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<PAGE> PAGE 2
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<PAGE> PAGE 3
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SIGNATURE THOMAS F. MCDONOUGH
TITLE SECRETARY
Exhibit 77(B)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Scudder New Asia Fund, Inc.:
In planning and performing our audit of the financial statements and
financial highlights of Scudder New Asia Fund, Inc. (the Fund) for the year
ended December 31, 1994, we considered its internal control structure,
including procedures for safeguarding securities, in order to determine our
auditing procedures for the purpose of expressing our opinion on the
financial statements and financial highlights and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal
control structure.
The management of Scudder New Asia Fund, Inc. is responsible for
establishing and maintaining an internal control structure. In fulfilling
this responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives of an internal
control structure are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from
unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure,
errors or irregularities may occur and not be detected. Also, projection of
any evaluation of the structure to future periods is subject to the risk
that it may become inadequate because of changes in conditions or that the
effectiveness of the design and operations may deteriorate.
Our consideration of the Fund's internal control structure would not
necessarily disclose all matters in the internal control structure that
might be material weaknesses under standards established by the American
Institute of Certified Public Accountants. A material weakness is a
condition in which the design or operation of the specific internal control
structure elements does not reduce to a relatively low level the risk that
errors or irregularities in amounts that would be material in relation to
the financial statements and financial highlights being audited may occur
and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for
safeguarding securities, that we consider to be material weaknesses, as
defined above, as of December 31, 1994.
This report is intended solely for the information and use of
management of Scudder New Asia Fund, Inc. and the Securities and Exchange
Commission.
/s/COOPERS & LYBRAND L.L.P.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
February 10, 1995
Scudder New Asia Fund, Inc.
345 Park Avenue (at 51st Street)
New York, New York 10154
(800) 349-4281
August 29, 1994
To the Stockholders:
The Annual Meeting of Stockholders of Scudder New Asia Fund, Inc. (the
"Fund") is to be held at 1:30 p.m., eastern time, on Thursday, October 13,
1994 at the offices of Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park
Avenue (at 51st Street), New York, New York 10154. Stockholders who are
unable to attend this meeting are strongly encouraged to vote by proxy,
which is customary in corporate meetings of this kind. A Proxy Statement
regarding the meeting, a proxy card so your vote may be cast and a
postage-prepaid envelope for returning your proxy card are enclosed.
At the Annual Meeting the stockholders will elect three Directors,
consider the ratification of the selection of Coopers & Lybrand as
independent accountants, consider the approval of the continuance of the
Investment Advisory, Management and Administration Agreement between the
Fund and its investment manager, Scudder, Stevens & Clark, Inc. and
consider the elimination of two, and an amendment to one, of the Fund's
fundamental investment policies. The stockholders present will hear a
report on the Fund and there will be an opportunity to discuss matters of
interest to you as a stockholder.
Your Fund's Directors recommend that the stockholders vote in favor of
each of the foregoing matters.
Respectfully,
/s/Nicholas Bratt /s/Edmond D. Villani
Nicholas Bratt Edmond D. Villani
President Chairman of the Board
STOCKHOLDERS ARE URGED TO SIGN THE PROXY AND MAIL IT IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS
IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES.
SCUDDER NEW ASIA FUND, INC.
Notice of Annual Meeting of Stockholders
To the Stockholders of
Scudder New Asia Fund, Inc.:
Please take notice that the Annual Meeting of Stockholders of Scudder New
Asia Fund, Inc. (the "Fund") has been called for 1:30 p.m., eastern time,
on Thursday, October 13, 1994 at the offices of Scudder, Stevens & Clark,
Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York, New York
10154, for the following purposes:
(1) To elect three Directors of the Fund to hold office for a term of
three years or until their respective successors are duly elected and
qualified.
(2) To ratify or reject the action taken by the Board of Directors in
selecting Coopers & Lybrand as independent accountants for the year ending
December 31, 1994.
(3) To approve or disapprove the continuance of the Investment
Advisory, Management and Administration Agreement between the Fund and
Scudder, Stevens & Clark, Inc.
(4) To approve or disapprove the elimination of the Fund's
fundamental investment policies regarding non-publicly traded securities.
(5) To approve or disapprove an amendment to the Fund's fundamental
investment policy regarding commodities and real estate.
To transact such other business as may properly come before the meeting or
any adjournments thereof.
Holders of record of shares of common stock of the Fund at the close of
business on August 16, 1994 are entitled to vote at the meeting and any
adjournments thereof.
By order of the Board of Directors,
Thomas F. McDonough, Secretary
August 29, 1994
IMPORTANT_We urge you to sign and date the enclosed proxy and return it in
the enclosed addressed envelope which requires no postage and is intended
for your convenience. Your prompt return of the enclosed proxy card may
save the Fund the necessity and expense of further solicitations to ensure
a quorum at the Annual Meeting. If you can attend the meeting and wish to
vote your shares in person at that time, you will be able to do so.
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Scudder New Asia Fund, Inc. (the
"Fund") for use at the Annual Meeting of Stockholders, to be held at 1:30
p.m., eastern time, on Thursday, October 13, 1994 at the offices of
Scudder, Stevens & Clark, Inc. (the "Manager" or "Scudder"), 25th Floor,
345 Park Avenue (at 51st Street), New York, New York 10154, and at any
adjournments thereof.
This Proxy Statement, the Notice of Annual Meeting of Stockholders and
the proxy card are first being mailed to stockholders on or about August
29, 1994. All properly executed proxies received in time for the meeting
will be voted as specified in the proxy or, if no specification is made, in
favor of each proposal referred to in the Proxy Statement. Any stockholder
giving a proxy has the power to revoke it by mail (addressed to the
Secretary at the principal executive office of the Fund, 345 Park Avenue,
New York, New York 10154) or in person at the meeting, by executing a
superseding proxy or by submitting a notice of revocation to the Fund.
The presence at any stockholders' meeting, in person or by proxy, of
stockholders entitled to cast a majority of the votes entitled to be cast
shall be necessary and sufficient to constitute a quorum for the
transaction of business. For purposes of determining the presence of a
quorum for transacting business at the Annual Meeting, abstentions and
broker "non-votes" will be treated as shares that are present but which
have not been voted. Broker "non-votes" are proxies received by the Fund
from brokers or nominees when the broker or nominee has neither received
instructions from the beneficial owner or other persons entitled to vote
nor has discretionary power to vote on a particular matter. Accordingly,
stockholders are urged to forward their voting instructions promptly.
Abstentions and broker non-votes will not be counted in favor of, but
will have no other effect on, the vote for proposals (1) and (2) that
require the approval of a majority of shares voting at the Annual Meeting.
Abstentions and broker non-votes will have the effect of a "no" vote for
proposals (3), (4) and (5) which require the approval of a specified
percentage of the outstanding shares of the Fund or of such shares present
at the Annual Meeting.
Holders of record of the common stock of the Fund at the close of
business on August 16, 1994 (the "Record Date") will be entitled to one
vote per share on all business of the meeting and any adjournments. There
were 8,423,056 shares of common stock outstanding on the Record Date.
(1) ELECTION OF DIRECTORS
Persons named as proxies in the accompanying form of proxy intend, in
the absence of contrary instructions, to vote all proxies in favor of the
election of the three nominees listed below as Directors of the Fund to
serve for a term of three years or until their respective successors are
duly elected and qualified. All nominees have consented to stand for
election and to serve if elected. If any such nominee should be unable to
serve, an event not now anticipated, the proxies will be voted for such
person, if any, as shall be designated by the Board of Directors to replace
any such nominee. Your Fund's Directors recommend that the stockholders
vote in favor of the election of the nominees listed on the following page.
Information Concerning Nominees
The following table sets forth certain information concerning each of
the nominees as a Director of the Fund. Each of the nominees is now a
Director of the Fund. Unless otherwise noted, each of the nominees has
engaged in the principal occupation listed in the following table for more
than five years, but not necessarily in the same capacity.
Class III_Nominees to serve until the 1997 Annual Meeting of Stockholders
<TABLE>
<CAPTION>
Present Office with the
Fund, if any; Principal Shares
Occupation or Employment Year First Beneficially
and Directorships in Became a Owned June 30, Percent
Name (Age) Publicly Held Companies Director 1994 (1) of Class
- - - ---------- ----------------------- --------- -------- --------
<C> <C> <C> <C> <C>
Edmond D. Chairman of the Board and 1990 3,333 less than
Villani Director of the Fund; and 1/4 of 1%
(47)*+ President and Managing
Director of Scudder,
Stevens & Clark, Inc.
Juris Vice President, Director 1986 1,475 (3) less than
Padegs and Assistant Secretary of 1/4 of 1%
(62)*+ the Fund; and Managing
Director of Scudder,
Stevens & Clark, Inc.
Robert J. Director of the Fund; 1994 _ _
Callander Executive-in-Residence,
(63) Columbia Business School,
Columbia University; Former
Vice Chairman, Chemical
Banking Corporation;
Director, The ARA Group,
Inc.; Barnes Group Inc.;
Beneficial Corporation;
Omnicom Group, Inc.;
Member, Council on Foreign
Relations.
<FN>
+ Messrs. Padegs and Villani are members of the Executive Committee of
the Fund.
</FN>
</TABLE>
Information Concerning Continuing Directors
The Board of Directors is divided into three classes, each serving a term
of three years. The terms of Classes I and II do not expire this year. The
following table sets forth certain information regarding the Directors in
such classes.
Class I_Directors to serve until the 1995 Annual Meeting of Stockholders
<TABLE>
<CAPTION>
Present Office with the
Fund, if any; Principal Shares
Occupation or Employment Year First Beneficially
and Directorships in Became a Owned June 30, Percent
Name (Age) Publicly Held Companies Director 1994 (1) of Class
- - - ---------- ----------------------- --------- -------- --------
<C> <C> <C> <C> <C>
Daniel Director of the Fund; and 1991 21,372 (4) 0.2537%
Pierce Chairman of the Board and
(60)* Managing Director of
Scudder, Stevens & Clark,
Inc.
Paul Director of the Fund; 1986 4,000 less than
Bancroft Venture Capitalist and 1/4 of 1%
III (64) Consultant since 1988;
Retired President, Chief
Executive Officer and
Director of Bessemer
Securities Corporation
(private investment
company); and Director of
Albany International, Inc.
(paper machine belt
manufacturer), Western
Atlas, Inc. (diversified
oil services and industrial
automation company) and
Measurex Corp. (process
control systems company).
William H. Director of the Fund; 1986 1,599 (5) less than
Gleysteen, President, The Japan 1/4 of 1%
Jr. (68) Society, Inc. (1989-
present); Vice President of
Studies, Council on Foreign
Relations (1987-89); and
United States Ambassador to
Korea (1978-81).
Thomas J. Director of the Fund; 1994 - _
Devine (67) Consultant.
</TABLE>
Class II_Directors to serve until the 1996 Annual Meeting of Stockholders
<TABLE>
<CAPTION>
Present Office with the
Fund, if any; Principal Shares
Occupation or Employment Year First Beneficially
and Directorships in Became a Owned June 30, Percent
Name (Age) Publicly Held Companies Director 1994 (1) of Class
- - - ---------- ----------------------- --------- -------- --------
<C> <C> <C> <C> <C>
Nicholas President and Director of 1986 2,416 less than
Bratt (46)* the Fund; and Managing 1/4 of 1%
Director of Scudder,
Stevens & Clark, Inc.
Wilson Director of the Fund; 1986 13,256 (2) less than
Nolen (67) Consultant (June 1989 to 1/4 of 1%
present); Corporate Vice
President of Becton,
Dickinson & Company
(manufacturer of medical
and scientific products)
(until June 1989); and
Director of Ecohealth, Inc.
(biotechnology company).
Hugh T. Director of the Fund; Co- 1993 1,343 less than
Patrick Director, Pacific Basin 1/4 of 1%
(64) Studies Program, Columbia
University; Member, Center
for Korean Research, East
Asian Institute, Columbia
University; Advisory Board,
Pacific Basin Institute;
ASEAN Economic Bulletin;
Asia Society; Professor of
Far Eastern Economics, Yale
University (1968-1984).
All Directors and Officers as a group 55,318 (6) 0.66%
<FN>
- - - ------------------
* Directors considered by the Fund and its counsel to be "interested
persons" (which as used in this proxy statement is as defined in the
Investment Company Act of 1940, as amended) of the Fund or of the
Fund's Manager. Messrs. Bratt, Padegs, Pierce and Villani are deemed
to be interested persons because of their affiliation with the Fund's
manager, Scudder, Stevens & Clark, Inc., or because they are officers
of the Fund or both.
(1) The information as to beneficial ownership is based on statements
furnished to the Fund by the nominees and Directors. Unless otherwise
noted, beneficial ownership is based on sole voting and investment
power.
(2) Dr. Nolen's total includes 2,156 shares held by members of his family
as to which he shares investment and voting power.
(3) Mr. Padegs' total includes 800 shares held in a fiduciary capacity.
(4) Mr. Pierce's total includes 19,322 shares held in a fiduciary capacity
and 1,000 shares held by members of his family as to which he shares
investment and voting power.
(5) Mr. Gleysteen's total includes 1,344 shares held by members of his
family as to which he shares investment and voting power.
(6) The total for the group includes 29,714 shares held with sole
investment and voting power and 4,499 shares held with shared
investment and voting power.
</FN>
</TABLE>
The Directors and Officers of the Fund may also serve in similar
capacities for other funds managed by Scudder.
Section 30(f) of the Investment Company Act of 1940, as amended (the
"1940 Act"), as applied to the Fund requires the Fund's Officers,
Directors, Manager, affiliates of the Manager, and persons who beneficially
own more than ten percent of a registered class of the Fund's outstanding
securities ("reporting persons"), to file reports of ownership of the
Fund's securities and changes in such ownership with the Securities and
Exchange Commission (the "SEC") and The New York Stock Exchange. Such
persons are required by SEC regulations to furnish the Fund with copies of
all such filings.
Based solely upon its review of the copies of such forms furnished to
it, and written representations from certain reporting persons that no
year-end reports were required for those persons, the Fund believes that
during the fiscal year ended December 31, 1993, all filing requirements
applicable to its reporting persons were complied with except that a
monthly Statement of Changes in Beneficial Ownership on behalf of Scudder,
Stevens & Clark, Inc. was filed late.
Certain accounts for which the Manager acts as investment adviser
owned 823,870 shares, in the aggregate, or 9.78% of the outstanding shares
of the Fund on June 30, 1994. The Manager may be deemed to be the
beneficial owner of such shares but disclaims any beneficial ownership in
such shares.
Except as noted above, to the best of the Fund's knowledge, as of June
30, 1994, no other person owned beneficially more than 5% of the Fund's
outstanding shares.
Honorary Director
James W. Morley serves as Honorary Director of the Fund. Honorary
Directors are invited to attend all Board meetings and to participate in
Board discussions, but are not entitled to vote on any matter presented to
the Board. Mr. Morley had served as Director of the Fund since 1986. Mr.
Morley retired as Director in 1993 in accordance with the Board of
Directors' retirement policy.
Committees of the Board_Board Meetings
The Board of Directors of the Fund met four times during the year
ended December 31, 1993. Each Director attended at least 75% of the total
number of meetings of the Board of Directors and of all committees of the
Board on which they served as regular members, except for Mr. Bratt who
attended 62.5%. The Valuation Committee is considered to consist of regular
members and alternates.
The Directors, in addition to an Executive Committee, have an Audit
Committee and a Nominating Committee.
Audit Committee
The Board has an Audit Committee consisting of those Directors who are
not interested persons of the Fund or of Scudder ("Noninterested
Directors") as defined in the 1940 Act, which met once during the year
ended December 31, 1993. The Audit Committee reviews with management and
the independent accountants for the Fund, among other things, the scope of
the audit and the controls of the Fund and its agents, reviews and approves
in advance the type of services to be rendered by independent accountants,
recommends the selection of independent accountants for the Fund to the
Board and in general considers and reports to the Board on matters
regarding the Fund's accounting and bookkeeping practices.
Nominating Committee
The Board has a Special Nominating Committee consisting of the
Noninterested Directors which met twice during the year ended December 31,
1993. The Committee is charged with the duty of making all nominations for
Noninterested Directors. Stockholders' recommendations as to nominees
received by management are referred to the Committee for their
consideration and action. The Committee met on April 14, 1994 to consider
and to nominate the nominees set forth above.
Executive Officers
The following persons are Executive Officers of the Fund:
<TABLE>
<CAPTION>
Present Office with the Fund; Year First Became
Name (Age) Principal Occupation or Employment an Officer(1)
----------- ---------------------------------- -------------
<C> <C> <C>
Edmond D. Villani (47) Chairman of the Board; President 1990
and Managing Director of Scudder,
Stevens & Clark, Inc.
Nicholas Bratt (46) President; Managing Director of 1986
Scudder, Stevens & Clark, Inc.
Elizabeth J. Allan (41) Vice President; Principal of 1989
Scudder, Stevens & Clark, Inc.
Jerard K. Hartman (61) Vice President; Managing Director 1986
of Scudder, Stevens & Clark, Inc.
Seung K. Kwak (33) Vice President; Managing Director 1993
of Scudder, Stevens & Clark, Inc.
David S. Lee (60) Vice President; Managing Director 1986
of Scudder, Stevens & Clark, Inc.
Pamela A. McGrath (40) Vice President and Assistant 1990
Treasurer; Principal of Scudder,
Stevens & Clark, Inc.
Juris Padegs (62) Vice President and Assistant 1986
Secretary; Managing Director of
Scudder, Stevens & Clark, Inc.
Edward J. O'Connell (49) Treasurer; Principal of Scudder, 1986
Stevens & Clark, Inc.
Thomas F. McDonough (47) Secretary and Assistant Treasurer; 1986
Principal of Scudder, Stevens &
Clark, Inc.
Coleen Downs Dinneen (33) Assistant Secretary; Vice 1992
President of Scudder, Stevens &
Clark, Inc.
<FN>
(1) The President, Treasurer and Secretary each holds office until a
successor has been duly elected and qualified and all other officers
hold office at the pleasure of the Directors.
</FN>
</TABLE>
Transactions with and Remuneration of Directors and Officers
The aggregate direct remuneration by the Fund of Directors not
affiliated with Scudder, Stevens & Clark, Inc. was $45,764, including
expenses, during the year ended December 31, 1993. Each unaffiliated
Director currently receives fees, paid by the Fund, of $750 per Directors'
meeting attended and an annual Director's fee of $4,500. Effective October
1, 1994, the annual fee will be $6,000. Each Director also receives $250
per committee meeting attended (other than Audit Committee and contract
meetings for each of which such Director receives a fee of $750). Scudder,
Stevens & Clark, Inc., as the Fund's Investment Manager, supervises the
Fund's investments, pays the compensation and certain expenses of its
personnel who serve as Directors and Officers of the Fund and receives a
management fee for its services. Several of the Fund's Officers and
Directors are also officers, directors, employees or stockholders of the
Manager and participate in the fees paid to that firm (see "Investment
Manager," page 12), although the Fund makes no direct payments to them.
Required Vote
Election of each of the listed nominees for Director requires the
affirmative vote of a majority of the votes cast at the meeting in person
or by proxy. Your Fund's Directors recommend that stockholders vote in
favor of each of the nominees.
(2) RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
At a meeting held on July 19, 1994, the Board of Directors of the
Fund, including a majority of the Noninterested Directors, selected Coopers
& Lybrand to act as independent accountants for the Fund for the year
ending December 31, 1994. Coopers & Lybrand are independent accountants and
have advised the Fund that they have no direct financial interest or
material indirect financial interest in the Fund. One or more
representatives of Coopers & Lybrand are expected to be present at the
Annual Meeting of Stockholders and will have an opportunity to make a
statement if they so desire. Such representatives are expected to be
available to respond to appropriate questions posed by stockholders or
management.
The Fund's financial statements for the year ended December 31, 1993
were audited by Coopers & Lybrand. In connection with its audit services,
Coopers & Lybrand reviewed the financial statements included in the Fund's
annual and semiannual reports to stockholders and its filings with the SEC.
Required Vote
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at the meeting in person
or by proxy. Your Fund's Directors recommend that stockholders of the Fund
ratify the selection of Coopers & Lybrand as independent accountants.
(3) APPROVAL OR DISAPPROVAL OF THE CONTINUANCE
OF THE INVESTMENT ADVISORY, MANAGEMENT AND ADMINISTRATION AGREEMENT
Scudder, Stevens & Clark, Inc., 345 Park Avenue, New York, New York,
acts as investment adviser to and manager for the Fund pursuant to an
Investment Advisory, Management and Administration Agreement dated July 29,
1992 (the "Agreement"). The Agreement was last approved by a vote of the
stockholders on October 14, 1993. At a meeting held on July 19, 1994 the
Directors, including a majority of the Noninterested Directors, approved
the terms and continuance of the Agreement and recommended that the
stockholders approve the continuance of the Agreement. The Agreement
continues in effect from year to year thereafter only so long as such
continuance is specifically approved at least annually by the vote of a
majority of the Noninterested Directors cast in person at a meeting called
for the purpose of voting on such approval, and either by vote of the
Directors or a majority of the Fund's outstanding voting securities, as
defined below. The Agreement may be terminated on 60 days' written notice,
without penalty, by the Directors; by the vote of the holders of a majority
of the Fund's outstanding voting securities; or by the Manager and
automatically terminates in the event of its assignment.
Under the Agreement, the Manager regularly makes investment decisions
for the Fund, prepares and makes available to the Fund research and
statistical data in connection therewith and supervises the acquisition and
disposition of securities by the Fund, including the selection of
broker/dealers to carry out the transactions, all in accordance with the
Fund's investment objective and policies and in accordance with guidelines
and directions from the Fund's Board of Directors. The Manager also
maintains or causes to be maintained for the Fund all books, records and
reports and other information (not otherwise provided by third parties)
required under the 1940 Act.
In considering the Agreement and recommending its approval by
stockholders, the Directors of the Fund, including the Noninterested
Directors, considering the best interests of stockholders of the Fund, took
into account all such factors they deemed relevant. Such factors include
the nature, quality and extent of the services furnished by the Manager to
the Fund; the necessity of the Manager maintaining and enhancing its
ability to continue to retain and attract capable personnel to serve the
Fund; the investment record of the Manager in managing the Fund; the
experience of the Manager in the field of international investing; possible
economies of scale; comparative data as to investment performance, advisory
fees and other fees, including administrative fees and expense ratios,
particularly fees and expense ratios of funds with foreign investments,
including single country and regional funds, advised by the Manager and
other investment managers; the risks assumed by the Manager from serving as
Manager to the Fund; the advantages and possible disadvantages to the Fund
of having a manager which also serves other investment companies as well as
other accounts; possible benefits to the Manager from serving as manager to
the Fund; current and developing conditions in the financial services
industry, including the entry into the industry of large and well
capitalized companies which are spending and appear to be prepared to
continue to spend substantial sums to engage personnel and to provide
services to competing investment companies; the financial resources of the
Manager and the continuance of appropriate incentives to assure that the
Manager will continue to furnish high-quality services to the Fund.
In reviewing the terms of the Agreement, the Noninterested Directors
received legal advice and were represented at the Fund's expense by
independent counsel, Ropes & Gray. The general counsel for the Fund is
Dechert Price & Rhoads.
The Agreement provides that the Manager receive an annual fee of 1.25%
of the first $75 million of average weekly net assets of the Fund, 1.15% of
such net assets on the next $125 million and 1.10% of the excess over $200
million. Under the Agreement each payment of a monthly fee to the Manager
shall be made within the ten days next following the day as of which such
payment is so computed. This fee is higher than management fees paid by
most other investment companies primarily because of the increased research
burden involved in investing in Asian markets, greater investment in
private placements and unlisted securities, increased travel and
communications costs and the increased scope and complexity of
administering the Fund. However, the fee is not necessarily higher than the
fees charged to funds with investment objectives similar to that of the
Fund. Further, the Manager assumes the obligation to provide certain
administrative services to the Fund at no extra cost.
For the year ended December 31, 1993, the fee amounted to $1,571,815,
which was equivalent to an annual effective rate of 1.21%.
The Agreement provides that the Manager shall not be liable for any
act or omission, error of judgment or mistake of law, or for any loss
suffered by the Fund in connection with matters to which such Agreement
relates, except a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Manager in the performance of its
duties or from reckless disregard by the Manager of its obligations and
duties under such Agreement.
Required Vote
Approval of the continuance of the Agreement will require the
affirmative vote of a majority of the Fund's outstanding voting securities
which for the purpose of this proposal means (1) the holders of more than
50% of the outstanding voting shares of the Fund or (2) the holders of 67%
or more of the shares present if more than 50% of the outstanding voting
shares are present at the meeting in person or by proxy, whichever is less.
If an affirmative vote of stockholders is not obtained, the Directors will
consider such action as they deem to be in the best interests of the Fund's
stockholders. Your Fund's Directors recommend that the stockholders vote to
approve the continuance of the Agreement.
Investment Manager
The Manager is a Delaware corporation. Daniel Pierce* is the Chairman
of the Board of the Manager. Edmond D. Villani# is the President of the
Manager. Stephen R. Beckwith#, Lynn S. Birdsong#, Nicholas Bratt#, Linda C.
Coughlin#, Margaret D. Hadzima*, Jerard K. Hartman#, Richard A. Holt@,
Dudley H. Ladd*, Douglas M. Loudon#, John T. PackardL, Juris Padegs# and
Cornelia M. Small# are the other members of the Board of Directors of the
Manager. The principal occupation of each of the above named individuals is
serving as a Managing Director of the Manager.
- - - ------------------
* Two International Place, Boston, Massachusetts
# 345 Park Avenue, New York, New York
d 101 California Street, San Francisco, California
@ Two Prudential Plaza, 180 West Stetson, Suite 5400, Chicago, Illinois
All of the outstanding voting and nonvoting securities of Scudder are
held of record by Stephen R. Beckwith, Daniel Pierce, Juris Padegs and
Edmond D. Villani, in their capacity as representatives (the
"Representatives") of the beneficial owners of such securities, pursuant to
a Security Holders' Agreement among Scudder, the beneficial owners of
securities of Scudder and the Representatives. Pursuant to such Security
Holders' Agreement, the Representatives have the right to reallocate shares
among the beneficial owners from time to time. Such reallocation will be in
cash transactions at net book value. All Managing Directors of Scudder own
voting and nonvoting stock; all Principals own nonvoting stock.
Messrs. Pierce, Bratt, Padegs and Villani who are Officers and/or
Directors of the Fund are Managing Directors of Scudder. In addition, the
following Directors or Officers of Scudder are Officers of the Fund in the
following capacities: Elizabeth J. Allan, Jerard K. Hartman, Seung K. Kwak,
and David S. Lee, Vice Presidents; and Edward J. O'Connell, Treasurer;
Thomas F. McDonough, Secretary and Assistant Treasurer; Pamela A. McGrath,
Vice President and Assistant Treasurer; and Coleen Downs Dinneen, Assistant
Secretary. Messrs. Hartman, Kwak and Lee are Managing Directors and Messrs.
McDonough and O'Connell and Ms. McGrath and Ms. Allan are Principals of the
Manager. Ms. Dinneen is a Vice President of the Manager.
In addition to acting as Manager to individuals and other
organizations, Scudder, or an affiliate acts as investment adviser to all
of the investment companies, including the Fund, listed below, and the
separate series thereof. All of the investment companies listed below,
except for The Argentina Fund, Inc., The Brazil Fund, Inc., The First
Iberian Fund, Inc., The Korea Fund, Inc., The Latin America Dollar Income
Fund, Inc., Montgomery Street Income Securities, Inc., Scudder New Asia
Fund, Inc., Scudder New Europe Fund, Inc. and Scudder World Income
Opportunities Fund, Inc. are open-end investment companies or mutual funds.
<TABLE>
<CAPTION>
Total Net Assets
as of Management Compensation
July 31, 1994 on an Annual Basis Based on the
Name (000 omitted) Value of Average Daily Net Assets
------ ------------- -----------------------------------
<S> <C> <C>
Scudder California $385,000 Scudder California Tax Free Fund:
Tax Free Trust 0.625 of 1%; 0.60 of 1% on net assets
in excess of $200 million. Scudder
California Tax Free Money Fund: 0.50
of 1%.
Scudder Cash $1,676,900 0.50 of 1%; 0.45 of 1% on net assets
Investment Trust in excess of $250 million; 0.40 of 1%
on net assets in excess of $500
million; 0.35 of 1% on net assets in
excess of $1 billion.
Scudder $557,000 1%; 0.95 of 1% on net assets in excess
Development Fund of $500 million; 0.90 of 1% on net
assets in excess of $1 billion.
Scudder Equity $1,349,400 Scudder Capital Growth Fund: 0.75 of
Trust 1%; 0.65 of 1% on net assets in excess
of $500 million; 0.60 of 1% on net
assets in excess of $1 billion.
Scudder Value Fund: 0.70 of 1%.
Scudder Fund, Inc. $571,800 Managed Government Securities Fund:
0.40 of 1%; 0.35 of 1% on net assets
in excess of $1.5 billion. Managed
Cash Fund: 0.40 of 1%; 0.35 of 1% on
net assets in excess of $1.5 billion.
Managed Federal Securities Fund: 0.40
of 1%; 0.35 of 1% on net assets in
excess of $1.5 billion. Managed Tax
Free Fund: 0.40 of 1%; 0.35 of 1% on
net assets in excess of $1.5 billion.
Managed Intermediate Government Fund:
0.65 of 1%.
Scudder Funds $2,645,800 Scudder Short Term Bond Fund: 0.60 of
Trust 1%; 0.50 of 1% on net assets in excess
of $500 million; 0.45 of 1% on net
assets in excess of $1 billion; 0.40
of 1% on net assets in excess of $1.5
billion; 0.375 of 1% on net assets in
excess of $2 billion and 0.35 of 1% on
net assets in excess of $3 billion.
Scudder Zero Coupon 2000 Fund: 0.60 of
1%.
Scudder Global $3,364,900 Scudder Global Fund: 1%; 0.95% of 1%
Fund, Inc. (1) on net assets in excess of $500
million. Scudder International Bond
Fund: 0.85 of 1%. Scudder Short Term
Global Income Fund: 0.75%; 0.70% of 1%
on net assets in excess of $1 billion.
Scudder Global Small Company Fund:
1.10%. Scudder Emerging Markets Income
Fund: 1%.
Scudder GNMA Fund $482,400 0.65 of 1%; 0.60 of 1% on net assets
in excess of $200 million; 0.55 of 1%
on net assets in excess of $500
million.
Scudder $743,700 Federal Portfolio: 0.15 of 1%.
Institutional Government Portfolio: 0.15 of 1%. Cash
Fund, Inc. Portfolio: 0.15 of 1%. Tax-Free
Portfolio: 0.15 of 1%.
Scudder $3,403,700 Scudder International Fund: 1%; 0.90
International of 1% on net assets in excess of $200
Fund, Inc. (2) million; 0.85 of 1% on net assets in
excess of $400 million; 0.80 of 1% on
net assets in excess of $800 million.
Scudder Latin America Fund: 1.25%.
Scudder Pacific Opportunities Fund:
1.10%.
Scudder Investment $1,978,000 Scudder Growth and Income Fund: 0.65
Trust (3) of 1%; 0.60 of 1% on net assets in
excess of $200 million; 0.55 of 1% on
net assets in excess of $400 million;
0.50 of 1% on net assets in excess of
$900 million. Scudder Quality Growth
Fund: 0.70 of 1%.
Scudder Municipal $1,109,200 Scudder High Yield Tax Free Fund: 0.70
Trust of 1%; 0.65 of 1% on net assets in
excess of $200 million. Scudder
Managed Municipal Bonds: 0.55 of 1%;
0.50 of 1% on net assets in excess of
$200 million; 0.475 of 1% on net
assets in excess of $700 million.
Scudder Mutual $130,500 Scudder Gold Fund: 1%.
Funds, Inc.
Scudder Portfolio $545,700 Scudder Income Fund: 0.65 of 1%; 0.60
Trust of 1% on net assets in excess of $200
million; 0.55 of 1% on net assets in
excess of $500 million. Scudder
Balanced Fund: 0.70 of 1%.
Scudder State Tax $779,500 Scudder Massachusetts Limited Term Tax
Free Trust Free Fund: 0.60 of 1%. Scudder
Massachusetts Tax Free Fund: 0.60 of
1%. Scudder New York Tax Free Fund:
0.625 of 1%; 0.60 of 1% on net assets
in excess of $200 million. Scudder New
York Tax Free Money Fund: 0.50 of 1%.
Scudder Ohio Tax Free Fund: 0.60 of
1%. Scudder Pennsylvania Tax Free
Fund: 0.60 of 1%.
Scudder Tax Free $235,200 0.50 of 1%; 0.48 of 1% on net assets
Money Fund in excess of $500 million.
Scudder Tax Free $907,200 Scudder Limited Term Tax Free Fund:
Trust 0.60 of 1%. Scudder Medium Term Tax
Free Fund: 0.60 of 1%; 0.50 of 1% on
net assets in excess of $500 million.
Scudder U.S. $367,900 0.50 of 1%.
Treasury Money
Fund
Scudder Variable $938,500 Money Market Portfolio: 0.37 of 1%.
Life Investment Capital Growth Portfolio: 0.475 of 1%.
Fund Growth and Income Portfolio: 0.475 of
1%. Bond Portfolio: 0.475 of 1%.
Balanced Portfolio: 0.475 of 1%.
International Portfolio: 0.875 of 1%.
The Japan Fund, $714,200 0.85 of 1% of the first $100 million
Inc. of average daily net assets; 0.75 of
1% on assets in excess of $100 million
up to and including $300 million; 0.70
of 1% on assets in excess of $300
million up to and including $600
million; 0.65 of 1% on assets in
excess of $600 million. The Manager
pays The Nikko International Capital
Management Co., Ltd. for investment
and research services: 0.15 of 1% up
to $700 million of average daily net
assets; 0.14 of 1% on assets in excess
of $700 million, payable monthly
during fiscal year 1994; 0.10 of 1% on
average daily net assets, payable
during fiscal year 1995.
Total Net Assets
as of Management Compensation
July 31, 1994 on an Annual Basis Based on the
Name (000 omitted) Value of Average Weekly Net Assets
------ ------------- -----------------------------------
The Argentina $130,800 1.30%; the Investment Manager pays
Fund, Inc.* Sociedad General de Negocios y Valores
S.A. for investment and research
services 0.36 of 1%.
The Brazil Fund, $326,400 1.30%; 1.25% on net assets in excess
Inc.* of $150 million; and 1.20% on net
assets in excess of $300 million; the
Manager pays Banco Icatu S.A. for
investment and research services 0.25
of 1%; 0.15 of 1% on net assets in
excess of $150 million; and 0.05 of 1%
on net assets in excess of $300
million.
The First Iberian $59,500 1.00%.
Fund, Inc.*
The Latin America $75,100 1.20%.
Dollar Income
Fund, Inc.*
Scudder New Asia $191,800 1.25%; 1.15% on net assets in excess
Fund, Inc.* of $75 million; 1.10% on net assets in
excess of $200 million.
Scudder New Europe $185,100 1.25%; 1.15% on net assets in excess
Fund, Inc.* of $75 million; 1.10% on net assets in
excess of $200 million.
Scudder World $47,000 1.20%.
Income
Opportunities
Fund, Inc.*
Total Net Assets
as of Management Compensation
July 31, 1994 on an Annual Basis Based on the
Name (000 omitted) Value of Average Monthly Net Assets
------ ------------- -----------------------------------
The Korea Fund, $565,900 1.15%; 1.10% on net assets in excess
Inc. (4)* of $50 million; 1% on net assets in
excess of $100 million. The Investment
Manager pays Daewoo Capital Management
Co., Ltd. for investment and research
services 0.2875 of 1%; 0.275 of 1% on
net assets in excess of $50 million;
0.25 of 1% on net assets in excess of
$100 million.
Montgomery Street $186,300 0.50 of 1%; 0.45 of 1% on net assets
Income Securities, in excess of $150 million; 0.40 of 1%
Inc. * on net assets in excess of $200
million.
<FN>
- - - ----------
(1) On September 8, 1994, The Board of Directors of Scudder International
Bond Fund will consider a new Investment Management Agreement, which
includes a change in the rate of management compensation to: 0.85 of
1%; 0.80 of 1% on net assets exceeding $1 billion
(2) On September 8, 1994, The Board of Directors of Scudder International
Fund will consider a new Investment Management Agreement, which
includes a change in the rate of management compensation to: 0.90 of
1%; 0.85 of 1% on net assets in excess of $500 million; 0.80 of 1% on
net assets in excess of $1 billion; 0.75 of 1% on nets assets
exceeding $2 billion.
(3) On August 9, 1994, The Board of Trustees of Scudder Growth and Income
Fund approved a change in the rate of management compensation to: 0.60
of 1%; 0.55 of 1% on net assets in excess of $500 million; 0.50 of 1%
on net assets in excess of $1 billion; 0.475 of 1% on net assets
exceeding $1.5 billion.
(4) On July 19, 1994, The Board of Directors of The Korea Fund, Inc.
approved, subject to stockholder ratification, a new Investment
Advisory, Management and Administration Agreement, which includes a
change in the rate of management compensation to: 1.15%; 1.10% on net
assets in excess of $50 million; 1.00% on net assets in excess of $100
million; 0.95 of 1% on nets assets in excess of $350 million; 0.90% on
net assets exceeding $750 million.
* These funds are not subject to state imposed expense limitations.
</FN>
</TABLE>
The Manager also provides investment advisory services to the mutual
funds which compose the AARP Investment Program from Scudder (the
"Program") with assets of approximately $12 billion. The eight funds which
are series of the four AARP trusts and their assets and compensation rates
are as follows:
<TABLE>
<CAPTION>
Total Net Assets
as of
July 31, 1994
Name (000 omitted) Individual Fund Fee Rate+++
------ ------------- ---------------------------
<S> <C> <C>
AARP Cash $356,600 AARP High Quality Money Fund: 0.10 of
Investment Funds 1%.
AARP Income Trust $6,345,000 AARP GNMA and U.S. Treasury Fund: 0.12
of 1%. AARP High Quality Bond Fund:
0.19 of 1%.
AARP Tax Free $2,122,300 AARP High Quality Tax Free Money Fund:
Income Trust 0.10 of 1%. AARP Insured Tax Free
General Bond Fund: 0.19 of 1%.
AARP Growth Trust $3,019,300 AARP Growth and Income Fund: 0.19 of
1%. AARP Capital Growth Fund: 0.32 of
1%. AARP Balanced Stock and Bond Fund:
0.19 of 1%.
<FN>
- - - ---------
+++ In addition to the Individual Fund Fee listed above, each of the eight
AARP Funds pays the Adviser an Annual Base Fee in proportion to the
ratio of its daily net assets to the daily net assets of all of the
AARP Funds. The Annual Base Fee Rate is: 0.35 of 1% on net assets of
the Program up to and including $2 billion; 0.33% on net assets of the
Program in excess of $2 billion up to and including $4 billion; 0.30
of 1% on net assets of the Program in excess of $4 billion up to and
including $6 billion; 0.28 of 1% on net assets of the Program in
excess of $6 billion up to and including $8 billion; 0.26 of 1% on net
assets of the Program in excess of $8 billion up to and including $11
billion; 0.25 of 1% on net assets of the Program in excess of $11
billion up to and including $14 billion; and 0.24 of 1% on net assets
of the Program in excess of $14 billion.
</FN>
</TABLE>
The Investment Manager (or an affiliate) also acts as investment
adviser to the following foreign investment funds: Canadian High Income
Fund, Scudder Floating Rate Fund for Fannie Mae Mortgage Securities, Global
Balanced Fund, Hot Growth Companies Fund, Indosuez High Yield Bond Fund,
InverLatin Dollar Income Fund, Inc., Scudder Latin America Investment Trust
PLC, ProMexico Fixed Income Dollar Fund, Scudder Global Opportunities
Funds, Scudder Mortgage Fund, Sovereign High Yield Investment Company N.V.
(A), Sovereign High Yield Investment Company N.V. (B), The Venezuela High
Income Fund N.V., Latin America Income and Appreciation Fund N.V. and The
World Capital Fund.
Scudder has agreed to maintain the expenses of certain of the above
investment companies (or series thereof) at or below a specified percentage
of net assets.
Directors, officers and employees of the Investment Manager from time
to time may have transactions with various banks, including the Fund's
custodian bank. It is the Investment Manager's opinion that the terms and
conditions of those transactions as have occurred were not influenced by
existing or potential custodial or other Fund relationships.
The Consolidated Statement of Condition as of December 31, 1993 and
related Independent Auditors' Report dated February 11, 1994 for the
Adviser is attached hereto as Exhibit A.
Brokerage Commissions on Portfolio Transactions
To the maximum extent feasible, the Manager places orders for
portfolio transactions for the Fund through Scudder Investor Services, Inc.
(the "Distributor"), a Massachusetts corporation registered as a
broker/dealer and a wholly owned subsidiary of the Manager, which in turn
places orders on behalf of the Fund with issuers, underwriters or other
brokers and dealers. The Distributor receives no commissions, fees or other
remuneration from the Fund for this service. Allocation of brokerage is
supervised by Scudder.
The Manager's primary objective when placing orders for the purchase
and sale of securities for the Fund is to obtain the most favorable net
results, taking into account such factors as: price, commission where
applicable (negotiable in the case of U.S. national securities exchange
transactions), size of order, difficulty of execution and skill required of
the executing broker/dealer. The Manager seeks to evaluate the overall
reasonableness of brokerage commissions paid (to the extent applicable)
through the familiarity of the Distributor with commissions charged on
comparable transactions as well as by comparing commissions paid by the
Fund to reported commissions paid by others. The Manager routinely reviews
commission rates and execution and settlement services performed, making
internal and external comparisons.
When it can be done consistently with the policy of obtaining the most
favorable net results, it is the Manager's practice to place orders with
brokers and dealers who supply market quotations to the Fund's custodian
for appraisal purposes or who supply research, market and statistical
information to the Manager. The term "research, market and statistical
information" includes advice as to the value of securities, the
advisability of investing in, purchasing or selling securities and the
availability of securities or purchasers or sellers of securities; and
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of
accounts. The Manager is not authorized, when placing portfolio
transactions for the Fund, to pay a brokerage commission (to the extent
applicable) or transaction cost in excess of that which another broker
might have charged for executing the same transaction solely on account of
the receipt of research, market or statistical information. The Manager
does not place orders with brokers or dealers on the basis that the broker
or dealer has or has not sold shares of investment funds managed by
Scudder. In effecting transactions in over-the-counter securities, orders
are placed with the principal market makers for the security being traded
unless, after exercising care, it appears that more favorable results are
otherwise available.
Although certain research, market and statistical information from
broker/dealers is useful to the Fund and to the Manager, it is the opinion
of the Manager that such information is only supplementary to the Manager's
own research effort since the information must still be analyzed, weighed
and reviewed by the Manager's staff. Such information may be useful to the
Manager in providing services to clients other than the Fund and not all
such information is used by the Manager in connection with the Fund.
Conversely, such information provided to Scudder by brokers and dealers
through whom other clients of Scudder effect securities transactions may be
useful to Scudder in providing services to the Fund.
Certain investments may be appropriate for the Fund and also for other
clients, including investment companies, advised by Scudder. Investment
decisions for the Fund and other clients are made with a view to achieving
their respective investment objectives and after consideration of such
factors as their current holdings, availability of cash for investment and
the size of their investments generally. Frequently, a particular security
may be bought or sold for only one client or in different amounts and at
different times for more than one but less than all clients. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling the security. In addition, purchases or sales of the
same security may be made for two or more clients on the same day. In such
event, such transactions will be allocated among the clients in a manner
believed by Scudder to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities
purchased or sold by the Fund. Purchase and sale orders for the Fund may be
combined with those of other clients of Scudder in the interest of
obtaining the most favorable net results to the Fund.
During the fiscal year ended December 31, 1993, the Fund paid total
brokerage commissions of $138,580 of which $138,551 (99.98% of the total
commissions paid), resulted from orders placed with brokers and dealers who
provided supplementary research, market and statistical information to the
Fund or the Manager. The aggregate amount of brokerage transactions subject
to brokerage commissions was $29,214,349 (96.70% of all brokerage
transactions). The balance of such brokerage was not allocated to any
particular broker or dealer or with regard to the above mentioned or any
other special factors.
During the year ended December 31, 1993 no recapture for the benefit
of the Fund of some portion of the brokerage commissions or similar fees
paid on behalf of the Fund on portfolio transactions was effected.
(4) AND (5) APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF TWO, AND AN
AMENDMENT TO ONE, OF THE FUND'S FUNDAMENTAL INVESTMENT POLICIES
The 1940 Act requires investment companies such as the Fund to adopt
certain specific investment policies that can be changed only by
stockholder vote. An investment company may also elect to designate other
policies that may be changed only by stockholder vote. Such investment
policies are referred to as "fundamental" investment policies. The Board of
Directors recommends that the stockholders approve the elimination of two,
and an amendment to one, of the Fund's fundamental investment policies to
provide the Fund with greater investment flexibility.
(4) APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE
FUND'S FUNDAMENTAL INVESTMENT POLICIES REGARDING
NON-PUBLICLY TRADED SECURITIES
Securities in which the Fund may invest include those that are not
listed on a stock exchange or traded in an over-the-counter market. Such
securities may include joint venture partnerships, limited partnerships and
restricted securities (securities which are subject to legal or contractual
restrictions). Investments in these types of securities give the Fund more
flexibility in attempting to achieve its investment objective and the
opportunity to invest more readily in developing markets. As a result of
the absence of a public trading market for these securities, however, they
may be less liquid than publicly traded securities. The Fund may encounter
substantial delays in attempting to sell non-publicly traded securities.
Although these securities may be resold in privately negotiated
transactions, the prices realized from these sales could be less than those
originally paid by the Fund. Further, companies whose securities are not
publicly traded are not subject to the disclosure and other investor
protection requirements which may be applicable if their securities were
publicly traded. In order to minimize these risks, the Manager performs
careful analysis before investing in any non-publicly traded securities,
including consideration of: overall growth prospects, financial condition,
competitive position, technology, research and development, productivity,
labor costs, raw material costs and sources, profit margins, return on
investment, structural changes in local economies, capital resources, the
degree of government regulation or deregulation, management and other
factors.
The Fund's Board of Directors believes it would be in the best
interests of the Fund and its stockholders to raise the percentage of
assets the Fund may invest in non-publicly traded securities. The Fund's
portfolio holds close to the current limit in non-publicly traded
securities, limiting the Fund's additional investment opportunities in the
newly industrializing economies in the Pacific Basin, where many securities
are not publicly traded.
Currently, Restriction (6) of the Fund's fundamental investment
restrictions limits investment in non-publicly traded securities to 15% of
the value of the Fund's total assets, and Restriction (9) limits the Fund's
investments to no more than 15% of the value of its total assets, in the
aggregate, in securities which are not readily marketable because of legal
or contractual restrictions or which are otherwise not readily marketable,
as well as repurchase agreements with maturities of longer than seven days.
As these restrictions are not required to be fundamental investment
policies by the 1940 Act, the Board of Directors proposes that stockholders
vote to eliminate Restrictions (6) and (9) as fundamental investment
policies. Upon the elimination of these policies, the Board will adopt the
non-fundamental policy set forth below regarding purchases of such
securities, which may be changed in the future without the expense and
delay of obtaining a stockholder vote. If approved by stockholders,
fundamental investment Restrictions (6) and (9) would be eliminated, and a
non-fundamental policy will be adopted by the Board of Directors as
follows:
"(The Fund may not) invest in illiquid securities if more than 20% of
its total assets (taken at current value) would be invested in such
securities."
If conditions change in the future, the Board of Directors may change
such a policy without further action by stockholders.
Voting Requirements for Proposal 4
Approval of this proposal requires the affirmative vote of a majority
of the voting securities, which means the lesser of (1) 67% or more of the
voting securities of the Fund present at the meeting, if the holders of
more than 50% of the outstanding voting securities are present or
represented by proxy; or (2) more than 50% of the outstanding voting
securities of the Fund. The Directors have considered various factors and
believe that this Proposal is in the best interest of the Fund's
stockholders. If the Proposal is not approved, the Fund's present
fundamental investment restriction will remain in effect. Your Fund's
Directors recommend that stockholders vote in favor of the change to the
Fund's investment restrictions described above.
(5) APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO THE
FUND'S FUNDAMENTAL INVESTMENT POLICY REGARDING
COMMODITIES AND REAL ESTATE
The Fund's strategy is to invest directly in the securities, primarily
equity securities, of Asian companies. Although expected to comprise only
an incidental portion of the Fund's portfolio at any time, the Fund may,
but is not required to, utilize certain investment strategies to hedge
various market risks (such as interest rates, currency exchange rates, and
broad or specific equity or fixed-income market movements), to manage the
effective maturity or duration of fixed-income securities in the Fund's
portfolio, or to enhance potential gain (although engaging in such
strategies to enhance gain is restricted to no more than 5% of the Fund's
net assets). These types of "strategic transactions" are commonly referred
to as derivatives, and may involve substantial risk. Currently, the Fund
has a fundamental investment policy relating to commodities, as required by
Section 8(b)(1)(F) of the 1940 Act. This investment policy specifically
enumerates a broad range of the types of strategic transactions in which
the Fund may invest as exceptions to the policy, since such transactions
could be deemed commodities as that term is defined in the Commodity
Exchange Act, by the appropriate regulatory authority. The policy was
written in 1989, when the Fund commenced operations, and excluded a broad
range of the types of strategic transactions available at the time. The
proposed change to the fundamental investment policy would specify physical
commodities, so that strategic transactions which may be deemed to be
"commodities", but which are not related to physical commodities, would no
longer need to be specifically and individually excluded from the policy.
Should stockholders approve this proposal, the Fund could change the list
of those strategic transactions which could be deemed to be "commodities"
without seeking stockholder approval.
In the course of pursuing these investment strategies, the Fund may
enter into certain strategic transactions including the purchase and sale
of exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other financial instruments, and the
purchase and sale of futures contracts on stock indices and options
thereon. Strategic transactions may be used to attempt to protect against
possible changes in the market value of securities held in or to be
purchased for the Fund's portfolio resulting from securities markets or
currency exchange rate fluctuations, to protect the Fund's unrealized gains
in the value of its portfolio securities, to facilitate the sale of such
securities for investment purposes, to manage the effective maturity or
duration of fixed-income securities in the Fund's portfolio, or to
establish a position in the derivatives markets as a temporary substitute
for purchasing or selling particular securities. Strategic transactions may
have risks associated with them including possible default by the other
party to the transaction, illiquidity and, to the extent the Adviser's view
as to certain market movements is incorrect, the risk that the use of such
strategic transactions could result in losses greater than if they had not
been used. The Fund's Board of Directors believes that it would be in the
best interest of the Fund and its stockholders to amend this restriction to
refer to physical commodities. The Fund does not intend to invest in any
strategic transactions other than those described in its prospectus dated
January 13, 1994.
In addition, the proposed amendment will clarify the exception
contained in Restriction (7) as it relates to real estate or interests in
real estate, in order to permit the Fund to invest in securities of
companies which deal in mortgages, as well as real estate and securities
secured by real estate and interests therein. The proposed amendment
reserves for the Fund the freedom of action to hold and sell real estate
acquired as a result of the Fund's ownership of securities. (For example,
this new provision would allow the Fund to dispose of real estate in the
event that it acquired real estate as a result of a mortgage foreclosure.)
The Fund does not intend to invest in any real estate related transactions
other than those listed above or in the Fund's prospectus.
If approved by stockholders, the Fund's fundamental investment policy
regarding commodities and real estate would be amended as follows (changes
noted in italics, deleted text noted by strikeouts):
"(The Fund may not) buy purchase or sell commodities or commodity
contracts or real estate (except that the Fund may invest in (i) securities
of companies which deal in real estate or mortgages, and (ii) securities
secured by real estate or interests therein, and that the Fund reserves
freedom of action to hold and to sell real estate acquired as a result of
the Fund's ownership of securities); or interests in real estate, although
it may purchase and or purchase or sell physical futures contracts on stock
indices and foreign currencies, securities which are secured by real estate
or commodities or contracts relating to physical and securities of
companies which invest or deal in real estate or commodities."
Voting Requirements for Proposal 5
Approval of this proposal requires the affirmative vote of a majority
of the voting securities, which means the lesser of (1) 67% or more of the
voting securities of the Fund present at the meeting, if the holders of
more than 50% of the outstanding voting securities are present or
represented by proxy; or (2) more than 50% of the outstanding voting
securities of the Fund. The Directors have considered various factors and
believe that this Proposal is in the best interest of the Fund's
stockholders. If the Proposal is not approved, the Fund's present
fundamental investment restriction will remain in effect. Your Fund's
Directors recommend that stockholders vote in favor of the change to the
Fund's investment restrictions described above.
Other Matters
The Board of Directors knows of no business to be brought before the
meeting other than as set forth above. If, however, any other matters
properly come before the meeting, it is the intention of the persons named
in the enclosed proxy card to vote such proxies on such matters in
accordance with their best judgment.
Miscellaneous
Proxies will be solicited by mail and may be solicited in person or by
telephone or telegraph by officers of the Fund, personnel of Scudder or an
agent of the Fund for compensation. The Fund has retained Corporate
Investor Communications, Inc., 111 Commerce Road, Carlstadt, New Jersey
07072-2586 to assist in the proxy solicitation. The cost of their services
is estimated at $7,000 plus reasonable out-of-pocket expenses. The expenses
connected with the solicitation of the proxies and with any further proxies
will be borne by the Fund. The Fund will reimburse banks, brokers and other
persons holding the Fund's shares registered in their names or in the names
of their nominees for their expenses incurred in sending proxy material to
and obtaining proxies from the beneficial owners of such shares.
The Annual Report for the year ended December 31, 1993 was mailed to
stockholders who were stockholders of record on August 16, 1994, the Record
Date for the Annual Meeting.
In the event that sufficient votes in favor of any proposal set forth
in the Notice of this meeting are not received by October 13, 1994, the
persons named as proxies on the enclosed proxy card may propose one or more
adjournments of the meeting to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of the holders of a
majority of the shares present in person or by proxy at the session of the
meeting to be adjourned. The persons named as proxies in the enclosed proxy
card will vote in favor of such adjournment those proxies which they are
entitled to vote in favor of the proposal for which further solicitation of
proxies is to be made. They will vote against any such adjournment those
proxies required to be voted against such proposal. The costs of any such
additional solicitation and of any adjourned session will be borne by the
Fund.
Stockholder Proposals
Any proposal by a stockholder of the Fund intended to be presented at
the 1995 Annual Meeting must be received at 345 Park Avenue, New York, New
York 10154 no later than May 1, 1995.
By order of the Board of Directors,
Thomas F. McDonough
Secretary
345 Park Avenue
New York, New York 10154
August 29, 1994
EXHIBIT A
SCUDDER, STEVENS & CLARK, INC.
Consolidated Statement of Condition
December 31, 1993
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets
Cash and cash equivalents $11,689,984
Short term investments 50,196,591
Investment advisory fees receivable 36,806,144
Service fees receivable 5,005,051
Expense reimbursement from funds 1,399,751
Income taxes receivable 4,502,214
Receivables for fund shares 5,466,585
Other current assets 4,840,317
------------
Total current assets 119,906,637
Investments available for sale 9,095,068
Other investments 2,222,345
Fixed assets, net of accumulated depreciation and 33,756,800
amortization
Other assets 5,554,131
------------
Total assets $170,534,981
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $19,572,911
Short term borrowing 13,000,000
Payables for fund shares 5,466,585
Deferred lease obligations 1,566,163
Total current liabilities 39,605,659
Deferred lease obligations 6,844,331
------------
Deferred income taxes 8,675,236
------------
Total liabilities 55,125,226
------------
Stockholders' equity
Common stock, par value $.01 per share:
Class A:
Authorized 9,250 shares, issued and outstanding 8,712 87
shares
Class B:
Authorized 8,000,000 shares, issued and outstanding 60,505
6,050,546 shares
Capital in excess of par value 58,784,982
Unrealized securities gains on investments available 1,343,658
for sale, net
Cumulative translation adjustment 264,316
Retained earnings 54,956,207
------------
Total stockholders' equity 115,409,755
------------
Total liabilities and stockholders' equity $170,534,981
============
</TABLE>
See accompanying notes to consolidated statement of condition.
SCUDDER, STEVENS & CLARK, INC.
Notes to Consolidated Statement of Condition
December 31, 1993
(1) Summary of Significant Accounting Policies
Organization, Principles of Consolidation
Scudder, Stevens & Clark, Inc. (the "Parent") serves as a registered
investment adviser to individuals, institutions and investment companies.
Its principal subsidiaries include Scudder Investor Services, Inc., a
registered broker/dealer which acts as principal underwriter and
administrator for a group of investment companies managed by the Parent;
Scudder Service Corporation which acts as transfer agent for these
investment companies; and Scudder Trust Company which acts as the
trustee/custodian of IRA, Keogh and other retirement plans primarily
invested in mutual funds managed or administered by the Parent and also
sponsors collective investment trusts and New Hampshire investment trusts.
The consolidated statement of condition includes the accounts of Scudder,
Stevens & Clark, Inc. and its subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated in consolidation.
Cash Equivalents
Cash equivalents represent primarily investments in affiliated Scudder
money market mutual funds amounting to $6,712,700 at December 31, 1993. The
Company is the investment manager for these funds.
Investment Securities
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
115, "Accounting for Certain Investments in Debt and Equity Securities," as
of December 31, 1993. The adoption of this standard did not have a material
impact on the Company's financial position. The following summarizes the
Company's accounting for its investments:
a. Short Term Investments
Short term investments consist of shares of short and medium term bond
funds advised by the Company. The Company does not intend to hold these
investments over the long term and carries them for liquidity purposes and
investment income and to realize gains from market fluctuations. The
investments are carried at market value. Gains and losses on redemptions
are calculated on the first in, first out cost method.
b. Investments Available for Sale
Investments available for sale consist of various equity and bond funds
advised by the Company and U.S. Treasury obligations. The Company intends
to hold these securities for the foreseeable future unless liquidity needs
demand or market conditions make it advantageous to liquidate them. The
investments are carried at market value, with unrealized gains and losses
net of deferred income taxes recognized as an adjustment to stockholders'
equity. Gains and losses on redemptions and sales are calculated on the
first in, first out cost method. In determining cost basis, premiums and
discounts are amortized on a level yield basis.
c. Other Investments
Other investments consist of seed money required for various mutual funds
advised by the Company which will be held until permitted to be liquidated,
normally 5 years, and equity interests in joint ventures and other
miscellaneous equity investments which will be held indefinitely. These
investments are carried at cost unless their value is permanently impaired.
Financial Instruments
In the course of its activities, the Company deals in financial instruments
such as cash, various receivables, investment securities, and expenses
payable. Due to the short term nature of all financial instruments except
for investment securities, the market value of such instruments
approximates the carrying value of the instruments. Market values of
investment securities have been disclosed in the financial statements and
footnotes.
Fund Share Transactions
Sales of fund shares are recorded on a trade date basis.
Fixed Assets
Fixed assets are carried at cost less accumulated depreciation and
amortization.
Deferred Lease Obligations
The Company recognizes lease obligations in connection with landlord
incentive rental terms or payments and premature lease terminations.
Income Taxes
The Company files a consolidated federal income tax return. The Parent and
its subsidiaries file separate state and local income tax returns.
Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting
for Income Taxes," which requires a change from the deferred method of
accounting for timing differences in the recognition of revenues and
expenses for tax and financial reporting purposes to the "asset and
liability method." Under the asset and liability method, deferred income
taxes are recognized for the tax consequences of temporary differences
between the financial statements and the tax bases of assets and
liabilities. The adoption of this standard did not have a material impact
on the Company's financial position.
(2) Related Party Transactions
The Company serves as an investment manager to various related investment
companies. Certain stockholders of the Company are members of the Boards of
Directors of these investment companies. At December 31, 1993, investment
advisory fees receivable and service fees receivable from affiliated mutual
funds were $22,470,588.
The Company pays certain expenses on behalf of affiliated mutual funds for
which it is reimbursed. At December 31, 1993, the amounts due to the
Company relating to these expenses were $1,399,751. In addition, the
Company absorbs expenses of mutual funds whose expenses exceed statutory or
Company imposed limitations. At December 31, 1993, the Company owed
$1,195,345 to these funds related to these expense limitations.
(3) Investments Available for Sale
<TABLE>
<CAPTION>
The following table presents information relating to the Company's
investments available for sale at December 31, 1993.
Gross Unrealized
Cost Market Value Gains (Losses)
<S> <C> <C> <C> <C>
Shares of mutual $4,738,294 $7,126,039 $2,453,988 $(66,243)
funds
U.S. Treasury 1,939,156 1,937,354 _ (1,802)
obligations
Other 20,529 31,675 11,146 _
------ ------ ------ ------
$6,697,979 $9,095,068 $2,465,134 $(68,045)
========== ========== ========== =========
</TABLE>
U.S. Treasury obligations mature in two years or less in 1993.
(4) Other Investments
<TABLE>
<CAPTION>
The following table presents information relating to the Company's other
investments at December 31, 1993.
Gross Unrealized
Cost Market Value Gains (Losses)
<S> <C> <C> <C> <C>
Other securities $1,849,060 $3,114,960 $1,265,900 $_
Shares of mutual 373,285 418,809 50,215 (4,691)
funds (restricted) ------- ------- ------ ------
$2,222,345 $3,533,769 $1,316,115 $(4,691)
========== ========== ========== ========
</TABLE>
(5) Fixed Assets
<TABLE>
<CAPTION>
Fixed assets at December 31, 1993 consisted of the following:
<S> <C>
Furniture and fixtures $15,340,356
Office equipment 33,904,357
Leasehold improvements 18,220,875
----------
67,465,588
Less accumulated depreciation and amortization 33,708,788
----------
Fixed assets, net $33,756,800
===========
</TABLE>
(6) Short Term Borrowing
The Company borrowed $13,000,000 under an unsecured $20,000,000 line of
credit from a commercial bank at an average rate of 4.85% to mature
February 8, 1994.
(7) Employee Benefit Plans
The Company sponsors the Scudder, Stevens & Clark Profit Sharing and 401(k)
Plan Trust and Scudder Defined Benefit Plan and Trust.
Scudder, Stevens & Clark Profit Sharing and 401(k) Plan Trust ("PSk")
The profit sharing part of PSk covers all employees of the Parent and
participating affiliates (the "Employer") who have worked 1,000 hours
during each year after the first year of employment. Employer contributions
made to the profit sharing part of PSk are completely discretionary and
dependent upon profits. The final determination as to the amount of
contribution for any year is made by the Board of Directors of the Parent.
Employer contributions are allocated to the profit sharing accounts of
eligible participants based on a percentage of such participants'
compensation exclusive of commissions. Combined contributions to PSk for
any calendar year are limited by statute to $30,000 per participant.
Employees are eligible to participate in the 401(k) part of PSk after three
months of service. The Employer makes no contributions to the 401(k) part
of PSk, employee participation in which is voluntary. Eligible participants
may contribute to either or both the profit sharing or 401(k) parts of PSk
to a combined maximum of 7% of defined compensation.
Scudder Defined Benefit Plan and Trust ("DBP")
Effective February 1, 1986, the Employer adopted a noncontributory defined
benefit plan covering employees who have worked 1,000 hours during each
year after the first year of employment. In general, benefits under DBP are
based on a participant's years of service with the Employer after January
31, 1986 and such participant's compensation exclusive of commissions.
The funding policy is to contribute annually to DBP the maximum amount that
can be deducted for federal income tax purposes. The Parent and its
participating affiliates contribute the amount necessary to fund DBP with
regard to each entity's employees.
The following table sets forth the plan's funded status and the basis for
the amounts recognized in the Company's consolidated financial statements
at December 31, 1993.
<TABLE>
<CAPTION>
Defined Benefit Plan:
<S> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation including vested benefits of $(8,721,044)
$7,274,399 ============
Projected benefit obligation for service rendered to date $(11,241,787)
Plan assets at fair value 10,897,542
------------
Plan assets less than projected benefit obligations (344,245)
Unrecognized net loss from past experience different from 1,671,673
that assumed and effects of changes in assumptions
Prior service cost not yet recognized in net periodic 160,508
pension cost
Unrecognized net assets at February 1, 1987 amortized over 34,964
15 years ------------
Prepaid pension cost $1,522,900
============
</TABLE>
At December 31, 1993, essentially all plan assets were invested in related
Scudder mutual funds primarily through the Scudder Balanced Fund.
The straight line amortization method is used in calculating prior service
cost. Gains and losses are amortized only if they are outside of the 10%
corridor of the larger of projected benefit obligation or fair value of
plan assets.
The weighted average discount rate and rate of increase in future
compensation levels used in determining the projected benefit obligation
were 7.5% and 6%, respectively. The expected long term rate of return on
plan assets, net of expenses, was 8.5%.
In addition, the Company established a defined contribution plan in London
to cover local employees.
The Company does not provide any other postretirement benefits to its
employees.
(8) Stockholders' Equity
The Company has two classes of common stock, Class A voting shares and
Class B nonvoting shares. The Company has the option to convert any (but
not all) shares of Class A common stock into an equal number of shares of
Class B common stock, and to convert any or all Class B common stock into
Class A common stock.
(9) Income Taxes
<TABLE>
<CAPTION>
The components of income taxes receivable and deferred income taxes at
December 31, 1993 are as follows:
<S> <C>
Income taxes receivable:
Federal $2,639,473
State and local 1,862,741
------------
$4,502,214
============
Deferred income taxes:
Federal $(6,109,967)
State and local (2,565,269)
------------
$(8,675,236)
============
</TABLE>
<TABLE>
<CAPTION>
The components of the net deferred tax liability at December 31, 1993 are
as follows:
<S> <C>
Deferred tax liabilities relating to:
Accrual to cash adjustment (Parent only) $7,325,143
Unrealized gain on investments available for sale 1,053,430
Pension contribution 700,418
Foreign exchange 151,929
----------
Total deferred liabilities 9,230,920
----------
Deferred tax assets relating to:
Depreciation 274,345
Unrealized loss on short term investments 169,243
Compensation expense 112,096
----------
Total deferred tax assets 555,684
----------
Net deferred tax liability $8,675,236
==========
</TABLE>
(10) Commitments
<TABLE>
<CAPTION>
Minimum rentals under noncancelable operating leases for office space and
equipment at December 31, 1993 are as follows:
<S> <C>
Year ending December 31
1994 $24,300,055
1995 22,220,816
1996 21,419,054
1997 16,219,558
1998 15,463,942
Later years 143,521,297
------------
243,144,722
Less minimum future rentals under noncancelable operating 1,191,207
subleases ------------
Total net minimum payment required $241,953,515
============
Such rentals are subject to escalation clauses.
</TABLE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Scudder, Stevens & Clark, Inc.
We have audited the accompanying consolidated statement of condition of
Scudder, Stevens & Clark, Inc. and subsidiaries as of December 31, 1993.
This financial statement is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of condition is
free of material misstatement. An audit of a statement of condition
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of condition. An audit of a statement of
condition also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of condition presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated statement of condition referred to above
presents fairly, in all material respects, the consolidated financial
position of Scudder, Stevens & Clark, Inc. and subsidiaries as of December
31, 1993 in conformity with generally accepted accounting principles.
KPMG Peat Marwick
New York, New York
February 11, 1994
Exhibit 77 Q2
Scudder New Asia Fund, Inc., Fiscal Year 1994
Form of Section 16(a) Disclosures for Proxy Statement
and Form 10-K (pursuant to Item 405 of Regulation S-K)
Section 30(f) of the Investment Company Act of 1940, as amended (the "1940
Act"), as applied to a fund, requires the Fund's Officers and Directors,
Investment Manager, affiliates of the Investment Manager and persons who
beneficially own more than ten percent of a registered class of the Fund's
outstanding securities ("reporting persons"), to file reports of ownership
of the Fund's securities and changes in such ownership with the Securities
and Exchange Commission (the "SEC") and the New York Stock Exchange. Such
persons are required by SEC regulations to furnish the Fund with copies of
all such filings.
Based solely upon its review of the copies of such forms received by it,
and written representations from certain reporting persons that no year-end
reports were required for those persons, the Fund believes that during the
fiscal year ended December 31, 1994 all filing requirements applicable to
its reporting persons were complied with except that Form 3 on behalf of
Margaret Hadzima and Richard Holt were filed late.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Scudder New Asia Fund, Inc. Annual Report for the fiscal year ended
December 31, 1994 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> SCUDDER NEW ASIA FUND, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 153,091,567
<INVESTMENTS-AT-VALUE> 180,176,479
<RECEIVABLES> 4,141,672
<ASSETS-OTHER> 40,076
<OTHER-ITEMS-ASSETS> 3,851,412
<TOTAL-ASSETS> 188,209,639
<PAYABLE-FOR-SECURITIES> 929,365
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40,408,788
<TOTAL-LIABILITIES> 41,338,153
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 113,261,310
<SHARES-COMMON-STOCK> 8,423,056
<SHARES-COMMON-PRIOR> 7,102,417
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (497,182)
<ACCUMULATED-NET-GAINS> 6,748,934
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,358,424
<NET-ASSETS> 146,871,486
<DIVIDEND-INCOME> 1,998,481
<INTEREST-INCOME> 1,570,663
<OTHER-INCOME> 0
<EXPENSES-NET> 3,175,148
<NET-INVESTMENT-INCOME> 393,996
<REALIZED-GAINS-CURRENT> 47,392,802
<APPREC-INCREASE-CURRENT> (72,785,297)
<NET-CHANGE-FROM-OPS> (24,998,499)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,935,479
<DISTRIBUTIONS-OF-GAINS> 35,376,835
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,304,872
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 15,767
<NET-CHANGE-IN-ASSETS> (31,105,869)
<ACCUMULATED-NII-PRIOR> (1,619,849)
<ACCUMULATED-GAINS-PRIOR> (2,602,833)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,264,745
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,175,148
<AVERAGE-NET-ASSETS> 190,550,858
<PER-SHARE-NAV-BEGIN> 25.06
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> (3.21)
<PER-SHARE-DIVIDEND> 0.23
<PER-SHARE-DISTRIBUTIONS> 4.20
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.44
<EXPENSE-RATIO> 1.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
