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T. Rowe Price
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Annual Report
New Asia Fund
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October 31, 1996
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Report Highlights
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* After getting off to a strong start this year, Far East markets stalled
during the six months ended October 31.
* Among the larger markets, only Hong Kong had a positive return for the six
months (10%); Thailand and South Korea had the largest negative returns -
33% and 34%, respectively.
* The New Asia Fund declined 6.49% for the six-month period, slightly behind
its benchmark index and Lipper Average; its 12-month return of 7.58% lagged
the benchmark but surpassed the Lipper Average.
* Holdings in Hong Kong were increased from 26% of fund assets to 34%;
exposure to Malaysia was basically unchanged at 18%, as were our Singapore
holdings at 14%.
* Contrary to expectations, growth did not accelerate except in Hong Kong. We
are focusing on rapidly growing companies with reasonable valuations and
see indications that growth may resume.
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Fellow Shareholders
================================================================================
The six-month period since our last report was unrewarding for Pacific Rim
investors, with a gradual erosion of the strong gains made early in the calendar
year. The negative returns of your fund, the benchmark index, and the peer group
average all reflect how difficult conditions have again been in Asia in recent
months.
<PAGE>
As in past years, the performances of the various Asian markets diverged
widely. The headline-catching advance of the Hong Kong market stood in stark
contrast to significant declines in Thailand, South Korea, and Singapore, all of
which affected performance due to the fund's broadly diversified approach to
investing in Asia. We are optimistic about Hong Kong's future and have built it
into the largest position (34% of net assets), but we are reluctant to raise
this weighting further with the Chinese takeover now only eight months away. We
have been particularly negative about Thailand and remain significantly
underweighted there, but our enthusiasm for South Korean stocks has proved
costly so far.
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Performance Comparison
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Periods Ended 10/31/96 6 Months 12 Months
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New Asia Fund - 6.49% 7.58%
MSCI All Country Far East Free Ex-Japan Index - 6.16 9.89
Lipper Pacific Ex-Japan Funds Average - 4.89 5.45
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Your fund's six-month return approximated that of the benchmark index and
lagged its peer group average. For the 12-month period, the fund outstripped the
average competitor fund, as shown in the table, but trailed the index due
largely to overweighted positions in some of the smaller markets, notably South
Korea, China, and India.
Investment Review
Hong Kong proved the most robust market in the last six months, rising over
10% as the economy showed signs of revival. Earnings estimates have started to
be upgraded on the back of strong results from the financial sector and gains in
residential property prices. While worries over U.S. interest rate increases
remain (reflecting the linkage of the Hong Kong and U.S. dollars), the Bank of
China has reduced its rates twice in the last few months, and the Hong Kong
market will benefit from stronger liquidity from the mainland. Consumers remain
cautious, due in part to political uncertainty about 1997, but Sino-British
relations have continued to thaw with the two governments at last agreeing to
approve the new container terminal development. The strongest sign of a pickup
came from the ports, where improving volumes in the summer attested to the
healthier Chinese economy.
The Malaysian market - your fund's second largest position - was relatively
resilient over the summer, with a high level of activity in smaller companies.
The economy appears to be starting to slow, which has reduced concerns about
Malaysia's high external deficits. New regulations in the insurance sector look
set to benefit the larger and better capitalized local firms such as Malaysian
Assurance Alliance.
<PAGE>
================================================================================
Market Performance
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(In U.S. Dollar Terms)
Periods Ended 10/31/96 6 Months 12 Months
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Hong Kong 10.40% 28.04%
Indonesia - 6.89 19.27
Malaysia - 0.88 26.84
Philippines - 0.76 10.57
Singapore - 16.44 - 3.14
South Korea - 34.02 - 36.25
Thailand - 32.59 - 29.45
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Source: FAME Information Services, Inc., using MSCI indices.
================================================================================
Singapore stocks, composing 14% of net assets, were very weak over the
period, falling 16%. Singapore's economy continued to slow sharply, dragged down
by declining exports. Non-oil domestic exports actually fell 6% from September
to September, with electronics particularly soft. In addition, with the
government announcing measures to dampen the residential property market (many
listed companies have high real estate exposure), the corporate reporting season
was disappointing; only low single-digit levels of earnings growth were reported
overall. While valuations look attractive historically, the market is unlikely
to perform strongly again until the economy firms, probably in 1997.
In Taiwan, the stock market paused for breath after a strong run. Political
tensions with Beijing are much reduced, although agreement has not yet been
reached regarding direct shipping links. The Taiwanese economy remained weak,
with the central bank gradually easing reserve requirements to the benefit of
our bank holdings.
The Thai market collapsed over the last six months, falling 33% due to
below-consensus earnings announcements, concern about bad loans in the banking
sector, and slowing economic growth together with the downgrading by
international rating agencies of Thai short-term debt. These worries spilled
into politics with allegations of economic mismanagement and corruption by
opposition politicians culminating in the dissolution of parliament at the end
of September. Although there were no particular new developments for stocks in
our portfolio, performance was adversely affected by poor overall market
conditions.
[Pie Chart: Geographical diversification: Hong Kong 34%, Malaysia 18%,
Singapore 14%, South Korea 6%, Indonesia 6%, Thailand 4%, Philippines 4%, Other
and Reserves 14%.]
<PAGE>
Politics was also a factor in the Indonesian market. The government's
suppression of key opposition figures in the late summer caused some rioting in
Jakarta and a subsequent stock market sell-off. There is little doubt that
President Suharto remains in control of the country, however, and with the
market's weakness, value has emerged among some key growth stocks. Quarterly
earnings on the whole were good, particularly from companies with strong
domestic franchises like Telekom Indonesia and Hanjaya Mandala Sampoerna.
Philippine companies continued to report strong earnings growth, supported
by a slowly accelerating economy. We remain comfortable with our holdings in
Philippine banks, such as Philippine National Bank, which are seeing improvement
in overall asset yields due to the improved economy. Although delays in the
disbursement of funds held back sales for C&P Homes, the government has made
this a priority, and we are starting to see some improvement. Following a good
agricultural harvest, the Filipino consumer is beginning to see a rise in
disposable income, which was evident in snack foods company Universal Robina's
recent sales pickup.
More political turmoil, an infiltration of North Korean soldiers, and a
sharply rising trade deficit conspired to push South Korea's stock market 34%
lower over the last six months. The trade account was damaged by the loss of
competitiveness against Japan in many industries after the recent weakness of
the yen and also by a sharp fall in semiconductor prices, which hurt a full 20%
of Korea's exports. While South Korea remains home to some of Asia's cheapest
stocks, the performance of the whole market is unlikely to improve until
earnings momentum returns.
Summary and Outlook
Asian equity markets were plagued this year by an unfolding deceleration in
growth brought on by a combination of tight domestic monetary conditions and a
dramatic deterioration in exports. We believe the bulk of the problem is
cyclical in nature and look for a significant improvement during the first half
of 1997 as earnings comparisons become easier, prices of key exports improve,
and inventories are finally reduced. However, the competitiveness of some Asian
industries remains a concern, and we would still like to see corporate
managements focusing more on returns to shareholders.
We can, though, find companies throughout the region that are growing
rapidly and now have reasonable valuations. We will continue to focus on these
investments and are hopeful that, with the economic backdrop improving, this
will lead to good performance in the year ahead.
Respectfully submitted,
[Signature]
Martin G. Wade
President
November 22, 1996
<PAGE>
================================================================================
About Your Investment Manager
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Since many of you are new investors in the T. Rowe Price international
stock funds, we want to tell you briefly about the management team behind them.
The funds are managed by Rowe Price-Fleming International, Inc., a joint venture
between T. Rowe Price and Robert Fleming Holdings Ltd. of London.
Rowe Price-Fleming brings a wealth of experience to international
investing. T. Rowe Price was founded in 1937, and Robert Fleming, a British
merchant bank and investment firm, was founded in 1873. Since its birth in 1979,
Rowe Price-Fleming has grown into the largest U.S. manager of international
no-load funds,* with more than $27 billion under its stewardship, including 11
stock and bond mutual funds.
While Rowe Price-Fleming's investment team is based in London, portfolio
managers are also located in Tokyo, Hong Kong, Singapore, Baltimore, and soon in
South America. The company's equity managers are responsible for specific stock
selection, but they are supported by more than 100 analysts in 14 financial
centers worldwide.
Rowe Price-Fleming's investment philosophy is straightforward and
consistent: Each equity fund seeks broad diversification among companies that
offer above-average growth prospects at reasonable valuations. While
diversifying among many different companies and industries, each fund adheres
strictly to its prospectus.
Portfolio managers combine a macroeconomic view of each market with
extensive research on individual companies. Therefore, your portfolios can
potentially benefit from positive economic trends as well as from the selection
of individual stocks that may perform well regardless of economic conditions.
Rowe Price-Fleming believes that its emphasis on faster-growing foreign
economies, broad diversification, and strong commitment to fundamental research
helps it identify the best opportunities in international stocks.
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*Strategic Insight Simfund
================================================================================
<PAGE>
================================================================================
Portfolio Highlights
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Industry Diversification
Percent of Percent of
Net Assets Net Assets
4/30/96 10/31/96
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Finance .................................. 49.2% 49.3%
Services ................................. 12.2 14.0
Multi-Industry ........................... 7.5 12.2
Materials ................................ 8.9 6.5
Energy ................................... 6.4 5.9
Consumer Goods ........................... 4.1 3.7
Capital Equipment ........................ 5.7 3.3
Miscellaneous ............................ 0.6 0.3
Reserves ................................. 5.4 4.8
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Total .................................... 100.0% 100.0%
================================================================================
================================================================================
Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
10/31/96
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Hutchison Whampoa, Hong Kong ................................... 3.6%
United Overseas Bank, Singapore 3.1
Hong Kong & Shanghai Bank, Hong Kong ........................... 2.6
Guoco Group, Hong Kong ......................................... 2.5
Hong Kong Land Holdings, Hong Kong ............................. 2.4
Swire Pacific, Hong Kong ....................................... 2.3
United Engineers, Malaysia ..................................... 2.3
Dao Heng Bank Group, Hong Kong ................................. 2.2
New World Development, Hong Kong ............................... 2.0
Overseas Union Bank, Singapore ................................. 2.0
Renong, Malaysia ............................................... 1.8
Magnum, Malaysia ............................................... 1.7
Tanjong, Malaysia .............................................. 1.7
China Trust, Taiwan ............................................ 1.6
Korea Electric Power, South Korea .............................. 1.6
<PAGE>
Singapore Land, Singapore ...................................... 1.6
Hysan Development, Hong Kong ................................... 1.4
Huaneng Power International, China ............................. 1.4
Arab Malaysian Finance, Malaysia ............................... 1.4
First Pacific, Hong Kong ....................................... 1.4
Singapore Press, Singapore ..................................... 1.3
Development Bank of Singapore, Singapore ....................... 1.3
Cheung Kong Holdings, Hong Kong 1.3
Hopewell Holdings, Hong Kong ................................... 1.2
DBS Land, Singapore ............................................ 1.2
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Total .......................................................... 46.9%
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================================================================================
Performance Comparison
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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 a broad-based average or index.
The index return does not reflect expenses, which have been deducted from the
fund's return.
[SEC Chart: New Asia Fund $21,252, MSCI AC Far East Free Ex-Japan Index
$33,137, Lipper Pacific Ex-Japan Funds Average $22,679
================================================================================
Average Annual Compound Total Return
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This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
================================================================================
Since Inception
Periods Ended 10/31/96 1 Year 3 Years 5 Years Inception Date
- --------------------------------------------------------------------------------
New Asia Fund 7.58% 0.38% 12.68% 13.18% 9/28/90
- --------------------------------------------------------------------------------
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
<TABLE>
For a share outstanding throughout each period
====================================================================================================================================
Financial Highlights
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Year 10 Months++ Year
Ended Ended Ended
10/31/96 10/31/95 10/31/94 10/31/93 12/31/92 12/31/91
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
Beginning of period ............... $ 8.12 $ 10.07 $ 9.88 $ 6.34 $ 5.91 $ 5.04
Investment activities
Net investment income ..... 0.06 0.08 0.06 0.03 0.10 0.10*
Net realized and
unrealized gain (loss) .... 0.55 (1.07) 0.36 3.51 0.56 0.87
Total from
investment activities ..... 0.61 (0.99) 0.42 3.54 0.66 0.97
Distributions
Net investment income ..... (0.09) (0.07) (0.04) -- (0.10) (0.10)
Net realized gain ......... -- (0.89) (0.19) -- (0.13) --
Total distributions ....... (0.09) (0.96) (0.23) -- (0.23) (0.10)
NET ASSET VALUE
End of period ..................... $ 8.64 $ 8.12 $ 10.07 $ 9.88 $ 6.34 $ 5.91
Ratios/Supplemental Data
Total return ...................... 7.58% (9.70)% 4.11% 55.84% 11.24% 19.32%*
Ratio of expenses to
average net assets ................ 1.11% 1.15% 1.22% 1.29%+ 1.51% 1.75%*
Ratio of net investment
income to average
net assets ........................ 0.66% 0.97% 0.85% 1.02%+ 1.64% 1.75%*
Portfolio turnover rate ........... 42.0% 63.7% 63.2% 40.4%+ 36.3% 49.0%
Average commission
rate paid ......................... $ 0.0057 $- $- $- $- $-
Net assets, end of period
(in millions) ..................... $ 2,041 $ 1,909 $ 2,303 $ 1,650 $ 315 $ 103
====================================================================================================================================
<FN>
* Excludes expenses in excess of a 1.75% voluntary expense limitation in effect through 12/31/92.
+ Annualized.
++ The fund's fiscal year-end was changed to 10/31.
# All per share figures reflect the 2-for-1 stock split effective 5/27/94.
</FN>
</TABLE>
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
Portfolio of Investments
Shares/Par Value
In thousands
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CHINA 3.4%
Common Stocks 3.4%
China North Industries Investment (USD) ............... 4,998,000 $ 2,249
Guangdong Electric Power (Class B) (HKD) + ............ 29,986,105 20,748
Huaneng Power International (Class N) ADR (USD) * ..... 1,875,640 29,072
Jilin Chemical Industrial (HKD) + ..................... 49,162,000 6,549
Shanghai Petrochemical (Class H) (HKD) ................ 30,186,000 8,101
Yizheng Chemical Fibre (Class H) (HKD) ................ 13,098,000 3,032
Total China (Cost $76,768) ............................ 69,751
HONG KONG 34.4%
Common Stocks and Warrants 34.4%
Amway Asia Pacific (USD) ............................... 168,000 5,985
Bank of East Asia ...................................... 2,802,276 10,945
Cathay Pacific Airways ................................. 7,500,000 11,737
CDL Hotels International ............................... 7,870,363 4,071
Cheung Kong Holdings ................................... 3,250,000 26,060
Cheung Kong Infrastructure ............................. 2,232,000 4,157
China Light & Power .................................... 1,750,000 8,125
China Strategic Investment, warrants, exp. 8/30/97 * ... 1,350,000 26
Citic Pacific .......................................... 1,000,000 4,863
Dao Heng Bank Group .................................... 10,004,260 43,991
Dickson Concepts International ......................... 80,000 259
Fairyoung Holdings ..................................... 19,390,000 7,774
First Pacific .......................................... 20,335,149 28,009
Great Eagle Holdings ................................... 5,752,275 18,487
Guangdong Investment ................................... 20,868,000 14,978
Guangzhou Investment ................................... 35,040,000 11,329
Guoco Group ............................................ 9,776,000 51,711
Henderson Investor ..................................... 2,960,000 3,235
Henderson Land Development ............................. 1,000,000 8,891
HKR International ...................................... 8,800,440 11,154
Hon Kwok Land Investment ............................... 20,441,949 6,675
Hong Kong & Shanghai Bank .............................. 2,587,503 52,706
Hong Kong & Shanghai Hotels ............................ 3,300,000 6,060
<PAGE>
Hong Kong Land Holdings (USD) .......................... 21,825,950 48,672
Hong Kong Realty & Trust ............................... 160,000 652
Hong Kong Telecommunications ........................... 11,594,327 20,468
Hopewell Holdings ...................................... 37,826,000 25,438
Hutchison Whampoa ...................................... 10,546,000 73,651
Hysan Development ...................................... 9,165,000 29,395
Hysan Development, warrants, exp. 4/30/98 * ............ 375,000 181
Jardine International Motor Holdings ................... 2,416,000 3,031
Kumagai Gumi, warrants, exp. 6/30/98 * ................. 388,000 73
Manhattan Card ......................................... 10,000,000 4,947
National Mutual Asia ................................... 14,146,000 11,892
New World Development .................................. 7,057,356 41,072
New World Infrastructure ............................... 2,885,000 7,182
Pokphand ............................................... 13,086,000 4,358
Shangri-La Asia Capital ................................ 4,999,000 7,144
South China Morning Post ............................... 6,884,000 5,876
South Sea Development * ................................ 2,085,090 102
Sun Hung Kai Properties ................................ 600,000 6,829
Swire Pacific (Class A) ................................ 5,300,000 46,782
Wharf Holdings ......................................... 3,920,000 16,172
Wing Hang Bank ......................................... 1,925,500 7,745
Total Hong Kong (Cost $591,107) ........................ 702,890
INDIA 1.9%
Common Stocks 1.9%
Grasim Industries GDS (USD) ....................... 526,000 7,233
Hindalco GDR (USD) ................................ 694,500 12,675
Mahanagar Telephone ............................... 1,200,000 7,667
Reliance Industries GDS (USD) + ................... 710,000 7,632
Tata Engineering & Locomotive ..................... 164,300 1,915
Tata Engineering & Locomotive GDR (USD) ........... 124,800 1,513
Total India (Cost $50,076) ........................ 38,635
INDONESIA 5.6%
Common Stocks 5.6%
Bank Dagang Nasional ............................ 4,921,250 3,486
Hanjaya Mandala Sampoerna ....................... 1,980,500 18,408
Indofoods Sukses Makmur ......................... 4,650,600 $ 9,783
Indorama Synthetic .............................. 2,280,500 6,511
Indosat (Class B) ............................... 2,832,000 8,572
Indosat (Class B) ADR (USD) ..................... 125,000 3,766
Jaya Real Property .............................. 2,376,000 2,627
Kalbe Farma ..................................... 788,000 930
<PAGE>
Modernland Realty ............................... 723,200 411
Mulia Industrindo ............................... 8,659,810 8,179
Pabrik Kertas Tjiwi Kimia ....................... 5,194,091 5,352
Panin Bank ...................................... 3,384,500 3,378
Semen Cibinong .................................. 914,400 2,022
Semen Gresik .................................... 3,714,000 10,683
Telekom Indonesia ............................... 12,357,000 18,435
Telekom Indonesia ADS (USD) ..................... 412,000 12,411
Total Indonesia (Cost $102,820) ................. 114,954
MALAYSIA 18.3%
Common Stocks and Warrants 16.5%
Affin Holdings ........................................ 9,764,800 25,122
Affin Holdings, warrants, exp. 11/15/99 * ............. 400 1
Arab Malaysian Finance ................................ 4,270,333 22,987
Bandar Raya Developments .............................. 1,200,000 2,327
Berjaya Leisure ....................................... 1,200,000 1,492
Berjaya Sports Toto ................................... 2,551,499 9,594
Chemical Company of Malaysia .......................... 2,643,000 8,107
Chemical Company of Malaysia, warrants, exp. 11/7/00 * 587,250 676
Commerce Asset Holdings ............................... 1,300,000 8,490
Diversified Resources ................................. 1,367,000 4,707
Gadek ................................................. 1,600,000 13,299
Hicom Holdings ........................................ 2,250,000 6,011
Magnum ................................................ 20,526,000 35,422
Malaysian Assurance Alliance .......................... 1,937,250 9,508
MBF Capital ........................................... 7,500,000 10,331
Metacorp .............................................. 900,000 2,743
Multi-Purpose Holdings ................................ 8,000,000 13,679
Pacific & Orient ...................................... 1,575,000 3,740
Phileo Allied ......................................... 6,000,000 10,022
Public Finance ........................................ 3,300,000 $ 5,094
Renong ................................................ 21,150,000 33,318
Renong, warrants, exp. 11/21/00 * ..................... 2,893,750 1,180
Resorts World ......................................... 1,928,000 11,065
Sime Darby ............................................ 900,000 3,188
Sungei Way Holdings ................................... 758,000 4,320
Tanjong ............................................... 9,031,000 35,030
Technology Resources Industries * ..................... 6,070,000 14,535
Tenaga Nasional Berhad ................................ 1,047,000 4,186
Time Engineering ...................................... 2,520,000 4,927
United Engineers ...................................... 2,500,000 19,790
Westmont Industries ................................... 6,873,600 11,590
<PAGE>
336,481
Preferred Stocks 0.5%
Arab Malaysian Finance, cv. loan stock, 7.50%, 11/20/99 .... 8,073,333 5,816
Phileo Allied, cv. loan stock, 4.00%, 9/12/01 .............. 4,000,000 1,963
Renong, cv. loan stock, 4.00%, 5/21/01 ..................... 4,630,000 1,695
9,474
Convertible Bonds 1.3%
Renong, 2.50%, 1/15/05 USD ...................... 800,000 921
United Engineers, 2.00%, 3/1/04 USD .............. 19,460,000 26,466
27,387
Total Malaysia (Cost $328,206) ................... 373,342
PHILIPPINES 3.8%
Common Stocks 3.8%
Ayala Land (Class B) ............................ 11,891,375 12,670
C & P Homes ..................................... 8,697,000 3,971
Enron Global Power & Pipeline (USD) ............. 469,100 13,193
JG Summit Holdings .............................. 8,557,000 2,377
JG Summit Holdings (Class B) GDS (USD) .......... 50,000 1,363
Metro Pacific ................................... 46,715,923 11,377
Philippine National Bank ........................ 674,430 7,763
San Miguel (Class B) ............................ 928,000 3,355
Southeast Asia Cement * ......................... 196,671,340 18,709
Universal Robina ................................ 7,204,000 3,289
Total Philippines (Cost $80,687) ................ 78,067
SINGAPORE 14.2%
Common Stocks and Warrants 14.2%
City Developments .................................... 393,000 3,097
DBS Land ............................................. 8,016,000 25,269
Development Bank of Singapore ........................ 2,221,000 26,649
Far East Levingston Shipbuilding ..................... 1,248,000 5,981
Fraser & Neave ....................................... 610,800 6,071
Jurong Shipyard ...................................... 1,319,000 6,181
Keppel ............................................... 1,149,000 8,565
Mandarin Oriental (USD) .............................. 3,111,512 4,200
Overseas Union Bank .................................. 5,911,000 40,288
Overseas Union Enterprises ........................... 1,697,000 8,313
Singapore Airlines ................................... 717,000 6,312
Singapore Land ....................................... 5,889,000 32,612
Singapore Press ...................................... 1,622,560 26,956
Straits Steamship Land ............................... 2,600,000 7,974
Straits Steamship Land, warrants, exp. 12/12/00 * .... 325,000 335
United Industrial .................................... 18,278,000 15,183
United Overseas Bank ................................. 6,429,500 62,538
United Overseas Bank, warrants, exp. 6/17/97 * ....... 491,208 1,744
Want Want Holdings (USD) ............................. 500,000 1,230
Total Singapore (Cost $284,910) ...................... 289,498
<PAGE>
SOUTH KOREA 6.2%
Common Stocks 6.2%
Cho Hung Bank ..................................... 1,146,000 11,909
Daewoo Securities ................................. 332,800 6,686
Hanil Bank ........................................ 865,320 7,940
Hanil Securities .................................. 456,700 4,754
Kook Min Bank ..................................... 858,129 16,451
Korea Electric Power .............................. 1,139,000 33,498
Korea Growth Trust IDR (USD) ...................... 40 1,100
Korea Housing Bank ................................ 468,430 9,826
Korea Mobile Telecommunications ADS (USD) ......... 180,000 2,385
Pohang Iron & Steel ............................... 143,640 9,153
Samsung Electronic * .............................. 180,218 13,179
Samsung Electronic, new * ......................... 43,746 2,991
Seoul Bank ........................................ 696,000 4,043
Shinhan Bank ...................................... 38,390 754
Yukong ............................................ 120,621 2,807
Total South Korea (Cost $172,113) ................. 127,476
TAIWAN 3.4%
Common Stocks 3.4%
Acer ........................................... 2,136,752 3,041
China Trust .................................... 18,993,432 33,656
Fuh Hwa Securities Finance ..................... 2,300,000 3,917
GVC Corporation GDR (USD) * .................... 41,349 293
GVC Corporation GDR (144A) (USD) * ............. 33,660 238
ICBC ........................................... 375,000 1,110
Macronix International ......................... 2,010,000 2,671
Taichung Business Bank ......................... 5,796,000 11,260
Yageo .......................................... 5,722,800 11,325
Yageo GDR (USD) ................................ 162,400 1,587
Total Taiwan (Cost $59,376) .................... 69,098
THAILAND 3.9%
Common Stocks and Warrants 3.8%
Advanced Information Service ........................ 250,000 3,393
Bangkok Bank ........................................ 1,542,100 16,452
Bank of Ayudhya ..................................... 1,239,187 3,548
Central Pattana ..................................... 1,449,100 6,144
PTT Exploration & Production ........................ 793,500 11,391
Siam Cement ......................................... 150,300 5,141
<PAGE>
Siam Commercial Bank ................................ 834,600 7,595
Thai Farmers Bank ................................... 1,048,020 8,016
Thai Farmers Bank, warrants, exp. 9/15/02 * ......... 235,327 100
Total Access Communications (USD) ................... 1,749,600 12,072
United Communications ............................... 503,200 4,184
78,036
Convertible Bonds 0.1%
Bangkok Bank, 3.25%, 3/3/04 .............. USD 1,600,000 1,626
1,626
Total Thailand (Cost $78,232) ............ 79,662
VIETNAM 0.1%
Common Stocks 0.1%
Lazard Freres & Co. Vietnam Fund (USD) * ............. 152,800 $ 1,146
Total Vietnam (Cost $1,578) .......................... 1,146
SHORT-TERM INVESTMENTS 2.9%
Commercial Paper 2.9%
Bank of America, 5.40%, 2/5/97 .......................... $10,000,000 9,856
Caisse des Depots et Consignations, 4(2), 5.25%, 11/21/96 9,000,000 8,974
Finova Capital, 5.29%, 11/27/96 ......................... 10,000,000 9,962
Panasonic Finance, 4(2), 5.25%, 12/9/96 ................. 10,000,000 9,944
Investments in Commercial Paper through a joint account
5.56-5.63%, 11/1/96 .................... 19,893,760 19,894
Total Short-Term Investments (Cost $58,630) ............. 58,630
Total Investments in Securities
98.1% of Net Assets (Cost $1,884,503) ................... $ 2,003,149
Other Assets Less Liabilities ........................... 38,247
NET ASSETS .............................................. $ 2,041,396
NET ASSET VALUE PER SHARE ............................... $ 8.64
- --------------------------------------------------------------------------------
* Non-income producing
+ Affiliated company
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors."
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers -- total of such securities at year-end amounts to
0.01% of net assets.
HKD Hong Kong dollar
USD U.S. dollar
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
================================================================================
Assets
Investments in securities, at value (cost $1,884,503) ......... $ 2,003,149
Other assets .................................................. 76,784
Total assets .................................................. 2,079,933
Liabilities
Total liabilities ............................................. 38,537
NET ASSETS .................................................... $ 2,041,396
Net Assets Consist of:
Accumulated net investment income - net of distributions ...... $ 10,897
Accumulated net realized gain/loss - net of distributions ..... (41,221)
Net unrealized gain (loss) .................................... 118,420
Paid-in-capital applicable to 236,268,877 shares of
$0.01 par value capital stock outstanding;
2,000,000,000 shares of the Corporation authorized ............ 1,953,300
NET ASSETS .................................................... $ 2,041,396
NET ASSET VALUE PER SHARE ..................................... $ 8.64
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
Year
Ended
10/31/96
- --------------------------------------------------------------------------------
Investment Income
Income
Dividend (net of foreign taxes of $3,156) ................ $ 33,010
Interest ................................................. 5,015
Total income ............................................. 38,025
Expenses
Investment management .................................... 17,871
Shareholder servicing .................................... 4,454
Custody and accounting ................................... 847
Prospectus and shareholder reports ....................... 384
Registration ............................................. 193
Legal and audit .......................................... 38
Directors ................................................ 13
Miscellaneous ............................................ 40
Total expenses ........................................... 23,840
Net investment income ............................................ 14,185
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (including $196 from affiliated companies) .... 1,198
Foreign currency transactions ............................ (1,412)
Net realized gain (loss) ................................. (214)
Change in net unrealized gain (loss)
Securities ............................................... 118,571
Other assets and liabilities
denominated in foreign currencies ........................ (140)
Change in net unrealized gain or loss .................... 118,431
Net realized and unrealized gain (loss) .......................... 118,217
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ........................................... $ 132,402
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
Year Year
Ended Ended
10/31/96 10/31/95
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations
Net investment income ........................... $ 14,185 $ 19,512
Net realized gain (loss) ........................ (214) (42,464)
Change in net unrealized gain or loss ........... 118,431 (197,839)
Increase (decrease) in net assets from operations 132,402 (220,791)
Distributions to shareholders
Net investment income ........................... (20,404) (15,633)
Net realized gain ............................... -- (199,093)
Decrease in net assets from distributions ....... (20,404) (214,726)
Capital share transactions *
Shares sold ..................................... 861,270 666,757
Distributions reinvested ........................ 19,209 204,998
Shares redeemed ................................. (859,974) (830,186)
Increase (decrease) in net assets from capital
share transactions ........................ 20,505 41,569
Net Assets
Increase (decrease) during period ................. 132,503 (393,948)
Beginning of period ............................... 1,908,893 2,302,841
End of period ..................................... $ 2,041,396 $ 1,908,893
* Share information
Shares sold ..................................... 97,874 81,249
Distributions reinvested ........................ 2,351 25,593
Shares redeemed ................................. (99,089) (100,461)
Increase (decrease) in shares outstanding ....... 1,136 6,381
================================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
================================================================================
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 New Asia Fund (the fund), a
diversified, open-end management investment company, is one of the portfolios
established by the corporation and commenced operations on September 28, 1990.
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 amortized cost which 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.
<PAGE>
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.
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.
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.
Emerging Markets
At October 31, 1996, 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.
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. All securities purchased by the joint account
satisfy the fund's criteria as to quality, yield, and liquidity.
<PAGE>
Securities Lending
To earn additional income, the fund lends its securities to approved
brokers. At October 31, 1996, the market value of securities on loan was
$89,668,000, 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.
Other
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $851,177,000 and $876,747,000, respectively, for the year
ended October 31, 1996.
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 $39,472,000 which expire in 2003. Capital loss
carryforwards utilized in 1996 amounted to $555,000. The fund intends to retain
gains realized in future periods 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, the following
reclassifications were made during the year ended October 31, 1996. The results
of operations and net assets were not affected by the reclassifications.
================================================================================
Undistributed net realized gain $ 23,000
Paid-in-capital (23,000)
- --------------------------------------------------------------------------------
At October 31, 1996, the aggregate cost of investments for federal income
tax and financial reporting purposes was $1,884,503,000, and net unrealized gain
aggregated $118,646,000, of which $253,295,000 related to appreciated
investments and $134,649,000 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.
<PAGE>
The investment management agreement between the fund and the manager
provides for an annual investment management fee, of which $1,472,000 was
payable at October 31, 1996. The fee is computed daily and paid monthly, and
consists 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 0.305% for assets
in excess of $50 billion. At October 31, 1996, and for the year ended then
ended, the effective annual group fee rate was 0.33%. 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 $3,443,000 for the year ended
October 31, 1996, of which $383,000 was payable at period-end.
During the year ended October 31, 1996, the fund, in the ordinary course of
business, paid commissions of $1,349,000 to, and placed security purchase and
sale orders aggregating $276,848,000 with, certain affiliates of the manager in
connection with the execution of various portfolio transactions.
<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 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 New Asia Fund (one of
the portfolios constituting T. Rowe Price International Funds, Inc., hereafter
referred to as the "Fund") at October 31, 1996, the results of its operations
for the year then ended, and the changes in its net assets and the financial
highlights for each of the two years in the period then ended, 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 audits. We conducted our
audits 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
audits, which included confirmation of securities at October 31, 1996 by
correspondence with custodians and, where appropriate, the application of
alternative auditing procedures for unsettled security transactions, provide 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 19, 1996
================================================================================
During fiscal year 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 two fiscal years
preceding the change, the fund received unqualified opinions and had no
disagreements with Coopers & Lybrand L.L.P. or reportable events that caused the
change.
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
================================================================================
Investment Services And Information
- --------------------------------------------------------------------------------
KNOWLEDGABLE SERVICE REPRESENTATIVES
By Phone
Shareholder service representatives are available from 8 a.m. to 10 p.m. ET
Monday through Friday and from 8:30 a.m. to 5 p.m. ET on weekends. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
In Person
Visit one of our investor center locations to meet with a representative
who will be able to assist you with your accounts. While there, you can drop off
applications or obtain prospectuses and other literature.
AUTOMATED 24-HOUR SERVICES
Tele*Access(R)
Call 1-800-638-2587 to obtain information such as account balance, date and
amount of your last transaction, latest dividend payment, fund prices, and
yields. Additionally, you have the ability to request prospectuses, statements,
and account and tax forms; to reorder checks; and to initiate purchase,
redemption, and exchange orders for identically registered accounts.
T. Rowe Price OnLine
Through a personal computer via dial-up modem, you can replicate all the
services available on Tele*Access plus conduct transactions in your Discount
Brokerage and Variable Annuity accounts.
ACCOUNT SERVICES
Checking
Write checks for $500 or more on any money market and most bond fund
accounts (except the High Yield and Emerging Markets Bond Funds).
Automatic Investing
Build your account over time by investing directly from your bank account
or paycheck with Automatic Asset Builder. Additionally, Automatic Exchange
enables you to set up systematic investments from one fund account into another,
such as from a money fund into a stock fund. A low, $50 minimum makes it easy to
get started.
<PAGE>
Automatic Withdrawal
If you need money from your fund account on a regular basis, you can
establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options
Reinvest all or some of your distributions, or take them in cash. We give
you maximum flexibility and convenience.
DISCOUNT BROKERAGE*
Investments Available
You can trade stocks, bonds, options, precious metals, and other securities
at a savings over regular commission rates.
To Open an Account
Call a shareholder service representative for more information.
INVESTMENT INFORMATION
Combined Statement
A comprehensive overview of your T. Rowe Price accounts is provided. The
summary page gives you earnings by tax category, provides total portfolio value,
and lists your investments by type--stock, bond, and money market. Detail pages
itemize account transactions by fund.
Shareholder Reports
Portfolio managers review the performance of the funds in plain language
and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report
This is a quarterly newsletter with relevant articles on market trends,
personal financial planning, and T. Rowe Price's economic perspective.
Performance Update
This quarterly report reviews recent market developments and provides
comprehensive performance information for every T. Rowe Price fund.
Insights
This library of information includes reports on mutual fund tax issues,
investment strategies, and financial markets.
Detailed Investment Guides
Our widely acclaimed Asset Mix Worksheet, College Planning Kit, Retirees
Financial Guide, and Retirement Planning Kit (also available on disk for PC use)
can help you determine and reach your investment goals.
*A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
<PAGE>
================================================================================
Mutual Funds
- --------------------------------------------------------------------------------
Stock Funds
================================================================================
Domestic
- --------------------------------------------------------------------------------
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons
OTC
Science & Technology
Small-Cap Value
Spectrum Growth
Value
International/Global
- --------------------------------------------------------------------------------
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
<PAGE>
Bond Funds
================================================================================
Domestic Taxable
- --------------------------------------------------------------------------------
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-free
California Tax-Free Bond
Florida Insured Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
International/Global
- --------------------------------------------------------------------------------
Global Government Bond
Emerging Markets Bond
International Bond
<PAGE>
Money Market
================================================================================
Taxable
- --------------------------------------------------------------------------------
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
- --------------------------------------------------------------------------------
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
Blended Asset
================================================================================
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
T. Rowe Price No-Load Variable Annuity
================================================================================
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Discount Brokerage
<PAGE>
================================================================================
DICOUNT BROKERAGE
A Division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC
- --------------------------------------------------------------------------------
This low-cost service gives you the opportunity to easily consolidate all
your investments with one company. Through T. Rowe Price Discount Brokerage, you
can buy and sell individual securities-stocks, bonds, options, and others-at
considerable commission savings. We also provide a wide range of services,
including:
Automated Telephone and Computer Services
You can enter trades, access quotes, and review account information 24
hours a day, seven days a week. Any trades executed through these programs save
you an additional 10% on commissions.*
Investor Information
A variety of informative reports, such as our Brokerage Insights series,
S&P Market Month newsletter, and optional S&P Stock Reports, can help you better
evaluate economic trends and investment opportunities.
Dividend Reinvestment Service
Virtually all stocks held in customer accounts are eligible for this
service, free of charge.
- --------------------------------------------------------------------------------
*Discount applies to our current commission schedule; subject to our $35 minimum
commission.
================================================================================
For yield, price, last transaction,
current balance or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access(R):
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
<PAGE>
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
http://www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price New Asia Fund.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
T. Rowe Price Investment Services, Inc., Distributor
RPRTNAS 10/31/96
