premx emerging markets bond fund paikx …individual.troweprice.com/gcfiles/pdf/sremb.pdfproof #4...

Proof #4

June 30, 2017

PREMX

PAIKX

PRXIX

SEMIANNUAL REPORT

Emerging Markets Bond Fund

Emerging Markets Bond Fund– Advisor Class

Emerging Markets Bond Fund– I Class

T. RowE PRICE

The fund primarily invests in government and corporate fixed income securities issued in developing nations for high current income and capital appreciation.

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REPORTS ON THE WEB

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HIGHLIGHTS

• Emergingmarketsbondsgeneratedsolidreturnsinthefirstsixmonthsof2017,buildingontheirstrong2016performancedespitesomeweaknessincommodityprices.

• TheEmergingMarketsBondFundreturned6.30%,outperformingtheJ.P.MorganEmergingMarketsBondIndexGlobal.

• SecurityselectioninArgentinaandBrazilbenefitedrelativeperfor-mance,whileanunderweighttoUruguayandapositioninPuertoRicoweighedonreturns.

• Whiletechnicalpressurescouldbetriggeredbyfaster-than-expectedcentralbanktighteningindevelopedmarketsorincreasedcommoditypricevolatility,thelong-termfundamentaldriversforemergingmarketsdebtremainsupportivewithsignificantpoliticalreformsinkeymarkets,tighterfiscalbudgets,healthiercurrentaccountbalances,andstrengtheninggrowthprospects.

T. Rowe Price Emerging Markets Bond Fund

The views and opinions in this report were current as of June 30, 2017.They are not guarantees of performance or investment results andshouldnotbe takenas investmentadvice. Investmentdecisionsreflectavarietyof factors,and themanagers reserve the right tochange theirviews about individual stocks, sectors, and the markets at any time.As a result, the views expressed should not be relied upon as a fore-castof the fund’s future investment intent.Thereport iscertifiedunderthe Sarbanes-Oxley Act, which requiresmutual funds and other publiccompanies to affirm that, to the best of their knowledge, the informa-tionintheirfinancialreportsisfairlyandaccuratelystatedinallmaterialrespects.

http://www.troweprice.com

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Manager’s Letter

1

Fellow Shareholders

Emerging markets sovereign bonds denominated in U.S. dollars generated solid

returns in the first six months of 2017, building on their strong 2016 performance

despite some weakness in commodity prices. Fears about the Trump administration

instituting protectionist trade policies that would punish some export-dependent

emerging markets abated. Locally denominated emerging markets bonds easily

outperformed their dollar-denominated cousins in U.S. dollar terms, while emerging

markets corporate bonds modestly lagged emerging markets sovereign debt

denominated in U.S. dollars or local currencies.

As seen in the Performance Comparison table, the Emerging Markets Bond Fund returned 6.30% for the six months ended June 30, 2017. The fund outperformed its bench-mark, the J.P. Morgan Emerging Markets Bond Index Global, but under-performed its Lipper peer group average. (Results for Advisor and I Class shares vary, reflecting their different fee structures.)

MARKET ENVIRONMENT

Emerging markets sovereign bonds denominated in U.S. dollars generated solid returns in the first six months of 2017, building on their strong 2016 performance. The rally in the asset class continued despite some weakness in commodity prices. The price of a barrel of

Six-MonthPeriodEnded6/30/17 TotalReturn

EmergingMarketsBondFund 6.30%

EmergingMarketsBondFund–AdvisorClass 6.16

EmergingMarketsBondFund–IClass 6.39

J.P.MorganEmergingMarketsBondIndexGlobal 6.20

LipperEmergingMarketHardCurrencyDebtFundsAverage 6.63

Performance Comparison

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Brent crude oil, the worldwide benchmark, fell below $45 in June after starting 2017 at nearly $55. While emerging markets are divided about evenly between net oil exporters that benefit from higher prices and net oil importers that benefit from lower prices, the commodities markets tend to drive broad investor sentiment toward riskier asset classes such as emerging markets debt.

Economic growth in China, which is another factor that influences sentiment toward “risk assets,” appeared to hold up well. China’s gross domestic product (GDP) expanded at a 6.9% rate in the first quarter of 2017 from the year-earlier quarter after growing 6.7% for the full year 2016, within the target range of 6.5% to 7%. Brazil’s economy expanded in the first quarter of 2017 as the country’s central bank cut interest rates to help lift its economy out of recession. Brazil’s dollar-denominated sovereign debt returned over 7% as President Michel Temer made meaningful progress toward implementing fiscal reforms that would improve the country’s credit profile. However, corruption allegations against Temer increased uncertainty around the outlook for key fiscal reforms. Fears about the Trump administration

instituting protectionist trade policies that would punish export-dependent emerging markets such as Mexico abated, leading to returns over 8% for Mexican government debt denominated in dollars.

Many emerging markets currencies gained against the U.S. dollar even as the Federal Reserve slowly raised U.S. interest rates, helping

locally denominated emerging markets bonds easily outperform their dollar-denominated cousins in U.S. dollar terms. The Mexican peso rallied to its highest level since the U.S. presidential election, gaining almost 14% against the dollar in the six-month period and boosting Mexico’s local sovereign debt to a 22% return. The peso is one of the most liquid emerging markets currencies and tends to trade as a proxy for risk in the segment. The Russian ruble climbed nearly 3% versus the greenback. The Russian currency’s strength, combined with

Six-MonthPeriodEnded6/30/17 TotalReturn

J.P.MorganEmergingMarketsBondIndexGlobal 6.20%

Mexico 8.01

Brazil 7.09

Argentina 5.84

Turkey 9.47

Indonesia 7.42

Source:J.P.Morgan.InU.S.dollars.

Emerging Markets Performance

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interest rate cuts from Russia’s central bank, led to returns over 9% for ruble-denominated government bonds. The Brazilian real was one of the few major currencies to fall against the U.S. dollar in the first half of 2017, declining almost 2% as the Central Bank of Brazil eased monetary policy.

Corporate bonds issued by companies in emerging markets—which are denominated in “hard currencies” such as U.S. dollars—lagged emerging markets sovereigns but still broadly gained more than 5% for the reporting period, according to J.P. Morgan data. Noninvestment-grade corporate bonds from developing countries performed particularly well as their compelling yields attracted investors. Healthy demand for the asset class helped offset a record pace of new issuance of emerging markets corporate debt. Bonds with high yield credit ratings made up an increasing proportion of the new supply as noninvestment-grade issuers took advantage of the strong technical conditions to bring new debt to market. Companies used the bulk of the proceeds from selling new bonds to refinance existing debt rather than adding to their total indebtedness.

PORTFOLIO REVIEW AND POSITIONING

Security selection in Argentina was the most significant positive factor in the fund’s relative performance as a result of the portfolio’s emphasis on Argentine corporate debt instead of the country’s sovereign bonds. Argentina has benefited from enacting economic and regulatory reforms, which have led to positive GDP growth and lower inflation. We expect the country’s economic growth to accelerate further as it boosts investment in its energy sector and continues to increase the efficiency of its agricultural industry. Our positions in Argentine corporate bonds from issuers that benefit from growing domestic demand, as well as those in the energy and financials sectors, were among the best performers.

The fund’s overweight allocation to Brazil and security selection in the country also contributed to relative returns. An allocation to bonds from Petrobras, Brazil’s partially state-owned oil company, also helped relative performance. Petrobras continued to benefit from new sources of financing, non-core asset sales, and expectations for lower levels of government intervention in Brazil’s domestic oil industry. Our Brazilian corporate bonds in the financials, industrials, and consumer-related sectors also performed well. We reduced the portfolio’s overall

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allocation to Brazil over the course of the reporting period by nearly two percentage points as valuations moved higher, but we remained overweight at the end of June. (Please refer to the fund’s portfolio of

investments for a complete list of holdings and the amount each represents in the portfolio.)

In terms of broad country allocation, the fund was underweight sovereign bonds from longer-duration, more efficiently priced countries,

including the Philippines, Poland, and Lithuania. We think that these countries offer limited relative value and, in the cases of Poland and Lithuania, are more exposed to European Union growth risks. Because investor appetite for risk and yield was strong, this positioning benefited relative performance as these countries underperformed government debt from countries that the market generally views as higher risk. We also added exposure to Egypt and Lebanon, moving from an underweight to both countries to overweights. We think that the political environment and outlook for meaningful reforms is improving in Egypt and Lebanon. Also, their bonds are often less correlated with the debt of other developing markets, providing useful diversification.

On the negative side, the fund’s underweight to strong-performing Uruguay detracted from relative returns. Uruguay’s bonds advanced after it reported higher-than-expected growth. Investors also favored the country’s debt because they expect it to benefit from improving economies in Brazil and Argentina, which are Uruguay’s largest trading partners. In addition, Uruguay debt has a relatively long duration, so it benefited more than most emerging markets from the decrease in longer-term U.S. Treasury yields in the first half of 2017. The fund’s underweight to Uruguay stemmed from our opinion that the country’s bonds are low yielding even given its investment-grade credit ratings.

The fund also has a small position in municipal bonds from Puerto Rico, which are not included in the benchmark. This exposure weighed modestly on relative returns after Puerto Rico’s federal oversight Board approved the Puerto Rican governor’s long-term fiscal recovery plan, which left less money to cover debt service than market participants had

PeriodsEnded 12/31/16 6/30/17

WeightedAverageMaturity(years) 10.6 10.7

WeightedAverageSpreadDuration(years) 6.0 6.5

Source:T.RowePrice.

Portfolio Characteristics

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expected. Puerto Rico’s bankruptcy process and restructuring negotiations with bondholders are ongoing, and we anticipate that the debt will ultimately recover, to some degree, from its distressed prices.

We modestly reduced the portfolio’s allocation to emerging markets corporate debt over the course of the reporting period, positioning the fund somewhat more defensively. While we maintained a positive outlook for emerging markets corporate debt

in general, we found more attractive opportunities in sovereign bonds as corporate credit spreads continued to tighten. Emerging markets corporate bonds are also generally less liquid than government debt. Within the emerging markets corporate segment, we tend to favor quasi-sovereign issuers, such as Brazil’s Petrobras, because they are generally more liquid and provide similar links to underlying growth trends.

The fund holds select locally denominated sovereign bonds where the relative value appears compelling versus debt denominated in U.S. dollars. We maintained the portfolio’s allocation to locally denominated bonds at around 8% in the first half of this year. Benign inflation, attractive inflation-adjusted local yields, and expectations for supportive central bank policies made select local markets, such as Brazil, attractive. Depending upon our outlook for a particular currency and the costs involved, we may fully or partially hedge the currency exposure to reduce risk, or opt not to hedge if a currency appears to be poised to gain against the dollar. During the year, we hedged most of the portfolio’s foreign exchange exposure or utilized non-U.S. dollar funding currencies. The fund’s nondollar currency exposure was very limited. The fund maintains material holdings of

Not Rated3%

BBB20%

Cash andEquivalents2%

B andBelow

41%

Quality Diversification

A andAbove5%


BB29%

Based on net assets as of 6/30/17.

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. T. Rowe Price does not evaluate these ratings but simply assigns them to the appropriate credit quality category as determined by the rating agency.

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currency forward contracts, a form of derivative, as a hedging tool. The fund’s exposure to currency derivatives detracted slightly from absolute performance during the six-month period as the dollar generally underperformed the foreign currencies.

Market liquidity is a key variable that we are closely monitoring as the Fed slowly raises interest rates. Reduced liquidity can limit our ability to buy and sell emerging markets bonds at efficient prices. Emerging markets debt, as one of the riskier and less traded fixed income asset classes, tends to have lower liquidity than high-quality government debt, such as U.S. Treasuries. As markets adapt to the Fed’s first tightening cycle since 2006, temporary dislocations may result in limited liquidity for some bonds from developing countries. As a result, we actively consider market depth and liquidity when evaluating bonds for purchase or sale, and we have been deliberately improving the aggregate liquidity of our portfolio holdings.

Venezuela5%

Indonesia7%

Other and Reserves

42%

Argentina8%

Brazil12%

Mexico14%

Russia5%

Geographic Diversification

Turkey7%


Based on net assets as of 6/30/17.

Percentages reflect the issuing country of thefund’s securities and exclude the effect offorward currency contracts.

NetCurrencyExposure:

U.S.Dollar 100%

ArgentinianPeso 1

EgyptianPound 1

Totalmaynotequal100%duetoroundingandotherfactors.

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OUTLOOK

The long-term drivers of emerging markets debt are solid. The fundamentals of many emerging markets sovereign and corporate issuers have improved as a result of significant political reforms in key countries, tighter government budgets, stronger balance sheets, healthier current account balances, and strengthening growth prospects. We expect the economic growth advantage of emerging countries over developed markets to widen with Russia and Brazil pulling out of recessions in 2017. Growing reform momentum in countries such as Egypt and Argentina should further boost expansion in developing countries. In addition, emerging markets debt also offers materially better yield than sovereign bonds from developed markets, many of which are mired in political uncertainty. While political turmoil in developed markets could create periods of volatility and weak sentiment toward riskier asset classes such as emerging markets debt, we believe that it poses limited systemic risk.

However, risks for the asset class remain. China’s struggle to manage its transition from an export-oriented economy to one focused on domestic consumption without inducing an abrupt slowdown remains a key global risk that we are monitoring. Over the longer term, we expect Chinese growth to slow toward a more sustainable long-term rate, but, in the short term, there is a strong political imperative to deliver stability ahead of the National Congress of the Communist Party of China this fall. Geopolitical risks centered on the Korean Peninsula and the Middle East have become increasingly acute. Markets have generally been surprisingly unfazed by these factors, but that could quickly change if investors were to adopt a more conservative risk posture. Possibly the most meaningful risk on the horizon is the potential for central banks in developed markets to tighten monetary policy more aggressively than markets expect. Policy adjustments from the Fed, the European Central Bank, or the Bank of Japan could trigger an increase in yields on developed markets sovereign bonds, which could trigger outflows from emerging markets debt by removing part of the yield advantage the asset class currently offers.

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The diverse background of country-specific developments in emerging markets drives the importance of country selection and maintaining a long-term investment view. We believe that the extended reach of T. Rowe Price’s global credit, sovereign, and equity research platforms, combined with our emphasis on collaboration across those platforms, gives us a critical edge in the analysis of individual countries and bonds in emerging fixed income markets.

Respectfully submitted,

Michael J. ConeliusLead portfolio manager and chairman of the Emerging Markets Bond Fund’s Investment Advisory Committee.

July 25, 2017

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.

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Risk of International Bond Investing

FundsthatinvestoverseasgenerallycarrymoreriskthanfundsthatinveststrictlyinU.S.assets,includingunpredictablechangesincurrencyvalues.Investmentsinemergingmarketsaresubjecttoabruptandseverepricedeclinesandshouldberegardedasspeculative.Theeconomicandpoliticalstructuresofdevelopingnations,inmostcases,donotcomparefavorablywiththeU.S.orotherdevelopedcountriesintermsofwealthandstability,andtheirfinancialmarketsoftenlackliquidity.Somecountriesalsohavelegaciesofhyperinflation,currencydevaluations,andgovernmentalinterferenceinmarkets.

International investments are subject to currency risk,adeclineinthevalueofaforeigncurrencyversustheU.S.dollar,whichreducesthedollarvalueofsecuritiesdenominatedinthatcurrency.Theoverallimpactonafund’sholdingscanbesignificantandlonglastingdependingonthecurrenciesrepresentedintheportfolio,howeachoneappreciatesordepreciatesinrelationtotheU.S.dollar,andwhethercurrencypositionsarehedged.Further,exchangeratemovementsareunpredictable,anditisnotpossibletoeffectivelyhedgethecurrencyrisksofmanydevelopingcountries.

Bonds are also subject to interest rate risk,thedeclineinbondpricesthatusuallyaccompaniesariseininterestrates,andcredit risk,thechancethatanyfundholdingcouldhaveitscreditratingdowngradedorthatabondissuerwilldefault(failtomaketimelypaymentsofinterestorprincipal),potentiallyreducingthefund’sincomelevelandshareprice.

Glossary

Credit spreads:TheadditionalyieldthatinvestorsdemandtoholdabondwithcreditriskcomparedwithaTreasurysecuritywithacomparablematuritydate.

Duration:Ameasureofabond’sorbondfund’ssensitivitytochangesininterestrates.Forexample,afundwithadurationofsixyearswouldfallabout6%inresponsetoaone-percentage-pointriseinrates,andviceversa.

Gross domestic product:Thetotalmarketvalueofallgoodsandservicesproducedinacountryinagivenyear.

J.P. Morgan Emerging Markets Bond Index Global:TracksU.S.dollargovernmentbondsof31foreigncountries.

Lipper averages:TheaveragesofavailablemutualfundperformancereturnsforspecifiedtimeperiodsincategoriesdefinedbyLipperInc.

Weighted average maturity:Ameasureofafund’ssensitivitytointerestrates.Ingeneral,thelongertheaveragematurity,thegreaterthefund’ssensitivitytointerestratechanges.Theweightedaveragematuritymaytakeintoaccounttheinterestratereadjustmentdatesforcertainsecurities.Moneyfundsmustmaintainaweightedaveragematurityoflessthan60days.

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PRICE AND YIELD

PeriodsEnded 12/31/16 6/30/17

EmergingMarketsBondFundSharePrice $12.27 $12.64

DividendsPerShare For6months 0.42 0.40

For12months 0.79 0.81

SECYield(30-Day) 6.20% 5.54%

EmergingMarketsBondFund–AdvisorClassSharePrice $12.27 $12.64



SECYield(30-Day) 6.21% 5.34%

EmergingMarketsBondFund–IClassSharePrice $12.26 $12.63



SECYield(30-Day) 6.36% 5.71%

12-monthdividendsmaynotequalthecombined6-monthfiguresduetorounding.Yieldswillvaryandarenotguaranteed.

Portfolio Highlights

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Performance and Expenses

Growth of $10,000

Thischartshowsthevalueofahypothetical$10,000investmentinthefundoverthepast10fiscalyearperiodsorsinceinception(forfundslacking10-yearrecords).Theresultiscomparedwithbenchmarks,whichmayincludeabroad-basedmarketindexandapeergroupaverageorindex.Marketindexesdonotincludeexpenses,whicharedeductedfromfundreturnsaswellasmutualfundaveragesandindexes.

As of 6/30/17

E M E R G I N G M A R K E T S B O N D F U N D

Emerging Markets Bond Fund $18,960

J.P. Morgan Emerging Markets Bond Index Global $20,224

Lipper Emerging Market Hard Currency Debt Funds Average $18,220

10,000

16,000

22,000

28,000

34,000

$40,000

Note: Performance for the Advisor and I Classes will vary due to their differing fee structures. See returns table below.

6/07 6/136/126/116/106/096/08 6/176/14 6/15 6/16

Since InceptionPeriodsEnded6/30/17 1Year 5Years 10Years Inception Date

EmergingMarketsBondFund 8.91% 5.49% 6.61% – –

EmergingMarketsBondFund–AdvisorClass 8.60 – – 11.09% 8/28/15

EmergingMarketsBondFund–IClass 9.08 – – 11.52 8/28/15

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 or, for Advisor and I 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.

Thistableshowshowthefundwouldhaveperformedeachyearifitsactual(orcumulative)returnshadbeenearnedataconstantrate.Averageannualtotalreturnfiguresincludechangesinprincipalvalue,reinvesteddividends,andcapitalgaindistributions.Returnsdonotreflecttaxesthattheshareholdermaypayonfunddistributionsortheredemptionoffundshares.Whenassessingperformance,investorsshouldconsiderbothshort-andlong-termreturns.

Average Annual Compound Total Return

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EmergingMarketsBondFund 0.92%

EmergingMarketsBondFund–AdvisorClass 1.43

EmergingMarketsBondFund–IClass 0.77

Theexpenseratioshownisasofthefund’sfiscalyearended12/31/16.Thisnumbermayvaryfromtheexpenseratioshownelsewhereinthisreportbecauseitisbasedonadifferenttimeperiodand,ifapplicable,includesacquiredfundfeesandexpensesbutdoesnotincludefeeorexpensewaivers.

Expense Ratio

Fund Expense Example

Asamutualfundshareholder,youmayincurtwotypesofcosts:(1)transactioncosts,suchasredemptionfeesorsalesloads,and(2)ongoingcosts,includingmanagementfees,distributionandservice(12b-1)fees,andotherfundexpenses.Thefollowingexampleisintendedtohelpyouunderstandyourongoingcosts(indollars)ofinvestinginthefundandtocomparethesecostswiththeongoingcostsofinvestinginothermutualfunds.Theexampleisbasedonaninvestmentof$1,000investedatthebeginningofthemostrecentsix-monthperiodandheldfortheentireperiod.

Pleasenotethatthefundhasthreeshareclasses:Theoriginalshareclass(InvestorClass)chargesnodistributionandservice(12b-1)fee,AdvisorClasssharesareofferedonlythroughunaffiliatedbrokersandotherfinancialintermediariesandchargea0.25%12b-1fee,andIClasssharesareavailabletoinstitutionallyorientedclientsandimposeno12b-1oradministrativefeepayment.Eachshareclassispresentedseparatelyinthetable.

Actual ExpensesThefirstlineofthefollowingtable(Actual)providesinformationaboutactualaccountvaluesandexpensesbasedonthefund’sactualreturns.Youmayusetheinformationonthisline,togetherwithyouraccountbalance,toestimatetheexpensesthatyoupaidovertheperiod.Simplydivideyouraccountvalueby$1,000(forexample,an$8,600accountvaluedividedby$1,000=8.6),thenmultiplytheresultbythenumberonthefirstlineundertheheading“ExpensesPaidDuringPeriod”toestimatetheexpensesyoupaidonyouraccountduringthisperiod.

Hypothetical Example for Comparison PurposesTheinformationonthesecondlineofthetable(Hypothetical)isbasedonhypotheticalaccountvaluesandexpensesderivedfromthefund’sactualexpenseratioandanassumed5%peryearrateofreturnbeforeexpenses(notthefund’sactualreturn).Youmaycomparetheongoingcostsofinvestinginthefundwithotherfundsbycontrastingthis5%hypotheticalexampleandthe5%hypotheticalexamplesthatappearintheshareholderreportsoftheotherfunds.Thehypotheticalaccountvaluesandexpensesmaynotbeusedtoestimatetheactualendingaccountbalanceorexpensesyoupaidfortheperiod.

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Fund Expense Example (continued)

Note: T.RowePricechargesanannualaccountservicefeeof$20,generallyforaccountswithlessthan$10,000.ThefeeiswaivedforanyinvestorwhoseT.RowePricemutualfundaccountstotal$50,000ormore;accountselectingtoreceiveelectronicdeliveryofaccountstatements,transactionconfirmations,prospectuses,andshareholderreports;oraccountsofaninvestorwhoisaT.RowePricePersonalServicesorEnhancedPersonalServicesclient(enrollmentintheseprogramsgenerallyrequiresT.RowePriceassetsofatleast$250,000).Thisfeeisnotincludedintheaccompanyingtable.Ifyouaresubjecttothefee,keepitinmindwhenyouareestimatingtheongoingexpensesofinvestinginthefundandwhencomparingtheexpensesofthisfundwithotherfunds.

Youshouldalsobeawarethattheexpensesshowninthetablehighlightonlyyourongoingcostsanddonotreflectanytransactioncosts,suchasredemptionfeesorsalesloads.Therefore,thesecondlineofthetableisusefulincomparingongoingcostsonlyandwillnothelpyoudeterminetherelativetotalcostsofowningdifferentfunds.Totheextentafundchargestransactioncosts,however,thetotalcostofowningthatfundishigher.

Beginning Ending ExpensesPaid AccountValue AccountValue DuringPeriod* 1/1/17 6/30/17 1/1/17to6/30/17

Investor ClassActual $1,000.00 $1,063.00 $4.76

Hypothetical(assumes5%returnbeforeexpenses) 1,000.00 1,020.18 4.66

Advisor ClassActual 1,000.00 1,061.60 6.13


I ClassActual 1,000.00 1,063.90 3.99


*Expensesareequaltothefund'sannualizedexpenseratioforthe6-monthperiod,multipliedbytheaverageaccountvalueovertheperiod,multipliedbythenumberofdaysinthemostrecentfiscalhalfyear(181),anddividedbythedaysintheyear(365)toreflectthehalf-yearperiod.TheannualizedexpenseratiooftheInvestorClasswas0.93%,theAdvisorClasswas1.20%,andtheIClasswas0.78%.


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T. Rowe Price Emerging Markets Bond FundUnaudited

Financial Highlights For a share outstanding throughout each period

Investor Class

6 Months Ended

6/30/17

Year Ended

12/31/16 12/31/15 12/31/14 12/31/13 12/31/12 NET ASSET VALUE

Beginning of period

$ 12.27 $ 11.42 $ 12.09 $ 12.48 $ 14.22 $ 12.74

Investment activities

Net investment income(1)

0.40

0.81

0.73

0.72

0.70

0.79

Net realized and unrealized gain / loss

0.37

0.83

(0.65)

(0.31)

(1.70)

1.65

Total from investment activities

0.77

1.64

0.08

0.41

(1.00)

2.44

Distributions

Net investment income

(0.40) (0.71) (0.75) (0.72) (0.66) (0.77)

Net realized gain

–

– – (0.08) (0.08) (0.19)

Tax return of capital

–

(0.08) – – – –

Total distributions

(0.40) (0.79) (0.75) (0.80) (0.74) (0.96)

NET ASSET VALUE

End of period $ 12.64 $ 12.27 $ 11.42 $ 12.09 $ 12.48 $ 14.22

Ratios/Supplemental Data Total return(2) 6.30% 14.63% 0.62% 3.21% (7.19)% 19.62%

Ratio of total expenses to average net assets

0.93%

(3) 0.92%

0.93%

0.93%

0.94%

0.94%

Ratio of net investment income to average net assets 6.40%

(3) 6.67%

6.13%

5.62%

5.29%

5.83%

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The accompanying notes are an integral part of these financial statements.

6 Months Ended

6/30/17

Year Ended

12/31/16 12/31/15 12/31/14 12/31/13 12/31/12 Ratios/Supplemental Data (continued) Portfolio turnover rate

31.7% 59.5% 61.5% 45.0% 45.7% 40.7%

Net assets, end of period

(in millions)

$ 5,182 $ 6,162 $ 4,400 $ 4,268 $ 3,935 $ 4,024

(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

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Advisor Class

6 Months Ended

6/30/17

Year Ended

12/31/16

8/28/15(1)

Through

12/31/15 NET ASSET VALUE

Beginning of period

$ 12.27 $ 11.42 $ 11.65



0.41(3)

0.73(3)

0.21(3)

Net realized and unrealized gain / loss 0.34 0.88 (0.21)


0.75 1.61 0.00

Distributions


(0.38) (0.68) (0.23)


– (0.08) –

Total distributions

(0.38) (0.76) (0.23)

NET ASSET VALUE

End of period $ 12.64 $ 12.27 $ 11.42

Ratios/Supplemental Data Total return(4) 6.16%(3) 14.31%(3) (0.01)%(3)


1.20%(3)(5)

1.20%(3)

1.20%(3)(5)

Ratio of net investment income to average net assets

6.17%(3)(5)

6.27%(3)

5.20%(3)(5)

Portfolio turnover rate

31.7% 59.5% 61.5%

Net assets, end of period (in thousands) $ 672 $ 1,448 $ 245

(1) Inception date (2) Per share amounts calculated using average shares outstanding method. (3) Excludes expenses in excess of a 1.20% contractual expense limitation in effect through

4/30/18. (4) 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.

(5) Annualized

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I Class

6 Months Ended

6/30/17

Year Ended

12/31/16

8/28/15(1)

Through

12/31/15 NET ASSET VALUE

Beginning of period

$ 12.26 $ 11.41 $ 11.65



0.42

0.83

0.18(3)

Net realized and unrealized gain / loss 0.36 0.83 (0.17)


0.78 1.66 0.01

Distributions


(0.41) (0.72) (0.25)


– (0.09) –Total distributions

(0.41) (0.81) (0.25)

NET ASSET VALUE

End of period $ 12.63 $ 12.26 $ 11.41

Ratios/Supplemental Data Total return(4) 6.39% 14.81% 0.05%(3)


0.78%(5)

0.77%

0.79%(3)(5)

Ratio of net investment income to average net assets

6.46%(5)

6.80%

5.40%(3)(5)

Portfolio turnover rate

31.7% 59.5% 61.5%

Net assets, end of period (in millions) $ 1,403 $ 283 $ 10

(1) Inception date (2) Per share amounts calculated using average shares outstanding method. (3) See Note 6. Excludes expenses waived of 0.06% of average net assets for the period

ended 12/31/15, related to the contractual operating expense limitation in effect through 4/30/18.

(4) 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.

(5) Annualized

Proof #4

T. Rowe Price Emerging Markets Bond FundUnaudited June 30, 2017

Portfolio of Investments ‡ Par/Shares $ Value

(Cost and value in $000s)

18

First Page Footer

ALBANIA 0.0%

Government Bonds 0.0%

Government of Albania, 5.75%, 11/12/20 (EUR) 100,000 127

Total Albania (Cost $115) 127

ANGOLA 0.0%


Republic of Angola, 7.00%, 8/17/19 (USD) 562,500 580

Republic of Angola, 9.50%, 11/12/25 (USD) 450,000 475

Total Angola (Cost $993) 1,055

ARGENTINA 8.0%

Convertible Bonds 0.3%

MercadoLibre, 2.25%, 7/1/19 (USD) 8,884,000 18,257

18,257

Corporate Bonds 2.0%

Banco de Galicia y Buenos Aires, FRN, 8.25%, 7/19/26 (USD) (1) 30,399,000 34,351

Banco Hipotecario, 9.75%, 11/30/20 (USD) 5,350,000 6,160

Banco Hipotecario, 9.75%, 11/30/20 (USD) (1) 2,775,000 3,199

Banco Macro, 17.50%, 5/8/22 (1) 138,600,000 8,286

Banco Macro, FRN, 6.75%, 11/4/26 (USD) (1) 28,340,000 29,615

IRSA Propiedades Comerciales, 8.75%, 3/23/23 (USD) (1) 22,260,000 25,154

Pampa Energia, 7.50%, 1/24/27 (USD) (1) 7,695,000 8,043

Tarjeta Naranja, FRN, 22.438%, 4/11/22 (USD) (1) 13,365,000 13,766

YPF Sociedad Anonima, FRN, 23.083%, 7/7/20 (USD) (1) 4,550,000 4,971

133,545


Province of Buenos Aires, 7.875%, 6/15/27 (USD) (1) 7,400,000 7,680

Province of Buenos Aires, 9.125%, 3/16/24 (USD) 5,750,000 6,469

Province of Buenos Aires, 9.125%, 3/16/24 (USD) (1) 11,200,000 12,600

Province of Buenos Aires, 9.95%, 6/9/21 (USD) 12,350,000 14,109

Province of Buenos Aires, FRN, 23.393%, 5/31/22 (1) 191,620,000 11,788

Proof #4


Par/Shares $ Value


19

Republic of Argentina, 5.625%, 1/26/22 (USD) 960,000 985


Republic of Argentina, 6.875%, 4/22/21 (USD) 990,000 1,063

Republic of Argentina, 6.875%, 1/26/27 (USD) 22,490,000 23,311

Republic of Argentina, 7.125% (USD) (1)(2) 19,207,000 17,459





Republic of Argentina, FRN, 2.50%, 12/31/38 (USD) 860,000 564

Republic of Argentina, FRN, 19.725%, 3/1/18 149,370,000 8,915

Republic of Argentina, FRN, 26.25%, 6/21/20 135,885,000 8,506

Republic of Argentina, Inflation-Indexed, FRN, 5.83%, 12/31/33 23,510,000 10,656

Republic of Argentina, Zero Coupon, 12/15/35 (USD) 187,360,000 16,909

373,710

Total Argentina (Cost $507,885) 525,512

AZERBAIJAN 0.6%


State Oil of the Azer, 4.75%, 3/13/23 (USD) 6,700,000 6,460

6,460


Southern Gas Corridor, 6.875%, 3/24/26 (USD) 32,700,000 35,486

35,486

Total Azerbaijan (Cost $42,206) 41,946

BRAZIL 11.7%


Banco do Brasil, FRN, 9.00% (USD) (2) 15,700,000 15,975

Banco Nacional De Desenvolvimento, 4.00%, 4/14/19 (USD) 645,000 652

Banco Nacional de Desenvolvimento, 5.75%, 9/26/23 (USD) 205,000 217

Proof #4


Par/Shares $ Value


20

BR Malls International Finance, 8.50% (USD) (1)(2) 3,444,000 3,458

BR Malls International Finance, 8.50% (USD) (2) 2,290,000 2,299

Cosan Luxembourg, 7.00%, 1/20/27 (USD) 8,380,000 8,615

Cosan Luxembourg, 7.00%, 1/20/27 (USD) (1) 16,175,000 16,628

Cosan Overseas, 8.25% (USD) (2) 1,085,000 1,091

Marfig Holding Europe, 8.00%, 6/8/23 (USD) (1) 8,905,000 9,063

Minerva Luxembourg, 6.50%, 9/20/26 (USD) (1) 16,700,000 16,324

Minerva Luxembourg, 7.75%, 1/31/23 (USD) 16,030,000 16,851

Petrobras Global Finance, 6.85% (USD) (2) 47,601,000 42,246

Petrobras Global Finance, 7.375%, 1/17/27 (USD) 34,370,000 36,449



Rumo, 7.375%, 2/9/24 (USD) (1) 9,295,000 9,570

362,389


Brazil Notas do Tesouro Nacional, 10.00%, 1/1/21 679,300,000 205,086

Brazil Notas do Tesouro Nacional, 10.00%, 1/1/23 500,000 149

Brazil Notas do Tesouro Nacional, 10.00%, 1/1/27 63,900,000 18,728

Brazil Notas do Tesouro Nacional, Inflation-Indexed 6.00%, 8/15/24 215,000 199

Republic of Brazil, 2.625%, 1/5/23 (USD) 695,000 646

Republic of Brazil, 4.25%, 1/7/25 (USD) 27,812,000 27,360





Republic of Brazil, 7.125%, 1/20/37 (USD) 245,000 281


405,041

Total Brazil (Cost $724,549) 767,430

Proof #4


Par/Shares $ Value


21

CANADA 0.1%

Common Stocks 0.1%

Frontera Energy, D Shares (USD) (3) 165,925 4,382

Total Canada (Cost $531) 4,382

CHILE 0.0%


Codelco, 4.875%, 11/4/44 (USD) 400,000 427

427


Republic of Chile, 3.86%, 6/21/47 (USD) 700,000 703

703

Total Chile (Cost $1,126) 1,130

CHINA 0.6%


State Grid Overseas Investment, 3.125%, 5/22/23 (USD) 880,000 886

State Grid Overseas Investment, 4.125%, 5/7/24 (USD) 16,788,000 17,822


State Grid Overseas Investment, 4.375%, 5/22/43 (USD) (1) 990,000 1,078


36,015


Export-Import Bank China, 3.375%, 3/14/27 (USD) 350,000 348

348

Total China (Cost $36,145) 36,363

Proof #4


Par/Shares $ Value


22

COLOMBIA 2.1%

Common Stocks 0.0%

Frontera Energy (CAD) (3) 89,716 2,369

2,369


Banco de Bogota, 6.25%, 5/12/26 (USD) 18,000,000 19,217

Banco de Bogota, 6.25%, 5/12/26 (USD) (1) 5,000,000 5,338

Frontera Energy, PIK, 10.00%, 11/2/21 (USD) (1) 1,600,000 1,806

Frontera Energy, PIK, 10.00%, 11/2/21 (USD) 6,637,000 7,492

Grupo Aval, 4.75%, 9/26/22 (USD) 6,000,000 6,120

39,973


Republic of Colombia, 4.00%, 2/26/24 (USD) 1,180,000 1,228

Republic of Colombia, 4.375%, 7/12/21 (USD) 490,000 522

Republic of Colombia, 4.50%, 1/28/26 (USD) 400,000 427




96,145

Total Colombia (Cost $144,180) 138,487

COSTA RICA 0.0%


Instituto Costarricense, 6.375%, 5/15/43 (USD) 600,000 539

Total Costa Rica (Cost $524) 539

CROATIA 0.0%


Republic of Croatia, 6.625%, 7/14/20 (USD) 200,000 221

Republic of Croatia, 6.375%, 3/24/21 (USD) 200,000 222

Proof #4


Par/Shares $ Value


23

Republic of Croatia, 5.50%, 4/4/23 (USD) 950,000 1,041

Total Croatia (Cost $1,426) 1,484

DOMINICAN REPUBLIC 2.1%


Dominican Republic, 5.50%, 1/27/25 (USD) 18,900,000 19,609

Dominican Republic, 5.50%, 1/27/25 (USD) (1) 11,965,000 12,413


Dominican Republic, 5.95%, 1/25/27 (USD) (1) 500,000 524






Total Dominican Republic (Cost $127,573) 135,835

ECUADOR 0.0%


Republic of Ecuador, 7.95%, 6/20/24 (USD) 200,000 188

Republic of Ecuador, 9.65%, 12/13/26 (USD) (1) 200,000 201



Total Ecuador (Cost $1,059) 1,070

EGYPT 3.2%


Government of Egypt, 5.875%, 6/11/25 (USD) (1) 600,000 588

Government of Egypt, 5.875%, 6/11/25 (USD) 26,950,000 26,411

Government of Egypt, 6.875%, 4/30/40 (USD) 1,110,000 1,055

Government of Egypt, 7.50%, 1/31/27 (USD) (1) 61,245,000 65,161

Government of Egypt, 8.50%, 1/31/47 (USD) (1) 61,790,000 66,767

Proof #4


Par/Shares $ Value


24

Government of Egypt Treasury Bill, 0.00%, 1/9/18 143,000,000 7,154

Government of Egypt Treasury Bill, 0.00%, 2/6/18 852,100,000 42,130

Total Egypt (Cost $204,912) 209,266

EL SALVADOR 1.0%


Republic of El Salvador, 5.875%, 1/30/25 (USD) 7,070,000 6,375

Republic of El Salvador, 6.375%, 1/18/27 (USD) 950,000 862

Republic of El Salvador, 6.375%, 1/18/27 (USD) (1) 5,510,000 5,000





Republic of El Salvador, 8.625%, 2/28/29 (USD) (1) 27,010,000 28,158


Total El Salvador (Cost $69,456) 67,180

GABON 0.2%


Republic of Gabon, 6.375%, 12/12/24 (USD) 14,050,000 13,716

Republic of Gabon, 6.95%, 6/16/25 (USD) 1,000,000 999

Total Gabon (Cost $13,990) 14,715

GHANA 1.7%


Republic of Ghana, 7.875%, 8/7/23 (USD) 36,650,000 37,498


Republic of Ghana, 9.25%, 9/15/22 (USD) (1) 5,430,000 5,868


Proof #4


Par/Shares $ Value


25

Republic of Ghana, 24.75%, 7/19/21 780,000 209

Total Ghana (Cost $107,202) 110,167

GRENADA 0.1%


Government of Grenada, FRN, 7.00%, 5/12/30 (USD) 5,267,637 3,292

Total Grenada (Cost $3,174) 3,292

GUATEMALA 0.0%


Republic of Guatemala, 4.50%, 5/3/26 (USD) (1) 975,000 987

Total Guatemala (Cost $990) 987

HONG KONG 0.3%


Bank of East Asia, FRN, 4.25%, 11/20/24 (USD) 13,350,000 13,546

SmarTone Finance, 3.875%, 4/8/23 (USD) 8,700,000 8,764

22,310


Hong Kong Sukuk, 3.132%, 2/28/27 (USD) 493,000 495

495

Total Hong Kong (Cost $22,367) 22,805

HUNGARY 0.0%


Magyar Export-Import Bank, 4.00%, 1/30/20 (USD) (1) 200,000 207

Republic of Hungary, 5.375%, 2/21/23 (USD) 402,000 448


Proof #4


Par/Shares $ Value


26



Total Hungary (Cost $1,830) 1,870

INDIA 0.8%


Adani Transmissions, 4.00%, 8/3/26 (USD) (1) 14,600,000 14,641

Delhi International Airport, 6.125%, 10/31/26 (USD) (1) 11,750,000 12,619

HPCL-Mittal Energy, 5.25%, 4/28/27 (USD) 6,930,000 7,148

34,408


Export-Import Bank of India, 3.375%, 8/5/26 (USD) 1,102,000 1,081

Export-Import Bank of India, 8.375%, 7/24/25 17,000,000 280

Export-Import Bank of India, 9.45%, 1/22/19 7,000,000 112

Government of India, 8.12%, 12/10/20 27,200,000 441

Government of India, 8.40%, 7/28/24 830,630,000 13,915

National Highways Authority of India, 7.30%, 5/18/22 30,000,000 468

16,297

Total India (Cost $49,214) 50,705

INDONESIA 6.6%


Indika Energy Captial II, 6.875%, 4/10/22 (USD) 500,000 488

Indo Energy Finance II, 6.375%, 1/24/23 (USD) 5,750,000 5,390

Listrindo Capital, 4.95%, 9/14/26 (USD) (1) 5,265,000 5,357

Listrindo Capital, 4.95%, 9/14/26 (USD) 8,900,000 9,056

Majapahit Holdings, 7.875%, 6/29/37 (USD) 190,000 249

Pertamina, 5.625%, 5/20/43 (USD) 93,426,000 96,890

Perusahaan Listrik Negar, 5.25%, 10/24/42 (USD) 15,300,000 15,377

Solusi Tunas Pratama, 6.25%, 2/24/20 (USD) 3,900,000 4,098

Proof #4


Par/Shares $ Value


27

TBG Global, 5.25%, 2/10/22 (USD) 4,575,000 4,760

141,665


Perusahaan Penerbit, 3.40%, 3/29/22 (USD) (1) 500,000 506

Perusahaan Penerbit, 4.15%, 3/29/27 (USD) (1) 450,000 457

Perusahaan Penerbit, 4.325%, 5/28/25 (USD) (1) 5,395,000 5,577

Perusahaan Penerbit, 4.35%, 9/10/24 (USD) 73,872,000 77,289

Perusahaan Penerbit, 4.55%, 3/29/26 (USD) 21,255,000 22,186

Republic of Indonesia, 3.375%, 4/15/23 (USD) 28,059,000 28,242

Republic of Indonesia, 3.75%, 4/25/22 (USD) (1) 24,950,000 25,676




Republic of Indonesia, 4.875%, 5/5/21 (USD) 690,000 743

Republic of Indonesia, 5.125%, 1/15/45 (USD) (1) 901,000 967




Republic of Indonesia, 5.625%, 5/15/23 416,750,000,000 34,678


Republic of Indonesia, 5.95%, 1/8/46 (USD) (1) 350,000 415


Republic of Indonesia, 8.375%, 9/15/26 200,500,000,000 20,746


291,312

Total Indonesia (Cost $414,650) 432,977

ISRAEL 0.1%


Israel Electric, 7.75%, 12/15/27 (USD) 7,400,000 9,315

Proof #4


Par/Shares $ Value


28

Total Israel (Cost $7,664) 9,315

IVORY COAST 0.8%


Republic of Cote d'Ivoire, 5.375%, 7/23/24 (USD) 1,644,000 1,608

Republic of Cote d'Ivoire, 5.375%, 7/23/24 (USD) (1) 361,000 353

Republic of Cote d'Ivoire, 6.375%, 3/3/28 (USD) 15,710,000 15,923

Republic of Cote d'Ivoire, 6.375%, 3/3/28 (USD) (1) 3,756,000 3,807

Republic of Cote d'Ivoire, FRN, 5.75%, 12/31/32 (USD) 32,845,500 31,634

Total Ivory Coast (Cost $53,850) 53,325

JAMAICA 2.8%


Government of Jamaica, 6.75%, 4/28/28 (USD) 39,239,000 44,536






Total Jamaica (Cost $168,938) 181,713

KAZAKHSTAN 1.4%


Development Bank of Kazakhstan, 4.125%, 12/10/22 (USD) 15,000,000 15,072

KazMunayGas National, 4.75%, 4/19/27 (USD) (1) 5,560,000 5,466

KazMunayGas National, 5.75%, 4/30/43 (USD) 35,490,000 34,489

KazMunayGas National, 6.375%, 4/9/21 (USD) 200,000 218

KazMunayGas National, 7.00%, 5/5/20 (USD) 30,295,000 32,991

88,236


Republic of Kazakhstan, 3.875%, 10/14/24 (USD) 400,000 407

Proof #4


Par/Shares $ Value


29




1,752

Total Kazakhstan (Cost $84,988) 89,988

KUWAIT 0.2%


Equate Petrochemical, 4.25%, 11/3/26 (USD) (1) 15,230,000 15,474

Total Kuwait (Cost $14,962) 15,474

LEBANON 2.9%


Lebanese Republic, 5.80%, 4/14/20 (USD) 30,500,000 30,699

Lebanese Republic, 6.00%, 5/20/19 (USD) 130,000 132








Total Lebanon (Cost $187,688) 188,067

MALAYSIA 0.0%


1MDB Global Investments, 4.40%, 3/9/23 (USD) 1,100,000 1,022

1,022

Proof #4


Par/Shares $ Value


30


Government of Malaysia, 4.254%, 5/31/35 1,850,000 418

418

Total Malaysia (Cost $1,384) 1,440

MEXICO 13.5%


Alfa, 6.875%, 3/25/44 (USD) (1) 13,995,000 15,325

Banco Mercantil del Norte, FRN, 5.75%, 10/4/31 (USD) (1) 14,300,000 14,307

Banco Mercantil del Norte, FRN, 7.625% (USD) (1)(2) 7,525,000 7,806

Banco Nacional Comercio, FRN, 3.80%, 8/11/26 (USD) (1) 27,735,000 27,735

BBVA Bancomer, FRN, 5.35%, 11/12/29 (USD) 7,000,000 7,122

Cemex, 7.75%, 4/16/26 (USD) 17,000,000 19,486

Grupo Cementos Chihuahua, 5.25%, 6/23/24 (USD) (1) 6,796,000 6,946

Grupo Financiero Invermexico, FRN, 8.50% (USD) (2) 16,600,000 17,651

Pemex Project Funding Master Trust, 6.625%, 6/15/35 (USD) 35,000 36

Petroleos Mexicanos, 3.50%, 1/30/23 (USD) 2,600,000 2,499


Petroleos Mexicanos, 4.50%, 1/23/26 (USD) 1,000,000 975

Petroleos Mexicanos, 4.625%, 9/21/23 (USD) 680,000 690




Petroleos Mexicanos, 6.50%, 3/13/27 (USD) (1) 74,795,000 80,442




Petroleos Mexicanos, 7.19%, 9/12/24 42,400,000 2,120

Petroleos Mexicanos, FRN, 4.878%, 3/11/22 (USD) (1) 29,250,000 31,583

Poinsettia Finance, 6.625%, 6/17/31 (USD) (1) 3,600,000 3,659

Red Carreteras Occide, 9.00%, 6/10/28 (1) 52,990,000 2,835

Tendedora Nemak, 5.50%, 2/28/23 (USD) 15,000,000 15,487

Proof #4


Par/Shares $ Value


31

Trust F/1401, 5.25%, 12/15/24 (USD) 3,993,000 4,179

Trust F/1401, 5.25%, 1/30/26 (USD) 5,150,000 5,388

664,846


United Mexican States, 3.60%, 1/30/25 (USD) 17,400,000 17,652

United Mexican States, 3.625%, 3/15/22 (USD) 600,000 624






United Mexican States, 5.75% (USD) (2) 4,472,000 4,662


United Mexican States, 6.50%, 6/10/21 659,500,000 36,233

United Mexican States, 7.50%, 6/3/27 467,500,000 27,130

224,166

Total Mexico (Cost $884,713) 889,012

MONGOLIA 0.0%


Government of Mongolia, 8.75%, 3/9/24 (USD) (1) 200,000 220

Proof #4


Par/Shares $ Value


32

Government of Mongolia, 10.875%, 4/6/21 (USD) 2,170,000 2,485

Total Mongolia (Cost $2,714) 2,705

MOROCCO 0.0%


OCP, 6.875%, 4/25/44 (USD) 200,000 227

227


Kingdom of Morocco, 4.25%, 12/11/22 (USD) 400,000 420

Kingdom of Morocco, 5.50%, 12/11/42 (USD) 200,000 222

642

Total Morocco (Cost $848) 869

OMAN 0.7%


Sultanate of Oman, 4.75%, 6/15/26 (USD) 8,000,000 7,885

Sultanate of Oman, 4.75%, 6/15/26 (USD) (1) 34,405,000 33,910

Sultanate of Oman, 6.50%, 3/8/47 (USD) (1) 3,055,000 3,127

Total Oman (Cost $45,420) 44,922

PAKISTAN 0.7%


Islamic Republic of Pakistan, 6.75%, 12/3/19 (USD) (1) 16,075,000 16,989

Islamic Republic of Pakistan, 7.25%, 4/15/19 (USD) 4,958,000 5,231

Islamic Republic of Pakistan, 8.25%, 4/15/24 (USD) 1,495,000 1,702

Islamic Republic of Pakistan, 8.25%, 9/30/25 (USD) (1) 200,000 230

Third Pakistan International Sukuk, 5.50%, 10/13/21 (USD) (1) 19,030,000 19,867

Total Pakistan (Cost $41,989) 44,019

Proof #4


Par/Shares $ Value


33

PANAMA 0.0%


Republic of Panama, 3.875%, 3/17/28 (USD) 800,000 822



Total Panama (Cost $1,402) 1,419

PARAGUAY 0.0%


Republic of Paraguay, 4.70%, 3/27/27 (USD) (1) 1,000,000 1,029

Total Paraguay (Cost $1,000) 1,029

PERU 0.4%


Corporacion Financiera de Desarroll, FRN 5.25%, 7/15/29 (USD) (1) 200,000 209

Petroleos del Peru, 5.625%, 6/19/47 (USD) (1) 6,235,000 6,329

VM Holdings, 5.375%, 5/4/27 (USD) (1) 19,550,000 19,785

26,323


Republic of Peru, 5.70%, 8/12/24 782,000 251

Republic of Peru, 6.35%, 8/12/28 (1) 1,165,000 382

633

Total Peru (Cost $26,409) 26,956

PHILIPPINES 0.2%


ICTSI Treasury, 4.625%, 1/16/23 (USD) 7,000,000 7,210

ICTSI Treasury, 5.875%, 9/17/25 (USD) 1,845,000 2,007

National Power, 9.625%, 5/15/28 (USD) 340,000 516

Proof #4


Par/Shares $ Value


34

Power Sector Assets & Liabilities, 7.39%, 12/2/24 (USD) 730,000 943

10,676


Republic of Philippines, 3.95%, 1/20/40 (USD) 375,000 392




2,131

Total Philippines (Cost $12,687) 12,807

ROMANIA 0.0%


Republic of Romania, 4.375%, 8/22/23 (USD) 200,000 212

Republic of Romania, 4.75%, 2/24/25 420,000 114






Total Romania (Cost $1,368) 1,374

RUSSIA 4.6%


Gazprom, 7.288%, 8/16/37 (USD) 13,500,000 16,020

GTH Finance, 7.25%, 4/26/23 (USD) 8,600,000 9,508

Metalloinvest Finance, 4.85%, 5/2/24 (USD) (1) 13,000,000 13,024

Russian Agricultural Bank, 8.50%, 10/16/23 (USD) 22,268,000 25,813

Russian Railways, 5.70%, 4/5/22 (USD) 36,200,000 38,846

Sberbank of Russia, 5.125%, 10/29/22 (USD) 5,600,000 5,782

Sberbank of Russia, 6.125%, 2/7/22 (USD) 24,175,000 26,372

VEB Finance, 5.942%, 11/21/23 (USD) 400,000 430

Proof #4


Par/Shares $ Value


35

VEB Finance, 6.80%, 11/22/25 (USD) 17,600,000 19,556

155,351


Russian Federation, 4.50%, 4/4/22 (USD) 56,600,000 59,815


Russian Federation, 5.00%, 4/29/20 (USD) 900,000 955



Russian Federation, 8.15%, 2/3/27 15,724,000 278



Russian Federation, FRN, 7.50%, 3/31/30 (USD) 1,474,600 1,773

148,650

Total Russia (Cost $295,908) 304,001

SAUDI ARABIA 0.3%


KSA Sukuk, 3.628%, 4/20/27 (USD) (1) 20,800,000 21,272

Total Saudi Arabia (Cost $20,842) 21,272

SENEGAL 0.3%


Republic of Senegal, 6.25%, 5/23/33 (USD) (1) 17,650,000 17,959

Total Senegal (Cost $17,950) 17,959

SERBIA 3.8%


Republic of Serbia, 4.875%, 2/25/20 (USD) (1) 6,000,000 6,261

Republic of Serbia, 4.875%, 2/25/20 (USD) 80,750,000 84,263

Republic of Serbia, 5.75%, 7/21/23 82,260,000 798

Proof #4


Par/Shares $ Value


36

Republic of Serbia, 5.875%, 12/3/18 (USD) (1) 7,200,000 7,541





Republic of Serbia, 10.00%, 2/5/22 1,489,910,000 16,824

Republic of Serbia, FRN, 6.75%, 11/1/24 (USD) 4,512,558 4,620

Total Serbia (Cost $241,694) 250,906

SOUTH AFRICA 2.2%


Eskom Holdings, 5.75%, 1/26/21 (USD) 200,000 203

Eskom Holdings, 6.75%, 8/6/23 (USD) 200,000 205

Eskom Holdings, 7.125%, 2/11/25 (USD) 73,750,000 75,409

Petra Diamonds, 7.25%, 5/1/22 (USD) (1) 7,720,000 7,920

Transnet, 4.00%, 7/26/22 (USD) 650,000 634

84,371


Republic of South Africa, 4.30%, 10/12/28 (USD) 300,000 281

Republic of South Africa, 4.665%, 1/17/24 (USD) 47,588,000 48,282

Republic of South Africa, 4.875%, 4/14/26 (USD) 400,000 402

Republic of South Africa, 5.875%, 9/16/25 (USD) 10,800,000 11,643

60,608

Total South Africa (Cost $143,958) 144,979

SOUTH KOREA 0.0%


Export Import Bank of Korea, 8.00%, 5/15/18 (IDR) 6,520,000,000 495

Total South Korea (Cost $489) 495

Proof #4


Par/Shares $ Value


37

SRI LANKA 3.0%


Bank of Ceylon, 5.325%, 4/16/18 (USD) 4,700,000 4,746

National Savings Bank, 8.875%, 9/18/18 (USD) 6,495,000 6,866

11,612


Republic of Sri Lanka, 5.75%, 1/18/22 (USD) 29,215,000 30,354


Republic of Sri Lanka, 6.00%, 1/14/19 (USD) (1) 9,890,000 10,262

Republic of Sri Lanka, 6.00%, 1/14/19 (USD) 887,000 920






Republic of Sri Lanka, 6.825%, 7/18/26 (USD) 280,000 296


Republic of Sri Lanka, 10.60%, 7/1/19 82,410,000 536

Republic of Sri Lanka, 10.60%, 9/15/19 22,000,000 143

Republic of Sri Lanka, 11.00%, 8/1/24 3,399,000,000 21,666

183,100

Total Sri Lanka (Cost $188,547) 194,712

TRINIDAD AND TOBAGO 0.1%


Petroleum Company of Trinidad & Tobago 9.75%, 8/14/19 (USD) (1) 8,290,000 8,617

Total Trinidad and Tobago (Cost $8,437) 8,617

Proof #4


Par/Shares $ Value


38

TURKEY 7.2%


Akbank Tas, FRN, 7.20%, 3/16/27 (USD) 6,000,000 6,243

Akbank Tas, FRN, 7.20%, 3/16/27 (USD) (1) 7,985,000 8,309

TC Ziraat Bankasi, 4.75%, 4/29/21 (USD) 41,300,000 41,515

56,067


Republic of Turkey, 3.25%, 3/23/23 (USD) 600,000 564


Republic of Turkey, 4.489%, 11/25/24 (USD) 39,150,000 38,505



















417,337

Total Turkey (Cost $470,809) 473,404

Proof #4


Par/Shares $ Value


39

UKRAINE 3.1%


Kernel Holding, 8.75%, 1/31/22 (USD) (1) 12,235,000 13,160

Mriya Agro Holding, 9.45%, 4/19/18 (USD) (1)(3)(4) 10,000,000 650

Mriya Agro Holding, 9.45%, 4/19/18 (USD) (3)(4) 9,450,000 614

Mriya Agro Holding, 10.95%, 4/19/18 (USD) (3)(4) 1,500,000 113

Mriya Agro Holding, 12.00%, 12/31/18 (USD) (6) 4,500,000 4,500

19,037


Government of Ukraine, 0.00%, 5/31/40 (USD) (1)(7) 14,662,000 5,743

Government of Ukraine, 7.75%, 9/1/19 (USD) (1) 290,000 300

Government of Ukraine, 7.75%, 9/1/20 (USD) (1) 25,050,000 25,708

Government of Ukraine, 7.75%, 9/1/20 (USD) 69,200,000 71,016








Government of Ukraine, 7.75%, 9/1/25 (USD) 200,000 196



185,083

Total Ukraine (Cost $214,709) 204,120

UNITED ARAB EMIRATES 1.0%

Convertible Bonds 0.1%

DP World, 1.75%, 6/19/24 (USD) (5) 6,800,000 6,918

6,918

Proof #4


Par/Shares $ Value


40


DP World, 6.85%, 7/2/37 (USD) (5) 10,890,000 12,826

Emaar Sukuk, 3.635%, 9/15/26 (USD) 13,200,000 12,826

Emirates NBD Tier 1, FRN, 5.75 (USD) (2) 15,100,000 15,384

Ruwais Power, 6.00%, 8/31/36 (USD) 13,700,000 15,978

57,014

Total United Arab Emirates (Cost $62,551) 63,932

UNITED STATES 0.5%


Kosmos Energy, 7.875%, 8/1/21 (1) 1,500,000 1,523

Kosmos Energy, 7.875%, 8/1/21 (1) 10,475,000 10,632

12,155

Municipal Securities 0.3%

Commonwealth of Puerto Rico, Series A, GO 8.00%, 7/1/35 (3)(4) 32,260,000 19,558

Puerto Rico Public Buildings Auth., Series I 5.00%, 7/1/36 (3)(4) 2,930,000 1,549

Puerto Rico Public Buildings Auth., Series U 5.25%, 7/1/42 (3)(4) 5,235,000 2,781

23,888

Total United States (Cost $45,694) 36,043

URUGUAY 0.1%


Republic of Uruguay, 4.125%, 11/20/45 (USD) 296,775 274




Proof #4


Par/Shares $ Value


41

Republic of Uruguay, 9.875%, 6/20/22 (1) 152,000,000 5,511

Total Uruguay (Cost $7,126) 7,351

VENEZUELA 5.1%

Common Stocks 0.0%

Republic of Venezuela, Warrants, 4/15/20 (USD) (3) 7,140 35

35


Petroleos de Venezuela, 5.375%, 4/12/27 (USD) 80,115,000 29,042




Petroleos de Venezuela, 8.50%, 10/27/20 (USD) (1) 12,199,000 8,826





320,370


Republic of Venezuela, 7.65%, 4/21/25 (USD) 10,589,000 4,527

Republic of Venezuela, 7.75%, 10/13/19 (USD) 24,900,000 12,761

17,288

Total Venezuela (Cost $380,644) 337,693

VIETNAM 1.1%


Debt & Asset Trading, 1.00%, 10/10/25 (USD) 4,520,000 2,821

2,821

Proof #4


Par/Shares $ Value


42


Socialist Republic of Vietnam, 4.80%, 11/19/24 (USD) (1) 7,300,000 7,690

Socialist Republic of Vietnam, 4.80%, 11/19/24 (USD) 45,254,000 47,672

Socialist Republic of Vietnam, 5.90%, 11/19/18 1,562,000,000 7,043

Socialist Republic of Vietnam, FRN, 2.25%, 3/13/28 (USD) 4,750,000 4,210

66,615

Total Vietnam (Cost $68,476) 69,436

ZAMBIA 1.1%


Republic of Zambia, 5.375%, 9/20/22 (USD) 44,845,000 42,106


Republic of Zambia, 8.97%, 7/30/27 (USD) (1) 3,815,000 4,073


Republic of Zambia, 11.00%, 8/29/21 3,250,000 278

Total Zambia (Cost $64,378) 72,362

OPTIONS PURCHASED 0.0% (8)

Credit Default Swap, Protection Sold (Relevant Credit: Markit CDX.NA.HY-S28, 5 Year Index), Receive 5.00%, Pay upon credit default,10/18/17 @ 1.065%, Goldman Sachs (USD )(3) 130,250,000 2,102

EUR Put/USD Call, 11/6/17 @ 1.0879 (EUR) Citigroup Global Markets (3) 63,200,000 184

KRW Put/USD Call, 7/13/17 @1,165.00 (USD) Bank of America (3) 64,710,000 144

RUB Put/USD Call, 8/14/17 @ 62.708 (USD), Deutsche Bank (3) 31,800,000 202

Total Options Purchased (Cost $4,994) 2,632

Proof #4


Par/Shares $ Value


43

SHORT-TERM INVESTMENTS 2.7%

Money Market Funds 2.5%

T. Rowe Price Government Reserve Fund, 0.99% (5)(9) 163,245,258 163,245

163,245

U.S. Treasury Obligations 0.2%

U.S. Treasury Bills, 1.00%, 3/29/18 (10) 1,000,000 992

U.S. Treasury Bills, 1.007%, 3/29/18 (10) 2,000,000 1,985

U.S. Treasury Bills, 1.018%, 3/29/18 (10) 11,000,000 10,916

13,893

Total Short-Term Investments (Cost $177,139) 177,138

Total Investments in Securities

99.0% of Net Assets (Cost $6,428,466) $ 6,520,810

‡

Country classifications are generally based on MSCI categories or another unaffiliated third party data provider; Par/Shares 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 $1,129,909 and represents 17.2% of net assets.

(2) Perpetual security with no stated maturity date. (3) Non-income producing (4) In default with respect to payment of interest. (5) Affiliated Company (6) Level 3 in fair value hierarchy. See Note 2. (7)

GDP-linked note provides for contingent payments linked to the gross domestic product of Ukraine; par reflects notional and will not be paid over the life or at maturity.

(8)

Par/Shares amount represents either the total number of shares or total contract value of the securities underlying the options. See Note 3.

(9) Seven-day yield (10)

At June 30, 2017, all or a portion of this security is pledged as collateral and/or margin deposit to cover future funding obligations.

ARS Argentine Peso AUD Australian Dollar BRL Brazilian Real CAD Canadian Dollar

Proof #4


Par/Shares $ Value


44

CLP Chilean Peso EUR Euro FRN Floating-Rate Note GBP British Pound

GO General Obligation HUF Hungarian Forint IDR Indonesian Rupiah INR Indian Rupee

KRW South Korean Won MXN Mexican Peso PEN Peruvian New Sol PHP Philippines Peso PIK Payment-in-kind

PLN Polish Zloty RON New Romanian Leu RSD Serbian Dinar RUB Russian Ruble SGD Singapore Dollar THB Thai Baht TWD Taiwan Dollar USD U.S. Dollar ZAR South African Rand

OPTIONS WRITTEN 0.0% (8)

Credit Default Swap, Protection Bought (Relevant Credit: Markit CDX.NA.HY-S28, 5 Year Index), Pay 5.00%, Receive upon credit default,10/18/17 @ 1.011%, Goldman Sachs (USD ) 130,250,000 (363)

Total Options Written (Premiums $(319)) (363)

Proof #4


45

(Amountsin000s)

SWAPS (0.1)%

Notional Amount

MarketValue Initial Value

Unrealized Gain (Loss)

CENTRALLY CLEARED SWAPS (0.1)%

Credit Default Swaps, Protection Bought (0.1)%

United States (0.1)%

Protection Bought (Relevant Credit: Markit CDX.NA.HY-S28, 5 Year Index), Pay 5.00% Receive upon credit default, 6/20/22 59,900$ (4,218)$ (4,613)$ 395

Total Centrally Cleared Credit Default Swaps, Protection Bought 395

Total Centrally Cleared Swaps 395

Net Payments (Receipts) of Variation Margin to Date (538)

Variation Margin Receivable (Payable) on Centrally Cleared Swaps $ (143)

Notional Amount

MarketValue

Upfront Premiums Paid/(Received)


BILATERAL SWAPS (0.0)%

Credit Default Swaps, Protection Bought 0.0%

Argentina 0.0%

Goldman Sachs, Protection Bought (Relevant Credit: Republic of Argentina, 7.625%, 4/22/46) Pay 5.00%, Receive upon credit default 6/20/22 (USD) 15,250$ (1,192)$ (805)$ (387)

(805) (387)

China 0.0%

Citibank, Protection Bought (Relevant Credit: Bank of China/ Hong Kong, 3.125%, 1/23/19) Pay 1.00%, Receive upon credit default 6/20/22 (USD) 24,800 (202) 169 (371)

Citibank, Protection Bought (Relevant Credit: Republic of China, 7.50%, 10/28/27) Pay 1.00%, Receive upon credit default 6/20/22 (USD) 6,000 (87) (8) (79)

161 (450)

Proof #4


46

Notional Amount

MarketValue

Upfront Premiums Paid/(Received)


South Korea 0.0%

Citibank, Protection Bought (Relevant Credit: Republic of Korea, 7.125%, 4/16/19) Pay 1.00%, Receive upon credit default 6/20/22 (USD) 30,000 (677) (672) (5)

(672) (5)

Supranational 0.0%

Goldman Sachs, Protection Bought (Relevant Credit: Markit CDX.EM-S27, 5 Year Index) Pay 1.00%, Receive upon credit default 6/20/22 (USD) 34,030 1,552 1,724 (172)

JPMorgan Chase, Protection Bought (Relevant Credit: Markit CDX.EM-S27, 5 Year Index) Pay 1.00%, Receive upon credit default 6/20/22 (USD) 33,500 1,528 1,745 (217)

3,469 (389)

United States 0.0%

Deutsche Bank, Protection Bought (Relevant Credit: Assured Guaranty U.S. Holdings, 7.00% 6/1/34), Pay 5.00%, Receive upon credit default, 9/20/19 6,500 (656) (204) (452)

(204) (452)

Total Bilateral Credit Default Swaps, Protection Bought 1,949 (1,683)

Total Bilateral Swaps $ 1,949$ (1,683)

(Amountsin000s)

Proof #4


Forward Currency Exchange Contracts

47

(Amounts in 000s)

Counterparty Settlement Receive Deliver Unrealized Gain (Loss)

Bank of America Merrill Lynch 7/7/17 ARS 1,757 USD 110 $ (4)

Bank of America Merrill Lynch 7/14/17 RUB 32,335 USD 550 (3)

Bank of America Merrill Lynch 7/14/17 USD 271 RON 1,148 (17)

Bank of America Merrill Lynch 8/18/17 ZAR 282,326 USD 21,700 (280)

Bank of America Merrill Lynch 8/25/17 USD 8,570 AUD 11,490 (255)

Bank of America Merrill Lynch 9/5/17 USD 60,749 BRL 203,217 191

Barclays Bank 7/7/17 USD 387 IDR 5,145,347 1 Barclays Bank 7/7/17 USD 127 IDR 1,709,036 (1) Barclays Bank 7/14/17 USD 68 RON 286 (4) Barclays Bank 7/14/17 USD 16,449 RUB 955,735 274 BNP Paribas 7/7/17 USD 106 ARS 1,757 — BNP Paribas 7/7/17 USD 159 PHP 7,932 2 BNP Paribas 7/14/17 USD 815 RUB 49,540 (23) BNP Paribas 8/11/17 USD 183 TWD 5,556 — BNP Paribas 9/5/17 BRL 46,633 USD 13,916 (20) BNP Paribas 9/8/17 ARS 1,757 USD 102 — CIBC World Markets 9/22/17 USD 25,729 CAD 34,114 (610) Citibank 7/14/17 USD 22,655 MXN 431,211 (1,071) Citibank 7/14/17 USD 68 RON 287 (4) Citibank 7/14/17 USD 19,124 RUB 1,116,144 234 Citibank 8/18/17 USD 16,867 HUF 4,704,454 (562) Citibank 8/18/17 USD 20,962 ZAR 282,326 (458) Citibank 8/25/17 EUR 7,158 USD 8,090 107 Citibank 9/8/17 USD 32,811 KRW 37,478,500 25 Citibank 9/15/17 USD 34 MXN 612 — Credit Suisse 7/14/17 RUB 2,052,708 USD 34,266 475 Credit Suisse 7/14/17 USD 32,607 RUB 1,890,507 611 Credit Suisse 8/11/17 CLP 212,065 USD 321 (2) Credit Suisse 8/11/17 USD 32,648 CLP 21,989,759 (445) Credit Suisse 9/8/17 USD 167 PEN 549 (1) Deutsche Bank 8/18/17 USD 16,420 PLN 62,411 (419) Deutsche Bank 8/18/17 USD 39,122 SGD 55,029 (875) Deutsche Bank 9/5/17 USD 52,611 BRL 176,059 147 Deutsche Bank 9/5/17 USD 19,625 BRL 66,075 (66)

Proof #4


48

(Amounts in 000s)

Forward Currency Exchange Contracts (continued)

Counterparty Settlement Receive Deliver Unrealized Gain (Loss)

Goldman Sachs 8/11/17 USD 24,809 IDR 333,166,055 (87) Goldman Sachs 8/11/17 USD 913 INR 59,188 1 Goldman Sachs 8/11/17 USD 32,260 TWD 965,534 483 Goldman Sachs 9/15/17 USD 463 MXN 8,431 4 Goldman Sachs 9/15/17 USD 235 MXN 4,328 (1)

HSBC Bank 7/7/17 IDR 6,841,228 USD 512 1 HSBC Bank 7/7/17 USD 559 THB 19,238 (8) HSBC Bank 7/14/17 USD 9,421 MXN 169,737 82 HSBC Bank 7/14/17 USD 8,160 MXN 155,218 (381) HSBC Bank 8/11/17 THB 14,682 USD 434 (1) HSBC Bank 8/11/17 USD 514 IDR 6,880,092 (1) HSBC Bank 8/18/17 USD 68 RSD 7,741 (5) HSBC Bank 8/18/17 USD 351 SGD 485 (2) HSBC Bank 8/25/17 USD 7,634 AUD 10,234 (227) HSBC Bank 8/25/17 USD 2,747 GBP 2,112 (8) HSBC Bank 9/22/17 CAD 21,702 USD 16,415 341 JPMorgan Chase 7/7/17 IDR 3,065,929 USD 231 (1) JPMorgan Chase 7/7/17 PHP 7,932 USD 157 — JPMorgan Chase 7/14/17 RUB 844,922 USD 13,968 332 JPMorgan Chase 7/14/17 USD 9,265 MXN 174,219 (320) JPMorgan Chase 7/14/17 USD 148 RON 628 (9) JPMorgan Chase 7/14/17 USD 102 RSD 11,927 (11) JPMorgan Chase 7/14/17 USD 33,191 RUB 1,909,893 866 JPMorgan Chase 8/18/17 USD 236 RSD 26,890 (18) JPMorgan Chase 8/25/17 USD 129 EUR 114 (2) JPMorgan Chase 9/15/17 MXN 2,803 USD 154 (1) Morgan Stanley 7/14/17 USD 16,503 RUB 950,981 408 Morgan Stanley 8/25/17 EUR 7,043 USD 7,953 112 Morgan Stanley 9/5/17 USD 52,918 BRL 176,062 452 Standard Chartered 7/7/17 THB 19,238 USD 564 2 Standard Chartered 7/7/17 USD 228 IDR 3,052,774 (1) Standard Chartered 7/14/17 USD 9,470 MXN 180,256 (448) Standard Chartered 9/5/17 USD 47,165 BRL 157,886 116

Net unrealized gain (loss) on open forward currency exchange contracts $ (1,385)

Proof #4


49

Futures Contracts($000s)

ExpirationContract

ValueUnrealized Gain (Loss)

Short,1,035U.S.TreasuryNotesfiveyearcontracts 9/17 $ (121,960) $ 528

Long,582UltraU.S.TreasuryBondscontracts 9/17 96,539 (700)

Netpayments(receipts)ofvariationmargintodate (50)

Variationmarginreceivable(payable)onopenfuturescontracts $ (222)

Proof #4


50


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. The following securities were considered affiliated companies for all or some portion of the six months ended June 30, 2017. Purchase and sales cost and investment income reflect all activity for the period then ended. Affiliate

PurchaseCost

SalesCost

InvestmentIncome

Value6/30/17

Value12/31/16

DP World $ — $ 7,191 $ 190 $ 12,826 $ * DP World, Conv. Bond 7,106 — 1 6,918 —T. Rowe Price Government Reserve Fund ¤ ¤ 511 163,245 233,065

Totals $ 702 $ 182,989 $ 233,065

* On the date indicated, issuer was held but not considered an affiliated company¤ 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 $ 182,012

Dividend income 511 Interest income 191

Investment income $ 702

Realized gain (loss) on securities $ 662

Capital gain distributions from mutual funds $ -

Proof #4

51


($000s, except shares and per share amounts)

Statement of Assets and Liabilities

Assets

Investments in securities, at value (cost $6,428,466) $ 6,520,810

Interest receivable 116,479

Receivable for shares sold 59,543

Receivable for investment securities sold 20,782

Foreign currency (cost $9,182) 9,107

Unrealized gain on forward currency exchange contracts 5,267

Bilateral swap premiums paid 3,638

Cash deposits on futures contracts 2,046

Cash 47

Other assets 86

Total assets 6,737,805

Liabilities

Payable for shares redeemed 87,940

Payable for investment securities purchased 46,856

Unrealized loss on forward currency exchange contracts 6,652

Investment management fees payable 4,074

Bilateral swap premiums received 1,689

Unrealized loss on bilateral swaps 1,683

Written options (premiums $319) 363

Due to affiliates 334

Variation margin payable on futures contracts 222

Payable to directors 5

Variation margin payable on centrally cleared swaps 143

Other liabilities 2,155

Total liabilities 152,116

NET ASSETS $ 6,585,689

Proof #4

52



Statement of Assets and Liabilities

Net Assets Consist of:

Overdistributed net investment income $ (34,174)

Accumulated undistributed net realized loss (29,659)

Net unrealized gain 88,978

Paid-in capital applicable to 521,212,274 shares of $0.01 par value capital stock outstanding; 18,000,000,000 shares of the Corporation authorized 6,560,544

NET ASSETS $ 6,585,689 NET ASSET VALUE PER SHARE

Investor Class ($5,182,150,931 / 410,087,882 shares outstanding) $ 12.64

Advisor Class ($671,989 / 53,172 shares outstanding) $ 12.64

I Class ($1,402,866,375 / 111,071,220 shares outstanding) $ 12.63

Proof #4


($000s)

Statement of Operations

53

6 Months Ended

6/30/17Investment Income (Loss)

Income Interest $ 237,833 Dividend 496 Other 122

Total income 238,451

Expenses Investment management 24,107 Shareholder servicing

Investor Class $ 4,575 Advisor Class 1 I Class 90 4,666

Rule 12b-1 fees Advisor Class 1

Prospectus and shareholder reports Investor Class 67 I Class 2 69

Custody and accounting 523 Registration 101 Legal and audit 33 Directors 11 Miscellaneous 18 Waived / paid by Price Associates (1)

Total expenses 29,528

Net investment income 208,923

Realized and Unrealized Gain / Loss

Net realized gain (loss) Securities 79,105 Futures 1,775 Swaps (1,265) Foreign currency transactions (34,298)

Net realized gain 45,317

Proof #4


($000s)

Statement of Operations

54


6 Months Ended

6/30/17Change in net unrealized gain / loss

Securities 139,056 Futures (266) Swaps (943) Written options (44) Other assets and liabilities denominated in foreign currencies 7,144

Change in net unrealized gain / loss 144,947

Net realized and unrealized gain / loss 190,264

INCREASE IN NET ASSETS FROM OPERATIONS $ 399,187

Proof #4


($000s)

55

Statement of Changes in Net Assets

6 Months Ended

6/30/17

Year Ended

12/31/16Increase (Decrease) in Net Assets

Operations Net investment income $ 208,923 $ 351,016 Net realized gain (loss) 45,317 (17,208) Change in net unrealized gain / loss 144,947 305,026 Increase in net assets from operations 399,187 638,834

Distributions to shareholders

Net investment income Investor Class (174,896) (299,776) Advisor Class (36) (29) I Class (32,951) (8,423)

Tax return of capital Investor Class – (34,956) Advisor Class – (3) I Class – (910)

Decrease in net assets from distributions (207,883) (344,097)

Capital share transactions*

Shares sold Investor Class 495,169 1,990,936 Advisor Class 283 1,625 I Class 1,268,493 279,546

Distributions reinvested Investor Class 166,955 316,970 Advisor Class 27 15 I Class 22,152 8,647

Shares redeemed Investor Class (1,815,042) (839,377) Advisor Class (1,136) (482) I Class (188,679) (16,814)

Redemption fees received 200 158 Increase (decrease) in net assets from capital share transactions (51,578) 1,741,224

Proof #4


($000s)

56


Statement of Changes in Net Assets

6 Months Ended

6/30/17

Year Ended

12/31/16Net Assets

Increase during period 139,726 2,035,961 Beginning of period 6,445,963 4,410,002

End of period $ 6,585,689 $ 6,445,963

Overdistributed net investment income (34,174) (35,214)

*Share information

Shares sold Investor Class 39,244 160,555 Advisor Class 23 134 I Class 101,200 22,877

Distributions reinvested Investor Class 13,229 25,989 Advisor Class 2 1 I Class 1,751 701

Shares redeemed Investor Class (144,624) (69,741) Advisor Class (90) (38) I Class (14,925) (1,373)

Increase (decrease) in shares outstanding (4,190) 139,105

Proof #4

57


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 Emerging Markets Bond Fund (the fund) is a nondiversified, open-end management investment company established by the corporation. The fund seeks to provide high income and capital appreciation. The fund has three classes of shares: the Emerging Markets Bond Fund (Investor Class), the Emerging Markets Bond Fund–Advisor Class (Advisor Class), and the Emerging Markets Bond Fund–I Class (I Class). Advisor Class shares are sold only through unaffiliated brokers and other unaffiliated financial intermediaries. I Class shares generally are available only to investors meeting a $1,000,000 minimum investment or certain other criteria. The Advisor Class operates under a Board-approved Rule 12b-1 plan pursuant to which the class compensates financial intermediaries for distribution, shareholder servicing, and/or certain administrative services; the Investor and I Classes do not pay Rule 12b-1 fees. Each class has exclusive voting rights on matters related solely to that class; separate voting rights on matters that relate to all classes; and, in all other respects, the same rights and obligations as the other classes.

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation The fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 (ASC 946). The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), including, but not limited to, ASC 946. GAAP requires 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. 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.

Proof #4

58


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. Income distributions are declared by each class daily and paid monthly. Distributions to shareholders are recorded on the ex-dividend date. A capital gain distribution may also be 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 Shareholder servicing, prospectus, and shareholder report expenses incurred by each class are charged directly to the class to which they relate. Expenses common to all 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. The Advisor Class pays Rule 12b-1 fees, in an amount not exceeding 0.25% of the class’s average daily net assets.

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 Guidance In October 2016, the Securities and Exchange Commission (SEC) issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements related to periods ending on or after August 1, 2017; adoption will have no effect on the fund’s net assets or results of operations.

Proof #4

59


NOTE 2 - VALUATION

The fund’s financial instruments are valued and each class’s net asset value (NAV) per share is computed at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day the NYSE is open for business. However, the NAV per share may be calculated at a time other than the normal close of the NYSE if trading on the NYSE is restricted, if the NYSE closes earlier, or as may be permitted by the SEC.

Fair Value The fund’s financial instruments are reported at fair value, which GAAP defines as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The T. Rowe Price Valuation Committee (the Valuation Committee) is an internal committee that has been delegated certain responsibilities by the fund’s Board of Directors (the Board) to ensure that financial instruments are appropriately priced at fair value in accordance with GAAP and the 1940 Act. Subject to oversight by the Board, the Valuation Committee develops and oversees pricing-related policies and procedures and approves all fair value determinations. Specifically, the Valuation Committee establishes procedures to value securities; determines pricing techniques, sources, and persons eligible to effect fair value pricing actions; oversees the selection, services, and performance of pricing vendors; oversees valuation-related business continuity practices; and provides guidance on internal controls and valuation-related matters. The Valuation Committee reports to the Board and has representation from legal, portfolio management and trading, operations, risk management, and the fund’s treasurer.

Various valuation techniques and inputs are used to determine the fair value of financial instruments. GAAP establishes the following fair value hierarchy that categorizes the inputs used to measure fair value:

Level 1 – quoted prices (unadjusted) in active markets for identical financial instruments that the fund can access at the reporting date

Level 2 – inputs other than Level 1 quoted prices that are observable, either directly or indirectly (including, but not limited to, quoted prices for similar financial instruments in active markets, quoted prices for identical or similar financial instruments in inactive markets, interest rates and yield curves, implied volatilities, and credit spreads)

Level 3 – unobservable inputs

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Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and reflect the assumptions that market participants would use to price the financial instrument. Unobservable inputs are those for which market data are not available and are developed using the best information available about the assumptions that market participants would use to price the financial instrument. GAAP requires valuation techniques to maximize the use of relevant observable inputs and minimize the use of unobservable inputs. When multiple inputs are used to derive fair value, the financial instrument is assigned to the level within the fair value hierarchy based on the lowest-level input that is significant to the fair value of the financial instrument. Input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level but rather the degree of judgment used in determining those values.

Valuation Techniques Debt securities generally are 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. Generally, debt securities are categorized in Level 2 of the fair value hierarchy; however, to the extent the valuations include significant unobservable inputs, the securities would be categorized in Level 3.

Equity securities listed or regularly traded on a securities exchange or in the 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. OTC Bulletin Board securities are valued at the mean of the closing 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 closing bid and asked prices for domestic securities and the last quoted sale or closing price for international securities.

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For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted to reflect the fair value of such securities at the close of the NYSE. If the fund determines that developments between the close of a foreign market and the close of the NYSE will affect the value of some or all of its portfolio securities, the fund will adjust the previous quoted 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 quoted 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. The 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 quoted prices and information to evaluate or adjust those prices. The fund cannot predict how often it will use quoted prices and how often it will determine it necessary to adjust those prices to reflect fair value. As a means of evaluating its security valuation process, the fund routinely compares quoted prices, the next day’s opening prices in the same markets, and adjusted prices.

Actively traded equity securities listed on a domestic exchange generally are categorized in Level 1 of the fair value hierarchy. Non-U.S. equity securities generally are categorized in Level 2 of the fair value hierarchy despite the availability of quoted prices because, as described above, the fund evaluates and determines whether those quoted prices reflect fair value at the close of the NYSE or require adjustment. OTC Bulletin Board securities, certain preferred securities, and equity securities traded in inactive markets generally are categorized in Level 2 of the fair value hierarchy.

Investments in mutual funds are valued at the mutual fund’s closing NAV per share on the day of valuation and are categorized in Level 1 of the fair value hierarchy. Listed options, and OTC options with a listed equivalent, are valued at the mean of the closing bid and asked prices and generally are categorized in Level 2 of the fair value hierarchy. Financial futures contracts are valued at closing settlement prices and are categorized in Level 1 of the fair value hierarchy. Forward currency exchange contracts are valued using the prevailing forward exchange rate and are categorized in Level 2 of the fair value hierarchy. Swaps are valued at prices furnished by an independent pricing service or independent swap dealers and generally are categorized in Level 2 of the fair value hierarchy; however, if unobservable inputs are significant to the valuation,

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the swap would be categorized in Level 3. Assets and liabilities other than financial instruments, including short-term receivables and payables, are carried at cost, or estimated realizable value, if less, which approximates fair value.

Thinly traded financial instruments and those 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 Valuation Committee. The objective of any fair value pricing determination is to arrive at a price that could reasonably be expected from a current sale. Financial instruments fair valued by the Valuation Committee are primarily private placements, restricted securities, warrants, rights, and other securities that are not publicly traded.

Subject to oversight by the Board, the Valuation Committee regularly makes good faith judgments to establish and adjust the fair valuations of certain securities as events occur and circumstances warrant. For instance, in determining the fair value of troubled or thinly traded debt instruments, the Valuation Committee considers a variety of factors, which may include, but are not limited to, the issuer’s business prospects, its financial standing and performance, recent investment transactions in the issuer, strategic events affecting the company, market liquidity for the issuer, and general economic conditions and events. In consultation with the investment and pricing teams, the Valuation Committee will determine an appropriate valuation technique based on available information, which may include both observable and unobservable inputs. The Valuation Committee typically will afford greatest weight to actual prices in arm’s length transactions, to the extent they represent orderly transactions between market participants, transaction information can be reliably obtained, and prices are deemed representative of fair value. However, the Valuation Committee may also consider other valuation methods such as a discount or premium from market value of a similar, freely traded security of the same issuer; discounted cash flows; yield to maturity; or some combination. Fair value determinations are reviewed on a regular basis and updated as information becomes available, including actual purchase and sale transactions of the issue. Because any fair value determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions, and fair value prices determined by the Valuation Committee could differ from those of other market participants. Depending on the relative significance of unobservable inputs, including the valuation technique(s) used, fair valued securities may be categorized in Level 2 or 3 of the fair value hierarchy.

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Valuation Inputs The following table summarizes the fund’s financial instruments, based on the inputs used to determine their fair values on June 30, 2017:

($000s) Level 1 Level 2 Level 3 Total Value

Quoted Prices

Significant Observable

Inputs

Significant Unobservable

Inputs

Assets

InvestmentsinSecurities,except: $ — $ 6,139,552 $ — $ 6,139,552

Ukraine — 199,620 4,500 204,120

Short-TermInvestments 163,245 13,893 — 177,138

TotalSecurities 163,245 6,353,065 4,500 6,520,810

Swaps — 3,080 — 3,080

ForwardCurrencyExchangeContracts — 5,267 — 5,267

Total $ 163,245 $ 6,361,412 $ 4,500 $ 6,529,157

Liabilities

OptionsWritten $ — $ 363 $ — $ 363

Swaps — 2,957 — 2,957

ForwardCurrencyExchangeContracts — 6,652 — 6,652

FuturesContracts 222 — — 222

Total $ 222 $ 9,972 $ — $ 10,194

There were no material transfers between Levels 1 and 2 during the six months ended June 30, 2017.

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Following is a reconciliation of the fund’s Level 3 holdings for the six months ended June 30, 2017. Gain (loss) reflects both realized and change in unrealized gain/loss on Level 3 holdings during the period, if any, and is included on the accompanying Statement of Operations. The change in unrealized gain/loss on Level 3 instruments held at June 30, 2017, totaled $0 for the six months ended June 30, 2017.

($000s) BeginningBalance1/1/17

Gain (Loss)DuringPeriod

EndingBalance

6/30/17

InvestmentsinSecurities

CorporateBonds $ 4,500 $ — $ 4,500

NOTE 3 - DERIVATIVE INSTRUMENTS

During the six months ended June 30, 2017, 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 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. The fund at all times maintains sufficient cash reserves, liquid assets, or other SEC-permitted asset types to cover its settlement obligations under open derivative contracts.

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The fund values its derivatives at fair value 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. Generally, the fund accounts for its derivatives on a gross basis. It does not offset the fair value of derivative liabilities against the fair value of derivative assets on its financial statements, nor does it 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 derivative instruments held as of June 30, 2017, 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

Interestratederivatives Futures* $ 528

Foreignexchangederivatives Securities^,Forwards 5,797

Creditderivatives Securities^,BilateralSwaps,andPremiums,CentrallyClearedSwaps* 5,577

Total $ 11,902

Liabilities

Interestratederivatives Futures* $ 700

Foreignexchangederivatives Forwards 6,652

Creditderivatives Writtenoptions,BilateralSwaps,andPremiums,CentrallyClearedSwaps* 3,177

Total $ 10,529

*Thefairvaluepresentedincludescumulativegain(loss)onopenfuturescontractsandcentrallyclearedswaps;however,thevaluereflectedontheaccompanyingStatementofAssetsandLiabilitiesisonlytheunsettledvariationmarginreceivable(payable)atthatdate.

^Purchasedoptionsand/orpurchasedswaptionsarereportedassecuritiesandarereflectedintheaccompanyingPortfolioofInvestments.

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Additionally, the amount of gains and losses on derivative instruments recog-nized in fund earnings during the six months ended June 30, 2017, 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

Securities^Written Options Futures

ForeignCurrency

Transactions Swaps Total

Realized Gain (Loss)

Interestratederivatives $ – $ – $ 1,775 $ – $ – $ 1,775

Foreignexchangederivatives (233) – – (32,985) – (33,218)

Creditderivatives (636) – – – (1,265) (1,901)

Total $ (869) $ – $ 1,775 $ (32,985) $ (1,265) $ (33,344)

Change in Unrealized Gain / Loss

Interestratederivatives $ – $ – $ (266) $ – $ – $ (266)

Foreignexchangederivatives (2,712) – – 7,712 – 5,000

Creditderivatives 350 (44) – – (943) (637)

Total $ (2,362) $ (44) $ (266) $ 7,712 $ (943) $ 4,097

^Purchasedoptionsand/orpurchasedswaptionsarereportedassecurities.

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Counterparty Risk and Collateral The fund invests in derivatives in various markets, which expose it to differing levels of counterparty risk. Counterparty risk on exchange-traded and centrally cleared derivative contracts, such as futures, exchange-traded options, and centrally cleared swaps, is minimal because the clearinghouse provides protection against counterparty defaults. For futures and centrally cleared swaps, the fund is required to deposit collateral in an amount specified by the clearinghouse and the clearing firm (margin requirement), and the margin requirement must be maintained over the life of the contract. Each clearinghouse and clearing firm, in its sole discretion, may adjust the margin requirements applicable to the fund.

Derivatives, such as bilateral swaps, forward currency exchange contracts, and OTC options, that are transacted and settle directly with a counterparty (bilateral derivatives) expose the fund to greater counterparty risk. To mitigate this risk, the fund has entered into master netting arrangements (MNAs) with certain counterparties that permit net settlement under specified conditions and, for certain counterparties, also require the exchange of collateral to cover mark-to-market exposure. MNAs may be in the form of International Swaps and Derivatives Association master agreements (ISDAs) or foreign exchange letter agreements (FX letters).

MNAs provide the ability to offset amounts the fund owes a counterparty against amounts the counterparty owes the fund (net settlement). Both ISDAs and FX letters generally allow termination of transactions and net settlement upon the occurrence of contractually specified events, such as failure to pay or bankruptcy. In addition, ISDAs specify other events, the occurrence of which would allow one of the parties to terminate. For example, a downgrade in credit rating of a counterparty would allow the fund to terminate while a decline in the fund’s net assets of more than a specified percentage would allow the counterparty to terminate. Upon termination, all transactions with that counterparty would be liquidated and a net termination amount settled. ISDAs include collateral agreements whereas FX letters do not. Collateral requirements are determined daily based on the net aggregate unrealized gain or loss on all bilateral derivatives with a counterparty, subject to minimum transfer amounts that typically range from $100,000 to $250,000. Any additional collateral required due to changes in security values is typically transferred the same business day.

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Collateral may be in the form of cash or debt securities issued by the U.S. government or related agencies. Cash posted by the fund is reflected as cash deposits in the accompanying financial statements and generally is restricted from withdrawal by the fund; 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. For bilateral derivatives, collateral posted or received by the fund is held in a segregated account at the fund’s custodian. As of June 30, 2017, securities valued at $8,463,000 had been posted by the fund to counterparties for bilateral derivatives. As of June 30, 2017, collateral pledged by counterparties to the fund for bilateral derivatives consisted of $6,317,000 cash and securities valued at $275,000. As of June 30, 2017, cash of $2,046,000 and securities valued at $1,985,000 had been posted by the fund for exchange-traded and/or centrally cleared derivatives.

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 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 six months ended June 30, 2017, the volume of the fund’s activity in forwards, based on underlying notional amounts, was generally between 8% and 10% of net assets.

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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; 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 specific 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. Payments are made or received by the fund each day to settle daily fluctuations in the value of the contract (variation margin), which reflect changes in the value of the underlying financial instrument. Variation margin is recorded as unrealized gain or loss until the contract is closed. The value of a futures contract included in net assets is the amount of unsettled variation margin; net variation margin receivable is reflected as an asset, and net variation margin payable is reflected as a liability on the accompanying Statement of Assets and Liabilities. 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, 2017, the volume of the fund’s activity in futures, based on underlying notional amounts, was generally between 0% and 3% of net assets.

Options The fund is subject to foreign currency exchange rate risk and credit risk in the normal course of pursuing its investment objectives and uses options to help manage such risks. The fund may use options to manage exposure to security prices, interest rates, foreign currencies, and credit quality; as an efficient means of adjusting exposure to all or a part of a target market; to enhance income; as a cash management tool; or to adjust credit exposure. Options are included in net assets at fair value, purchased options are included in Investments in Securities, and written options are separately reflected as a liability on the accompanying Statement of Assets and Liabilities. Premiums on unexercised, expired options are recorded as realized gains or losses; premiums on exercised options are recorded as an adjustment to the proceeds from the sale or cost of the purchase. The difference between the premium and the amount received or paid in a closing transaction is also treated as realized gain

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or loss. In return for a premium paid, currency options give the holder the right, but not the obligation, to buy and sell currency at a specified exchange rate. In return for a premium paid, options on swaps give the holder the right, but not the obligation, to enter a specified swap contract on predefined terms. The exercise price of an option on a credit default swap is stated in terms of a specified spread that represents the cost of credit protection on the reference asset, including both the upfront premium to open the position and future periodic payments. The exercise price of an interest rate swap is stated in terms of a fixed interest rate; generally, there is no upfront payment to open the position. Risks related to the use of options include possible illiquidity of the options markets; trading restrictions imposed by an exchange or counterparty; movements in the underlying asset values and currency values and credit ratings; and, for written options, potential losses in excess of the fund’s initial investment. During the six months ended June 30, 2017, the volume of the fund’s activity in options, based on underlying notional amounts, was generally between 0% and 7% of net assets. Transactions in written options and related premiums received during the six months ended June 30, 2017, were as follows:

Number of Contracts Premiums

Outstandingatbeginningofperiod 0 $ 0

Written 130,250,000 319

Outstandingatendofperiod 130,250,000 $ 319

($000s)

Swaps The fund is subject to credit risk in the normal course of pursuing its investment objectives and uses swap contracts to help manage such risk. 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; or to adjust portfolio duration and credit exposure. Swap agreements can be settled either directly with the counter-party (bilateral swap) or through a central clearinghouse (centrally cleared swap). Fluctuations in the fair value of a contract are reflected in unrealized gain or loss and are reclassified to realized gain or loss upon contract termi-nation or cash settlement. Net periodic receipts or payments required by a

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contract increase or decrease, respectively, the value of the contract until the contractual payment date, at which time such amounts are reclassified from unrealized to realized gain or loss. For bilateral swaps, cash payments are made or received by the fund on a periodic basis in accordance with contract terms; unrealized gain on contracts and premiums paid are reflected as assets and unrealized loss on contracts and premiums received are reflected as liabilities on the accompanying Statement of Assets and Liabilities. For bilateral swaps, premiums paid or received are amortized over the life of the swap and are recognized as realized gain or loss in the Statement of Operations. For centrally cleared swaps, payments are made or received by the fund each day to settle the daily fluctuation in the value of the contract (variation margin). Accordingly, the value of a centrally cleared swap included in net assets is the unsettled variation margin; net variation margin receivable is reflected as an asset and net variation margin payable is reflected as a liability on the accompanying Statement of Assets and Liabilities.

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(ies) 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 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, 2017, the volume of the fund’s activity in swaps, based on underlying notional amounts, was generally between 1% and 4% of net assets.

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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 and Frontier Markets The fund may invest, either directly or through investments in T. Rowe Price institutional funds, in securities of companies located in, issued by governments of, or denominated in or linked to the currencies of emerging and frontier market countries; at period-end, approximately 66% of the fund’s net assets were invested in emerging markets and 30% in frontier markets. Emerging markets, and to a greater extent frontier markets, generally have economic structures that are less diverse and mature, and political systems that are less stable, than developed countries. These 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. Such securities are often subject to greater price volatility, less liquidity, and higher rates of inflation than U.S. securities. Investing in frontier markets is significantly riskier than investing in other countries, including emerging markets.

Noninvestment-Grade Debt At June 30, 2017, approximately 60% of the fund’s net assets were invested, either directly or through its investment in T. Rowe Price institutional funds, in noninvestment-grade debt, including “high yield” or “junk” bonds or leveraged loans. The noninvestment-grade debt market may experience sudden and sharp price swings due to a variety of factors, including changes in economic forecasts, stock market activity, large sustained sales by major investors, a high-profile default, or a change in market sentiment. These events may decrease the ability of issuers to make principal and interest payments and adversely affect the liquidity or value, or both, of such securities. Investments in noninvestment-grade holdings may be considered speculative.

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.

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Other Purchases and sales of portfolio securities other than short-term and U.S. government securities aggregated $1,985,174,000 and $2,029,852,000, respectively, for the six months ended June 30, 2017.

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 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, 2016, the fund had $62,813,000 of available capital loss carryforwards.

At June 30, 2017, the cost of investments for federal income tax purposes was $6,433,793,000. Net unrealized gain aggregated $83,650,000 at period-end, of which $215,954,000 related to appreciated investments and $132,304,000 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). 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 0.45% 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

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ranging from 0.48% for the first $1 billion of assets to 0.265% for assets in excess of $650 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, 2017, the effective annual group fee rate was 0.29%.

The Advisor Class is subject to a contractual expense limitation through April 30, 2018. During the limitation period, Price Associates is required to waive its management fee or pay any expenses (excluding interest, expenses related to borrowings, taxes, brokerage, and other non-recurring expenses permitted by the investment management agreement) that would otherwise cause the class’s ratio of annualized total expenses to average net assets (expense ratio) to exceed its expense limitation of 1.20%. The class is required to repay Price Associates for expenses previously waived/paid to the extent the class’s net assets grow or expenses decline sufficiently to allow repayment without causing the class’s expense ratio to exceed its expense limitation in effect at the time of the waiver. However, no repayment will be made more than three years after the date of a payment or waiver.

The I Class is also subject to an operating expense limitation (I Class limit) pursuant to which Price Associates is contractually required to pay all operating expenses of the I Class, excluding management fees, interest, expenses related to borrowings, taxes, brokerage, and other non-recurring expenses permitted by the investment management agreement, to the extent such operating expenses, on an annualized basis, exceed 0.05% of average net assets. This agreement will continue until April 30, 2018, and may be renewed, revised, or revoked only with approval of the fund’s Board. The I Class is required to repay Price Associates for expenses previously paid to the extent the class’s net assets grow or expenses decline sufficiently to allow repayment without causing the class’s operating expenses to exceed the I Class limit in effect at the time of the waiver. However, no repayment will be made more than three years after the date of a payment or waiver. For the six months ended June 30, 2017, the I Class operated below its expense limitation.

Pursuant to these agreements, $1,000 of expenses were waived/paid by Price Associates during the six months ended June 30, 2017. Including this amounts, expenses previously waived/paid by Price Associates in the amount of $3,000 remain subject to repayment by the fund at June 30, 2017.

In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates provides certain accounting and administrative services to the

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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 subaccounting and recordkeeping services for certain retirement accounts invested in the Investor Class and I Class. For the six months ended June 30, 2017, expenses incurred pursuant to these service agreements were $41,000 for Price Associates; $480,000 for T. Rowe Price Services, Inc.; and $20,000 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.

Additionally, the fund is one of several mutual funds in which certain college savings plans managed by Price Associates may invest. As approved by the fund’s Board of Directors, shareholder servicing costs associated with each college savings plan are borne by the fund in proportion to the average daily value of its shares owned by the college savings plan. For the six months ended June 30, 2017, the fund was charged $13,000 for shareholder servicing costs related to the college savings plans, of which $11,000 was for 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, 2017, less than 1% of the outstanding shares of the Investor Class were held by college savings plans.

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. None of the Spectrum Funds or Retirement Funds invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to special servicing agreements, expenses associated with the operation of the Spectrum Funds 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 Funds and Retirement Funds.

Expenses allocated under these agreements are reflected as shareholder servicing expense in the accompanying financial statements. For the six months ended June 30, 2017, the fund was allocated $334,000 of Spectrum Funds’ expenses and $2,809,000 of Retirement Funds’ expenses. Of these amounts, $1,282,000 related to services provided by Price. At period-end, the amount payable to Price pursuant to these agreements is reflected as Due to Affiliates

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in the accompanying financial statements. At June 30, 2017, approximately 77% of the outstanding shares of the Investor Class were held by the Spectrum Funds and Retirement Funds.

In addition, other mutual funds, trusts, and other accounts managed by Price Associates or its affiliates (collectively, Price funds and accounts) may invest in the fund and are not subject to the special servicing agreements disclosed above. No Price fund or account may invest for the purpose of exercising management or control over the fund. At June 30, 2017, approximately 23% of the I Class’s outstanding shares were held by Price funds and accounts.

The fund may invest in the T. Rowe Price Government Reserve Fund, the T. Rowe Price Treasury Reserve Fund, or the T. Rowe Price Short-Term Fund (collectively, the Price Reserve Funds), open-end management investment companies managed by Price Associates and considered affiliates of the fund. The Price Reserve Funds are offered as short-term investment options to mutual funds, trusts, and other accounts managed by Price Associates or its affiliates and are not available for direct purchase by members of the public. The Price Reserve Funds pay no investment management fees.

As of June 30, 2017, T. Rowe Price Group, Inc., or its wholly owned subsidiaries owned 21,459 shares of the Advisor Class, representing 40% of the Advisor Class’s net assets.

The fund may participate in securities purchase and sale transactions with other funds or accounts advised by Price Associates (cross trades), in accordance with procedures adopted by the fund’s Board and Securities and Exchange Commission rules, which require, among other things, that such purchase and sale cross trades be effected at the independent current market price of the security. During the six months ended June 30, 2017, the fund had no purchases or sales cross trades with other funds or accounts advised by Price Associates.

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Information on Proxy Voting Policies, Procedures, and Records

AdescriptionofthepoliciesandproceduresusedbyT.RowePricefundsandportfoliostodeterminehowtovoteproxiesrelatingtoportfoliosecuritiesisavailableineachfund’sStatementofAdditionalInformation.Youmayrequestthisdocumentbycalling1-800-225-5132orbyaccessingtheSEC’swebsite,sec.gov.

Thedescriptionofourproxyvotingpoliciesandproceduresisalsoavailableonourcorporatewebsite.Toaccessit,pleasevisitthefollowingWebpage:

https://www3.troweprice.com/usis/corporate/en/utility/policies.html

Scrolldowntothesectionnearthebottomofthepagethatsays,“ProxyVotingPolicies.”ClickontheProxyVotingPolicieslinkintheshadedbox.

Eachfund’smostrecentannualproxyvotingrecordisavailableonourwebsiteandthroughtheSEC’swebsite.ToaccessitthroughT.RowePrice,visitthewebsitelocationshownabove,andscrolldowntothesectionnearthebottomofthepagethatsays,“ProxyVotingRecords.”ClickontheProxyVotingRecordslinkintheshadedbox.

How to Obtain Quarterly Portfolio Holdings

ThefundfilesacompletescheduleofportfolioholdingswiththeSecuritiesandExchangeCommissionforthefirstandthirdquartersofeachfiscalyearonFormN-Q.Thefund’sFormN-QisavailableelectronicallyontheSEC’swebsite(sec.gov);hardcopiesmaybereviewedandcopiedattheSEC’sPublicReferenceRoom,100FSt.N.E.,Washington,DC20549.FormoreinformationonthePublicReferenceRoom,call1-800-SEC-0330.

https://www3.troweprice.com/usis/corporate/en/utility/policies.html

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Approval of Investment Management Agreement

Eachyear,thefund’sBoardofDirectors(Board)considersthecontinuationoftheinvestmentmanagementagreement(AdvisoryContract)betweenthefundanditsinvestmentadvisor,T.RowePriceAssociates,Inc.(Advisor).Inthatregard,atanin-personmeetingheldonMarch6–7,2017(Meeting),theBoard,includingamajorityofthefund’sindependentdirectors,approvedthecontinuationofthefund’sAdvisoryContract.AttheMeeting,theBoardconsideredthefactorsandreachedtheconclusionsdescribedbelowrelatingtotheselectionoftheAdvisorandtheapprovaloftheAdvisoryContract.TheindependentdirectorswereassistedintheirevaluationoftheAdvisoryContractbyindependentlegalcounselfromwhomtheyreceivedseparatelegaladviceandwithwhomtheymetseparately.

InprovidinginformationtotheBoard,theAdvisorwasguidedbyadetailedsetofrequestsforinformationsubmittedbyindependentlegalcounselonbehalfoftheindependentdirectors.InconsideringandapprovingtheAdvisoryContract,theBoardconsideredtheinformationitbelievedwasrelevant,including,butnotlimitedto,theinformationdiscussedbelow.TheBoardconsiderednotonlythespecificinformationpresentedinconnectionwiththeMeetingbutalsotheknowledgegainedovertimethroughinteractionwiththeAdvisoraboutvarioustopics.TheBoardmeetsregularlyand,ateachofitsmeetings,coversanextensiveagendaoftopicsandmaterialsandconsidersfactorsthatarerelevanttoitsannualconsiderationoftherenewaloftheT.RowePricefunds’advisorycontracts,includingperformanceandtheservicesandsupportprovidedtothefundsandtheirshareholders.

Services Provided by the AdvisorTheBoardconsideredthenature,quality,andextentoftheservicesprovidedtothefundbytheAdvisor.Theseservicesincluded,butwerenotlimitedto,directingthefund’sinvestmentsinaccordancewithitsinvestmentprogramandtheoverallmanagementofthefund’sportfolio,aswellasavarietyofrelatedactivitiessuchasfinancial,investmentoperations,andadministrativeservices;compliance;maintainingthefund’srecordsandregistrations;andshareholdercommunications.TheBoardalsoreviewedthebackgroundandexperienceoftheAdvisor’sseniormanagementteamandinvestmentpersonnelinvolvedinthemanagementofthefund,aswellastheAdvisor’scompliancerecord.TheBoardconcludedthatitwassatisfiedwiththenature,quality,andextentoftheservicesprovidedbytheAdvisor.

Investment Performance of the FundTheBoardtookintoaccountdiscussionswiththeAdvisorandreportsthatitreceivesthroughouttheyearrelatingtofundperformance.InconnectionwiththeMeeting,theBoardreviewedthefund’snetannualizedtotalreturnsforthe1-,2-,3-,4-,5-,and10-yearperiodsasofSeptember30,2016,andcomparedthesereturnswiththeperformanceofapeergroupoffundswithsimilarinvestmentprogramsandawidevarietyofotherpreviouslyagreed-uponcomparableperformancemeasuresandmarketdata,includingthosesuppliedbyBroadridge,whichisanindependentproviderofmutualfunddata.


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Approval of Investment Management Agreement (continued)

OnthebasisofthisevaluationandtheBoard’songoingreviewofinvestmentresults,andfactoringintherelativemarketconditionsduringcertainoftheperformanceperiods,theBoardconcludedthatthefund’sperformancewassatisfactory.

Costs, Benefits, Profits, and Economies of ScaleTheBoardrevieweddetailedinformationregardingtherevenuesreceivedbytheAdvisorundertheAdvisoryContractandotherbenefitsthattheAdvisor(anditsaffiliates)mayhaverealizedfromitsrelationshipwiththefund,includinganyresearchreceivedunder“softdollar”agreementsandcommission-sharingarrangementswithbroker-dealers.TheBoardconsideredthattheAdvisormayreceivesomebenefitfromsoft-dollararrangementspursuanttowhichresearchisreceivedfrombroker-dealersthatexecutethefund’sportfoliotransactions.TheBoardreceivedinformationontheestimatedcostsincurredandprofitsrealizedbytheAdvisorfrommanagingtheT.RowePricefunds.TheBoardalsoreviewedestimatesoftheprofitsrealizedfrommanagingthefundinparticular,andtheBoardconcludedthattheAdvisor’sprofitswerereasonableinlightoftheservicesprovidedtothefund.

TheBoardalsoconsideredwhetherthefundbenefitsunderthefeelevelssetforthintheAdvisoryContractfromanyeconomiesofscalerealizedbytheAdvisor.UndertheAdvisoryContract,thefundpaysafeetotheAdvisorforinvestmentmanagementservicescomposedoftwocomponents—agroupfeeratebasedonthecombinedaveragenetassetsofmostoftheT.RowePricefunds(includingthefund)thatdeclinesatcertainassetlevelsandanindividualfundfeeratebasedonthefund’saveragedailynetassets—andthefundpaysitsownexpensesofoperations(subjecttoexpenselimitationsagreedtobytheAdvisorwithrespecttothefund’sAdvisorClassandIClass).AttheMeeting,theBoardapprovedanadditional0.005%breakpointtothegroupfeeschedule,effectiveMay1,2017.Withthenewbreakpoint,thegroupfeeratewilldeclineto0.265%whenthecombinedaveragenetassetsoftheapplicableT.RowePricefundsexceed$650billion.TheBoardconcludedthattheadvisoryfeestructureforthefundcontinuedtoprovideforareasonablesharingofbenefitsfromanyeconomiesofscalewiththefund’sinvestors.

Fees and ExpensesTheBoardwasprovidedwithinformationregardingindustrytrendsinmanagementfeesandexpenses.Amongotherthings,theBoardrevieweddataforpeergroupsthatwerecompiledbyBroadridge,whichcompared:(i)contractualmanagementfees,totalexpenses,actualmanagementfees,andnon-managementexpensesoftheInvestorClassofthefundwithagroupofcompetitorfundsselectedbyBroadridge(InvestorClassExpenseGroup);(ii)totalexpensesandactualmanagementfeesoftheAdvisorClassofthefundwithagroupofcompetitorfundsselectedbyBroadridge(AdvisorClassExpenseGroup);and(iii)totalexpenses,actualmanagementfees,andnon-managementexpensesoftheInvestorClassofthefundwithabroadersetoffundswithintheLipperinvestmentclassification(ExpenseUniverse).TheBoardconsideredthefund’scontractualmanagementfeerate,actualmanagementfeerate(whichreflectthemanagementfeesactuallyreceivedfromthefundbytheAdvisorafteranyapplicablewaivers,reductions,

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Approval of Investment Management Agreement (continued)

orreimbursements),operatingexpenses,andtotalexpenses(whichreflectsthenettotalexpenseratioofthefundafteranywaivers,reductions,orreimbursements)incomparisonwiththeinformationfortheBroadridgepeergroups.Broadridgegenerallyconstructedthepeergroupsbyseekingthemostcomparablefundsbasedonsimilarinvestmentclassificationsandobjectives,expensestructure,assetsize,andoperatingcomponentsandattributesandrankedfundsintoquintiles,withthefirstquintilerepresentingthefundswiththelowestrelativeexpensesandthefifthquintilerepresentingthefundswiththehighestrelativeexpenses.TheinformationprovidedtotheBoardindicatedthatthefund’scontractualmanagementfeerankedinthethirdquintile(InvestorClassExpenseGroup);thefund’sactualmanagementfeeraterankedinthethirdquintile(InvestorClassExpenseGroup),firstquintile(AdvisorClassExpenseGroup),andfourthquintile(ExpenseUniverse);andthefund’stotalexpensesrankedinthethirdandfourthquintiles(InvestorClassExpenseGroup),fourthquintile(AdvisorClassExpenseGroup),andsecondandthirdquintiles(ExpenseUniverse).

TheBoardalsoreviewedthefeeschedulesforinstitutionalaccountsandprivateaccountswithsimilarmandatesthatareadvisedorsubadvisedbytheAdvisoranditsaffiliates.ManagementprovidedtheBoardwithinformationabouttheAdvisor’sresponsibilitiesandservicesprovidedtosubadvisoryandotherinstitutionalaccountclients,includinginformationabouthowtherequirementsandeconomicsoftheinstitutionalbusinessarefundamentallydifferentfromthoseofthemutualfundbusiness.TheBoardconsideredinformationshowingthattheAdvisor’smutualfundbusinessisgenerallymorecomplexfromabusinessandcomplianceperspectivethanitsinstitutionalaccountbusinessandconsideredvariousrelevantfactors,suchasthebroaderscopeofoperationsandoversight,moreextensiveshareholdercommunicationinfrastructure,greaterassetflows,heightenedbusinessrisks,anddifferencesinapplicablelawsandregulationsassociatedwiththeAdvisor’sproprietarymutualfundbusiness.Inassessingthereasonablenessofthefund’smanagementfeerate,theBoardconsideredthedifferencesinthenatureoftheservicesrequiredfortheAdvisortomanageitsmutualfundbusinessversusmanagingadiscretepoolofassetsasasubadvisortoanotherinstitution’smutualfundorforaninstitutionalaccountandthattheAdvisorgenerallyperformssignificantadditionalservicesandassumesgreaterriskinmanagingthefundandotherT.RowePricefundsthanitdoesforinstitutionalaccountclients.

Onthebasisoftheinformationprovidedandthefactorsconsidered,theBoardconcludedthatthefeespaidbythefundundertheAdvisoryContractarereasonable.

Approval of the Advisory ContractAsnoted,theBoardapprovedthecontinuationoftheAdvisoryContract.Nosinglefactorwasconsideredinisolationortobedeterminativetothedecision.Rather,theBoardconcluded,inlightofaweightingandbalancingofallfactorsconsidered,thatitwasinthebestinterestsofthefundanditsshareholdersfortheBoardtoapprovethecontinuationoftheAdvisoryContract(includingthefeestobechargedforservicesthereunder).

Proof #4

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Proof #4

F110-051 8/17

T.RowePriceInvestmentServices,Inc.100EastPrattStreetBaltimore,MD21202

201708-229629

STOCK FUNDSDomestic Blue Chip GrowthCapital Appreciation‡

Capital OpportunityDiversified Mid-Cap GrowthDividend GrowthEquity IncomeEquity Index 500Extended Equity Market IndexFinancial ServicesGrowth & IncomeGrowth StockHealth Sciences‡

Media & TelecommunicationsMid-Cap Growth‡

Mid-Cap Value‡

New America GrowthNew EraNew Horizons‡

QM U.S. Small & Mid-Cap Core EquityQM U.S. Small-Cap Growth EquityQM U.S. Value EquityReal EstateScience & TechnologySmall-Cap Stock‡

Small-Cap ValueTax-Efficient Equity Total Equity Market IndexU.S. Large-Cap CoreValue

ASSET ALLOCATION FUNDSBalanced Global AllocationPersonal Strategy BalancedPersonal Strategy GrowthPersonal Strategy IncomeReal AssetsSpectrum GrowthSpectrum IncomeSpectrum InternationalTarget Date Fundsˆ

BOND FUNDSDomestic TaxableCorporate IncomeCredit OpportunitiesFloating RateGNMA High Yield‡

Inflation Protected BondLimited Duration Inflation

Focused BondNew IncomeShort-Term BondTotal ReturnUltra Short-Term BondU.S. Bond Enhanced IndexU.S. High YieldU.S. Treasury IntermediateU.S. Treasury Long-Term

Domestic Tax-FreeCalifornia Tax-Free BondGeorgia Tax-Free BondIntermediate Tax-Free High YieldMaryland Short-Term Tax-Free BondMaryland Tax-Free BondNew Jersey Tax-Free BondNew York Tax-Free BondSummit Municipal IncomeSummit Municipal IntermediateTax-Free High YieldTax-Free IncomeTax-Free Short-IntermediateVirginia Tax-Free Bond

MONEY MARKET FUNDSTaxableCash Reserves1

Government Money2

U.S. Treasury Money2

MONEY MARKET FUNDS (cont.)Tax-FreeCalifornia Tax-Free Money1

Maryland Tax-Free Money1

New York Tax-Free Money1

Summit Municipal Money Market1

Tax-Exempt Money1

INTERNATIONAL/GLOBAL FUNDSStockAfrica & Middle EastAsia OpportunitiesEmerging EuropeEmerging Markets StockEmerging Markets Value StockEuropean Stock Global ConsumerGlobal Growth StockGlobal IndustrialsGlobal Real EstateGlobal StockGlobal Technology‡‡

International Concentrated EquityInternational DiscoveryInternational Equity IndexInternational StockInternational Value EquityJapanLatin AmericaNew AsiaOverseas StockQM Global Equity

BondDynamic Global BondEmerging Markets BondEmerging Markets Corporate BondEmerging Markets Local Currency BondGlobal High Income BondGlobal Multi-Sector BondInternational BondInternational Bond (USD Hedged)

Thispagecontainssupplementaryinformationthatisnotpartoftheshareholderreport.

T. Rowe Price Mutual Funds

Call 1-800-225-5132 to 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. ‡Subjecttocertainexceptions,thefundiscurrentlyclosedtonewinvestorsandnewaccounts.‡‡EffectiveatthecloseofbusinessonFriday,September29,2017,thefundwillbeclosedtonewinvestorsandnewaccounts,subjecttocertainexceptions.

ˆTheTargetDateFundsareinclusiveoftheRetirementFunds,theTargetFunds,andtheRetirementBalancedFund.

1 Retail Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. Beginning October 14, 2016, the Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.

2 Government Funds: You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.

premx emerging markets bond fund paikx …individual.troweprice.com/gcfiles/pdf/sremb.pdfproof #4...

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