N-CSR 1 nas.txt T. ROWE PRICE NEW ASIA FUND Item 1. Report to Shareholders T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report This report is certified under the Sarbanes-Oxley Act of 2002, which requires that public companies, including mutual funds, affirm that the information provided in their annual and semiannual shareholder reports fully and fairly represents their financial position. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report Performance Comparison This chart shows the value of a hypothetical $10,000 investment in the fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records). The result is compared with benchmarks, which may include a broad-based market index and a peer group average or index. Market indexes do not include expenses, which are deducted from fund returns as well as mutual fund averages and indexes. [Graphic Omitted] NEW ASIA FUND New Asia Fund $10,029 MSCI All Country Far East Free Ex-Japan Index $8,320 Lipper Pacific Ex-Japan Funds Average $9,371 MSCI AC Far East Lipper Pacific Ex-Japan Ex-Japan Free Index Funds Average New Asia Fund 10/31/1993 10000 10000 10000 10/31/1994 11546.2 10719.8 10411.2 10/31/1995 10676 9930.04 9401.32 10/31/1996 11731.8 10721.2 10113.6 10/31/1997 7673.42 7890.5 7018.01 10/31/1998 5904.49 6138.9 5897.4 10/31/1999 8978.14 8764.01 8771.36 10/31/2000 7058.7 7931.87 8711.98 10/31/2001 5281.2 6079.68 6252.56 10/31/2002 6081.01 6620.86 6950.01 10/31/2003 8320.08 9371.13 10029.1 Average Annual Compound Total Return Periods Ended 10/31/03 1 Year 5 Years 10 Years New Asia Fund 44.30% 11.20% 0.03% MSCI All Country Far East Free Ex-Japan Index 36.82 7.10 -1.82 Lipper Pacific Ex-Japan Funds Average 37.16 9.71 -1.00 Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report Dear Shareholder, We are pleased to report that your fund returned 44.30% during the 12 months ended October 31, 2003, as you can see in the table on the preceding page. The fund outperformed its peer group, the Lipper Pacific Ex-Japan Funds Average, and the MSCI All Country Far East Free Ex-Japan Index by healthy margins. The fund's performance versus its benchmarks was aided by our large allocation to the strong Indian market, which gained more than 74% for the past 12 months. As you know, the fund's objective is long-term growth of capital through investments in large and small companies located, or with primary operations, in Asia and the Pacific Basin (excluding Japan). Because the economies of Hong Kong, Singapore, Malaysia, Thailand, and other countries in the region are in an earlier stage of development than more established economies, they should offer investors good growth potential over the long term. However, the fund's relatively limited geographic orientation and exposure to some emerging markets increase its risk level. The Major International Index Returns table shows how the world's major regions performed over the past year. As you can see, international stock markets posted strong gains that were led by emerging markets. The MSCI Emerging Markets Free Index, Emerging Europe and Middle East Index, and the Emerging Markets Free Latin America Index all performed better than the developed market MSCI EAFE (Europe, Australasia, and Far East) Index and the S&P 500 Index of large-cap U.S. stocks. MAJOR INTERNATIONAL INDEX RETURNS Period Ended 10/31/03 12 Month Return MSCI Emerging Markets Free Index 48.74% MSCI Emerging Europe and Middle East Index 52.12 MSCI Emerging Markets Free Latin America Index 59.75 MSCI EAFE Index 27.57 S&P 500 Index 20.80 The Market Performance table shows how the fund's largest markets performed over the past year. All of our largest country allocations performed well, led by India, our fourth-largest allocation. Even Malaysia's market, the weakest among our top five, gained 29% during the past 12 months. MARKET PERFORMANCE (In U.S. Dollar Terms) Period Ended 10/31/03 12 Months South Korea 30.50% Hong Kong 33.78 Taiwan 41.85 India 74.48 Malaysia 29.04 Source: RIMES Online, using MSCI indices. [Graphic Omitted] Geographic Diversification South Korea 26% Hong Kong 17% Taiwan 16% India 16% Malaysia 8% Thailand 6% Singapore 4% Other and Reserves 7% Based on net assets of 10/31/03. The Geographic Diversification pie chart shows the fund's country allocations at the end of our fiscal year. As you can see, our largest investments were in South Korea, Hong Kong, Taiwan, and India. Finally, I'm sure you are aware that mutual fund companies have recently come under scrutiny for their trading policies. The investigations have led to allegations that executives of several mutual fund companies permitted or engaged in improper mutual fund trading. In addition, certain intermediaries that process fund transactions are alleged to have assisted some investors in executing improper mutual fund trades. I want T. Rowe Price shareholders to know that we emphatically condemn the abuses that have been revealed or alleged against other firms in our industry. Our firm has not entered and will not enter into any agreements with any investors or intermediaries that authorize after-hours trading or excessive short-term trading in any of our funds. T. Rowe Price investors can be assured that our firm unequivocally opposes illegal or inappropriate trading of any nature and has policies and procedures in place designed to protect the best interests of our long-term shareholders. No T. Rowe Price executives or portfolio managers or investment personnel of the T. Rowe Price mutual funds have engaged in any inappropriate trading of T. Rowe Price mutual funds. You may find out more about our trading policies and the steps we take to protect your interests by visiting our Web site (troweprice.com). These policies are also spelled out in your fund's prospectus. We thank you for your continued support. Respectfully, James S. Riepe Chairman November 21, 2003 T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report FINANCIAL HIGHLIGHTS For a share outstanding throughout each period Year Ended 10/31/03 10/31/02 10/31/01 10/31/00 10/31/99 NET ASSET VALUE Beginning of period $ 5.68 $ 5.11 $ 7.12 $ 7.20 $ 4.93 Investment activities Net investment income (loss) 0.06 0.03 0.03 0.04 0.05 Net realized and unrealized gain (loss) 2.44 0.54 (2.04) (0.08)** 2.31 Total from investment activities 2.50 0.57 (2.01) (0.04) 2.36 Distributions Net investment income (0.04) - - (0.04) (0.09) NET ASSET VALUE End of period $ 8.14 $ 5.68 $ 5.11 $ 7.12 $ 7.20 Ratios/Supplemental Data Total return^ 44.30% 11.15% (28.23)% (0.68)% 48.73% Ratio of total expenses to average net assets 1.17% 1.17% 1.22% 1.08% 1.21% Ratio of net investment income (loss) to average net assets 1.06% 0.53% 0.49% 0.41% 0.87% Portfolio turnover rate 71.7% 72.0% 49.0% 52.2% 69.9% Net assets, end of period (in millions) $ 826 $ 562 $ 527 $ 875 $ 996 ^ 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. ** The amount presented is calculated pursuant to a methodology prescribed by the Securities and Exchange Commission for a share outstanding throughout the period. This amount is inconsistent with the fund's aggregate gains and losses because of the timing of sales and redemptions of fund shares in relation to fluctuating market values for the investment portfolio. The accompanying notes are an integral part of these financial statements. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report October 31, 2003 STATEMENT OF NET ASSETS (ss.) Shares Value In thousands BERMUDA 0.4% Common Stocks 0.4% Grande Holdings (HKD) 1,766,000 $ 1,864 Grande Holdings, 144A (HKD) 1,084,000 1,145 Total Bermuda (Cost $3,476) 3,009 CAYMAN ISLAND 1.0% Common Stocks 1.0% Harbin Brewery Group (HKD) 4,646,000 2,183 tom.com (HKD) * 18,340,000 5,902 Total Cayman Island (Cost $6,864) 8,085 CHINA 1.0% Common Stocks 1.0% BYD (HKD) 1,142,500 2,978 China Telecom Limited (HKD) 5,012,000 1,662 Hainan Meilan Airport (HKD) 1,131,000 779 New World Development, 144A (HKD) 4,000,000 2,562 Total China (Cost $6,558) 7,981 HONG KONG 17.1% Common Stocks 17.1% Asia Aluminum Holdings 17,648,000 3,499 BOC Hong Kong 4,766,000 8,252 Cathay Pacific Airways 2,719,000 5,198 Cheung Kong Holdings 1,928,000 16,071 China Insurance 4,692,000 3,141 China Mobile (Hong Kong) 5,770,500 16,380 CNOOC 2,419,500 4,563 Dah Sing Financial 225,200 1,573 Esprit Holdings 2,592,001 8,125 Giordano International 9,110,000 4,105 Henderson Land Development 1,157,000 4,855 Hong Kong Exchanges & Clearing 2,610,000 5,678 Hutchison Whampoa 2,431,900 18,784 Li & Fung 2,660,000 $ 4,469 New World Development 5,492,000 3,517 Next Media * 9,738,000 4,137 PCCW Limited * 5,481,000 3,951 Shun Tak Holdings 5,166,000 1,746 Sun Hung Kai Properties 841,000 7,064 Swire Pacific, Series A 835,000 5,095 Techtronic Industries 598,000 1,647 Television Broadcast 1,220,000 5,780 Varitronix 3,676,000 3,904 Total Hong Kong (Cost $105,289) 141,534 INDIA 16.1% Common Stocks 16.1% Arvind Mills * 3,942,000 3,979 Ballarpur Industries * 2,609,338 4,321 Bharti Tele-Ventures * 5,055,284 10,056 Bombay Dyeing 1,604,100 4,456 Gail India 1,307,800 4,725 HDFC Bank 1,899,818 13,320 Hindalco Industries 113,791 2,752 I-Flex Solutions, 144A * 423,100 6,414 Indian Hotels 815,690 6,348 Kotak Mahindra Finance 1,050,000 7,912 Larsen & Toubro 932,100 8,361 Mahindra & Mahindra 2,274,100 17,116 Maruti Udyog * 1,515,500 10,828 Maruti Udyog (Restricted shares) * 400,300 2,860 Moschip Semiconductor * 1,121,126 1,044 State Trading Corp of India 331,899 989 Tata Motors 726,200 6,008 Tata Tea 815,100 4,748 Televison Eighteen India *+ 661,500 2,122 Zee Telefilms 4,903,400 14,812 Total India (Cost $78,279) 133,171 INDONESIA 0.5% Common Stocks 0.5% PT Indocement Tunggal Prakarsa * 12,334,500 $ 2,794 PT Semen Cibinong * 33,413,500 1,416 Total Indonesia (Cost $3,813) 4,210 MALAYSIA 7.5% Common Stocks 7.5% Arab Malaysian * 8,850,500 2,865 Berjaya Sports Toto 4,948,200 5,677 Berjaya Sports Toto, Series B * 2,045,250 2,207 CIMB Berhad 4,769,200 5,748 Gamuda Berhad 2,074,000 4,148 Hong Leong Bank 3,987,900 5,719 IJM 2,462,000 3,337 Magnum 9,150,700 6,815 Malayan Banking Berhad 1,611,800 4,326 MK Land Holdings 7,719,100 4,571 Multi-Purpose Holdings * 10,817,900 3,530 Pos Malaysia & Services Holdings 3,362,100 1,469 Road Builder 3,214,000 3,349 SP Setia 6,146,999 5,823 Symphony House Berhad * 4,663,600 2,369 Total Malaysia (Cost $55,330) 61,953 SINGAPORE 4.2% Common Stocks 4.2% Ascendas, REIT 3,981,000 2,357 Ascendas, 144A, REIT 5,134,800 3,040 Capitamall Trust 4,662,000 3,430 Creative Technology 404,200 4,205 DBS 489,000 4,019 Elec & Eltek (USD) 1,480,900 4,220 GES International 5,700,000 2,129 GP Batteries 913,000 $ 2,015 Keppel 2,070,000 7,079 SIA Engineering 2,012,000 2,371 Total Singapore (Cost $27,697) 34,865 SOUTH KOREA 25.5% Common Stocks 23.0% Amorepacific 54,220 7,445 CJ Home Shopping 58,070 2,208 Daewoo Shipbuilding & Marine Engineering * 110,900 1,490 Daewoo Shipbuilding & Marine Engineering GDR (USD) * 51,400 1,347 Daewoo Shipbuilding GDR, 144A (USD) * 148,200 3,883 Hanwha Chemical * 1,039,970 7,223 Kook Soon Dang 185,926 3,456 Kookmin Bank 445,386 16,257 Kookmin Bank ADR (USD) 68,800 2,528 Korean Air Lines 314,600 4,200 Kumgang Korea Chemical 82,990 7,005 LG Ad 157,290 2,638 LG Card 334,670 3,407 LG Chemical 102,120 4,099 LG Home Shopping 74,500 3,632 LG International 633,230 3,847 Lotte Chilsung Beverage 13,480 6,834 Lotte Confectionery 8,660 3,805 NCsoft 67,680 3,603 POSCO 47,430 5,530 Pusan Bank 767,870 4,152 Samsung Electronics 144,532 57,398 Samsung Fire & Marine Insurance 114,600 6,546 Shinhan Financial 485,000 6,967 Shinsegae 27,100 5,438 South Korea Telecom 86,280 15,237 190,175 Preferred Stocks 2.5% Hyundai Motor 479,980 $ 7,909 Samsung Electronics 62,390 12,388 20,297 Total South Korea (Cost $123,325) 210,472 TAIWAN 16.1% Common Stocks 16.1% Accton Technology 2,333,124 1,451 Acer 5,397,851 7,954 Advantech 2,370,023 3,562 Basso Industry 1,845,000 3,698 Benq GDR, 144A (USD) 707,300 4,562 China Trust Finance Holdings 6,222,516 6,474 Delta Electronics 419,485 536 EVA Airways 6,439,000 2,733 EVA Airways (Bonus shares) 120,851 51 Evergreen Marine 7,005,460 6,153 First Financial Holdings * 7,313,000 4,914 Formosa Plastic 5,138,349 7,875 Fubon Financial Holdings 4,908,000 5,178 Hon Hai Precision Industry 1,794,754 8,040 Merry Electronics 2,440,000 3,955 Nan Ya Plastic 5,176,631 6,911 Phoenixtec Power 3,331,575 3,977 Polaris Securities 5,259,600 2,620 Quanta Computer 1,336,500 3,644 Ritek * 7,357,000 5,182 Taishin Financial Holdings 6,393,000 4,541 Taiwan Cellular 4,359,000 3,918 Taiwan Semiconductor Manufacturing 7,515,073 14,840 United Microelectronics 10,446,280 9,575 Vanguard International Semiconductor * 23,237,000 7,910 Wan Hai Lines 3,228,116 3,159 Total Taiwan (Cost $102,617) 133,413 THAILAND 6.4% Common Stocks 6.4% Bangkok Bank, NVDR * 4,982,000 $ 10,737 Italian-Thai Development * 3,733,600 8,046 Jasmine International * 10,287,500 2,733 Jasmine International, Rights, 12/15/03 * 10,287,500 1,431 Kasikornbank Public, NVDR * 9,721,000 10,292 Land & Houses, NVDR 25,201,300 7,642 Siam Commercial Bank * 8,072,000 8,344 Sino-Thai Engineering & Construction * 8,265,200 3,521 TelecomAsia, Rights, 4/3/08 * 1,597,894 0 Total Thailand (Cost $27,107) 52,746 UNITED KINGDOM 1.2% Common Stocks 1.2% Astro All Asia Networks (MYR) * 1,845,000 2,292 HSBC (HKD) 532,434 8,019 Total United Kingdom (Cost $8,082) 10,311 SHORT-TERM INVESTMENTS 2.4% Money Market Funds 2.4% T. Rowe Price Reserve Investment Fund,1.10% # 19,618,789 19,619 Total Short-Term Investments (Cost $19,619) 19,619 SECURITIES LENDING COLLATERAL 4.9% Money Market Pooled Account 4.9% Investment in money market pooled account managed by JP Morgan Chase Bank, London 40,481,850 40,482 Total Securities Lending Collateral (Cost $40,482) 40,482 Total Investments in Securities 104.3% of Net Assets (Cost $608,538) $ 861,851 Other Assets Less Liabilities (35,723) NET ASSETS $ 826,128 Net Assets Consist of: Undistributed net investment income (loss) $ 6,180 Undistributed net realized gain (loss) (227,537) Net unrealized gain (loss) 252,442 Paid-in-capital applicable to 101,526,359 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized 795,043 NET ASSETS $ 826,128 NET ASSET VALUE PER SHARE $ 8.14 (ss.) Denominated in currency of the country of incorporation unless otherwise noted # Seven-day yield * Non-income producing + Affiliated company - See Note 2. 144A 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 of such securities at period-end amounts to $21,606,000 and represents 2.6% of net assets ADR American Depository Receipts GDR Global Depository Receipts HKD Hong Kong dollar MYR Malaysian ringgit NVDR Non Voting Depository Receipt REIT Real Estate Investment Trust USD United States dollar The accompanying notes are an integral part of these financial statements. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report Statement of Operations In thousands Year Ended 10/31/03 Investment Income (Loss) Income Dividend (net of foreign taxes of $1,999) $ 12,806 Securities lending 594 Other income 102 Interest (net of foreign taxes of $4) 17 Total income 13,519 Expenses Investment management 4,974 Shareholder servicing 1,660 Custody and accounting 297 Prospectus and shareholder reports 83 Legal and audit 46 Registration 30 Directors 9 Miscellaneous 7 Total expenses 7,106 Net investment income (loss) 6,413 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities (including foreign tax refunds of $81) 37,335 Foreign currency transactions (627) Net realized gain (loss) 36,708 Change in net unrealized gain (loss) Securities (net of increase in deferred foreign taxes of $865) 203,720 Other assets and liabilities denominated in foreign currencies (45) Change in net unrealized gain (loss) 203,675 Net realized and unrealized gain (loss) 240,383 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 246,796 The accompanying notes are an integral part of these financial statements. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report STATEMENT OF CHANGES IN NET ASSETS In thousands Year Ended 10/31/03 10/31/02 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ 6,413 $ 3,464 Net realized gain (loss) 36,708 (41,559) Change in net unrealized gain (loss) 203,675 106,145 Increase (decrease) in net assets from operations 246,796 68,050 Distributions to shareholders Net investment income (3,896) - Capital share transactions * Shares sold 690,304 1,124,302 Distributions reinvested 3,715 - Shares redeemed (672,776) (1,157,585) Increase (decrease) in net assets from capital share transactions 21,243 (33,283) Net Assets Increase (decrease) during period 264,143 34,767 Beginning of period 561,985 527,218 End of period $ 826,128 $ 561,985 *Share information Shares sold 116,376 178,727 Distributions reinvested 643 - Shares redeemed (114,487) (182,987) Increase (decrease) in shares outstanding 2,532 (4,260) The accompanying notes are an integral part of these financial statements. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report October 31, 2003 NOTES TO FINANCIAL STATEMENTS Note 1 - Significant Accounting Policies T. Rowe Price International Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act). The T. Rowe Price New Asia Fund (the fund), a nondiversified, open-end management investment company, is one portfolio established by the corporation and commenced operations on September 28, 1990. The fund seeks long-term growth of capital through investments in companies located (or with primary operations) in Asia (excluding Japan). The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates made by fund management. Valuation The fund values its investments and computes its net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price, or official closing price for certain markets, at the time the valuations are made. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and ask prices for domestic securities and the last quoted sale price for international securities. Investments in mutual funds are valued at the mutual fund's closing net asset value per share on the day of valuation. Other investments 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 T. Rowe Price Valuation Committee, established by the fund's Board of Directors. Most foreign markets close before the NYSE. Normally, developments that could affect the values of securities that occur between the close of a foreign market and the close of the NYSE will not be reflected in security valuations used by the fund to compute its share price. However, if developments are so significant that they will, in the judgment of the fund, clearly and materially affect security values, such valuations may be adjusted to reflect the estimated fair value of the securities as of the close of the NYSE, as determined in good faith by the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. 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 ask prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses. Expenses Paid Indirectly Credits earned on temporarily uninvested cash balances at the custodian are used to reduce the fund's custody charges. Other Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Dividend income and distributions to shareholders are recorded by the fund on the ex-dividend date. Dividends from mutual fund investments are reflected as dividend income; capital gain distributions from mutual fund investments are reflected as realized gain/loss. In the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is dependent on claims that may be made against the fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote. Note 2 - Investment Transactions Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks or enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund's prospectus and Statement of Additional Information. Emerging Markets At October 31, 2003, approximately 97% of the fund's net assets were invested in securities of companies located in emerging markets or denominated in currencies of emerging market countries. Future economic or political developments could adversely affect the liquidity or value, or both, of such securities. Securities Lending The fund lends its securities to approved brokers to earn additional income. It receives as collateral cash and U.S. government securities valued at 102% to 105% of the value of the securities on loan. Cash collateral is invested in a money market pooled account managed by the fund's lending agent in accordance with investment guidelines approved by fund management. Collateral is maintained over the life of the loan in an amount not less than the value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the fund the next business day. Although risk is mitigated by the collateral, the fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return the securities. Securities lending revenue recognized by the fund consists of earnings on invested collateral and borrowing fees, net of any rebates to the borrower and compensation to the lending agent. At October 31, 2003, the value of loaned securities was $40,135,000; aggregate collateral consisted of $40,482,000 in the money market pooled account and U.S. government securities valued at $2,852,000. Affiliated Companies 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. At October 31, 2003, the value of affiliated companies totaled $2,122,000, representing 0.3% of the value of the fund's investments in securities. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $436,687,000 and $418,490,000, respectively, for the year ended October 31, 2003. Note 3 - Federal Income Taxes No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ significantly 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. Financial records are not adjusted for temporary differences. Distributions during the year ended October 31, 2003 totaled $3,896,000 and were characterized as ordinary income for tax purposes. At October 31, 2003, the tax-basis components of net assets were as follows: Unrealized appreciation $ 264,386,000 Unrealized depreciation (13,344,000) Net unrealized appreciation (depreciation) 251,042,000 Undistributed ordinary income 7,057,000 Capital loss carryforwards (227,014,000) Paid-in capital 795,043,000 Net assets $ 826,128,000 Federal income tax regulations require the fund to treat the gain/loss on passive foreign investment companies as realized on the last day of the tax year; accordingly, $1,400,000 of unrealized losses reflected in the accompanying financial statements were realized for tax purposes as of October 31, 2003. The fund intends to retain realized gains to the extent of available capital loss carryforwards for federal income tax purposes. In 2003, the fund utilized $36,951,000 of capital loss carryforwards. As of October 31, 2003, the fund had $148,017,000 of capital loss carryforwards that expire in 2006, $38,195,000 that expire in 2009, and $40,802,000 that expire in 2010. For the year ended October 31, 2003, the fund recorded the following permanent reclassifications to reflect tax character. Results of operations and net assets were not affected by these reclassifications. Undistributed net investment income $ 81,000 Undistributed net realized gain (81,000) At October 31, 2003, the cost of investments for federal income tax purposes was $609,938,000. Note 4 - Foreign Taxes The fund is subject to foreign income taxes imposed by certain countries in which it invests. Foreign income taxes are accrued by the fund as a reduction of income. Gains realized upon disposition of Indian securities held by the fund are subject to capital gains tax in India, payable prior to repatriation of sale proceeds. The tax is computed on net realized gains, and realized losses in excess of gains may be carried forward eight years to offset future gains. In addition, the fund accrues a deferred tax liability for net unrealized gains on Indian securities. At October 31, 2003, the fund had a deferred tax liability of $865,000, and $2,243,000 of capital loss carryforwards that expire in 2010, and $8,777,000 that expire in 2011. Note 5- Related Party Transactions The fund is managed by T. Rowe Price International, Inc. (the manager), a wholly owned subsidiary of T. Rowe Price Associates, Inc. (Price Associates), which is wholly owned by T. Rowe Price Group, Inc. The investment management agreement between the fund and the manager provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.50% of the fund's average daily net assets, and the fund's pro-rata share of a group fee. The group fee 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 0.295% for assets in excess of $120 billion. The fund's portion of the group fee is determined by the ratio of its average daily net assets to those of the group. At October 31, 2003, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $551,000. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc., provides shareholder and administrative services in its capacity as the fund's transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. Expenses incurred pursuant to these service agreements totaled $1,253,000 for the year ended October 31, 2003, of which $110,000 was payable at period-end. The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum Funds) may invest. The Spectrum Funds do not invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to a special servicing agreement, expenses associated with the operation of the Spectrum Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Spectrum Funds. Expenses allocated under this agreement are reflected as shareholder servicing expense in the accompanying financial statements. For the year ended October 31, 2003, the fund was allocated $12,000 of Spectrum Funds' expenses, of which $2,000 related to services provided by Price and $1,000 was payable at period-end. At October 31, 2003, approximately 0.4% of the outstanding shares of the fund were held by the Spectrum Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the Reserve Funds), open-end management investment companies managed by Price Associates. The Reserve Funds are offered as cash management options only to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates, and are not available to the public. The Reserve Funds pay no investment management fees. During the year ended October 31, 2003, dividend income from the Reserve Funds totaled $194,000. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report REPORT OF INDEPENDENT AUDITORS To the Board of Directors of T. Rowe Price International Funds, Inc. and Shareholders of T. Rowe Price New Asia Fund In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of T. Rowe Price New Asia Fund (one of the portfolios comprising T. Rowe Price International Funds, Inc., hereafter referred to as the "Fund") at October 31, 2003, and the results of its operations, the changes in its net assets and the financial highlights for each of the fiscal periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland November 24, 2003 T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 10/31/03 We are providing this information as required by the Internal Revenue Code. The amounts shown may differ from those elsewhere in this report because of differences between tax and financial reporting requirements. For taxable non-corporate shareholders, $5,019,000 of the fund's distributed income and short-term capital gains represents qualified dividend income subject to the 15% rate category. The fund will pass through foreign source income of $8,967,000 and foreign taxes paid of $1,908,000. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report ABOUT THE FUND'S DIRECTORS AND OFFICERS Your fund is governed by a Board of Directors that meets regularly to review investments, performance, expenses, and other business matters, and is responsible for protecting the interests of shareholders. The majority of the fund's directors are independent of T. Rowe Price Associates, Inc. (T. Rowe Price); "inside" directors are officers of T. Rowe Price. The Board of Directors elects the fund's officers, who are listed in the final table. The business address of each director and officer is 100 East Pratt Street, Baltimore, MD 21202. The Statement of Additional Information includes additional information about the fund directors and is available without charge by calling a T. Rowe Price representative at 1-800-225-5132. Independent Directors Name (Date of Birth) Principal Occupation(s) During Past 5 Years Year Elected* and Directorships of Other Public Companies Anthony W. Deering Director, Chairman of the Board, President, and Chief (1/28/45) Executive Officer, The Rouse Company, real estate 1991 developers; Director, Mercantile Bank (4/03 to present) Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, an (1/27/43) acquisition and management advisory firm 1988 David K. Fagin Director, Golden Star Resources Ltd., Canyon (4/9/38) Resources Corp. (5/00 to present), and Pacific Rim 2001 Mining Corp. (2/02 to present); Chairman and President, Nye Corp. F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates, (8/22/34) Inc., consulting environmental and civil engineers 2001 John G. Schreiber Owner/President, Centaur Capital Partners, Inc., (10/21/46) a real estate investment company; Senior Advisor and 2001 Partner, Blackstone Real Estate Advisors, L.P.; Director, AMLI Residential Properties Trust, Host Marriott Corp., and The Rouse Company Hubert D. Vos Owner/President, Stonington Capital Corp., a (8/2/33) private investment company 2001 Paul M. Wythes Founding Partner, Sutter Hill Ventures, a venture (6/23/33) capital limited partnership, providing equity capital 1996 to young high-technology companies throughout the United States; Director, Teltone Corp. * Each independent director oversees 106 T. Rowe Price portfolios and serves until retirement, resignation, or election of a successor. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report Inside Directors Name (Date of Birth) Year Elected* [Number of T.Rowe Price Principal Occupation(s) During Past 5 Years and Portfolios Overseen] Directorships of Other Public Companies James S. Riepe Director and Vice President, T. Rowe Price; Vice (6/25/43) Chairman of the Board, Director, and Vice President, 2002 T. Rowe Price Group, Inc.; Chairman of the Board and [106] Director, T. Rowe Price Global Asset Management Limited, T. Rowe Price Global Investment Services Limited, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of the Board, Director, President, and Trust Officer, T. Rowe Price Trust Company; Director, T. Rowe Price International, Inc.; Chairman of the Board, International Funds M. David Testa Chief Investment Officer, Director, and Vice President, (4/22/44) T. Rowe Price; Vice Chairman of the Board, Chief 1979 Investment Officer, Director, and Vice President, [106] T. Rowe Price Group, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited; Chairman of the Board and Director, T. Rowe Price International, Inc.; Director and Vice President, T. Rowe Price Trust Company; Vice President, International Funds * Each inside director serves until retirement, resignation, or election of a successor. Officers Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Christopher D. Alderson (3/29/62) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., and T. Rowe Price International, Inc. Mark C.J. Bickford-Smith (4/30/62) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc. Stephen V. Booth (6/21/61) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., and T. Rowe Price Trust Company Brian J. Brennan, CFA (7/14/64) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., and T. Rowe Price Trust Company Joseph A. Carrier (12/30/60) Vice President, T. Rowe Price, T. Rowe Treasurer, International Funds Price Group, Inc., and T. Rowe Price Investment Services, Inc. Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report Officers (continued) Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Michael J. Conelius, CFA (6/16/64) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., and T. Rowe Price International, Inc. Ann B. Cranmer (3/23/47) Vice President, T. Rowe Price Group, Assistant Vice President, Inc.,and T. Rowe Price International, International Funds Inc.; Vice President and Secretary, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited Julio A. Delgado, CFA (5/13/65) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc. Frances Dydasco (5/8/66) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc. Mark J.T. Edwards (10/27/57) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc. Roger L. Fiery III, CPA (2/10/59) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company John R. Ford, CFA (11/25/57) Vice President, T. Rowe Price and President, International Funds T. Rowe Price Group, Inc.; Chief Investment Officer, Director, and Vice President, T. Rowe Price International, Inc. Gregory S. Golczewski (1/15/66) Vice President, T. Rowe Price and Vice President, International Funds T. Rowe Price Trust Company M. Campbell Gunn (3/9/56) Vice President, T. Rowe Price Global Vice President, International Funds Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Henry H. Hopkins (12/23/42) Director and Vice President, T. Rowe Vice President, International Funds Price Group, Inc., T. Rowe Price Investment Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; Vice President, T. Rowe Price, T. Rowe Price International, Inc., and T. Rowe Price Retirement Plan Services, Inc. Ian D. Kelson (8/16/56) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., and T. Rowe Price International, Inc.; formerly Head of Fixed Income, Morgan Grenfell/Deutsche Asset Management (to 2000) Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report Officers (continued) Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Patricia B. Lippert (1/12/53) Assistant Vice President, T. Rowe Price Secretary, International Funds and T. Rowe Price Investment Services, Inc. Raymond A. Mills, Ph.D., CFA (12/3/60) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., and T. Rowe Price International, Inc. George A. Murnaghan (5/1/56) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., T. Rowe Price International, Inc., T. Rowe Price Investment Services, Inc., and T. Rowe Price Trust Company Gonzalo Pangaro, CFA (11/27/68) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc. D. James Prey III (11/26/59) Vice President, T. Rowe Price Vice President, International Funds and T. Rowe Price Group, Inc. Robert A. Revel-Chion (3/9/65) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc. Christopher J. Rothery (5/26/63) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc. James B.M. Seddon (6/17/64) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc. Robert W. Smith (4/11/61) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., and T. Rowe Price International, Inc. Benedict R.F. Thomas, CFA (8/27/64) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc. Justin Thomson (1/14/68) Vice President, T. Rowe Price Group, Vice President, International Funds Inc., and T. Rowe Price International, Inc.; formerly Portfolio Manager, G.T. Capital/Invesco (to 1998) Julie L. Waples (6/12/70) Vice President, T. Rowe Price Vice President, International Funds David J.L. Warren (4/14/57) Vice President, T. Rowe Price and Executive Vice President, T. Rowe Price Group, Inc.; Chief International Funds Executive Officer, Director, and President, T. Rowe Price International, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. T. Rowe Price New Asia Fund -------------------------------------------------------------------------------- Certified Annual Report Officers (continued) Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) William F. Wendler II, CFA (3/14/62) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., and T. Rowe Price International, Inc. Richard T. Whitney, CFA (5/7/58) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company Edward A. Wiese, CFA (4/12/59) Vice President, T. Rowe Price, T. Rowe Vice President, International Funds Price Group, Inc., and T. Rowe Price Trust Company; Chief Investment Officer, Director, and Vice President, T. Rowe Price Savings Bank Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. Item 2. Code of Ethics. As of the end of the period covered by this report, the registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report. Item 3. Audit Committee Financial Expert. The registrant's Board of Directors/Trustees has determined that Mr. David K. Fagin qualifies as an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form N-CSR. Item 4. Principal Accountant Fees and Services. Not required at this time. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. [Reserved] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. [Reserved] Item 9. Controls and Procedures (a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is attached. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. T. Rowe Price International Funds, Inc. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date December 19, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date December 19, 2003 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date December 19, 2003