-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hb2ABqXCyHocVMw5vze2zLzGclX7IpaaHDHFNi4hrjnqaojYjUgczvt6nxdasg/2 2q2e0WTZYOujTOhqRzW9Vg== 0000798738-96-000008.txt : 19960903 0000798738-96-000008.hdr.sgml : 19960903 ACCESSION NUMBER: 0000798738-96-000008 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960830 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: 96624320 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, 1996 A closed-end investment company seeking long-term capital appreciation primarily through investment in the equity securities of Asian companies. Scudder New Asia Fund, Inc. 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 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 In Brief 3 Letter to Shareholders 3 Other Information 6 Investment Summary 7 Portfolio Summary 8 Investment Portfolio 9 Financial Statements 16 Financial Highlights 19 Notes to Financial Statements 20 Report of Independent Accountants 24 Directors and Officers 25 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 In Brief o With a few exceptions, Asian equity markets posted lackluster gains, held back by slowing economic growth and weak exports, particularly in electronics. Confusion over the direction of U.S. interest rates also dampened investor interest in Asian equities. o As of September 1996, Morgan Stanley Capital International will add Taiwan and China to several of their widely used Pacific benchmarks and increase the weight allotted to South Korea. This could generate new buying interest in those nations and temporarily cap relative investment demand in Hong Kong, Malaysia, Singapore, and Thailand, where weightings in the indices will be reduced. o The portfolio continues to be broadly diversified across 11 Asian countries, including the region's smaller, developing markets. Letter to Shareholders Dear Shareholders: Scudder New Asia Fund's total return for the six-month period ended June 30, 1996, was 5.57%, based on a $0.77 increase in net asset value per share, a $0.06 per share capital gain distribution, and $0.02 per share in income. Fund shares traded on the New York Stock Exchange rose 1.37%. The unmanaged Morgan Stanley Capital International Pacific Index (with Japan weighted at 25%) rose 4.49%. The Morgan Stanley All Country Asia Free Index (with Japan at 25%) rose 7.63% for the same period. Helping boost portfolio performance were overweight positions in Japan, Taiwan, and the Philippines, as well as underweight positions in Singapore and Thailand. The Fund's large exposure to Indonesian consumer-related stocks was a negative factor. In our opinion, economic fundamentals in Asia remain strong. Lower interest rates in the United States would be a positive for some Asian stock markets, particularly Hong Kong, but flat or modestly rising rates wouldn't be bad news either -- that would indicate strength in the U.S. economy, which could also benefit Asian fundamentals. JAPAN By mid-year 1996, the Japanese stock market had risen over 50% from its summer 1995 lows in yen terms. Economic growth in the first quarter of 1996 surprised on the upside, thanks to a confluence of positive year-on-year effects, and bore out the stock market's optimism. Corporate earnings estimates for fiscal year 1996 (which ends March 1997) project good earnings growth, and interim numbers to be announced in the fall are awaited as an indication of whether these expectations will be borne out. Summer has brought a decelerating stock market and creeping fears of deja vu in the form of yet another stillborn economic recovery. Foreigners have turned net sellers of late, and Japanese investors have not been sufficiently active to take up the slack. The yen has traded mainly in the Y105-110 range, with dollar strength encouraging the market and vice versa. On a one year plus horizon, we expect the yen to weaken against the U.S. dollar, increasing the attractiveness of investing in Japanese exporters. At the same time, such dollar strength would reduce the value of yen-denominated stocks in dollar terms. We have therefore hedged approximately one quarter of our yen exposure. Early in the year, we had added to our Japan exposure in the New Asia Fund. More recently, due to concerns that earnings expectations already reflected in prices might disappoint, we have taken some profits and reduced our Japan exposure back to a neutral position. 3 HONG KONG The Hang Seng Index has been building a base through the first half of 1996. Since then, confidence has been bolstered by the strong performance of the traditionally interest-rate-sensitive property and banking sectors, and receding concerns about rising U.S. interest rates. The near- to medium-term outlook is balanced between the one off impact of a reduction in Hong Kong's weighting in the MSCI Free indices in September and, over the medium term, a more positive outlook for both the Chinese economy and the outcome of Hong Kong's return to China in July 1997. Recent interim results have been healthy, supporting our positive outlook for the banks and conglomerates, including HSBC and First Pacific, which represent the bulk of our Hong Kong holdings. The PHILIPPINES We remain bullish on the Philippines for several reasons. Fundamental attractions include a positive balance of trade, a fiscal surplus, and higher economic growth versus 1995. Solid corporate profits continue and, unlike several other countries in the region, the Philippines' political situation is stable. Right now, the market valuation relative to growth is one of the most attractive in the Pacific Rim. Recent deregulation and an expectation that interest rates are headed lower could potentially enhance corporate earnings. Inflation fears early this year were deflated when it became clear that prices were spiked by a temporary rise in food prices. The Philippines is also becoming a magnet for foreign direct investment due to its winning combination of low real estate prices, a highly literate and abundant English-speaking work force, and a pivotal location within the booming region. The biggest question mark is whether the government will be able to balance the public sector books by passing a tax reform package. The expectation is that passage eventually will be successful. We remain overweight in the Philippines, with holdings focusing on real estate, housing, finance, infrastructure, and retailing, all of which may benefit from the improved economic picture. INDONESIA Although we remain bullish on Indonesia, we have reduced our exposure modestly in anticipation of heightened political uncertainty. A number of "sweetheart" deals involving President Suharto's family have created an air of uncertainty regarding business openness. Additional concerns in the political arena were raised during recent opposition party riots in Jakarta, which provided fodder for international press reports on social unrest and focused attention on the President's advanced age and lack of an heir apparent. Political rumblings aside, economic and corporate fundamentals remain on track, and we believe the market will move higher over the next 12 months. We continue to believe that the pulp and paper companies offer substantial upside potential, and we remain comfortable with select consumption plays. MALAYSIA Heading into 1996, there was good reason to believe the Malaysian stock market would not perform well. Rampant wage inflation, a widening current account deficit, and currency weakness did not leave room for much optimism. Malaysian investors didn't seem to share those concerns, however, and their buying spree resulted in a healthy 16% market gain in dollar terms for the first quarter alone. The market did pause during the second quarter to catch its breath, and it appears that government measures to douse a potentially overheated economy are working. The slowdown is also due to a drop in exports from the electronics sector. We are concerned that the impact from this drop may be greater than the markets currently anticipate. We remain underweight in Malaysia, with holdings concentrated in finance-related stocks, infrastructure, and energy. OUTLOOK Barring a meltdown in U.S. equities or a political blow-up in the region, we anticipate that Asian equity markets will consolidate and begin to recover over the next six to 12 months. Moreover, we believe Scudder New Asia Fund is positioned to take advantage of a number of potentially positive factors, including revival in export demand, a gradual easing of interest rates, ongoing 4 infrastructure development, and robust foreign direct investment. The portfolio represents our best research conclusions, which we believe will translate into long-term capital appreciation for the Fund's shareholders. As always, we welcome your 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 5 Other Information 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 a leader 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 nine other open-end investment companies which invest primarily in foreign securities. 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, The Brazil Fund, The Korea Fund, The Latin America Dollar Income Fund, Scudder New Europe Fund, and Scudder World Income Opportunities Fund are traded on the New York Stock Exchange and The First Iberian Fund is traded on the American Stock Exchange. 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 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. Theresa Gusman, Portfolio Manager, helps set the Fund's general investment strategies. Ms. Gusman, who joined Scudder in 1995 and the Fund's team in 1996, has 13 years of experience working in the investment industry. 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. 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. 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 8209, Boston, MA 02266-8209, (800) 426-5523. Net Asset Value The Fund's NAV is published every Monday in The Wall Street Journal under the heading "Closed End Funds." The Fund's NAV is also published in The New York Times and Barron's. As a service to overseas shareholders, the Fund's NAV is listed daily in The Financial Times ("FT"). For your information the NAV of the Fund and other Scudder managed closed-end funds can be found in the "FT Managed Funds Service" section under the heading "other offshore funds" below the Scudder, Stevens & Clark, Inc. banner. 6 SCUDDER NEW ASIA FUND, INC. INVESTMENT SUMMARY AS OF JUNE 30, 1996 - ----------------------------------------------------------------- HISTORICAL INFORMATION TOTAL RETURN (%) LIFE OF FUND --------------------------------------------------------------- MARKET VALUE NET ASSET VALUE (a) ------------------- -------------------- AVERAGE AVERAGE CUMULATIVE ANNUAL CUMULATIVE ANNUAL ------------------- -------------------- QUARTERLY -11.36 - 1.39 - FISCAL YEAR TO DATE 1.37 - 5.57 - ONE YEAR -0.58 -0.58 5.70 5.70 THREE YEAR 11.33 3.64 27.85 8.53 FIVE YEAR 58.69 9.68 54.20 9.05 LIFE OF FUND* 137.66 10.05 180.62 12.09 - ----------------------------------------------------------------- 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 (%) with the exact data points listed in the table below. 1987* 1988 1989 1990 1991 1992 1993 1994 1995 1996 -------------------------------------------------------------------------------- NET ASSET VALUE... $11.07 $12.41 $12.93 $18.70 $15.68 $15.49 $17.93 $22.44 $16.00 $16.06 INCOME DIVIDENDS.. $ - $ .07 $ - $ - $ .08 $ .08 $ .08 $ .48 $ .02 $ .02 CAPITAL GAINS DISTRIBUTIONS..... $ - - $ - $ 1.56 $ 1.93 $ .15 $ .52 $ - $ 5.06 $ .87 TOTAL RETURN (%).. -.81 12.75 4.19 59.40 -2.03 .28 20.28 27.88 -5.41 5.70
(a) Total investment returns reflect changes in net asset value per share during each period and assumes that 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. * The Fund commenced operations on June 25, 1987. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE FUND. 7 SCUDDER NEW ASIA FUND, INC. PORTFOLIO SUMMARY AS OF JUNE 30, 1996 - --------------------------------------------------------------------------- DIVERSIFICATION Common Stocks 90% Convertible Bonds 8% Cash Equivalents 1% 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 the Fund's equity securities Japan 30% Hong Kong 13% Malaysia 11% Indonesia 10% Philippines 8% Thailand 7% Korea 4% Taiwan 4% India 4% Other 9% ---- 100% ==== A graph in the form of a pie chart appears here, illustrating the exact data points in the above table. Sector breakdown of the Fund's equity securities Financial 30% Manufacturing 14% Service Industries 8% Consumer Staples 7% Metals & Minerals 7% Construction 7% Transportation 6% Technology 6% Durables 5% Other 10% ---- 100% ==== A graph in the form of a pie chart appears here, illustrating the exact data points in the above table. - --------------------------------------------------------------------------- TEN LARGEST EQUITY HOLDINGS (24% of Portfolio) 1. FIRST PACIFIC CO. International management and investment company in Hong Kong 2. HUTCHISON WHAMPOA, LTD. Container terminal and real estate company in Hong Kong 3. JAPAN ASSOCIATED FINANCE CO. Venture capital company in Japan 4. CANON INC. Leading producer of visual image and information equipment in Japan 5. UNITED ENGINEERS MALAYSIA Holding company involved in expressway operations, project management, engineering and construction in Malaysia 6. NICHIEI CO., LTD. Finance company for small- and medium-sized firms in Japan 7. MATSUSHITA ELECTRICAL INDUSTRIAL CO., LTD. Leading manufacturer of consumer electronic products in Japan 8. POHANG IRON & STEEL CO., LTD Leading steel producer in Korea 9. HM SAMPOERNA Tobacco company in Indonesia 10. RENONG BHD. Holding company involved in engineering, construction, financial services, telecommunication and information technology in Malaysia 8 [Logo] Scudder New Asia Fund, Inc. Investment Portfolio as of June 30, 1996 =======================================================================================================================
Principal Market Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS -- 0.8% UNITED STATES 1,169,000 Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 6/28/96 at 5.45% to be repurchased at $1,169,531 on 7/1/96, collateralized by a $1,162,000 U.S. Treasury Note, 5.625%, 1/31/98 (Cost $1,169,000) ..................... 1,169,000 ----------- - ----------------------------------------------------------------------------------------------------------------------- LIMITED PARTNERSHIP -- 0.7% JAPAN 1 unit JAFCO #6 Investment Enterprise Partnership (Venture capital company) (b) TOTAL LIMITED PARTNERSHIP (Cost $773,606) ..................... 1,003,047 ----------- - ----------------------------------------------------------------------------------------------------------------------- CONVERTIBLE BONDS -- 8.7% JAPAN 2.2% JPY 99,000,000 SMC Corp., 4.6%, 3/31/97 (Major manufacturer of pneumatic equipment) .......................................... 1,414,868 JPY 140,000,000 Softbank Corp., 0.5%, 3/29/02 (Bank) .......................... 1,651,351 ----------- 3,066,219 ----------- KOREA 0.9% 1,000,000 Ssangyong Cement Industrial Co., Ltd., 3%, 12/31/05 (Major cement producer) ..................................... 1,225,000 ----------- MALAYSIA 2.9% 820,000 Commerce Asset Holdings Bhd., 1.750%, 9/26/04 (Bank) .......... 975,800 MYR 213,000 Renong Bhd ICULS, 4%, 5/21/01 (Holding company involved in engineering and construction, financial services, telecommunications and information technology) ................................................... 80,265 2,475,000 United Engineers Malaysia, 2%, 3/1/04 (Holding company involved in expressway operations, project management, engineering and construction) ............................... 2,970,000 ----------- 4,026,065 ----------- PHILIPPINES 0.8% 718,000 AYALA International Finance Co., 3%, 6/8/00 (Industrial conglomerate) ................................... 1,155,980 ----------- TAIWAN 1.3% 2,040,000 TECO Electric & Machinery, 2.75%, 4/15/04 (Manufacturer of household appliances and computer products) .............. 1,759,500 ----------- THAILAND 0.6% 1,000,000 TPI Polene Co., Ltd., 2.750%, 2/8/06 (Producer and distributor of low density polyethylene plastic pellets) .... 925,000 ----------- TOTAL CONVERTIBLE BONDS (Cost $11,911,055) .................... 12,157,764 ----------- - -----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 9 [Logo] Scudder New Asia Fund, Inc. Investment Portfolio (continued) =======================================================================================================================
Market Shares Value ($) - ----------------------------------------------------------------------------------------------------------------------- COMMON STOCKS -- 89.8% CHINA 2.1% 94,900 China Yuchai International Ltd. (Holding company which manufactures and sells diesel truck engines) .......... 723,613 113,000 Guangshen Railway Co. Ltd. (ADR) (Operator of only railroad in the Pearl River delta) .......................... 2,161,125 ----------- 2,884,738 ----------- HONG KONG 13.3% 3,683,486 First Pacific Co., Ltd. (International management and investment company) ......................................... 5,686,485 154,736 HSBC Holdings Ltd. (Bank) ..................................... 2,338,806 168,000 Hang Seng Bank Ltd. (Commercial banking and related financial services) ......................................... 1,692,859 608,000 Hutchison Whampoa, Ltd. (Container terminal and real estate company) ........................................ 3,825,159 670,000 Jinhui Shipping and Transportation Co. Ltd. (Operator of cargo fleet of ships transporting steel, iron ore, non-ferrous metals and agricultural products) ............... 716,900 283,000 Shangri-La Asia Ltd. (Hotel and property holding company) ..... 396,673 137,500 Swire Pacific Ltd. "A" (General trading and real estate company) .................................................... 1,176,808 570,000 Television Broadcasts, Ltd. (Television broadcasting) ......... 2,139,134 380,000 VTech Holdings Ltd. (Manufacturer of consumer electronic products) ........................................ 620,999 ----------- 18,593,823 ----------- INDIA 3.9% 46,100 Bajaj Auto (GDR) (Maker of two and three wheel vehicles) ...... 1,763,325 13,500 Housing Development Finance Corp. Ltd. (Housing finance provider to individuals, corporations and developers) ...... 1,125,830 52,600 Indian Hotels & Resorts Co., Ltd. (GDR) (Hotel operator) ...... 1,506,990 51,800 Ranbaxy Laboratories (Pharmaceutical company) ................. 1,061,900 ----------- 5,458,045 ----------- INDONESIA 9.7% 135,800 Asia Pulp & Paper Co., Ltd. (ADR) (Producer of pulp and paper)* ..................................................... 1,663,550 1,207,000 Bakrie & Brothers (Manufacturer of industrial steel products, steel pipes, corrugated sheet iron, asbestos and fiber cements) .......................................... 1,711,321 1,163,600 Bank Bira (Foreign registered) (Commercial, corporate and foreign exchange banking) ............................... 1,049,865
The accompanying notes are an integral part of the financial statements. 10
======================================================================================================================= Market Shares Value ($) - ----------------------------------------------------------------------------------------------------------------------- 330,000 Ciputra Development Co. (Foreign registered) (Developer of office properties, shopping and commercial centers, industrial properties and sports facilities) ................ 669,925 249,000 HM Sampoerna (Tobacco company) ................................ 2,835,016 465,000 Indorama Synthetics (Producer of polyester fiber, yarn and fabric) ................................................. 1,178,732 421,000 Jaya Real Properties (Property developer) ..................... 1,340,779 151,500 Kalbe Farma (IDR) (Pharmaceutical producer and distributor) ... 338,475 31,000 Kalbe Farma (Ordinary) ........................................ 69,259 130,000 Modern Photo Film Co. (Photographic film distributor) ......... 558,539 180,000 Modern Photo Film Co. (IDR) (New)** ........................... 773,362 2,274,000 Sekar Bumi (Producer of frozen raw shrimp, prawns and fish) ... 1,367,820 ----------- 13,556,643 ----------- JAPAN 27.0% 36,000 Ariake Japan Co., Ltd. (Leading maker of natural seasonings made from meat extracts) .................................... 1,362,776 100 Asahi Diamond Industrial Co., Ltd. (Leading manufacturer of diamond-tipped tools, especially for use in electric machinery and automobile industries) ........................ 1,307 156,000 Canon Inc. (Leading producer of visual image and information equipment) ...................................... 3,252,229 80,000 Daito Trust Construction Co., Ltd. (Construction and building management services) ............................... 1,199,652 278 East Japan Railway Co. (Railroad operator) .................... 1,461,619 17,600 FCC Co., Ltd. (Manufacturer of motorcycle and automobile clutches) ................................................... 654,981 28,000 Japan Associated Finance Co. (Venture capital company) ........ 3,277,100 250,000 Kawasaki Steel Corp. (Major integrated steelmaker) ............ 902,940 29,000 Kyocera Corp. (Leading ceramic package manufacturer) .......... 2,055,045 36,800 Kyokuto Kaihatsu Kogyo Co., Ltd. (Leading maker of dump trucks and other specialty vehicles) ........................ 777,287 19,000 Mabuchi Motor Co., Ltd. (Manufacturer of DC motors) ........... 1,212,637 154,000 Matsushita Electrical Industrial Co., Ltd. (Leading manufacturer of consumer electronic products) ............... 2,872,583 44,326 Nichiei Co., Ltd. (Finance company for small-and medium-sized firms) ......................................... 2,958,714 45,000 Nippon Electric Glass Co., Ltd. (Leading producer of cathode-ray tube glass) ..................................... 769,442
The accompanying notes are an integral part of the financial statements. 11 [Logo] Scudder New Asia Fund, Inc. Investment Portfolio (continued) =======================================================================================================================
Market Shares Value ($) - ----------------------------------------------------------------------------------------------------------------------- 59,000 Pioneer Electronics Corp. (Leading manufacturer of audio equipment) ............................................ 1,408,037 16,000 Riso Kagaku Corp. (Manufacturer of copying machines) .......... 1,287,432 680 Royal Ltd. (Wholesaler and retailer of automobile equipment and parts) ........................................ 21,327 34,000 Shimamura Co., Ltd. (Discount retailer) ....................... 1,498,468 172,000 ShinMaywa Industries, Ltd. (Leading maker of dump trucks and other specialty vehicles) ........................ 1,761,441 11,000 Shohkoh Fund & Co., Ltd. (Finance company for small and medium-sized firms) ..................................... 2,313,354 28,000 Square Co., Ltd. (Producer of software for video games) ....... 1,646,231 60,000 Sumitomo Electric Industries, Ltd. (Leading manufacturer of electric wires and cables) ............................... 861,336 601,000 Sumitomo Metal Industries, Ltd. (Leading integrated crude steel producer) ....................................... 1,846,441 81,000 Takasago Thermal Engineering Co., Inc. (Leading engineering firm, specializing in air conditioning) ......... 1,310,931 122,000 Toshiba Engineering & Construction Co., Ltd. (Leading installer of thermal and nuclear power plants) .............. 1,193,618 ----------- 37,906,928 ----------- KOREA 3.5% 29,450 Dong-A Pharmaceutical (Pharmaceutical company) ................ 755,128 1,027 Korea Mobile Telecom (Mobile telecommunication company)(c) .... 1,264,000 116,400 Pohang Iron & Steel Co., Ltd. (ADR) (Leading steel producer) ................................................... 2,837,250 ----------- 4,856,378 ----------- MALAYSIA 8.0% 145,000 AMMB Holdings Bhd. (Holding company for Arab Malaysian Merchant Bank Bhd. which provides financial, insurance and investment services) ............... 633,594 544,000 Arab-Malaysian Corp. (Investment holding company with interests in financial services, infrastructure and property) ................................................... 2,137,182 220,000 Malayan Banking Bhd. (Leading banking and financial services group) ............................................. 2,116,657 126,000 Malaysia Assurance Alliance Bhd. (Multiline insurance company) .................................................... 666,747 386,000 Rashid Hussain Bhd. (Securities dealer) ....................... 1,415,875 1,686,000 Renong Bhd (Holding company involved in engineering, construction, financial services, telecommunication and information technology) ................................. 2,690,030
The accompanying notes are an integral part of the financial statements. 12
======================================================================================================================= Market Shares Value ($) - ----------------------------------------------------------------------------------------------------------------------- 133,125 Renong Bhd Warrants* .......................................... 60,305 930,000 TA Enterprises Bhd. (Investment holding company involved in securities brokerage, property development, venture capital and financing) ...................................... 1,453,999 ----------- 11,174,389 ----------- PHILIPPINES 6.7% 7,561,000 Aboitiz Equity Ventures Inc. (Conglomerate: electricity, infrastructure, shipbuilding) ............................... 1,414,080 1,710,200 C & P Homes, Inc. (Home construction company) ................. 1,485,002 2,014,300 DMCI Holdings, Inc. (Construction and property development company)* ....................................... 1,441,531 562,440 First Philippine Holdings Corp. "B" (Holding company involved in electric power distribution, construction services and passenger bus transportation) .................. 1,373,966 1,250,000 International Container Terminal Services, Inc. (Containerized cargo handling firm)* ........................ 846,851 5,657,000 Robinson's Land Corp. "B" (Developer of residential and commercial real estate) ................................. 1,403,454 5,445,600 SM Prime Holdings Corp. (Leader in commercial center operations) ................................................. 1,413,362 402,000 Southeast Asia Cement Holdings, Inc. (Cement producer)* ....... 52,168 ----------- 9,430,414 ----------- SINGAPORE 3.9% 394,000 Overseas Union Bank Ltd. (Leading bank group) ................. 2,708,575 203,000 Singapore Airlines Ltd. (Foreign registered) (Scheduled airline) .................................................... 2,143,657 324,000 Wing Tai Holdings Ltd. (Property investment and development, garment manufacturing, trading in fabric and architectural products) .......................... 688,873 ----------- 5,541,105 ----------- TAIWAN 2.8% 245,000 Asia Cement Corp. (Cement producer) ........................... 476,290 195,000 Cathay Life Insurance Co. (Life insurance company) ............ 1,374,637 142,000 China Development Corp. (Provider of loan and guarantee services to manufacturing and service industries) ........... 469,549 384,000 Far Eastern Department Store (Department store chain) ......... 492,558 532,800 Taiwan Semiconductor Manufacturing Co. (Manufacturer of integrated circuits and other semiconductor devices) ..... 1,113,227 ----------- 3,926,261 ----------- THAILAND 6.7% 59,600 Ban Pu Coal Public Co., Ltd. (Leading miner of sub-bituminous coal in southeast Asia) ...................... 1,718,621
The accompanying notes are an integral part of the financial statements. 13 [Logo] Scudder New Asia Fund, Inc. Investment Portfolio (continued) =======================================================================================================================
Market Shares Value ($) - ----------------------------------------------------------------------------------------------------------------------- 108,700 Bangkok Bank Ltd. (Leading commercial bank) ................... 1,473,027 102,900 PTT Exploration and Production Co., Ltd. (Petroleum refinery) . 1,507,930 44,600 Siam Cement Co., Ltd. (Construction materials and industrial conglomerate) .................................... 2,189,151 242,962 TPI Polene Co., Ltd. (Producer and distributor of low density polyethylene plastic pellets) ....................... 1,100,675 128,960 Thai Farmers Bank (Commercial bank) ........................... 1,412,286 ----------- 9,401,690 ----------- UNITED STATES 2.2% 77,200 Freeport McMoRan Copper & Gold, Inc. "A" (U.S. company mining in Indonesia) ................................ 2,306,350 46,981 Pacific Basin Bulk Shipping Ltd. (Shipping company specializing in the handysize dry bulk carrier segment in the Pacific region) ...................................... 675,352 127,500 Pacific Basin Bulk Shipping Ltd. Warrants (expire 9/30/99)* ... 111,563 ----------- 3,093,265 ----------- TOTAL COMMON STOCKS (Cost $106,235,674) ....................... 125,823,679 ----------- - ----------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PORTFOLIO -- 100.0% (Cost $120,089,335)(a) ... 140,153,490 =========== (a) The cost for federal income tax purposes was $121,291,252. At June 30, 1996, net unrealized appreciation for all securities based on tax cost was $18,862,238. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of market value over tax cost of $24,618,300 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over market value of $5,756,062. (b) Securities valued in good faith by the valuation committee of the Board of Directors. The cost for these securities at June 30, 1996 aggregated $773,606. 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 30,1996 was $134,647. See Note A of the Notes to Financial Statements. * Non-income producing security. ** New shares issued during 1996, eligible for a pro rata share of 1996 dividends. See page 8 for sector breakdown of the Fund's equity securities. Currency abbreviations ---------------------- JPY Japanese Yen MYR Malaysian Ringgit
The accompanying notes are an integral part of the financial statements. 14 ================================================================================ - -------------------------------------------------------------------------------- Transactions in written call options during the six months ended June 30, 1996 were:
Options on Currencies ---------------------------- Japanese Premiums Yen (000's) Received ($) ---------------------------- Outstanding at December 31, 1995 ............ 1,500,000 352,500 Written ...................... -- -- Closed ....................... (1,500,000) (352,500) Exercised .................... -- -- --------------------------- Outstanding at June 30, 1996 ................ -- -- ========= =======
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, 1996 - -----------------------------------------------------------------------------------------------------------
ASSETS Investments, at market (identified cost $120,089,335)(Note A) ............... $140,153,490 Cash ........................................................................ 66,423 Foreign currency holdings, at market (identified cost $2,007,913)(Note A) ... 2,007,877 Other receivables: Investments sold .................................................... 2,566,778 Dividends and interest .............................................. 384,350 Other assets ................................................................ 1,307 ------------ Total assets ................................................ 145,180,225 LIABILITIES Payables: Investments purchased ............................................... $4,519,641 Accrued management fee (Note C) ..................................... 141,001 Other accrued expenses (Note C) ..................................... 190,681 Net payable on closed foreign currency exchange contracts (Note A) .. 46,709 ---------- Total liabilities ........................................... 4,898,032 ------------ Net assets, at market value ................................................. $140,282,193 ============ NET ASSETS Net assets consist of: Accumulated distributions in excess of net investment income ........ $ (1,434,429) Accumulated net realized gain ....................................... 3,271,868 Net unrealized appreciation (depreciation) on: Investments ................................................. 20,064,155 Foreign currency related transactions ....................... (8,397) Common stock ........................................................ 87,370 Additional paid-in capital .......................................... 118,301,626 ------------ Net assets, at market value ................................................. $140,282,193 ============ NET ASSET VALUE per share ($140,282,193 [Divided by] 8,737,037 shares of common stock issued and outstanding, $.01 par value, 50,000,000 shares authorized) .................................................. $16.06 ======
The accompanying notes are an integral part of the financial statements. - -------------------------------------------------------------------------------- 16 ================================================================================ - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1996 - ---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Income: Dividends (net of taxes withheld of $124,294) ............... $ 842,551 Interest (net of taxes withheld of $1,346) .................. 216,174 ---------- 1,058,725 Expenses: Management fee (Note C) ..................................... $ 840,438 Custodian and accounting fees (Note C) ...................... 237,191 Directors' fees and expenses (Note C) ....................... 76,918 Reports to shareholders ..................................... 46,580 Auditing .................................................... 42,975 Services to shareholders .................................... 23,964 Other ....................................................... 20,446 1,288,512 ---------- ---------- Net investment loss ................................................. (229,787) ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain (loss) from: Investments ................................................. 4,500,628 Options ..................................................... 342,000 Foreign currency related transactions ....................... (112,849) 4,729,779 ---------- Net unrealized appreciation (depreciation) during the period on: Investments ................................................. 3,088,721 Options ..................................................... (279,750) Foreign currency related transactions ....................... (6,505) 2,802,466 ---------- ---------- Net gain on investment transactions ................................. 7,532,245 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ $7,302,458 ==========
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 1996 1995 - ------------------------------------------------------------------------------------------------------------ Operations: Net investment loss ................................................. $ (229,787) $ (90,715) Net realized gain from investment transactions ...................... 4,729,779 6,334,507 Net unrealized appreciation (depreciation) on investment transactions during the period ................... 2,802,466 (10,105,132) ------------ ------------ Net increase (decrease) in net assets resulting from operations ............. 7,302,458 (3,861,340) ------------ ------------ Distributions to shareholders: From net investment income ($.02 per share) ......................... (174,619) -- ------------ ------------ From net realized gain from investment transactions ($.06 and $1.51 per share, respectively) .................... (523,677) (13,083,441) ------------ ------------ In excess of net realized gain from investment transactions ($.16 per share) ............................................ -- (1,376,361) ------------ ------------ Reinvestment of distributions ............................................... 810,267 4,317,420 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS ........................................... 7,414,429 (14,003,722) Net assets at beginning of period ........................................... 132,867,764 146,871,486 ------------ ------------ NET ASSETS AT END OF PERIOD (including accumulated distributions in excess of net investment income of $1,434,429 and $1,030,023, respectively) ......................... $140,282,193 $132,867,764 ============ ============ OTHER INFORMATION INCREASE IN FUND SHARES Shares outstanding at beginning of period ................................... 8,688,394 8,423,056 Shares issued to shareholders in reinvestment of distributions ...... 48,643 265,338 ------------ ------------ Shares outstanding at end of period ......................................... 8,737,037 8,688,394 ============ ============
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 1996 1995 1994 1993 1992 1991 - ------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ...... $15.29 $17.44 $25.06 $14.73 $14.94 $13.44 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income (loss) ............ (.03) (.01) .05 .10 .08 .08 Net realized and unrealized gain (loss) on investments (b) ............. .88 (.47) (3.21) 10.63 .22 1.61 ------ ------ ------ ------ ------ ------ Total from investment operations .......... .85 (.48) (3.16) 10.73 .30 1.69 ------ ------ ------ ------ ------ ------ Dilution resulting from rights offering ... -- -- (.03) -- -- -- ------ ------ ------ ------ ------ ------ Less distributions: From net investment income .............. (.02) -- -- (.15) (.08) (.08) In excess of net investment income ...... -- -- (.23) (.17) -- -- From net realized gains on investments .. (.06) (1.51) (4.20) -- (.43) (.11) In excess of net realized gains on investments ........................ -- (.16) -- (.08) -- -- ------ ------ ------ ------ ------ ------ Total distributions ....................... (.08) (1.67) (4.43) (.40) (.51) (.19) ------ ------ ------ ------ ------ ------ Net asset value, end of period ............ $16.06 $15.29 $17.44 $25.06 $14.73 $14.94 ====== ====== ====== ====== ====== ====== Market value, end of period ............... $14.63 $14.50 $16.16(d) $27.38 $14.25 $15.13 ====== ====== ====== ====== ====== ====== TOTAL RETURN Per share market value (%) .............. 1.37** (.04) (25.10) 95.71 (2.59) 27.60 Per share net asset value (%)(c) ........ 5.57** (2.36) (11.67) 73.32 1.94 12.54 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period ($ millions) .. 140 133 147 178 104 106 Ratio of operating expenses (excluding interest) to average net assets (%) ... 1.86* 1.74 1.67 1.71 1.76 1.79 Ratio of net investment income (loss) to average net assets (%) ............. (.33)* (.07) .21 .56 .50 .54 Portfolio turnover rate (%) ............. 88.7* 58.1 81.6 10.3 13.7 12.3 Average commission rate paid (e) ........ $.0129 $ -- $ -- $ -- $ -- $ -- (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 investment returns reflect changes in net asset value per share during each period and assumes that 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. (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. (e) Average commission rate paid per share of common and preferred securities is calculated for fiscal years beginning on or after September 1, 1995. * Annualized ** Not 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 Fund's financial statements are prepared in accordance with generally accepted accounting principles which require the use of management estimates. The policies described below are followed consistently by the Fund in the preparation of its financial statements. 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 ($453,744) over the local share price ($810,256) for these securities valued by the Valuation Committee was approximately 0.3% of the Fund's net assets at June 30, 1996. All other securities valued in good faith by the Valuation Committee amounted to $1,003,047 or 0.7% of the Fund's net assets at June 30, 1996. 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. 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 and as a hedge against changes in exchange rates relating to foreign currency denominated assets. 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. In addition, from November 1, 1995 through December 31, 1995, the Fund incurred approximately $1,405,000 of net realized capital losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ended December 31, 1996. 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 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. 22 ================================================================================ B. PURCHASES AND SALES OF SECURITIES --------------------------------- For the six months ended June 30, 1996, purchases and sales of investment securities (excluding short-term investments) aggregated $61,162,207 and $60,005,646, respectively. 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, 1996, the fee pursuant to the agreement amounted to $840,438, which is equivalent to an annual effective rate of 1.21% of the Fund's average daily net assets. Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is responsible for determining the daily net asset value per share and maintaining the portfolio and general accounting records of the Fund. For the six months ended June 30, 1996, the amount charged to the Fund by SFAC aggregated $63,410, of which $21,445 is unpaid at June 30, 1996. 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, 1996, Directors' fees and expenses aggregated $76,918. 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. 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, 1996, 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, 1995, and the financial highlights for the six months ended June 30, 1996 and for each of the five years in the period ended December 31, 1995. 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, 1996 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, 1996, 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, 1995, and the financial highlights for the six months ended June 30, 1996 and for each of the five years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. Boston, Massachusetts COOPERS & LYBRAND L.L.P. August 26, 1996 24 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. 25 (This page intentionally left blank.) 26 (This page intentionally left blank.) 27 -----END PRIVACY-ENHANCED MESSAGE-----