-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N4rypm5GFEOcts2rGdLkqEmH7COsK50T0pOvZhqtKk3dobLfmk8Ov3P9lWouMNdJ eE0/+3VfnL0AGOeaJOSWBQ== 0000313212-04-000037.txt : 20040511 0000313212-04-000037.hdr.sgml : 20040511 20040511160452 ACCESSION NUMBER: 0000313212-04-000037 CONFORMED SUBMISSION TYPE: N-CSR/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040511 EFFECTIVENESS DATE: 20040511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUNDS INC CENTRAL INDEX KEY: 0000313212 IRS NUMBER: 521175211 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-02958 FILM NUMBER: 04796518 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 3015472000 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL TRUST DATE OF NAME CHANGE: 19900301 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE INTERNATIONAL FUND INC DATE OF NAME CHANGE: 19890914 N-CSR/A 1 ibf.txt T. ROWE PRICE INTERNATIONAL BOND FUND Item 1. Report to Shareholders T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- December 31, 2003 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 International Bond 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. INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- [Graphic omitted] As of 12/31/03 International Bond Fund $17,574 J.P. Morgan Global Government Bond Broad Index, Non-U.S. Dollar $19,652 J.P. Morgan Global Government Bond Broad Index, International Non-U.S. Dollar Bond Fund 12/93 $10,000 $10,000 12/94 10,496 9,816 12/95 12,731 11,808 12/96 13,387 12,651 12/97 12,908 12,250 12/98 15,204 14,090 12/99 14,274 12,983 12/00 13,938 12,577 12/01 13,451 12,148 12/02 16,518 14,797 12/03 19,652 17,574 Note: Performance for Advisor Class shares will vary due to the differing fee structures. See returns table below. Average Annual Compound Total Return - -------------------------------------------------------------------------------- Since Inception Periods Ended 12/31/03 1 Year 5 Years 10 Years 3/31/00 - -------------------------------------------------------------------------------- International Bond Fund 18.77% 4.52% 5.80% -- International Bond Fund-Advisor Class 18.62 -- -- 8.77% J.P. Morgan Global Government Bond Broad Index, Non-U.S. Dollar 18.97 5.27 6.99 9.27* * Benchmark since-inception performance is from 3/31/00 to 12/31/03. 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 International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report Dear Shareholder, We are pleased to report that the International Bond Fund delivered solid returns in 2003. As you can see in the table on the preceding page, we slightly underperformed the benchmark, the J.P. Morgan Global Government Bond Broad Index, Non-U.S. Dollar, over the 12-month period. The performance for the Advisor Class, which has a different fee structure, was marginally lower. The fund, which invests in local currency instruments, was helped by the weak U.S. dollar and hurt by the negative impact of rising interest rates. As you know, the fund seeks high current income and capital appreciation by investing in high-quality, nondollar-denominated bonds outside the U.S. The fund is intended for investors who wish to diversify their fixed-income investments and can accept the risks unique to international investing, especially changes in currency values. The Portfolio Characteristics table shows various portfolio characteristics as of December 31, 2003, compared to a year earlier. The fund's weighted average maturity fell to 6.4 years from 6.6 years, and its weighted average quality was unchanged from one year ago at AA+. Portfolio Characteristics - -------------------------------------------------------------------------------- Periods Ended 12/31/02 12/31/03 International Bond Fund 30-Day Standardized Yield to Maturity 2.30% 2.29% International Bond Fund-Advisor Class 30-Day Standardized Yield to Maturity 2.17% 2.16% Weighted Average Maturity (years) 6.6 6.4 Weighted Average Effective Duration (years) 4.7 4.7 Weighted Average Quality* AA+ AA+ * Based on T. Rowe Price research. The Developed Markets Performance table on page 4 shows how bonds in various developed markets performed over the last year. On a local currency basis, Spain's bonds delivered the best returns; however, Australian government securities performed the best when results were measured in U.S. dollars. As shown in the Geographic Diversification table on the following page, 14% of the fund's assets were invested in government bonds of both Germany and Japan. Developed Markets Performance - -------------------------------------------------------------------------------- In Local In U.S. 12 Months Ended 12/31/03 Currency Dollars - -------------------------------------------------------------------------------- Australia 2.63% 37.32% France 3.85 24.82 Germany 3.87 24.84 Italy 3.89 24.88 Japan -0.80 9.84 Spain 4.06 25.08 United Kingdom 2.05 13.47 Source: J.P. Morgan Geographic Diversification - -------------------------------------------------------------------------------- [Graphic Omitted] Germany 14% Japan 14% France 9% Italy 8% Netherlands 6% United Kingdom 5% Spain 5% Other & Reserves 39% Percentages reflect the issuing country of the fund's securities and exclude the effect of forward currency contracts. 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. Thank you for your continued support. Respectfully submitted, James S. Riepe Chairman January 26, 2004 T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report Financial Highlights For a share outstanding throughout each period - -------------------------------------------------------------------------------- International Bond class Year Ended 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 NET ASSET VALUE Beginning of period $ 9.29 $ 7.86 $ 8.47 $ 9.16 $ 10.46 Investment activities Net investment income (loss) 0.25 0.25 0.32 0.40 0.37 Net realized and unrealized gain (loss) 1.46 1.43 (0.61) (0.70) (1.18) Total from investment activities 1.71 1.68 (0.29) (0.30) (0.81) Distributions Net investment income (0.25) (0.25) -- -- (0.33) Net realized gain (0.50) -- -- -- (0.11) Tax return of capital -- -- (0.32) (0.39) (0.05) Total distributions (0.75) (0.25) (0.32) (0.39) (0.49) NET ASSET VALUE End of period $ 10.25 $ 9.29 $ 7.86 $ 8.47 $ 9.16 ----------------------------------------------------------- Ratios/Supplemental Data Total return^ 18.77% 21.80% (3.41)% (3.13)% (7.86)% Ratio of total expenses to average net assets 0.91% 0.93% 0.95% 0.91% 0.90% Ratio of net investment income (loss) to average net assets 2.58% 3.01% 3.98% 4.76% 3.93% Portfolio turnover rate 38.5% 113.9% 107.6% 160.5%(Ckmk) 94.9% Net assets, end of period (in millions) $ 1,306 $ 1,058 $ 762 $ 753 $ 779 ^ 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. (Ckmk.) Excludes the effect of the acquisition of the T. Rowe Price Global Bond Fund's assets. The accompanying notes are an integral part of these financial statements. T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report Financial Highlights For a share outstanding throughout each period - -------------------------------------------------------------------------------- Advisor Class Year 3/31/00 Ended Through 12/31/03 12/31/02 12/31/01 12/31/00 NET ASSET VALUE Beginning of period $ 9.28 $ 7.85 $ 8.47 $ 8.88 Investment activities Net investment income (loss) 0.24 0.24 0.31* 0.30* Net realized and unrealized gain (loss) 1.46 1.43 (0.62) (0.42) Total from investment activities 1.70 1.67 (0.31) (0.12) Distributions Net investment income (0.24) (0.24) -- -- Net realized gain (0.50) -- -- -- Tax return of capital -- -- (0.31) (0.29) Total distributions (0.74) (0.24) (0.31) (0.29) NET ASSET VALUE End of period $ 10.24 $ 9.28 $ 7.85 $ 8.47 Ratios/Supplemental Data Total return^ 18.62% 21.65% (3.73)%* (1.29)%* Ratio of total expenses to average net assets 1.06% 1.08% 1.15%* 1.15%*! Ratio of net investment income (loss) to average net assets 2.43% 2.82% 3.28%* 4.60%*! Portfolio turnover rate 38.5% 113.9% 107.6% 160.5%(Ckmk.) Net assets, end of period (in thousands) $ 50,217 $ 14,760 $ 5,026 $ 120 ^ 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. * Excludes expenses in excess of a 1.15% contractual expense limitation in effect through 12/31/03. (Ckmk.) Excludes the effect of the acquisition of the T. Rowe Price Global Bond Fund's assets. ! Annualized The accompanying notes are an integral part of these financial statements. T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Portfolio of Investments (ss.) Shares/Par Value - -------------------------------------------------------------------------------- ($ 000s) AUSTRALIA 0.3% Government Bonds 0.3% New South Wales Treasury, 6.00%, 5/1/12 5,070,000 3,882 Total Australia (Cost $3,168) 3,882 AUSTRIA 3.7% Government Bonds 3.7% Republic of Austria, 3.80%, 10/20/13 2,700,000 3,254 Republic of Austria, 4.00%, 7/15/09 16,400,000 20,963 Republic of Austria, 5.50%, 1/15/10 18,750,000 25,729 Total Austria (Cost $39,577) 49,946 BELGIUM 4.6% Government Bonds 4.6% Kingdom of Belgium, 6.25%, 3/28/07 8,100,000 11,160 Kingdom of Belgium, 6.50%, 3/31/05 15,600,000 20,648 Kingdom of Belgium, 7.25%, 4/29/04 24,250,000 31,044 Total Belgium (Cost $48,956) 62,852 CANADA 2.1% Government Bonds 2.1% Government of Canada, 5.25%, 6/1/12 26,070,000 21,107 Government of Canada, 5.75%, 6/1/29 8,200,000 6,832 Total Canada (Cost $22,073) 27,939 DENMARK 1.5% Government Bonds 1.5% Kingdom of Denmark, 6.00%, 11/15/11 19,400,000 3,661 Kingdom of Denmark, 7.00%, 11/10/24 8,530,000 1,830 Kingdom of Denmark, 8.00%, 3/15/06 76,850,000 14,383 Total Denmark (Cost $13,670) 19,874 FINLAND 1.8% Government Bonds 1.8% Republic of Finland, 5.00%, 7/4/07 4,500,000 5,999 Republic of Finland, 5.00%, 4/25/09 14,000,000 18,765 Total Finland (Cost $19,170) 24,764 FRANCE 8.5% Government Bonds 8.5% Government of France, 4.00%, 4/25/09 13,420,000 17,216 Government of France, 5.00%, 7/12/05 3,130,000 4,094 Government of France, 5.00%, 1/12/06 26,100,000 34,409 Government of France, 5.00%, 4/25/12 19,800,000 26,420 Government of France, 5.25%, 4/25/08 2,200,000 2,973 Government of France, 5.50%, 4/25/29 5,000,000 6,820 Government of France, 5.75%, 10/25/32 16,672,000 23,558 Total France (Cost $93,998) 115,490 GERMANY 14.0% Government Bonds 14.0% Bundesobligation, 5.00%, 8/19/05 43,470,000 56,903 Bundesrepublic, 4.50%, 7/4/09 37,000,000 48,464 Bundesrepublic, 4.75%, 7/4/28 5,685,000 6,975 Bundesrepublic, 5.00%, 1/4/12 20,100,000 26,815 Bundesrepublic, 5.50%, 1/4/31 4,550,000 6,215 Bundesrepublic, 6.00%, 1/5/06 19,350,000 25,938 Bundesrepublic, 6.00%, 7/4/07 14,000,000 19,224 Total Germany (Cost $153,288) 190,534 GREECE 4.4% Government Bonds 4.4% Hellenic Republic, 4.60%, 5/20/13 13,030,000 16,679 Hellenic Republic, 6.00%, 2/19/06 6,000,000 8,060 Hellenic Republic, 6.50%, 1/11/14 11,063,940 16,195 Hellenic Republic, 6.60%, 1/15/04 15,000,000 18,924 Total Greece (Cost $47,472) 59,858 HUNGARY 0.2% Government Bonds 0.2% Government of Hungary, 6.25%, 6/12/07 649,350,000 2,797 Total Hungary (Cost $2,841) 2,797 IRELAND 0.9% Government Bonds 0.9% Republic of Ireland, 4.00%, 4/18/10 3,150,000 3,997 Republic of Ireland, 5.00%, 4/18/13 6,100,000 8,107 Total Ireland (Cost $9,138) 12,104 ITALY 7.9% Government Bonds 7.9% Republic of Italy, 5.00%, 10/15/07 10,940,000 14,618 Republic of Italy, 5.25%, 8/1/11 5,400,000 7,304 Republic of Italy, 6.00%, 11/1/07 33,800,000 46,684 Republic of Italy, 6.00%, 5/1/31 24,590,000 35,216 Republic of Italy, 7.25%, 11/1/26 2,483,653 4,089 Total Italy (Cost $75,172) 107,911 JAPAN 13.6% Government Bonds 13.6% Government of Japan, 0.90%, 12/22/08 1,360,000,000 12,898 Government of Japan, 1.00%, 12/20/12 2,432,200,000 22,188 Government of Japan, 1.30%, 6/20/11 5,993,000,000 56,915 Government of Japan, 1.40%, 3/20/12 3,050,000,000 29,003 Government of Japan, 1.70%, 9/20/10 1,945,400,000 19,091 Government of Japan, 1.80%, 9/21/09 2,307,100,000 22,817 Government of Japan, 2.00%, 6/20/22 565,000,000 5,471 Government of Japan, 2.20%, 6/22/20 1,663,000,000 16,678 Total Japan (Cost $169,955) 185,061 MEXICO 0.3% Government Bonds 0.3% United Mexican States, 10.50%, 8/24/06 35,450,000 3,548 3,548 Warrants 0.0% United Mexican States, Series B, Warrants, 6/1/04 (USD) 1,334,506 13 United Mexican States, Series C, Warrants, 6/1/05 (USD) 1,334,506 3 16 Total Mexico (Cost $3,478) 3,564 NETHERLANDS 6.2% Government Bonds 6.2% Government of Netherlands, 5.00%, 7/15/11 6,200,000 8,288 Government of Netherlands, 5.25%, 7/15/08 24,000,000 32,449 Government of Netherlands, 5.50%, 1/15/28 235,000 319 Government of Netherlands, 5.75%, 1/15/04 34,624,157 43,670 Total Netherlands (Cost $66,175) 84,726 POLAND 2.9% Government Bonds 2.9% Government of Poland, 5.75%, 6/24/08 128,480,000 33,145 Government of Poland, 8.50%, 11/12/06 21,900,000 6,171 Total Poland (Cost $37,433) 39,316 PORTUGAL 3.5% Government Bonds 3.5% Republic of Portugal, 5.15%, 6/15/11 8,275,000 11,125 Republic of Portugal, 5.25%, 10/14/05 28,000,000 36,919 Total Portugal (Cost $38,106) 48,044 RUSSIA 0.5% Government Bonds 0.5% Russian Federation, 3.00%, 5/14/11 (USD) 8,300,000 6,588 Total Russia (Cost $6,522) 6,588 SOUTH AFRICA 0.6% Government Bonds 0.6% Republic of South Africa, 13.00%, 8/31/10 44,900,000 8,012 Total South Africa (Cost $6,869) 8,012 SPAIN 4.7% Government Bonds 4.7% Kingdom of Spain, 4.95%, 7/30/05 12,350,000 16,161 Kingdom of Spain, 6.00%, 1/31/08 34,200,000 47,432 Total Spain (Cost $49,726) 63,593 SWEDEN 1.0% Government Bonds 1.0% Kingdom of Sweden, 5.00%, 1/15/04 6,600,000 918 Kingdom of Sweden, 5.00%, 1/28/09 84,500,000 12,200 Total Sweden (Cost $10,309) 13,118 UNITED KINGDOM 5.1% Government Bonds 5.1% United Kingdom Treasury, 4.25%, 6/7/32 16,980,000 28,231 United Kingdom Treasury, 5.00%, 3/7/08 8,540,000 15,482 United Kingdom Treasury, 5.00%, 3/7/12 5,000,000 9,066 United Kingdom Treasury, 5.75%, 12/7/09 5,100,000 9,610 United Kingdom Treasury, 8.50%, 12/7/05 3,250,000 6,252 Total United Kingdom (Cost $61,743) 68,641 UNITED STATES 9.3% Money Market Funds 9.3% T. Rowe Price Reserve Investment Fund, 1.13% # 125,946,149 125,946 Total United States (Cost $125,946) 125,946 SECURITIES LENDING COLLATERAL 0.6% Money Market Pooled Account 0.6% Investment in money market pooled account managed by JP Morgan Chase Bank, London, 1.115% # 8,012,000 8,012 Total Securities Lending Collateral (Cost $8,012) 8,012 Total Investments in Securities 98.2% of Net Assets (Cost $1,112,797) $1,332,572 T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report - -------------------------------------------------------------------------------- Forward Currency Exchange Contracts Amounts in (000s) Unrealized Counterparty Settlement Receive Deliver Gain (Loss) - ------------ ---------- ----------------- ------------------- ----------- ABN Amro 2/26/04 AUD 8,663 USD 6,173 $ 306 State Street 2/26/04 CAD 10,393 USD 7,925 97 ABN Amro 2/26/04 CZK 58,664 USD 2,176 107 J.P. Morgan Chase 2/26/04 EUR 5,990 USD 7,215 320 Credit Suisse 2/26/04 EUR 756 USD 905 46 Morgan Stanley 2/26/04 EUR 3,110 USD 3,747 165 ABN Amro 2/26/04 EUR 5,869 USD 7,151 232 ABN Amro 2/26/04 GBP 6,100 USD 10,284 556 State Street 2/26/04 JPY 14,661,623 EUR 113,542 (5,731) J.P. Morgan Chase 2/26/04 JPY 984,788 USD 9,130 79 Credit Suisse 2/26/04 JPY 56,163 USD 515 10 Morgan Stanley 2/26/04 JPY 12,715,230 USD 117,083 1,817 J.P. Morgan Chase 2/26/04 KRW 23,560,550 USD 19,435 233 State Street 2/26/04 MXN 12,231 USD 1,064 16 ABN Amro 2/26/04 SEK 13,448 USD 1,758 107 ABN Amro 2/26/04 SGD 6,540 USD 3,798 56 J.P. Morgan Chase 2/26/04 USD 2,380 CAD 3,110 (21) J.P. Morgan Chase 2/26/04 USD 17,995 EUR 14,736 (542) J.P. Morgan Chase 2/26/04 USD 3,160 GBP 1,839 (108) J.P. Morgan Chase 2/26/04 USD 6,145 JPY 662,956 (55) Morgan Stanley 2/26/04 USD 6,638 JPY 716,943 (66) Credit Suisse 2/26/04 USD 33,057 PLN 130,958 (1,792) State Street 2/26/04 ZAR 11,434 USD 1,741 (52) Net unrealized gain (loss) on open forward currency exchange contracts $ (4,220) --------- - -------------------------------------------------------------------------------- Futures Contracts ($ 000s) Contract Unrealized Expiration Value Gain (Loss) ---------- --------------- ---------------- Short, 49 ten year U.S. Treasury contracts, $130 pledged as initial margin 3/04 $ (5,501) $ (7) Net payments (receipts) of variation margin to date -- Variation margin receivable (payable) on open futures contracts $ (7) ---------------- (ss.) Denominated in currency of the country of incorporation unless otherwise noted # Seven-day yield AUD Australian dollar CAD Canadian dollar CZK Czech koruna EUR Euro GBP British pound JPY Japanese yen KRW South Korean won MXN Mexican peso PLN Polish zloty SEK Swedish krona SGD Singapore dollar USD United States dollar ZAR South African rand The accompanying notes are an integral part of these financial statements. T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Statement of Assets and Liabilities - -------------------------------------------------------------------------------- ($ 000s) Assets Investments in securities, at value (cost $1,112,797) $ 1,332,572 Other assets 45,235 Total assets 1,377,807 Liabilities Total liabilities 21,273 NET ASSETS $ 1,356,534 -------------------- Net Assets Consist of: Undistributed net investment income (loss) $ 7 Undistributed net realized gain (loss) (20,433) Net unrealized gain (loss) 218,118 Paid-in-capital applicable to 132,311,363 shares of $0.01 par value capital stock outstanding; 2,000,000,000 shares of the Corporation authorized 1,158,842 NET ASSETS $ 1,356,534 -------------------- NET ASSET VALUE PER SHARE International Bond class ($1,306,316,577/127,407,464 shares outstanding) $ 10.25 -------------------- Advisor Class ($50,217,377/4,903,899 shares outstanding) $ 10.24 -------------------- The accompanying notes are an integral part of these financial statements. T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report Statement of Operations - -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 Investment Income (Loss) Income Interest $ 40,954 Dividend 976 Securities lending 100 Total income 42,030 Expenses Investment management 8,050 Shareholder servicing International Bond class 2,188 Advisor Class 19 Custody and accounting 503 Registration 95 Prospectus and shareholder reports International Bond class 76 Advisor Class 7 Distribution and service (12b-1) - Advisor Class 69 Legal and audit 26 Directors 10 Miscellaneous 7 Total expenses 11,050 Net investment income (loss) 30,980 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities 52,122 Futures (1,237) Foreign currency transactions 4,163 Net realized gain (loss) 55,048 Change in net unrealized gain (loss) Securities 126,051 Futures 386 Other assets and liabilities denominated in foreign currencies (2,719) Change in net unrealized gain (loss) 123,718 Net realized and unrealized gain (loss) 178,766 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 209,746 -------------------- The accompanying notes are an integral part of these financial statements. T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report Statement of Changes in Net Assets - -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 12/31/02 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ 30,980 $ 26,771 Net realized gain (loss) 55,048 14,269 Change in net unrealized gain (loss) 123,718 136,893 Increase (decrease) in net assets from operations 209,746 177,933 Distributions to shareholders Net investment income International Bond class (30,305) (26,454) Advisor Class (668) (263) Net realized gain International Bond class (61,184) -- Advisor Class (2,235) -- Decrease in net assets from distributions (94,392) (26,717) Capital share transactions * Shares sold International Bond class 412,857 370,938 Advisor Class 42,114 10,509 Distributions reinvested International Bond class 86,713 25,110 Advisor Class 2,656 261 Shares redeemed International Bond class (364,191) (249,306) Advisor Class (11,647) (2,873) Increase (decrease) in net assets from capital share transactions 168,502 154,639 Net Assets Increase (decrease) during period 283,856 305,855 Beginning of period 1,072,678 766,823 End of period $ 1,356,534 $ 1,072,678 --------------- --------------- T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report Statement of Changes in Net Assets - -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 12/31/02 *Share information Shares sold International Bond class 42,028 43,479 Advisor Class 4,214 1,259 Distributions reinvested International Bond class 8,617 2,990 Advisor Class 263 31 Shares redeemed International Bond class (37,148) (29,450) Advisor Class (1,164) (339) Increase (decrease) in shares outstanding 16,810 17,970 The accompanying notes are an integral part of these financial statements. T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report December 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 International Bond Fund (the fund), a nondiversified, open-end management investment company, is one portfolio established by the corporation. The fund seeks to provide high current income and capital appreciation by investing primarily in high-quality, nondollar-denominated bonds outside the U.S. The fund has two classes of shares: International Bond Fund (International Bond class), offered since September 10, 1986, and International Bond-Advisor Class (Advisor Class), offered since March 31, 2000. Advisor Class shares are sold only through brokers and other financial intermediaries that are compensated by the class for distribution and certain administrative services under a Board-approved Rule 12b-1 plan. Each class has exclusive voting rights on matters related solely to that class, separate voting rights on matters that relate to both classes, and, in all other respects, the same rights and obligations as the other class. 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. Debt securities are generally traded in the over-the-counter market. Securities with original maturities of one year or more are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service, which considers 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 original maturities of less than one year are stated at fair value, which is determined by using a matrix system that establishes a value for each security based on bid-side money market yields. Investments in mutual funds are valued at the mutual fund's closing net asset value per share on the day of valuation. Purchased and written options are valued at the mean of the closing bid and ask prices. Financial futures contracts are valued at closing settlement prices. 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. Class Accounting The Advisor Class pays distribution and administrative expenses in the form of Rule 12b-1 fees, in an amount not exceeding 0.25% of the class's average daily net assets. Shareholder servicing, prospectus, and shareholder report expenses incurred by each class are charged directly to the class to which they relate. Expenses common to both classes and investment income are allocated to the classes based upon the relative daily net assets of each class's settled shares; realized and unrealized gains and losses are allocated based upon the relative daily net assets of each class's outstanding shares. Income distributions are declared by each class on a daily basis and paid monthly. Capital gain distributions, if any, are declared and paid by the fund, typically on an annual basis. Credits The fund earns credits on temporarily uninvested cash balances at the custodian that reduce the fund's custody charges. Custody expense in the accompanying financial statements is presented before reduction for credits. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Premiums and discounts on debt securities are amortized for financial reporting purposes. Dividends received from mutual fund investments are reflected as dividend income. Dividend income is recorded on the ex-dividend date. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Payments ("variation margin") made or received to settle the daily fluctuations in the value of futures contracts are recorded as unrealized gains or losses until the contracts are closed. Unrealized gains and losses on futures and forward currency exchange contracts are included in other assets and other liabilities, respectively, and in the change in net unrealized gain or loss in the accompanying financial statements. Distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared on a daily basis and paid monthly. Capital gain distributions, if any, are typically declared and paid on an annual basis. Other 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. Forward Currency Exchange Contracts During the year ended December 31, 2003, the fund was a party to forward currency exchange contracts under which it is obligated to exchange currencies at specified future dates and exchange rates. Risks arise from the possible inability of counterparties to meet the terms of their agreements and from movements in currency values. Futures Contracts During the year ended December 31, 2003, the fund was a party to futures contracts, which provide for the future sale by one party and purchase by another of a specified amount of a specific financial instrument at an agreed upon price, date, time, and place. Risks arise from possible illiquidity of the futures market and from movements in security values and/or interest rates. Options Call and put options give the holder the right to purchase or sell, respectively, a security at a specified price on a certain date. Risks arise from possible illiquidity of the options market and from movements in security values and/or currency values. 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 December 31, 2003, the value of loaned securities was $7,137,000; aggregate collateral consisted of $8,012,000 in the money market pooled account. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $556,570,000 and $393,214,000, respectively, for the year ended December 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 December 31, 2003 were characterized as follows for tax purposes: - -------------------------------------------------------------------------------- Ordinary income $ 93,124,000 Long-term capital gain 1,268,000 Total distributions $ 94,392,000 -------------------- At December 31, 2003, the tax-basis components of net assets were as follows: - -------------------------------------------------------------------------------- Unrealized appreciation $ 229,244,000 Unrealized depreciation (55,823,000) Net unrealized appreciation (depreciation) 173,421,000 Undistributed ordinary income 24,271,000 Paid-in capital 1,158,842,000 Net assets $ 1,356,534,000 -------------------- Federal income tax regulations require the fund to defer recognition of capital losses realized on certain forward currency exchange contract transactions; accordingly, $47,420,000 of realized losses reflected in the accompanying financial statements have not been recognized for tax purposes as of December 31, 2003. Federal income tax regulations require the fund to treat the gain/loss on certain open futures and forward currency exchange contracts as realized on the last day of the tax year; accordingly, $2,723,000 of unrealized losses reflected in the accompanying financial statements were realized for tax purposes as of December 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 $11,999,000 of capital loss carryforwards. At December 31, 2003, the cost of investments for federal income tax purposes was $1,157,494,000. NOTE 4 - 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 0.35% 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 December 31, 2003, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $754,000. The Advisor Class is also subject to a contractual expense limitation through December 31, 2003. During the limitation period, the manager is required to waive its management fee and reimburse the class for any expenses, excluding interest, taxes, brokerage commissions, and extraordinary expenses, that would otherwise cause the class's ratio of total expenses to average net assets (expense ratio) to exceed its expense limitation of 1.15%. Through December 31, 2005, the class is required to repay the manager for expenses previously reimbursed and management fees waived to the extent its net assets have grown or expenses have declined sufficiently to allow repayment without causing the class's expense ratio to exceed its expense limitation. For the year ended December 31, 2003, the Advisor Class operated below its expense limitation. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share prices and 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 International Bond class. Expenses incurred pursuant to these service agreements totaled $595,000 for the year ended December 31, 2003, of which $55,000 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 December 31, 2003, the International Bond class was allocated $1,310,000 of Spectrum Funds' expenses, of which $908,000 related to services provided by Price and $110,000 was payable at period-end. At December 31, 2003, approximately 46% of the outstanding shares of the International Bond class 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 December 31, 2003, dividend income from the Reserve Funds totaled $976,000. T. Rowe Price International Bond 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 International Bond Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of T. Rowe Price International Bond Fund (one of the portfolios comprising T. Rowe Price International Funds, Inc., hereafter referred to as the "Fund") at December 31, 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 December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland January 26, 2004 T. Rowe Price International Bond Fund - -------------------------------------------------------------------------------- Certified Annual Report Tax Information (Unaudited) for the Tax Year Ended 12/31/03 - -------------------------------------------------------------------------------- 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. The fund's distributions to shareholders included: o $61,756,000 from short-term capital gains, o $1,663,000 from long-term capital gains, of which $878,000 was subject to the 15% rate gains category, and $785,000 to the 20% rate gains category. Information on Proxy Voting - -------------------------------------------------------------------------------- A description of the policies and procedures that the T. Rowe Price International Bond Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, upon request by calling 1-800-225-5132. It also appears in the fund's Statement of Additional Information (Form 485B), which can be found on the SEC's Web site, www.sec.gov. T. Rowe Price International Bond 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. Karen N. Horn (9/21/43) 2003 Managing Director and President, Global Private Client Services, Marsh Inc.; Managing Director and Head of International Private Banking, Bankers Trust; Director, Eli Lilly and Company 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 107 T. Rowe Price portfolios and serves until retirement, resignation, or election of a successor. ** Retired from Board of Directors effective December 31, 2003. T. Rowe Price International Bond 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 [107] 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, CFA, CIC (4/22/44) 1979 [107] 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.; Chairman of the Board and Director, T. Rowe Price International, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited; 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 International Bond 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, FCIS (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. 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, PhD, 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. Julie L. Waples (5/12/70) 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. 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 has 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. (a) - (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant's principal accountant were as follows: 2003 2002 Audit Fees $16,119 $16,375 Audit-Related Fees 1,196 -- Tax Fees 4,186 3,965 All Other Fees 124 150 Audit fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant's financial statements, specifically the issuance of a report on internal controls. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other fees include the registrant's pro-rata share of amounts for agreed-upon procedures in conjunction with service contract approvals by the registrant's Board of Directors/Trustees. (e)(1) The registrant's audit committee has adopted a policy whereby audit and non-audit services performed by the registrant's principal accountant for the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant require pre-approval in advance at regularly scheduled audit committee meetings. If such a service is required between regularly scheduled audit committee meetings, pre-approval may be authorized by one audit committee member with ratification at the next scheduled audit committee meeting. Waiver of pre-approval for audit or non-audit services requiring fees of a de minimis amount is not permitted. (2) No services included in (b) - (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not applicable. (g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant's principal accountant for non-audit services rendered to the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $719,000 and $671,000, respectively, and were less than the aggregate fees billed for those same periods by the registrant's principal accountant for audit services rendered to the T. Rowe Price Funds. (h) All non-audit services rendered in (g) above were pre-approved by the registrant's audit committee. Accordingly, these services were considered by the registrant's audit committee in maintaining the principal accountant's independence. 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. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. 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 April 26, 2004 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 April 26, 2004 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date April 26, 2004 EX-99.CERT 2 ex-99cert.txt 302 CERTIFICATIONS Item 10(a)(2). CERTIFICATIONS I, James S. Riepe, certify that: 1. I have reviewed this report on Form N-CSR of T. Rowe Price International Bond Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 26, 2004 /s/ James S. Riepe James S. Riepe Principal Executive Officer CERTIFICATIONS I, Joseph A. Carrier, certify that: 1. I have reviewed this report on Form N-CSR of T. Rowe Price International Bond Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 26, 2004 /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer EX-99.CODE ETH 3 ex-99_codeeth.txt CODE OF ETHICS Code of Ethics for Principal Executive and Senior Financial Officers of The Price Funds under the Sarbanes-Oxley Act of 2002 I. General Statement. This Code of Ethics (the "Price Funds S-O Code") has been designed to bring the Price Funds into compliance with the applicable requirements of the Sarbanes-Oxley Act of 2002 (the "Act") rules promulgated by The Securities and Exchange Commission thereunder ("Regulations"). The Price Funds S-O Code applies solely to the Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller of, or persons performing similar functions for, a Price Fund (whether such persons are employed by a Price Fund or third party) ("Covered Officers"). The "Price Funds" shall include each mutual fund that is managed, sponsored and distributed by affiliates of T. Rowe Price Group, Inc. ("Group"). The investment managers to the Price Funds will be referred to as the "Price Fund Advisers." A list of Covered Officers is attached as Exhibit A. The Price Fund Advisers have, along with their parent, T. Rowe Price Group, Inc. ("Group") also maintained a comprehensive Code of Ethics and Conduct (the "Group Code") since 1972, which applies to all officers, directors and employees of the Price Funds, Group and its affiliates. As mandated by the Act, Group has adopted a Code (the "Group S-O Code"), similar to the Price Funds S-O Code, which applies solely to its principal executive and senior financial officers. The Group S-O Code and the Price Funds S-O Code will be referred to collectively as the "S-O Codes". The Price Funds S-O Code has been adopted by the Price Funds in accordance with the Act and Regulations thereunder and will be administered in conformity with the disclosure requirements of Item 2 of Form N-CSR. The S-O Codes are attachments to the Group Code. In many respects the S-O Codes are supplementary to the Group Code, but the Group Code is administered separately from the S-O Codes, as the S-O Codes are from each other. II. Purpose of the Price Funds S-O Code. The purpose of the Price Funds S-O Code, as mandated by the Act and the Regulations, is to establish standards that are reasonably designed to deter wrongdoing and to promote: Ethical Conduct. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. Disclosure. Full, fair, accurate, timely and understandable disclosure in reports and documents that the Price Funds file with, or submit to, the SEC and in other public communications made by the Price Funds. Compliance. Compliance with applicable governmental laws, rules and regulations. Reporting of Violations. The prompt internal reporting of violations of the Price Funds S-O Code to an appropriate person or persons identified in the Price Funds S-O Code. Accountability. Accountability for adherence to the Price Funds S-O Code. III. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest. Overview. Each Covered Officer owes a duty to the Price Funds to adhere to a high standard of honesty and business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his or her service to, the Price Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of his or her position with a Price Fund. Certain conflicts of interest covered by the Price Funds S-O Code arise out of the relationships between Covered Officers and the Price Funds and may already be subject to provisions regulating conflicts of interest in the Investment Company Act of 1940 ("Investment Company Act"), the Investment Advisers Act of 1940 ("Investment Advisers Act") and the Group Code. For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Price Fund because of their status as "affiliated persons" of a Price Fund. The compliance programs and procedures of the Price Funds and Price Fund Advisers are designed to prevent, or identify and correct, violations of these provisions. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between a Price Fund and its Price Fund Adviser (and its affiliates) of which the Covered Officers may also be officers or employees. As a result, the Price Funds S-O Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Price Funds or for the Price Fund Advisers, or for both), be involved in establishing policies and implementing decisions which will have different effects on these entities. The participation of the Covered Officers in such activities is inherent in the contractual relationship between each Price Fund and its respective Price Fund Adviser. Such participation is also consistent with the performance by the Covered Officers of their duties as officers of the Price Funds and, if consistent with the provisions of the Investment Company Act and the Investment Advisers Act, it will be deemed to have been handled ethically. Other conflicts of interest are covered by the Price Funds S-O Code, even if these conflicts of interest are not addressed by or subject to provisions in the Investment Company Act and the Investment Advisers Act. Whenever a Covered Officer is confronted with a conflict of interest situation where he or she is uncertain as to the appropriate action to be taken, he or she should discuss the matter with the Chairperson of Group's Ethics Committee or another member of the Committee. Handling of Specific Types of Conflicts. Each Covered Officer (and close family members) must not: Entertainment. Accept entertainment from any company with which any Price Fund or any Price Fund Adviser has current or prospective business dealings, including portfolio companies, unless such entertainment is in full compliance with the policy on entertainment as set forth in the Group Code. Gifts. Accept any gifts, except as permitted by the Group Code. Improper Personal Influence. Use his or her personal influence or personal relationships improperly to influence investment decisions, brokerage allocations or financial reporting by the Price Funds to the detriment of any one or more of the Price Funds. Taking Action at the Expense of a Price Fund. Cause a Price Fund to take action, or fail to take action, for the personal benefit of the Covered Officer rather than for the benefit of one or more of the Price Funds. Misuse of Price Funds' Transaction Information. Use knowledge of portfolio transactions made or contemplated for a Price Fund or any other clients of the Price Fund Advisers to trade personally or cause others to trade in order to take advantage of or avoid the market impact of such portfolio transactions. Outside Business Activities. Engage in any outside business activity that detracts from a Covered Officer's ability to devote appropriate time and attention to his or her responsibilities to a Price Fund. Service Providers. Excluding Group and its affiliates, have any ownership interest in, or any consulting or employment relationship with, any of the Price Funds' service providers, except that an ownership interest in public companies is permitted Receipt of Payments. Have a direct or indirect financial interest in commissions, transaction charges, spreads or other payments paid by a Price Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest (such as compensation or equity ownership) arising from the Covered Officer's employment by Group or any of its affiliates. Service as a Director or Trustee. Serve as a director, trustee or officer of any public or private company or a non-profit organization that issues securities eligible for purchase by any of the Price Funds, unless approval is obtained as required by the Group Code. IV. Covered Officers' Specific Obligations and Accountabilities. A. Disclosure Requirements and Controls. Each Covered Officer must familiarize himself or herself with the disclosure requirements (Form N-1A registration statement, proxy (Schedule 14A), shareholder reports, Forms N-SAR, N-CSR, etc.) applicable to the Price Funds and the disclosure controls and procedures of the Price Fund and the Price Fund Advisers. B. Compliance with Applicable Law. It is the responsibility of each Covered Officer to promote compliance with all laws, rules and regulations applicable to the Price Funds and the Price Fund Advisers. Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Price Funds and the Price Fund Advisers and take other appropriate steps with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Price Funds file with, or submit to, the SEC, and in other public communications made by the Price Funds. C. Fair Disclosure. Each Covered Officer must not knowingly misrepresent, or cause others to misrepresent, facts about a Price Fund to others, whether within or outside the Price organization, including to the Price Fund's directors and auditors, and to governmental regulators and self-regulatory organizations. D. Initial and Annual Affirmations. Each Covered Officer must: 1. Upon adoption of the Price Funds S-O Code (or thereafter, as applicable, upon becoming a Covered Officer), affirm in writing that he or she has received, read, and understands the Price Funds S-O Code. 2. Annually affirm that he or she has complied with the requirements of the Price Funds S-O Code. E. Reporting of Material Violations of the Price Funds S-O Code. If a Covered Officer becomes aware of any material violation of the Price Funds S-O Code or laws and governmental rules and regulations applicable to the operations of the Price Funds, he or she must promptly report the violation ("Report") to the Chief Legal Counsel of the Price Funds ("CLC"). Failure to report a material violation will be considered itself a violation of the Price Funds S-O Code. The CLC is identified in the attached Exhibit B. It is the Price Funds policy that no retaliation or other adverse action will be taken against any Covered Officer or other employee of a Price Fund, a Price Fund Adviser or their affiliates based upon any lawful actions of the Covered Officer or employee with respect to a Report made in good faith. F. Annual Disclosures. Each Covered Officer must report, at least annually, all affiliations or other relationships as called for in the "Annual Questionnaire for Executive Officers and/or Employee Directors/Trustees of Group and the Price Funds." V. Administration of the Price Funds S-O Code. The Ethics Committee is responsible for administering the Price Funds S-O Code and applying its provisions to specific situations in which questions are presented. A. Waivers and Interpretations. The Chairperson of the Ethics Committee has the authority to interpret the Price Funds S-O Code in any particular situation and to grant waivers where justified, subject to the approval of the Joint Audit Committee of the Price Funds. All material interpretations concerning Covered Officers will be reported to the Joint Audit Committee of the Price Funds at its next meeting. Waivers, including implicit waivers, to Covered Officers will be publicly disclosed as required in the Instructions to N-CSR. Pursuant to the definition in the Regulations, an implicit waiver means a Price Fund's failure to take action within a reasonable period of time regarding a material departure from a provision of the Price Funds S-O Code that has been made known to an "executive officer" (as defined in Rule 3b-7 under the Securities Exchange Act of 1934) of a Price Fund. An executive officer of a Price Fund includes its president and any vice-president in charge of a principal business unit, division or function. B. Violations/Investigations. The following procedures will be followed in investigating and enforcing the Price Funds S-O Code: 1. The CLC will take or cause to be taken appropriate action to investigate any potential or actual violation reported to him or her. 2. The CLC, after consultation if deemed appropriate with Outside Counsel to the Price Funds, will make a recommendation to the appropriate Price Funds Board regarding the action to be taken with regard to each material violation. Such action could include any of the following: a letter of censure or suspension, a fine, a suspension of trading privileges or termination of officership or employment. In addition, the violator may be required to surrender any profit realized (or loss avoided) from any activity that is in violation of the Price Funds S-O Code. VI. Amendments to the Price Funds S-O Code. Except as to the contents of Exhibit A and Exhibit B, the Price Funds S-O Code may not be materially amended except in written form, which is specifically approved or ratified by a majority vote of each Price Fund Board, including a majority of the independent directors on each Board. VII. Confidentiality. All reports and records prepared or maintained pursuant to the Price Funds S-O Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law, the Price Funds S-O Code or as necessary in connection with regulations under the Price Funds S-O Code, such matters shall not be disclosed to anyone other than the directors of the appropriate Price Fund Board, Outside Counsel to the Price Funds, members of the Ethics Committee and the CLC and authorized persons on his or her staff. Approved: October 2003 Exhibit A Persons Covered by the Price Funds S-O Code of Ethics James S. Riepe, Chairman and Chief Executive Officer Joseph A. Carrier, Treasurer and Chief Financial Officer Exhibit B Chief Legal Counsel to the Price Funds Henry H. Hopkins EX-99.906 4 ex-99_906cert.txt 906 CERTIFICATIONS Item 10(b). CERTIFICATION UNDER SECTION 906 OF SARBANES-OXLEY ACT OF 2002 Name of Issuer: T. Rowe Price International Bond Fund In connection with the Report on Form N-CSR for the above named issuer, the undersigned hereby certifies, to the best of his knowledge, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: April 26, 2004 /s/ James S. Riepe James S. Riepe Principal Executive Officer Date: April 26, 2004 /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----