N-CSR 1 jaf.txt T. ROWE PRICE JAPAN FUND Item 1. Report to Shareholders -------------------------------------------------------------------------------- T. Rowe Price Japan 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 Japan 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] JAPAN FUND -------------------------------------------------------------------------------- As of 10/31/03 Japan Fund $8,107 TSE First Section Index $6,314 MSCI Japan Index $6,986 TSE First MSCI Japan Section Index Index Japan Fund 10/31/93 10,000 10,000 10,000 10/94 10,874 10,895 10,925 10/95 9,182 9,481 9,520 10/96 9,069 9,416 9,145 10/97 7,064 7,716 8,080 10/98 5,912 6,616 6,813 10/99 9,969 10,498 13,808 10/00 8,408 9,291 11,790 10/01 5,758 6,276 7,492 10/02 4,682 5,246 5,762 10/03 6,314 6,986 8,107 Average Annual Compound Total Return -------------------------------------------------------------------------------- Periods Ended 10/31/03 1 Year 5 Years 10 Years Japan Fund 40.71% 3.54% -2.08% TSE First Section Index 34.85 1.32 -4.49 TSE Second Section Index 60.14 17.45 0.58 MSCI Japan Index 18.49 3.35 -4.00 Lipper Japanese Funds Average 33.74 2.12 -1.79 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 Japan Fund -------------------------------------------------------------------------------- Certified Annual Report Dear Shareholder, We are pleased to report that your fund returned 40.71% during the 12 months ended October 31, 2003. The fund outpaced its average competitor fund as measured by the Lipper Japanese Funds Average and the large-company TSE First Section Index but lagged the smaller-company TSE Second Section Index. The fund also outperformed its new benchmark, the MSCI Japan Index. We are introducing the MSCI Japan Index because we believe it better reflects the overall Japanese market. We will continue to show the TSE indexes. Fund performance was aided by our banking and real estate holdings and by strong returns from our consumer discretionary stocks. As you know, the fund's objective is long-term growth of capital through investment in common stocks of large and small companies located or with primary operations in Japan. The fund is diversified across a range of industries and companies. Major International Index Returns -------------------------------------------------------------------------------- Period Ended 10/31/03 12-Month Return MSCI EAFE Index 27.57% MSCI Europe Index 24.71 MSCI Japan Index 33.18 MSCI Pacific Ex-Japan 37.19 S&P 500 Stock Index 20.80 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 results, benefiting from renewed optimism for global economic growth. Japanese stocks as measured by the MSCI Japan Index outperformed the MSCI EAFE Index, which tracks non-U.S. developed stock markets, as well as stocks in Europe and the U.S. The Sector Diversification table on the next page shows how the fund's assets were allocated at the end of the reporting period compared with the year earlier. We have lowered our allocation to consumer discretionary, consumer staples, and information technology stocks while boosting our stake in materials and industrials and business services. Sector Diversification -------------------------------------------------------------------------------- Percent of Net Assets 10/31/02 10/31/03 Consumer Discretionary 24.6% 22.7% Industrials and Business Services 16.6 19.4 Information Technology 24.1 18.0 Materials 0.4 12.0 Financials 10.4 12.0 Telecommunication Services 5.8 5.1 Health Care 4.2 2.1 Consumer Staples 8.4 1.8 Energy 0.6 0.0 Utilities 0.0 0.0 Reserves 4.9 6.9 -------------------------------------------------------------------------------- Total 100.0% 100.0% 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 20, 2003 T. Rowe Price Japan 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 $ 5.06 $ 6.58 $ 11.59 $ 13.62 $ 6.72 Investment activities Net investment income (loss) (0.02) (0.04) (0.04) (0.06) (0.02) Net realized and unrealized gain (loss) 2.08 (1.48) (3.77) (1.92) 6.92 Total from investment activities 2.06 (1.52) (3.81) (1.98) 6.90 Distributions Net realized gain -- -- (1.20) (0.05) -- NET ASSET VALUE End of period $ 7.12 $ 5.06 $ 6.58 $ 11.59 $ 13.62 ----------------------------------------------------------- Ratios/Supplemental Data Total return^ 40.71% (23.10)% (36.45)% (14.61)% 102.68% Ratio of total expenses to average net assets 1.38% 1.35% 1.25% 1.09% 1.14% Ratio of net investment income (loss) to average net assets (0.43)% (0.60)% (0.43)% (0.38)% (0.27)% Portfolio turnover rate 254.7% 104.2% 45.8% 59.5% 58.8% Net assets, end of period (in thousands) $ 170,707 $ 101,879 $ 146,406 $ 309,686 $ 513,739 ^ 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 accompanying notes are an integral part of these financial statements. T. Rowe Price Japan Fund -------------------------------------------------------------------------------- Certified Annual Report October 31, 2003 Statement of Net Assets (ss.) Shares Value -------------------------------------------------------------------------------- In thousands JAPAN 93.1% COMMON STOCKS 93.1% Consumer Discretionary 22.7% Bandai 60,300 $ 1,599 D&M Holdings * 192,000 767 Daiichikosho 53,100 2,821 Daimaru 270,000 1,589 Funai Electric 11,600 1,543 Geo (New shares) * 248 1,061 Gulliver International 15,500 971 Nissan Motor 456,800 5,111 Nissan Shatai 205,000 1,119 Nissen 118,400 2,210 NOK 45,000 1,770 Round One 543 1,114 Round One (New shares) * 397 815 Sanei-International 38,900 866 SEIKO * 207,000 1,068 Takamatsu * 28,000 521 Takara 139,300 930 TMS Entertainment 174,000 781 Touei Housing 19,300 372 Toyoda Gosei 74,800 2,208 Toyota Motor 216,900 6,166 United Arrows 43,800 1,957 USS 20,770 1,473 Total Consumer Discretionary 38,832 Consumer Staples 1.8% Asahi Breweries 119,400 996 Milbon * 15,000 354 Uni-Charm 36,300 1,691 Total Consumer Staples 3,041 Financial 12.0% Aioi Insurance 460,000 1,713 Bank of Yokohama 412,000 1,777 Daiwa Securities 252,000 $ 1,840 Leopalace21 186,000 1,841 Mitsubishi Tokyo Financial 255 1,830 Nomura Securities 111,000 1,903 Orix 22,700 1,907 Privee Zurich Turnaround Group * 57,000 1,206 Sumisho Auto Leasing 22,400 543 Sumitomo Mitsui Financial 570 2,863 Sumitomo Realty & Development 226,000 2,094 Sumitomo Trust & Banking 170,000 948 Total Financial 20,465 Health Care 2.1% Takeda Chemical Industries 57,400 2,028 Yamanouchi Pharmaceutical 59,700 1,496 Total Health Care 3,524 Industrials & Business Services 19.4% Aica Kogyo 192,000 1,873 Central Glass 256,000 1,625 Chiyoda * 343,000 2,233 Dai Nippon Printing 147,000 2,267 Daikin Industries 77,000 1,640 Glory 53,000 1,661 Hitachi Construction Machinery 136,000 1,771 Kawasaki Kisen Kaisha 604,000 2,419 Mitsubishi 335,000 3,471 Mitsui 247,000 1,794 Moshi Moshi Hotline 23,450 1,670 Pasona * 270 1,935 Ryobi * 466,000 1,265 Secom 25,500 996 THK 82,300 1,667 Tokyu Construction * 179,600 2,417 Tomen Electronics 18,100 789 Toyota Tsusho 158,000 1,659 Total Industrials & Business Services 33,152 Information Technology 18.0% Canon 58,000 2,802 Faith 174 1,414 Hoya 13,100 $ 1,184 Internet Initiative ADR (USD) * 94,800 492 Keyence 7,800 1,713 Konica Minolta Holdings 133,000 1,745 Kuroda Electric 46,000 1,450 Mitsui High-Tec 99,300 1,248 NEC 150,000 1,323 Nidec 18,000 1,741 Nikon * 176,000 2,668 Nippon Electric Glass 75,000 1,376 Oki Electric Industry * 602,000 2,662 Square Enix 87,600 2,442 Sumisho Lease 43,900 1,348 Uniden 115,000 2,183 Yahoo Japan * 62 923 Yokogawa Electric 170,000 1,984 Total Information Technology 30,698 Materials 12.0% Arisawa Manufacturing 64,000 2,552 Asahi Kasei 399,000 1,899 Chugoku Marine Paints 295,000 1,347 Fuji Seal 50 2 JFE Holdings 97,400 2,486 Kaneka 244,000 1,899 Mitsui Mining & Smelting 410,000 1,638 Nitto Denko 37,700 1,975 Oji Paper 275,000 1,461 Okura Industrial * 126,000 1,110 Shin-Etsu Chemical 31,200 1,159 Sumitomo Metal Mining 311,000 2,130 Teijin 312,000 924 Total Materials 20,582 Telecommunication Services 5.1% Japan Telecom Holdings 419 1,252 Nippon Telegraph & Telephone 784 3,496 NTT DoCoMo 1,183 2,557 Okinawa Cellular Telephone 211 1,368 Total Telecommunication Services 8,673 Total Japan (Cost $126,519) 158,967 SHORT-TERM INVESTMENTS 5.7% Money Market Funds 5.7% T. Rowe Price Reserve Investment Fund, 1.10% # 9,651,630 $ 9,652 Total Short-Term Investments (Cost $9,652) 9,652 SECURITIES LENDING COLLATERAL 13.4% Money Market Pooled Account 13.4% Investment in money market pooled account managed by JP Morgan Chase Bank, London 22,866,706 22,867 Total Securities Lending Collateral (Cost $22,867) 22,867 Total Investments in Securities 112.2% of Net Assets (Cost $159,038) $ 191,486 Other Assets Less Liabilities Including $22,867 obligation to return securities lending collateral (20,779) NET ASSETS $ 170,707 -------------------- Net Assets Consist of: Undistributed net realized gain (loss) $ (82,521) Net unrealized gain (loss) 32,428 Paid-in-capital applicable to 23,972,392 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized 220,800 ------- NET ASSETS $ 170,707 -------------------- NET ASSET VALUE PER SHARE $ 7.12 -------------------- # Seven-day yield * Non-income producing (ss.) Denominated in currency of the country of incorporation unless otherwise noted ADR American Depository Receipts USD United States dollar The accompanying notes are an integral part of these financial statements. T. Rowe Price Japan Fund -------------------------------------------------------------------------------- Certified Annual Report Statement of Operations -------------------------------------------------------------------------------- In thousands Year Ended 10/31/03 Investment Income (Loss) Income Dividend (net of foreign taxes of $100) $ 933 Securities lending 124 Total income 1,057 Expenses Investment management 915 Shareholder servicing 413 Custody and accounting 122 Registration 34 Legal and audit 26 Prospectus and shareholder reports 22 Directors 6 Miscellaneous 4 Total expenses 1,542 Net investment income (loss) (485) Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities (122) Foreign currency transactions 209 Net realized gain (loss) 87 Change in net unrealized gain (loss) Securities 45,367 Other assets and liabilities denominated in foreign currencies (17) Change in net unrealized gain (loss) 45,350 Net realized and unrealized gain (loss) 45,437 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 44,952 -------------------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Japan 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) $ (485) $ (796) Net realized gain (loss) 87 (47,357) Change in net unrealized gain (loss) 45,350 16,896 Increase (decrease) in net assets from operations 44,952 (31,257) Capital share transactions * Shares sold 222,393 252,194 Shares redeemed (198,517) (265,464) Increase (decrease) in net assets from capital share transactions 23,876 (13,270) Net Assets Increase (decrease) during period 68,828 (44,527) Beginning of period 101,879 146,406 End of period $ 170,707 $ 101,879 ------------------------------------- *Share information Shares sold 42,164 42,471 Shares redeemed (38,332) (44,578) Increase (decrease) in shares outstanding 3,832 (2,107) The accompanying notes are an integral part of these financial statements. T. Rowe Price Japan 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 Japan Fund (the fund), a diversified, open-end management investment company, is one portfolio established by the corporation and commenced operations on December 30, 1991. The fund seeks long-term growth of capital through investments in the common stocks of companies located (or with primary operations) in 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 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 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. 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 $21,380,000; aggregate collateral consisted of $22,867,000 in the money market pooled account. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $289,129,000 and $272,324,000, 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. There were no distributions in the year ended October 31, 2003. At October 31, 2003, the tax-basis components of net assets were as follows: -------------------------------------------------------------------------------- Unrealized appreciation $ 34,079,000 Unrealized depreciation (1,651,000) Net unrealized appreciation (depreciation) 32,428,000 Capital loss carryforwards (82,521,000) Paid-in capital 220,800,000 Net assets $ 170,707,000 -------------------- The fund intends to retain realized gains to the extent of available capital loss carryforwards for federal income tax purposes. As of October 31, 2003, the fund had $34,916,000 of capital loss carryforwards that expire in 2009, $47,099,000 that expire in 2010, and $506,000 that expire in 2011. For the year ended October 31, 2003, the fund recorded the following permanent reclassifications to reflect tax character. Reclassifications to paid-in capital relate primarily to the current net operating loss. Reclassifications between income and gain relate primarily to the character of gains or losses on passive foreign investment companies. Results of operations and net assets were not affected by these reclassifications. -------------------------------------------------------------------------------- Undistributed net investment income $ 485,000 Undistributed net realized gain (484,000) Paid-in capital (1,000) At October 31, 2003, the cost of investments for federal income tax purposes was $159,038,000. 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. 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 $115,000. 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 $348,000 for the year ended October 31, 2003, of which $31,000 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 $14,000 of Spectrum Funds' expenses, of which $2,000 related to services provided by Price and $2,000 was payable at period-end. At October 31, 2003, 2.2% of the outstanding shares of the fund were held by the Spectrum Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the 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 $59,000. T. Rowe Price Japan 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 Japan 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 Japan 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 Japan 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, $75,000 of the fund's 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 $75,000 and foreign taxes paid of $75,000. T. Rowe Price Japan 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) Year Elected* Principal Occupation(s) During Past 5 Years and Directorships of Other Public Companies Anthony W. Deering (1/28/45) 1991 Director, Chairman of the Board, President, and Chief Executive Officer, The Rouse Company, real estate developers; Director, Mercantile Bank (4/03 to present) Donald W. Dick, Jr. (1/27/43) 1988 Principal, EuroCapital Advisors, LLC, an acquisition and management advisory firm David K. Fagin (4/9/38) 2001 Director, Golden Star Resources Ltd., Canyon Resources Corp. (5/00 to present), and Pacific Rim Mining Corp. (2/02 to present); Chairman and President, Nye Corp. F. Pierce Linaweaver (8/22/34) 2001 President, F. Pierce Linaweaver & Associates, Inc., consulting environmental and civil engineers John G. Schreiber (10/21/46) 2001 Owner/President, Centaur Capital Partners, Inc., a real estate investment company; Senior Advisor and Partner, Blackstone Real Estate Advisors, L.P.; Director, AMLI Residential Properties Trust, Host Marriott Corp., and The Rouse Company Hubert D. Vos (8/2/33) 2001 Owner/President, Stonington Capital Corp., a private investment company Paul M. Wythes (6/23/33) 1996 Founding Partner, Sutter Hill Ventures, a venture capital limited partnership, providing equity capital 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 Japan Fund -------------------------------------------------------------------------------- Certified Annual Report Inside Directors Name (Date of Birth) Year Elected* [Number of T. Rowe Price Portfolios Overseen] Principal Occupation(s) During Past 5 Years and Directorships of Other Public Companies James S. Riepe (6/25/43) 2002 [106] Director and Vice President, T. Rowe Price; Vice Chairman of the Board, Director, and Vice President, T. Rowe Price Group, Inc.; Chairman of the Board and 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 (4/22/44) 1979 [106] Chief Investment Officer, Director, and Vice President, T. Rowe Price; Vice Chairman of the Board, Chief Investment Officer, Director, and Vice President, 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, International Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Mark C.J. Bickford-Smith (4/30/62) Vice President, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Stephen V. Booth (6/21/61) Vice President, International Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Brian J. Brennan, CFA (7/14/64) Vice President, International Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price Trust Company Joseph A. Carrier (12/30/60) Treasurer, International Funds Vice President, T. Rowe Price, T. Rowe 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 Japan 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, International Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Ann B. Cranmer (3/23/47) Assistant Vice President, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, 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, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Frances Dydasco (5/8/66) Vice President, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Mark J.T. Edwards (10/27/57) Vice President, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Roger L. Fiery III, CPA (2/10/59) Vice President, International Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company John R. Ford, CFA (11/25/57) President, International Funds Vice President, T. Rowe Price and 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, International Funds Vice President, T. Rowe Price and T. Rowe Price Trust Company M. Campbell Gunn (3/9/56) Vice President, International Funds Vice President, T. Rowe Price Global Investment Services Limited, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Henry H. Hopkins (12/23/42) Vice President, International Funds Director and Vice President, T. Rowe 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, International Funds Vice President, T. Rowe Price, T. Rowe 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 Japan Fund -------------------------------------------------------------------------------- Certified Annual Report Officers (continued) Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Patricia B. Lippert (1/12/53) Secretary, International Funds Assistant Vice President, T. Rowe Price and T. Rowe Price Investment Services, Inc. Raymond A. Mills, Ph.D., CFA (12/3/60) Vice President, International Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. George A. Murnaghan (5/1/56) Vice President, International Funds Vice President, T. Rowe Price, T. Rowe 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, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. D. James Prey III (11/26/59) Vice President, International Funds Vice President, T. Rowe Price and T. Rowe Price Group, Inc. Robert A. Revel-Chion (3/9/65) Vice President, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Christopher J. Rothery (5/26/63) Vice President, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. James B.M. Seddon (6/17/64) Vice President, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Robert W. Smith (4/11/61) Vice President, International Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Benedict R.F. Thomas, CFA (8/27/64) Vice President, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Justin Thomson (1/14/68) Vice President, International Funds Vice President, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc.; formerly Portfolio Manager, G.T. Capital/Invesco (to 1998) Julie L. Waples (6/12/70) Vice President, International Funds Vice President, T. Rowe Price David J.L. Warren (4/14/57) Executive Vice President, International Funds Vice President, T. Rowe Price and T. Rowe Price Group, Inc.; Chief 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 Japan 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, International Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., and T. Rowe Price International, Inc. Richard T. Whitney, CFA (5/7/58) Vice President, International Funds Vice President, T. Rowe Price, T. Rowe Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company Edward A. Wiese, CFA (4/12/59) Vice President, International Funds Vice President, T. Rowe Price, T. Rowe 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