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