<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
Asian stock markets outside Japan lost ground during your fund's fourth quarter,
after rising strongly in previous months. Overall, the past 12 months were
disappointing, as several Asian markets continued to suffer from the hangover
that followed 1993's strong bull market.
Asian stock markets, like those everywhere, are driven primarily by interest
rates and earnings growth. In Asia (ex-Japan), interest rates are tied to U.S.
rates in varying degrees, and U.S. rates eased only slightly this past quarter
after falling significantly earlier in 1995. Countries with ballooning current
account deficits, like Thailand and Malaysia, actually saw rates rise over the
quarter. Most Asian economies are overheating after many years of enviable
growth, and earnings projections consequently are being trimmed.
With no help from earnings or interest rates, Asian markets struggled to make
any progress, especially with American investors focused on their own booming
market. Mutual fund flows into international funds were sluggish, and specialty
Asian funds saw slight net redemptions.
Your fund's results reflect the unfavorable market environment that prevailed
for both the quarter and much of the year. Performance trailed the benchmark
index chiefly because of the fund's increasing focus on the Asian equity markets
at the expense of Australia and New Zealand -- markets we essentially exited
last summer. These markets, which remain a large part of the benchmark index,
outperformed for most of the year, as international investors sought refuge from
the
- -------------------------------------------------------------------------------
Performance Comparison
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 10/31/95
3 Months 12 Months
-------- ---------
<S> <C> <C>
New Asia Fund -7.31% -9.70%
MSCI Pacific Ex-Japan -3.13 -2.08
</TABLE>
- -------------------------------------------------------------------------------
difficult conditions afflicting all the emerging markets of Asia. Performance
was also hurt by a buildup of exposure to China and a corresponding
underweighting in Hong Kong.
Market and Portfolio Review
Hong Kong shares, your fund's largest commitment, rose 2.7% over the quarter,
led by the conglomerate sector. In contrast, China shares overall fell almost
16% (based on the MSCI China Free Index), though most of the damage was in the
larger, Hong Kong-listed "H" and New York-listed "N" shares. We continued to add
to our China exposure, both directly and through Hong Kong-listed companies with
substantial mainland activities. All macro-economic evidence and our own visits
to mainland companies show a successful soft landing in progress for this
formerly overheated mega-economy. The government is easing credit gradually;
inflation is falling fast toward single digits; and the external accounts and
foreign reserves look healthy indeed. More important, succession to Deng Xiao
Peng seems to be assured, and those successors are committed to a smooth and
even ebullient transfer of Hong Kong from the U.K. on July 1, 1997. We added two
Hong Kong-listed, Southern China conglomerates to the portfolio, Guangdong
Investment and Guangzhou Investment. We also added First Pacific, a Hong Kong-
listed, regional conglomerate with interests in telecommunications, consumer
goods, banking, and property.
The Singapore market was extremely dull over the quarter, falling 5.6% on
light volume and somewhat disappointing corporate earnings. Nevertheless, the
overall environment remains the envy of other Asian countries: low inflation, a
large current account surplus, and gently easing interest rates. With valuations
at the low end of historic ranges, we view the market favorably. Over the
quarter, we added to our bank holdings, such as Overseas Union Bank, as
price/earnings
<PAGE>
ratios are again below projected earnings growth while balance sheets are rock
solid. However, we trimmed our position in the ship repairers, as falling
shipbuilding prices are encouraging owners to buy new ships rather than repair
old ones.
- -------------------------------------------------------------------------------
Market Performance
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 10/31/95
(in U.S. Dollar Terms)
----------------------
3 Months 12 Months
-------- ---------
<S> <C> <C>
Australia -1.0% 6.1%
Hong Kong 2.7 0.8
Indonesia -6.3 -10.9
Malaysia -12.6 -13.8
New Zealand 1.9 14.8
Philippines -17.3 -21.7
Singapore -5.6 -7.7
South Korea 7.4 -2.0
Thailand -7.4 -14.5
</TABLE>
- -------------------------------------------------------------------------------
Source: Morgan Stanley Capital International Perspective
Malaysian stock prices fell significantly in dollar terms. The economy seems
to be on steroids, having grown 8% or more each year for eight years. The side
effects of this growth are manifested by labor shortages, barely suppressed
inflation, and a ballooning current account deficit. Interest rates have edged
up to attract short-term capital to balance external payments, but higher rates
have cut into corporate earnings and siphoned liquidity away from stocks. We
took profits in some of our market-leading infrastructure plays, Renong and
United Engineers, and are looking to trim elsewhere.
A similar picture of overheating is also evident in the other Southeast Asian
economies, particularly Thailand, Indonesia, and the Philippines, where widening
current account deficits and inflation weighed on their respective markets.
These pressures were exacerbated by the return of "hot" short-term capital
inflows into the region, in striking contrast to early 1995 when Mexico-related
concerns led to a flurry of speculative selling in a number of regional
currencies.
Nevertheless, our confidence in the long-run growth potential of this region
is unshaken for two reasons. First, we are encouraged by the revival since early
1994 of foreign direct investment in manufacturing, a key feature of the late
1980s boom. As the Japanese economy recovers, we expect this trend to continue.
The second reason is strong export growth despite rising cost pressures and wage
competition from labor surplus countries such as China, India, and Vietnam.
Essentially the Southeast Asian countries are successfully climbing the value-
added ladder and remain highly competitive.
Thailand was particularly weak this past quarter. Investment now exceeds 40%
of GDP, one of the highest rates in the world, and accelerating capital imports
are affecting the current account deficit despite strong export growth (+24%
annually in August). Inflation rose steadily all year, hitting an annual rate of
6.6% in October. We shaved weightings slightly in some banks, where valuations
are high, and in Siam Cement.
The picture is similar in Indonesia, where September inflation came in at an
annual rate of 9%, and June trade numbers showed the first deficit in four
years. Nevertheless,
- --------------------------------------------------------------------------------
Geographic Diversification
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Hong Kong 26%
Malaysia 19%
Singapore 15%
South Korea 9%
Thailand 9%
Indonesia 6%
Other and Reserves 16%
</TABLE>
2
<PAGE>
approved foreign direct investment projects totaled over $30 billion for the 12
months ending August, a 67% increase over the previous year and a sure sign that
the recent investment deregulation package (which cut red tape and allowed
higher foreign ownership in certain industries) is attracting foreign capital.
The market ended the quarter down over 6%, depressed by the prospect of a
massive Telkom stock offering in the fourth calendar quarter. We cut weightings
slightly in cement stocks Semen Cibinong and Semen Gresik.
The Philippines market was torpedoed by the September inflation number, which
soared to an annual rate of 11.8% from 8.4% in August, and ended the quarter
down over 17% in dollar terms. Here again, foreign direct investment is
encouraging: first half foreign investment nearly doubled over the previous
year, reflecting a number of structural reforms undertaken by the Ramos
government and a perception that political risk is minimal. We added to our
position in residential developer C & P Homes.
Taiwan, which accounted for only 1.2% of fund assets on October 31, remained
among the weakest markets in Asia, rocked by ongoing banking problems and
China's saber rattling. China held military exercises close to Taiwan in an
attempt to discourage a growing movement in the small republic seeking permanent
independence from China rather than eventual reunification. We took some profits
in our electronics holdings, which had benefited from the impressive runup of
U.S. technology stocks.
The South Korean economy seemed to turn the corner during the summer. The
trade picture finally improved with lower import growth, which allowed corporate
bond yields to fall. The South Korean stock market is interest rate driven, and
falling bond yields made it one of the best Asian markets over the quarter,
rising 7.4%. Taking advantage of the increase in foreign ownership limits from
12% to 15%, we significantly added to our weighting, bringing South Korean
holdings to almost 10% of fund assets. Banks were the main additions, where low
P/Es, discounts to book value, and the prospect of improved earnings due to the
deregulation made an enticing combination. We also added to positions in core
stocks Korea Electric Power and Pohang Iron & Steel, the world's second-largest
steel company.
Growth in Australia and New Zealand continued to decelerate, particularly in
New Zealand, and we have virtually no exposure to either country. Over the next
few years, however, we believe New Zealand will reap the benefits of fundamental
restructuring. A key challenge for Australian policymakers will be to boost the
nation's inadequate savings rate, and we anticipate currency weakness over the
next couple of years as the commodity cycle peaks.
Summary and Outlook
Asian stock markets are still "Waiting for Godot," experiencing a normal dull
period after the 1993 boom and 1994 correction. Economies are overheating and
earnings growth decelerating. However, not all markets in the region are at the
same stage in this cycle. China and Hong Kong were the first to slow and promise
to be the first to recover, which is why we have raised these weightings,
especially in China. We already see the first swallows of spring for these two
interconnected economies and stock markets in the guise of improved property
prices, credit creation, and money flows from U.S. investors. As the U.S. bull
market slows, especially the technology sector, investors will look for the
next growth area, and we believe they will look east to Asia.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
November 17, 1995
3
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
Periods Ended October 31, 1995
<TABLE>
<CAPTION>
Change in Price Per Share
- ---------------------------------
<S> <C>
3 Months (From $8.76 to $8.12) $-0.64
12 Months (From $10.07 to $8.12) -1.95
- --------------------------------------------------------------------------------
Total Net Assets $1,908.9 million
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Twenty-Five Largest Holdings
- -------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
Percent of
Net Assets
------------
<S> <C>
Hutchison Whampoa, Hong Kong 4.0%
United Overseas Bank, Singapore 2.9
Korea Electric Power, South Korea 2.8
Dao Heng Bank Group, Hong Kong 2.8
United Engineers, Malaysia 2.5
Renong, Malaysia 2.4
Swire Pacific 'A', Hong Kong 2.4
Technology Resources Industries, Malaysia 2.4
Guoco Group, Hong Kong 2.4
Huaneng Power International
'N' ADR (USD), China 2.1
Hong Kong Land Holdings (USD), Hong Kong 1.8
Singapore Land, Singapore 1.8
Siam Commercial Bank, Thailand 1.6
Wharf Holdings, Hong Kong 1.5
Bangkok Bank Public, Thailand 1.3
DBS Land, Singapore 1.3
Singapore Airlines, Singapore 1.3
Singapore Press, Singapore 1.2
Guangdong Electric Power (HKD), China 1.2
Arab Malaysian Finance, Malaysia 1.2
Westmont, Malaysia 1.2
Indosat, Indonesia 1.1
Samsung Electronics, South Korea 1.0
Commerce Asset Holdings, Malaysia 1.0
Affin Holdings, Malaysia 1.0
- --------------------------------------------------------------------------------
Total 46.2%
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Industry Diversification
- --------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
Percent of
Net Assets
------------
<S> <C>
Finance 44.5%
Services 13.0
Multi-Industry 10.7
Materials 9.1
Capital Equipment 7.8
Energy 7.8
Consumer Goods 3.9
Other Industries 0.2
Reserves 3.0
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Security Classification
- --------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
Percent Market
of Net Cost Value
Assets (000) (000)
------- ---------- ----------
<S> <C> <C> <C>
Common Stocks,
Rights and
Warrants 95.4% $1,819,819 $1,819,046
Preferred Stocks 0.3 5,259 6,615
Bonds 1.3 25,629 25,121
Short-Term
Investments 0.7 13,583 13,583
------ ---------- ----------
Total Investments 97.7 1,864,290 1,864,365
Other Assets Less
Liabilities 2.3 44,614 44,528
- --------------------------------------------------------------------------------
Total Net Assets 100.0% $1,908,904 $1,908,893
- --------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
COMPARISON OF SIX YEAR CUMULATIVE RETURN
AMONG NEW ASIA FUND AND MSCI PACIFIC EX-JAPAN
<TABLE>
<CAPTION>
Measurement period New Asia MSCI Pacific
(Fiscal Year Covered) Fund Ex-Japan
--------------------- ---- ------------
<S> <C> <C>
Measurement PT -
9/28/90 $ 10,000 $ 10,000
FYE 10/90 $ 10,290 $ 9,877
FYE 10/91 $ 11,702 $ 13,192
FYE 10/92 $ 13,856 $ 14,476
FYE 10/93 $ 21,014 $ 22,042
FYE 10/94 $ 21,878 $ 24,524
FYE 10/95 $ 19,756 $ 24,014
</TABLE>
Note: The index return does not reflect expenses, which have been deducted from
the fund's return.
* Commencement of operations.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
Periods Ended October 31, 1995
<TABLE>
<CAPTION>
Since
Inception
1 Year 5 Years (9/28/90)
------ ------- ---------
<S> <C> <C>
-9.70% 13.93% 14.30%
</TABLE>
- --------------------------------------------------------------------------------
Note: For the above periods ended 9/30/95, the fund's returns were -7.82%,
15.15%, and 15.15%, respectively.
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
5
<PAGE>
- --------------------------------------------------------------------------------
Portfolio of Investments
T. Rowe Price New Asia Fund / October 31, 1995
- --------------------------------------------------------------------------------
(values in thousands)
<TABLE>
<CAPTION>
Value
-------
- --------------------------------------------------------------------------------
CHINA -- 6.2%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
4,998,000 shs *China North Industries
Investment (USD).............................. $ 4,548
41,988,000 +*Guangdong Electric
Power (HKD)................................... 23,080
2,519,400 *Huaneng Power International
'N' ADR (USD)................................. 40,625
72,452,000 +*Jilin Chemical
Industrial 'H' (HKD).......................... 15,181
15,922,000 Qingling Motors 'H' (HKD)........................ 3,480
36,917,000 Shanghai Haixing Shipping
'H' (HKD)..................................... 3,820
39,019,000 Shanghai Petrochemical
'H' (HKD)..................................... 11,229
3,398,000 Shanghai Shangling Electric
Appliance 'B' (USD)........................... 2,990
43,396,000 Yizheng Chemical Fibre
'H' (HKD)..................................... 12,629
Total China 117,582
<CAPTION>
- --------------------------------------------------------------------------------
HONG KONG -- 25.9%
- --------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS
<C> <S> <C>
194,000 Amway Asia Pacific (USD)......................... 6,256
1,400,000 Cheung Kong Holdings............................. 7,895
1,600,000 China Light & Power.............................. 8,526
9,420,000 China Strategic Investment....................... 3,472
1,350,000 wts *China Strategic Investment,
8/30/97....................................... 122
2,400,000 shs Citic Pacific.................................... 7,496
14,528,260 Dao Heng Bank Group.............................. 53,271
19,344,000 +Fairyoung Holdings............................... 8,506
3,334,400 wts +*Fairyoung Holdings, 6/30/96...................... 125
15,160,000 shs First Pacific.................................... 17,451
3,142,000 Giordano International........................... 2,601
1,939,000 Goldlion Holdings................................ 1,103
5,584,000 Great Eagle Holdings............................. 15,311
28,310,000 Guangdong Investment............................. 16,660
69,342,000 Guangzhou Investment............................. 14,260
9,764,000 Guoco Group...................................... 45,210
6,078,000 HKR International................................ 5,267
19,697,590 Hon Kwok Land Investment......................... 5,987
250,000 Hong Kong & Shanghai Bank........................ 3,638
1,199,000 Hong Kong Ferry.................................. 1,241
19,078,501 Hong Kong Land
Holdings (USD)................................ 34,341
13,800,000 shs Hutchison Whampoa................................ 76,035
6,446,000 Hysan Development................................ 16,424
3,880,000 Kumagai Gumi..................................... 2,936
13,838,000 Manhattan Card................................... 5,906
5,651,000 Ming Pao Enterprise.............................. 2,741
13,146,000 National Mutual Asia............................. 10,117
650,000 New World Development............................ 2,530
4,948,082 New World Infrastructure
Limited....................................... 8,704
710,000 +Pacific Basin Bulk
Shipping (USD)................................... 10,029
11,540,000 Pokphand......................................... 4,627
4,559,000 Shangri-La Asia Capital.......................... 5,042
2,085,090 *South Sea Development............................ 76
10,868,000 Swank International
Manufacturers................................. 1,279
6,150,000 Swire Pacific 'A'................................ 46,135
14,590,000 Techtronic Industries............................ 1,510
246,000 *Ultronics International.......................... 10
8,200,000 Wharf Holdings................................... 27,681
4,331,000 Wing Hang Bank................................... 13,948
Total Hong Kong 494,469
<CAPTION>
- --------------------------------------------------------------------------------
INDIA -- 1.9%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
526,000 Grasim Industries GDS (USD)...................... 10,915
463,000 Hindalco GDR (USD)............................... 14,770
5,700 Indian Rayon & Industries
GDR (USD)..................................... 68
610,000 +Reliance Industries
GDS (USD)..................................... 9,299
78,000 Tata Engineering &
Locomotive GDR (USD).......................... 1,618
Total India 36,670
<CAPTION>
- --------------------------------------------------------------------------------
INDONESIA -- 6.5%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
2,691,000 Astra International.............................. 5,392
5,496,750 Bank Dagang Nasional............................. 4,901
1,100,000 Citra Marga Nusaphala
Persada....................................... 908
3,824,000 Dharmala Intiland................................ 2,147
682,166 Duta Anggada Realty.............................. 428
149,200 Gadjah Tunggal................................... 95
1,885,500 Hanjaya Mandala Sampoerna........................ 17,435
3,139,300 Indofoods Sukses Makmur.......................... 14,515
2,621,500 Indorama Synthetic............................... 8,686
3,343,000 Indosat.......................................... 11,335
</TABLE>
6
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
291,510 shs Indosat 'B' ADR (USD)............................ $ 9,656
1,188,000 Jaya Real Property............................... 3,387
394,000 Kalbe Farma...................................... 1,249
512,000 Modernland Realty................................ 722
4,678,000 Mulia Industrindo................................ 13,801
2,815,050 Pabrik Kertas Tjiwi Kimia........................ 5,206
4,527,500 Panin Bank....................................... 4,984
1,021,400 Semen Cibinong................................... 2,676
5,117,000 Semen Gresik..................................... 13,294
1,518,000 United Tractors.................................. 3,008
123,825
CONVERTIBLE BOND
1,228,800,000 IDR Modernland Realty,
6.00%, 1/4/03................................. 512
Total Indonesia 124,337
<CAPTION>
- --------------------------------------------------------------------------------
MALAYSIA -- 18.9%
- --------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS
<C> <S> <C>
9,477,000 shs Affin Holdings................................... 17,902
1,154,400 wts *Affin Holdings, 11/15/99......................... 732
1,672,000 shs Aokam Perdana.................................... 2,803
298,800 wts *Aokam Perdana, 4/16/97........................... 381
1,355,000 shs Arab Malaysian................................... 4,559
5,323,333 Arab Malaysian Finance........................... 18,645
1,927,000 Bandar Raya
Development................................... 2,882
3,450,000 wts *Bandar Raya Development,
9/1/97........................................ 2,919
6,053,000 shs Berjaya Leisure.................................. 4,598
4,500,666 Berjaya Sports Toto.............................. 9,388
3,474,000 Chemical Company
of Malaysia................................... 6,973
2,221,000 Commerce Asset Holdings.......................... 11,013
2,881,333 wts *Commerce Asset Holdings,
6/27/98....................................... 7,824
1,816,000 shs *Crest Petroleum.................................. 3,559
2,530,000 Hong Leong Bank.................................. 6,820
1,235,000 Ioi Properties................................... 2,600
4,119,500 Land & General................................... 9,565
7,250,000 Magnum........................................... 12,326
3,681,000 Malaysian Airline System......................... 10,068
3,595,000 Malaysian Assurance
Alliance......................................... 14,573
3,000,000 MBF Capital...................................... 2,834
2,290,000 Metacorp......................................... 5,813
1,654,000 *Pacific & Orient................................. 4,524
4,021,000 Public Finance................................... 7,564
28,414,000 Renong........................................... 43,387
600,000 Resorts World.................................... 2,928
2,320,000 Sungei Way Holdings.............................. 7,806
816,000 wts *Sungei Way Holdings,
8/20/97....................................... 1,927
2,040,000 shs Sunway Building
Technology.................................... 5,459
1,010,000 Tanjong.......................................... 2,544
18,018,000 *Technology Resources
Industries.................................... 45,736
5,340,000 United Engineers................................. 33,204
6,377,000 +Westmont......................................... 22,085
335,941
PREFERRED STOCKS
8,073,333 Arab Malaysian Finance,
7.50% Cv. Loan Stock,
11/20/99...................................... 4,289
1,381,000 Berjaya Sports Toto, 9.00%
Cv. Loan Stock, 10/30/97...................... 2,326
6,615
CONVERTIBLE BONDS
2,900,000 USD Renong, 2.50%, 1/15/05........................... 3,176
13,585,000 United Engineers,
2.00%, 3/1/04................................. 15,181
18,357
Total Malaysia 360,913
<CAPTION>
- --------------------------------------------------------------------------------
NEW ZEALAND -- 0.1%
- --------------------------------------------------------------------------------
COMMON STOCK
<C> <S> <C>
508,450 shs Independent Newspapers........................... 1,551
<CAPTION>
- --------------------------------------------------------------------------------
PHILIPPINES -- 3.5%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
7,091,250 Ayala Land 'B'................................... 8,179
7,075,000 *C & P Homes...................................... 4,556
469,100 Enron Global Power &
Pipeline (USD)................................ 11,082
17,113,500 JG Summit Holdings 'B'........................... 4,803
50,000 JG Summit Holdings 'B'
GDS (USD)..................................... 1,400
132,060 Manila Electric.................................. 985
20,000,000 Metro Pacific.................................... 2,884
640,000 Philipine Commerce
International Bank............................ 5,241
69,220 Philippine Long Distance
Telephone..................................... 3,859
77,500 Philippine Long Distance
Telephone ADR (USD)........................... 4,350
1,679,500 *Pilipino Telephone............................... 1,485
25,709,450 *SM Prime......................................... 6,919
85,261,000 *Southeast Asia Cement............................ 11,145
Total Philippines 66,888
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SINGAPORE -- 14.6%
- --------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS
<C> <S> <C>
8,327,000 shs DBS Land......................................... $ 24,633
882,000 Development Bank
of Singapore.................................. 10,112
1,249,000 Far East Levingston
Shipbuilding.................................. 5,392
2,790,000 Jurong Shipyard.................................. 18,560
1,513,000 Keppel........................................... 12,421
2,121,000 Mandarin Oriental (USD).......................... 2,376
7,418,000 Neptune Orient Lines............................. 8,137
2,938,000 Overseas Union Bank.............................. 18,298
3,185,000 Overseas Union Enterprises....................... 16,906
1,683,000 Sembawang........................................ 8,159
2,577,000 Singapore Airlines............................... 23,891
6,052,000 Singapore Land................................... 33,836
1,517,560 Singapore Press.................................. 23,735
1,105,000 Straits Steamship Land........................... 3,097
17,378,000 United Industrial................................ 15,496
5,785,500 United Overseas Bank............................. 50,772
982,208 wts *United Overseas Bank,
6/17/97....................................... 3,754
Total Singapore 279,575
<CAPTION>
- --------------------------------------------------------------------------------
SOUTH KOREA -- 9.5%
- --------------------------------------------------------------------------------
COMMON STOCKS AND RIGHTS
<C> <S> <C>
1,146,000 shs Cho Hung Bank.................................... 16,414
326,275 Daewoo Securities................................ 11,104
845,320 Hanil Bank....................................... 10,926
456,700 Hanil Securities................................. 6,983
100,000 Keum Kang Development............................ 2,222
657,300 *Kook Min Bank.................................... 13,702
180,716 *Kook Min Bank, new............................... 3,472
1,199,000 Korea Electric Power............................. 53,803
433,540 Korea First Bank................................. 4,216
80 Korea Growth Trust IDR
(USD)......................................... 2,840
60,000 *Korea Mobile
Telecommunications
GDS (USD)..................................... 2,235
147,971 Kun Young Construction........................... 2,321
34,474 rts *Kun Young Construction........................... 0
108,080 shs Pohang Iron & Steel.............................. 10,819
85,735 Samsung Electronics.............................. 19,483
781 *Samsung Electronics, new......................... 172
98,091 *Samsung Engineering &
Construction.................................. 3,256
36,834 shs *Samsung Engineering &
Construction, new............................. $ 1,184
1,196,000 Seoul Bank....................................... 11,504
105,000 Yukong........................................... 3,952
Total South Korea 180,608
<CAPTION>
- --------------------------------------------------------------------------------
TAIWAN -- 1.2%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
293,000 China Steel GDS (USD)............................ 5,421
666,592 *GVC Corporation
GDR (USD)..................................... 5,999
329,673 +*Tung Ho Steel Enterprise
GDR (USD)..................................... 3,544
232,329 *Yageo GDR (USD).................................. 2,265
17,229
CONVERTIBLE BONDS
1,100,000 USD Acer, 4.00%, 6/10/01............................. 3,383
2,989,000 Formosa Chemical & Fibre,
1.75%, 7/19/01................................ 2,869
6,252
Total Taiwan 23,481
<CAPTION>
- --------------------------------------------------------------------------------
THAILAND -- 8.6%
- --------------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
462,000 shs Advanced Information
Service Public................................ 7,344
2,456,900 Bangkok Bank Public.............................. 25,384
3,124,800 Bank of Ayudhya.................................. 18,005
475,300 Central Pattana Public........................... 1,699
43,000 Central Pattana Public (L)....................... 154
1,139,300 Krung Thai Bank Public........................... 4,505
326,000 Land & House..................................... 5,260
400,000 PTT Exploration &
Production.................................... 3,624
2,926,000 *Sahavirya Steel.................................. 4,476
308,300 Siam Cement...................................... 16,809
2,544,800 Siam Commercial Bank............................. 29,731
1,994,620 Thai Farmers Bank................................ 16,486
3,108,600 Thai Military Bank............................... 12,229
1,705,000 *Total Access
Communications (USD).......................... 10,315
574,100 United Communications......................... 7,209
Total Thailand 163,230
<CAPTION>
- --------------------------------------------------------------------------------
VIETNAM -- 0.1%
- --------------------------------------------------------------------------------
COMMON STOCK
<C> <S> <C>
140,800 *Lazard Freres & Co.
Vietnam Fund (USD)............................ 1,478
</TABLE>
8
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 0.7%
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
$10,000,000 Avco Financial Services
Floating Rate
Medium-Term Note,
5.827%, 12/21/95.............................. $10,000
3,000,000 National Westminster Bank,
Commercial Paper,
6.125%, 11/8/95............................... 3,001
582,166 Investments in Commercial
Paper through a joint
account, 5.87-5.88%, 11/1/95.................. 582
Total Short-Term Investments 13,583
- --------------------------------------------------------------------------------
Total Investments in Securities -- 97.7%
of Net Assets (Cost $1,864,290)
$1,864,365
- --------------------------------------------------------------------------------
Other Assets Less Liabilities.................................. 44,528
----------
NET ASSETS..................................................... $1,908,893
==========
NET ASSET VALUE PER SHARE...................................... $8.12
=====
- --------------------------------------------------------------------------------
</TABLE>
* Non-income producing
+ Affiliated company
HKD Hong Kong dollar
IDR Indonesian rupia
USD U.S. dollar
(L) Local registered
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
T. Rowe Price New Asia Fund / October 31, 1995
(in thousands)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $1,864,290)............. $1,864,365
Other assets...................................................... 73,895
----------
Total assets...................................................... 1,938,260
----------
LIABILITIES....................................................... 29,367
----------
NET ASSETS........................................................ $1,908,893
==========
Net Assets Consist of:
Accumulated net investment income - net of distributions.......... $ 17,116
Accumulated net realized gain/loss - net of distributions......... (41,030)
Net unrealized gain (loss)........................................ (11)
Paid-in-capital applicable to 235,132,955 shares of $0.01 par
value capital stock outstanding; 2,000,000,000 shares of the
Corporation authorized.......................................... 1,932,818
----------
NET ASSETS........................................................ $1,908,893
==========
NET ASSET VALUE PER SHARE......................................... $8.12
=====
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price New Asia Fund / Year Ended October 31, 1995
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividend (net of foreign taxes of $3,900)......................... $ 34,731
Interest.......................................................... 7,748
Other............................................................. 43
---------
Total income...................................................... 42,522
---------
Expenses
Investment management............................................. 16,864
Shareholder servicing............................................. 4,266
Custody and accounting............................................ 987
Prospectus and shareholder reports................................ 424
Registration...................................................... 237
Proxy and annual meeting.......................................... 94
Directors......................................................... 39
Legal and audit................................................... 23
Miscellaneous..................................................... 76
---------
Total expenses.................................................... 23,010
---------
Net investment income............................................... 19,512
---------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities........................................................ (39,711)
Foreign currency transactions..................................... (2,753)
---------
Net realized gain (loss).......................................... (42,464)
---------
Change in net unrealized gain or loss on:
Securities........................................................ (197,815)
Other assets and liabilities denominated in foreign currencies.... (24)
---------
Change in net unrealized gain or loss............................. (197,839)
---------
Net realized and unrealized gain (loss)............................. (240,303)
---------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS................... $(220,791)
=========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price New Asia Fund
(in thousands)
<TABLE>
<CAPTION>
Year Ended October 31,
1995 1994
---------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income.............................. $ 19,512 $ 17,373
Net realized gain (loss)........................... (42,464) 202,920
Change in net unrealized gain or loss.............. (197,839) (176,293)
---------- -----------
Increase (decrease) in net assets from operations.. (220,791) 44,000
---------- -----------
Distributions to shareholders
Net investment income.............................. (15,633) (6,625)
Net realized gain.................................. (199,093) (35,973)
---------- -----------
Decrease in net assets from distributions.......... (214,726) (42,598)
---------- -----------
Capital share transactions*
Shares sold........................................ 666,757 1,784,458
Distributions reinvested........................... 204,998 40,413
Shares redeemed.................................... (830,186) (1,173,882)
---------- -----------
Increase (decrease) in net assets from capital
share transactions................................ 41,569 650,989
---------- -----------
Increase (decrease) in net assets.................. (393,948) 652,391
NET ASSETS
Beginning of period.................................. 2,302,841 1,650,450
---------- ----------
End of period........................................ $1,908,893 $2,302,841
========== ==========
- --------------------------------------------------------------------------------
*Share information
Shares sold........................................ 81,249 177,655
Distributions reinvested........................... 25,593 3,858
Shares redeemed.................................... (100,461) (119,834)
---------- ----------
Increase (decrease) in shares outstanding.......... 6,381 61,679
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price New Asia Fund / October 31, 1995
Note 1 - Significant Accounting Policies
T. Rowe Price International Funds, Inc. (the Corporation) is registered under
the Investment Company Act of 1940. The New Asia Fund (the fund), a
diversified, open-end management investment company, is one of the portfolios
established by the Corporation.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including Nasdaq) are valued at the last quoted sales price at the
time the valuations are made. A security which 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. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price within
the limits of the latest bid and asked prices deemed by the Board of Directors,
or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service. Short-
term debt securities are valued at their cost which, when combined with accrued
interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities 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 or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
B) Affiliated Companies - Investments in companies 5% or more of whose
outstanding voting securities are held by the fund are defined as "Affiliated
Companies" in Section 2(a)(3) of the Investment Company Act of 1940.
C) Currency Translation - Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such transactions.
The effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and losses.
D) 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. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
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.
A) Emerging Markets - At October 31, 1995, the fund held investments in
securities of companies located in emerging markets. Future economic or
political developments could adversely affect the liquidity or value, or both,
of such securities.
B) Commercial Paper Joint Account - The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper.
12
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
All securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
C) Securities Lending - To earn additional income, the fund lends its
securities to approved brokers. At October 31, 1995, the market value of
securities on loan was $26,498,000, which was fully collateralized with cash.
Although the 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 them.
D) Other - Purchases and sales of portfolio securities, other than short-term
securities, aggregated $1,207,678,000 and $1,319,045,000, respectively, for the
year ended October 31, 1995.
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 and distribute all of its
taxable income. The fund has unused realized capital loss carryforwards for
federal income tax purposes of $40,050,000 which expire in 2003. The Fund
intends to retain gains realized in future years that may be offset by available
capital loss carryforwards.
In order for the fund's capital accounts and distributions to shareholders to
reflect the tax character of certain transactions, $2,464,000 of undistributed
net investment income and $2,474,000 of undistributed net realized gains were
reclassified as a $10,000 decrease to paid-in-capital during the year ended
October 31, 1995. The results of operations and net assets were not affected by
the reclassifications.
At October 31, 1995, the aggregate cost of investments for federal income tax
and financial reporting purposes was $1,864,290,000 and net unrealized gain
aggregated $75,000, of which $168,242,000 related to appreciated investments and
$168,167,000 to depreciated investments.
Note 4 - Related Party Transactions
The fund is managed by Rowe Price-Fleming International, Inc. (the Manager),
which is owned by T. Rowe Price Associates, Inc. (Price Associates), Robert
Fleming Holdings Limited, and Jardine Fleming Holdings Limited under a joint
venture agreement.
The investment management agreement between the fund and the Manager provides
for an annual investment management fee, of which $1,402,000 was payable at
October 31, 1995. The fee is computed daily and paid monthly, consisting of an
Individual Fund Fee equal to 0.50% of average daily net assets and a Group Fee.
The Group Fee is based on the combined assets of certain mutual funds sponsored
by the Manager or Price Associates (the Group). The Group Fee rate ranges from
0.48% for the first $1 billion of assets to 0.31% for assets in excess of $34
billion. At October 31, 1995, and for the year then ended, the effective annual
Group Fee rate was 0.34%. The fund pays a pro rata share of the Group Fee based
on the ratio of its net assets to those of the Group.
In addition, the fund has entered into agreements with Price Associates and
two wholly owned subsidiaries of Price Associates, pursuant to which the fund
receives certain other services. Price Associates computes the daily share
price and maintains the financial records of the fund. T. Rowe Price Services,
Inc. is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price Retirement
Plan Services, Inc., provides subaccounting and recordkeeping services for
certain retirement accounts invested in the fund. The fund incurred expenses
pursuant to these related party agreements totaling approximately $3,366,000 for
the year ended October 31, 1995, of which $401,000 was payable at period-end.
During the year ended October 31, 1995, the fund, in the ordinary course of
business, paid commissions of $2,523,000 to, and placed security purchase and
sale orders aggregating $516,321,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions.
13
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price New Asia Fund
<TABLE>
<CAPTION>
For a share outstanding throughout each period++++
----------------------------------------------------------------------------
Year Ended Ten Months Year Ended September 28,
October 31, Ended December 31, 1990* to
------------------- October 31, ---------------- December 31,
1995 1994 1993++ 1992 1991 1990
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................... $10.07 $ 9.88 $6.34 $5.91 $5.04 $5.00
------ ------- ----- ----- ----- -----
Investment Activities
Net investment income............... 0.08 0.06 0.03 0.10 0.10** 0.04**
Net realized and unrealized
gain (loss)....................... (1.07) 0.36 3.51 0.56 0.87 0.04
----- ------- ----- ----- ----- -----
Total from investment activities.... (0.99) 0.42 3.54 0.66 0.97 0.08
----- ------- ----- ----- ----- -----
Distributions
Net investment income............... (0.07) (0.04) -- (0.10) (0.10) (0.04)
Net realized gain................... (0.89) (0.19) -- (0.13) -- --
------ ------- ----- ----- ----- -----
Total distributions................. (0.96) (0.23) -- (0.23) (0.10) (0.04)
------ ------- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD........ $ 8.12 $ 10.07 $9.88 $6.34 $5.91 $5.04
====== ======= ===== ===== ===== =====
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total return.......................... (9.7)% 4.1% 55.8% 11.2% 19.3%** 1.6%**
Ratio of expenses to
average net assets.................. 1.15% 1.22% 1.29%+ 1.51% 1.75%** 1.75%**+
Ratio of net investment income to
average net assets.................. 0.97% 0.85% 1.02%+ 1.64% 1.75%** 2.10%**+
Portfolio turnover rate............... 63.7% 63.2% 40.4%+ 36.3% 49.0% 3.2%+
Net assets, end of period
(in thousands)...................... $1,908,893 $2,302,841 $1,650,450 $314,504 $102,922 $10,986
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++++ All per share figures reflect the 2-for-1 stock split effective May 27,
1994.
* Commencement of operations.
++ The fund's fiscal year-end was changed to October 31.
** Excludes expenses in excess of a 1.75% voluntary expense limitation in
effect through December 31, 1992.
14
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
T. Rowe Price New Asia Fund
In our opinion, the accompanying statement of assets & 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 New Asia Fund (one of
the portfolios constituting T. Rowe Price International Funds, Inc.) at October
31, 1995, and the results of its operations, the changes in its net assets and
the financial highlights for the year ended October 31, 1995, in conformity with
generally accepted accounting principles. 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 audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards 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
audit, which included confirmation of securities at October 31, 1995 by
correspondence with custodians and brokers and, where appropriate, the
application of alternative auditing procedures for unsettled security
transactions, provides a reasonable basis for the opinion expressed above. The
financial statements of the Fund for the fiscal periods presented prior to the
year ended October 31, 1995 were audited by other independent accountants whose
report dated November 17, 1994 expressed an unqualified opinion on those
statements.
PRICE WATERHOUSE LLP
Baltimore, Maryland
November 17, 1995
During fiscal 1995, Price Waterhouse LLP succeeded Coopers & Lybrand, L.L.P. as
independent accountants for the T. Rowe Price New Asia Fund, a decision that was
approved by the fund's Board of Directors. During the last two fiscal years, the
fund has received unqualified opinions and has had no disagreements with Coopers
& Lybrand, L.L.P. or reportable events that caused the change.
15
<PAGE>
- --------------------------------------------------------------------------------
Annual Report
- --------------------------------------------------------------------------------
For yield, price, last transaction,
and current balance, 24 hours, T. Rowe Price
7 days a week, call: -------------
1-800-638-2587 toll free
625-7676 Baltimore area New Asia Fund
For assistance with your existing
fund account, call:
Shareholder Service Center October 31, 1995
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distri-
bution only to shareholders and to
others who have received a copy of
the prospectus of the T. Rowe Price
New Asia Fund.
[LOGO OF T. ROWE PRICE APPEARS HERE]
NAF
