the fee tables. A discussion about the factors considered by the Board and its conclusions in approving each fund’s investment management contract with T. Rowe Price appears in each fund’s semiannual report to shareholders for the period ended April 30. T. ROWE PRICE 84 Fund Operations and Shareholder Services T. Rowe Price provides accounting services to the T. Rowe Price funds. T. Rowe Price Services, Inc. acts as the transfer and dividend disbursing agent and provides shareholder and administrative services to the funds. T. Rowe Price Retirement Plan Services, Inc., provides recordkeeping, sub-transfer agency, and administrative services for certain types of retirement plans investing in the funds. These companies receive compensation from the funds for their services. The funds may also pay third- party intermediaries for performing shareholder and administrative services for underlying shareholders in omnibus accounts. All funds also serve as underlying funds in which certain fund-of-funds products, the T. Rowe Price Spectrum and/or Retirement Funds, invest. Subject to approval by each fund’s Board, each fund bears a proportional share of the operating expenses of the fund-of-funds products. All of the fees discussed above are included in the fees and expenses table under “Other expenses” and in the fund’s financial statements. MORE INFORMATION ABOUT THE FUNDS AND THEIR INVESTMENT RISKS Consider your investment goals, your time horizon for achieving them, and your tolerance for risk. The funds may be appropriate for you if you are seeking diversification for your equity investments and can accept the risks that accompany foreign investments. Your decision should take into account whether you have any other foreign stock investments. If you do not, you may want to consider investing in a more widely diversified fund to gain the broadest exposure to global opportunities. A diversified emerging markets fund may be an appropriate part of your overall portfolio if you are supplementing existing holdings primarily in developed foreign markets and are comfortable with the potentially significant volatility associated with investing in emerging markets. If you seek to supplement a diversified international portfolio with a more concentrated investment, a fund focusing on a particular geographic area may be appropriate. The market frequently rewards growth stocks with price increases when earnings expectations are met or exceeded. Funds that employ a growth-oriented approach to stock selection rely on the premise that by investing in companies that increase their earnings faster than both inflation and the overall economy, the market will eventually reward those companies with a higher stock price. A fund’s successful implementation of a growth-oriented strategy should lead to long-term growth of capital over time. Funds that employ a value-oriented approach to stock selection seek to invest in companies whose stock prices are low in relation to the value of their assets or future prospects. By identifying companies whose stocks are currently out of favor or undervalued, value funds hope to realize significant appreciation as other investors recognize the stock’s intrinsic value and the price rises accordingly. Generally, careful MORE ABOUT THE FUNDS 85 selection of stocks having value characteristics can, over time, limit the downside risk of a value-oriented portfolio compared with the broad market. In addition, stocks whose prices are below a company’s intrinsic value may offer the potential for substantial capital appreciation. Investing abroad increases the opportunities available to you. Some foreign countries may have greater potential for economic growth than the U.S. Emerging market, regional, and single-country funds allow investors to seek potentially superior growth in the areas they view as most promising, but with commensurately higher risks. Investing a portion of your overall portfolio in stock funds with foreign holdings can enhance your diversification while providing the opportunity to increase long-term returns. Portfolio managers closely monitor fund investments as well as political and economic trends in each country and region. Holdings are adjusted according to the portfolio manager’s analysis and outlook. The impact of unfavorable developments in a particular country may be reduced when investments are spread among many countries. However, the economies and financial markets of countries in a certain region may be heavily influenced by one another. International Funds Comparison Guide Fund Geographic focus Company emphasis Expected risk relative to the other funds Africa & Middle East Africa & Middle East All sizes Highest Emerging Europe Europe (including Eastern Europe and the former Soviet Union) All sizes Highest Emerging Markets Stock Worldwide (excluding U.S.) All sizes Highest European Stock Europe (including Eastern Europe) All sizes Moderate International Discovery Worldwide (excluding U.S.) Small- to medium sized Higher International Growth & Income Worldwide (excluding U.S.) Large, well established Moderate International Stock Worldwide (excluding U.S.) Large- to medium-sized Moderate Japan Japan All sizes Higher Latin America Latin America All sizes Highest New Asia Far East and Pacific Basin (excluding Japan) All sizes Highest Overseas Stock Worldwide (excluding U.S.) Large, well established Moderate T. ROWE PRICE 86 The risk profile of the funds varies with the investment style they pursue, their geographic focus, and whether they invest in developed markets, emerging markets, or both. Even investments in countries with highly developed economies are subject to significant risks. As with all stock funds, a fund’s share price can fall because of weakness in one or more of its primary equity markets, a particular industry, or specific holdings. Stock markets can decline for many reasons, including adverse political, social, or economic developments, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, our assessment of companies held in a fund may prove incorrect, resulting in losses or poor performance, even in rising markets. Growth stocks can be volatile for several reasons. Since these companies usually invest a high portion of earnings in their businesses, they may lack the dividends that can cushion stock prices in a falling market. Also, earnings disappointments often lead to sharply falling prices because investors buy growth stocks in anticipation of superior earnings growth. Finding undervalued stocks requires considerable research to identify the particular company, analyze its financial condition and prospects, and assess the likelihood that the stock’s underlying value will be recognized by the market and reflected in its price. A value approach to investing carries the risk that the market will not recognize a security’s intrinsic value for a long time or that a stock judged to be undervalued may actually be appropriately priced. Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. As with any mutual fund, there is no guarantee the funds will achieve their objectives. The funds’ share price fluctuates, which means you could lose money when you sell your shares of the funds. Some particular risks affecting the funds include the following: Currency risk This refers to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that foreign currency. The overall impact on a fund’s holdings can be significant, unpredictable, and long-lasting, depending on the currencies represented in the fund’s portfolio and how each foreign currency appreciates or depreciates in relation to the U.S. dollar and whether currency positions are hedged. Under normal conditions, the funds do not engage in extensive foreign currency hedging programs. Further, since exchange rate movements are volatile, a fund’s attempts at hedging could be unsuccessful, and it is not possible to effectively hedge the currency risks of many emerging market countries. MORE ABOUT THE FUNDS 87 Other risks of foreign investing Risks can result from varying stages of economic and political development, differing regulatory environments, trading days and accounting standards, uncertain tax laws, and higher transaction costs of non-U.S. markets. Investments outside the U.S. could be subject to governmental actions such as capital or currency controls, nationalization of a company or industry, expropriation of assets, or imposition of high taxes. A trading market may close without warning for extended time periods, preventing a fund from buying or selling securities in that market. Trading in the underlying securities of the funds may take place in various foreign markets on certain days when the funds are not open for business and do not calculate net asset values. For example, the Africa & Middle East Fund invests in securities that trade in various foreign markets that are open on weekends. As a result, net asset values may be significantly affected on days when shareholders cannot make transactions. Emerging markets risk (Africa & Middle East, Emerging Europe, Emerging Markets Stock, Latin America, New Asia Funds; other funds to a lesser degree, except Japan Fund) Investments in emerging markets, which include Africa, parts of Europe and much of Asia, the Middle East, and Central and South America, are subject to the risk of abrupt and severe price declines. The economic and political structures of emerging market countries, in most cases, do not compare favorably with the U.S. or other developed countries in terms of wealth and stability, and their financial markets often lack liquidity. These economies are less developed and can be overly reliant on particular industries and more vulnerable to the ebb and flow of international trade, trade barriers, and other protectionist or retaliatory measures. Certain countries have legacies and periodic episodes of hyperinflation and currency devaluations, particularly Russia and many Latin American nations, and more recently many Asian countries. Governments in many emerging market countries participate to a significant degree in their economies and securities markets. Foreign investments may be restricted and subject to greater government control, including repatriation of sales proceeds. Some countries have histories of instability and upheaval that could cause their governments to act in a detrimental or hostile manner toward private enterprise or foreign investment. Investments in countries or regions that have recently begun moving away from central planning and state-owned industries toward free markets should be regarded as speculative. While some countries have made progress in economic growth, liberalization, fiscal discipline, and political and social stability, there is no assurance these trends will continue. Significant risks, such as war and terrorism, currently affect some emerging market countries. Fund performance will likely be hurt by exposure to nations in the midst of hyperinflation, currency devaluation, trade disagreements, sudden political upheaval, or interventionist government policies. The volatility of emerging markets may be heightened by the actions (such as significant buying or selling) of a few major investors. For example, substantial increases or decreases in cash flows of T. ROWE PRICE 88 mutual funds investing in these markets could significantly affect local securities prices and, therefore, cause fund share prices to decline. All of these factors make investing in such countries significantly riskier than in other countries and any one of these could cause a fund’s share price to decline. Geographic risk (Africa & Middle East, Emerging Europe, European Stock, Japan, Latin America, and New Asia Funds; others to a lesser degree) Funds that are less diversified across geographic regions, countries, industries, or individual companies are generally riskier than more diversified funds. For example, investors in the Japan Fund are fully exposed to that country’s economic cycles, stock market valuations, and currency exchange rates, which could increase the fund’s risks compared with a more diversified fund. The economies and financial markets of certain regions—such as Latin America, Asia, Europe, and the Middle East and Africa—can be interdependent and may all decline at the same time. Ongoing concerns over the rising debt levels of certain European countries could further stress the European banking system and potentially lead to a default or breakup of the euro, which would pose special challenges for the financial markets and particularly for those funds with euro-denominated holdings. Such an event could lead to exchange controls or market closures, and negatively impact a fund’s ability to settle trades, convert euros into U.S. dollars, or assign values to its European securities Small- and medium-sized company risk (International Discovery Fund; others to a lesser degree) To the extent each fund invests in small- and mid-capitalization stocks, it is likely to be more volatile than a fund that invests only in large companies. Small and medium-sized companies are generally riskier because they may have limited product lines, capital, and managerial resources. Their securities may trade less frequently and with greater price swings. Nondiversified status (Africa & Middle East, Emerging Europe, Latin America, and New Asia Funds) There is additional risk with each fund that is nondiversified and thus can invest more of its assets in a smaller number of issuers. For example, poor performance by a single large holding of a fund would adversely affect fund performance more than if the fund were invested in a larger number of companies. Some of the principal tools we use to try to reduce overall risk include intensive research when evaluating a company’s prospects and limiting exposure to any one industry or company. While most assets will be invested in common stocks, other strategies may be employed that are not considered part of a fund’s principal investment strategies. For instance, a fund may invest, to a limited extent, in derivatives such as futures contracts and forward foreign currency exchange contracts. Any investments in futures would typically serve as an efficient means of gaining exposure to certain markets or as a cash management tool to maintain liquidity while being invested in the market. Forward foreign currency exchange contracts would primarily be used to settle trades in a foreign currency or to help protect a fund’s holdings from MORE ABOUT THE FUNDS 89 unfavorable changes in foreign currency exchange rates, although other currency hedging techniques may be used from time to time. To the extent the fund uses futures and foreign currency exchange contracts, it is exposed to potential volatility and losses greater than direct investments in the contract’s underlying assets, and the risk that anticipated currency movements will not be accurately predicted. Recent legislation calls for a new regulatory framework for the derivatives markets. The full extent and impact of new regulations are not certain at this time. New regulations have made the use of derivatives by funds more costly, may limit the availability of certain types of derivatives, and may otherwise adversely affect the value or performance of derivatives used by funds. The Statement of Additional Information contains more detailed information about each fund and its investments, operations, and expenses. INVESTMENT POLICIES AND PRACTICES This section takes a detailed look at some of the types of fund securities and the various kinds of investment practices that may be used in day-to-day portfolio management. Fund investments are subject to further restrictions and risks described in the Statement of Additional Information. Shareholder approval is required to substantively change fund objectives. Shareholder approval is also required to change certain investment restrictions noted in the following section as “fundamental policies.” Portfolio managers also follow certain “operating policies” that can be changed without shareholder approval. Shareholders will receive at least 60 days’ prior notice of a change in a fund’s policy requiring it to normally invest at least 80% of its assets in stocks or a particular geographic area, as the case may be. Fund holdings of certain kinds of investments cannot exceed maximum percentages of total assets, which are set forth in this prospectus. For instance, fund investments in certain derivatives are limited to 10% of total assets. While these restrictions provide a useful level of detail about fund investments, investors should not view them as an accurate gauge of the potential risk of such investments. For example, in a given period, a 5% investment in derivatives could have significantly more of an impact on a fund’s share price than its weighting in the portfolio. The net effect of a particular investment depends on its volatility and the size of its overall return in relation to the performance of all other fund investments. Certain investment restrictions, such as a required minimum or maximum investment in a particular type of security, are measured at the time a fund purchases a security. The status, market value, maturity, credit quality, or other characteristics of a fund’s securities may change after they are purchased, and this may cause the T. ROWE PRICE 90 amount of a fund’s assets invested in such securities to exceed the stated maximum restriction or fall below the stated minimum restriction. If any of these changes occur, it would not be considered a violation of the investment restriction and will not require the sale of an investment if it was proper at the time it was made (this exception does not apply to a fund’s borrowing policy). However, purchases by a fund during the time it is above or below the stated percentage restriction would be made in compliance with applicable restrictions. For purposes of determining whether a particular country is considered a developed market or an emerging market, the funds use the designation set forth by MSCI Barra, a third-party provider of benchmark indexes and data services for institutions worldwide. For purposes of determining whether a fund invests at least 80% of its net assets in a particular country or geographic region, the fund uses a country assigned to a security by MSCI Barra or another unaffiliated third-party data provider. The fund generally follows this same process with respect to the remaining 20% of assets but may occasionally make an exception after assessing various factors relating to a company. Changes in fund holdings, fund performance, and the contribution of various investments to fund performance are discussed in the shareholder reports. Portfolio managers have considerable discretion in choosing investment strategies and selecting securities they believe will help achieve fund objectives. Types of Portfolio Securities In seeking to meet their investment objectives, fund investments may be made in any type of security or instrument (including certain potentially high-risk derivatives described in this section) whose investment characteristics are consistent with their investment programs. The following pages describe various types of fund holdings and investment management practices. Diversification With the exception of the Africa & Middle East, Emerging Europe, Latin America, and New Asia Funds, as a fundamental policy, a fund will not purchase a security if, as a result, with respect to 75% of its total assets, more than 5% of the fund’s total assets would be invested in securities of a single issuer or more than 10% of the outstanding voting securities of the issuer would be held by the fund. Nondiversified Status–Africa & Middle East, Emerging Europe, Latin America, and New Asia Funds The fund is a nondiversified mutual fund. This means that the fund may invest a greater portion of its assets in, and own a greater amount of the voting securities of, a single issuer than a diversified fund, which may subject the fund to greater risk with respect to its portfolio securities and greater volatility with respect to its share price. The fund, however, intends to qualify as a “regulated investment company” under the Internal Revenue Code. As a result, each fund must invest so that, at the end of each MORE ABOUT THE FUNDS 91 fiscal quarter, with respect to 50% of its total assets, no more than 5% of its total assets is invested in the securities of a single issuer and not more than 10% of the voting securities of any issuer are held by the fund. With respect to the remaining 50% of fund assets, no more than 25% may be invested in a single issuer. All funds Fund investments are primarily in common stocks and, to a lesser degree, other types of securities as described below. Common and Preferred Stocks Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks after bonds and before common stock in its claim on income for dividend payments and on assets should the company be liquidated. After other claims are satisfied, common stockholders participate in company profits on a pro-rata basis; profits may be paid out in dividends or reinvested in the company to help it grow. Increases and decreases in earnings are usually reflected in a company’s stock price, so common stocks generally have the greatest appreciation and depreciation potential of all corporate securities. Unlike common stock, preferred stock does not ordinarily carry voting rights. While most preferred stocks pay a dividend, a fund may decide to purchase preferred stock where the issuer has omitted, or is in danger of omitting, payment of its dividend. The funds may purchase American Depositary Receipts and Global Depositary Receipts, which are certificates evidencing ownership of shares of a foreign issuer. American Depositary Receipts and Global Depositary Receipts trade on established markets and are alternatives to directly purchasing the underlying foreign securities in their local markets and currencies. Such investments are subject to many of the same risks associated with investing directly in foreign securities. Convertible Securities and Warrants Investments may be made in debt or preferred equity securities that are convertible into, or exchangeable for, equity securities at specified times in the future and according to a certain exchange ratio. Convertible bonds are typically callable by the issuer, which could in effect force conversion before the holder would otherwise choose. Traditionally, convertible securities have paid dividends or interest at rates higher than common stocks but lower than nonconvertible securities. They generally participate in the appreciation or depreciation of the underlying stock into which they are convertible, but to a lesser degree than common stock. Some convertible securities combine higher or lower current income with options and other features. Warrants are options to buy, directly from the issuer, a stated number of shares of common stock at a specified price anytime during the life of the warrants (generally, two or more years). Warrants can be highly volatile, have no voting rights, and pay no dividends. T. ROWE PRICE 92 Participation Notes (P-notes) A fund may gain exposure to securities traded in foreign markets through investments in P-notes. P-notes are generally issued by banks or broker-dealers and are designed to offer a return linked to an underlying common stock or other security. An investment in a P-note involves additional risks beyond the risks normally associated with a direct investment in the underlying security. While the holder of a P-note is entitled to receive from the broker-dealer or bank any dividends paid by the underlying security, the holder is not entitled to the same rights (e.g., voting rights) as a direct owner of the underlying security. P-notes are considered general unsecured contractual obligations of the banks or broker-dealers that issue them as the counterparty. As such, the fund must rely on the creditworthiness of the counterparty for its investment returns on the P-notes, and could lose the entire value of its investment in the event of default by a counterparty. Additionally, there is no assurance that there will be a secondary trading market for a P-note or that the trading price of a P-note will equal the value of the underlying security. Operating policy For the Africa & Middle East Fund, there is no limit on fund investments in P-notes. For all other funds, investments in P-notes are limited to 20% of total assets. Fixed Income Securities From time to time, a fund may invest in corporate and government fixed income securities as well as below investment-grade bonds, commonly referred to as “junk” bonds. These securities would be purchased in companies that meet fund investment criteria. The price of a fixed income security fluctuates with changes in interest rates, generally rising when interest rates fall and falling when interest rates rise. Below investment-grade bonds, or “junk” bonds, can be more volatile and have greater risk of default than investment-grade bonds. Operating policy The Africa & Middle East, Emerging Europe, Emerging Markets Stock, Latin America, and New Asia Funds may each invest 10% of total assets in below investment-grade bonds. Fund investments in convertible securities are not subject to these limits. Futures and Options Futures, a type of potentially high-risk derivative, are often used to manage or hedge risk because they enable the investor to buy or sell an asset in the future at an agreed- upon price. Options, another type of potentially high-risk derivative, give the investor the right (when the investor purchases the option), or the obligation (when the investor “writes” or sells the option), to buy or sell an asset at a predetermined price in the future. Futures and options contracts may be bought or sold for any number of reasons, including to manage exposure to changes in securities prices and foreign currencies; as an efficient means of increasing or decreasing a fund’s exposure to certain markets; in an effort to enhance income; to protect the value of portfolio securities; and to serve as a cash management tool. Call or put options may be MORE ABOUT THE FUNDS 93 purchased or sold on securities, futures, and financial indexes. A fund may choose to continue a futures contract by “rolling over” an expiring futures contract into an identical contract with a later maturity date. This could increase the fund’s transaction costs and portfolio turnover rate. Futures contracts and options may not always be successful hedges; their prices can be highly volatile; using them could lower a fund’s total return; and the potential loss from the use of futures can exceed a fund’s initial investment in such contracts. Operating policies Initial margin deposits on futures and premiums on options used for non-hedging purposes will not exceed 5% of a fund’s net asset value. The total market value of securities covering call or put options may not exceed 25% of total assets. No more than 5% of total assets will be committed to premiums when purchasing call or put options. Hybrid Instruments These instruments (a type of potentially high-risk derivative) can combine the characteristics of securities, futures, and options. For example, the principal amount, redemption, or conversion terms of a security could be related to the market price of some commodity, currency, security, or securities index. Such instruments may or may not bear interest or pay dividends. Under certain conditions, the redemption value of a hybrid could be zero. Hybrids can have volatile prices and limited liquidity, and their use may not be successful. Operating policy Fund investments in hybrid instruments are limited to 10% of total assets. Currency Derivatives The funds will normally conduct their foreign currency exchange transactions, if any, either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward contracts to purchase or sell foreign currencies. The funds will generally not enter into a forward contract with a term greater than one year. The funds will generally enter into forward foreign currency exchange contracts only under two circumstances. First, a fund may “lock in” the U.S. dollar price of the security when it enters into a contract for the purchase or sale of a security denominated in a foreign currency. Second, when the fund believes that the currency of a particular foreign country may move substantially against another currency, it may enter into a forward contract to sell or buy the former foreign currency (or another currency that acts as a proxy for that currency). The contract may approximate the value of some or all of the fund’s portfolio securities denominated in such foreign currency. Under unusual circumstances, a fund may commit a substantial portion or the entire value of its portfolio to the consummation of these contracts. T. Rowe Price will consider the effect such a commitment to forward T. ROWE PRICE 94 contracts would have on each fund’s investment program and the flexibility of each fund to purchase additional securities. Although forward contracts will be used primarily to protect the fund from adverse currency movements, they involve the risk that anticipated currency movements will not be accurately predicted, and a fund’s total return could be adversely affected as a result. Hedging may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the funds and could affect whether dividends paid are classified as capital gains or ordinary income. Investments in Other Investment Companies A fund may invest in other investment companies, including open-end funds, closed- end funds, and exchange-traded funds. A fund may purchase the securities of another investment company to temporarily gain exposure to a portion of the market while awaiting purchase of securities or as an efficient means of gaining exposure to a particular asset class. The fund might also purchase shares of another investment company to gain exposure to the securities in the investment company’s portfolio at times when the fund may not be able to buy those securities directly. Any investment in another investment company would be consistent with the fund’s objective and investment program. The risks of owning another investment company are generally similar to the risks of investing directly in the securities in which that investment company invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the fund’s performance. In addition, because closed-end funds and exchange-traded funds trade on a secondary market, their shares may trade at a premium or discount to the actual net asset value of their portfolio securities and their shares may have greater volatility because of the potential lack of liquidity. As a shareholder of an investment company not sponsored by T. Rowe Price, the fund must pay its pro-rata share of that investment company’s fees and expenses. The fund’s investments in non-T. Rowe Price investment companies are subject to the limits that apply to investments in other funds under the Investment Company Act of 1940 or under any applicable exemptive order. A fund may also invest in certain other T. Rowe Price funds as a means of gaining efficient and cost-effective exposure to certain asset classes, provided the investment is consistent with the fund’s investment program and policies. Such an investment could allow the fund to obtain the benefits of a more diversified portfolio than might otherwise be available through direct investments in the asset class, and will subject the fund to the risks associated with the particular asset class. Examples of asset classes in which other T. Rowe Price mutual funds concentrate their investments include high yield bonds, floating rate loans, international bonds, emerging market MORE ABOUT THE FUNDS 95 bonds, and emerging market stocks. If the fund invests in another T. Rowe Price fund, the management fee paid by the fund will be reduced to ensure that the fund does not incur duplicate management fees as a result of its investment. Illiquid Securities Some fund holdings may be considered illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold in the ordinary course of business within seven days at approximately the prices at which they are valued. The determination of liquidity involves a variety of factors. Illiquid securities may include private placements that are sold directly to a small number of investors, usually institutions. Unlike public offerings, such securities are not registered with the SEC. Although certain of these securities may be readily sold, for example under Rule 144A of the Securities Act of 1933, others may have resale restrictions and can be illiquid. The sale of illiquid securities may involve substantial delays and additional costs, and a fund may only be able to sell such securities at prices substantially less than what it believes they are worth. Operating policy Fund investments in illiquid securities are limited to 15% of net assets. Types of Investment Management Practices Reserve Position A certain portion of fund assets will be held in reserves. Fund reserve positions can consist of: 1) shares of a T. Rowe Price internal money fund or short-term bond fund; 2) short-term, high-quality U.S. and foreign dollar-denominated money market securities, including repurchase agreements; and 3) U.S. dollar or non-U.S. dollar currencies. For temporary, defensive purposes, there is no limit on a fund’s holdings in reserves. If a fund has significant holdings in reserves, it could compromise the fund’s ability to achieve its objectives. The reserve position provides flexibility in meeting redemptions, paying expenses and managing cash flows into a fund, and can serve as a short-term defense during periods of unusual market volatility. Non-U.S. dollar reserves are subject to currency risk. Borrowing Money and Transferring Assets A fund may borrow from banks, other persons, and other T. Rowe Price funds for temporary emergency purposes to facilitate redemption requests, or for other purposes consistent with fund policies as set forth in this prospectus. Such borrowings may be collateralized with fund assets, subject to restrictions. Fundamental policy Borrowings may not exceed 331/3% of total assets. Operating policy A fund will not transfer portfolio securities as collateral except as necessary in connection with permissible borrowings or investments, and then such transfers may not exceed 331/3% of total assets. A fund will not purchase additional securities when borrowings exceed 5% of total assets. T. ROWE PRICE 96 Lending of Portfolio Securities A fund may lend its securities to broker-dealers, other institutions, or other persons to earn additional income. Risks include the potential insolvency of the broker-dealer or other borrower that could result in delays in recovering securities and capital losses. Additionally, losses could result from the reinvestment of collateral received on loaned securities in investments that default or do not perform as well as expected. Fundamental policy The value of loaned securities may not exceed 331/3% of total assets. Portfolio Turnover Turnover is an indication of frequency of trading. A fund will not generally trade in securities for short-term profits, but when circumstances warrant, securities may be purchased and sold without regard to the length of time held. Each time a fund purchases or sells a security, it incurs a cost. This cost is reflected in its net asset value but not in its operating expenses. The higher the turnover rate, the higher the transaction costs and the greater the impact on a fund’s total return. Higher turnover can also increase the possibility of taxable capital gain distributions. The funds’ portfolio turnover rates are shown in the Financial Highlights table. DISCLOSURE OF FUND PORTFOLIO INFORMATION Each T. Rowe Price fund’s portfolio holdings are disclosed on a regular basis in its semiannual and annual shareholder reports, and on Form N-Q, which is filed with the SEC within 60 days of the fund’s first and third fiscal quarter-end. The money funds also file detailed month-end portfolio holdings information with the SEC each month. Such information will be made available to the public 60 days after the end of the month to which the information pertains. In addition, the funds disclose their calendar quarter-end portfolio holdings on troweprice.com 15 calendar days after each quarter. Under certain conditions, up to 5% of a fund’s holdings may be included in this portfolio list without being individually identified. Generally, securities would not be individually identified if they are being actively bought or sold and it is determined that the quarter-end disclosure of the holding could be harmful to the fund. A security will not be excluded for these purposes from a fund’s quarter-end holdings disclosure for more than one year. Money funds also disclose their month-end portfolio holdings on troweprice.com five business days after each month. The quarter-end portfolio holdings will remain on the website for one year and the month-end money fund portfolio holdings will remain on the website for six months. Each fund also discloses its 10 largest holdings on troweprice.com on the seventh business day after each month-end. These holdings are listed in alphabetical order along with the aggregate percentage of the fund’s total assets that these 10 holdings represent. Each monthly top 10 list will remain on the website for six MORE ABOUT THE FUNDS 97 months. A description of T. Rowe Price’s policies and procedures with respect to the disclosure of portfolio information is in the Statement of Additional Information. F INANCIAL HIGHLIGH TS The Financial Highlights table, which provides information about each fund’s financial history, is based on a single share outstanding throughout the periods shown. Each fund’s section of the table is part of the fund’s financial statements, which are included in its annual report and are incorporated by reference into the Statement of Additional Information (available upon request). The total returns in the table represent the rate that an investor would have earned or lost on an investment in the fund (assuming reinvestment of all dividends and distributions and no payment of any applicable account or redemption fees). The financial statements in the annual reports were audited by the funds’ independent registered public accounting firm, PricewaterhouseCoopers LLP. T. ROWE PRICE 98 Financial Highlights Year ended October 31 Africa & Middle East Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $11.92 $7.05 $7.06 $7.64 $6.51 Income From Investment Operations Net investment income* 0.41 0.14 0.12 0.13 0.14 Net gains or losses on securities (both realized and unrealized) (5.30) 0.30a 0.61 (1.10) 0.76 Total from investment operations (4.89) 0.44 0.73 (0.97) 0.90 Less Distributions Dividends (from net investment income) — (0.43) (0.15 ) (0.12) (0.10) Distributions (from capital gains) (0.01) — — (0.04) — Returns of capital — — — — — Total distributions (0.01) (0.43) (0.15 ) (0.16) (0.10) Redemption fees added to paid in capital 0.03 — — — — Net asset value, end of period $7.05 $7.06 $7.64 $6.51 $7.31 Total return (40.81)% 7.40% 10.61 % (12.98)% 14.09% Ratios/Supplemental Data Net assets, end of period (in thousands) $288,151 $215,535 $232,929 $144,759 $149,791 Ratio of expenses to average net assets 1.32% 1.62% 1.47 % 1.50% 1.52% Ratio of net income to average net assets 3.20% 2.48% 1.69 % 1.79% 2.10% Portfolio turnover rate 77.3% 93.2% 91.2 % 65.9% 65.0% * Per share amounts calculated using average shares outstanding method. a The amount presented for a share outstanding throughout the year is inconsistent with the change in the aggregate gains and losses for the year because of the timing of sales and redemptions of the fund’s shares in relation to fluctuating market values for the investment portfolio. MORE ABOUT THE FUNDS 99 Financial Highlights Year ended October 31 Emerging Europe Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $39.18 $12.38 $15.97 $21.66 $17.83 Income From Investment Operations Net investment income* 1.14 (0.02) (0.01 ) (0.02) 0.13 Net gains or losses on securities (both realized and unrealized) (23.98) 4.93 5.71 (3.81) 0.56 Total from investment operations (22.84) 4.91 5.70 (3.83) 0.69 Less Distributions Dividends (from net investment income) — (1.32) — — — Distributions (from capital gains) (3.96) — (0.01 ) — — Returns of capital — — — — — Total distributions (3.96) (1.32) (0.01 ) — — Redemption fees added to paid in capital — — — — — Net asset value, end of period $12.38 $15.97 $21.66 $17.83 $18.52 Total return (64.91)% 49.25% 35.68 % (17.68)% 3.87% Ratios/Supplemental Data Net assets, end of period (in millions) $451 $637 $772 $494 $420 Ratio of expenses to average net assets 1.32% 1.64% 1.41 % 1.45% 1.55% Ratio of net income to average net assets 3.49% (0.19)% (0.07 )% (0.09)% 0.71% Portfolio turnover rate 36.0% 39.7% 27.7 % 21.7% 10.9% * Per share amounts calculated using average shares outstanding method. T. ROWE PRICE 100 Financial Highlights Year ended October 31 Emerging Markets Stock Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $48.99 $17.88 $27.61 $34.50 $30.98 Income From Investment Operations Net investment income* 0.79 0.16 0.11 0.22 0.17 Net gains or losses on securities (both realized and unrealized) (28.66) 10.17 6.93 (3.30) 1.28 Total from investment operations (27.87) 10.33 7.04 (3.08) 1.45 Less Distributions Dividends (from net investment income) (0.30) (0.61) (0.15 ) (0.10) (0.12) Distributions (from capital gains) (2.95) — — (0.34) — Returns of capital — — — — — Total distributions (3.25) (0.61) (0.15 ) (0.44) (0.12) Redemption fees added to paid in capital 0.01 0.01 — — — Net asset value, end of period $17.88 $27.61 $34.50 $30.98 $32.31 Total return (60.61)% 60.05% 25.58 % (9.05)% 4.74% Ratios/Supplemental Data Net assets, end of period (in millions) $2,483 $4,291 $5,258 $5,895 $6,804 Ratio of expenses to average net assets 1.24% 1.32% 1.27 % 1.26% 1.27% Ratio of net income to average net assets 2.19% 0.79% 0.37 % 0.65% 0.55% Portfolio turnover rate 30.9% 37.0% 26.6 % 18.6% 24.1% * Per share amounts calculated using average shares outstanding method. MORE ABOUT THE FUNDS 101 Financial Highlights Year ended October 31 European Stock Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $24.35 $10.82 $13.97 $14.92 $14.22 Income From Investment Operations Net investment income* 0.40 0.42 0.30 0.33 0.29 Net gains or losses on securities (both realized and unrealized) (10.48) 3.12 1.13 (0.74) 1.30 Total from investment operations (10.08) 3.54 1.43 (0.41) 1.59 Less Distributions Dividends (from net investment income) (0.32) (0.39) (0.48 ) (0.29) (0.34) Distributions (from capital gains) (3.13) — — — — Returns of capital — — — — — Total distributions (3.45) (0.39) (0.48 ) (0.29) (0.34) Net asset value, end of period $10.82 $13.97 $14.92 $14.22 $15.47 Total return (47.65)% 33.78% 10.46 % (2.84)% 11.70% Ratios/Supplemental Data Net assets, end of period (in millions) $573 $708 $722 $706 $703 Ratio of expenses to average net assets 1.01% 1.08% 1.03 % 1.01% 1.00% Ratio of net income to average net assets 2.22% 3.71% 2.21 % 2.16% 2.02% Portfolio turnover rate 105.9% 88.3% 61.1 % 57.6% 41.6% * Per share amounts calculated using average shares outstanding method. T. ROWE PRICE 102 Financial Highlights Year ended October 31 International Discovery Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $60.13 $25.10 $35.74 $42.69 $39.78 Income From Investment Operations Net investment income* 0.40 0.26 0.18 0.34 0.57 Net gains or losses on securities (both realized and unrealized) (29.14) 10.75 7.31 (2.63) 5.27 Total from investment operations (28.74) 11.01 7.49 (2.29) 5.84 Less Distributions Dividends (from net investment income) (0.34) (0.37) (0.24 ) (0.17) (0.38) Distributions (from capital gains) (5.95) — (0.30 ) (0.45) — Returns of capital — — — — — Total distributions (6.29) (0.37) (0.54 ) (0.62) (0.38) Redemption fees added to paid in capital — — — — — Net asset value, end of period $25.10 $35.74 $42.69 $39.78 $45.24 Total return (52.68)% 44.55% 21.19 % (5.47)% 14.91% Ratios/Supplemental Data Net assets, end of period (in millions) $1,373 $2,101 $2,629 $2,414 $2,775 Ratio of expenses to average net assets 1.24% 1.29% 1.24 % 1.23% 1.23% Ratio of net income to average net assets 0.92% 0.94% 0.48 % 0.78% 1.38% Portfolio turnover rate 66.7% 64.5% 54.8 % 49.3% 40.2% * Per share amounts calculated using average shares outstanding method. MORE ABOUT THE FUNDS 103 Financial Highlights Year ended October 31 International Growth & Income Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $20.43 $9.73 $12.15 $13.32 $12.41 Income From Investment Operations Net investment income* 0.47 0.32 0.31 0.37 0.36 Net gains or losses on securities (both realized and unrealized) (9.85) 2.51 1.16 (0.98) 0.15 Total from investment operations (9.38) 2.83 1.47 (0.61) 0.51 Less Distributions Dividends (from net investment income) (0.36) (0.41) (0.28 ) (0.30) (0.34) Distributions (from capital gains) (0.96) — (0.02 ) — — Returns of capital — — — — — Total distributions (1.32) (0.41) (0.30 ) (0.30) (0.34) Net asset value, end of period $9.73 $12.15 $13.32 $12.41 $12.58 Total return (48.75)% 30.28% 12.29 % (4.71)% 4.47% Ratios/Supplemental Data Net assets, end of period (in millions) $1,711 $2,544 $3,227 $4,151 $5,600 Ratio of expenses to average net assets 0.89% 0.94% 0.89 % 0.87% 0.87% Ratio of net income to average net assets 3.05% 3.25% 2.51 % 2.82% 2.95% Portfolio turnover rate 23.8% 16.6% 31.3 % 26.3% 29.9% * Per share amounts calculated using average shares outstanding method. T. ROWE PRICE 104 Financial Highlights Year ended October 31 International Stock Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $20.17 $8.91 $12.02 $14.04 $13.27 Income From Investment Operations Net investment income* 0.26 0.27 0.14 0.23 0.18 Net gains or losses on securities (both realized and unrealized) (9.25) 3.10 2.14 (0.81) 0.61 Total from investment operations (8.99) 3.37 2.28 (0.58) 0.79 Less Distributions Dividends (from net investment income) (0.31) (0.22) (0.26 ) (0.15) (0.18) Distributions (from capital gains) (1.96) (0.04) — (0.04) — Returns of capital — — — — — Total distributions (2.27) (0.26) (0.26 ) (0.19) (0.18) Net asset value, end of period $8.91 $12.02 $14.04 $13.27 $13.88 Total return (49.65)% 39.01% 19.23 % (4.20)% 6.17% Ratios/Supplemental Data Net assets, end of period (in millions) $3,892 $5,431 $6,227 $6,976 $9,182 Ratio of expenses to average net assets 0.87% 0.91% 0.87 % 0.85% 0.85% Ratio of net income to average net assets 1.75% 2.88% 1.13 % 1.65% 1.36% Portfolio turnover rate 63.7% 65.0% 54.8 % 43.0% 33.5% * Per share amounts calculated using average shares outstanding method. MORE ABOUT THE FUNDS 105 Financial Highlights Year ended October 31 Japan Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $11.14 $6.70 $7.00 $7.45 $7.52 Income From Investment Operations Net investment income* 0.06 0.03 0.04 0.06 0.07 Net gains or losses on securities (both realized and unrealized) (4.50) 0.35 0.44 0.05 0.18 Total from investment operations (4.44) 0.38 0.48 0.11 0.25 Less Distributions Dividends (from net investment income) — (0.06) (0.03 ) (0.04) (0.07) Distributions (from capital gains) — (0.02) — — (0.02) Returns of capital — — — — — Total distributions — (0.08) (0.03 ) (0.04) (0.09) Net asset value, end of period $6.70 $7.00 $7.45 $7.52 $7.68 Total return (39.86)% 5.66% 6.87 % 1.45% 3.41% Ratios/Supplemental Data Net assets, end of period (in thousands) $244,367 $204,409 $198,104 $179,048 $159,466 Ratio of expenses to average net assets 1.07% 1.15% 1.13 % 1.12% 1.14% Ratio of net income to average net assets 0.67% 0.43% 0.56 % 0.79% 0.87% Portfolio turnover rate 105.3% 121.5% 62.0 % 72.1% 55.1% * Per share amounts calculated using average shares outstanding method. T. ROWE PRICE 106 Financial Highlights Year ended October 31 Latin America Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $59.74 $24.76 $43.40 $55.19 $46.48 Income From Investment Operations Net investment income* 0.41 0.42 0.33 0.81 0.55 Net gains or losses on securities (both realized and unrealized) (33.18) 19.40 11.85 (9.01) (3.03) Total from investment operations (32.77) 19.82 12.18 (8.20) (2.48) Less Distributions Dividends (from net investment income) (0.40) (0.32) (0.40) (0.28) (0.75) Distributions (from capital gains) (1.85) (0.87) — (0.23) (2.82) Returns of capital — — — — — Total distributions (2.25) (1.19) (0.40) (0.51) (3.57) Redemption fees added to paid in capital 0.04 0.01 0.01 — — Net asset value, end of period $24.76 $43.40 $55.19 $46.48 $40.43 Total return (56.77)% 84.10% 28.23% (14.99)% (4.92)% Ratios/Supplemental Data Net assets, end of period (in millions) $1,379 $2,638 $3,058 $2,224 $1,760 Ratio of expenses to average net assets 1.22% 1.29% 1.24% 1.25% 1.24% Ratio of net income to average net assets 0.81% 1.36% 0.69% 1.55% 1.32% Portfolio turnover rate 19.7% 21.2% 14.1% 14.8% 16.7% * Per share amounts calculated using average shares outstanding method. MORE ABOUT THE FUNDS 107 Financial Highlights Year ended October 31 New Asia Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $25.16 $8.01 $14.39 $19.31 $17.91 Income From Investment Operations Net investment income* 0.39 0.09 0.10 0.20 0.18 Net gains or losses on securities (both realized and unrealized) (15.61) 6.69 4.94 (1.36) 1.05 Total from investment operations (15.22) 6.78 5.04 (1.16) 1.23 Less Distributions Dividends (from net investment income) (0.19) (0.40) (0.08) (0.09) (0.15) Distributions (from capital gains) (1.75) — (0.04) (0.15) (2.73) Returns of capital — — — — — Total distributions (1.94) (0.40) (0.12) (0.24) (2.88) Redemption fees added to paid in capital 0.01 — — — — Net asset value, end of period $8.01 $14.39 $19.31 $17.91 $16.26 Total return (65.12)% 88.57% 35.20% (6.07)% 9.98% Ratios/Supplemental Data Net assets, end of period (in millions) $5,913 $1,828 $3,619 $5,261 $4,518 Ratio of expenses to average net assets 0.93% 0.96% 1.01% 0.96% 0.95% Ratio of net income to average net assets 1.53% 2.35% 0.83% 0.61% 1.15% Portfolio turnover rate 53.4% 55.4% 59.6% 49.4% 41.1% * Per share amounts calculated using average shares outstanding method. T. ROWE PRICE 108 Financial Highlights Year ended October 31 Overseas Stock Fund 2008 2009 2010 2011 2012 Net asset value, beginning of period $11.64 $5.86 $7.50 $8.22 $7.86 Income From Investment Operations Net investment income* 0.21 0.20 0.16 0.19 0.19 Net gains or losses on securities (both realized and unrealized) (5.86) 1.63 0.74 (0.40) 0.36 Total from investment operations (5.65) 1.83 0.90 (0.21) 0.55 Less Distributions Dividends (from net investment income) (0.12) (0.19) (0.17) (0.15) (0.17) Distributions (from capital gains) (0.01) — (0.01) — — Returns of capital — — — — — Total distributions (0.13) (0.19) (0.18) (0.15) (0.17) Redemption fees added to paid in capital $5.86 $7.50 $8.22 $7.86 $8.24 Net asset value, end of period (49.04)% 32.19% 12.17% (2.64)% 7.36% Total return (0.12) (0.19) (0.17) (0.15) (0.17) Ratios/Supplemental Data Net assets, end of period (in millions) $1,211 $1,902 $2,455 $3,769 $5,160 Ratio of expenses to average net assets 0.93% 0.97% 0.90% 0.88% 0.87% Ratio of net income to average net assets 2.29% 3.26% 2.07% 2.27% 2.46% Portfolio turnover rate 34.2% 20.9% 24.8% 16.7% 13.6% * Per share amounts calculated using average shares outstanding method. INVESTING WITH T. ROWE PRICE 4 ACCOUNT REQUIREMENTS AND TRANSACTION INFORMATION If you are purchasing fund shares through a third-party intermediary, contact the intermediary for information regarding its policies on purchasing, exchanging, and redeeming fund shares, as well as initial and subsequent investment minimums. Tax Identification Number We must have your correct Social Security number or employer identification number on a signed New Account form or W-9 Form. Otherwise, federal law requires the funds to withhold a percentage of your dividends, capital gain distributions, and redemptions and may subject you to an Internal Revenue Service fine. If this information is not received within 60 days after your account is established, your account may be redeemed at the fund’s then-current net asset value. Transaction Confirmations We send immediate confirmations for most of your fund transactions. However, certain transactions, such as systematic purchases, dividend reinvestments, checkwriting redemptions for money funds, and transactions in money funds used as a T. Rowe Price Brokerage sweep account, do not receive an immediate transaction confirmation but are reported on your account statement. Please review transaction confirmations and account statements as soon as you receive them and promptly report any discrepancies to Shareholder Services by calling 1-800-225-5132. Employer-Sponsored Retirement Plans and Institutional Accounts T. Rowe Price Trust Company 1-800-492-7670 Transaction procedures in the following sections may not apply to employer-sponsored retirement plans and institutional accounts. For procedures regarding employer-sponsored retirement plans, please call T. Rowe Price Trust Company or consult your plan administrator. For institutional account procedures, please call your designated account manager or service representative. T. ROWE PRICE 110 We do not accept third-party checks for initial purchases; however, we do accept third-party checks for subsequent purchases. In addition, T. Rowe Price does not accept purchases by cash, traveler’s checks, or credit card checks. OPENING A NEW ACCOUNT $2,500 minimum initial investment; $1,000 for retirement accounts and Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts ($25,000 minimum initial investment for Summit Funds only) Important Information About Opening an Account Pursuant to federal law, all financial institutions must obtain, verify, and record information that identifies each person or entity that opens an account. This information is needed not only for the account owner and any other person who opens the account, but also for any person who has authority to act on behalf of the account. When you open an account, you will be asked for the name, residential street address, date of birth, and Social Security number or employer identification number for each account owner and person(s) opening an account on behalf of others, such as custodians, agents, trustees, or other authorized signers. Corporate and other institutional accounts require documents showing the existence of the entity (such as articles of incorporation or partnership agreements) to open an account. Certain other fiduciary accounts (such as trusts or power of attorney arrangements) require documentation, which may include an original or certified copy of the trust agreement or power of attorney to open an account. For more information, call Investor Services at 1-800-638-5660. We will use this information to verify the identity of the person(s)/entity opening the account. We will not be able to open your account until we receive all of this information. If we are unable to verify your identity, we are authorized to take any action permitted by law. (See Rights Reserved by the Funds.) INVESTING WITH T. ROWE PRICE 111 The funds are generally available only to investors residing in the United States. In addition, purchases in state tax-free funds are limited to investors living in states where the fund is available for sale. The address of record on your account must be located in one of these states, or you will be restricted from purchasing fund shares. Contact Investor Services for more information. Account Registration If you own other T. Rowe Price funds, you should consider registering any new account identically to your existing accounts so you can exchange shares among them easily. (The name(s) of the account owner(s) and the account type must be identical.) For joint accounts or other types of accounts owned or controlled by more than one party, either owner/party has complete authority to act on behalf of all and give instructions concerning the account without notice to the other party. T. Rowe Price may, in its sole discretion, require written authorization from all owners/parties to act on the account for certain transactions (for example, to transfer ownership). By Mail Please make your check payable to T. Rowe Price Funds (otherwise it may be returned), and send your check, together with the New Account form, to the appropriate address below: via U.S. Postal Service T. Rowe Price Account Services P.O. Box 17300 Baltimore, MD 21297-1300 via private carriers/overnight services T. Rowe Price Account Services Mail Code 17300 4515 Painters Mill Road Owings Mills, MD 21117-4903 Note: Please use the correct address to avoid a delay in opening your new account. By Wire Visit us online at troweprice.com or call Investor Services for an account number and wire transfer instructions. T. ROWE PRICE 112 In order to obtain an account number, you must supply the name, date of birth, Social Security number or employer identification number, and residential or business street address for each owner on the account. Complete a New Account form and mail it to one of the appropriate T. Rowe Price addresses listed under By Mail. Note: Although the purchase will be made, services may not be established and Internal Revenue Service penalty withholding may occur until we receive a signed New Account form. Online You can open a new mutual fund account online. Go to troweprice.com/newaccount to choose the type of account you wish to open. To open an account electronically, you must be a U.S. citizen residing in the U.S. or a resident alien and not subject to Internal Revenue Service backup withholding. Additionally, you must provide consent to receive certain documents electronically. You will have the option of providing your bank account information that will enable you to make electronic funds transfers to and from your bank account. To set up this banking service online, additional steps will be taken to verify your identity. By Exchange Visit us online at troweprice.com (see Automated Services under Information About Your Services) or call Shareholder Services. The new account will have the same registration as the account from which you are exchanging. Services for the new account may be carried over by telephone request if they are preauthorized on the existing account. For limitations on exchanging, please see Transaction Procedures and Special Requirements—Excessive and Short-Term Trading. In Person Drop off your New Account form at any Investor Center location listed on the back cover and obtain a receipt. INVESTING WITH T. ROWE PRICE 113 PURCH ASING ADDITIONAL SH ARES $100 minimum per fund account for all additional purchases, including those made through Automatic Asset Builder (all funds except Summit Funds); $100 minimum per fund account for additional purchases through Automatic Asset Builder and $1,000 for all other additional purchases (Summit Funds) By Automated Clearing House Visit us online at troweprice.com or call Shareholder Services if you have established electronic transfers using the Automated Clearing House system. By Wire Go to troweprice.com or call Shareholder Services for wire transfer instructions. T. Rowe Price must receive the wire by the close of the New York Stock Exchange (normally 4 p.m. ET) to receive that day’s share price. There is no assurance that you will receive the share price for the same day you initiated the wire from your financial institution. By Mail 1. Make your check payable to T. Rowe Price Funds (otherwise it may be returned). 2. Mail the check to us at the following address with either a fund reinvestment slip or a note indicating the fund you want to purchase and your fund account number. 3. Please use the correct address to avoid a delay in processing your transaction and remember to provide your account number and the fund name on the memo line of your check. via U.S. Postal Service T. Rowe Price Account Services P.O. Box 17300 Baltimore, MD 21297-1300 (To send mail directly to T. Rowe Price via private carriers and overnight services, see previous section.) Your transaction will receive the share price for the business day that the request is received by T. Rowe Price prior to the close of the New York Stock Exchange (normally 4 p.m. ET) (not the day the request is received at the P.O. box). By Automatic Asset Builder Fill out the Automatic Asset Builder section on the New Account form or Shareholder Services form. T. ROWE PRICE 114 EXCH ANGING AND REDEEMING SHARES Exchange Service You can move money from one account to an existing, identically registered account or open a new identically registered account. An exchange from one fund to another is considered a sale and purchase for tax purposes. (Exchanges into a state tax-free fund are limited to investors living in states where the fund is available.) For exchange policies, please see Transaction Procedures and Special Requirements— Excessive and Short-Term Trading Policy. Redemptions Redemption proceeds can be mailed to your account address, sent by Automated Clearing House transfer to your bank, or wired to your bank (provided your bank information is already on file). Redemption proceeds of less than $5,000 sent by wire are subject to a $5 fee paid to the fund. Please note that large purchase and redemption requests initiated through automated services, including the National Securities Clearing Corporation, may be rejected and, in such instances, the transaction must be placed by contacting a service representative. If you request to redeem a specific dollar amount, and the market value of your account is less than the amount of your request, your redemption will not be processed, and you will need to submit a new redemption request in proper form. If you change your address on an account, proceeds will not be mailed to the new address for 15 calendar days after the address change, unless we receive a signature guaranteed letter of instruction. Some of the T. Rowe Price funds may impose a redemption fee. Check the fund’s prospectus under Contingent Redemption Fee in Pricing Shares and Receiving Sale Proceeds. The fee is paid to the fund. For redemptions by check or electronic transfer, please see Information About Your Services. INVESTING WITH T. ROWE PRICE 115 Online Visit us online at troweprice.com. Customers with Account Access (our secure self-service Web platform for individual investors) can electronically exchange shares between identically registered T. Rowe Price accounts and electronically redeem shares from their mutual fund accounts. By Phone Call Shareholder Services If you find our phones busy during unusually volatile markets, please consider placing your order through troweprice.com (if you have previously authorized these services) or express mail. By Mail For each account involved, provide the account name and number, fund name, and exchange or redemption amount. For exchanges, be sure to specify any fund you are exchanging out of and the fund or funds you are exchanging into. T. Rowe Price may require a signature guarantee of all registered owners (see Transaction Procedures and Special Requirements— Signature Guarantees). Please use one of the following addresses: For nonretirement and individual retirement accounts: via U.S. Postal Service T. Rowe Price Account Services P.O. Box 17302 Baltimore, MD 21297-1302 via private carriers/overnight services T. Rowe Price Account Services Mail Code 17302 4515 Painters Mill Road Owings Mills, MD 21117-4903 For employer-sponsored retirement accounts: via U.S. Postal Service T. Rowe Price Trust Company P.O. Box 17479 Baltimore, MD 21297-1479 via private carriers/overnight services T. Rowe Price Trust Company Mail Code 17479 4515 Painters Mill Road Owings Mills, MD 21117-4903 T. ROWE PRICE 116 For requests that are not sent via private carriers or overnight services, your transaction will receive the share price for the business day that the request is received by T. Rowe Price prior to the close of the New York Stock Exchange (normally 4 p.m. ET) (not the day the request is received at the P.O. box). Requests for redemptions from employer-sponsored retirement accounts may be required to be in writing; please call T. Rowe Price Trust Company or your plan administrator for instructions. Individual retirement account distributions may be requested in writing or by telephone; please call Shareholder Services to obtain an Individual Retirement Account Distribution form or an Individual Retirement Account Shareholder Services form to authorize the telephone redemption service. RIGHTS RESERVED BY THE FUNDS T. Rowe Price funds and their agents, in their sole discretion, reserve the following rights: (1) to waive or lower investment minimums; (2) to accept initial purchases by telephone; (3) to refuse any purchase or exchange order; (4) to cancel or rescind any purchase or exchange order placed through an intermediary, no later than the business day after the order is received by the intermediary (including, but not limited to, orders deemed to result in excessive trading, market timing, or 5% ownership); (5) to cease offering fund shares at any time to all or certain groups of investors; (6) to freeze any account and suspend account services when notice has been received of a dispute regarding the ownership of the account or a legal claim against an account or if there is reason to believe a fraudulent transaction may occur; (7) to otherwise modify the conditions of purchase and modify or terminate any services at any time; (8) to waive any wire, small account, maintenance, or fiduciary fees charged to a group of shareholders; (9) to act on instructions reasonably believed to be genuine; (10) to involuntarily redeem an account at the net asset value calculated the day the account is INVESTING WITH T. ROWE PRICE 117 redeemed, in cases of threatening conduct, suspected fraudulent or illegal activity, or if the fund or its agent is unable, through its procedures, to verify the identity of the person(s) or entity opening an account; and (11) for money funds, to suspend redemptions and postpone the payment of proceeds to facilitate an orderly liquidation of the fund. INFORMATION ABOUT YOUR SERVICES Shareholder Services 1-800-225-5132 Investor Services 1-800-638-5660 Many services are available to you as a shareholder; some you receive automatically, and others you must authorize or request on the New Account form. By signing up for services on the New Account form, you avoid having to complete a separate form at a later time and obtain a signature guarantee. This section discusses some of the services currently offered. 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Rowe Price College Savings Plan (national plan), call 1-800-369-3641; Maryland College Investment Plan, call 1-888-4-MD-GRAD; and University of Alaska College Savings Plan, call 1-866-277-1005. T. ROWE PRICE 118 Automated Services Online Account Access You can sign up online to conduct account transactions through our website at troweprice.com. Tele*AccessSM 1-800-638-2587 24-hour service via a toll-free number enables you to access information on fund performance, prices, distributions, account balances, and your latest transactions. Plan Account Line 1-800-401-3279 This 24-hour service is similar to Tele*AccessSM but is designed specifically to meet the needs of retirement plan investors. By Telephone and In Person Purchase, redeem, or exchange shares by calling one of our service representatives or by visiting one of our Investor Center locations listed on the back cover. 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Keep in mind, however, that a check results in a redemption; a check written on a bond fund will create a taxable event that you and we must report to the Internal Revenue Service. INVESTING WITH T. ROWE PRICE 119 Automatic Investing Automatic Asset Builder You can instruct us to automatically transfer money from your bank account, or you can instruct your employer to send all or a portion of your paycheck to the fund or funds you designate. Each systematic purchase must be at least $100 per fund account to be eligible for the Automatic Asset Builder service. Minimum initial purchase requirements will still apply. Automatic Exchange You can set up systematic investments from one fund account into another, such as from a money fund into a stock fund. T . 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Rowe Price Investment Services, Inc.; T. Rowe Price Savings Bank; T. Rowe Price Trust Company; and the T. Rowe Price Funds. To help you achieve your financial goals, T. Rowe Price offers a wide range of stock, bond, and money market investments, as well as convenient services and informative reports. For mutual fund or T. Rowe Price Brokerage information Investor Services 1-800-638-5660 For existing accounts Shareholder Services 1-800-225-5132 For the hearing impaired 1-800-367-0763 For performance, prices, or account information Tele*AccessSM 24 hours, 7 days 1-800-638-2587 Internet address troweprice.com Plan Account Line For retirement plan investors: The appropriate 800 number appears on your retirement account statement. T. 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Suite A-100 Tysons Corner 1600 Tysons Boulevard Suite 150 McLean, Virginia A Statement of Additional Information for the T. Rowe Price family of funds, which includes additional information about the funds, has been filed with the SEC and is incorporated by reference into this prospectus. Further information about fund investments, including a review of market conditions and the manager’s recent investment strategies and their impact on performance during the past fiscal year, is available in the annual and semiannual shareholder reports. To obtain free copies of any of these documents, or for shareholder inquiries, call 1-800-638-5660. These documents and updated performance information are available through troweprice.com. Fund information and Statements of Additional Information are also available from the Public Reference Room of the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-551-8090. Fund reports and other fund information are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the Public Reference Room, Washington, D.C. 20549-1520. Proof #4 April 30, 2012 PRASX SemiANNuAl RePORT T. Rowe PRice New Asia Fund The fund invests in growth companies located in the Asia ex-Japan region. Proof #4 REPORTS ON THE WEB Sign up for our E-mail Program, and you can begin to receive updated fund reports and prospectuses online rather than through the mail. Log in to your account at troweprice.com for more information. HIGHLIGHTS • Asian stock markets rose in the six months ended April 30, 2012, as Europe’s debt crisis stabilized and risk appetite improved early in the year. • The New Asia Fund rose 7.96% and easily outpaced its benchmark index and Lipper peer group average, lifted by strong stock selection in South Korea and Taiwan. • Worries about a hard economic landing in China increased over the period, but we believe a gradual slowdown is more likely as the government tries to rebalance the drivers of economic growth. • We believe near-term performance will be volatile as Europe’s debt crisis and China’s slowdown temper risk appetite. We remain focused on finding companies with strong and sustainable growth characteris- tics that can withstand a volatile environment and a possibly weaker global growth outlook. T. Rowe Price New Asia Fund The views and opinions in this report were current as of April 30, 2012. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a fore- cast of the fund’s future investment intent. The report is certified under the Sarbanes-Oxley Act, which requires mutual funds and other public companies to affirm that, to the best of their knowledge, the informa- tion in their financial reports is fairly and accurately stated in all material respects. Proof #4 T. Rowe Price New Asia Fund Manager’s Letter 1 Fellow Shareholders Stocks in developing Asia rose over the six months ended April 30, 2012, a period marked by heightened volatility in response to global macroeconomic events. Stocks began the period at depressed levels, as Europe’s inability to solve its worsening debt crisis at the end of 2011 led investors to flee from riskier assets and pile into U.S. Treasuries and other safe havens. Early this year, the extreme pessimism that marked the end of 2011 lifted as Europe’s crisis appeared to stabilize and U.S. economic data improved. However, the rally was short-lived as economic data and turmoil in Europe worsened, leading to another market downturn. The New Asia Fund returned 7.96% for the six-month period ended April 30, 2012, widely exceeding the MSCI All Country Asia ex Japan Index, its primary benchmark, and the Lipper Pacific Ex Japan Funds Average. Stock selection across the region, led by South Korea, Taiwan, and Thailand, accounted for outperformance. From a sector viewpoint, financials, consumer staples, and materials were the top contributors to relative results. In terms of absolute performance, information technology was the biggest contribu- tor, followed by financials and consumer staples. China remains the largest country position, although we have reduced our exposure in light of growing evidence of a pronounced slowdown. Our sector allocations continue to reflect our preference for areas driven by domestic consumption. Six-Month Period Ended 4/30/12 Total Return New Asia Fund 7.96% MSCI All Country Asia ex Japan Index 4.96 Lipper Pacific Ex Japan Funds Average 5.53 Performance Comparison Proof #4 2 The fund’s long-term performance continues to shine within its peer group. Lipper ranked the fund first in its peer group for the 10-year period ended April 30, 2012. (Based on cumulative total return, Lipper ranked the New Asia Fund 9 of 91, 4 of 50, 2 of 35, and 1 of 28 funds in the Pacific Ex-Japan funds universe for the 1-, 3-, 5-, and 10-year periods ended April 30, 2012, respectively. Past performance cannot guarantee future results.) MaRkET ENvIRONMENT At the start of our reporting period last November, global stock markets were roiled by Europe’s debt crisis. Greece was nearly bank- rupt, a credit crunch crippled the region’s banks, and most of Europe teetered on the brink of recession. Against this backdrop of fear and uncertainty, Asian and other emerging markets stocks fared poorly as investors sold off riskier assets. The crisis reached a turning point on December 21, when the European Central Bank pumped roughly $640 billion of cheap short-term loans into the region’s banking system. This long-term refinancing operation, or LTRO—which was followed by a second massive infusion in February—restored stability to Europe’s credit markets. Combined with the U.S. Federal Reserve’s commitment to keep interest rates at very low levels until 2014, the move also encouraged risk taking by reassuring investors that accom- modative policies in the developed world would continue, spurring them to seek higher-yielding assets. Meanwhile, U.S. economic data indicated that the country’s recovery was picking up. As a result of these positive developments, global risk sentiment improved, and developing Asian stocks rallied in early 2012. But by the end of our reporting period in April, rising European bond yields and renewed concerns about China’s slowdown prompted investors to retreat from emerging markets, trimming some of the first quarter’s gains. Periods Ended 4/30/12 Total Return (In U.S. Dollar Terms) 6 Months 12 Months Thailand 24.43% 10.12% Indonesia 0.94 0.23 Singapore 7.74 -5.89 Hong Kong 7.99 -5.92 China 6.85 -11.00 South Korea 6.42 -11.01 Taiwan 2.28 -14.21 India -9.66 -23.47 Source: RIMES Online, using MSCI indexes. Market Performance Proof #4 3 Country performance varied across the region. Thailand was the best performer, rallying 24.43% as growth picked up after devastating floods in 2011. China’s market advanced as investors appeared to bet that growing signs of a slowdown would force the government to relax monetary policy and take other measures to revive growth. But India’s market slumped as it grappled with slowing growth, persistent inflation, and a weak currency. Inflation—a nagging problem in Asia over the past two years—subsided over the past six months in most countries as Europe’s crisis and China’s slowdown eclipsed worries about rising prices. Most Asian countries either loosened monetary policy or held rates steady in an effort to safeguard domestic growth as Europe’s crisis worsened. PORTfOLIO REvIEW South korea, Taiwan, and Southeast asia South Korea was the top contributor to our performance versus the benchmark due to stock selection. Our positions in Samsung Electronics and Hyundai, the fund’s top two holdings, ranked among the biggest absolute contributors. Shares of Samsung, Asia’s largest consumer electronics maker, rose to a record in April after the company reported its highest profit in more than two years due to strength in its mobile business. We have a high level of conviction in Samsung, which recently overtook Nokia as the world’s biggest handset maker, and think it has solid growth prospects as global smartphone and tablet sales rise and mobile computing becomes more widespread. Hyundai, South Korea’s largest carmaker, also performed well as it reported strong earnings, lifted by resilient U.S. demand and new car models. (Please refer to the portfolio of investments for a com- plete list of holdings and the amount each represents in the portfolio.) Taiwan lifted relative returns due to positive stock selection, led by Quanta Computer, whose shares hit a multiyear high in March after reporting surprisingly strong earnings. Quanta makes laptops for various computer companies, including Apple, and has benefited as sales of Apple’s laptops and other gadgets have soared. We believe Quanta has excellent growth potential as it expands in servers and storage, and it is one of our top holdings. Despite our successful stock picks in Taiwan and South Korea, we remain underweight in both countries because their trade-dependent economies are very sensitive to global demand and offer relatively few compelling growth opportunities. Proof #4 4 Our positioning in Thailand, Indonesia, and the Philippines also benefited relative performance. Shares of CP ALL, Thailand’s biggest convenience store operator, rose to a record high in the spring, making it one of the fund’s top absolute contributors. Resilient domestic demand and a growing middle class have sustained strong growth across Southeast Asia but also raised inflation risks, and central banks in all three countries have recently stopped interest rate cuts. We are overweight to most of Southeast Asia except for Malaysia, where we are underweight but maintain exposure through a sizable position in financial services company CIMB Group Holdings Berhad. Southeast Asian markets have been stellar performers in recent years as greater political stability and economic reforms have reduced the cost of doing business, but these developments have also pushed stock prices higher. We are optimistic about the outlook for Southeast Asia but are mindful that companies there will need to deliver on earnings growth to justify their premium valuations. India India, the region’s worst performer over the period, hurt relative performance due to our small overweight position. We have a cautious view of India, which is struggling with slowing growth, high inflation, and widening fiscal and trade deficits. India’s currency, the rupee, weakened significantly over the period, worsening inflationary pres- sures. After aggressively raising interest rates over the past two years to tamp down inflation, India cut its benchmark rate in April to revive growth, but rising prices have limited its scope for more rate cuts. Perhaps most discouraging is India’s political gridlock, as its Congress party-led government has been unable to reduce the fiscal deficit and push through economic reforms needed to lure foreign investment. Despite our caution about India’s near-term outlook, the country is home to many world-class businesses with solid growth prospects, and our country exposure rose slightly due to a few sizable purchases. We initiated a position in Wipro, one of India’s top software services companies. Global demand for software design and maintenance is strong, most of Wipro’s clients are multi national companies that are sheltered from India’s slowdown, and its stock price offered a good buying opportunity. We also initiated positions in Bharti Airtel, the country’s biggest mobile phone company, and Cipla, a Proof #4 5 generic drug maker with good expo sure to developed and emerging markets like Latin America and Africa, where pharmaceutical demand is quickly growing. China China was the largest country detractor from relative performance due to adverse stock selection. Travel agency Ctrip.com was the fund’s biggest detractor as its shares fell sharply due to weaker-than-expected results and fears about growing competition. Our research indicates that Ctrip’s competitive edge in business travel and call centers is eroding as leisure travel takes off and more people in China book trips online, but we believe the stock trades at an excessive discount and maintained our position. Internet portal Sina was another poor performer amid worries about government censorship and slowing growth in the number of visitors to its site. We maintained a modest position in Sina at the end of the period. Recent indicators show that China’s economy is cooling after decades of rapid growth. Contrary to some of the prevailing headlines, we believe the risk of a hard economic landing is relatively low as Beijing has several policy options it can use to sustain growth at its desired level. Much of China’s rise has been fueled by fixed asset investment such as spending on infrastructure and real estate, but its long-term goal is more sustainable growth driven by domestic consumption. This transition will take years and inevitably produce some volatile economic data in the coming quarters. Rather than being alarmed by China’s slowdown, we see it as evidence of a larger restructuring story that will result in lower but higher-quality growth over the long run. India 12% Hong Kong 9% Singapore 7% Indonesia 5% China 25% Other and Reserves 15% South Korea 14% Taiwan 13% Based on net assets as of 4/30/12. Geographic Diversification Proof #4 6 Our stock selection aims to capitalize on the government’s goal of rebalancing the pillars of economic growth. We increased our position in Tencent Holdings, China’s biggest Internet company. Tencent con- tinues to draw subscribers due to its dominance in online gaming, and the outlook for its advertising business is promising. We also increased our position in Baidu, China’s leading Internet search company and one of the fund’s largest holdings. Most of Baidu’s revenue comes from domestic advertising, which should stay resilient even if the economy slows. China remains the fund’s largest country allocation, but our exposure declined as we sold several names in light of the weaker growth outlook. We eliminated utility and toll road oper- ator Beijing Enterprises, high-end car dealer China ZhengTong Auto Services, and Ping An Insurance, the country’s biggest insurer. Generally, our intention is to avoid companies that we believe are unprepared for a lower-growth environment, especially those in industries with excess capacity or that may be hurt by changes in government policy. Our sector exposures stayed largely unchanged. Information technology (IT), financials, and consumer discretionary accounted for the top three sector allocations at the end of the period. We continue to favor areas driven by domestic consumption, such as consumer staples and discretionary stocks, which should see solid long-term growth as Asia’s middle class Percent of Net Assets 10/31/11 4/30/12 Information Technology 20.2% 22.3% Financials 23.0 21.9 Consumer Discretionary 14.7 12.0 Industrials and Business Services 9.9 9.5 Consumer Staples 5.6 8.2 Utilities 6.1 5.7 Materials 4.9 5.5 Energy 4.6 4.8 Telecommunication Services 3.6 3.9 Health Care 1.4 2.1 Other and Reserves 6.0 4.1 Total 100.0% 100.0% Historical weightings reflect current industry/sector classifications. Sector Diversification WE CONTINUE TO FAvOR AREAS DRIvEN By DOMESTIC CONSUMPTION, SUCH AS CONSUMER STAPLES AND DISCRETIONARy STOCKS... Proof #4 7 grows in size and wealth. In response to China’s slowdown, we have become more defensive in our positioning by raising our allocation to consumer staples and reducing exposure to discretionary stocks. We trimmed our position in Italian luxury goods maker Prada, one of the top contributors over the period, over concern that high-end spending may suffer as China’s economy slows. OuTLOOk Investor sentiment remains fragile and global stock markets face numerous risks. Europe’s debt crisis, now entering its third year, shows no signs of nearing a resolution. Popular resistance to austerity has surged, as shown by recent elections in France and Greece, and speculation that Greece will leave the eurozone is rising. We expect volatility to persist over the near term as fallout from Europe’s debt crisis continues to dictate investors’ risk appetite. China’s slowdown is another worry. April trade data released after the close of our reporting period were surprisingly weak, and on May 12 Beijing announced it would lower banks’ reserve requirements, its third cut since November. Although China wants to manage a gradual slowdown, we believe that April’s worse-than-expected data caught policymakers off guard. Looking ahead, we would not be surprised to see the government further relax monetary policy and take other steps to stimulate the economy and avert a hard landing. As we said earlier, we do not believe a severe downturn is on the horizon. However, we are taking steps to make sure the fund is defensively positioned as we anticipate China’s slowdown may prove rocky in the near term. We are carefully reviewing our Chinese holdings and paring our exposure to sectors that we believe are least prepared to handle a slowdown. Despite our cautious outlook for near-term perfor- mance, we remain optimistic about Asia’s long-term prospects. Growing urbanization, increasing consump- tion, and upward mobility are inexorable trends that will drive strong and sustainable growth in the region over the long run. Disposable incomes are rising among lower- to middle-class households, lending support to THE RECENT FINANCIAL MARKETS vOLATILITy HAS gIvEN US AMPLE OPPORTUNITy TO BUy HIgH-qUALITy COMPANIES AT ATTRACTIvE PRICES. Proof #4 8 companies and industries that rely on domestic demand. The recent financial markets volatility has given us ample opportunity to buy high-quality companies at attractive prices. We will continue to take advantage of short-term weakness to build positions in names that meet our growth criteria. Respectfully submitted, Anh Lu Portfolio manager and chairman of the fund’s Investment Advisory Committee May 17, 2012 The committee chairman has day-to-day responsibility for managing the portfolio and works with committee members in developing and executing the fund’s investment program. Proof #4 9 T. Rowe Price New Asia Fund Risks of International Investing Funds that invest overseas generally carry more risk than funds that invest strictly in U.S. assets. Funds investing in a single country or in a limited geographic region tend to be riskier than more diversified funds. Risks can result from varying stages of economic and political development; differing regulatory environments, trading days, and accounting standards; and higher transaction costs of non-U.S. markets. Non-U.S. investments are also subject to currency risk, or a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency. Glossary Lipper averages: The averages of available mutual fund performance returns for specified time periods in categories defined by Lipper Inc. MSCI all Country asia ex Japan Index: An index that measures equity market performance of developed and emerging countries in Asia, excluding Japan. Proof #4 10 T. Rowe Price New Asia Fund TWENTY-fIvE LaRGEST HOLDINGS Percent of Net Assets 4/30/12 Samsung Electronics, South Korea 5.9% Hyundai, South Korea 2.8 Taiwan Semiconductor Manufacturing, Taiwan 2.7 Taiwan Cement, Taiwan 2.2 CNOOC, China 2.2 Baidu, China 2.2 CIMB group Holdings Berhad, Malaysia 2.1 quanta Computer, Taiwan 1.8 Siliconware Precision Industries, Taiwan 1.7 CP ALL, Thailand 1.6 China Oilfield Services, China 1.5 Wipro, India 1.5 New Oriental Education & Technology, China 1.5 ENN Energy Holdings, China 1.5 Jardine Matheson, Hong Kong 1.5 Swire Pacific, Hong Kong 1.5 China Resources Power Holdings, China 1.5 Singapore Telecommunications, Singapore 1.4 Oversea-Chinese Banking, Singapore 1.4 China Merchants Holdings International, China 1.4 Li & Fung, Hong Kong 1.4 Kasikornbank, Thailand 1.4 Infosys Technologies, India 1.4 Cheung Kong Holdings, Hong Kong 1.4 President Chain Store, Taiwan 1.3 Total 46.8% Note: The information shown does not reflect any exchange-traded funds (ETFs), cash reserves, or collateral for securities lending that may be held in the portfolio. Portfolio Highlights Proof #4 11 T. Rowe Price New Asia Fund Performance and Expenses MSCI All Country Asia ex Japan Index $30,333 New Asia Fund $40,816 As of 4/30/12 4/02 4/084/074/064/054/044/03 4/124/09 N E W A S I A F U N D Lipper Pacific Ex Japan Funds Average $29,677 10,000 28,000 46,000 64,000 82,000 $100,000 4/10 4/11 Growth of $10,000 This chart shows the value of a hypothetical $10,000 investment in the 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. Periods Ended 4/30/12 1 year 5 years 10 years New Asia Fund -3.28% 8.25% 15.10% This table shows how the fund would have performed each year if its actual (or cumula- tive) returns for the periods shown had been earned at a constant rate. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results. Average Annual Compound Total Return Proof #4 12 T. Rowe Price New Asia Fund Fund Expense Example As a mutual fund shareholder, you may incur two types of costs: (1) transaction costs, such as redemption fees or sales loads, and (2) ongoing costs, including management fees, distri- bution and service (12b-1) fees, and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to com- pare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the entire period. actual Expenses The first line of the following table (“Actual”) provides information about actual account values and expenses based on the fund’s actual returns. you may use the information on this line, together with your account balance, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The information on the second line of the table (“Hypothetical”) is based on hypothetical account values and expenses derived from the fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the fund’s actual return). you may compare the ongoing costs of investing in the fund with other funds by contrasting this 5% hypotheti- cal example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Note: T. Rowe Price charges an annual account service fee of $20, generally for accounts with less than $10,000. The fee is waived for any investor whose T. Rowe Price mutual fund accounts total $50,000 or more; accounts electing to receive electronic delivery of account statements, transaction confirmations, prospectuses, and shareholder reports; or accounts of an investor who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced Personal Services client (enrollment in these programs generally requires T. Rowe Price assets of at least $100,000). This fee is not included in the accompanying table. If you are subject to the fee, keep it in mind when you are estimating the ongoing expenses of investing in the fund and when comparing the expenses of this fund with other funds. you should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs, such as redemption fees or sales loads. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. To the extent a fund charges transaction costs, however, the total cost of owning that fund is higher. Proof #4 13 T. Rowe Price New Asia Fund Beginning Ending Expenses Paid Account value Account value During Period* 11/1/11 4/30/12 11/1/11 to 4/30/12 Actual $1,000.00 $1,079.60 $4.91 Hypothetical (assumes 5% return before expenses) 1,000.00 1,020.14 4.77 * Expenses are equal to the fund’s annualized expense ratio for the 6-month period (0.95%), multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182), and divided by the days in the year (366) to reflect the half-year period. New Asia Fund Fund Expense Example (continued) Proof #4 14 T. Rowe Price New Asia Fund Periods Ended 3/31/12 1 year 5 years 10 years New Asia Fund 0.95% 9.43% 15.19% Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end perform ance, please visit our website (troweprice.com) or contact a T. Rowe Price representative at 1-800-225-5132. The performance information shown does not reflect the deduction of a 2% redemption fee on shares held for 90 days or less. If it did, the performance would be lower. This table provides returns through the most recent calendar quarter-end rather than through the end of the fund’s fiscal period. It shows how the fund would have performed each year if its actual (or cumulative) returns for the periods shown had been earned at a constant rate. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. When assessing performance, investors should consider both short- and long-term returns. Quarter-End Returns New Asia Fund 0.96% The expense ratio shown is as of the fund’s fiscal year ended 10/31/11. This number may vary from the expense ratio shown elsewhere in this report because it is based on a different time period and, if applicable, does not include fee or expense waivers. Expense Ratio Proof #4 15 T. Rowe Price New Asia Fund Unaudited Financial Highlights For a share outstanding throughout each period 6 Months Ended 4/30/12 Year Ended 10/31/11 10/31/10 10/31/09 10/31/08 10/31/07 NET ASSET VALUE Beginning of period $ 17.91 $ 19.31 $ 14.39 $ 8.01 $ 25.16 $ 13.87 Investment activities Net investment income (1) 0.03 0.20 0.10 0.09 0.39 0.26 Net realized and unrealized gain (loss) 0.90 (1.36) 4.94 6.69 (15.61) 12.83 Total from investment activities 0.93 (1.16) 5.04 6.78 (15.22) 13.09 Distributions Net investment income (0.15) (0.09) (0.08) (0.40) (0.19) (0.21) Net realized gain (2.73) (0.15) (0.04) – (1.75) (1.59) Total distributions (2.88) (0.24) (0.12) (0.40) (1.94) (1.80) Redemption fees added to paid-in capital (1) – – – – 0.01 – NET ASSET VALUE End of period $ 15.96 $ 17.91 $ 19.31 $ 14.39 $ 8.01 $ 25.16 Ratios/Supplemental Data Total return(2) 7.96% (6.07)% 35.20% 88.57% (65.12)% 105.57% Ratio of total expenses to average net assets 0.95% (3) 0.96% 0.96% 1.01% 0.96% 0.93% Ratio of net investment income to average net assets 0.37% (3) 1.07% 0.61% 0.83% 2.35% 1.53% Proof #4 16 T. Rowe Price New Asia Fund Unaudited Financial Highlights For a share outstanding throughout each period The accompanying notes are an integral part of these financial statements. 6 Months Ended 4/30/12 Year Ended 10/31/11 10/31/10 10/31/09 10/31/08 10/31/07 Ratios/Supplemental Data (continued) Portfolio turnover rate 20.0% 68.1% 49.4% 59.6% 55.4% 53.4% Net assets, end of period (in millions) $ 4,231 $ 4,122 $ 5,261 $ 3,619 $ 1,828 $ 5,913 (1) Per share amounts calculated using average shares outstanding method. (2) 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 and payment of no redemption or account fees. Total return is not annualized for periods less than one year. (3) Annualized Proof #4 T. Rowe Price New Asia Fund Unaudited April 30, 2012 Portfolio of Investments ‡ Shares/$ Par Value (Cost and value in $000s) 17 CHINA 24.7% Common Stocks 23.7% AutoNavi, ADR (USD) (1) 702,000 8,284 Baidu, ADR (USD) (1) 699,100 92,771 China Foods (HKD) 16,544,000 17,976 China Merchants Holdings International (HKD) 18,584,000 60,241 China Oilfield Services, H Shares (HKD) 39,610,000 64,224 China Resources Power Holdings (HKD) 34,304,000 62,607 China Shenhua Energy, H Shares (HKD) (1) 10,199,500 45,288 China Unicom Hong Kong (HKD) (2) 12,968,000 23,099 CNOOC (HKD) 43,893,000 93,572 Ctrip.com International, ADR (USD) (1) 1,461,356 31,668 ENN Energy Holdings (HKD) 18,070,000 63,466 Hengan International Group (HKD) 2,953,500 31,348 ICBC China, H Shares (HKD) 48,375,990 32,235 Kingboard Laminates Holding (HKD) 36,187,000 16,837 New Oriental Education & Technology, ADR (USD) (1) 2,392,100 63,941 Parkson Retail (HKD) (2) 37,190,500 41,559 Ports Design (HKD) (2) 7,992,000 11,722 Shandong Weigao Group Medical Polymer, H Shares (HKD) (2) 26,698,000 30,866 Shanghai Pharmaceuticals Holding, H Shares (HKD) (1)(2) 17,750,800 26,722 Sina (USD) (1) 341,000 19,952 Tencent Holdings (HKD) 1,785,800 56,161 Wumart Stores, H Shares (HKD) (2) 21,251,250 48,974 Yingde Gases (HKD) 20,715,500 24,057 Zhejiang Expressway, H Shares (HKD) 50,180,000 36,089 1,003,659 Common Stocks - China A shares 1.0% China Vanke 28,948,146 41,196 41,196 Total China (Cost $894,293) 1,044,855 Proof #4 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 18 HONG KONG 8.6% Common Stocks 8.6% AIA Group 15,913,400 56,712 Cheung Kong Holdings 4,334,000 57,760 Jardine Matheson (USD) 1,270,000 63,056 L'OCCITANE (2) 16,296,250 43,478 Li & Fung 27,900,000 59,693 Swire Pacific, Class A 5,336,500 62,969 VTech Holdings (2) 1,747,700 19,597 Total Hong Kong (Cost $351,198) 363,265 INDIA 11.5% Common Stocks 11.5% Ambuja Cements 7,212,751 20,612 Bharti Airtel 3,918,758 23,089 Cipla 3,987,426 23,607 Container Corporation of India 2,094,844 35,060 Emami 3,972,888 34,452 Gail India 5,258,029 32,925 HDFC Bank 3,788,174 38,999 Hero Motorcorp 785,163 33,328 Infosys 1,252,510 58,440 Oberoi Realty 5,211,430 26,700 Phoenix Mills (2) 7,537,325 29,992 Ultratech Cement 1,020,059 27,524 Wipro 8,313,111 64,060 Zee Entertainment Enterprises 15,238,838 36,492 Total India (Cost $542,317) 485,280 Proof #4 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 19 INDONESIA 4.8% Common Stocks 4.8% AKR Corporindo 71,438,500 32,064 Astra International 5,185,500 40,060 Bank Mandiri 51,179,109 41,208 Perusahaan Gas Negara 94,220,000 34,344 XL Axiata 95,272,500 55,979 Total Indonesia (Cost $125,633) 203,655 ITALY 0.6% Common Stocks 0.6% Prada (HKD) (1)(2) 3,763,800 25,565 Total Italy (Cost $17,924) 25,565 MALAYSIA 3.6% Common Stocks 3.6% CIMB Group Holdings Berhad 35,789,870 87,641 Genting 5,678,100 19,402 IJM 11,587,100 20,984 Malayan Cement 9,474,700 22,513 Total Malaysia (Cost $98,946) 150,540 PHILIPPINES 3.3% Common Stocks 3.3% Ayala 1,798,720 18,319 Ayala Land 97,016,700 49,290 Energy Development 336,456,400 47,018 Metropolitan Bank & Trust 12,196,425 26,403 Total Philippines (Cost $103,327) 141,030 Proof #4 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 20 SINGAPORE 6.8% Common Stocks 6.8% Capitamall Trust, REIT 33,359,000 48,522 Fraser & Neave 6,864,000 39,049 Oversea-Chinese Banking 8,436,000 61,080 SembCorp Industries 13,432,000 54,813 Singapore Telecommunications 24,332,000 61,346 Venture 3,530,000 24,532 Total Singapore (Cost $252,825) 289,342 SOUTH KOREA 14.1% Common Stocks 13.5% AMOREPACIFIC 49,535 47,557 Hana Tour Service (2) 606,681 25,043 Hyundai 503,879 119,714 Hyundai Development 1,030,810 21,754 KEPCO Plant Service & Engineering 566,270 20,869 Samsung Electronics 182,633 224,630 Samsung Engineering 99,007 18,836 Samsung Fire & Marine 235,188 44,951 Shinhan Financial Group 1,396,481 48,810 572,164 Preferred Stocks 0.6% Samsung Electronics 33,496 23,978 23,978 Total South Korea (Cost $442,461) 596,142 TAIWAN 12.8% Common Stocks 12.8% Chinatrust Financial Holding 64,050,139 40,897 Proof #4 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 21 Chroma Ate 13,396,000 30,545 Farglory Land Development 9,161,000 16,936 Pegatron 8,197,000 11,871 President Chain Store 10,598,000 56,966 Quanta Computer 28,327,000 74,482 Siliconware Precision Industries 61,310,000 72,732 Synnex Technology International 12,534,349 29,396 Taiwan Cement 78,630,538 93,818 Taiwan Semiconductor 38,248,574 113,664 Total Taiwan (Cost $460,816) 541,307 THAILAND 4.3% Common Stocks 4.3% Bumrungrad Hospital (1) 4,546,300 9,019 CP ALL (1) 26,797,200 66,666 Kasikornbank, NVDR 11,128,200 59,169 Siam Cement, NVDR 3,962,400 45,101 Total Thailand (Cost $107,095) 179,955 UNITED KINGDOM 0.9% Common Stocks 0.9% Standard Chartered (HKD) (2) 1,559,800 38,519 Total United Kingdom (Cost $41,197) 38,519 SHORT-TERM INVESTMENTS 2.7% Money Market Funds 2.7% T. Rowe Price Reserve Investment Fund, 0.10% (3)(4) 114,466,860 114,467 Total Short-Term Investments (Cost $114,467) 114,467 Proof #4 T. Rowe Price New Asia Fund Shares/$ Par Value (Cost and value in $000s) 22 SECURITIES LENDING COLLATERAL 0.8% Investments in a Pooled Account through Securities Lending Program with JPMorgan Chase Bank 0.8% Money Market Funds 0.7% T. Rowe Price Reserve Investment Fund, 0.10% (3)(4) 29,147,768 29,148 29,148 Repurchase Agreements 0.1% Credit Suisse, Tri-Party, Dated 4/30/12, 0.17%, Delivery Value of $4,505,795 on 5/1/12, Collateralized by U.S. Government securities, 0.625% - 1.875%, 7/15/13 - 7/15/21, valued at $4,595,889 4,505,774 4,506 4,506 Total Investments through Securities Lending Program with JPMorgan Chase Bank 33,654 Total Securities Lending Collateral (Cost $33,653) 33,654 Total Investments in Securities 99.5% of Net Assets (Cost $3,586,152) $ 4,207,576 ‡ Country classifications are generally based on MSCI categories or another unaffiliated third party data provider; securities are denominated in the currency of the country presented unless otherwise noted. (1) Non-income producing (2) All or a portion of this security is on loan at April 30, 2012. See Note 3. (3) Affiliated Companies (4) Seven-day yield ADR American Depository Receipts HKD Hong Kong Dollar NVDR Non-Voting Depository Receipts REIT Real Estate Investment Trust USD U.S. Dollar Proof #4 Affiliated Companies ($000s) T. Rowe Price New Asia Fund The accompanying notes are an integral part of these financial statements. 23 The fund may invest in certain securities that are considered affiliated companies. As defined by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. Based on the fund’s relative ownership, the following securities were considered affiliated companies for all or some portion of the six months ended April 30, 2012. Purchase and sales cost and investment income reflect all activity for the period then ended. Affiliate Purchase Cost Sales Cost Investment Income Value 4/30/12 Value 10/31/11 Hana Tour Service $ 484 $ 1,124 $ 171 $ 25,043 $ 20,385 Phoenix Mills — 1,085 — 29,992 31,470 T. Rowe Price Reserve Investment Fund, 0.10% ¤ ¤ 67^ 143,615 295,961 Totals $ 238 $ 198,650 $ 347,816 ¤ Purchase and sale information not shown for cash management funds. ^ Excludes earnings on securities lending collateral invested in the T. Rowe Price Reserve Investment Fund, which are subject to rebates and fees as described in Note 3. Amounts reflected on the accompanying financial statements include the following amounts related to affiliated companies: Investment in securities, at cost $ 234,432 Dividend income 238 Interest income — Investment income $ 238 Realized gain (loss) on securities $ (1,203) Capital gain distributions from mutual funds $ — Proof #4 24 T. Rowe Price New Asia Fund Unaudited April 30, 2012 The accompanying notes are an integral part of these financial statements. ($000s, except shares and per share amounts) Statement of Assets and Liabilities Assets Investments in securities, at value (cost $3,586,152) $ 4,207,576 Receivable for investment securities sold 49,630 Foreign currency (cost $9,709) 9,676 Dividends receivable 9,014 Cash 6,857 Receivable for shares sold 4,076 Other assets 48,828 Total assets 4,335,657 Liabilities Obligation to return securities lending collateral 33,653 Payable for investment securities purchased 12,770 Payable for shares redeemed 8,606 Investment management fees payable 2,732 Due to affiliates 379 Other liabilities 46,748 Total liabilities 104,888 NET ASSETS $ 4,230,769 Net Assets Consist of: Undistributed net investment income $ 2,654 Accumulated undistributed net realized loss (26,091) Net unrealized gain 621,304 Paid-in capital applicable to 265,109,042 shares of $0.01 par value capital stock outstanding; 4,500,000,000 shares of the Corporation authorized 3,632,902 NET ASSETS $ 4,230,769 NET ASSET VALUE PER SHARE $ 15.96 Proof #4 T. Rowe Price New Asia Fund Unaudited ($000s) Statement of Operations 25 The accompanying notes are an integral part of these financial statements. 6 Months Ended 4/30/12 Investment Income (Loss) Income Dividend (net of foreign taxes of $1,709) $ 26,006 Securities lending 110 Interest 2 Total income 26,118 Expenses Investment management 15,779 Shareholder servicing 2,248 Prospectus and shareholder reports 162 Custody and accounting 429 Registration 13 Legal and audit 48 Directors 12 Miscellaneous 64 Total expenses 18,755 Net investment income 7,363 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities (net of foreign taxes of $441) (2,525) Foreign currency transactions (477) Net realized loss (3,002) Change in net unrealized gain (loss) Securities 285,176 Other assets and liabilities denominated in foreign currencies (10) Change in net unrealized gain 285,166 Net realized and unrealized gain 282,164 INCREASE IN NET ASSETS FROM OPERATIONS $ 289,527 Proof #4 T. Rowe Price New Asia Fund Unaudited ($000s) 26 The accompanying notes are an integral part of these financial statements. Statement of Changes in Net Assets 6 Months Ended 4/30/12 Year Ended 10/31/11 Increase (Decrease) in Net Assets Operations Net investment income $ 7,363 $ 48,917 Net realized gain (loss) (3,002) 877,803 Change in net unrealized gain (loss) 285,166 (1,223,705) Increase (decrease) in net assets from operations 289,527 (296,985) Distributions to shareholders Net investment income (33,272) (24,428) Net realized gain (605,575) (40,715) Decrease in net assets from distributions (638,847) (65,143) Capital share transactions* Shares sold 441,107 610,430 Distributions reinvested 517,690 49,622 Shares redeemed (500,806) (1,437,594) Redemption fees received 215 585 Increase (decrease) in net assets from capital share transactions 458,206 (776,957) Net Assets Increase (decrease) during period 108,886 (1,139,085) Beginning of period 4,121,883 5,260,968 End of period $ 4,230,769 $ 4,121,883 Undistributed net investment income 2,654 28,563 *Share information Shares sold 29,023 32,717 Distributions reinvested 38,009 2,640 Shares redeemed (32,118) (77,561) Increase (decrease) in shares outstanding 34,914 (42,204) Proof #4 27 T. Rowe Price New Asia Fund Unaudited April 30, 2012 Notes to Financial Statements T. Rowe Price International Funds, Inc. (the corporation), is registered under the Investment Company Act of 1940 (the 1940 Act). The New Asia Fund (the fund) is a nondiversified, open-end management investment company established by the corporation. The fund commenced operations on September 28, 1990. The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located (or with primary operations) in Asia (excluding Japan). NOTE 1 - SIGNIfICaNT aCCOuNTING POLICIES Basis of Preparation The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), which require the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Premiums and discounts on debt securities are amortized for financial reporting purposes. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Income tax-related interest and penalties, if incurred, would be recorded as income tax expense. 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 on the ex-dividend date. Income distributions are declared and paid annually. Capital gain distributions, if any, are generally declared and paid by the fund annually. Currency Translation Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and asked prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses. Proof #4 28 T. Rowe Price New Asia Fund Credits The fund earns credits on temporarily uninvested cash balances held at the custodian, which reduce the fund’s custody charges. Custody expense in the accompanying financial statements is presented before reduction for credits. Redemption fees A 2% fee is assessed on redemptions of fund shares held for 90 days or less to deter short-term trading and to protect the interests of long-term shareholders. Redemption fees are withheld from proceeds that shareholders receive from the sale or exchange of fund shares. The fees are paid to the fund and are recorded as an increase to paid-in capital. The fees may cause the redemption price per share to differ from the net asset value per share. New accounting Pronouncements In May 2011, the Financial Accounting Standards Board (FASB) issued amended guidance to align fair value measure- ment and disclosure requirements in U.S. GAAP with International Financial Reporting Standards. The guidance is effective for fiscal years and interim periods beginning on or after December 15, 2011. Adoption will have no effect on net assets or results of operations. In December 2011, the FASB issued amended guidance to enhance disclosure for offsetting assets and liabilities. The guidance is effective for fiscal years and interim periods beginning on or after January 1, 2013; adoption will have no effect on the fund’s net assets or results of operations. NOTE 2 - vaLuaTION The fund’s financial instruments are reported at fair value as defined by GAAP. The fund determines the values of its assets and liabilities and computes its net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. valuation Methods Equity securities listed or regularly traded on a securities exchange or in the over-the-counter (OTC) market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made, except for OTC Bulletin Board securities, which are valued at the mean of the latest bid and asked prices. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange deter- mined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and asked prices for domestic securities and the last quoted sale price for international securities. Debt securities with remaining maturities of less than one year at the time of acquisition generally use amortized cost in local currency to approximate fair Proof #4 29 T. Rowe Price New Asia Fund value. However, if amortized cost is deemed not to reflect fair value or the fund holds a significant amount of such securities with remaining maturities of more than 60 days, the securities are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service. Investments in mutual funds are valued at the mutual fund’s closing net asset value per share on the day of valuation. Other investments, including restricted securities and private placements, and those financial instruments 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 the T. Rowe Price Valuation Committee, established by the fund’s Board of Directors (the Board). Subject to oversight by the Board, the Valuation Committee develops pricing-related policies and procedures and approves all fair-value determinations. The Valuation Committee regularly makes good faith judgments, using a wide variety of sources and information, to establish and adjust valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of private-equity instruments, the Valuation Committee considers a variety of factors, including the company’s business prospects, its financial performance, strategic events impacting the company, relevant valuations of similar companies, new rounds of financing, and any negotiated transactions of significant size between other investors in the company. Because any fair-value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions. For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted under the circumstances described below. If the fund deter- mines that developments between the close of a foreign market and the close of the NYSE will, in its judgment, materially affect the value of some or all of its portfolio securities, the fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of the close of the NYSE. In deciding whether it is necessary to adjust closing prices to reflect fair value, the fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. A fund may also fair value securities in other situations, such as when a particular foreign market is closed but the fund is open. The fund uses outside pricing services to provide it with closing prices and informa- tion to evaluate and/or adjust those prices. The fund cannot predict how often it will use closing prices and how often it will determine it necessary to adjust Proof #4 30 T. Rowe Price New Asia Fund those prices to reflect fair value. As a means of evaluating its security valuation process, the fund routinely compares closing prices, the next day’s opening prices in the same markets, and adjusted prices. Additionally, trading in the underlying securities of the fund may take place in various foreign markets on certain days when the fund is not open for business and does not calculate a net asset value. As a result, net asset values may be significantly affected on days when shareholders cannot make transactions. valuation Inputs Various inputs are used to determine the value of the fund’s financial instruments. These inputs are summarized in the three broad levels listed below: Level 1 – quoted prices in active markets for identical financial instruments Level 2 – observable inputs other than Level 1 quoted prices (including, but not limited to, quoted prices for similar financial instruments, interest rates, prepayment speeds, and credit risk) Level 3 – unobservable inputs Observable inputs are those based on market data obtained from sources independent of the fund, and unobservable inputs reflect the fund’s own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with financial instru- ments at that level. For example, non-U.S. equity securities actively traded in foreign markets generally are reflected in Level 2 despite the availability of closing prices because the fund evaluates and determines whether those closing prices reflect fair value at the close of the NYSE or require adjustment, as described above. The following table summarizes the fund’s financial instru- ments, based on the inputs used to determine their values on April 30, 2012: ($000s) Level 1 Level 2 Level 3 Total value Quoted Prices Significant Observable Inputs Significant unobservable Inputs Investments in Securities, except: $ — $ 3,014,600 $ — $ 3,014,600 China $ 216,616 $ 828,239 $ — $ 1,044,855 Short-Term Investments 114,467 — — 114,467 Securities Lending Collateral 29,148 4,506 — 33,654 Total $ 360,231 $ 3,847,345 $ — $ 4,207,576 Proof #4 31 T. Rowe Price New Asia Fund NOTE 3 - OTHER INvESTMENT TRaNSaCTIONS Consistent with its investment objective, the fund engages in the following prac- tices to manage exposure to certain risks and/or to enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund’s prospectus and Statement of Additional Information. Emerging Markets At April 30, 2012, approximately 79% of the fund’s net assets were invested, either directly or through investments in T. Rowe Price institutional funds, in securities of companies located in emerging markets, securities issued by governments of emerging market countries, and/or securi- ties denominated in or linked to the currencies of emerging market countries. Emerging market securities are often subject to greater price volatility, less liquidity, and higher rates of inflation than U.S. securities. In addition, emerging markets may be subject to greater political, economic, and social uncertainty, and differing regulatory environments that may potentially impact the fund’s ability to buy or sell certain securities or repatriate proceeds to U.S. dollars. Repurchase agreements All repurchase agreements are fully collateralized by U.S. government securities. Collateral is in the possession of the fund’s custo- dian or, for tri-party agreements, the custodian designated by the agreement. Although risk is mitigated by the collateral, the fund could experience a delay in recovering its value and a possible loss of income or value if the counterparty fails to perform in accordance with the terms of the agreement. China a shares During the six months ended April 30, 2012, the fund invested in certain Chinese equity securities (A shares) available only to local Chinese investors and Qualified Foreign Institutional Investors (QFII). The fund gains access to the A-share market through T. Rowe Price Associates, Inc., which serves as the registered QFII for all participating T. Rowe Price- sponsored products (each a participating account). Investment decisions related to A shares are specific to each participating account, and each account bears the resultant economic and tax consequences of its holdings and transactions in A shares. The fund is subject to certain restrictions and administrative processes relating to its ability to repatriate cash balances, investment proceeds, and earnings associated with its A shares and may incur substantial delays in gaining access to its assets or a loss of value in the event of noncompliance with applicable Chinese rules or requirements. Current Chinese tax law is unclear whether capital gains realized on the fund’s investments in A shares will be subject to tax. Because management believes it more likely than not that Chinese capital gains tax ultimately will not be imposed, there are no accrued taxes reflected in the accompanying financial statements. Proof #4 32 T. Rowe Price New Asia Fund Securities Lending The fund lends its securities to approved brokers to earn additional income. It receives as collateral cash and U.S. government securi- ties valued at 102% to 105% of the value of the securities on loan. Collateral is maintained over the life of the loan in an amount not less than the value of loaned securities as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the fund the next business day. Cash collateral is invested by the fund’s lending agent(s) in accordance with investment guidelines approved by management. 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 the securities or if collateral investments decline in value. Securities lending revenue recognized by the fund consists of earnings on invested collateral and borrowing fees, net of any rebates to the borrower and compensation to the lending agent. In accordance with GAAP, investments made with cash collateral are reflected in the accompanying financial statements, but collateral received in the form of securities are not. On April 30, 2012, the value of cash collateral investments was $33,654,000, and the value of loaned securities was $31,659,000. Other Purchases and sales of portfolio securities other than short-term securities aggregated $771,499,000 and $874,402,000, respectively, for the six months ended April 30, 2012. NOTE 4 - fEDERaL INCOME TaxES No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Distributions determined in accordance with federal income tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences. The amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year-end; accordingly, tax-basis balances have not been determined as of the date of this report. At April 30, 2012, the cost of investments for federal income tax purposes was $3,599,423,000. Net unrealized gain aggregated $608,033,000 at period-end, of which $819,266,000 related to appreciated investments and $211,233,000 related to depreciated investments. Proof #4 33 T. Rowe Price New Asia Fund NOTE 5 - fOREIGN TaxES The fund is subject to foreign income taxes imposed by certain countries in which it invests. Acquisition of certain foreign currencies related to security transactions are also subject to tax. Additionally, capital gains realized by the fund upon disposition of securities issued in or by certain foreign countries are subject to capital gains tax imposed by those countries. All taxes are computed in accordance with the applicable foreign tax law, and, to the extent permitted, capital losses are used to offset capital gains. Taxes attributable to income are accrued by the fund as a reduction of income. Taxes incurred on the purchase of foreign currencies are recorded as realized loss on foreign currency transactions. Current and deferred tax expense attributable to net capital gains is reflected as a component of realized and/or change in unrealized gain/loss on securities in the accompanying financial statements. At April 30, 2012, the fund had no deferred tax liability attributable to foreign securities and $4,753,000 of foreign capital loss carryforwards all of which expire in 2020. NOTE 6 - RELaTED PaRTY TRaNSaCTIONS The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). Price Associates has entered into subadvisory agreements with T. Rowe Price International Ltd and T. Rowe Price Hong Kong Limited, wholly owned subsidiaries of Price Associates, to provide investment advisory services to the fund; the subadvisory agreements provide that Price Associates may pay the subadvisors up to 60% of the management fee that Price Associates receives from the fund. The investment management agreement between the fund and Price Associates provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.50% of the fund’s average daily net assets, and a group fee. The group fee rate is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.28% for assets in excess of $300 billion. The fund’s group fee is determined by applying the group fee rate to the fund’s average daily net assets. At April 30, 2012, the effective annual group fee rate was 0.30%. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share price and provides certain other administrative services to the fund. T. Rowe Price Services, Inc., provides Proof #4 34 T. Rowe Price New Asia Fund shareholder and administrative services in its capacity as the fund’s transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. For the six months ended April 30, 2012, expenses incurred pursuant to these service agreements were $74,000 for Price Associates; $905,000 for T. Rowe Price Services, Inc.; and $81,000 for T. Rowe Price Retirement Plan Services, Inc. The total amount payable at period-end pursuant to these service agreements is reflected as Due to Affiliates in the accompanying financial statements. The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum Funds) may invest. The Spectrum Funds do not invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to a special servicing agreement, expenses associated with the opera- tion of the Spectrum Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum Funds. Expenses allocated under this agreement are reflected as shareholder servicing expense in the accompanying financial statements. For the six months ended April 30, 2012, the fund was allocated $56,000 of Spectrum Funds’ expenses, of which $38,000 related to services provided by Price. The amount payable at period-end pursuant to this agreement is reflected as Due to Affiliates in the accompanying financial statements. Additionally, redemption fees received by the Spectrum Funds are allocated to each underlying Price fund in proportion to the average daily value of its shares owned by the Spectrum Funds. At April 30, 2012, approximately 2% of the outstanding shares of the fund were held by the Spectrum Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the T. Rowe Price Reserve Investment Funds), open-end management investment companies managed by Price Associates and considered affiliates of the fund. The T. Rowe Price Reserve Investment Funds are offered as cash management options to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates and are not available for direct purchase by members of the public. The T. Rowe Price Reserve Investment Funds pay no investment management fees. Proof #4 35 T. Rowe Price New Asia Fund Information on Proxy Voting Policies, Procedures, and Records A description of the policies and procedures used by T. Rowe Price funds and portfolios to determine how to vote proxies relating to portfolio securities is available in each fund’s Statement of Additional Information, which you may request by calling 1-800-225-5132 or by accessing the SEC’s website, sec.gov. The description of our proxy voting policies and procedures is also available on our website, troweprice.com. To access it, click on the words “Our Company” at the top of our corporate homepage. Then, when the next page appears, click on the words “Proxy voting Policies” on the left side of the page. Each fund’s most recent annual proxy voting record is available on our website and through the SEC’s website. To access it through our website, follow the directions above, then click on the words “Proxy voting Records” on the right side of the Proxy voting Policies page. How to Obtain Quarterly Portfolio Holdings The fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-q. The fund’s Form N-q is available electronically on the SEC’s website (sec.gov); hard copies may be reviewed and copied at the SEC’s Public Reference Room, 100 F St. N.W., Washington, DC 20549. For more information on the Public Reference Room, call 1-800-SEC-0330. Proof #4 36 T. Rowe Price New Asia Fund Approval of Investment Management Agreement On March 6, 2012, the fund’s Board of Directors (Board) unanimously approved the con- tinuation of the investment advisory agreement (Advisory Contract) between the fund and its investment advisor, T. Rowe Price Associates, Inc. (Advisor). The Board also unani- mously approved the continuation of the investment subadvisory agreement (Subadvisory Contract) that the Advisor has entered into with T. Rowe Price International Ltd and T. Rowe Price Hong Kong Limited (Subadvisors) on behalf of the fund. The Board considered a variety of factors in connection with its review of the Advisory Contract and Subadvisory Contract, also taking into account information provided by the Advisor during the course of the year, as discussed below: Services Provided by the advisor and Subadvisors The Board considered the nature, quality, and extent of the services provided to the fund by the Advisor and Subadvisors. These services included, but were not limited to, directing the fund’s investments in accordance with its investment program and the overall management of the fund’s portfolio, as well as a variety of related activities such as financial, accounting, and administrative services; maintaining the fund’s records and registrations; and shareholder communications. The Board also reviewed the background and experience of the Advisor’s and Subadvisors’ senior management teams and invest- ment personnel involved in the management of the fund. The Board concluded that it was satisfied with the nature, quality, and extent of the services provided by the Advisor and Subadvisors. Investment Performance of the fund The Board reviewed the fund’s average annual total returns over the three-month and 1-, 3-, 5-, and 10-year periods, as well as the fund’s year-by-year returns, and compared these returns with a wide variety of previously agreed upon comparable performance measures and market data, including those supplied by Lipper and Morningstar, which are independent providers of mutual fund data. On the basis of this evaluation and the Board’s ongoing review of investment results, and factoring in the relative market condi- tions during certain of the performance periods, the Board concluded that the fund’s performance was satisfactory. Costs, Benefits, Profits, and Economies of Scale The Board reviewed detailed information regarding the revenues received by the Advisor under the Advisory Contract and other benefits that the Advisor (and its affiliates, including the Subadvisors) may have realized from its relationship with the fund, including research received under “soft dollar” agreements and commission-sharing arrangements with broker-dealers. The Board considered that the Advisor and Subadvisors may receive some benefit from soft-dollar arrangements pursuant to which research is received from broker- dealers that execute the applicable fund’s portfolio transactions. The Board received infor- mation on the estimated costs incurred and profits realized by the Advisor from managing T. Rowe Price mutual funds. The Board also reviewed estimates of the gross profits realized from managing the fund in particular, and the Board concluded that the Advisor’s profits were reasonable in light of the services provided to the fund. Proof #4 37 T. Rowe Price New Asia Fund Approval of Investment Management Agreement (continued) The Board also considered whether the fund or other funds benefit under the fee levels set forth in the Advisory Contract from any economies of scale realized by the Advisor. Under the Advisory Contract, the fund pays a fee to the Advisor for investment management services composed of two components—a group fee rate based on the combined average net assets of most of the T. Rowe Price mutual funds (including the fund) that declines at certain asset levels and an individual fund fee rate based on the fund’s average daily net assets—and the fund pays its own expenses of operations. Under the Subadvisory Contract, the Advisor may pay each Subadvisor up to 60% of the advisory fee that the Advisor receives from the fund. The Board concluded that the advisory fee structure for the fund continued to provide for a reasonable sharing of benefits from any economies of scale with the fund’s investors. fees The Board was provided with information regarding industry trends in management fees and expenses, and the Board reviewed the fund’s management fee rate, operating expenses, and total expense ratio in comparison with fees and expenses of other compa- rable funds based on information and data supplied by Lipper. The information provided to the Board indicated that the fund’s management fee rate and total expense ratio were above the median for certain groups of comparable funds but below the median for other groups of comparable funds. The Board also reviewed the fee schedules for institutional accounts and private accounts with similar mandates that are advised or subadvised by the Advisor and its affiliates. Management provided the Board with information about the Advisor’s responsibilities and services provided to institutional account clients that illustrated how the require- ments and economies of the institutional business are fundamentally different from those of the mutual fund business. The information showed that the Advisor’s responsibilities for its institutional account business are more limited than its responsibilities for the fund and other T. Rowe Price mutual funds that it advises and that the Advisor performs significant additional services and assumes greater risk for the fund and other T. Rowe Price mutual funds than it does for institutional account clients. On the basis of the infor- mation provided, the Board concluded that the fees paid by the fund under the Advisory Contract were reasonable. approval of the advisory Contract and Subadvisory Contract As noted, the Board approved the continuation of the Advisory Contract and Subadvisory Contract. No single factor was considered in isolation or to be determinative to the decision. Rather, the Board was assisted by the advice of independent legal counsel and concluded, in light of a weighting and balancing of all factors considered, that it was in the best interests of the fund and its shareholders for the Board to approve the continuation of the Advisory Contract and Subadvisory Contract (including the fees to be charged for services thereunder). Proof #4 119494 F39-051 6/12 T. Rowe Price Mutual Funds For more information about T. Rowe Price funds or services, please contact us directly at 1-800-225-5132. Request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Investments in the money market 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. * T. Rowe Price Advisor and R Classes may be available for these funds. T. Rowe Price Advisor and R Classes are offered only through financial intermediaries. For more information about T. Rowe Price Advisor and R Classes, contact your financial professional or call T. Rowe Price at 1-877-804-2315. ‡ Closed to new investors except for a direct rollover from a retirement plan into a T. Rowe Price IRA invested in this fund. ˆ The Retirement Funds are inclusive of the Retirement 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, and Income Funds. §Subject to certain exceptions, the fund will be closed to new investors effective April 30, 2012. STOCk fuNDS Domestic Blue Chip Growth* Capital Appreciation* Capital Opportunity* Diversified Mid-Cap Growth Diversified Small-Cap Growth Dividend Growth* Equity Income* Equity Index 500 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 Equity Total Equity Market Index U.S. Large-Cap Core* Value* aSSET aLLOCaTION fuNDS Balanced Personal Strategy Balanced Personal Strategy Growth Personal Strategy Income Real Assets Retirement Funds*ˆ BOND fuNDS Domestic Taxable Corporate Income Floating Rate* GNMA High Yield*§ Inflation Protected Bond New Income* Short-Term Bond* Spectrum Income Strategic Income* Summit GNMA U.S. Bond Enhanced Index U.S. Treasury Intermediate U.S. Treasury Long-Term Domestic Tax-free California Tax-Free Bond 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 Short-Intermediate Virginia Tax-Free Bond MONEY MaRkET fuNDS Taxable Prime Reserve Summit Cash Reserves U.S. Treasury Money MONEY MaRkET fuNDS (cont.) Tax-free California Tax-Free Money Maryland Tax-Free Money New York Tax-Free Money Summit Municipal Money Market Tax-Exempt Money INTERNaTIONaL/GLOBaL fuNDS Stock Africa & Middle East Emerging Europe Emerging Markets Stock European Stock Global Infrastructure* Global Large-Cap Stock* Global Real Estate* Global Stock* Global Technology International Discovery International Equity Index International Growth & Income* International Stock* Japan Latin America New Asia Overseas Stock Spectrum International Bond Emerging Markets Bond Emerging Markets Corporate Bond* Emerging Markets Local Currency Bond* International Bond* T. Rowe Price Investment Services, Inc. 100 East Pratt Street Baltimore, MD 21202 This page contains supplementary information that is not part of the shareholder report. SUMMARY PROSPECTUS PRASX March 1, 2013 T. Rowe Price New Asia Fund A fund seeking long-term growth of capital through investments in common stocks of companies located (or with primary operations) in Asia (excluding Japan). Before you invest, you may want to review the fund’s prospectus, which contains more information about the fund and its risks. You can find the fund’s prospectus and other information about the fund online at troweprice.com/prospectus. You can also get this information at no cost by calling 1-800-225-5132 or by sending an e-mail request to info@troweprice.com. This Summary Prospectus incorporates by reference the fund’s prospectus, dated March 1, 2013, and Statement of Additional Information, dated March 1, 2013. The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. SUMMARY 1 Investment Objective The fund seeks long-term growth of capital through investments primarily in the common stocks of companies located (or with primary operations) in Asia (excluding Japan). Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Fees and Expenses of the Fund Shareholder fees (fees paid directly from your investment) Maximum sales charge (load) imposed on purchases NONE Maximum deferred sales charge (load) NONE Redemption fee (as a percentage of amount redeemed on shares held for 90 days or less) 2.00% Maximum account fee $20 a Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.80% Distribution and service (12b-1) fees 0.00% Other expenses 0.15% Total annual fund operating expenses 0.95% a Subject to certain exceptions, accounts with a balance of less than $10,000 are charged an annual $20 fee. Example This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 year 3 years 5 years 10 years $97 $303 $525 $1,166 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the T. ROWE PRICE 2 most recent fiscal year, the fund’s portfolio turnover rate was 41.1% of the average value of its portfolio. Investments, Risks, and Performance Principal Investment Strategies The fund will normally invest at least 80% of its net assets (including any borrowings for investment purposes) in Asian companies (excluding Japanese companies). The fund may purchase the stocks of companies of any size. The fund expects to make substantially all of its investments in common stocks of companies located (or with primary operations) in the countries listed below, as well as others as their markets develop: • Primary Emphasis: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Thailand. • Others: Pakistan, Sri Lanka, and Vietnam. The fund is “nondiversified,” meaning it may invest a greater portion of assets in a single company and own more of the company’s voting securities than is permissible for a “diversified” fund. While the fund invests with an awareness of the outlook for industry sectors and individual countries within the region, bottom-up stock selection is the focus of our decision-making. Country allocation is driven largely by stock selection, though we may limit investments in markets that appear to have poor overall prospects. Security selection reflects a growth style. The fund relies on a global team of investment analysts dedicated to in-depth fundamental research in an effort to identify companies capable of achieving and sustaining above-average, long-term earnings growth. We seek to purchase stocks of such companies at reasonable prices in relation to present or anticipated earnings, cash flow, or book value. In selecting investments, the fund generally favors companies with one or more of the following characteristics: • leading or improving market position; • attractive business niche; • attractive or improving franchise or industry position; • seasoned management; • stable or improving earnings and/or cash flow; and • sound or improving balance sheet. The fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. Principal Risks As with any mutual fund, there is no guarantee that the fund will achieve its objective. The fund’s share price fluctuates, which means you could lose money by investing in the fund. The principal risks of investing in this fund are summarized as follows: SUMMARY 3 Active management risk The fund is subject to the risk that the investment adviser’s judgments about the attractiveness, value, or potential appreciation of the fund’s investments may prove to be incorrect. If the securities selected and strategies employed by the fund fail to produce the intended results, the fund could underperform other funds with similar objectives and investment strategies. Risks of stock investing Stocks generally fluctuate in value more than bonds and may decline significantly over short time periods. There is a chance that stock prices overall will decline because stock markets tend to move in cycles, with periods of rising prices and falling prices. The value of a stock in which the fund invests may decline due to general weakness in the stock market or because of factors that affect a company or a particular industry. Foreign investing risk Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, and regulatory and financial reporting standards, that differ from those of the U.S. Emerging markets risk The risks of foreign investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in foreign developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on foreign investments, restrictions on gaining access to sales proceeds, and less liquid and efficient trading markets. Geographic concentration risk Because the fund concentrates its investments in a particular geographic region, the fund’s performance is closely tied to the social, political, and economic conditions within that region. Political developments and changes in regulatory, tax, or economic policy in particular countries within the region could significantly affect the markets in those countries as well as the entire region. As a result, the fund is likely to be more volatile than more geographically diverse international funds. Many Asian economies have at various times been negatively affected by inflation, an over-reliance on international trade, political and social instability, and less developed financial systems and securities trading markets. Trade restrictions, unexpected decreases in exports, changes in government policies, or natural disasters could have a significant impact on companies doing business in Asia. Nondiversification risk As a nondiversified fund, the fund has the ability to invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor performance by a single issuer could adversely T. ROWE PRICE 4 affect fund performance more than if the fund were invested in a larger number of issuers. The fund’s share price can be expected to fluctuate more than that of a comparable diversified fund. Investment style risk Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The fund’s growth approach to investing could cause it to underperform other stock funds that employ a different investment style. Growth stocks tend to be more volatile than certain other types of stocks and their prices usually fluctuate more dramatically than the overall stock market. A stock with growth characteristics can have sharp price declines due to decreases in current or expected earnings and may lack dividends that can help cushion its share price in a declining market. Performance The bar chart showing calendar year returns and the average annual total returns table indicate risk by illustrating how much returns can differ from one year to the next and how fund performance compares with that of a comparable market index. The fund’s past performance (before and after taxes) is not necessarily an indication of future performance. The fund can also experience short-term performance swings, as shown by the best and worst calendar quarter returns during the years depicted. Calendar Year Returns New Asia Fund Best Quarter 6/30/09 55.24% Worst Quarter 3/31/08 -22.80% ’10 ’09 ’08 ’07 ’12 ’11 ’06 ’05 ’04 ’03 Quarter Ended Total Return 53.54 18.60 26.43 36.12 66.38 -60.99 102.76 20.35 -12.14 23.69 -116 -87 -58 -29 0 29 58 87 116 145% In addition, the average annual total returns table shows hypothetical after-tax returns to suggest how taxes paid by a shareholder may influence returns. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax SUMMARY 5 returns shown are not relevant to investors who hold their fund shares through tax- deferred arrangements, such as a 401(k) account or individual retirement account. Average Annual Total Returns Periods ended December 31, 2012 1 Year 5 Years 10 Years New Asia Fund Returns before taxes 23.69 % 0.68 % 18.36 % Returns after taxes on distributions 23.30 0.00 17.51 Returns after taxes on distributions and sale of fund shares 16.00 0.52 16.66 MSCI All Country Asia ex Japan Index (reflects no deduction for fees, expenses, or taxes) 22.70 0.12 14.95 Lipper Pacific Ex Japan Funds Average 22.06 -0.19 14.18 Updated performance information is available through troweprice.com or may be obtained by calling 1-800-225-5132. Management Investment Adviser T. Rowe Price Associates, Inc. (T. Rowe Price) Investment Sub-advisers T. Rowe Price International Ltd (T. Rowe Price International) and T. Rowe Price Hong Kong Limited (Price Hong Kong) Portfolio Manager Title Managed Fund Since Joined Investment Adviser Anh Lu Chairman of Investment Advisory Committee 2009 2001 Purchase and Sale of Fund Shares The fund’s investment minimums generally are as follows (if you hold shares through a financial intermediary, the intermediary may impose different investment minimums): Type of Account Minimum initial purchase Minimum subsequent purchase Individual retirement accounts, small business retirement plan accounts, and Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts $1,000 $100 All other accounts 2,500 100 You may purchase, redeem, or exchange shares of the fund on any day the New York Stock Exchange is open for business by accessing your account online at troweprice.com, by calling 1-800-225-5132, or by written request. If you hold shares T. ROWE PRICE 6 through a financial intermediary, you must purchase, redeem, and exchange shares through your intermediary. Tax Information Any dividends or capital gains are declared and paid annually, usually in December. Distributions by the fund, whether or not you reinvest these amounts in additional fund shares, may be taxed as ordinary income or capital gains unless you invest through a tax-deferred account. A redemption or exchange of fund shares may be taxable. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the fund through a broker-dealer or other financial intermediary, the fund and its related companies may pay the intermediary for the performance of administrative services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information on these payments. T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, MD 21202 F39-045 3/1/13