-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LvFS6j1xIXTIWjyOKbMwotgbR3RdQ/ZpvxMYniMGyAPY86OO0JxwcMWAaVpz+Oe6 r9swPkcAmaoSKMQ1g6hmTA== 0000787628-95-000011.txt : 19950905 0000787628-95-000011.hdr.sgml : 19950905 ACCESSION NUMBER: 0000787628-95-000011 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950831 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCUDDER NEW ASIA FUND INC CENTRAL INDEX KEY: 0000798738 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133410777 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04789 FILM NUMBER: 95569304 BUSINESS ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 2123266200 FORMER COMPANY: FORMER CONFORMED NAME: JAPAN ASIA SPECIAL FUND INC DATE OF NAME CHANGE: 19870518 N-30D 1 SEMIANNUAL REPORT - SCUDDER NEW ASIA FUND, INC. SCUDDER NEW ASIA FUND, INC. Semiannual Report June 30, 1995 A closed-end investment company seeking long-term capital appreciation through investment in securities, primarily equity securities, of Asian companies. Investment objective and policies o long-term capital appreciation through investment primarily in equity securities of Asian companies Investment characteristics o a closed-end investment company investing in a broad spectrum of Asian companies and industries o a vehicle for international diversification through participation in Asian stock markets General Information Executive offices Scudder New Asia Fund, Inc. 345 Park Avenue New York, NY 10154 Telephone: For Fund Information: 1-800-349-4281 Transfer agent, registrar and dividend reinvestment plan agent For account information: 1-800-426-5523 State Street Bank and Trust Company P.O. Box 8200 Boston, MA 02266-8200 Custodian Brown Brothers Harriman & Co. Legal counsel Dechert Price & Rhoads Independent Accountants Coopers & Lybrand L.L.P. New York Stock Exchange Symbol -- SAF Contents Letter to Shareholders 3 Investment Summary 8 Portfolio Summary 9 Investment Portfolio 10 Financial Statements 16 Financial Highlights 19 Notes to Financial Statements 20 Report of Independent Accountants 25 Dividend Reinvestment and Cash Purchase Plan 26 Investment Manager Back cover Directors and Officers Back cover This report is sent to the shareholders of Scudder New Asia Fund, Inc. for their information. It is not a prospectus, circular, or representation intended for use in the purchase or sale of shares of the Fund or of any securities mentioned in the report. 2 Letter to Shareholders Dear Shareholders: We are pleased to present the semiannual report for Scudder New Asia Fund, Inc. (the "Fund") for the period ended June 30, 1995. The Fund finished the six-month period with a net asset value (NAV) of $16.00, down from $17.44 on December 31, 1994. For more information on the Fund's performance, please refer to the table on page 8 entitled "Investment Summary." The Portfolio The portfolio, with only a 5% cash position, was close to fully invested at the end of the first half of the year. This position reflects both attractive, new investment prospects and our continued positive outlook for the region. During the semiannual period, we actively trimmed the portfolio in Malaysia due to the negative impact of an anti-inflationary campaign by the government on several of our holdings. We trimmed positions in Japan early in the year to take advantage of large currency gains in a falling market, but have begun to add back to our holdings in the face of compelling values in order to maintain a neutral weighting in the country. We continued to sell in the Korean market in the second quarter but are currently identifying ways to redeploy funds into that market as it has recently reached very attractive levels. Finally, due to concerns about the property sector in Hong Kong, we sold property stocks and reinvested a portion of the proceeds into two conglomerates and a bank that we feel are well positioned to benefit from regional growth. Additions in the portfolio came in an Indonesian consumer stock, Philippine telecommunication and oil stocks and in Singaporean bank stocks, based on the banks' ability to benefit from regional growth. The portfolio therefore has a neutral weight in Japan compared to the unmanaged Morgan Stanley Pacific Basin Index (with Japan capped at 25%) (the "Index"), underweight positions in Hong Kong, Malaysia and Singapore and overweight positions in the remaining countries. Geographic Diversification of Common Stock and Convertible Holdings (as a percentage of the Fund's equity portfolio) Six-Month Return in Local 3/31/95 6/30/95 Currency Term ------- ------- ------------- Japan 25.6% 25.6% -22.0% Hong Kong 17.9 16.4 13.0 Malaysia 9.8 6.8 8.5 South Korea 8.2 5.0 -7.0 Thailand 5.1 8.4 1.6 Indonesia 7.2 10.0 9.4 Philippines 4.4 6.5 3.1 India 4.0 5.0 -18.6 Taiwan 4.3 3.8 -24.6 Singapore 6.6 6.6 -3.6 China 2.0 1.7 unavailable Pakistan 0.5 0.6 -22.9 The growth prospects for the Pacific region continue to be the most promising on the globe for the long term. The portfolio is poised to participate in the region's growth with investments in areas ranging from infrastructure and utilities to the booming possibilities of consumer goods. Regional conglomerates and banks also make up a significant portion of the Fund as these will be the vital sources of both the vision and the financing required to achieve the region's growth potential. For the first half of 1995 the Pacific region markets continued to exhibit the volatility to which we have become accustomed. The top four performers of 1994 (Korea, India, Taiwan and Japan) were the bottom four performers of the first half of 1995. The incredible strength of the Japanese yen sent shock waves through the region's markets early in the period. The yen's subsequent partial reversal stands as a challenge to us all to chart our near term course wisely in our attempts to best position the Fund with regard to the continued currency volatility that surely lies ahead. Rapid declines in the region's markets and the concurrent outflow of capital in the first quarter was replaced by recovery in the second quarter as investors were attracted by excessive risk premiums. The apparent peaking (for now) of U.S. interest rates and the resulting increase 3 in available liquidity is a significant positive for the economies and the markets of the region going forward. A discussion follows of the individual Pacific markets. Quarterly Review of Stock Index Trends (in local currency terms) Percent Exchange 3/31/95 6/30/95 Change -------- ------- ------- ------ Tokyo 1st Section 1307.89 1196.99 -8.48% 2nd Section 1717.15 1501.04 -12.59 Hang Seng 8587.72 9206.54 7.21 China Enterprises 1026.11 1030.47 0.42 Kuala Lumpur 984.07 1026.62 4.32 SE of Thailand 1216.68 1394.77 14.64 Straits-Singapore 2093.12 2093.12 0.00 Korean SE 931.78 894.41 -4.01 Taiwan SE 6524.00 5444.97 -16.54 Manila Comp 2392.25 2766.45 15.64 Jakarta SE 428.64 492.02 14.79 Bombay SE Sensitive 3260.96 3247.36 -0.42 S&P 500 500.71 544.75 8.80 Market Round-up As is typical of performance in this volatile region, only four of the investable markets for the Fund turned in positive results for the first half of the year. The best performer for the period was Hong Kong with a 12% return, 7% coming in the second quarter. In our view the picture for Hong Kong is mixed. Residential property--a key sector in Hong Kong--has begun to clear at significantly lower prices. Economic fundamentals--unemployment, retail sales, inflation and the trade balance--continued to deteriorate and slowing economic growth in China and in the developed world is a negative for Hong Kong given its important exposure to trade. Balanced against these negatives is the prospect of lower U.S. interest rates and their likely positive impact on Hong Kong's stocks. Currently we are cautious on this market in light of its recent run-up and deteriorating corporate fundamentals. We expect to gradually reduce our holdings in Hong Kong over the balance of the year. Malaysia gained 10.7% in U.S. dollar terms in the first half with 8.4% of the rise coming in the second quarter. Factors in the market's strength include the landslide victory of the ruling party in elections (limited changes were made in the cabinet line-up which bodes well for ongoing economic programs) and a change of heart with regard to tightening monetary policy (due to widening regional interest rate differentials). Both factors reassured market participants in the near term. However, although "liquidity" may continue to push up Malaysian stocks in the short term, we are leery of overheating in the longer term as the economy grows more quickly than anticipated and said liquidity remains unchecked. First quarter GDP was up 9.9% raising the possibility of double digit growth for the full year. Full employment, wage inflation which outpaces productivity gains, and a shortage in basic inputs (such as cement) also contribute to our concern. We have made some changes to our Malaysia holdings, selling off our telecom exposure (Telekom Malaysia and TRI) where increasing competition and government regulation threaten profit margins, and adding to our infrastructure exposure in the form of civil engineer/developer/conglomerate Renong Berhad. We have sold off our position in Aokam Perdana, a wood products manufacturer whose management's "lack of candor" made us unwilling to wait out the current period of poor corporate and stock performance. Long term concerns keep us cautious about the Malaysian market, particularly in light of the valuations after its recent positive performance although we remain positive with regard to certain sectors (infrastructure and banks with exposure to the manufacturing and infrastructure sectors). In Thailand, a strong 14% gain in the second quarter put that market in the gainers' camp for the first half with a 4.3% return for the period in U.S. dollar terms. This rebound occurred as renewed confidence in the baht improved liquidity and reduced interest rates. Strong company results brought overseas 4 investors back to the Thai market, boosting prices. Among those showing impressive results were holdings such as Siam Cement (first quarter net profit up 40%) and Thai Farmers Bank which reported a first quarter profit gain of 27% on strong loan growth and interest margin expansion. Investment growth is strong and high capital goods imports have widened current account deficits considerably. Inflation remains a concern. We recently raised our exposure to Thailand, particularly in the banking sector given the unique position of Thai banks to experience continued above market profit gains in a high interest rate environment. The outperformance of the banking sector over the general market (up 9% and 2.6% for the period, respectively) has allowed us to participate fully in the second quarter rally. The Indonesian market rose 3.4% in the first half of the year, also based on a second quarter surge of 15%. Prospects for strong corporate profits growth and the expectation of stable interest rates and increased liquidity fueled this gain. In addition, the May announcement of the government's deregulation package to reduce tariffs on foreign investments was well received, and automated trading on the Jakarta exchange was implemented smoothly. We continue to find the strong growth and relatively low valuation of Indonesian stocks attractive. We have recently added Sampoerna, a large local cigarette company to our holdings and may add to our already overweight position going forward. Singapore's market was flat in the second quarter and returned a first half performance of -2.5% in U.S. dollar terms. The pace of economic growth is slowing--probably a good thing--to 7.2% in the first quarter of 1995 compared to 8.3% in the preceding quarter and 11.4% in the first quarter of 1994. Contributing to the slowdown were substantial drops in the growth rates of the manufacturing and construction sectors (12% to 7% and 16% to 7%, respectively, for the first quarter of 1995 and the last of 1994). Corporate earnings announcements are currently close to forecasts. Our participation in this market is limited mainly to banks (which we see as participants in the growth in the surrounding region) as other sectors remain under pressure due to wage inflation and a strengthening Singapore dollar. Chinese "H" shares closed flat on the quarter after a very bumpy ride and ended off 3.5% for the first half. Persistent rumors about Deng Xiaoping's demise together with poor earnings depressed market sentiment. More substantively, investors were angered when it was revealed that Tsingtao Brewery misappropriated cash into lending activities as opposed to capacity expansion as promised to investors during the initial public offering. Our Tsingtao investment has since been sold. This incident became the latest in a series of revelations reinforcing a growing sense that shareholders' interests are treated casually in the People's Republic and souring the appetite for Chinese stocks. Economic expansion is slowing but inflation continues to be a concern although headline inflation numbers indicate slight easing due to price control measures. We have become more pessimistic about the immediate prospect for Chinese companies and have begun to reduce our already small exposure there. The Philippine stock market enjoyed an impressive 16% gain for the second quarter but still suffered a decline of 5% for the first half. Contributing to the rebound were renewed interest in emerging markets coupled with the expectation that lower interest rates would supply increased liquidity to the market and reassurance of political stability. The Philippines remains one of the only countries with accelerating growth in the region. However, the trade deficit continues to widen despite the faster increase in exports (+30% for the first four months) than in imports (+23%) given the high import base. This is being offset in large part by a high level of foreign direct investment into the country. Unemployment has reached nearly 12%, making it difficult for the government to deal with inflation of 6.8%. However, this level of inflation is not high by Philippine standards and represents a big improvement over 1994's average rate of 9.1%. Although current economic fundamentals are less than perfect, we are monitoring them closely and believe they are trending in the right direction. We remain positive on the outlook for Philippine stocks overall and thus, continue to overweight the Philippines. 5 The Korean market declined 2.2% for the second quarter resulting in a first half decline of 9.5% in U.S. dollar terms. Challenges for the market include increasing interest rates in early 1995 and more recently, the ruling party's poor showing in local elections. The election was the first time in thirty years that local elections were held. Since political allegiances in Korea tend to reflect regional loyalties, the Democratic Liberal Party's poor showing is said to portend little for its prospects at the national level. Time will tell, but the successful conclusion of the elections is surely an indication of the greater rootedness of democracy in South Korea and must be viewed positively. Looking forward Korean economic fundamentals are strong and we anticipate a decrease in interest rates as corporate capital expenditures and cash demand decline. Therefore we are constructive on the market and view the recent declines as an opportunity to add to our positions at attractive valuations. For the second quarter the Japanese market continued its downward trajectory but currency movements did not shield dollar-based investors as much as they did in the first quarter. In local terms the market dropped 8.5% compared to 6.9% in dollar terms. This puts the market down 23% for the first six months of 1995 in local terms and down 9.9% in dollar terms. Unfortunately the grim situation in which Japan finds itself currently affords the investor no tangible reason for enthusiasm. Yen strength and asset deflation are the chief worries. Economic growth for the current year is likely to be near zero. Unemployment at 3% is considered high by Japanese standards and real layoffs are yet to begin. Consumer spending is declining. It remains to be seen how the banks' bad loan problems will be resolved. Japan's rudderless government can offer no quick fix. Our Japan stock picks concentrate on 1) globally competitive manufacturers with substantial offshore manufacturing capability such as Canon, Kyocera and Mabuchi Motors, 2) globally competitive producers of basic materials, such as Kawasaki Steel, which we view as a long-term winner, 3) niche domestic financial businesses such as Nichiei and Jafco and 4) potential beneficiaries of government infrastructure stimulus spending such as Maeda Road Construction and DDI. Our Japan holdings are at a neutral weight, achieved by buying for the long term into market decline. Even in the absence of tangible reasons for enthusiasm, we believe that the bad news is well known. However, given the more visible and exciting opportunities elsewhere in the region, our exposure will remain neutral for the foreseeable future. India was a flat performer for the second quarter and fell 17% for the first half of the year. Indian stocks have been weak for reasons external to companies' earnings fundamentals. The biggest cloud has been political, as losses in local elections erode the leading Congress party's power. Growth in the real economy has likewise pressured stock prices as corporations sell shares to invest in plant and equipment. Finally, a long queue of privatizations and companies preparing to issue stock threatens to dwarf demand. This notwithstanding, we are impressed with the fundamentals of Indian companies and hold a small number of shares with an eye to the long term. Taiwan's stock market was the most disappointing in our investment portfolio, dropping 16% in the second quarter and 22% for the first half of the year. Strong economic growth (+7%) for the first quarter did not offset negative factors. These included slower U.S. economic growth and the expectation of a negative impact on Taiwan's cyclical exporters. Tension surrounding protest over the visit of Taiwan's president Lee Tenghui to the United States proved a negative for Taiwanese stocks. Also problematic is reduced liquidity which limits local buying. Our weighting in Taiwan is positive because we have found attractive companies in which to invest. One example is UMC, a semiconductor fabrication subcontractor for many global majors. UMC has been very successful as a result of extremely favorable demand and appreciation of their exacting standard of manufacturing and service. A Team Approach to Investing Scudder New Asia Fund, Inc. is managed by a team of Scudder investment professionals who each play an important role in the Fund's management process. Team members work together to develop investment strategies and select securities for the Fund's portfolio. They are supported by Scudder's large staff 6 of economists, research analysts, traders, and other investment specialists who work in Scudder's offices across the United States and abroad. We believe our team approach benefits Fund investors by bringing together many disciplines and leveraging Scudder's extensive resources. Lead Portfolio Manager Elizabeth J. Allan assumed responsibility for the Fund's day-to-day management and investment strategies in February 1994. Ms. Allan, who has been a member of the Fund's team since its inception in 1987, has 12 years of Pacific Basin research and investment management experience. Nicholas Bratt, Portfolio Manager, has been a member of the Fund's team since 1987 and helps set the Fund's general investment strategies. Mr. Bratt has over 20 years of experience in worldwide investing, including 19 years of experience as a portfolio manager, and has been at Scudder since 1976. Seung Kwak, Portfolio Manager, has directed our Tokyo-based research effort since he joined Scudder in 1988. Joyce E. Cornell, Portfolio Manager, focuses on stock selection, a role she has played since she joined Scudder in 1991. Ms. Cornell has eight years of investment experience as a research analyst. Eileen O. Gerspach, Portfolio Manager, helps set the Fund's general investment strategies. Ms. Gerspach, who joined the team in 1994, has worked in the investment industry since 1984 and has eight years of experience as a portfolio manager. Dividend Reinvestment Plan The Fund's Dividend Reinvestment and Cash Purchase Plan offers you a convenient way to have your dividends and capital gain distributions reinvested in shares of the Fund. Its features are more fully described on page 26. We are pleased that you are an investor in the Fund. We would be happy to receive any questions or comments. You can reach us at 1-800-349-4281. Respectfully, /s/Nicholas Bratt /s/Edmond D. Villani Nicholas Bratt Edmond D. Villani President Chairman of the Board 7 Scudder New Asia Fund, Inc. Investment Summary as of June 30, 1995 - ----------------------------------------------------------------------------- Historical Information Life of Fund Total Return (%) ---------------------------------------------- Market Value Net Asset Value(a) ------------------- ------------------- Average Average Cumulative Annual Cumulative Annual ------------------- ------------------- Quarterly -2.36 -- 3.76 -- Fiscal Year to Date 1.29 -- -3.08 -- One Year -8.16 -8.16 -5.41 -5.41 Three Year 41.91 12.37 45.49 13.31 Five Year 65.61 10.62 42.93 7.41 Life of Fund* 139.05 11.45 165.50 12.92 - ----------------------------------------------------------------------------- Per Share Information and Returns (a) Yearly periods ended June 30 A chart in the form of a bar graph appears here, illustrating the Fund Total Return (%) and Index Total Return (%) with the exact data points listed in the table below. 1987* 1988 1989 1990 1991 1992 1993 1994 1995 ----------------------------------------------------------------------- Net Asset Value... $11.07 $12.41 $12.93 $18.70 $15.68 $15.49 $17.93 $22.44 $16.00 Income Dividends.. $ -- $ .07 $ -- $ -- $ .08 $ .08 $ .08 $ .48 $ .02 Capital Gains Distributions..... $ -- $ -- $ -- $ 1.56 $ 1.93 $ .15 $ .52 $ -- $ 5.06 Total Return (%).. -.81 12.75 4.19 59.40 -2.03 .28 20.28 27.88 -5.41
(a) Performance is historical and assumes reinvestment of all dividends and capital gains. These percentages are not an indication of the performance of a shareholder's investment in the Fund based on market value due to differences between the market price of the stock and the net asset value of the Fund during each period. * The Fund commenced operations on June 25, 1987. Past results are not necessarily indicative of future performance of the Fund. 8 Scudder New Asia Fund, Inc. Portfolio Summary as of June 30, 1995 - ----------------------------------------------------------------------------- Diversification - ----------------------------------------------------------------------------- - --------------------------- Common Stocks 88% Convertible Bonds 6% Cash Equivalents 5% Limited Partnership 1% ---- 100% ==== A graph in the form of a pie chart appears here, illustrating the exact data points in the above table. Geographical breakdown of Sector breakdown of the Fund's the Fund's equity securities equity securities - --------------------------- ----------------------------------- Japan 26% Financial 24% Hong Kong 16% Manufacturing 18% Indonesia 10% Metals and Minerals 9% Thailand 8% Communications 7% Malaysia 7% Consumer Staples 7% Singapore 7% Construction 6% Philippines 6% Utilities 6% Pakistan/India 6% Technology 4% Korea 5% Durables 4% Other 9% Other 15% ---- ---- 100% 100% ==== ==== Two graphs in the form of pie charts appear here, illustrating the exact data points in the above tables. - --------------------------------------------------------------------------- Ten Largest Equity Holdings - --------------------------------------------------------------------------- 1. Freeport McMoRan Copper and Gold, Inc. "A" U.S. company mining in Indonesia 2. Modern Photo Film Co. Photographic film distributor in Indonesia 3. Hong Kong Electric Holdings, Ltd. Electric utility and real estate 4. Korea Mobile Telecom Korea's largest mobile telephone communication company 5. Swire Pacific Ltd. General trading and real estate company in Hong Kong 6. Development Bank of Singapore Banking and financial services 7. HSBC Holdings Ltd. Bank in Hong Kong 8. Overseas Union Bank Ltd. Leading bank group in Singapore 9. Canon Inc. Leading producer of visual image and information equipment in Japan 10. Hutchison Whampoa, Ltd. Container terminal and real estate company in Hong Kong 9 [LOGO] SCUDDER NEW ASIA FUND, INC. INVESTMENT PORTFOLIO AS OF JUNE 30, 1995 =========================================================================================================
Principal Market Amount ($) Value ($) - --------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS -- 4.6% 6,491,000 Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 6/30/95 at 6.07% to be repurchased at $6,494,283 on 7/3/95, collateralized by a $6,065,000 U.S. Treasury Note, 7.875%, 11/15/99 (Cost $6,491,000)...................................... 6,491,000 --------- - --------------------------------------------------------------------------------------------------------- CONVERTIBLE BONDS -- 6.0% INDIA 0.8% 700,000 Jindal 4.25%, 3/31/99, (Steel manufacturer) 654,500 400,000 Reliance Industries, 3.5%, 11/3/99 (Producer of textiles, synthetic fibers and plastics)......................... 434,000 --------- 1,088,500 --------- KOREA 0.9% 1,000,000 Ssangyong Cement Industrial Co., Ltd., 3%, 12/31/05 (Major cement producer)................................ 1,165,000 --------- MALAYSIA 2.3% 1,265,000 Renong Berhad, 2.5%, 1/15/05 (Holding company involved in engineering and construction, financial services, telecommunication and information technology)................................ 1,416,800 805,000 Telekom Malaysia Berhad, 4%, 10/3/04 (Telecommunication services)........................... 772,800 960,000 United Engineers Malaysia, 2%, 3/1/04 (Leading comprehensive contractor).............................. 1,070,400 --------- 3,260,000 --------- TAIWAN 2.0% 2,040,000 TECO Electric & Machinery, 2.75%, 4/15/04 (Manufacturer of household appliances and computer products)......... 1,892,100 569,000 United Microelectronics Corp., Ltd., 1.25%, 6/8/04 (Semiconductor manufacturer)........................... 967,300 --------- 2,859,400 --------- TOTAL CONVERTIBLE BONDS (Cost $8,791,605).................. 8,372,900 --------- - --------------------------------------------------------------------------------------------------------- LIMITED PARTNERSHIP -- 0.8% JAPAN 1 JAFCO #6 Investment Enterprise Partnership (b) (Venture capital company)* (Cost $773,606)............. 1,181,231 ---------
The accompanying notes are an integral part of the financial statements. 10
================================================================================================================== Market Shares Value ($) - ------------------------------------------------------------------------------------------------------------------ COMMON STOCKS -- 88.5% CHINA 1.7% 57,000 Huaneng Power International, Inc. Series N (ADR) (Developer and operator of large coal-fired power plants).. 1,047,375 75,000 Shandong Huaneng Power Co. (ADR) (Electric power utility)...... 571,875 1,994,000 Yizheng Chemical Fibre Co., Ltd. (Manufacturer and distributor of polyester stable fibers).................... 695,860 ---------- 2,315,110 ---------- HONG KONG 15.6% 274,000 China Light & Power Co., Ltd. (Electric utility)............... 1,409,505 247,687 HSBC Holdings Ltd. (Bank)...................................... 3,177,362 700 Henderson Land Development Co., Ltd. (Property developer)...... 3,827 1,084,000 Hong Kong Electric Holdings, Ltd. (Electric utility and real estate)........................................... 3,684,835 1,394,800 Hong Kong Telecommunications, Ltd. (Telecommunication services)............................... 2,758,268 608,000 Hutchison Whampoa, Ltd. (Container terminal and real estate company)....................................... 2,946,917 670,000 Jinhui Shipping & Transportation Co., Ltd. (Operator of dry bulk cargo ships in southern China)........................ 871,000 332,000 Peregrine Investment Holdings Ltd. (Leading financial services group).................................. 472,024 430,000 Swire Pacific Ltd. "A" (General trading and real estate company)....................................... 3,279,091 630,000 Television Broadcasts, Ltd. (Television broadcasting).......... 2,214,840 4,225,300 Yips Hang Cheung (Manufacturer of mixed solvent and paints)................................................ 1,146,859 ---------- 21,964,528 ---------- INDIA 3.9% 78,500 Bajaj Auto (GDR) (Maker of two and three wheel vehicles)....... 2,178,375 90,000 Indian Hotels & Resorts Co., Ltd. (GDR) (Hotel operator)....... 1,462,500 75,000 Ranbaxy Laboratories (GDR) (Pharmaceutical company)............ 1,912,500 ---------- 5,553,375 ---------- INDONESIA 9.5% 939,000 Gadjah Tunggal (Tire manufacturer)............................. 1,349,259 179,000 HM Sampoerna (Tobacco company)................................. 1,406,601 593,500 Jaya Real Properties (Property developer)...................... 1,785,564 723,000 Kabelmetal Indonesia (IDR) (Cable manufacturer)................ 1,217,445 91,000 Kabelmetal Indonesia........................................... 153,233
The accompanying notes are an integral part of the financial statements. 11 [LOGO] SCUDDER NEW ASIA FUND, INC. INVESTMENT PORTFOLIO (CONTINUED) ==========================================================================================================
Market Shares Value ($) - ---------------------------------------------------------------------------------------------------------- 31,000 Kalbe Farma (IDR) (Pharmaceutical producer and distributor)...... 141,985 531,000 Kalbe Farma...................................................... 2,432,061 533,000 Modern Photo Film Co. (Photographic film distributor)............ 2,895,959 180,000 Modern Photo Film Co. (IDR) (New**).............................. 977,997 424 Supreme Cable Co. (b) (Manufacturer of power and telecommunication cables)...................................... 1,337 67,271 Unilever-Indonesia (Consumer products manufacturer).............. 1,012,312 ---------- 13,373,753 ---------- JAPAN 23.6% 70,000 Asahi Diamond Industrial Co., Ltd. (Leading manufacturer of diamond-tipped tools, especially for use in electric machinery and automobile industries).................. 857,930 182,000 Canon Inc. (Leading producer of visual image and information equipment)......................................... 2,959,524 256 DDI Corp. (Long distance telephone and cellular operator)........ 2,051,258 278 East Japan Railway Co. (Railway operator)........................ 1,424,969 1,000 FCC Co., Ltd. (Manufacturer of motorcycle and automobile clutches)........................................... 28,045 21,700 Hasegawa Co., Ltd. (Leading retailer of Buddhist altars and accessories)........................................ 255,700 158,000 Hitachi Metals, Ltd. (Major producer of high-quality specialty steels).............................................. 1,770,553 28,000 Japan Associated Finance Co. (Venture capital company)........... 2,553,703 250,000 Kawasaki Steel Corp. (Major integrated steelmaker)*.............. 818,948 15,700 Keyence Corp. (Specialized manufacturer of sensors).............. 1,757,497 34,000 Kyocera Corp. (Leading ceramic package manufacturer)............. 2,796,441 19,000 Mabuchi Motor Co., Ltd. (Manufacturer of DC motors).............. 1,307,488 72,000 Maeda Road Construction Co., Ltd. (Major road paver)............. 1,391,386 233,000 NSK Ltd. (Leading manufacturer of bearings and other machinery parts)............................................... 1,342,568 44,326 Nichiei Co., Ltd. (Finance company for small and medium-sized firms)............................................ 2,731,691 60 Nissen Co., Ltd. (Mail-order women's apparel distributor)........ 1,803 200 Nitori Co., Ltd. (Importer and retailer of furniture and interior products)............................................. 5,397 28,800 Royal Ltd. (Wholesaler and retailer of automobile equipment and parts)........................................... 1,018,088 35,900 SMC Corp. (Leading maker of pneumatic equipment)................. 2,060,131
The accompanying notes are an integral part of the financial statements. 12
================================================================================================================== Market Shares Value ($) - ------------------------------------------------------------------------------------------------------------------ 172,000 ShinMaywa Industries, Ltd. (Leading maker of dump trucks and other specialty vehicles)............................... 1,441,018 1,600 Softbank Corp. (Wholesaler of personal computer software and publisher of related materials)....................... 262,063 5,000 Square Co., Ltd. (Producer of software for video games)................ 186,767 92,000 Sumitomo Corp. (Leading general trading company, with offices, subsidiaries and affiliates throughout the world).... 836,906 60,000 Sumitomo Electric Industries, Ltd. (Leading manufacturer of electric wires and cables)...................................... 714,075 601,000 Sumitomo Metal Industries, Ltd. (Leading integrated crude steel producer)*............................................. 1,565,086 58,100 THK Co., Ltd. (Manufacturer of linear motion systems for industrial machinery).......................................... 1,068,002 ---------- 33,207,037 ---------- KOREA 3.9% 1,572 Daewoo Telecom Co. (New**) (Manufacturer of personal computers and communications equipment)............................ 16,399 3,507 Korea Mobile Telecom (c) (Mobile telecommunication company)............ 3,300,997 42,757 L G Electronics, Inc. (GDR) (Major electronics manufacturer)........... 513,084 2,494 L G Electronics, Inc. (GDR) (b)**...................................... 48,321 5,083 Samsung Electronics Co., Ltd.* (c) (Major electronics manufacturer)...................................................... 866,909 2,506 Samsung Electronics Co., Ltd. (GDR) (b) (New voting**)................. 177,363 1,021 Samsung Electronics Co., Ltd. (Sponsored GDR).......................... 73,512 4,558 Yukong, Ltd. (Korea's leading oil refiner)............................. 190,555 546 Yukong, Ltd. (b) (New**)............................................... 22,693 24,000 Yukong, Ltd. (GDS) (non-voting)........................................ 264,000 2,876 Yukong, Ltd. (GDR) (b)................................................. 59,763 ---------- 5,533,596 ---------- MALAYSIA 4.2% 378,000 Arab-Malaysian Corp. (Investment holding company with interests in financial services, infrastructure and property)...................................................... 1,349,169 112,500 Genting Berhad (Operator of tourist resorts, hotels and restaurants)............................................ 1,112,308 95,000 Kim Hin Industries (Ceramic tile manufacturer)*........................ 444,308 236,000 Malayan Banking Berhad (Leading banking and financial services group).................................................... 1,868,636 231,500 YTL Corp. (General construction company)............................... 1,130,195 ---------- 5,904,616 ----------
The accompanying notes are an integral part of the financial statements. 13 [LOGO] SCUDDER NEW ASIA FUND, INC. INVESTMENT PORTFOLIO (CONTINUED) ===================================================================================================================
Market Shares Value ($) - ------------------------------------------------------------------------------------------------------------------- PAKISTAN 0.6% 215,970 Adamjee Insurance (Insurance company)............................ 785,028 ----------- PHILIPPINES 6.2% 1,988,000 Ayala Corp. "B" (Industrial conglomerate)........................ 2,218,403 211,090 Benpres Holdings Corp. (GDR) (Media and infrastructure conglomerate)................................................ 1,741,493 159,000 Manila Electric Co. "B" (Electric utility)....................... 1,276,233 788,375 Petron Corp. (Refiner and marketer of petroleum products)........ 517,043 15,000 Philippine Long Distance Telephone Co. (Sponsored ADR) (Telecommunication services)................................. 1,076,250 458,900 San Miguel Corp. "B" (Brewery)................................... 1,904,597 ----------- 8,734,019 ----------- SINGAPORE 6.3% 287,000 Development Bank of Singapore (Banking and financial services)... 3,264,630 132,081 Jardine Matheson Holdings, Ltd. (Conglomerate: real estate, merchandising, engineering).................................. 970,795 488,000 Overseas Union Bank Ltd. (Leading bank group).................... 3,072,256 264,000 Sembawang Corp. (Ship repair and maritime services group) 1,605,380 ----------- 8,913,061 ----------- TAIWAN 1.6% 26 Taipei Fund (IDR) (Investment company)........................... 2,223,000 ----------- THAILAND 8.0% 66,700 Ban Pu Coal Public Co., Ltd. (Leading miner of sub-bituminous coal in southeast Asia)....................... 1,578,314 82,100 Bangkok Bank Ltd. (Leading commercial bank, providing full range of financial services)............................ 904,830 240,000 PTT Exploration and Production Co., Ltd. (Petroleum refinery) 2,586,710 537,000 Sahavirya Steel Industry (Steel producer)........................ 1,316,390 25,400 Siam Cement Co., Ltd. (Construction materials and industrial conglomerate)................................................ 1,621,977 252,850 TPI Polene Co., Ltd. (Producer and distributor of low density polyethylene plastic pellets)................................ 1,721,183 159,260 Thai Farmers Bank (Commercial bank).............................. 1,522,908 ----------- 11,252,312 ----------- UNITED STATES 3.4% 198,000 Freeport McMoRan Copper & Gold, Inc. "A" (U.S. company mining in Indonesia)........................... 4,083,750 46,500 Pacific Basin Bulk Shipping Ltd. (Shipping company specializing in the handysize dry bulk carrier segment in the Pacific region)....................................... 674,250 127,500 Pacific Basin Bulk Shipping Ltd. Warrants (expire 9/30/99)*...... 79,688 ----------- 4,837,688 ----------- TOTAL COMMON STOCKS (Cost $104,053,413).......................... 124,597,123 -----------
The accompanying notes are an integral part of the financial statements. 14
===================================================================================================================== Principal Market Amount Value ($) - --------------------------------------------------------------------------------------------------------------------- PURCHASED OPTIONS 0.1% JAPANESE YEN 0.1% 1,500,000,000 Put on Japanese Yen, strike price 86.34, expires 10/6/95 (Cost $314,454)............................................ 198,000 ----------- - --------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PORTFOLIO -- 100.0% (Cost $120,424,078) (a)... 140,840,254 =========== (a) The cost for federal income tax purposes was $121,159,310. At June 30, 1995, net unrealized appreciation for all securities based on tax cost was $19,680,944. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of market value over tax cost of $28,585,807 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over market value of $8,904,863. (b) Securities valued in good faith by the valuation committee of the Board of Directors. The cost for these securities at June 30, 1995 aggregated $986,815. See Note A of the Notes to Financial Statements. (c) Securities that have met the foreign#ownership limitation valued at a premium in good faith by the Valuation Committee of the Board of Directors. The cost of these securities at June 30, 1995 was $722,899. See Note A of the Notes to Financial Statements. * Non-income producing security. ** New shares issued during 1995, eligible for a pro rata share of 1995 dividends. See page 9 for sector breakdown of the Fund's equity securities.
At June 30, 1995, the outstanding written option was as follows (Note A):
Call Option Principal Amount (JPY) (000's) Expiration Date Strike Price Market Value ($) - -------------------------------------------------------------------------------------------------------------------- Japanese Yen (Premium received $314,454)...... 1,500,000 10/6/95 JPY 78.0 100,500 =======
The accompanying notes are an integral part of the financial statements. 15 [LOGO] SCUDDER NEW ASIA FUND, INC. FINANCIAL STATEMENTS ==================================================================================================================== - -------------------------------------------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995 - -------------------------------------------------------------------------------------------------------------------- ASSETS Investments, at market (identified cost $120,424,078) (Note A)................... $140,840,254 Cash............................................................................. 160 Foreign currency holdings, at market (identified cost $400,947) (Note A)......... 397,405 Other receivables: Investments sold............................................................... 20,918 Dividends and interest......................................................... 333,342 Other assets..................................................................... 1,307 ------------ Total assets................................................................ 141,593,386 LIABILITIES Payables: Investments purchased.......................................................... $2,143,408 Accrued management fee (Note C)................................................ 137,925 Other accrued expenses (Note C)................................................ 157,265 Written option, at value (premium received $314,454) (Note A).................. 100,500 ---------- Total liabilities........................................................... 2,539,098 ------------ Net assets, at market value...................................................... $139,054,288 ============ NET ASSETS Net assets consist of: Accumulated distributions in excess of net investment income................... $ (406,255) Accumulated net realized gain on investment transactions....................... 1,254,451 Net unrealized appreciation (depreciation) on: Investments................................................................. 20,416,176 Options .................................................................... 213,954 Foreign currency related transactions....................................... (2,768) Common stock................................................................... 86,884 Additional paid-in capital..................................................... 117,491,846 ------------ Net assets, at market value...................................................... $139,054,288 ============ NET ASSET VALUE per share ($139,054,288 / 8,688,394 shares of common stock issued and outstanding, $.01 par value, 50,000,000 shares authorized).......... $16.00 ======
The accompanying notes are an integral part of the financial statements. 16 =========================================================================================================== - ----------------------------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1995 - ----------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Income: Dividends (including taxes withheld of $69,424)................. $ 972,809 Interest........................................................ 318,213 ----------- 1,291,022 Expenses: Management fee (Note C)......................................... $ 825,356 Directors' fees and expenses (Note C)........................... 56,182 Custodian fees.................................................. 180,152 Reports to shareholders......................................... 44,934 Auditing........................................................ 51,159 Legal........................................................... 15,449 Services to shareholders........................................ 10,020 Other........................................................... 16,843 1,200,095 ----------- ----------- Net investment income................................................ 90,927 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain (loss) from: Investments..................................................... 4,473,707 Foreign currency related transactions........................... (2,545,988) 1,927,719 ----------- Net unrealized appreciation (depreciation) during the period on: Investments..................................................... (6,668,736) Options......................................................... (70,306) Foreign currency related transactions........................... 7,980 (6,731,062) ----------- ----------- Net loss on investment transactions.................................. (4,803,343) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $(4,712,416) ===========
The accompanying notes are an integral part of the financial statements. 17 [LOGO] SCUDDER NEW ASIA FUND, INC. FINANCIAL STATEMENTS (CONTINUED) ============================================================================================================ - ------------------------------------------------------------------------------------------------------------ STATEMENTS OF CHANGES IN NET ASSETS - ------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, INCREASE (DECREASE) IN NET ASSETS 1995 1994 - ------------------------------------------------------------------------------------------------------------ Operations: Net investment income..................................................... $ 90,927 $ 393,996 Net realized gain from investment transactions............................ 1,927,719 47,392,802 Net unrealized depreciation on investment transactions during the period......................................... (6,731,062) (72,785,297) ------------ ------------ Net decrease in net assets resulting from operations......................... (4,712,416) (24,998,499) ------------ ------------ Distributions to shareholders: In excess of net investment income ($.23 per share for December 31, 1994)..................................................... -- (1,935,479) ------------ ------------ From net realized gain from investment transactions ($.86 and $4.20 per share, respectively)............................... (7,422,202) (35,376,835) ------------ ------------ Fund share transactions: Net proceeds of shares issued in connection with the Fund's rights offering, net of offering costs of $421,048............................ -- 30,817,588 Reinvestment of distributions ............................................ 4,317,420 387,356 ------------ ------------ Net increase in net assets from Fund share transactions................... 4,317,420 31,204,944 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS............................................ (7,817,198) (31,105,869) Net assets at beginning of period............................................ 146,871,486 177,977,355 ------------ ------------ NET ASSETS AT END OF PERIOD (including accumulated distributions in excess of net investment income of $406,255 and $497,182, respectively).......... $139,054,288 $146,871,486 ============ ============ OTHER INFORMATION INCREASE IN FUND SHARES Shares outstanding at beginning of period.................................... 8,423,056 7,102,417 Shares issued in connection with Fund's rights offering................... -- 1,304,872 Shares issued to shareholders in reinvestment of distributions............ 265,338 15,767 ------------ ------------ Shares outstanding at end of period.......................................... 8,688,394 8,423,056 ============ ============
The accompanying notes are an integral part of the financial statements. 18 [LOGO] SCUDDER NEW ASIA FUND, INC. FINANCIAL HIGHLIGHTS ================================================================================ THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD (A) AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL STATEMENTS AND MARKET PRICE DATA. - ----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEARS ENDED DECEMBER 31, JUNE 30, -------------------------------------------------------- PER SHARE OPERATING PERFORMANCE 1995 1994 1993 1992 1991 1990 - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period ............ $17.44 $25.06 $14.73 $14.94 $13.44 $16.36 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income ......................... .01 .05 .10 .08 .08 .08 Net realized and unrealized gain (loss) on investments (b)...................... (.59) (3.21) 10.63 .22 1.61 (.81) ------ ------ ------ ------ ------ ------ Total from investment operations................. (.58) (3.16) 10.73 .30 1.69 (.73) ------ ------ ------ ------ ------ ------ Dilution resulting from rights offering.......... -- (.03) -- -- -- -- ------ ------ ------ ------ ------ ------ Less distributions: From net investment income..................... -- -- (.15) (.08) (.08) (.08) In excess of net investment income............. -- (.23) (.17) -- -- -- From net realized gains on investments......... (.86) (4.20) -- (.43) (.11) (2.11) In excess of net realized gains on investments.................................. -- -- (.08) -- -- -- ------ ------ ------ ------ ------ ------ Total distributions.............................. (.86) (4.43) (.40) (.51) (.19) (2.19) ------ ------ ------ ------ ------ ------ Net asset value, end of period................... $16.00 $17.44 $25.06 $14.73 $14.94 $13.44 ====== ====== ====== ====== ====== ====== Market value, end of period...................... $15.50 $16.16(d) $27.38 $14.25 $15.13 $12.00 ====== ====== ====== ====== ====== ====== TOTAL RETURN Per share market value (%)..................... 1.29* (25.10) 95.71 (2.59) 27.60 (10.53) Per share net asset value (%)(c)............... (3.08)* (11.67) 73.32 1.94 12.54 (2.77) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period ($ millions)......... 139 147 178 104 106 94 Ratio of interest expense to average net assets (%) .............................. -- -- -- -- -- .02 Ratio of operating expenses (excluding interest) to average net assets (%) ......... 1.74** 1.67 1.71 1.76 1.79 1.77 Ratio of net investment income (loss) to average net assets (%) ................... .13** .21 .56 .50 .54 .46 Portfolio turnover rate (%) ................... 40.4** 81.6 10.3 13.7 12.3 24.1 (a) Based on monthly average shares outstanding during the period. (b) Net of provision for federal income tax of $.02 per share for the year ended December 31, 1991. (c) Total return based on per share net asset value reflects the effects of changes in net asset value on the performance of the Fund during each period, and assumes dividends and capital gains distributions, if any, were reinvested. These percentages are not an indication of the performance of a shareholder's investment in the Fund based on market value due to differences between the market price of the stock and the net asset value of the Fund during each period. (d) Market value of $20.38 has been reduced to reflect a distribution of $4.22 per share payable on January 17, 1995, relating to a due bill which entitles individuals who purchase shares prior to January 18, 1995, the ex date of the dividend, to be reimbursed by the seller in the amount of the distribution. * Not annualized ** Annualized
19 [LOGO] SCUDDER NEW ASIA FUND, INC. NOTES TO FINANCIAL STATEMENTS ================================================================================ A. SIGNIFICANT ACCOUNTING POLICIES ------------------------------- Scudder New Asia Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The policies described below are followed consistently by the Fund in the preparation of its financial statements in conformity with generally accepted accounting principles. SECURITY VALUATION. Portfolio securities which are traded on U.S. or foreign stock exchanges are valued at the most recent sale price reported on the exchange on which the security is traded most extensively. If no sale occurred, the security is then valued at the mean between the most recent bid and asked quotations. If there are no such bid and asked quotations, the most recent bid quotation is used. Securities quoted on the National Association of Securities Dealers Automatic Quotation ("NASDAQ") System, for which there have been sales, are valued at the most recent sale price reported on such system. If there are no such sales, the value is the high or "inside" bid quotation. Securities which are not quoted on the NASDAQ System but are traded in another over-the-counter market are valued at the most recent sale price on such market. If no sale occurred, the security is then valued at the calculated mean between the most recent bid and asked quotations. If there are no such bid and asked quotations, the most recent bid quotation shall be used. Portfolio debt securities with remaining maturities greater than sixty days are valued by pricing agents approved by the Officers of the Fund, which prices reflect broker/dealer-supplied valuations and electronic data processing techniques. If the pricing agents are unable to provide such quotations, the most recent bid quotation supplied by a bona fide market maker shall be used. Short-term investments having a maturity of sixty days or less are valued at amortized cost. All other securities are valued at fair value as determined in good faith by the Valuation Committee of the Board of Directors, although the actual calculation may be done by others, including certain investments in securities that have met the limit for aggregate foreign ownership and for which premiums to the local stock exchange prices are offered by prospective foreign investors. The aggregate premium ($1,134,633) over the local share price ($3,033,273) for these securities valued by the Valuation Committee was approximately 0.8% of the Fund's net assets at June 30, 1995. All other securities valued in good faith by the Valuation Committee amounted to $1,490,708 or 1.1% of the Fund's net assets at June 30, 1995. OPTIONS. An option contract is a contract in which the writer of the option grants the buyer of the option the right to purchase from (call option), or sell to (put option), the writer a designated instrument at a specified price within a specified period of time. Certain options, including options on indices, will require cash settlement by the Fund if the option is exercised. During the period, the Fund purchased put options and wrote call options on Japanese Yen as a hedge against potential adverse price movements in the value of portfolio assets. If the Fund writes an option and the option expires unexercised, the Fund will realize income, in the form of a capital gain, to the extent of the amount received for the option (the "premium"). If the Fund elects to close out the option it would recognize a gain or loss based on the difference between the cost of closing the option and the initial premium received. If the Fund purchased an option and allows 20 ================================================================================ the option to expire it would realize a loss to the extent of the premium paid. If the Fund elects to close out the option it would recognize a gain or loss equal to the difference between the cost of acquiring the option and the amount realized upon the sale of the option. The gain or loss recognized by the Fund upon the exercise of a written call or purchased put option is adjusted for the amount of option premium. If a written put or purchased call option is exercised the Fund's cost basis of the acquired security or currency would be the exercise price adjusted for the amount of the option premium. The liability representing the Fund's obligation under an exchange traded written option or investment in a purchased option is valued at the last sale price or, in the absence of a sale, the mean between the closing bid and asked price or at the most recent asked price (bid for purchased options) if no bid and asked price are available. Over-the-counter written or purchased options are valued using dealer supplied quotations. When the Fund writes a covered call option, the Fund foregoes, in exchange for the premium, the opportunity to profit during the option period from an increase in the market value of the underlying security or currency above the exercise price. When the Fund writes a put option it accepts the risk of a decline in the market value of the underlying security or currency below the exercise price. Over-the-Counter options have the risk of the potential inability of counterparties to meet the terms of their contracts. The Fund's maximum exposure to purchased options is limited to the premium initially paid. In addition, certain risks may arise upon entering into option contracts including the risk that an illiquid secondary market will limit the Fund's ability to close out an option contract prior to the expiration date and, that a change in the value of the option contract may not correlate exactly with changes in the value of the securities or currencies hedged. REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with certain banks and domestic or foreign broker/dealers whereby the Fund, through its custodian, receives delivery of the underlying securities, the amount of which at the time of purchase and each subsequent business day is required to be maintained at such a level that the market value, depending on the maturity of the repurchase agreement and the underlying collateral, is equal to at least 100.5% of the resale price. FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained in U.S. dollars. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, other assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. The Fund does not isolate that portion of gains and losses on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains and losses from investments. Net realized and unrealized gain (loss) from foreign currency related transactions includes gains and losses between trade and settlement dates on securities transactions, gains and losses arising from the sales of foreign currency, and gains and losses between the ex and payment dates on dividends, interest, and foreign withholding taxes. 21 [LOGO] SCUDDER NEW ASIA FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at the settlement date at a negotiated rate. During the period, the Fund utilized forward contracts as a hedge in connection with portfolio purchases and sales of securities denominated in foreign currencies. Forward contracts are valued at the prevailing forward exchange rate of the underlying currencies and unrealized gain/loss is recorded daily. Forward contracts having the same settlement date and broker are offset and any gain (loss) is realized on the date of offset; otherwise, gain (loss) is realized on settlement date. Realized and unrealized gains and losses which represent the difference between the value of the forward contract to buy and the forward contract to sell are included in net realized and unrealized gain (loss) from foreign currency related transactions. Certain risks may arise upon entering into forward contracts from the potential inability of counterparties to meet the terms of their contracts. Additionally, when utilizing forward contracts to hedge the Fund gives up the opportunity to profit from favorable exchange rate movements during the term of the contract. FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of the Internal Revenue Code which are applicable to regulated investment companies, and to distribute all of its taxable income to its shareholders. The Fund accordingly paid no U.S. federal income taxes, and no federal income tax provision was required. DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are made annually. Distributions of net realized gains from investment transactions in excess of available capital loss carryforwards, which would be taxable to the Fund if not distributed, will be distributed to shareholders annually. An additional distribution may be made to the extent necessary to avoid the payment of a four percent federal excise tax. The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations which may differ from generally accepted accounting principles. These differences relate primarily to investments in Passive Foreign Investment Companies, foreign denominated investments, forward contracts and certain securities sold at a loss. As a result, net investment income and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund. The Fund uses the identified cost method for determining realized gain or loss on investments for both financial and federal income tax reporting purposes. OTHER. Investment security transactions are accounted for on a trade-date basis. Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Distributions to shareholders are recorded on the ex-dividend date except in situations where, under New York Stock Exchange rules, the ex-dividend date is deferred until after the payment date. Deferred ex-date distributions are recorded four business days prior to the record date. 22 ================================================================================ B. PURCHASES AND SALES OF SECURITIES --------------------------------- For the six months ended June 30, 1995, purchases and sales of investment securities (excluding short-term investments) aggregated $27,645,542 and $49,143,738, respectively. During the period, the Fund wrote a call option principal amount JPY 1,500,000,000, premium received $314,454. In addition, a call option was exercised by the holder of the option principal amount JPY 1,970,000,000, premium received $958,000. C. RELATED PARTIES --------------- Under the Investment Advisory and Management Agreement (the "Management Agreement") with Scudder, Stevens & Clark, Inc. (the "Manager") the Fund has agreed to pay the Manager a fee equal to an annual rate of 1.25% of the first $75,000,000 of average weekly net assets of the Fund, 1.15% of the next $125,000,000 and 1.10% of the excess over $200,000,000, payable monthly. As manager of the assets of the Fund, the Manager directs the investments of the Fund in accordance with its investment objectives, policies, and restrictions. The Manager determines the securities, instruments, and other contracts relating to investments to be purchased, sold or entered into by the Fund. In addition to portfolio management services, the Manager shall provide certain administrative services in accordance with the Management Agreement. For the six months ended June 30, 1995, the fee pursuant to the agreement amounted to $825,356, which is equivalent to an annual effective rate of 1.20% of the Fund's average weekly net assets. The Fund pays each Director not affiliated with the Manager, $6,000 annually, plus specified amounts for attended board and committee meetings. For the six months ended June 30, 1995, Directors' fees and expenses aggregated $56,182. D. INVESTING IN FOREIGN MARKETS ---------------------------- Investing in foreign markets may involve special risks and considerations not typically associated with investing in the United States. These risks include revaluation of currencies and future adverse political and economic developments. Moreover, securities issued in these markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies. Foreign investment in the securities markets of several foreign countries is restricted or controlled in varying degrees. These restrictions may limit investment in certain foreign countries. In addition, the repatriation of both investment income and capital from some foreign countries may be subject to restrictions. 23 [LOGO] SCUDDER NEW ASIA FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ E. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (000 OMITTED) ---------------------------------------------------------
NET GAIN (LOSS) NET INCREASE ON INVESTMENT AND (DECREASE) FOREIGN CURRENCY IN NET ASSETS QUARTER INVESTMENT NET INVESTMENT RELATED RESULTING ENDED INCOME* INCOME (LOSS) TRANSACTIONS FROM OPERATIONS - ----------- -------------- ---------------- ------------------ -------------------- PER PER PER PER 1995 TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE - ---- ----- ----- ----- ----- ----- ----- ----- ----- March 31, $ 466 $ .05 $ (144) $(.02) $ (9,580) $(1.11) $ (9,724) $(1.13) June 30, 825 .10 235 .03 4,777 .52 5,012 .55 ------- ----- ------ ----- --------- ------ --------- ------ Totals $ 1,291 $ .15 $ 91 $ .01 $ (4,803) $ (.59) $ (4,712) $ (.58) ======= ===== ====== ===== ========= ====== ========= ======
PER PER PER PER 1994 TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE - ------------ ------- ----- ------ ----- ------- ------ ------ ------ March 31, $ 634 $ .08 $ (109) $ (.01) $ (22,870) $ (2.95) $ (22,979) $(2.96) June 30, 1,158 .17 356 .04 4,241 .54 4,597 .58 September 30, 959 .09 158 .02 13,694 1.82 13,852 1.84 December 31, 818 .09 (11) -- (20,457) (2.62) (20,468) (2.62) ------- ----- ------ ----- -------- ------- --------- ------ Totals $ 3,569 $ .43 $ 394 $ .05 $ (25,392) $ (3.21) $ (24,998) $(3.16) ======= ===== ====== ===== ========= ======= ========= ====== * Net of foreign taxes withheld
24 [LOGO] SCUDDER NEW ASIA FUND, INC. REPORT OF INDEPENDENT ACCOUNTANTS ================================================================================ TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF SCUDDER NEW ASIA FUND, INC.: We have audited the accompanying statement of assets and liabilities of Scudder New Asia Fund, Inc., including the investment portfolio, as of June 30, 1995, and the related statement of operations for the six months then ended, the statements of changes in net assets for the six months then ended and for the year ended December 31, 1994, and the financial highlights for the six months ended June 30, 1995 and for each of the five years in the period ended December 31, 1994. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1995 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Scudder New Asia Fund, Inc. as of June 30, 1995, the results of its operations for the six months then ended, the changes in its net assets for the six months then ended and for the year ended December 31, 1994, and the financial highlights for the six months ended June 30, 1995 and for each of the five years in the period ended December 31, 1994 in conformity with generally accepted accounting principles. Boston, Massachusetts COOPERS & LYBRAND L.L.P. August 11, 1995 25 Scudder New Asia Fund, Inc. Dividend Reinvestment and Cash Purchase Plan The Plan The Fund's Dividend Reinvestment and Cash Purchase Plan (the "Plan") offers you an automatic way to reinvest your dividends and capital gains distributions in shares of the Fund. The Plan also provides for cash investments in Fund shares of $100 to $3,000 semiannually through State Street Bank and Trust Company, the Plan Agent. Note that the Fund's share price for purposes of the Plan is calculated net of due-bills, if applicable. Automatic Participation Each shareholder of record is automatically a participant in the Plan unless the shareholder has instructed the Plan Agent in writing otherwise. Such a notice must be received by the Plan Agent not less than 10 days prior to the record date for a dividend or distribution in order to be effective with respect to that dividend or distribution. A notice which is not received by that time will be effective only with respect to subsequent dividends and distributions. Shareholders who do not participate in the Plan will receive all distributions in cash paid by check in dollars mailed directly to the shareholder by State Street Bank and Trust Company, as dividend paying agent. Shares Held by a Nominee If your shares are held in the name of a brokerage firm, bank, or other nominee as the shareholder of record, please consult your nominee (or any successor nominee) to determine whether it is participating in the Plan on your behalf. Many nominees are generally authorized to receive cash dividends unless they are specifically instructed by a client to reinvest. If you would like your nominee to participate in the Plan on your behalf, you should give your nominee instructions to that effect as soon as possible. Pricing of Dividends and Distributions If the market price per share on the payment date for the dividend or distribution (the "Valuation Date") equals or exceeds net asset value per share on that date, the Fund will issue new shares to participants at the greater of the following on the Valuation Date: (a) net asset value, or (b) 95% of the market price. The Valuation Date will be the dividend or distribution payment date or, if that date is not a New York Stock Exchange trading date, the next preceding trading date. If the net asset value exceeds the market price of Fund shares at such time, participants in the Plan are considered to have elected to receive shares of stock from the Fund, valued at market price, on the Valuation Date. In either case, for Federal income tax purposes, the shareholder receives a distribution equal to the market value on Valuation Date of new shares issued. State and local taxes may also apply. If the Fund should declare an income dividend or net capital gains distribution payable only in cash, the Plan Agent will, as agent for the participants, buy Fund shares in the open market, on the New York Stock Exchange or elsewhere, for the participants' account on, or shortly after, the payment date. Voluntary Cash Purchases Participants in the Plan have the option of making additional cash payments to the Plan Agent, semiannually, in any amount from $100 to $3,000, for investment in the Fund's shares. The Plan Agent will use all such monies received from participants to purchase Fund shares in the open market on or about February 15 and August 15. Any voluntary cash payments received more than 30 days prior to these dates will be returned by the Plan Agent, and interest will not be paid on any uninvested cash payments. To avoid unnecessary cash accumulations, and also to allow ample time for receipt and processing by the Plan Agent, it is suggested that participants send in voluntary cash payments to 26 be received by the Plan Agent approximately ten days before February 15, or August 15, as the case may be. A participant may withdraw a voluntary cash payment by written notice, if the notice is received by the Plan Agent not less than 48 hours before such payment is to be invested. Participant Plan Accounts The Plan Agent maintains all participant accounts in the Plan and furnishes written confirmation of all transactions in the account, including information needed by participants for personal and tax records. Shares in the account of each plan participant will be held by the Plan Agent in non-certificated form in the name of the participant, and each participant will be able to vote those shares purchased pursuant to the Plan at a shareholder meeting or by proxy. No Service Fee to Reinvest There is no service fee charged to participants for reinvesting dividends or distributions from net realized capital gains. The Plan Agent's fees for the handling of the reinvestment of dividends and capital gains distributions will be paid by the Fund. There will be no brokerage commissions with respect to shares issued directly by the Fund as a result of dividends or capital gains distributions payable either in stock or in cash. However, participants will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of any dividends or capital gains distributions payable only in cash. Costs for Cash Purchases With respect to purchases of Fund shares from voluntary cash payments, the Plan Agent will charge $0.75 for each such purchase for a participant. Each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases of Fund shares in connection with voluntary cash payments made by the participant. Brokerage charges for purchasing small amounts of stock for individual accounts through the Plan are expected to be less than the usual brokerage charges for such transactions, because the Plan Agent will be purchasing stock for all participants in blocks and pro-rating the lower commission thus attainable. Amendment or Termination The Fund and the Plan Agent each reserve the right to terminate the Plan. Notice of the termination will be sent to the participants of the Plan at least 30 days before the record date for a dividend or distribution. The Plan also may be amended by the Fund or the Plan Agent, but (except when necessary or appropriate to comply with applicable law, rules or policies of a regulatory authority) only by giving at least 30 days' written notice to participants in the Plan. A participant may terminate his account under the Plan by written notice to the Plan Agent. If the written notice is received 10 days before the record day of any distribution, it will be effective immediately. If received after that date, it will be effective as soon as possible after the reinvestment of the dividend or distribution. If a participant elects to sell his shares before the Plan is terminated, the Plan Agent will deduct a $2.50 fee plus brokerage commissions from the sale transaction. Plan Agent Address and Telephone Number You may obtain more detailed information by requesting a copy of the Plan from the Plan Agent. All correspondence (including notifications) should be directed to: Scudder New Asia Fund Dividend Reinvestment and Cash Purchase Plan, c/o State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-8200, (617) 328-5000, ext. 6406. 27 Investment Manager The investment manager of Scudder New Asia Fund, Inc. (the "Fund") is Scudder, Stevens & Clark, Inc., one of the most experienced investment management and investment counsel firms in the United States. Established in 1919, the firm provides investment counsel for individuals, investment companies and institutions. Scudder has offices throughout the United States and subsidiaries in London and in Tokyo. Scudder has been active in international investment management for over 40 years. It manages Scudder International Fund, which was initially incorporated in Canada in 1953 as the first foreign investment company registered with the U.S. Securities and Exchange Commission. Scudder's investment company clients include eight other open-end investment companies which invest worldwide. In addition to the Fund, Scudder also manages the assets of seven other closed-end investment companies which invest in foreign securities. The Argentina Fund, Inc. (investing primarily in equity securities of Argentine issuers), The Brazil Fund, Inc. (investing primarily in equity securities of Brazilian issuers), The Korea Fund, Inc. (investing in a broad spectrum of Korean industries), The Latin America Dollar Income Fund, Inc. (investing principally in Latin American debt instruments), Scudder New Europe Fund, Inc. (investing in equity securities traded on smaller or emerging European securities markets) and Scudder World Income Opportunities Fund, Inc. (investing in global income and, to a limited extent, equity securities) are traded on the New York Stock Exchange. The First Iberian Fund, Inc. (investing primarily in Spanish and Portuguese securities) is traded on the American Stock Exchange. Directors and Officers EDMOND D. VILLANI* Chairman of the Board and Director NICHOLAS BRATT* President and Director PAUL BANCROFT III Director ROBERT J. CALLANDER Director THOMAS J. DEVINE Director WILLIAM H. GLEYSTEEN, JR. Director JAMES W. MORLEY Honorary Director DR. WILSON NOLEN Director JURIS PADEGS* Vice President, Assistant Secretary and Director HUGH T. PATRICK Director DANIEL PIERCE* Director ROBERT G. STONE, JR. Honorary Director ELIZABETH J. ALLAN* Vice President JERARD K. HARTMAN* Vice President SEUNG KWAK* Vice President DAVID S. LEE* Vice President THOMAS F. McDONOUGH* Secretary and Assistant Treasurer PAMELA A. McGRATH* Treasurer EDWARD J. O'CONNELL* Vice President and Assistant Treasurer COLEEN DOWNS DINNEEN* Assistant Secretary * Scudder, Stevens & Clark, Inc. -----END PRIVACY-ENHANCED MESSAGE-----