SCUDDER NEW ASIA FUND, INC.
Annual Report
December 31, 1995
A closed-end investment company seeking long-term capital appreciation primarily
through investment in the equity securities of Asian companies.
<PAGE>
Scudder New Asia Fund, Inc.
- ---------------------------
Investment objective and policies
* long-term capital appreciation through investment primarily in equity
securities of Asian companies
Investment characteristics
* a closed-end investment company investing in a broad spectrum of Asian
companies and industries
* a vehicle for international diversification through participation in Asian
stock markets
General Information
- -------------------
Executive offices
Scudder New Asia Fund, Inc.
345 Park Avenue
New York, NY 10154
For Fund Information: 1-800-349-4281
Transfer agent, registrar and dividend
reinvestment plan agent
For account information: 1-800-426-5523
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
Custodian
Brown Brothers Harriman & Co.
Legal counsel
Dechert Price & Rhoads
Independent Accountants
Coopers & Lybrand L.L.P.
New York Stock Exchange Symbol--SAF
Contents
- --------
In Brief 3
Letter to Shareholders 3
Other Information 6
Investment Summary 7
Portfolio Summary 8
Investment Portfolio 9
Financial Statements 15
Financial Highlights 18
Notes to Financial Statements 19
Report of Independent Accountants 24
Tax Information 25
Dividend Reinvestment and
Cash Purchase Plan 27
Shareholder Meeting Results 29
Investment Manager 30
Directors and Officers 30
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>
In Brief
* Asian stock prices were restrained during the year by a number of factors,
including strong returns in the U.S. and a reluctance on the part of
investors worldwide to participate in the smaller, developing markets.
* Your portfolio managers took advantage of the markets' malaise by purchasing
fundamentally strong companies with solid earnings gains selling at
attractive valuations.
* The portfolio was broadly diversified across 12 Asian countries during the
year, with strategic additions to holdings in Indonesia and the Philippines.
Letter to Shareholders
- ----------------------
Dear Shareholders:
In 1995, strong growth in U.S. equities coupled with a lingering
anti-emerging market bias worldwide restrained investor interest in Asian
stocks. Scudder New Asia Fund, Inc. returned -2.36% during the period, based on
a $2.15 decline in net asset value per share and a $1.67 per share capital gain
distribution. Fund shares traded on the New York Stock Exchange declined
somewhat less, contributing to a -0.04% return at market price for the period.
The unmanaged Morgan Stanley Combined Asia Free (plus Japan at 25%) Index
returned a comparatively stronger 1.58% due in part to its greater exposure to
Hong Kong, where property-related stocks were generally favored by Asian equity
investors during the period.
The Year That Was
The stellar performance of U.S. equities in 1995 generally kept U.S.
investment capital at home, depriving Asian markets of liquidity. Meanwhile, an
anti-emerging market bias was exacerbated by recurring Mexican peso panics,
which hurt the smaller Asian markets in particular.
Sentiment rather than a change in local fundamentals seemed to be a key
driver of equity prices in 1995. Markets that performed relatively well--Hong
Kong, Singapore, and Malaysia--were viewed relatively less favorably by our
analysts on a fundamental basis. Smaller markets such as the Philippines were
weak despite superior economic growth and a supply of companies with excellent
short- and long-term prospects selling at attractive valuations. Our belief in
the fundamentals of these markets is reflected in the Fund's country weightings.
We have taken advantage of the markets' malaise by adding to stocks at what we
believe are attractive prices. Five of the Fund's largest country weightings are
reviewed below.
Hong Kong was one of the few strong Asian markets in 1995, rising
approximately 20% in U.S. dollar terms. Our stance on Hong Kong currently is
neutral. On the one hand, the market may remain an important beneficiary of
liquidity inflows. On the other hand, we note Hong Kong's imminent reversion to
Chinese sovereignty in 1997 and its potentially negative effect on trade and
property values. Also, corporate profit growth has decelerated and may remain
weak. We have avoided pure real estate plays in Hong Kong. Short term, this has
held back the Fund's relative performance since real estate stocks were the
strongest in the Hong Kong market in 1995. Instead, we have concentrated on more
diversified "regional plays" such as holding company First Pacific. First
Pacific's businesses are involved in marketing, distribution, and
telecommunications in 25 countries throughout Asia. We believe Hong Kong's
broader-based regional companies are positioned best to weather any shocks
associated with the upcoming transfer of sovereignty.
3
<PAGE>
The Indonesian stock market rose 5% in dollar terms in 1995, making it a
relatively good performer in the Asian context. Still, returns were moderated by
several factors, including a large number of new stock offerings, rumors that
the rupiah would be devalued, and concerns that rising imports would translate
into more trade shortfalls in 1996. We remain sanguine about Indonesia's trade
balance. Most imports are unfinished or capital goods and therefore appropriate
for Indonesia's high-growth stage of economic development. Further, realization
of scheduled foreign direct investment over the next 18 months should have a
beneficial and growing impact on the country's balance of payments. We have been
quite positive on Indonesia and remain overweight. Well-managed companies with
strong visible growth are selling at compelling multiples. We anticipate average
1996 corporate profit growth in excess of 20% on a market multiple near ten
times earnings.
Most would agree that 1995 was not a good year for Japan. Beginning with the
Kobe earthquake that led to Nick Leeson's troubles with Nikkei futures at the
expense of Barings PLC, through the Aum Shinrikyo nerve gas incidents, banking
failures, political scandals, Daiwa Bank's banishment from New York, and
revelations of a nuclear reactor crisis, the year was notable for its bad news.
The stock market nevertheless climbed a wall of worry in the second half,
racking up a respectable 10%+ gain for dollar investors that resulted in a -2%
return for the year. We plan to continue adding to our Japan weighting into the
first quarter as the country's economic recovery gathers steam. The major
short-term concerns remain the banking/real estate crisis and the yen.
Authorities have dealt with some of the former problem--indeed, the fact that
"the problem" is being explicitly discussed in those terms is encouraging--yet
much remains to be done. Mounting revelations of political malfeasance,
appalling bureaucratic misjudgments, and even involvement by the Japanese mob
have turned voters cynical and very much against a publicly financed bailout of
the size that would be needed to clean things up. The yen/dollar rate has
provided relief recently, but there is always the threat that a short-lived
spike in the value of the yen could spook investors. In general, we believe
Japanese corporate earnings will continue to recover in 1996, perhaps more than
is commonly anticipated. This will result primarily from restructuring and the
increased contributions from offshore manufacturing facilities. Against a slower
pace of deflation we are finding some companies with sufficient marketing clout
to raise prices. Going into the new year, we continue to hold steel stocks for
their strong earnings recovery off a very depressed base; blue chip
manufacturers, particularly those exposed to the embryonic personal computer
revolution in Japan; and basic retailers, long absent from the portfolio and
poised to benefit from a slower pace of deflation and a nascent recovery in
consumption.
Malaysia's stock market did well in dollar terms in the first half of 1995
but gave back most of its gains in the second half, ending the year with a 2%
return. Our underweight position in Malaysia from late spring meant we missed
some of the second quarter's 8% rise but limited the impact of the third and
fourth quarter's retreat. In the fourth quarter we did some "bargain shopping"
but remained underweight as of December 31. Malaysia's GNP has increased in
excess of 8% a year for the past eight years. Careful scripting of government
announcements notwithstanding, the country began to pay the price last year in
the form of rampant wage inflation, rising interest rates, and downward currency
pressure. Also of concern are increasing competition from other Asian countries
and a widening current account deficit. On the positive side, political
jockeying for power seems to have calmed down and although the government
continues to deny that economic overheating exists, they are quietly trying to
address the problem. We believe these issues will restrain the Malaysian stock
market in the coming months. Our Malaysian exposure is concentrated in banks
benefiting from strong loan growth and ongoing margin expansion, and in civil
engineering firms involved in essential infrastructure development projects
slated to continue into the next decade.
4
<PAGE>
The Philippine stock market gave one of the region's wilder rides in 1995,
returning -13% to U.S. dollar-based investors. Contributing to this poor
performance were a fear of inflation (exacerbated by rising food prices in the
wake of severe typhoon damage) and the anti-emerging market sentiment discussed
earlier. We remain positive on opportunities in the Philippines. The market has
gone from cheap to cheaper, trading at 13 times 1996 earnings with the
expectation of 25% earnings gains on average. In our view, inflation is under
control. Interest rates may creep up slightly but the end is in sight. Money
supply growth remains within the IMF's target range, and deregulation,
particularly in the oil and retail industries, should continue in 1996.
Political stability is intact with a strong sense of cooperation and consensus
among political leaders. Although the country's balance sheet is weak, it is
continually improving. Multinational foreign direct investment in the
Philippines has been booming thanks to the positive experience of big names now
manufacturing there such as Motorola, and a very competitive cost structure
relative to neighboring countries. We remain overweight in the Philippines with
our exposure concentrated in infrastructure (power, water, transportation,
cement), home building, and retail--areas that should benefit from the country's
rapid economic growth.
Outlook
The portfolio is positioned to benefit from two changes we expect going
forward. First, weaker returns in U.S. equities should bring global
investors--and hence liquidity--back to Asian markets. Second, the relative
price for growth in emerging Asian markets should become sufficiently compelling
to enable them to outperform their larger Asian neighbors. As we saw in 1993,
the smaller Asian markets can move up very far very quickly. It is unlikely that
1996 will be another 1993, but once these stocks start to move we may see strong
upward momentum in prices. The portfolio reflects our best research conclusions,
including fundamentally attractive companies and country weightings based on our
expectations for economic, political, and market developments.
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
5
<PAGE>
Other Information
- -----------------
A Team Approach to Investing
Scudder New Asia Fund, Inc. is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. We believe our
team approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.
Lead Portfolio Manager Elizabeth J. Allan assumed responsibility for the
Fund's day-to-day management and investment strategies in February 1994. Ms.
Allan, who has been a member of the Fund's team since its inception in 1987, has
12 years of Pacific Basin research and investment management experience.
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 27.
Annual Meeting Election Results
At the October 11, 1995, Annual Meeting, the shareholders elected four
directors, which appeared in your proxy statement. The selection of Coopers &
Lybrand L.L.P. as the Fund's independent accountants for the fiscal year ending
December 31, 1995, was ratified. Shareholders also approved the continuance of
the investment advisory, management and administration agreement between the
Fund and Scudder, Stevens & Clark, Inc. Please see the table entitled
"Shareholder Meeting Results" on page 29 for more information.
Net Asset Value
The Fund's NAV is published every Monday in The Wall Street Journal under the
heading "Closed End Funds." The Fund's NAV is also published in The New York
Times and Barron's.
As a service to overseas shareholders, the Fund's NAV is listed daily in The
Financial Times ("FT"). For your information the NAV of the Fund and other
Scudder managed closed-end funds can be found in the "FT Managed Funds Service"
section under the heading "other offshore funds" below the Scudder, Stevens &
Clark, Inc. banner.
6
<PAGE>
SCUDDER NEW ASIA FUND
INVESTMENT SUMMARY AS OF DECEMBER 31, 1995
- -----------------------------------------------------------------
HISTORICAL
INFORMATION Total Return (%)
LIFE OF FUND -----------------------------------------------
Market Value Net Asset Value (a)
--------------------- ---------------------
Average Average
Cumulative Annual Cumulative Annual
--------------------- ---------------------
Quarterly 1.98 -- -1.83 --
One Year -0.04 -0.04 -2.36 -2.36
Three Year 46.54 13.58 49.48 14.34
Five Year 82.14 12.74 71.48 11.39
Life of Fund* 135.91 10.57 167.48 12.21
- -----------------------------------------------------------------
PER SHARE INFORMATION AND RETURNS (A)
YEARLY PERIODS ENDED DECEMBER 31
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) with the exact
data points listed in the table below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987* 1988 1989 1990 1991 1992 1993 1994 1995
------------------------------------------------------------------------
NET ASSET VALUE... $10.81 $12.04 $16.36 $13.44 $14.94 $14.73 $25.06 $17.44 $15.29
INCOME DIVIDENDS.. $ .02 $ .05 $ -- $ .08 $ .08 $ .08 $ .32 $ .23 $ --
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ -- $ 1.38 $ 2.11 $ .11 $ .43 $ .08 $ 4.20 $ 1.67
TOTAL RETURN (%).. -2.93 11.78 47.84 -2.77 12.54 1.94 73.32 -11.67 -2.36
</TABLE>
(a) Total investment returns reflect changes in net asset value per share
during each period and assumes that dividends and capital gains
distributions, if any, were reinvested. These percentages are not an
indication of the performance of a shareholder's investment in the Fund
based on market.
* The Fund commenced operations on June 25, 1987.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE
FUND.
7
<PAGE>
SCUDDER NEW ASIA FUND, INC.
PORTFOLIO SUMMARY AS OF DECEMBER 31, 1995
- ---------------------------------------------------------------------------
DIVERSIFICATION
--------------------------
Common Stocks 89%
Convertible Bonds 4%
Cash Equivalents 6%
Limited Partnership 1%
----
100%
====
Geographical breakdown of the Sector breakdown of the Fund's
Fund's equity securities equity securities
- ----------------------------- ------------------------------
Japan 26% Financial 27%
Hong Kong 17% Manufacturing 18%
Indonesia 13% Consumer Staples 11%
Malaysia 8% Metals and Minerals 8%
Korea 7% Construction 7%
Thailand 7% Technology 5%
Philippines 7% Service Industries 4%
Pakistan/India 5% Health 4%
Taiwan 4% Durables 3%
Other 6% Other 13%
---- ----
100% 100%
==== ====
Graphs in the form of a pie charts appear,
illustrating the exact data points in the
above tables.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
1. FIRST PACIFIC CO., LTD.
International management and investment company in Hong Kong
2. MODERN PHOTO FILM CO.
Photographic film distributor in Indonesia
3. HSBC HOLDINGS LTD.
Bank in Hong Kong
4. HUTCHISON WHAMPOA, LTD.
Container terminal and real estate company in Hong Kong
5. HM SAMPOERNA
Tobacco company in Indonesia
6. OVERSEAS UNION BANK LTD.
Leading bank group in Singapore
7. SWIRE PACIFIC LTD.
General trading and real estate company in Hong Kong
8. NICHIEI CO., LTD.
Finance company for small- and medium-sized firms in Japan
9. KOREA MOBILE TELECOM
Korea's largest mobile telecommunication company
10. JAPAN ASSOCIATED FINANCE CO.
Venture capital company in Japan
8
<PAGE>
<TABLE>
[logo] Scudder New Asia Fund, Inc.
Investment Portfolio as of December 31, 1995
==========================================================================================================
<CAPTION>
Principal Market
Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE
AGREEMENTS - 6.0%
8,410,000 Repurchase Agreement with Donaldson, Lufkin &
Jenrette dated 12/29/95 at 5.85% to be repurchased
at $8,415,467 on 1/2/96, collateralized by a
$7,816,000 U.S. Treasury Note, 8.125%, 2/15/98
(Cost $8,410,000) ........................................ 8,410,000
---------
- ----------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS - 3.9%
INDIA 0.6% 865,000 Reliance Industries, 3.5%, 11/3/99 (Producer of textiles,
synthetic fibers and plastics) ........................... 869,325
JAPAN 0.5% 700,000 THK Co., Ltd., 2.25%, 3/31/99 (Manufacturer of linear
motion systems for industrial machinery) ................. 668,026
KOREA 0.9% 1,000,000 Ssangyong Cement Industrial Co., Ltd., 3%, 12/31/05
(Major cement producer) .................................. 1,205,000
MALAYSIA 0.8% 960,000 United Engineers Malaysia, 2%, 3/1/04 (Leading
comprehensive contractor) ................................ 1,094,400
TAIWAN 1.1% 2,040,000 TECO Electric & Machinery, 2.75%, 4/15/04
(Manufacturer of household appliances and
computer products) ....................................... 1,616,700
---------
TOTAL CONVERTIBLE BONDS (Cost $5,915,034) .................. 5,453,451
---------
- ----------------------------------------------------------------------------------------------------------
LIMITED PARTNERSHIP - 0.8%
JAPAN 1 unit JAFCO #6 Investment Enterprise Partnership (b)
(Venture capital company) (Cost $773,606) ................ 1,065,709
---------
- ----------------------------------------------------------------------------------------------------------
COMMON STOCKS - 89.0%
Shares
------
CHINA 0.2% 28,000 China Yuchai International Ltd. (Holding company for
Guangxi Yuchai Machinery Co., which manufactures
and sells diesel truck engines) .......................... 227,500
---------
HONG KONG 16.4% 2,093,000 China Resources Enterprises Ltd. (Property investment
and holding company) ..................................... 1,082,703
4,191,238 First Pacific Co., Ltd. (International management and
investment company) ...................................... 4,634,347
247,687 HSBC Holdings Ltd. (Bank) .................................. 3,747,737
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
[logo] Scudder New Asia Fund, Inc.
Investment Portfolio (continued)
==========================================================================================================
<CAPTION>
Market
Shares Value ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
168,000 Hang Seng Bank Ltd. (Commercial banking and related
financial services) ........................................ 1,504,559
608,000 Hutchison Whampoa, Ltd. (Container terminal and real
estate company) ............................................ 3,695,571
670,000 Jinhui Shipping & Transportation Co., Ltd. (Operator of
dry bulk cargo ships in southern China) .................... 824,100
430,000 Swire Pacific Ltd. "A" (General trading and real estate
company) ................................................... 3,336,566
812,000 Television Broadcasts, Ltd. (Television broadcasting) ........ 2,893,062
380,000 VTech Holdings Ltd. (Manufacturer of consumer electronic
products) .................................................. 697,834
2,934,300 Yips Hang Cheung (Manufacturer of mixed solvents and paints) . 360,502
----------
22,776,981
----------
INDIA 4.4% 78,500 Bajaj Auto (GDR) (Maker of two and three wheel vehicles) ..... 2,021,375
90,000 Indian Hotels & Resorts Co., Ltd. (GDR) (Hotel operator) ..... 1,743,750
75,000 Ranbaxy Laboratories (GDR) (Pharmaceutical company)* ......... 1,884,000
30,400 Reliance Industries (GDS) (Producer of textiles, synthetic
fibers and plastics) ....................................... 425,600
----------
6,074,725
----------
INDONESIA 12.2% 1,462,000 Bakrie & Brothers (Manufacturer of industrial steel products,
steel pipes, corrugated sheet iron, asbestos and fiber
cements) ................................................... 2,653,532
345,000 HM Sampoerna (Tobacco company) ............................... 3,591,078
419,500 Indorama Synthetics (Producer of polyester chips, staple
fibers and texturized yarn) ................................ 1,518,199
593,500 Jaya Real Properties (Property developer) .................... 1,648,251
531,000 Kalbe Farma (IDR) (Pharmaceutical producer and distributor)* . 1,799,803
31,000 Kalbe Farma .................................................. 105,073
533,000 Modern Photo Film Co. (Photographic film distributor) ........ 3,088,673
180,000 Modern Photo Film Co. (IDR) (New)** .......................... 1,043,079
1,085,000 Sekar Bumi (Producer of frozen raw shrimp, prawns and fish) .. 949,049
424 Supreme Cable Co. (b) (Manufacturer of power and
telecommunication cables) .................................. 630
52,271 Unilever-Indonesia (Consumer products manufacturer) .......... 628,669
----------
17,026,036
----------
JAPAN 23.1% 30,000 Ariake Japan Co., Ltd. (Leading maker of natural seasonings
made from meat extracts) ................................... 1,030,978
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
==========================================================================================================
<CAPTION>
Market
Shares Value ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
70,000 Asahi Diamond Industrial Co., Ltd. (Leading manufacturer
of diamond-tipped tools, especially for use in electric
machinery and automobile industries) ....................... 982,575
156,000 Canon Inc. (Leading producer of visual image and
information equipment) ..................................... 2,824,008
278 East Japan Railway Co. (Railway operator) .................... 1,350,978
16,000 FCC Co., Ltd. (Manufacturer of motorcycle and
automobile clutches) ....................................... 563,795
700 Hasegawa Co., Ltd. (Leading retailer of Buddhist altars and
accessories) ............................................... 4,947
158,000 Hitachi Metals, Ltd. (Major producer of high-quality
specialty steels) .......................................... 1,973,088
28,000 Japan Associated Finance Co. (Venture capital company) ....... 2,954,501
250,000 Kawasaki Steel Corp. (Major integrated steelmaker) ........... 871,249
34,000 Kyocera Corp. (Leading ceramic package manufacturer) ......... 2,524,492
19,000 Mabuchi Motor Co., Ltd. (Manufacturer of DC motors) .......... 1,180,833
233,000 NSK Ltd. (Leading manufacturer of bearings and other
machinery parts) ........................................... 1,691,675
44,326 Nichiei Co., Ltd. (Finance company for small and
medium-sized firms) ........................................ 3,304,068
13,000 Nippon Electric Glass Co., Ltd. (Leading producer of
cathode-ray tube glass) .................................... 246,660
12,400 Riso Kagaku Corp. (Manufacturer of copying machines) ......... 1,045,537
28,800 Royal Ltd. (Wholesaler and retailer of automobile
equipment and parts) ....................................... 961,859
35,900 SMC Corp. (Leading maker of pneumatic equipment) ............. 2,596,060
172,000 ShinMaywa Industries, Ltd. (Leading maker of dump trucks
and other specialty vehicles) .............................. 1,418,625
28,000 Square Co., Ltd. (Producer of software for video games) ...... 1,146,563
60,000 Sumitomo Electric Industries, Ltd. (Leading manufacturer
of electric wires and cables) .............................. 720,232
601,000 Sumitomo Metal Industries, Ltd. (Leading integrated crude
steel producer)* ........................................... 1,821,036
30,400 THK Co., Ltd. (Manufacturer of linear motion systems for
industrial machinery) ...................................... 865,208
----------
32,078,967
----------
KOREA 5.9% 33,400 Choongnam Spinning Co., Ltd. (Korea's leading
manufacturer of cotton yarn) ............................... 650,132
</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>
23,600 Daewoo Securities Co., Ltd. (Brokerage and financial services) .. 614,528
29,000 Dong-A Pharmaceutical (Pharmaceutical company) .................. 785,047
2,727 Korea Mobile Telecom (c) (Mobile telecommunication company) ..... 3,074,137
81,800 Pohang Iron & Steel Co., Ltd. (ADR) (Leading producer of
steel products for construction and shipbuilding industries) .. 1,789,375
5,083 Samsung Electronics Co., Ltd. (c)
(Major electronics manufacturer) .............................. 933,123
159 Samsung Electronics Co., Ltd. (GDS) (Non-voting) ................ 9,381
1,051 Samsung Electronics Co., Ltd. (GDS) (Voting) .................... 100,896
2,446 Samsung Electronics Co., Ltd. (GDS) (Voting) (New)*.............. 227,478
63 Samsung Electronics Co., Ltd. (c) (New)** ....................... 11,524
---------
8,195,621
---------
MALAYSIA 6.6% 693,000 Arab-Malaysian Corp. (Investment holding company with
interests in financial services, infrastructure and property) . 2,510,375
500 Genting Berhad (Operator of tourist resorts, hotels and
restaurants) .................................................. 4,174
298,000 Malayan Banking Berhad (Leading banking and financial
services group) ............................................... 2,511,005
1,645,000 Renong Berhad (Holding company involved in engineering
and construction, financial services, telecommunication
and information technology) ................................... 2,435,406
15,000 Time Engineering Berhad (Conglomerate: project
engineering, power production, telecommunication
and electronic data services) ................................. 34,847
270,000 United Engineers (Leading comprehensive contractor) ............. 1,722,251
---------
9,218,058
---------
PAKISTAN 0.1% 43,370 Adamjee Insurance (Insurance company) ........................... 131,191
---------
PHILIPPINES 6.6% 7,561,000 Aboitiz Equity Ventures Inc. (Conglomerate: electricity,
infrastructure, shipbuilding) ................................. 1,441,289
1,181,700 Ayala Corp. "B" (Industrial conglomerate) ....................... 1,441,647
710,500 Bacnotan Cement Corp. (Producer of portland and
pozzolan cements) ............................................. 487,571
2,277,200 C & P Homes, Inc. (Home construction company) ................... 1,671,220
468,700 First Philippine Holdings Corp. "B" (Holding company
involved in electric power distribution, construction
services, passenger bus transportation) ....................... 911,311
1,250,000 International Container Terminal Services, Inc.
(Containerized cargo handling firm)* .......................... 655,261
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
===========================================================================================================
<CAPTION>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
4,538,000 SM Prime Holdings Corp. (Leader in commercial center
operations)* ................................................ 1,297,560
5,751,700 Southeast Asia Cement Holdings, Inc. (Cement producer)* ....... 745,550
1,891,000 Vitarich Corp. (Operator of poultry farms and hatcheries) ..... 519,070
-----------
9,170,479
-----------
SINGAPORE 2.4% 1,487 Jardine Matheson Holdings, Ltd. (Conglomerate: real estate,
merchandising, engineering) ................................. 10,186
488,000 Overseas Union Bank Ltd. (Leading bank group) ................. 3,363,733
-----------
3,373,919
-----------
TAIWAN 2.1% 65,000 Advanced Semiconductor Engineering Co., Ltd. (GDR)
(Manufacturer of integrated circuit packages) ............... 859,625
666,000 Taiwan Semiconductor Manufacturing Co. (Manufacturer
of integrated circuits and other semiconductor devices) ..... 2,086,818
-----------
2,946,443
-----------
THAILAND 6.7% 59,600 Ban Pu Coal Public Co., Ltd. (Leading miner of
sub-bituminous coal in southeast Asia) ...................... 1,296,578
133,100 Bangkok Bank Ltd. (Leading commercial bank,
providing full range of financial services) ................. 1,616,856
130,000 PTT Exploration and Production Co., Ltd. (Petroleum refinery) . 1,362,445
576,200 Sahavirya Steel Industry (Steel producer)* .................... 766,284
25,500 Siam Cement Co., Ltd. (Construction materials and
industrial conglomerate) .................................... 1,413,180
202,250 TPI Polene Co., Ltd. (Producer and distributor of low
density polyethylene plastic pellets) ....................... 1,204,347
10,112 TPI Polene Co., Ltd. Rights (b)* .............................. 56,200
159,260 Thai Farmers Bank (Commercial bank) ........................... 1,605,877
-----------
9,321,767
-----------
UNITED STATES 2.3% 88,800 Freeport McMoRan Copper & Gold, Inc. "A" (U.S. company
mining in Indonesia) ........................................ 2,486,400
46,981 Pacific Basin Bulk Shipping Ltd. (Shipping company
specializing in the handysize dry bulk carrier segment
in the Pacific region) ...................................... 540,279
127,500 Pacific Basin Bulk Shipping Ltd. Warrants (expire 9/30/99)* ... 111,563
-----------
3,138,242
-----------
TOTAL COMMON STOCKS (Cost $106,570,535) ....................... 123,679,929
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
<TABLE>
[logo] Scudder New Asia Fund, Inc.
Investment Portfolio (continued)
=============================================================================================================
<CAPTION>
Principal Market
Amount Value ($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PURCHASED OPTIONS 0.3%
JAPANESE YEN 1,500,000,000 Put on Japanese Yen, strike price JPY 102.31, expires 4/9/96
(Cost $352,500) ............................................ 388,020
-----------
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0% (Cost $122,021,675) (a) .. 138,997,109
===========
<FN>
(a) The cost for federal income tax purposes was $123,233,400. At December 31, 1995, net unrealized
appreciation for all securities based on tax cost was $15,763,709. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of market value over tax cost of
$23,175,294 and aggregate gross unrealized depreciation for all securities in which there was an excess
of tax cost over market value of $7,411,585.
(b) Securities valued in good faith by the valuation committee of the Board of Directors. The cost for these
securities at December 31, 1995 aggregated $774,520. 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 December 31,1995 was
$607,366. See Note A of the Notes to Financial Statements.
* Non-income producing security.
** New shares issued during 1995, eligible for a pro rata share of 1995 dividends.
See page 8 for sector breakdown of the Fund's equity securities.
</FN>
</TABLE>
<TABLE>
At December 31, 1995, the outstanding written option was as follows (Note A):
<CAPTION>
Call Option Principal Amount (JPY) Expiration Date Strike Price Market Value ($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Japanese Yen (Premium
received $352,500) ... 1,500,000,000 4/9/96 JPY 93.0 72,750
</TABLE>
<TABLE>
Transactions in written call options during the year ended December 31, 1995 were:
<CAPTION>
Options on Currencies
-------------------------------
Japanese Premiums
Yen (000's) Received ($)
-------------------------------
<S> <C> <C>
Outstanding at
December 31, 1994 .... 1,970,000 958,000
Written .............. 3,000,000 666,954
Closed ............... (1,500,000) (314,454)
Exercised ............ (1,970,000) (958,000)
-------------------------------
Outstanding at
December 31, 1995 .... 1,500,000 352,500
========= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
[logo] Scudder New Asia Fund, Inc.
Financial Statements
============================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $122,021,675) (Note A) ................. $138,997,109
Cash ........................................................................... 535
Foreign currency holdings, at market (identified cost $610,372) (Note A) ....... 610,631
Other receivables:
Investments sold ............................................................. 661,979
Dividends and interest ....................................................... 174,404
Other assets ................................................................... 1,307
------------
Total assets ................................................................. 140,445,965
LIABILITIES
Payables:
Dividends .................................................................... $7,037,599
Investments purchased ........................................................ 178,805
Accrued management fee (Note C) .............................................. 138,244
Other accrued expenses (Note C) .............................................. 150,803
Written options, at value (premium received $352,500) (Note A) ............... 72,750
----------
Total liabilities .......................................................... 7,578,201
------------
Net assets, at market value .................................................... $132,867,764
============
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net investment income ................. $ (1,030,023)
Accumulated net realized loss on investment transactions ..................... (934,234)
Net unrealized appreciation (depreciation) on:
Investments ................................................................ 16,975,434
Options .................................................................... 279,750
Foreign currency related transactions ...................................... (1,892)
Common stock ................................................................. 86,884
Additional paid-in capital ................................................... 117,491,845
------------
Net assets, at market value .................................................... $132,867,764
============
NET ASSET VALUE per share ($132,867,764 / 8,688,394 shares of common stock
issued and outstanding, $.01 par value, 50,000,000 shares authorized) ........ $15.29
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
<TABLE>
[logo] Scudder New Asia Fund, Inc.
Financial Statements (continued)
==========================================================================================================
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (including taxes withheld of $135,441) ........................ $ 1,771,542
Interest ................................................................ 553,368
-----------
2,324,910
Expenses:
Management fee (Note C) ............................................... $ 1,671,767
Custodian and accounting fees (Note C) ................................ 400,134
Directors' fees and expenses (Note C) ................................. 90,156
Auditing .............................................................. 97,155
Reports to shareholders ............................................... 71,645
Services to shareholders .............................................. 31,372
Legal ................................................................. 28,527
Other ................................................................. 24,869 2,415,625
----------- -----------
Net investment loss ...................................................... (90,715)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments ........................................................... 6,523,045
Options ............................................................... 302,916
Foreign currency related transactions ................................. (491,454) 6,334,507
Net unrealized appreciation (depreciation) during the period on: -----------
Investments ........................................................... (10,109,478)
Options ............................................................... (4,510)
Foreign currency related transactions ................................. 8,856 (10,105,132)
----------- -----------
Net loss on investment transactions ....................................... (3,770,625)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ $(3,861,340)
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
<TABLE>
============================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) .............................................. $ (90,715) $ 393,996
Net realized gain from investment transactions ............................ 6,334,507 47,392,802
Net unrealized depreciation on investment
transactions during the period .......................................... (10,105,132) (72,785,297)
------------ ------------
Net decrease in net assets resulting from operations ........................ (3,861,340) (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
($1.51 and $4.20 per share, respectively) ............................... (13,083,441) (35,376,835)
------------ ------------
In excess of net realized gain from investment transactions
($.16 per share for December 31, 1995) .................................. (1,376,361) --
------------ ------------
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
------------ ------------
DECREASE IN NET ASSETS ...................................................... (14,003,722) (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 $1,030,023 and $497,182, respectively) ........ $132,867,764 $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.
- --------------------------------------------------------------------------------
17
<PAGE>
<TABLE>
[logo]Scudder New Asia Fund, Inc.
Financial Highlights
==================================================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
----------------------------------------------
PER SHARE OPERATING PERFORMANCE 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $17.44 $25.06 $14.73 $14.94 $13.44
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) ................ (.01) .05 .10 .08 .08
Net realized and unrealized gain
(loss) on investments (b) ................. (.47) (3.21) 10.63 .22 1.61
------ ------ ------ ------ ------
Total from investment operations .............. (.48) (3.16) 10.73 .30 1.69
------ ------ ------ ------ ------
Dilution resulting from rights offering ....... -- (.03) -- -- --
------ ------ ------ ------ ------
Less distributions:
From net investment income .................. -- -- (.15) (.08) (.08)
In excess of net investment income .......... -- (.23) (.17) -- --
From net realized gains on investments ...... (1.51) (4.20) -- (.43) (.11)
In excess of net realized gains
on investments ............................ (.16) -- (.08) -- --
------ ------ ------ ------ ------
Total distributions ........................... (1.67) (4.43) (.40) (.51) (.19)
------ ------ ------ ------ ------
Net asset value, end of period ................ $15.29 $17.44 $25.06 $14.73 $14.94
====== ====== ====== ====== ======
Market value, end of period ................... $14.50 $16.16(d) $27.38 $14.25 $15.13
====== ====== ====== ====== ======
TOTAL RETURN
Per share market value (%) .................. (.04) (25.10) 95.71 (2.59) 27.60
Per share net asset value (%)(c) ............ (2.36) (11.67) 73.32 1.94 12.54
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) ...... 133 147 178 104 106
Ratio of operating expenses (excluding
interest) to average net assets (%) ....... 1.74 1.67 1.71 1.76 1.79
Ratio of net investment income (loss)
to average net assets (%) ................. (.07) .21 .56 .50 .54
Portfolio turnover rate (%) ................. 58.1 81.6 10.3 13.7 12.3
<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 investment returns reflect changes in net asset value per share during each period and
assumes that dividends and capital gains distributions, if any, were reinvested. These
percentages are not an indication of the performance of a shareholder's investment in the
Fund based on market.
(d) Market value of $20.38 has been reduced to reflect a distribution of $4.22 per share payable
on January 17, 1995, relating to a due bill which entitles individuals who purchase shares
prior to January 18, 1995, the ex date of the dividend, to be reimbursed by the seller in the
amount of the distribution.
- --------------------------------------------------------------------------------------------------
</FN>
</TABLE>
18
<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 ($1,034,065) over the local share price ($2,984,719) for
these securities valued by the Valuation Committee was approximately 0.8% of
the Fund's net assets at December 31, 1995. All other securities valued in
good faith by the Valuation Committee amounted to $1,122,539 or 0.8% of the
Fund's net assets at December 31, 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
19
<PAGE>
[logo]Scudder New Asia Fund, Inc.
Notes to Financial Statements (continued)
================================================================================
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.
20
<PAGE>
================================================================================
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.
In addition, from November 1, 1995 through December 31, 1995, the Fund incurred
approximately $1,405,000 of net realized capital losses. As permitted by tax
regulations, the Fund intends to elect to defer these losses and treat them
as arising in the fiscal year ended December 31, 1996.
DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made annually. Distributions of net realized gains from investment transactions
in excess of available capital loss carryforwards, which would be taxable to
the Fund if not distributed, will be distributed to shareholders annually.
An additional distribution may be made to the extent necessary to avoid the
payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences relate primarily to investments in Passive Foreign Investment
Companies, foreign denominated investments and certain securities sold at a
loss. As a result, net investment income and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
OTHER. Investment security transactions are accounted for on a trade-date
basis. Dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis. Distributions to shareholders are recorded on the
ex-dividend date except in situations where, under New York Stock Exchange
rules, the ex-dividend date is deferred until after the payment date.
21
<PAGE>
[logo]Scudder New Asia Fund, Inc.
Notes to Financial Statements (continued)
================================================================================
B. Purchases and Sales of Securities
---------------------------------
For the year ended December 31, 1995, purchases and sales of investment
securities (excluding short-term investments) aggregated $78,650,101 and
$102,558,412, respectively.
C. Related Parties
---------------
Under the Investment Advisory and Management Agreement (the "Management
Agreement") with Scudder, Stevens & Clark, Inc. (the "Manager") the Fund has
agreed to pay the Manager a fee equal to an annual rate of 1.25% of the first
$75,000,000 of average weekly net assets of the Fund, 1.15% of the next
$125,000,000 and 1.10% of the excess over $200,000,000, payable monthly. As
manager of the assets of the Fund, the Manager directs the investments of the
Fund in accordance with its investment objectives, policies, and restrictions.
The Manager determines the securities, instruments, and other contracts relating
to investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Manager shall provide certain administrative
services in accordance with the Management Agreement. For the year ended
December 31, 1995, the fee pursuant to the agreement amounted to $1,671,767,
which is equivalent to an annual effective rate of 1.20% of the Fund's average
weekly net assets.
Effective July 26, 1995, Scudder Fund Accounting Corporation ("SFAC"), a
subsidiary of the Adviser, assumed responsibility for determining the daily net
asset value per share and maintaining the portfolio and general accounting
records of the Fund. For the year ended December 31, 1995, the amount charged
to the Fund by SFAC aggregated $61,032, of which $12,007 is unpaid at December
31, 1995.
The Fund pays each Director not affiliated with the Manager, $6,000 annually,
plus specified amounts for attended board and committee meetings. For the year
ended December 31, 1995, Directors' fees and expenses aggregated $90,156.
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.
22
<PAGE>
<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
September 30, 608 .07 3 .00 4,009 .50 4,012 .50
December 31, 426 .05 (185) (.02) (2,976) (.38) (3,161) (.40)
------ ---- ----- ----- ------- ------ ------- ------
Totals $2,325 $.27 $ (91) $(.01) $ (3,770) $ (.47) $ (3,861) $ (.48)
====== ==== ===== ===== ======= ====== ======= ======
</TABLE>
<TABLE>
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>
23
<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 December 31,
1995, and the related statement of operations for the year then ended, the
statements of changes in net assets for the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended. 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
December 31, 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 December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended in conformity with generally accepted
accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
February 9, 1996
24
<PAGE>
[logo] Scudder New Asia Fund, Inc.
Tax Information
================================================================================
By now shareholders for whom year end tax reporting is required by the IRS
should have received their Form 1099-DIV and tax information letter from the
Fund.
The Fund paid distributions of $1.60 per share from long-term capital gains
during its year ended December 31, 1995. Pursuant to Section 852 of the
Internal Revenue Code, the Fund designates $7,539,129 as a long-term capital
gain dividend for the fiscal year ended December 31, 1995.
Due to the nature of its investments, the Fund pays a variety of foreign taxes
throughout the year. As in prior years, the Fund intends to make an election
under section 853 of the Internal Revenue Code. This election will allow
shareholders to treat their proportionate share of foreign taxes paid by the
Fund as having been paid directly by them. Additionally, shareholders will be
required to report their proportionate share of such taxes paid as gross
income (in addition to other amounts of reportable distributions paid by the
Fund).
The total amount of income received by the Fund from sources within foreign
countries and possessions of the United States for its year ended December
31, 1995 was $.016 per share (representing a total of $135,441). The total
amount of taxes paid by the Fund to such countries was $.016 per share
(representing a total of $135,441). The following table provides a breakdown by
country of ordinary income dividends and foreign taxes paid by the Fund in 1995:
<TABLE>
<CAPTION>
1995 Foreign Tax Credit Tables
------------------------------
Country Foreign Income Foreign Taxes
- ------- -------------- -------------
<S> <C> <C>
Indonesia 3.17% 18.35%
India 0.26 1.49
Japan 3.76 21.72
Korea 2.67 15.43
Malaysia 1.73 10.00
Pakistan 0.63 3.64
Philippines 0.93 5.39
Singapore 3.06 17.68
Thailand 1.09 6.30
United States 82.70 --
------ ------
100.00% 100.00%
====== ======
</TABLE>
Please consult a tax adviser if you have questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have specific
questions about your account, please call (800) 426-5523.
25
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26
<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
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
27
<PAGE>
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 prorating 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.
28
<PAGE>
Shareholder Meeting Results
The Annual Meeting of Shareholders of Scudder New Asia Fund, Inc. was held
on Wednesday, October 11, 1995, at the offices of Scudder, Stevens & Clark,
Inc., 25th Floor, 345 Park Avenue, New York, New York. The three matters voted
upon by Shareholders and the resulting votes for each matter are presented
below.
1. The election of four Directors of the Fund to hold office for a term of
three years or until their respective successors shall have been duly
elected and qualified.
Director: Number of Votes:
--------- ----------------
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Daniel Pierce 6,744,309 143,117
Paul Bancroft III 6,749,224 138,203
William H. Gleysteen, Jr. 6,741,553 145,874
Thomas J. Devine 6,719,866 167,560
</TABLE>
2. Ratification or rejection of the action taken by the Board of Directors
in selecting Coopers & Lybrand L.L.P. as independent accountants for the
fiscal year ending December 31, 1995.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
6,776,290 50,709 60,427
3. Approval or disapproval of the continuance of the Investment Advisory,
Management and Administration Agreement between the Fund and Scudder,
Stevens & Clark, Inc.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
6,711,050 99,549 76,827
29
<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 a leader in international investment management for over 40
years. It manages Scudder International Fund, which was initially incorporated
in Canada in 1953 as the first foreign investment company registered with the
U.S. Securities and Exchange Commission. Scudder's investment company clients
include nine other open-end investment companies which invest primarily in
foreign securities.
In addition to the Fund, Scudder also manages the assets of seven other
closed-end investment companies which invest in foreign securities: The
Argentina Fund, The Brazil Fund, The Korea Fund, The Latin America Dollar Income
Fund, Scudder New Europe Fund, and Scudder World Income Opportunities Fund are
traded on the New York Stock Exchange and The First Iberian Fund is traded on
the American Stock Exchange.
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.
30
