December 31, 2017 - T. Rowe Price · (USD Hedged) International Bond Fund ... , which requires mutual funds and other public ... we will discuss the market

TNIBX

TTABX

TNBMX

International Bond Fund (USD Hedged)

International Bond Fund (USD Hedged)–Advisor Class

International Bond Fund (USD Hedged)–I Class

ANNUALREPORT

December 31, 2017

T. Rowe PRICe

The fund primarily invests in investment-grade nondollar-denominated bonds, which are normally hedged to the U.S. dollar, for current income and capital appreciation.

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HIGHLIGHTS

• DevelopedmarketsinternationalbondsgeneratedsolidreturnsonthebackofaweakerU.S.dollarandstablegovernmentbondmarketsduringthe12-monthreportingperiod,whiledollar-hedgedreturnsweremuchmoremodest.

• TheInternationalBondFund(USDHedged)returned1.24%fortheperiodfromfundinceptiononSeptember12,2017,throughDecember31,2017,outperformingtheBloombergBarclaysGlobalAggregateexUSDBondUSDHedgedIndexanditsLipperpeergroupaverage.

• Thestrategyhedgesmostofitsnondollar-denominatedholdingsbacktoU.S.dollars,givinginvestorsaccesstothediversificationbenefitsofinternationalbondswithoutincurringthehighervolatilityofcurrencyexposure.

• Effectivesecurityselectioniscriticallyimportantastheinternationalbondmarketgrowsinsize,complexity,andmaturity,highlightingtheimportanceofT.RowePrice’sglobalsovereign,credit,andequityresearchplatforms.

T. Rowe Price International Bond Fund (USD Hedged)

TheviewsandopinionsinthisreportwerecurrentasofDecember31,2017.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.

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T. Rowe Price International Bond Fund (USD Hedged)Manager’s Letter

1

Fellow Shareholders

Although the fund’s inception was in mid-September, we will discuss the market

environment for the entire 12-month reporting period. Developed markets

international bonds generated solid returns on the back of a weaker U.S. dollar and

stable government bond markets, while dollar-hedged returns were much more

modest. Bond markets with credit risk continued to trend upward with very little

volatility. The U.S. dollar lost ground against most other currencies in 2017, ending

the greenback’s multiyear run of strength.

The International Bond Fund (USD Hedged) returned 1.24% for the time period from its inception on September 12, 2017, through December 31, 2017. (Results for Advisor and I Class shares vary,

reflecting their different fee structures.) The fund outperformed the benchmark Bloomberg Barclays Global Aggregate ex USD Bond USD Hedged Index and the Lipper International Income Funds Average for the short since-inception time frame.

The International Bond Fund (USD Hedged) hedges most of its nondollar-denominated holdings back to U.S. dollars, giving investors

access to the diversification benefits of international bonds without incurring the higher volatility of currency exposure. As a result, it will not significantly benefit in periods of U.S. dollar weakness and

TotalReturn Since InceptionPeriodEnded12/31/17 9/12/17

InternationalBondFund(USDHedged) 1.24%

InternationalBondFund(USDHedged)–AdvisorClass 1.01

InternationalBondFund(USDHedged)–IClass 1.25

BloombergBarclaysGlobalAggregateexUSDBondUSDHedgedIndex 0.82

LipperInternationalIncomeFundsAverage -0.12

Performance Comparison

2

will not significantly suffer during periods of U.S. dollar strength. Aside from the lack of foreign exchange exposure, the fund has the same objective, portfolio management team, investment process, and strategy as the T. Rowe Price International Bond Fund.

MARKET ENVIRONMENT

U.S. gross domestic product increased at annualized rates of 3.1% and 3.2% in the second and third quarters, respectively, rebounding from a weak first quarter. The U.S. labor market was healthy, with the national unemployment rate reaching a 17-year low of 4.1% in 2017’s fourth quarter. Even with very weak readings from early 2017 in the rearview mirror, inflation remained subdued. Citing the strengthening labor market and expectations that inflation would move higher

over the medium term, the Fed raised short-term interest rates by 25 basis points in March, June, and December, lifting the federal funds target rate to a range of 1.25% to 1.50%. Additionally, in October, the Fed began the process of slowly unwinding its $4.5 trillion balance sheet.

While UK growth remained positive and the pound sterling gained versus the U.S.

dollar in the reporting period, the decline in the value of sterling since the Brexit vote triggered an increase in inflation. In November, the Bank of England (BoE) raised its benchmark lending rate by 25 basis points to 0.50% in an effort to subdue inflation. The rate hike was the first from the BoE since 2007. Eurozone growth was surprisingly strong, leading many market participants to anticipate that the European Central Bank (ECB) would begin to remove

TotalReturnfor 6Months 12MonthsPeriodsEnded InLocal InU.S. InLocal InU.S.12/31/17 Currency Dollars Currency Dollars

BloombergBarclaysGlobalAggregateexUSDBondUSDHedgedIndex – 1.82% – 2.48%

Japan 0.52% 0.26 0.17% 3.71

Italy 1.69 7.06 0.75 14.70

UnitedKingdom 1.79 6.00 1.95 11.61

France 1.22 6.57 0.45 14.36

Spain 0.85 6.17 1.09 15.09

UnitedStates 0.43 0.43 2.31 2.31

Israel 2.79 3.32 4.53 15.88

Source:BloombergBarclays.

Developed Markets Performance

3

its accommodative monetary policy. In October, ECB President Mario Draghi announced that the central bank would continue to buy bonds at least through September 2018 while cutting the size of its monthly purchases in half beginning in January 2018. Japanese growth remained sluggish and inflation persistently low, leading the Bank of Japan to maintain its government bond purchase policy that targets a 0% yield on the 10-year Japanese government bond. Growth in emerging markets as a whole continued to outpace expansion in developed markets, although there was more dispersion in the economic health of individual emerging countries as a result of idiosyncratic themes.

The U.S. dollar lost ground against most other currencies in 2017, ending the greenback’s multiyear run of strength. The U.S. Treasury yield curve flattened as anticipation of the Fed’s slow interest rate normalization pushed short-term yields higher while limited inflation pressure benefited longer-maturity Treasuries, whose yields decreased. U.S. Treasuries offered a meaningful yield premium over high-quality government bonds from other developed markets, supporting demand. The 10-year U.S. Treasury note’s yield finished the year at 2.40%, down modestly from 2.45% at the beginning of 2017. Volatility in

Treasuries was unusually low. The yield on the 10-year U.S. Treasury note generally stayed between 2.10% and 2.55% during the year, a tight 45 basis point range. In 2016, the yield varied from about 1.40% to 2.60%, a much larger 120 basis point range. Volatility was similarly low in core eurozone government debt, although the 10-year German bund yield increased near the

end of the year to around 0.45% amid stronger-than-expected growth in Europe. The yield on the 10-year UK sovereign note finished the year little changed at about 1.20%, after anticipation of the BoE’s rate increase helped push yields up from their midyear lows. There was modestly higher volatility in emerging markets government debt, given the differing monetary policies and political situations across individual countries.

TotalReturnPeriodsEnded12/31/17 6Months 12Months

J.P.MorganEmergingMarketsBondIndexGlobal 2.94% 9.32%

India 1.44 4.93

Chile 3.39 9.65

Mexico 3.65 11.95

Malaysia 2.44 8.81

Indonesia 3.89 11.60

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

Emerging Markets performance

4

U.S. high yield bonds rallied through most of the year, supported by rising prices of oil and other commodities in the second half of the year. The price of a barrel of Brent crude oil, the global benchmark, finished 2017 at nearly $67 after starting the year at about $55 and falling below $45 in June. Noninvestment-grade bonds from issuers in industries related to commodities account for a significant proportion of the U.S. high yield market. Credit spreads on U.S. high yield reached their narrowest levels in 10 years late in 2017. In Europe, high yield bond credit spreads compressed so much that the yield of the sector, as measured by the J.P. Morgan European Currency High Yield Index, reached 3.00% in October, compared with an average yield since 1999 of 8.78%, before widening somewhat at the end of the year. Although they lagged high yield bonds, investment-grade corporate bonds from U.S. issuers posted solid gains, benefiting from anticipation of tax reform from the Trump administration. European investment-grade corporates underperformed their U.S. cousins. Sovereign and corporate bonds from emerging markets were among the best-performing fixed income segments in 2017, benefiting from the ongoing search for higher-yielding assets in an environment of low interest rates.

PORTFOLIO REVIEW AND POSITIONING

The portfolio outperformed the benchmark from fund inception on September 12 through the end of 2017. Given the short period of the fund’s operation, however, we believe that it is useful to focus on the fund’s positioning rather than relative performance factors. The

portfolio was overweight some periphery eurozone countries that are likely to benefit from improving economic fundamentals and fiscal positions, such as Portugal, Slovenia, and Cyprus. We had an underweight position in

higher-quality eurozone government debt—notably in Germany—as we expected increasing global yields and ECB tapering to weigh on German sovereign bonds. The portfolio’s overall eurozone duration was shorter than that of the benchmark, with much of this short positioning coming from the underweight to German government bonds. The fund was underweight UK government debt because of our

PeriodEnded 12/31/17

WeightedAverageMaturity(years) 9.4

WeightedAverageEffectiveDuration(years) 7.0

Source:T.RowePrice.

Portfolio Characteristics

5

expectation that Brexit-related uncertainty and economic headwinds would push UK yields up.

Within emerging markets, we generally favor allocations to countries that are easing monetary policy or that have steep yield curves, including Brazil, Indonesia, and Serbia. Our exposure to locally denominated Brazilian government bonds was particularly beneficial to relative performance as the Central Bank of Brazil continued to cut interest rates, boosting prices

of the debt. Many of the fund’s emerging markets positions are in countries that we believe are more insulated from increases in global interest rates, including Malaysia and India. We were underweight

emerging markets such as the Czech Republic, where prices did not appear to accurately reflect our expectations for higher inflation.

In terms of sector allocation, we maintained an allocation to European high yield bonds, which continued to indirectly benefit from the ECB’s bond buying as well as Europe’s low inflation and generally credit-friendly environment. We also had exposure to

BBB29%

A22%

Not Rated6%

Cash andEquivalents

6%

AA15%

BB andBelow

12%

AAA10%

Based on net assets as of 12/31/17.

Source: Moody’s Investors Service; if Moody’s does notrate a security, then Standard & Poor’s (S&P) is used as asecondary source. When available, T. Rowe Price will useFitch for securities that are not rated by Moody’s or S&P.T. Rowe Price does not evaluate these ratings but simplyassigns them to the appropriate credit quality categoryas determined by the rating agency.

Quality Diversification

Spain4%

India4%

UnitedKingdom7%

France5%

Other andReserves

53%Italy9%

UnitedStates

3%

Japan15%

Based on net assets as of 12/31/17. Percentages reflectthe issuing country of the fund’s securities and exclude the effect of forward currency contracts.

Geographic Diversification

6

euro-denominated government-related debt and emerging markets corporate bonds. The fund was modestly overweight investment-grade corporate bonds relative to the benchmark. We used credit derivatives to hedge part of our exposure to credit-related markets in order to limit risk while still potentially benefiting from individual security selection.

The fund maintains material holdings of various types of derivatives, primarily for hedging risk or gaining exposure to certain sectors or currencies. The fund’s overall exposure to derivatives detracted from absolute performance during the reporting period. Currency forward contracts were the principal detractors.

OUTLOOK

The Fed is set to increase the pace of its balance sheet unwinding and could potentially raise rates three times in 2018. Central banks in other developed markets, including the UK, Canada, and Sweden, could also hike rates while the ECB has already reduced the pace of its bond buying and could end it later in 2018. If this gradual move toward tighter global monetary policy proceeds in line with market expectations, we expect modestly higher bond yields globally, slightly tighter credit spreads, a weaker U.S. dollar against most currencies, and continued strong performance from emerging markets bonds and currencies.

However, we will continue to closely monitor inflation readings because we believe that there is potential for price pressures to start rising modestly as a result of stronger global growth, higher oil prices, and tight labor markets in several developed countries. There are also signs that inflation has reached a bottom in emerging markets, with the exception of some isolated situations, such as Mexico. Given that consensus inflation expectations still remain subdued, even a tentative rise could catch markets off guard and lead to a rapid repricing in core bond markets that pushes yields much higher.

There are also meaningful risks in the political sphere. Although the Trump administration has delivered tax reform, significant uncertainty still surrounds the U.S. president’s ability to deliver on many of his campaign promises. Direct fiscal stimulus in the form of infrastructure spending has been delayed while the U.S. government continues to pursue trade protection measures that could have negative ramifications for the global economy if implemented. In Europe,

7

fears of populism have receded, but Italy’s March elections have the potential to reignite political risk. Also, noise and ambiguity about the UK’s exit from the European Union is likely to continue through 2018.

The uncertainty dominating the market environment should provide a tailwind for our strategy as we try to find sectors and individual securities that become mispriced as a result of temporary market dislocations. In this environment, we believe that the extended reach of T. Rowe Price’s global sovereign, credit, and equity research platforms, combined with our emphasis on collaboration across those platforms, gives us a critical edge in analyzing risks and opportunities in both developed and emerging fixed income markets.

Respectfully submitted,

Arif HusainPresident of the International Fixed Income Division and co-portfolio manager and cochairman of the fund’s Investment Advisory Committee

Kenneth OrchardCo-portfolio manager and cochairman of the fund’s Investment Advisory Committee

January 26, 2018

The committee chairmen have day-to-day responsibility for the portfolio and work with committee members in developing and executing the fund’s investment program.

8


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’sholdingscanbesignificantandlong-lastingdependingonthecurrenciesrepresentedintheportfolio,howeachoneappreciatesordepreciatesinrelationtotheU.S.dollar,andwhethercurrencypositionsarehedged.Further,exchangeratemovementsareunpredictable,anditisnotpossibletoeffectivelyhedgethecurrencyrisksofmanydevelopingcountries.

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

Glossary

Bloomberg Barclays Global Aggregate ex USD Bond USD Hedged Index: Anunmanagedindexthattracksaninternationalbasketofbondsthatcontainsgovernment,corporate,agency,andmortgage-relatedbonds,hedgedtoU.S.dollars.

Credit spread: Measurestheadditionalyieldthatinvestorsdemandascompensationforholdingabondwithcreditriskversusasimilar-maturityTreasurysecurityorothertypeoflow-riskbond.

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.

9


Glossary (continued)

Quasi-sovereign debt: Debtissuedbyacorporationandbackedbytherespectivegovernment,typicallyofferingthehigheryieldsofcorporatedebtwiththeaddedbenefitofgovernmentsupport.

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

Yield curve: Agraphicdepictionoftherelationshipbetweenyieldsandmaturitydatesforasetofsimilarsecurities.Asecuritywithalongermaturityusuallyhasahigheryield.Ifashort-termsecurityoffersahigheryield,thenthecurveissaidtobe“inverted.”Ifshort-andlong-termbondsareofferingequivalentyields,thenthecurveissaidtobe“flat.”

Note:BloombergIndexServicesLtd.Copyright2018,BloombergIndexServicesLtd.Usedwithpermission.

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PRICE AND YIELD

12/31/17


PricePerShare $10.06

DividendsPerShare SinceInception9/15/17 0.03

SECYieldWithWaivera(30-Day) 1.51%

SECYieldWithoutWaiver(30-Day) 1.39%

International Bond Fund (USD Hedged)–Advisor Class



SECYieldWithWaiverb(30-Day) 1.14%


International Bond Fund (USD Hedged)–I Class



SECYieldWithWaiverc(30-Day) 1.60%


12-monthdividendsmaynotequalthecombined6-monthfiguresduetorounding.Yieldswillvaryandarenotguaranteed.

aThroughApril30,2020,T.RowePriceAssociates(TRPA),hasagreedtowaiveitsmanagementfeesorbearanyexpenses(excludinginterest;expensesrelatedtoborrowings,taxes,andbrokerage;nonrecurring,extraordinaryexpenses;andacquiredfundfeesandexpenses)thatwouldcausetheclass’sratioofexpensestoaveragedailynetassetstoexceed0.74%.Detailsareavailableinthefund’sprospectus.

bThroughApril30,2020,TRPAhasagreedtowaiveitsmanagementfeesorbearanyexpenses(excludinginterest;expensesrelatedtoborrowings,taxes,andbrokerage;nonrecurring,extraordinaryexpenses;andacquiredfundfeesandexpenses)thatwouldcausetheclass’sratioofexpensestoaveragedailynetassetstoexceed0.99%.Detailsareavailableinthefund’sprospectus.

cThroughApril30,2020,TRPAhasagreedtopaytheoperatingexpensesofthefund’sIClass,excludingmanagementfees;interest;expensesrelatedtoborrowings,taxes,andbrokerage;nonrecurring,extraordinaryexpenses;andacquiredfundfeesandexpenses(IClassoperatingexpenses)totheextenttheIClassoperatingexpensesexceedacertainportionoftheclass’saveragedailynetassets.Detailsareavailableinthefund’sprospectus.

Portfolio Highlights

11

T. Rowe Price International Bond Fund (USD Hedged)Performance and Expenses

Since InceptionPeriodEnded12/31/17 9/12/17




Current performance may be higher or lower than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. For the most recent month-end performance, please visit our website (troweprice.com) or contact a T. Rowe Price repre-sentative at 1-800-225-5132 or, for Advisor Class 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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Theexpenseratioisestimatedasofthefund’sinceptiondateof9/12/17.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.

13


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* 9/13/171 12/31/17 9/13/17to12/31/171,2

Investor ClassActual $1,000.00 $1,012.40 $1.76

7/1/171 12/31/17 7/1/17to12/31/171,3

Hypothetical(assumes5%returnbeforeexpenses) 1,000.00 1,022.28 2.96

Advisor Class 9/13/171 12/31/17 9/13/17to12/31/171,2

Actual $1,000.00 $1,010.10 $3.00

7/1/171 12/31/17 7/1/17to12/31/171,3



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Fund Expense Example (continued)

Beginning Ending ExpensesPaid AccountValue AccountValue DuringPeriod 9/13/171 12/31/17 9/13/17to12/31/171,2

I ClassActual $1,000.00 $1,012.50 $1.61

7/1/171 12/31/17 7/1/17to12/31/171,3


1Theactualexpenseexampleisbasedontheperiodsincetheclass’sstartofoperationson9/13/17,onedayafterinception;thehypotheticalexpenseexampleisbasedonthehalf-yearperiodbeginning7/1/17,asrequiredbytheSEC.

2Expensesareequaltotheclass’sannualizedexpenseratiofortheperiodsinceinception,multipliedbytheaverageaccountvalueovertheperiod,multipliedbythenumberofdaysintheperiod(110),anddividedbythedaysintheyear(365)toreflecttheperiodsincetheclass’sstartofoperations.TheannualizedexpenseratiooftheInvestorClasswas0.58%,theAdvisorClasswas0.99%,andtheIClasswas0.53%.

3Expensesareequaltotheclass’sannualizedexpenseratiofortheperiodsinceinception,multipliedbytheaverageaccountvalueovertheperiod,multipliedbythenumberofdaysinthemostrecentfiscalhalfyear(184),anddividedbythedaysintheyear(365)toreflectthehalf-yearperiod.TheannualizedexpenseratiooftheInvestorClasswas0.58%,theAdvisorClasswas0.99%,andtheIClasswas0.53%.


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Financial Highlights For a share outstanding throughout each period

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

Investor Class

9/12/17(1)

Through

12/31/17

NET ASSET VALUE

Beginning of period

$ 10.00

Investment activities

Net investment income(2)

0.04(3)

Net realized and unrealized gain / loss

0.08

Total from investment activities

0.12

Distributions

Net investment income

(0.03)

Net realized gain

(0.03)

Total distributions

(0.06)

NET ASSET VALUE

End of period $ 10.06

Ratios/Supplemental Data Total return(4) 1.24%(3)

Ratio of total expenses to average net assets 0.58%

(3)(5)

Ratio of net investment income to average net assets 1.48%

(3)(5)

Portfolio turnover rate

13.5%

Net assets, end of period (in millions)

$ 1,115

(1) Inception date (2) Per share amounts calculated using average shares outstanding method. (3) See Note 6. Excludes expenses in excess of a 0.74% contractual expense limitation in effect

through 4/30/20. (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

16




Advisor Class

9/12/17(1)

Through

12/31/17 NET ASSET VALUE

Beginning of period

$ 10.00



0.03(3)


0.07


0.10

Distributions


(0.02)

Net realized gain

(0.03)

Total distributions

(0.05)

NET ASSET VALUE




(3)(5)


(3)(5)


13.5%

Net assets, end of period (in thousands)

$ 251

(1) Inception date (2) Per share amounts calculated using average shares outstanding method. (3) See Note 6. Excludes expenses in excess of a 0.99% contractual expense limitation in effect



(5) Annualized

17




I Class

9/12/17(1)

Through

12/31/17 NET ASSET VALUE

Beginning of period

$ 10.00



0.04(3)


0.08


0.12

Distributions


(0.03)

Net realized gain

(0.03)

Total distributions

(0.06)

NET ASSET VALUE




(3)(5)


(3)(5)


13.5%

Net assets, end of period (in millions)

$ 121

(1) Inception date (2) Per share amounts calculated using average shares outstanding method. (3) Excludes expenses in excess of a 0.05% contractual operating expense limitation in effect



(5) Annualized

T. Rowe Price International Bond Fund (USD Hedged) December 31, 2017

Portfolio of Investments ‡ Par/Shares $ Value

(Cost and value in $000s)

18

ALBANIA 0.2%

Government Bonds 0.2%

Government of Albania, 5.75%, 11/12/20 (EUR) 1,955,000 2,638

Total Albania (Cost $2,583) 2,638

ARGENTINA 0.8%

Corporate Bonds 0.2%

Codere Finance 2 Luxembourg, 6.75%, 11/1/21 (EUR) 1,782,000 2,268

2,268


Republic of Argentina, 3.375%, 1/15/23 (EUR) 3,059,000 3,751

Republic of Argentina, FRN, BDLRPP + 3.25%, 22.75%, 3/1/20 21,672,082 1,190

Republic of Argentina, FRN, 7D ARPP, 28.75%, 6/21/20 21,305,622 1,216

YPF Sociedad Anonima, 8.75%, 4/4/24 (USD) 1,580,000 1,819

7,976

Total Argentina (Cost $10,182) 10,244

AUSTRALIA 2.3%


Transurban Finance, 1.875%, 9/16/24 (EUR) 3,340,000 4,235

4,235


Commonwealth of Australia, 3.00%, 3/21/47 7,250,000 5,282

New South Wales Treasury, 4.00%, 4/20/23 13,742,900 11,503

New South Wales Treasury, 4.00%, 5/20/26 9,257,800 7,845

24,630

Total Australia (Cost $28,328) 28,865


Par/Shares $ Value


19

AUSTRIA 1.4%


Hypo Alpe-Adria International, 2.375%, 12/13/22 9,800,000 12,757

Republic of Austria, 3.80%, 1/26/62 (1) 2,350,000 4,798

Total Austria (Cost $17,151) 17,555

BELGIUM 1.3%


Nyrstar Netherlands Holdings, 8.50%, 9/15/19 1,203,000 1,593

1,593


Kingdom of Belgium, 4.25%, 3/28/41 (1) 6,347,048 11,867

Kingdom of Belgium, 5.00%, 3/28/35 (1) 1,828,173 3,520

15,387

Total Belgium (Cost $16,560) 16,980

BRAZIL 1.5%


Cosan Luxembourg, 7.00%, 1/20/27 (USD) 1,389,000 1,500

1,500


Brazil Notas do Tesouro Nacional, Series F, 10.00%, 1/1/21 27,060,000 8,388



Petrobras Global Finance, 7.375%, 1/17/27 (USD) 1,733,000 1,912

17,163

Total Brazil (Cost $19,218) 18,663


Par/Shares $ Value


20

CANADA 1.1%


Government of Canada, 3.50%, 12/1/45 6,443,000 6,403

Province of Ontario, 2.60%, 6/2/25 1,349,000 1,079

Province of Ontario, 3.50%, 6/2/43 1,038,000 905

Province of Quebec, 5.00%, 12/1/38 4,827,000 5,093

Total Canada (Cost $13,165) 13,480

CHILE 2.7%


Bonos Tesoreria Pesos, 4.50%, 3/1/21 13,335,000,000 22,287

Bonos Tesoreria Pesos, 4.50%, 3/1/26 7,115,000,000 11,538

Total Chile (Cost $33,097) 33,825

CHINA 0.2%


Proven Honour Capital, 4.125%, 5/19/25 (USD) 2,051,000 2,115

Total China (Cost $2,132) 2,115

CYPRUS 2.2%


Republic of Cyprus, 2.75%, 6/27/24 (EUR) 520,000 678

Republic of Cyprus, 3.75%, 7/26/23 (EUR) 6,281,000 8,572



Total Cyprus (Cost $27,092) 27,548

CZECH REPUBLIC 1.1%


Residomo, 3.375%, 10/15/24 (EUR) (1) 718,000 883


Par/Shares $ Value


21

UniCredit Bank, 0.625%, 4/30/20 (EUR) 2,200,000 2,664

3,547


Czech Republic, 3.625%, 4/14/21 (EUR) 6,028,000 8,157

Czech Republic, 3.875%, 5/24/22 (EUR) 1,298,000 1,826

9,983

Total Czech Republic (Cost $13,295) 13,530

DENMARK 1.2%


Danske Bank, FRN, 2.75%, 5/19/26 (EUR) (2) 926,000 1,187

Danske Bank, FRN, 3.875%, 10/4/23 (EUR) (2) 1,273,000 1,569

Realkredit Danmark, 1.00%, 4/1/22 1,622,674 272

Realkredit Danmark, 2.00%, 4/1/23 7,038,854 1,234

Realkredit Danmark, 2.00%, 4/1/24 23,886,607 4,205

8,467


Kingdom of Denmark, 1.75%, 11/15/25 24,070,815 4,344

Kingdom of Denmark, 3.00%, 11/15/21 8,398,693 1,527

Kingdom of Denmark, 4.50%, 11/15/39 1,982,381 539

6,410

Total Denmark (Cost $14,633) 14,877

EGYPT 0.3%


Government of Egypt, 0.00%, 3/6/18 28,000,000 1,531

Government of Egypt, 0.00%, 3/27/18 28,500,000 1,540

Government of Egypt, 0.00%, 4/10/18 1,200,000 64

Total Egypt (Cost $3,153) 3,135


Par/Shares $ Value


22

FINLAND 0.2%


CityCon OYJ, 3.75%, 6/24/20 1,389,000 1,811

Citycon Treasury, 2.50%, 10/1/24 926,000 1,200

Total Finland (Cost $2,966) 3,011

FRANCE 5.5%


AXA, FRN, 3.875% (2)(4) 563,000 764

AXA, FRN, 5.25%, 4/16/40 (2) 600,000 797

BNP Paribas, 5.75%, 1/24/22 (GBP) 116,000 181

BPCE, 1.125%, 1/18/23 1,100,000 1,351

Credit Agricole, 1.00%, 9/16/24 1,800,000 2,201

Credit Agricole, 1.875%, 12/20/26 800,000 1,008

Horizon Parent Holdings, 8.25%, 2/15/22 (3) 1,273,000 1,627

Loxam, 7.00%, 7/23/22 1,244,000 1,571

RCI Banque, 3.25%, 4/25/18 (GBP) 269,000 366

Societe Fonciere Lyonnaise, 2.25%, 11/16/22 1,000,000 1,283

Societe Generale, 5.40%, 1/30/18 (GBP) 231,000 313

TDF Infrastructure, 2.50%, 4/7/26 100,000 126

TDF Infrastructure, 2.875%, 10/19/22 2,400,000 3,135

14,723


Dexia Credit Local, 0.625%, 1/21/22 2,750,000 3,375

Dexia Credit Local, 2.00%, 1/22/21 600,000 766

Electricite de France, 6.875%, 12/12/22 (GBP) 300,000 508

Republic of France, 1.75%, 11/25/24 6,672,052 8,854



53,085

Total France (Cost $66,581) 67,808


Par/Shares $ Value


23

GERMANY 1.5%


Garfunkelux, 8.50%, 11/1/22 (GBP) 879,000 1,240

ProSiebenSat.1 Media, 2.625%, 4/15/21 1,790,000 2,257

Safari Holding Verwaltun, 5.375%, 11/30/22 (1) 610,000 738

Safari Holding Verwaltun, 8.25%, 2/15/21 257,447 318

UnityMedia, 4.00%, 1/15/25 694,000 878

Vonovia Finance, 1.625%, 12/15/20 2,400,000 2,998

Vonovia Finance, FRN, 4.00% (2)(4) 2,600,000 3,412

Wepa Hygieneprodukte, 3.75%, 5/15/24 648,000 799

12,640


Federal Republic of Germany, 1.75%, 2/15/24 30,000 40

KfW, 4.70%, 6/2/37 (CAD) 1,703,000 1,679

KfW, 6.00%, 8/20/20 (AUD) 5,924,000 5,048

6,767

Total Germany (Cost $19,238) 19,407

GREECE 0.1%


Intralot Capital, 5.25%, 9/15/24 (1) 942,000 1,147

Total Greece (Cost $1,129) 1,147

ICELAND 0.8%


Islandsbanki, 1.75%, 9/7/20 (EUR) 657,000 816

Landsbankinn, 1.625%, 3/15/21 (EUR) 6,889,000 8,528

Republic of Iceland, 2.50%, 7/15/20 (EUR) 556,000 708

Total Iceland (Cost $9,878) 10,052


Par/Shares $ Value


24

INDIA 4.1%


Housing Development Finance Corp., 6.875%, 4/30/20 2,420,000,000 37,859

Housing Development Finance Corp., 7.875%, 8/21/19 840,000,000 13,361

Total India (Cost $50,514) 51,220

INDONESIA 2.0%


Jasa Marga (Persero), 7.50%, 12/11/20 (1) 31,140,000,000 2,328

Listrindo Capital, 4.95%, 9/14/26 (USD) 1,960,000 1,989

4,317


Republic of Indonesia, 3.75%, 6/14/28 (EUR) 7,150,000 9,906

Republic of Indonesia, 8.375%, 3/15/24 81,785,000,000 6,714

Republic of Indonesia, 8.75%, 5/15/31 36,635,000,000 3,154

19,774

Total Indonesia (Cost $23,532) 24,091

IRELAND 2.1%


Ardagh Packing Finance, 6.75%, 5/15/24 (1) 203,000 268

268


Republic of Ireland, 1.00%, 5/15/26 7,732,675 9,520



25,491

Total Ireland (Cost $25,361) 25,759


Par/Shares $ Value


25

ISRAEL 2.5%


Israel Fixed Bond, 1.75%, 8/31/25 72,329,462 21,340

State of Israel, 1.50%, 1/18/27 (EUR) 3,447,000 4,261

State of Israel, 4.625%, 3/18/20 (EUR) 4,275,000 5,655

Total Israel (Cost $30,777) 31,256

ITALY 9.3%


Autostrade per L'talia, 6.25%, 6/9/22 (GBP) 532,000 862

Enel Finance International, 5.625%, 8/14/24 (GBP) 868,000 1,426

FCA Capital Ireland, 4.00%, 10/17/18 1,038,000 1,286

Inter Media Communication, 4.875%, 12/31/22 (1) 655,000 803

Intesa Sanpaolo, 1.375%, 1/18/24 1,389,000 1,706

Intesa Sanpaolo, 3.928%, 9/15/26 1,489,000 1,956

Telecom Italia, 2.375%, 10/12/27 3,000,000 3,599

Telecom Italia, 5.875%, 5/19/23 (GBP) 400,000 630

UniCredit, 2.00%, 3/4/23 1,851,000 2,355

UniCredit, 3.625%, 1/24/19 810,000 1,009

15,632


Italy Buoni Poliennali del Tesoro, 0.90%, 8/1/22 13,018,000 15,736


Italy Buoni Poliennali del Tesoro, 2.20%, 6/1/27 80,000 98






99,113

Total Italy (Cost $113,011) 114,745


Par/Shares $ Value


26

JAPAN 14.5%


Government of Japan, 0.00%, 6/20/18 750,000,000 6,661

Government of Japan, 0.00%, 12/20/18 2,100,000,000 18,663












Government of Japan, Inflation-Indexed, 0.10%, 9/10/23 249,917,000 2,329



Government of Japan, Inflation-Indexed, 0.10%, 3/10/25 1,027,914,000 9,655

Total Japan (Cost $178,725) 179,570

LUXEMBOURG 0.6%


Altice Financing, 5.25%, 2/15/23 680,000 849

Altice Finco, 4.75%, 1/15/28 (1) 474,000 542

Altice Luxembourg, 6.25%, 2/15/25 1,257,000 1,477

Amigo Luxembourg, 7.625%, 1/15/24 (GBP) 289,000 405

Ardagh Group, 6.625%, 9/15/23 (3) 925,762 1,186

JAB Holdings, 2.125%, 9/16/22 2,100,000 2,700

Kleopatra Holdings, 8.50%, 6/30/23 (3) 150,000 183

Total Luxembourg (Cost $7,349) 7,342


Par/Shares $ Value


27

MALAYSIA 2.0%


1MDB Global Investments, 4.40%, 3/9/23 (USD) 6,600,000 6,428

Government of Malaysia, 4.736%, 3/15/46 76,200,000 18,499

Total Malaysia (Cost $23,936) 24,927

MEXICO 2.2%


Petroleos Mexicanos, 2.75%, 4/21/27 (EUR) 2,614,000 3,017

Petroleos Mexicanos, 3.125%, 11/27/20 (EUR) 463,000 597




United Mexican States, 7.50%, 6/3/27 27,772,800 1,397



Total Mexico (Cost $26,343) 26,685

MONGOLIA 0.2%


Government of Mongolia, 5.125%, 12/5/22 (USD) 2,600,000 2,581

Government of Mongolia, 10.875%, 4/6/21 (USD) 200,000 235

Total Mongolia (Cost $2,807) 2,816

MOROCCO 0.6%


Kingdom of Morocco, 4.50%, 10/5/20 (EUR) 5,084,000 6,788

Total Morocco (Cost $6,641) 6,788


Par/Shares $ Value


28

NETHERLANDS 0.8%


ABN Amro Bank, 6.375%, 4/27/21 463,000 661

Constellium, 4.25%, 2/15/26 (1) 330,000 397

Cooperatieve Rabobank, FRN, 2.50%, 5/26/26 (2) 1,851,000 2,350

ING Bank, FRN, 3.625%, 2/25/26 (2) 1,909,000 2,502

Lincoln Finance, 6.875%, 4/15/21 679,000 852

Maxeda Diy Holding, 6.125%, 7/15/22 (1) 355,000 428

Rabobank Nederland, 4.625%, 5/23/29 (GBP) 100,000 160

Rabobank Nederland, 4.875%, 1/10/23 (GBP) 926,000 1,452

Ziggo Secured Finance, 3.75%, 1/15/25 (1) 457,000 565

9,367


Kingdom of the Netherlands, 5.50%, 1/15/28 70,000 125

125

Total Netherlands (Cost $9,343) 9,492

NORWAY 0.4%


DNB NOR Boligkreditt, 1.875%, 11/21/22 (EUR) 2,234,000 2,902

2,902


Kingdom of Norway, 3.00%, 3/14/24 (1) 14,966,000 2,007

Kingdom of Norway, 3.75%, 5/25/21 (1) 1,851,000 247

2,254

Total Norway (Cost $5,143) 5,156


Par/Shares $ Value


29

PHILIPPINES 0.2%


ICTSI Treasury, 5.875%, 9/17/25 (USD) 1,690,000 1,868

Total Philippines (Cost $1,865) 1,868

PORTUGAL 1.7%


Republic of Portugal, 3.875%, 2/15/30 (1) 2,148,607 2,988



Total Portugal (Cost $19,507) 20,422

ROMANIA 1.7%


Republic of Romania, 4.625%, 9/18/20 (EUR) 4,215,000 5,699

Republic of Romania, 4.75%, 2/24/25 15,675,000 4,186

Republic of Romania, 4.875%, 11/7/19 (EUR) 2,798,000 3,672

Republic of Romania, 5.85%, 4/26/23 28,280,000 7,922

Total Romania (Cost $21,249) 21,479

RUSSIA 0.6%


Sberbank of Russia, 3.08%, 3/7/19 (EUR) 990,000 1,221

1,221


Russian Federation, 8.15%, 2/3/27 358,960,000 6,562

6,562

Total Russia (Cost $7,637) 7,783


Par/Shares $ Value


30

SERBIA 0.1%


Republic of Serbia, 5.75%, 7/21/23 54,150,000 575

Republic of Serbia, 7.25%, 9/28/21 (USD) 900,000 1,031

Total Serbia (Cost $1,585) 1,606

SINGAPORE 0.4%


Government of Singapore, 3.125%, 9/1/22 6,939,000 5,515

Total Singapore (Cost $5,426) 5,515

SLOVENIA 2.3%


Republic of Slovenia, 1.25%, 3/22/27 (EUR) 6,412,000 7,979





Republic of Slovenia, 5.25%, 2/18/24 (USD) 4,057,000 4,654

Total Slovenia (Cost $27,875) 28,344

SOUTH AFRICA 1.9%


Republic of South Africa, 10.50%, 12/21/26 265,550,000 23,993

Total South Africa (Cost $20,625) 23,993

SPAIN 3.8%


Banco Santander, 1.375%, 2/9/22 1,000,000 1,237

BBVA Sub Capital Unipers, FRN, 3.50%, 4/11/24 (2) 2,100,000 2,622

CaixaBank, FRN, 2.75%, 7/14/28 (2) 9,100,000 11,103


Par/Shares $ Value


31

Inmobiliaria Colonial, 2.728%, 6/5/23 2,900,000 3,792

Prosegur Cia de Seguridad, 2.75%, 4/2/18 400,000 483

Santander Consumer Finance, 0.90%, 2/18/20 1,800,000 2,196

Santander Issuances, 3.125%, 1/19/27 1,800,000 2,354

Telefonica Emisiones, 2.242%, 5/27/22 700,000 906

Telefonica Emisiones, 4.71%, 1/20/20 800,000 1,051

Telefonica Emisiones, 5.597%, 3/12/20 (GBP) 400,000 591

Telefonica Europe, FRN, 4.20% (2)(4) 1,400,000 1,773

Telefonica Europe, FRN, 5.875% (2)(4) 600,000 835

28,943


Kingdom of Spain, 1.50%, 4/30/27 (1) 11,500,000 13,859

Kingdom of Spain, 3.45%, 7/30/66 (1) 1,305,000 1,664

Kingdom of Spain, 5.15%, 10/31/44 (1) 1,410,000 2,449

17,972

Total Spain (Cost $46,463) 46,915

SRI LANKA 0.6%


Republic of Sri Lanka, 0.00%, 9/21/18 550,000,000 3,374

Republic of Sri Lanka, 6.20%, 5/11/27 (USD) (1) 736,000 779

Republic of Sri Lanka, 6.25%, 10/4/20 (USD) 100,000 106

Republic of Sri Lanka, 0.00%, 9/14/18 450,000,000 2,765

Total Sri Lanka (Cost $6,991) 7,024

SUPRANATIONAL 0.9%


European Investment Bank, 1.25%, 5/12/25 (SEK) 65,740,000 8,178

Inter-American Development Bank, 4.40%, 1/26/26 (CAD) 2,734,000 2,446

Total Supranational (Cost $10,560) 10,624


Par/Shares $ Value


32

SWEDEN 2.0%


Akelius Residential, 1.75%, 2/7/25 (EUR) 2,137,000 2,596

Nordea Hypotek, 1.00%, 4/8/22 140,100,000 17,377

Nordea Hypotek, 1.25%, 5/19/21 12,700,000 1,597

Skandinaviska Enskilda Banken, 1.50%, 6/17/20 13,500,000 1,706

23,276


Kingdom of Sweden, 1.00%, 11/12/26 9,940,000 1,259

1,259

Total Sweden (Cost $24,296) 24,535

SWITZERLAND 0.8%


Adecco International Financial Services 2.75%, 11/15/19 (EUR) 347,000 434

Cloverie, FRN, 7.50%, 7/24/39 (EUR) (2) 800,000 1,067

Credit Suisse Group Funding Limited, 1.25%, 4/14/22 (EUR) 2,083,000 2,577

Onex Wizard Acquisition Company II, 7.75%, 2/15/23 (EUR) 763,000 956

UBS AG London, 1.375%, 4/16/21 (EUR) 2,638,000 3,310

Zurich Insurance, FRN, 4.25%, 10/2/43 (EUR) (2) 694,000 970

Total Switzerland (Cost $9,171) 9,314

THAILAND 0.5%


Kingdom of Thailand, 4.875%, 6/22/29 150,695,000 5,683

Total Thailand (Cost $5,630) 5,683


Par/Shares $ Value


33

UNITED ARAB EMIRATES 0.1%


Emirates NBD Tier 1, FRN, 5.75% (USD) (2)(4) 807,000 821

Total United Arab Emirates (Cost $822) 821

UNITED KINGDOM 6.7%


AA Bond, 5.50%, 7/31/43 694,000 944

Aviva, FRN, 6.875%, 5/22/38 (EUR) (2) 636,000 781

B.A.T. International Finance, 4.00%, 9/4/26 1,951,000 2,967

Barclays, 1.875%, 12/8/23 (EUR) 1,851,000 2,334

Delphi Automotive, 1.50%, 3/10/25 (EUR) 1,389,000 1,710

Eastern Power Networks, 4.75%, 9/30/21 370,000 562

Experian Finance, 4.75%, 11/23/18 277,000 387

FCE Bank, 3.25%, 11/19/20 1,736,000 2,457

HBOS, 5.374%, 6/30/21 (EUR) 400,000 562

Heathrow Funding, 5.225%, 2/15/25 652,000 1,031

HSBC Bank, 4.75%, 3/24/46 1,620,000 2,889

HSBC Holdings, FRN, 3.375%, 1/10/24 (EUR) (2) 463,000 574

Imperial Tobacco Finance, 7.75%, 6/24/19 277,000 410

Intercontinental Hotels, 3.875%, 11/28/22 1,157,000 1,717

Leeds Building Society, 2.625%, 4/1/21 (EUR) 833,000 1,067

Lynx II, 7.00%, 4/15/23 463,000 655

Marks & Spencer, 4.75%, 6/12/25 1,389,000 2,105

Nationwide Building Society, FRN, 4.125%, 3/20/23 (EUR) (2) 1,909,000 2,310

Next, 3.625%, 5/18/28 324,000 453

Pinewood Finance, 3.75%, 12/1/23 (1) 150,000 204

RSA Insurance Group, FRN, 5.125%, 10/10/45 (2) 1,489,000 2,292

Severn Trent Water Utilities, 6.125%, 2/26/24 58,000 97

Sky, 1.875%, 11/24/23 (EUR) 1,851,000 2,367

Standard Chartered Bank, 7.75%, 4/3/18 200,000 275

Standard Chartered Bank, FRN, 4.00%, 10/21/25 (EUR) (2) 1,389,000 1,817


Par/Shares $ Value


34

Tesco, 6.125%, 2/24/22 509,000 792

Virgin Media Finance, 6.375%, 10/15/24 463,000 668

WM Morrison Supermarkets, 2.25%, 6/19/20 (EUR) 1,736,000 2,189

36,616


Government of the United Kingdom, 3.50%, 1/22/45 10,471,696 19,296

Government of the United Kingdom, 3.75%, 9/7/20 180,000 264

Government of the United Kingdom, 4.25%, 12/7/27 85,000 148




45,405

Total United Kingdom (Cost $79,105) 82,021

UNITED STATES 3.0%


Alliance Data Systems, 5.25%, 11/15/23 (EUR) 1,157,000 1,462

American International Group, 1.875%, 6/21/27 (EUR) 2,315,000 2,835

American International Group, 5.00%, 4/26/23 (GBP) 200,000 312

Apple, 3.05%, 7/31/29 (GBP) 926,000 1,381

Bank of America, VR, 1.379%, 2/7/25 (EUR) (2) 1,951,000 2,406

Carnival, 1.125%, 11/6/19 (EUR) 1,210,000 1,480

Citigroup, 6.25%, 9/2/19 (GBP) 437,000 640

ContourGlobal Power Holdings, 5.125%, 6/15/21 (EUR) 1,100,000 1,376

Discovery Communications, 2.50%, 9/20/24 (GBP) 1,720,000 2,296

Eastman Chemical, 1.50%, 5/26/23 (EUR) 512,000 639

Expedia, 2.50%, 6/3/22 (EUR) 1,504,000 1,907

General Motors Financial, 1.875%, 10/15/19 (EUR) 2,777,000 3,438

Goldman Sachs Group, 1.625%, 7/27/26 (EUR) 1,720,000 2,097

Goldman Sachs Group, 5.50%, 10/12/21 (GBP) 116,000 178

Manpower, 4.50%, 6/22/18 (EUR) 810,000 994

Met Life Global Funding I, 3.50%, 9/30/26 (GBP) 1,574,000 2,404

MetLife, 5.25%, 6/29/20 (GBP) 277,000 412


Par/Shares $ Value


35

Morgan Stanley, 1.375%, 10/27/26 (EUR) 1,851,000 2,223

Morgan Stanley, 5.00%, 5/2/19 (EUR) 350,000 448

Morgan Stanley, 5.375%, 8/10/20 (EUR) 350,000 477

Priceline Group, 2.15%, 11/25/22 (EUR) 875,000 1,126

Priceline Group, 2.375%, 9/23/24 (EUR) 2,762,000 3,580

Prologis, 2.25%, 6/30/29 (GBP) 1,620,000 2,141

Vantiv, 3.875%, 11/15/25 (GBP) (1) 525,000 719

Veritas, 7.50%, 2/1/23 (EUR) 424,000 539

Total United States (Cost $36,700) 37,510

SHORT-TERM INVESTMENTS 6.9%

Money Market Funds 5.1%

T. Rowe Price Government Reserve Fund, 1.24%, (5)(6) 63,296,908 63,297

63,297

U.S. Treasury Obligations 1.8%

U.S. Treasury Bills, 1.265%, 3/1/18 (7) 22,135,000 22,089

22,089

Total Short-Term Investments (Cost $85,386) 85,386


36

(Amountsin000s,exceptforcontracts)

OPTIONS PURCHASED 0.0%

OTC Options Purchased 0.0%

Counterparty Description Contracts Notional Amount Value

Citigroup EUR Put/ USD Call, 2/1/18 @ 1.174 (USD) (8) 1 6,150 6

Morgan Stanley

EUR Put/ USD Call, 2/1/18 @ 1.183 (USD) (8) 1 6,150 14

Citigroup EUR Put/ USD Call, 2/1/18 @ 1.164 (USD) (8) 1 6,150 3

Citigroup EUR Put/USD Call, 1/9/18 @ 1.173 (USD) (8) 1 18,500 1

Total Options Purchased (Cost $179) 24

Total Investments in Securities

99.9% of Net Assets (Cost $1,214,935) $ 1,235,594

‡

Country classifications are generally based on MSCI categories or another unaffiliated third party data provider; Par/Shares and Notional Amount 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 $70,634 and represents 5.7% of net assets.

(2)

Security is a fix-to-float security, which carries a fixed coupon until a certain date, upon which it switches to a floating rate. Reference rate and spread is provided if the rate is currently floating.

(3)

Security has the ability to pay in kind or pay in cash. When applicable, separate rates of such payments are disclosed.

(4) Perpetual security with no stated maturity date. (5) Seven-day yield (6) Affiliated Company (7)

At December 31, 2017, all or a portion of this security is pledged as collateral and/or margin deposit to cover future funding obligations.

(8) Non-income producing 3M CZK PRIBOR Three month CZK PRIBOR (Prague Interbank Offered Rate) 3M EUR

LIBOR Three month EUR EURIBOR (EURO interbank offered rate) 3M HKD

HIBOR Three month HKD HIBOR (Hong Kong Interbank Offered Rate)


37

3M JPY LIBOR Three month JPY LIBOR (London interbank offered rate)

3M PLN WIBOR Three month PLN WIBOR (Warsaw interbank offered rate)

7D ARPP Argentina Central Bank seven day repo reference rate AUD Australian Dollar BRL Brazilian Real

BDLRPP Argentina deposit rates (Badlar) at private banks CAD Canadian Dollar CHF Swiss Franc CLP Chilean Peso CNY China Renminbi CZK Czech Koruna DKK Danish Krone EUR Euro FRN Floating-Rate Note GBP British Pound HKD Hong Kong Dollar IDR Indonesian Rupiah ILS Israeli Shekel INR Indian Rupee JPY Japanese Yen

KRW South Korean Won MXN Mexican Peso MYR Malaysian Ringgit NOK Norwegian Krone OTC Over the counter PLN Polish Zloty RON New Romanian Leu RSD Serbian Dinar RUB Russian Ruble SEK Swedish Krona SGD Singapore Dollar THB Thai Baht TRY Turkish Lira

TWD Taiwan Dollar USD U.S. Dollar

VR

Variable Rate; rate shown is effective rate at period-end. The rates for certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and based on current market conditions.

ZAR South African Rand

38


(Amountsin000s)

SWAPS (0.3)%

Description NotionalAmount Value Initial Value

UnrealizedGain (Loss)

CENTRALLY CLEARED SWAPS (0.3)%

Interest Rate Swaps 0.1%

Czech Republic 0.0%

5 Year Interest Rate Swap, Pay Fixed 1.288% Annually, Receive Variable 0.52% Semi-Annually, 3M CZK PRIBOR, 9/27/22 5,500 $ 3 $ — $ 3

5 Year Interest Rate Swap, Pay Fixed 1.455% Annually, Receive Variable 0.60% Semi-Annually, 3M CZK PRIBOR, 10/24/22 136,000 36 — 36

5 Year Interest Rate Swap, Pay Fixed 1.58% Annually, Receive Variable 0.82% Semi-Annually, 3M CZK PRIBOR, 11/22/22 155,000 9 1 8

47

Foreign/Europe 0.0%

30 Year Interest Rate Swap, Pay Fixed 1.54% Annually, Receive Variable (0.276%) Semi-Annually 3M EUR LIBOR, 11/3/47 2,200 (34) 1 (35)

5 Year Interest Rate Swap, Pay Fixed 0.214% Annually, Receive Variable 0.272% Semi-Annually, 3M EUR LIBOR, 9/22/22 370 1 — 1

10 Year Interest Rate Swap, Pay Fixed 0.858% Annually, Receive Variable 0.272% Semi-Annually, 3M EUR LIBOR, 9/22/27 600 (1) — (1)

(35)

Hong Kong 0.0%

5 Year Interest Rate Swap, Pay Fixed 1.67%, Quarterly, Receive Variable 1.326% Quarterly 3M HKD HIBOR, 9/26/22 6,000 15 1 14

5 Year Interest Rate Swap, Pay Fixed 2.075% Quarterly, Receive Variable 1.238% Quarterly 3M HKD HIBOR, 12/8/22 14,000 1 1 —

39


(Amountsin000s)



5 Year Interest Rate Swap, Pay Fixed 1.955% Quarterly, Receive Variable 0.855% Quarterly 3M HKD HIBOR, 10/20/22 145,000 $ 68 $ — $ 68

5 Year Interest Rate Swap, Pay Fixed 1.90% Quarterly, Receive Variable 0.961% Quarterly 3M HKD HIBOR, 11/20/22 155,000 149 — 149

231

Japan 0.1%

20 Year Interest Rate Swap, Receive Fixed 0.732% Semi-Annually, Pay Variable (0.002%) Semi-Annually, 3M JPY LIBOR, 11/7/37 3,000,000 449 1 448

448

Poland 0.0%

5 Year Interest Rate Swap, Pay Fixed 2.555% Annually, Receive Variable 1.81% Semi-Annually, 3M PLN WIBOR, 11/6/22 10,700 (14) 1 (15)

5 Year Interest Rate Swap, Pay Fixed 2.58% Annually, Receive Variable 1.81% Semi-Annually, 3M PLN WIBOR, 11/6/22 10,700 (17) 1 (18)

5 Year Interest Rate Swap, Pay Fixed 2.50% Annually, Receive Variable 1.81% Semi-Annually 3M PLN WIBOR, 10/24/22 22,000 (14) — (14)

5 Year Interest Rate Swap, Pay Fixed 2.535% Annually, Receive Variable 1.81% Semi-Annually, 3M PLN WIBOR, 11/21/22 43,000 (37) — (37)

5 Year Interest Rate Swap, Pay Fixed 2.427% Annually, Receive Variable 1.81% Semi-Annually, 3M PLN WIBOR, 10/19/22 960 — — —

(84)

Total Centrally Cleared Interest Rate Swaps 607

Credit Default Swaps, Protection Bought (0.4)%

Foreign/Europe (0.4)%

Protection Bought (Relevant Credit: Markit iTraxx Europe CDSI-S28, 5 Year Index), Pay 1.00% Quarterly, Receive upon credit default, 12/20/22 (EUR) 42,000 (1,383) (1,168) (215)

40


(Amountsin000s)



Protection Bought (Relevant Credit: Markit iTraxx Crossover CDSI-S28, 5 Year Index), Pay 5.00% Quarterly, Receive upon credit default, 12/20/22 (EUR) 20,800 $ (3,083) $ (2,942) $ (141)

Total Centrally Cleared Credit Default Swaps, Protection Bought (356)

Total Centrally Cleared Swaps 251

Net payments (receipts) of variation margin to date 284

Valuation margin receivable (payable) on centrally cleared swaps $ 535

Description NotionalAmount Value

UpfrontPayments/(Receipts)


BILATERAL SWAPS 0.0%

Credit Default Swaps, Protection Bought 0.0%

Brazil 0.0%

Barclays Capital, Protection Bought (Relevant Credit: Republic of Brazil, 4.25%, 1/7/25), Pay 1.00% Quarterly, Receive upon credit default 12/20/22 (USD) 6,200 171 211 (40)

211 (40)

Chile 0.0%

Barclays Capital, Protection Bought (Relevant Credit: Republic of Chile, 3.875%, 8/5/20), Pay 1.00% Quarterly, Receive upon credit default 12/20/22 (USD) 6,200 (152) (133) (19)

(133) (19)

Indonesia 0.0%

Citibank, Protection Bought (Relevant Credit: Republic of Indonesia, 5.875%, 3/13/20), Pay 1.00% Quarterly, Receive upon credit default 12/20/22 (USD) 1,500 (11) — (11)

41


(Amountsin000s)




Barclays Capital, Protection Bought (Relevant Credit: Republic of Indonesia, 5.875%, 3/13/20), Pay 1.00% Quarterly, Receive upon credit default, 12/20/22 (USD) 1,550 $ (11) $ (3) $ (8)

(3) (19)

Malaysia 0.0%

Barclays Capital, Protection Bought (Relevant Credit: Penergangan Malaysia Berhad, 1.00% 12/20/22), Pay 1.00% Quarterly, Receive upon credit default, 12/20/22 (USD) 3,100 (61) (46) (15)

Barclays Capital, Protection Bought (Relevant Credit: Penergangan Malaysia Berhad, 1.00% 12/20/22), Pay 1.00% Quarterly, Receive upon credit default, 12/20/22 (USD) 3,100 (60) (53) (7)

(99) (22)

Mexico 0.0%

Barclays Capital, Protection Bought (Relevant Credit: United Mexican States, 4.15%, 3/28/27) Pay 1.00% Quarterly, Receive upon credit default, 12/20/22 (USD) 6,200 15 30 (15)

30 (15)

Peru 0.0%

Barclays Capital, Protection Bought (Relevant Credit: Republic of Peru, 8.75%, 11/21/33), Pay 1.00% Quarterly, Receive upon credit default 12/20/22 (USD) 6,200 (83) (72) (11)

(72) (11)

South Africa 0.0%

Citibank, Protection Bought (Relevant Credit: Republic of South Africa, 5.50%, 3/9/20), Pay 1.00% Quarterly, Receive upon credit default 12/20/22 (USD) 6,200 159 233 (74)

233 (74)

42


(Amountsin000s)




Turkey 0.0%

Citibank, Protection Bought (Relevant Credit: Republic of Turkey, 11.875%, 1/15/30), Pay 1.00% Quarterly, Receive upon credit default 12/20/22 (USD) 9,400 $ 273 $ 388 $ (115)

388 (115)

Total Credit Default Swaps, Protection Bought 555 (315)

Total Bilateral Swaps 555 (315)


Forward Currency Exchange Contracts

43

(Amounts in 000s)

Counterparty Settlement Receive Deliver Unrealized Gain (Loss)

Bank of America Merrill Lynch 1/12/18 RON 40,983 USD 10,465 $ 76

Bank of America Merrill Lynch 1/12/18 RUB 385,007 USD 6,567 112

Bank of America Merrill Lynch 1/12/18 USD 6,085 PLN 21,869 (197)

Bank of America Merrill Lynch 1/12/18 USD 5,007 RON 19,723 (65)

Bank of America Merrill Lynch 1/12/18 USD 3,169 RUB 189,000 (110)

Bank of America Merrill Lynch 1/19/18 RSD 12,750 USD 127 2

Bank of America Merrill Lynch 1/19/18 USD 5,410 ILS 18,975 (46)

Bank of America Merrill Lynch 1/19/18 USD 9,102 MXN 173,830 287

Bank of America Merrill Lynch 1/19/18 USD 78 RSD 7,971 (3)

Bank of America Merrill Lynch 1/19/18 USD 14,272 SEK 119,769 (342)

Bank of America Merrill Lynch 1/23/18 USD 12,232 CZK 264,756 (215)

Bank of America Merrill Lynch 1/25/18 USD 11,863 AUD 15,693 (381)

Bank of America Merrill Lynch 1/26/18 EUR 11,499 USD 13,626 189

Bank of America Merrill Lynch 1/26/18 GBP 121 USD 158 5

Bank of America Merrill Lynch 1/26/18 USD 362 CAD 441 11

Bank of America Merrill Lynch 1/26/18 USD 8,764 CAD 11,179 (133)

Bank of America Merrill Lynch 1/26/18 USD 6,164 DKK 38,695 (81)

Bank of America Merrill Lynch 1/26/18 USD 47,469 EUR 40,078 (682)

Bank of America Merrill Lynch 1/26/18 USD 13,893 GBP 10,490 (280)

Bank of America Merrill Lynch 1/26/18 USD 21,676 JPY 2,421,651 162

Bank of America Merrill Lynch 2/9/18 USD 21,241 ZAR 296,941 (2,625)



44

(Amounts in 000s)

Forward Currency Exchange Contracts (continued)


Bank of America Merrill Lynch 2/15/18 USD 122,355 EUR 103,123 (1,683)


Bank of America Merrill Lynch 2/15/18 USD 85,141 JPY 9,502,465 637

Bank of America Merrill Lynch 2/16/18 USD 11,662 AUD 15,429 (376)

Bank of America Merrill Lynch 2/16/18 USD 5,784 ILS 20,260 (48)

Bank of America Merrill Lynch 2/23/18 USD 1,155 NOK 9,483 (2)

Bank of America Merrill Lynch 3/15/18 USD 118,540 EUR 99,833 (1,750)


Bank of America Merrill Lynch 12/18/18 CZK 395,630 USD 18,658 292

Bank of America Merrill Lynch 12/18/18 USD 18,543 EUR 15,327 (287)

Barclays Bank 1/9/18 MYR 1,050 USD 250 9 Barclays Bank 1/9/18 USD 6,316 MYR 26,455 (219) Barclays Bank 1/12/18 RON 4,514 USD 1,140 21 Barclays Bank 1/12/18 USD 326 PLN 1,192 (16) Barclays Bank 1/19/18 SEK 52,255 USD 6,269 107 Barclays Bank 1/26/18 EUR 472 USD 562 5 Barclays Bank 1/26/18 GBP 1,142 USD 1,506 36 Barclays Bank 1/26/18 USD 23,755 EUR 20,031 (311) Barclays Bank 2/2/18 USD 2,336 IDR 31,808,729 (2) Barclays Bank 2/2/18 USD 3,139 TWD 94,188 (32) Barclays Bank 2/9/18 ZAR 87,601 USD 6,218 822 Barclays Bank 2/15/18 USD 6,514 EUR 5,471 (67) Barclays Bank 2/15/18 USD 14,591 JPY 1,633,345 66 Barclays Bank 3/2/18 USD 15,976 BRL 52,652 204 Barclays Bank 4/6/18 USD 750 CLP 485,074 (38) Barclays Bank 5/11/18 USD 750 CLP 485,074 (37) BNP Paribas 1/9/18 MYR 37,044 USD 8,886 265 BNP Paribas 1/12/18 CLP 6,008,339 USD 9,170 593 BNP Paribas 1/23/18 EUR 5,890 USD 6,971 104 BNP Paribas 1/26/18 EUR 257 USD 300 9 BNP Paribas 1/26/18 GBP 272 USD 369 (1) BNP Paribas 1/26/18 USD 184 GBP 138 (3) BNP Paribas 1/26/18 USD 209 JPY 23,657 (1) BNP Paribas 2/2/18 USD 3,774 IDR 51,755,375 (30)



45

(Amounts in 000s)



BNP Paribas 2/9/18 ZAR 78,776 USD 5,688 644 BNP Paribas 2/15/18 EUR 1,590 USD 1,905 7 BNP Paribas 2/15/18 USD 796 EUR 679 (21) BNP Paribas 2/23/18 USD 371 CHF 365 (5) BNP Paribas 4/6/18 USD 3,056 CLP 2,002,740 (196) BNP Paribas 5/11/18 USD 6,105 CLP 4,005,599 (395) CIBC World Markets 1/19/18 MXN 120,210 USD 6,361 (265) CIBC World Markets 1/25/18 AUD 7,933 USD 6,060 130 CIBC World Markets 1/25/18 USD 3,140 AUD 4,179 (120) CIBC World Markets 1/26/18 EUR 11,093 USD 12,935 393 CIBC World Markets 1/26/18 USD 37 EUR 31 — CIBC World Markets 2/15/18 USD 18,903 JPY 2,113,353 110 Citibank 1/12/18 CLP 2,002,763 USD 3,053 201 Citibank 1/12/18 USD 401 CLP 251,822 (8) Citibank 1/12/18 USD 3,241 RUB 189,147 (40) Citibank 1/19/18 RSD 310,550 USD 3,079 72 Citibank 1/19/18 USD 6,237 SGD 8,478 (104) Citibank 1/26/18 CAD 15,425 USD 12,172 104 Citibank 1/26/18 EUR 3,996 USD 4,762 39 Citibank 1/26/18 GBP 391 USD 522 6 Citibank 1/26/18 GBP 12 USD 16 — Citibank 1/26/18 USD 118 EUR 100 (2) Citibank 1/26/18 USD 134 GBP 99 — Citibank 2/15/18 USD 362 GBP 276 (11) Citibank 2/15/18 USD 6,153 JPY 685,141 60 Citibank 3/9/18 USD 841 TRY 3,419 (43) Citibank 3/15/18 JPY 890,023 USD 7,900 26 Citibank 5/11/18 USD 3,050 CLP 2,002,763 (200) Deutsche Bank 1/12/18 USD 646 CLP 403,728 (10) Deutsche Bank 1/12/18 USD 276 RON 1,057 4 Deutsche Bank 1/12/18 USD 6,323 RON 24,718 (34) Deutsche Bank 1/19/18 SEK 103,116 USD 12,352 231 Deutsche Bank 1/23/18 CZK 5,386 USD 250 3 Deutsche Bank 1/26/18 EUR 54 USD 65 — Deutsche Bank 1/26/18 GBP 8 USD 11 — Deutsche Bank 1/26/18 USD 70 GBP 52 1 Deutsche Bank 1/26/18 USD 1,825 GBP 1,369 (24) Deutsche Bank 2/2/18 INR 768,670 USD 11,864 139 Deutsche Bank 3/2/18 BRL 19,617 USD 6,051 (174) Deutsche Bank 3/9/18 TRY 3,419 USD 846 39 Deutsche Bank 3/15/18 USD 11,948 EUR 10,066 (181) Goldman Sachs 1/26/18 EUR 68,690 USD 81,537 990 Goldman Sachs 1/26/18 GBP 2,009 USD 2,682 32



46

(Amounts in 000s)



Goldman Sachs 1/26/18 USD 9,616 EUR 8,059 (66) Goldman Sachs 2/9/18 USD 6,319 KRW 7,046,429 (267) Goldman Sachs 2/15/18 USD 6,051 JPY 681,441 (9) HSBC Bank 1/9/18 MYR 13,582 USD 3,223 132 HSBC Bank 1/9/18 USD 8,662 MYR 35,992 (230) HSBC Bank 1/12/18 CLP 2,002,760 USD 3,066 189 HSBC Bank 1/12/18 PLN 280 USD 78 3 HSBC Bank 1/12/18 USD 6,909 CLP 4,382,644 (213) HSBC Bank 1/19/18 MXN 116,702 USD 6,222 (304) HSBC Bank 1/19/18 USD 5,379 ILS 18,815 (31) HSBC Bank 1/19/18 USD 3,152 MXN 61,043 56 HSBC Bank 1/19/18 USD 5,899 SGD 7,994 (80) HSBC Bank 1/23/18 CNY 20,064 USD 3,010 68 HSBC Bank 1/26/18 EUR 950 USD 1,140 1 HSBC Bank 1/26/18 GBP 2,237 USD 2,987 35 HSBC Bank 1/26/18 USD 19,291 EUR 16,460 (485) HSBC Bank 1/26/18 USD 1,339 JPY 151,726 (9) HSBC Bank 2/2/18 USD 24,569 INR 1,611,334 (594) HSBC Bank 2/2/18 USD 2,809 THB 92,136 (21) HSBC Bank 2/9/18 USD 17,771 SGD 24,097 (256) HSBC Bank 2/15/18 GBP 385 USD 510 11 HSBC Bank 2/15/18 JPY 311,485 USD 2,781 (11) HSBC Bank 2/15/18 USD 8,939 EUR 7,631 (240) HSBC Bank 2/15/18 USD 876 GBP 649 (1) HSBC Bank 2/16/18 USD 1,791 ILS 6,269 (14) HSBC Bank 2/23/18 CNY 811 USD 121 3 HSBC Bank 2/23/18 USD 1,159 NOK 9,425 9 HSBC Bank 3/15/18 USD 3,206 EUR 2,702 (50) HSBC Bank 4/6/18 USD 3,063 CLP 2,002,760 (189) JPMorgan Chase 1/23/18 CZK 130,019 USD 6,031 82 Morgan Stanley 1/9/18 MYR 25,405 USD 6,016 260 Morgan Stanley 1/19/18 USD 840 SEK 7,012 (15) Morgan Stanley 2/15/18 USD 19,779 EUR 16,692 (299) Morgan Stanley 3/15/18 USD 19,811 EUR 16,692 (301) Royal Bank of Canada 1/26/18 USD 6,136 CAD 7,899 (151) Royal Bank of Canada 2/16/18 USD 3,061 AUD 4,078 (121) Royal Bank of Canada 3/15/18 USD 691 GBP 520 (13) Standard Chartered 1/9/18 USD 3,505 MYR 14,634 (110) Standard Chartered 1/12/18 USD 23,689 CLP 14,989,409 (668) Standard Chartered 1/12/18 USD 116 RUB 6,860 (3) Standard Chartered 1/19/18 SEK 47 USD 6 — Standard Chartered 1/19/18 USD 124 MXN 2,251 10 Standard Chartered 1/19/18 USD 572 SEK 4,523 20



47

(Amounts in 000s)



Standard Chartered 1/19/18 USD 108 SGD 145 (1) Standard Chartered 1/23/18 CNY 20,000 USD 2,996 72 Standard Chartered 1/25/18 USD 603 AUD 752 16 Standard Chartered 1/26/18 EUR 878 USD 1,039 16 Standard Chartered 1/26/18 EUR 46 USD 55 — Standard Chartered 1/26/18 GBP 13 USD 17 — Standard Chartered 1/26/18 JPY 3,574,569 USD 31,460 298 Standard Chartered 1/26/18 USD 9,274 EUR 7,747 (33) Standard Chartered 2/2/18 USD 1,056 INR 69,170 (24) Standard Chartered 2/9/18 USD 6,073 KRW 6,660,103 (152) Standard Chartered 2/16/18 USD 2,686 ILS 9,402 (20) Standard Chartered 3/15/18 USD 77,081 JPY 8,724,520 (620) Standard Chartered 4/13/18 MYR 2,961 USD 723 6 State Street 1/12/18 USD 5,947 PLN 21,404 (202) State Street 1/19/18 USD 5,894 MXN 113,597 134 State Street 1/19/18 USD 14,430 SEK 117,316 115 State Street 1/19/18 USD 343 SEK 2,813 — State Street 1/23/18 CZK 129,351 USD 5,977 104 State Street 1/23/18 EUR 532 USD 622 17 State Street 1/23/18 USD 7,501 EUR 6,422 (214) State Street 1/25/18 USD 12,392 AUD 15,876 4 State Street 1/26/18 EUR 8,471 USD 9,928 248 State Street 1/26/18 GBP 111 USD 147 4 State Street 1/26/18 USD 8,511 CAD 10,736 (33) State Street 1/26/18 USD 5,891 DKK 37,041 (87) State Street 1/26/18 USD 99,378 EUR 83,974 (1,511) State Street 1/26/18 USD 13,870 GBP 10,489 (303) State Street 1/26/18 USD 8,652 JPY 977,535 (33) State Street 2/2/18 USD 2,917 THB 96,616 (50) State Street 2/15/18 USD 86,569 EUR 73,042 (1,288) State Street 2/15/18 USD 15,597 GBP 11,789 (342) State Street 2/16/18 AUD 1,042 USD 815 (2) State Street 3/15/18 JPY 767,078 USD 6,807 25 State Street 3/15/18 USD 94,875 EUR 79,946 (1,452) State Street 3/15/18 USD 16,194 GBP 12,221 (344) State Street 3/15/18 USD 1,062 JPY 119,061 1 State Street 3/15/18 USD 18,981 JPY 2,145,197 (124) UBS Investment Bank 2/2/18 USD 19,064 INR 1,250,000 (456) UBS Investment Bank 2/2/18 USD 3,016 TWD 90,155 (18) UBS Investment Bank 2/16/18 USD 11,533 AUD 15,078 (232)

Net unrealized gain (loss) on open forward currency exchange contracts $ (15,588)


48

Futures Contracts($000s)

Expiration Date

Notional Amount

Value and Unrealized Gain/(Loss)

Short,229EuroBOBLcontracts 3/18 $ (36,162) $ 158

Long,78EuroBTPcontracts 3/18 12,741 (295)

Short,92EuroBUNDcontracts 3/18 (17,847) 141

Short,46EuroBUXLcontracts 3/18 (9,044) 185

Long,77EuroOATcontracts 3/18 14,337 (158)

Short,137EuroSCHATZcontracts 3/18 (18,406) 23

Short,151GovernmentofCanadaBondscontracts 3/18 (16,191) 164

Long,230GovernmentofKoreaBondsthreeyearcontracts 3/18 23,179 (57)

Long,128GovernmentofKoreaBondstenyearcontracts 3/18 14,575 (54)

Short,74LongGiltcontracts 3/18 (12,505) (78)

Netpayments(receipts)ofvariationmargintodate (76)

Variationmarginreceivable(payable)onopenfuturescontracts $ (47)


49


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 that is under common ownership or control. The following securities were considered affiliated companies for all or some portion of the period ended December 31, 2017. Net realized gain (loss), investment income, change in net unrealized gain/loss, and purchase and sales cost reflect all activity for the period then ended.

Affiliate

Net Realized Gain(Loss)

Change in NetUnrealizedGain/Loss

InvestmentIncome

T. Rowe Price Government Reserve Fund $ — $ — $ 212 Totals $ —# $ — $ 212+ Supplementary Investment Schedule Affiliate

Value9/12/17

PurchaseCost

SalesCost

Value12/31/17

T. Rowe Price Government Reserve Fund $ — ¤ ¤ $ 63,297 $ 63,297^

# Capital gain/loss distributions from mutual funds represented $0 of the net realized gain (loss).

+ Investment income comprised $212 of dividend income and $0 of interest income. ¤ Purchase and sale information not shown for cash management funds. ^ The cost basis of investments in affiliated companies was $63,297.

50


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

Statement of Assets and Liabilities

Assets

Investments in securities, at value (cost $1,214,935) $ 1,235,594

Interest receivable 13,741

Unrealized gain on forward currency exchange contracts 9,184

Foreign currency (cost $2,503) 2,543

Bilateral swap premiums paid 862

Receivable for investment securities sold 667

Variation margin receivable on centrally cleared swaps 535

Due from affiliates 121

Receivable for shares sold 64

Other assets 1,233

Total assets 1,264,544

Liabilities

Unrealized loss on forward currency exchange contracts 24,772

Payable for investment securities purchased 864

Investment management fees payable 511

Unrealized loss on bilateral swaps 315

Bilateral swap premiums received 307

Variation margin payable on futures contracts 47

Due to affiliates 30

Payable for shares redeemed 5

Other liabilities 1,288

Total liabilities 28,139

NET ASSETS $ 1,236,405 Net Assets Consist of:

Undistributed net investment income $ 390

Accumulated undistributed net realized loss (3,030)

Net unrealized gain 5,248

Paid-in capital applicable to 122,956,181 shares of $0.01 par value capital stock outstanding; 18,000,000 shares of the Corporation authorized 1,233,797

NET ASSETS $ 1,236,405

51



Statement of Assets and Liabilities

NET ASSET VALUE PER SHARE

Investor Class ($1,114,778,372 / 110,860,983 shares outstanding) $ 10.06

Advisor Class ($251,265 / 25,000 shares outstanding) $ 10.05

I Class ($121,375,482 / 12,070,198 shares outstanding) $ 10.06


($000s)

Statement of Operations

52

9/12/17Through

12/31/17Investment Income (Loss)

Income Interest $ 3,702 Dividend 281

Total income 3,983

Expenses Investment management 925 Shareholder servicing

Investor Class 95 Custody and accounting 51 Registration 183 Legal and audit 3 Organization 3 Miscellaneous 3 Waived / paid by Price Associates (144)

Total expenses 1,119

Net investment income 2,864

Realized and Unrealized Gain / Loss

Net realized gain (loss) Securities 186 Futures 77 Swaps (359) Forward currency exchange contracts 444 Foreign currency transactions 555

Net realized gain 903


($000s)

Statement of Operations

53


9/12/17 Through

12/31/17Change in net unrealized gain / loss

Securities 20,659 Futures 29 Swaps (64) Forward currency exchange contracts (15,588) Other assets and liabilities denominated in foreign currencies 212

Change in net unrealized gain / loss 5,248

Net realized and unrealized gain / loss 6,151

INCREASE IN NET ASSETS FROM OPERATIONS $ 9,015


($000s)

54

Statement of Changes in Net Assets

9/12/17 Through

12/31/17Increase (Decrease) in Net Assets

Operations Net investment income $ 2,864 Net realized gain 903 Change in net unrealized gain / loss 5,248 Increase in net assets from operations 9,015

Distributions to shareholders

Net investment income Investor Class (2,123) Advisor Class (1) I Class (236)

Net realized gain Investor Class (3,651) Advisor Class (1) I Class (397)

Decrease in net assets from distributions (6,409)

Capital share transactions*

Shares sold Investor Class 1,125,342 Advisor Class 250 I Class 122,120

Distributions reinvested Investor Class 5,643 I Class 633

Shares redeemed Investor Class (18,574) I Class (1,615)

Increase in net assets from capital share transactions 1,233,799

Net Assets

Increase during period 1,236,405 Beginning of period –

End of period $ 1,236,405

Undistributed net investment income 390


55


Statement of Changes in Net Assets

(000s)

9/12/17 Through

12/31/17 *Share information

Shares sold Investor Class 112,143 Advisor Class 25 I Class 12,167

Distributions reinvested Investor Class 562 I Class 63

Shares redeemed Investor Class (1,844) I Class (160)

Increase in shares outstanding 122,956

56


Notes to Financial Statements

T. Rowe Price International Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act). The International Bond Fund (USD Hedged) (the fund) is a nondiversified, open-end management investment company established by the corporation. The fund incepted on September 12, 2017. The fund seeks to provide current income and capital appreciation. The fund has three classes of shares: the International Bond Fund (USD Hedged) (Investor Class), the International Bond Fund (USD Hedged)–Advisor Class (Advisor Class), and the International Bond Fund (USD Hedged)–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 Investment transactions are accounted for on the trade date basis. Income and expenses are recorded on the accrual basis. Realized gains and losses are reported on the identified cost basis. Premiums and discounts on debt securities are amortized for financial reporting purposes. Dividends received from mutual

57


fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Income tax-related interest and penalties, if incurred, are recorded as income tax expense. 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 respective date of such transaction. The portion of the results of operations attributable to changes in foreign exchange rates on investments is not bifurcated from the portion attributable to changes in market prices. 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. To the extent any expenses are waived or reimbursed in accordance with an expense limitation (see Note 6), the waiver or reimbursement is charged to the applicable class or allocated across the classes in the same manner as the related expense. The Advisor Class pays Rule 12b-1 fees, in an amount not exceeding 0.25% of the class’s average daily net assets; during the period ended December 31, 2017, the Advisor Class incurred less than $1,000 in these fees.

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.

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In-Kind Subscriptions Under certain circumstances, and when considered to be in the best interest of all shareholders, the fund may accept portfolio securities rather than cash as payment for the purchase of fund shares (in-kind subscription). For financial reporting and tax purposes, the cost basis of contributed securities is equal to the market value of the securities on the date of contribution. In-kind subscriptions result in no gain or loss and no tax consequences for the fund. During the period ended December 31, 2017, the fund accepted $874,948,000 of in-kind subscriptions, all of which were from other T. Rowe Price funds.

New Accounting Guidance In March 2017, the FASB issued amended guidance to shorten the amortization period for certain callable debt securities, held at a premium. The guidance is effective for fiscal years and interim periods beginning after December 15, 2018. Adoption will have no effect on the fund’s net assets or results of operations.

On August 1, 2017, the fund implemented amendments to Regulation S-X, issued by the Securities and Exchange Commission, which require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Adoption had no effect on the fund’s net assets or results of operations.

Indemnification In the normal course of business, the fund may provide indemnification in connection with its officers and directors, service providers, and/or private company investments. The fund’s maximum exposure under these arrangements is unknown; however, the risk of material loss is currently considered to be remote.

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.

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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

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

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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.

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, 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.

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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 December 31, 2017:

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

Quoted Prices

Significant Observable

Inputs

Significant Unobservable

Inputs

Assets

InvestmentsinSecurities,except: $ — $ 1,172,297 $ — $ 1,172,297

Short-TermInvestments 63,297 63,297

TotalSecurities 63,297 1,172,297 — 1,235,594

Swaps — 1,153 — 1,153

ForwardCurrencyExchangeContracts — 9,184 — 9,184

Total $ 63,297 $ 1,182,634 $ — $ 1,245,931

Liabilities

Swaps $ — $ 378 $ — $ 378

ForwardCurrencyExchangeContracts — 24,772 — 24,772

FuturesContracts 47 — — 47

Total $ 47 $ 25,150 $ — $ 25,197

There were no material transfers between Levels 1 and 2 during the period ended December 31, 2017.

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NOTE 3 - DERIVATIVE INSTRUMENTS

During the period ended December 31, 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 invest-ment and permits or requires net settlement. The fund invests in derivatives only if the expected risks and rewards are consistent with its investment objectives, 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.

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.

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The following table summarizes the fair value of the fund’s derivative instruments held as of December 31, 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*,CentrallyClearedSwaps* $ 1,398

Foreignexchangederivatives Securities^,Forwards 9,208

Creditderivatives BilateralSwaps,andPremiums 618

Total $ 11,224

Liabilities

Interestratederivatives Futures*,CentrallyClearedSwaps* $ 762

Foreignexchangederivatives Forwards 24,772

Creditderivatives BilateralSwaps,andPremiums,CentrallyClearedSwaps* 734

Total $ 26,268

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

^PurchasedoptionsarereportedassecuritiesandarereflectedintheaccompanyingPortfolioofinvestments.

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Additionally, the amount of gains and losses on derivative instruments recognized in fund earnings during the period ended December 31, 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^ Futures

Forward Currency

Exchange Contracts Swaps Total

Realized Gain (Loss)

Interestratederivatives $ — $ 77 $ — $ (1) $ 76

Foreignexchangederivatives (29) — 444 — 415

Creditderivatives — — — (358) (358)

Total $ (29) $ 77 $ 444 $ (359) $ 133

Change in Unrealized Gain / Loss

Interestratederivatives $ — $ 29 $ — $ 607 $ 636

Foreignexchangederivatives (156) — (15,588) — (15,744)

Creditderivatives — — — (671) (671)

Total $ (156) $ 29 $ (15,588) $ (64) $ (15,779)

^Purchasedoptionsarereportedassecurities.

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

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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.

The following table summarizes the fund’s derivatives at the reporting date by loss exposure to each counterparty or clearinghouse after consideration of collateral, if any. Exchange-traded and centrally cleared derivatives that settle variation margin daily are presented at the variation margin receivable or payable on the reporting date, and exchange-traded options are presented at value.

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($000s)

Counterparty

Form of

MNA

Gross Value on Statement of Assets

and LiabilitiesNet Amount

Due (to)/from Counterparty or Exchange

Collateral Pledged

(Received) by Fund

Loss Exposure, After Collateral* (not

less than $0)Asset Liability

BankofAmericaMerrillLynch ISDA $ 1,773 $ (9,890) $ (8,117) $ 6,163 $ —

BarclaysBank ISDA 1,456 (1,089) 367 (680) —

BNPParibas ISDA 1,622 (652) 970 — 971

CIBCWorldMarkets FXLetter 633 (385) 248 — 248

Citibank ISDA 950 (419) 531 (540) —

DeutscheBank ISDA 417 (423) (6) — —

GoldmanSachs ISDA 1,022 (342) 680 — 681

HSBCBank ISDA 507 (2,728) (2,221) 2,013 —

JPMorganChase ISDA 82 — 82 2,640 2,722

MorganStanley ISDA 274 (615) (341) — —

RoyalBankofCanada ISDA — (285) (285) — —

StandardChartered FXLetter 438 (1,631) (1,193) 835 —

StateStreet ISDA 652 (5,985) (5,333) 3,524 —

UBSInvestmentBank ISDA — (706) (706) 587 —

CentrallyClearedSwaps n/a 535 — 535 — 535

ExchangeTradedFutures n/a — (47) (47) 1,853 1,806

Total $ 10,361 $ (25,197)

*Insituationssuchascounterpartydefaultorbankruptcy,thefundmayhavefurtherrightsofoffsetagainstamountsduetoorfromthecounterpartyunderotheragreements.

Collateral may be in the form of cash or debt securities issued by the U.S. government or related agencies. Cash and currencies posted by the fund are reflected as cash deposits in the accompanying financial statements and generally are 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

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the fund’s assets because the fund does not obtain effective control over those assets. For bilateral derivatives, collateral posted by the fund is held in a segregated account by the fund’s custodian.

While typically not sold in the same manner as to equity or fixed income securities, exchange-traded or centrally cleared derivatives may be closed out only on the exchange or clearinghouse where the contracts were traded, and OTC and bilateral derivatives may be unwound with counterparties or transactions assigned to other counterparties to allow the fund to exit the transaction. This ability is subject to the liquidity of underlying positions.

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 increase exposure to a particular foreign currency or to shift the fund’s foreign currency exposure from one country to another, or to enhance the fund’s 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 period ended December 31, 2017, the volume of the fund’s activity in forwards, based on underlying notional amounts, was generally between 0% and 102% of net assets.

Futures Contracts The fund is subject to interest rate risk in the normal course of pursuing its investment objectives and uses futures contracts to help manage such risk. The fund may enter into futures contracts to manage exposure to interest rate and yield curve movements, security prices, foreign currencies, credit quality, and mortgage prepayments; as an efficient means of adjusting exposure to all or part of a target market; to enhance income; as

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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 interest rates, and potential losses in excess of the fund’s initial investment. During the period ended December 31, 2017, the volume of the fund’s activity in futures, based on underlying notional amounts, was generally between 0% and 16% of net assets.

Options The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives and uses options to help manage such risk. 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 or loss. In return for a premium paid, call and put options give the holder the right, but not the obligation, to purchase or sell, respectively, a security at a specified exercise price.

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 currency values; and, for written

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options, potential losses in excess of the fund’s initial investment. During the period ended December 31, 2017, the volume of the fund’s activity in options, based on underlying notional amounts, was generally between 0% and 3% of net assets.

Swaps The fund is subject to interest rate risk and credit risk in the normal course of pursuing its investment objectives and uses swap contracts to help manage such risks. The fund may use swaps in an effort to manage exposure to changes in interest rates, inflation rates, and credit quality; to adjust overall exposure to certain markets; to enhance total return or protect the value of portfolio securities; to serve as a cash management tool; or to adjust portfolio duration and credit exposure. Swap agreements can be settled either directly with the counterparty (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 termination or cash settlement. Net periodic receipts or payments required by a 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.

Interest rate swaps are agreements to exchange cash flows based on the difference between specified interest rates applied to a notional principal amount for a specified period of time. Risks related to the use of interest rate swaps include the potential for unanticipated movements in interest or currency rates, the possible failure of a counterparty to perform in accordance with the terms of the swap agreements, potential government regulation that could adversely affect the fund’s swap investments, and potential losses in excess of the fund’s initial investment.

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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 period ended December 31, 2017, the volume of the fund’s activity in swaps, based on underlying notional amounts, was generally between 0% and 20% of net assets.

NOTE 4 - OTHER INVESTMENT TRANSACTIONS

Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks and/or to enhance perfor-mance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund’s prospectus and Statement of Additional Information.

Emerging 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 27% of the fund’s net assets were invested in emerging markets and 6% 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.

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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 December 31, 2017, approximately 14% 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.

Other Purchases and sales of portfolio securities other than short-term and U.S. government securities aggregated $1,185,023,000 and $84,621,000, respectively, for the period ended December 31, 2017.

NOTE 5 - FEDERAL INCOME TAxES

No provision for federal income taxes is required since the fund intends 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.

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The fund files U.S. federal, state, and local tax returns as required. The fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return but which can be extended to six years in certain circumstances.

Reclassifications to paid-in capital relate primarily to nondeductible organizational expenses. Reclassifications between income and gain relate primarily to per-share rounding of distributions. For the period ended December 31, 2017, the following reclassifications were recorded to reflect tax character (there was no impact on results of operations or net assets):

Undistributednetinvestmentincome $ (114)

Undistributednetrealizedgain 116

Paid-incapital (2)

($000s)

Distributions during the period ended December 31, 2017 totaled $6,409,000 and were characterized as ordinary income for tax purposes. At December 31, 2017, the tax-basis cost of investments, including derivatives, and components of net assets were as follows:

Costofinvestments $ 1,207,797

Unrealizedappreciation $ 33,400

Unrealizeddepreciation (24,562)

Netunrealizedappreciation(depreciation) 8,838

Undistributedordinaryincome 391

Undistributedlong-termcapitalgain 306

Late-yearordinarylossdeferrals (6,927)

Paid-incapital 1,233,797

Netassets $ 1,236,405

($000s)

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The difference between book-basis and tax-basis net unrealized appreciation (depreciation) is attributable to the deferral of losses from certain derivative contracts, and the realization of gains/losses on certain open derivative contracts for tax purposes. In accordance with federal tax laws applicable to investment companies, net specified losses realized between November 1 and December 31 are not recognized for tax purposes until the subsequent year (late-year loss deferrals), however, such losses are recognized for financial reporting purposes in the year realized.

NOTE 6 - RELATED PARTY TRANSACTIONS

The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). Price Associates has entered into a sub-advisory agreement(s) with one or more of its wholly owned subsidiaries, to provide investment advisory services to the fund. The investment management agreement between the fund and Price Associates provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.20% of the fund’s average daily net assets, and a group fee. The group fee rate is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.265% 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 December 31, 2017, the effective annual group fee rate was 0.29%.

The Investor Class and Advisor Class are each subject to a contractual expense limitation through the limitation dates indicated in the table below. 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. Each 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 (after the repayment is taken into account) to exceed both: (1) the expense

75


limitation in place at the time such amounts were waived; and (2) the class’s current expense limitation. However, no repayment will be made more than three years after the date of a payment or waiver.

Advisor Class

Expenselimitation 0.74% 0.99%

Limitationdate April30,2020 April30,2020

Investor Class

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, 2020, 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 (after the repayment is taken into account) to exceed both: (1) the expense limitation in place at the time such amounts were paid; and (2) the class’s current expense limitation. However, no repayment will be made more than three years after the date of a payment or waiver. Pursuant to these agreements, $144,000 of expenses were waived/paid by Price Associates during the period ended December 31, 2017 and remain subject to repayment by the fund.

In addition, the fund has entered into service agreements with Price Associates and a wholly owned subsidiary of Price Associates (collectively, Price). Price Associates provides certain accounting and administrative services to the fund. T. Rowe Price Services, Inc. provides shareholder and administrative services in its capacity as the fund’s transfer and dividend-disbursing agent. For the period ended December 31, 2017, expenses incurred pursuant to these service agreements were $26,000 for Price Associates and less than $1,000 for T. Rowe Price Services, Inc. The total amount payable at period-end pursuant to these service agreements is reflected as Due to Affiliates in the accompanying financial statements.

The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Retirement Funds (Retirement Funds) may invest. The Retirement Funds do not invest in the

76


underlying Price funds for the purpose of exercising management or control. Pursuant to a special servicing agreement, expenses associated with the operation of the 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 Retirement Funds.

Expenses allocated under this special servicing agreement are reflected as shareholder servicing expense in the accompanying financial statements. For the period ended December 31, 2017, the fund was allocated $95,000 of Retirement Funds’ expenses. Of these amounts, $35,000 related to services provided by Price. At period-end, the amount payable to Price pursuant to this special servicing agreement is reflected as Due to Affiliates in the accompanying financial statements. At December 31, 2017, approximately 98% of the outstanding shares of the Investor Class were held by the 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 agreement disclosed above. No Price fund or account may invest for the purpose of exercising management or control over the fund. At December 31, 2017, approximately 99% of the I Class’s outstanding shares were held by Price funds and accounts.

The fund may invest its cash reserves in certain open-end management investment companies managed by Price Associates and considered affiliates of the fund: the T. Rowe Price Government Reserve Fund or the T. Rowe Price Treasury Reserve Fund, organized as money market funds, or the T. Rowe Price Short-Term Fund, a short-term bond fund (collectively, the Price Reserve Funds). 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. Cash collateral from securities lending is invested in the T. Rowe Price Short-Term Fund. The Price Reserve Funds pay no investment management fees.

77


As of December 31, 2017, T. Rowe Price Group, Inc., or its wholly owned subsidiaries owned 2,450,000 shares of the Investor Class, representing 2% of the Investor Class’s net assets, 25,000 shares of the Advisor Class, representing 100% of the Advisor Class’s net assets, and 25,000 shares of the I Class, representing less than 1% of the I 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 period ended December 31, 2017, the fund had no purchases or sales cross trades with other funds or accounts advised by Price Associates.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors of T. Rowe Price International Funds, Inc. and Shareholders of T. Rowe Price International Bond Fund (USD Hedged)

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of T. Rowe Price International Bond Fund (USD Hedged) (one of the funds constituting T. Rowe Price International Funds, Inc., hereafter referred to as the “Fund”) as of December 31, 2017, the related statements of operations and changes in net assets, including the related notes, and the financial highlights for the period September 12, 2017 (date of Fund’s Inception) through December 31, 2017 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2017, and the results of its operations, changes in its net assets and the financial highlights for the period September 12, 2017 (date of Fund’s Inception) through December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

79


Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017 by correspondence with the custodians, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audit provides a reasonable basis for our opinion.

PricewaterhouseCoopers LLPBaltimore, MarylandFebruary 15, 2018

We have served as the auditor of one or more investment companies in T. Rowe Price group of investment companies since 1973.

Report of Independent Registered Public Accounting Firm (continued)

80

Tax Information (Unaudited) for the Tax Year Ended 12/31/17

WeareprovidingthisinformationasrequiredbytheInternalRevenueCode.Theamountsshownmaydifferfromthoseelsewhereinthisreportbecauseofdifferencesbetweentaxandfinancialreportingrequirements.

Thefund’sdistributionstoshareholdersincluded$3,933,000fromshort-termcapitalgains.

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.

Information on Proxy Voting Policies, Procedures, and Records

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

How to Obtain Quarterly Portfolio Holdings


81


About the Fund’s Directors and Officers

YourfundisoverseenbyaBoardofDirectors(Board)thatmeetsregularlytoreviewawidevarietyofmattersaffectingorpotentiallyaffectingthefund,includingperformance,investmentprograms,compliancematters,advisoryfeesandexpenses,serviceproviders,andbusinessandregulatoryaffairs.TheBoardelectsthefund’sofficers,whoarelistedinthefinaltable.Atleast75%oftheBoard’smembersareindependentofT.RowePriceAssociates,Inc.(T.RowePrice),anditsaffiliates;“inside”or“interested”directorsareemployeesorofficersofT.RowePrice.Thebusinessaddressofeachdirectorandofficeris100EastPrattStreet,Baltimore,Maryland21202.TheStatementofAdditionalInformationincludesadditionalinformationaboutthefunddirectorsandisavailablewithoutchargebycallingaT.RowePricerepresentativeat1-800-638-5660.

Independent Directors

Name(Year of Birth)Year Elected*[Number of T. Rowe PricePortfolios Overseen]

Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years

BruceW.Duncan(1951)2013[191]

ChiefExecutiveOfficerandDirector(2009toDecember2016),ChairmanoftheBoard(January2016topresent),andPresident(2009toSeptember2016),FirstIndustrialRealtyTrust,anownerandoperatorofindustrialproperties;ChairmanoftheBoard(2005toSeptember2016)andDirector(1999toSeptember2016),StarwoodHotels&Resorts,ahotelandleisurecompany;Director,BostonProperties(May2016topresent);Director,MarriottInternational,Inc.(September2016topresent)

RobertJ.Gerrard,Jr.(1952)2012[191]

AdvisoryBoardMember,PipelineCrisis/WinningStrategies,acollaborativeworkingtoimproveopportunitiesforyoungAfricanAmericans(1997topresent)

PaulF.McBride(1956)2013[191]

AdvisoryBoardMember,VizziaTechnologies(2015topresent)

*Eachindependentdirectorservesuntilretirement,resignation,orelectionofasuccessor.

82


Independent Directors (continued)

Name(Year of Birth)Year Elected*[Number of T. Rowe PricePortfolios Overseen]


CeciliaE.Rouse,Ph.D.(1963)2012[191]

Dean,WoodrowWilsonSchool(2012topresent);ProfessorandResearcher,PrincetonUniversity(1992topresent);MemberofNationalAcademyofEducation(2010topresent);Director,MDRC,anonprofiteducationandsocialpolicyresearchorganization(2011topresent);ResearchAssociateofLaborStudiesProgram(2011to2015)andBoardMember(2015topresent),NationalBureauofEconomicResearch(2011topresent);ChairofCommitteeontheStatusofMinorityGroupsintheEconomicProfession(2012topresent);VicePresident(2015topresent),AmericanEconomicAssociation

JohnG.Schreiber(1946)2001[191]

Owner/President,CentaurCapitalPartners,Inc.,arealestateinvestmentcompany(1991topresent);Cofounder,Partner,andCochairmanoftheInvestmentCommittee,BlackstoneRealEstateAdvisors,L.P.(1992to2015);Director,GeneralGrowthProperties,Inc.(2010to2013);Director,BlackstoneMortgageTrust,arealestatefinancecompany(2012to2016);DirectorandChairmanoftheBoard,BrixmorPropertyGroup,Inc.(2013topresent);Director,HiltonWorldwide(2013topresent);Director,HudsonPacificProperties(2014to2016)

MarkR.Tercek(1957)2009[191]

PresidentandChiefExecutiveOfficer,TheNatureConservancy(2008topresent)

*Eachindependentdirectorservesuntilretirement,resignation,orelectionofasuccessor.

83


Inside Directors

Name(Year of Birth)Year Elected*[Number of T. Rowe Price Portfolios Overseen]


EdwardC.Bernard(1956)2006[191]

DirectorandVicePresident,T.RowePrice;ViceChairmanoftheBoard,Director,andVicePresident,T.RowePriceGroup,Inc.;ChairmanoftheBoard,Director,andPresident,T.RowePriceInvestmentServices,Inc.;ChairmanoftheBoardandDirector,T.RowePriceRetirementPlanServices,Inc.,andT.RowePriceServices,Inc.;ChairmanoftheBoard,ChiefExecutiveOfficer,Director,andPresident,T.RowePriceInternationalandT.RowePriceTrustCompany;ChairmanoftheBoard,allfunds

RobertW.Sharps,CFA,CPA**(1971)2017[135]

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,andT.RowePriceTrustCompany;VicePresident,InternationalFunds

*Eachinsidedirectorservesuntilretirement,resignation,orelectionofasuccessor.**EffectiveApril1,2017,BrianC.RogerswasreplacedbyRobertW.Sharpsasaninsidedirectorof

certainPriceFunds.

Officers

Name (Year of Birth)Position Held With International Funds Principal Occupation(s)

JasonR.Adams(1979)VicePresident

VicePresident,T.RowePriceandT.RowePriceGroup,Inc.;formerly,ResearchAnalyst,CaxtonAssociates(to2015)

UlleAdamson,CFA(1979)ExecutiveVicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational

RoyH.Adkins(1970)VicePresident


ChristopherD.Alderson(1962)President

DirectorandVicePresident,T.RowePriceInternational;VicePresident,PriceHongKong,PriceSingapore,andT.RowePriceGroup,Inc.

Unlessotherwisenoted,officershavebeenemployeesofT.RowePriceorT.RowePriceInternationalforatleast5years.

84


Officers (continued)


SyedH.Ali(1970)VicePresident

VicePresident,PriceSingaporeandT.RowePriceGroup,Inc.

PaulinaAmieva(1981)VicePresident

VicePresident,T.RowePriceandT.RowePriceGroup,Inc.

MalikS.Asif(1981)VicePresident


HarishankarBalkrishna(1983)VicePresident


SheenaL.Barbosa(1983)VicePresident

VicePresident,PriceHongKongandT.RowePriceGroup,Inc.

PeterJ.Bates,CFA(1974)ExecutiveVicePresident


LuisM.Baylac(1982)VicePresident


TimothyBei(1973)VicePresident


OliverD.M.Bell,IMC(1969)ExecutiveVicePresident


R.ScottBerg,CFA(1972)ExecutiveVicePresident


StevenE.Boothe,CFA(1977)VicePresident


PeterI.Botoucharov(1965)VicePresident


TalaBoulos(1984)VicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational;formerly,VicePresident,CEEMEACorporateCreditResearch,DeutscheBank(to2013)

DarrellN.Braman(1963)VicePresidentandSecretary

VicePresident,PriceHongKong,PriceSingapore,T.RowePrice,T.RowePriceGroup,Inc.,T.RowePriceInternational,T.RowePriceInvestmentServices,Inc.,andT.RowePriceServices,Inc.


85




RyanN.Burgess,CFA(1974)VicePresident


SheldonChan(1981)VicePresident


AndrewChang(1983)VicePresident

VicePresident,T.RowePriceGroup,Inc.

TakYiuCheng,CFA,CPA(1974)VicePresident


CarolynHoiCheChu(1974)VicePresident


ArchibaldCiganerAlbeniz,CFA(1976)ExecutiveVicePresident


RichardN.Clattenburg,CFA(1979)ExecutiveVicePresident

VicePresident,PriceSingapore,T.RowePrice,T.RowePriceGroup,Inc.,andT.RowePriceInternational

MichaelJ.Conelius,CFA(1964)ExecutiveVicePresident

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,T.RowePriceInternational,andT.RowePriceTrustCompany

MichaelF.Connelly,CFA(1977)VicePresident


AndrewS.Davis(1978)VicePresident


RicharddelosReyes(1975)VicePresident

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,andT.RowePriceTrustCompany

MichaelDellaVedova(1969)ExecutiveVicePresident


ShawnT.Driscoll(1975)VicePresident


BridgetA.Ebner(1970)VicePresident


DavidJ.Eiswert,CFA(1972)ExecutiveVicePresident

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,andT.RowePriceInternational


86




HenryM.Ellenbogen(1973)VicePresident


RyanW.Ferro(1985)VicePresident

VicePresident,T.RowePriceandT.RowePriceGroup,Inc.;formerly,student,TuckSchoolofBusinessatDartmouth(to2014)

MarkS.Finn,CFA,CPA(1963)VicePresident


QuentinS.Fitzsimmons(1968)VicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational;formerly,PortfolioManager,RoyalBankofScotlandGroup(to2015)

MelissaC.Gallagher(1974)VicePresident


JustinT.Gerbereux,CFA(1975)VicePresident


JohnR.Gilner(1961)ChiefComplianceOfficer

ChiefComplianceOfficerandVicePresident,T.RowePrice;VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInvestmentServices,Inc.

VishnuVardhanGopal(1979)VicePresident


JoelGrant(1978)VicePresident

VicePresident,T.RowePriceandT.RowePriceGroup,Inc.;formerly,Analyst,FidelityInternational(to2014)

PaulD.GreeneII(1978)VicePresident


BenjaminGriffiths,CFA(1977)VicePresident


AmandaB.Hall,CFA(1985)VicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational;formerly,student,StanfordGraduateSchoolofBusiness(to2014)

RichardL.Hall(1979)VicePresident


NabilHanano,CFA(1984)VicePresident

VicePresident,T.RowePriceInternational


87




StevenC.Huber,CFA,FSA(1958)VicePresident


StefanHubrich,Ph.D.,CFA(1974)VicePresident


ArifHusain,CFA(1972)ExecutiveVicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational;formerly,Director/HeadofUKandEuroFixedIncome,AllianceBernstein(to2013)

HiromasaIkeda(1971)VicePresident

VicePresident,PriceHongKongandT.RowePriceGroup,Inc.;formerly,Manager,FidelityKorea(to2014)

TetsujiInoue(1971)VicePresident


MichaelJacobs(1971)VicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational;formerly,VicePresident,JPMorganAssetManagement(to2013)

RandalS.Jenneke(1971)VicePresident


PrashantG.Jeyaganesh(1983)VicePresident


NinaP.Jones,CPA(1980)VicePresident


YoichiroKai(1973)VicePresident


JacobKann,CFA(1987)VicePresident

VicePresident,T.RowePrice;formerly,EquityResearchAssociate,EatonVanceCorporation(to2013)

JaiKapadia(1982)VicePresident


AndrewJ.Keirle(1974)ExecutiveVicePresident


PaulJ.Krug,CPA(1964)VicePresident



88




ChristopherJ.Kushlis,CFA(1976)VicePresident


ShengrongLau(1982)VicePresident


MarkJ.Lawrence(1970)VicePresident


JacquelineLiu(1979)VicePresident

VicePresident,PriceHongKongandT.RowePriceGroup,Inc.;formerly,InvestmentAnalyst,FidelityInternationalHongKongLimited(to2014)

AnhLu(1968)ExecutiveVicePresident


OxanaLyalina(1987)VicePresident

VicePresident,T.RowePriceInternational;formerly,SeniorAnalyst,GoldmanSachsInternational(to2013)

SebastienMallet(1974)VicePresident


RyanMartyn(1979)VicePresident


CatherineD.Mathews(1963)TreasurerandVicePresident


JonathanH.W.Matthews,CFA(1975)ExecutiveVicePresident


RaymondA.Mills,Ph.D.,CFA(1960)ExecutiveVicePresident

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,T.RowePriceInternational,andT.RowePriceTrustCompany

JihongMin(1979)VicePresident


EricC.Moffett(1974)ExecutiveVicePresident


SamyB.Muaddi,CFA(1984)ExecutiveVicePresident


TobiasF.Mueller(1980)VicePresident



89




JaredT.Murphy(1986)VicePresident

VicePresident,T.RowePrice;formerly,stu-dent,StanfordGraduateSchoolofBusiness(to2015);formerly,Associate,ShawSpringPartners(to2013)

JoshuaNelson(1977)ExecutiveVicePresident


PhilipA.Nestico(1976)VicePresident


MichaelNiedzielski(1979)VicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational;formerly,ManagerandAnalyst,FidelityInvestments,BostonandLondonoffices(to2015)

SridharNishtala(1975)VicePresident


JasonNogueira,CFA(1974)ExecutiveVicePresident


DavidOestreicher(1967)VicePresident

Director,VicePresident,andSecretary,T.RowePriceInvestmentServices,Inc.,T.RowePriceRetirementPlanServices,Inc.,T.RowePriceServices,Inc.,andT.RowePriceTrustCompany;ChiefLegalOfficer,VicePresident,andSecretary,T.RowePriceGroup,Inc.;VicePresidentandSecretary,T.RowePriceandT.RowePriceInternational;VicePresident,PriceHongKongandPriceSingapore

KennethA.Orchard(1975)ExecutiveVicePresident


CurtJ.Organt,CFA(1968)VicePresident


PaulT.O’Sullivan(1973)VicePresident


OluwaseunA.Oyegunle,CFA(1984)VicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational;formerly,student,TheWhartonSchool,UniversityofPennsylvania(to2013)


90




GonzaloPángaro,CFA(1968)ExecutiveVicePresident


VivekRajeswaran(1985)VicePresident


JohnW.Ratzesberger(1975)VicePresident

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,andT.RowePriceTrustCompany;formerly,NorthAmericanHeadofListedDerivativesOperation,MorganStanley(to2013)

ShannonH.Rauser(1987)AssistantSecretary

Employee,T.RowePrice

MelanieA.Rizzo(1982)VicePresident


DavidL.Rowlett,CFA(1975)VicePresident


MarielSantiago(1981)VicePresident

VicePresident,T.RowePriceandT.RowePriceGroup,Inc.;formerly,EquityResearchAnalyst,HSBCSecurities,Inc.(to2014)

FedericoSantilli,CFA(1974)ExecutiveVicePresident


SebastianSchrott(1977)VicePresident


JohnC.A.Sherman(1969)VicePresident


GabrielSolomon(1977)VicePresident


EunbinSong,CFA(1980)VicePresident


JoshuaK.Spencer,CFA(1973)VicePresident


DavidA.Stanley(1963)VicePresident


TaymourR.Tamaddon,CFA(1976)VicePresident



91




JuYenTan(1972)VicePresident


SinDeeTan,CFA(1979)VicePresident


DeanTenerelli(1964)ExecutiveVicePresident


SibyThomas(1979)VicePresident


JustinThomson(1968)ExecutiveVicePresident


MitchellJ.K.Todd(1974)VicePresident


MarkJ.Vaselkiv(1958)ExecutiveVicePresident


RupinderVig(1979)VicePresident

VicePresident,T.RowePriceGroup,Inc.,andT.RowePriceInternational;formerly,Partner,EgertonCapital(to2016);ExecutiveDirector,MorganStanley(to2014)

KesVisuvalingam,CFA(1968)VicePresident

Director,ResponsibleOfficer,andVicePresident,PriceHongKong;Director,ChiefExecutiveOfficer,andVicePresident,PriceSingapore;VicePresident,T.RowePriceGroup,Inc.

VerenaE.Wachnitz,CFA(1978)ExecutiveVicePresident


DavidJ.Wallack(1960)VicePresident


DaiWang(1989)VicePresident

VicePresident,PriceHongKongandT.RowePriceGroup,Inc.;formerly,student,HarvardBusinessSchool(to2014)

MeganWarren(1968)VicePresident

VicePresident,T.RowePrice,T.RowePriceGroup,Inc.,T.RowePriceRetirementPlanServices,Inc.,T.RowePriceServices,Inc.,andT.RowePriceTrustCompany;formerly,ExecutiveDirector,JPMorganChase(to2017)


92




HiroshiWatanabe,CFA(1975)VicePresident


ChristopherS.Whitehouse(1972)VicePresident


CliveM.Williams(1966)VicePresident

VicePresident,PriceHongKong,PriceSingapore,T.RowePrice,T.RowePriceGroup,Inc.,andT.RowePriceInternational

J.HowardWoodward,CFA(1974)VicePresident


MartaYago(1977)VicePresident


BenjaminT.Yeagle(1978)VicePresident


ErnestC.Yeung,CFA(1979)ExecutiveVicePresident

Director,ResponsibleOfficer,andVicePresident,PriceHongKong;VicePresident,T.RowePriceGroup,Inc.

AlisonMeiLingYip(1966)VicePresident


EricYuan(1984)VicePresident

VicePresident,PriceHongKong;formerly,student,ColumbiaBusinessSchool(to2016);formerly,Analyst,YulanCapitalManagement(to2014)

WenliZheng(1979)VicePresident



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F1114-050 2/18

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‡

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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)

T.RowePriceInvestmentServices,Inc.100EastPrattStreetBaltimore,MD21202

Thispagecontainssupplementaryinformationthatisnotpartoftheshareholderreport.

T. Rowe Price Mutual Funds

201802-367197

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.

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.

Documents

December 31, 2017 - T. Rowe Price · (USD Hedged) International Bond Fund ... , which requires mutual funds and other public ... we will discuss the market