SCUDDER
NEW ASIA
FUND, INC.
Semiannual Report
June 30, 1996
A closed-end investment company seeking long-term capital appreciation
primarily through investment in the equity securities of Asian companies.
<PAGE>
Scudder New Asia Fund, Inc.
Investment objective and policies
o long-term capital appreciation through investment primarily in equity
securities of Asian companies
Investment characteristics
o a closed-end investment company investing in a broad spectrum of Asian
companies and industries
o a vehicle for international diversification through participation in Asian
stock markets General Information
Executive offices
Scudder New Asia Fund, Inc.
345 Park Avenue
New York, NY 10154
For Fund Information: 1-800-349-4281
Transfer agent, registrar and dividend
reinvestment plan agent
For account information: 1-800-426-5523
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
Custodian
Brown Brothers Harriman & Co.
Legal counsel
Dechert Price & Rhoads
Independent Accountants
Coopers & Lybrand L.L.P.
New York Stock Exchange Symbol -- SAF
Contents
In Brief 3
Letter to Shareholders 3
Other Information 6
Investment Summary 7
Portfolio Summary 8
Investment Portfolio 9
Financial Statements 16
Financial Highlights 19
Notes to Financial Statements 20
Report of Independent Accountants 24
Directors and Officers 25
This report is sent to the shareholders of Scudder New Asia Fund, Inc. for their
information. It is not a prospectus, circular, or representation intended for
use in the purchase or sale of shares of the Fund or of any securities mentioned
in the report.
2
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In Brief
o With a few exceptions, Asian equity markets posted lackluster gains, held
back by slowing economic growth and weak exports, particularly in
electronics. Confusion over the direction of U.S. interest rates also
dampened investor interest in Asian equities.
o As of September 1996, Morgan Stanley Capital International will add Taiwan
and China to several of their widely used Pacific benchmarks and increase the
weight allotted to South Korea. This could generate new buying interest in
those nations and temporarily cap relative investment demand in Hong Kong,
Malaysia, Singapore, and Thailand, where weightings in the indices will be
reduced.
o The portfolio continues to be broadly diversified across 11 Asian countries,
including the region's smaller, developing markets.
Letter to Shareholders
Dear Shareholders:
Scudder New Asia Fund's total return for the six-month period ended June 30,
1996, was 5.57%, based on a $0.77 increase in net asset value per share, a $0.06
per share capital gain distribution, and $0.02 per share in income. Fund shares
traded on the New York Stock Exchange rose 1.37%. The unmanaged Morgan Stanley
Capital International Pacific Index (with Japan weighted at 25%) rose 4.49%. The
Morgan Stanley All Country Asia Free Index (with Japan at 25%) rose 7.63% for
the same period.
Helping boost portfolio performance were overweight positions in Japan,
Taiwan, and the Philippines, as well as underweight positions in Singapore and
Thailand. The Fund's large exposure to Indonesian consumer-related stocks was a
negative factor.
In our opinion, economic fundamentals in Asia remain strong. Lower interest
rates in the United States would be a positive for some Asian stock markets,
particularly Hong Kong, but flat or modestly rising rates wouldn't be bad news
either -- that would indicate strength in the U.S. economy, which could also
benefit Asian fundamentals.
JAPAN
By mid-year 1996, the Japanese stock market had risen over 50% from its
summer 1995 lows in yen terms. Economic growth in the first quarter of 1996
surprised on the upside, thanks to a confluence of positive year-on-year
effects, and bore out the stock market's optimism. Corporate earnings estimates
for fiscal year 1996 (which ends March 1997) project good earnings growth, and
interim numbers to be announced in the fall are awaited as an indication of
whether these expectations will be borne out. Summer has brought a decelerating
stock market and creeping fears of deja vu in the form of yet another stillborn
economic recovery. Foreigners have turned net sellers of late, and Japanese
investors have not been sufficiently active to take up the slack. The yen has
traded mainly in the Y105-110 range, with dollar strength encouraging the market
and vice versa. On a one year plus horizon, we expect the yen to weaken against
the U.S. dollar, increasing the attractiveness of investing in Japanese
exporters. At the same time, such dollar strength would reduce the value of
yen-denominated stocks in dollar terms. We have therefore hedged approximately
one quarter of our yen exposure. Early in the year, we had added to our Japan
exposure in the New Asia Fund. More recently, due to concerns that earnings
expectations already reflected in prices might disappoint, we have taken some
profits and reduced our Japan exposure back to a neutral position.
3
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HONG KONG
The Hang Seng Index has been building a base through the first half of 1996.
Since then, confidence has been bolstered by the strong performance of the
traditionally interest-rate-sensitive property and banking sectors, and receding
concerns about rising U.S. interest rates. The near- to medium-term outlook is
balanced between the one off impact of a reduction in Hong Kong's weighting in
the MSCI Free indices in September and, over the medium term, a more positive
outlook for both the Chinese economy and the outcome of Hong Kong's return to
China in July 1997. Recent interim results have been healthy, supporting our
positive outlook for the banks and conglomerates, including HSBC and First
Pacific, which represent the bulk of our Hong Kong holdings.
The PHILIPPINES
We remain bullish on the Philippines for several reasons. Fundamental
attractions include a positive balance of trade, a fiscal surplus, and higher
economic growth versus 1995. Solid corporate profits continue and, unlike
several other countries in the region, the Philippines' political situation is
stable. Right now, the market valuation relative to growth is one of the most
attractive in the Pacific Rim. Recent deregulation and an expectation that
interest rates are headed lower could potentially enhance corporate earnings.
Inflation fears early this year were deflated when it became clear that prices
were spiked by a temporary rise in food prices. The Philippines is also becoming
a magnet for foreign direct investment due to its winning combination of low
real estate prices, a highly literate and abundant English-speaking work force,
and a pivotal location within the booming region. The biggest question mark is
whether the government will be able to balance the public sector books by
passing a tax reform package. The expectation is that passage eventually will be
successful. We remain overweight in the Philippines, with holdings focusing on
real estate, housing, finance, infrastructure, and retailing, all of which may
benefit from the improved economic picture.
INDONESIA
Although we remain bullish on Indonesia, we have reduced our exposure
modestly in anticipation of heightened political uncertainty. A number of
"sweetheart" deals involving President Suharto's family have created an air of
uncertainty regarding business openness. Additional concerns in the political
arena were raised during recent opposition party riots in Jakarta, which
provided fodder for international press reports on social unrest and focused
attention on the President's advanced age and lack of an heir apparent.
Political rumblings aside, economic and corporate fundamentals remain on track,
and we believe the market will move higher over the next 12 months. We continue
to believe that the pulp and paper companies offer substantial upside potential,
and we remain comfortable with select consumption plays.
MALAYSIA
Heading into 1996, there was good reason to believe the Malaysian stock
market would not perform well. Rampant wage inflation, a widening current
account deficit, and currency weakness did not leave room for much optimism.
Malaysian investors didn't seem to share those concerns, however, and their
buying spree resulted in a healthy 16% market gain in dollar terms for the first
quarter alone. The market did pause during the second quarter to catch its
breath, and it appears that government measures to douse a potentially
overheated economy are working. The slowdown is also due to a drop in exports
from the electronics sector. We are concerned that the impact from this drop may
be greater than the markets currently anticipate. We remain underweight in
Malaysia, with holdings concentrated in finance-related stocks, infrastructure,
and energy.
OUTLOOK
Barring a meltdown in U.S. equities or a political blow-up in the region, we
anticipate that Asian equity markets will consolidate and begin to recover over
the next six to 12 months. Moreover, we believe Scudder New Asia Fund is
positioned to take advantage of a number of potentially positive factors,
including revival in export demand, a gradual easing of interest rates, ongoing
4
<PAGE>
infrastructure development, and robust foreign direct investment. The portfolio
represents our best research conclusions, which we believe will translate into
long-term capital appreciation for the Fund's shareholders.
As always, we welcome your questions or comments. You can reach us at
1-800-349-4281.
Respectfully,
/s/Nicholas Bratt /s/Edmond D. Villani
Nicholas Bratt Edmond D. Villani
President Chairman of the Board
5
<PAGE>
Other Information
Investment Manager
The investment manager of Scudder New Asia Fund, Inc. (the "Fund") is
Scudder, Stevens & Clark, Inc., one of the most experienced investment
management and investment counsel firms in the United States. Established in
1919, the firm provides investment counsel for individuals, investment companies
and institutions. Scudder has offices throughout the United States and
subsidiaries in London and in Tokyo.
Scudder has been a leader in international investment management for over 40
years. It manages Scudder International Fund, which was initially incorporated
in Canada in 1953 as the first foreign investment company registered with the
U.S. Securities and Exchange Commission. Scudder's investment company clients
include nine other open-end investment companies which invest primarily in
foreign securities.
In addition to the Fund, Scudder also manages the assets of seven other
closed-end investment companies which invest in foreign securities: The
Argentina Fund, The Brazil Fund, The Korea Fund, The Latin America Dollar Income
Fund, Scudder New Europe Fund, and Scudder World Income Opportunities Fund are
traded on the New York Stock Exchange and The First Iberian Fund is traded on
the American Stock Exchange.
A Team Approach to Investing
Scudder New Asia Fund, Inc. is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. We believe our
team approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.
Lead Portfolio Manager Elizabeth J. Allan assumed responsibility for the
Fund's day-to-day management and investment strategies in February 1994. Ms.
Allan, who has been a member of the Fund's team since its inception in 1987, has
12 years of Pacific Basin research and investment management experience. Theresa
Gusman, Portfolio Manager, helps set the Fund's general investment strategies.
Ms. Gusman, who joined Scudder in 1995 and the Fund's team in 1996, has 13 years
of experience working in the investment industry. Nicholas Bratt, Portfolio
Manager, has been a member of the Fund's team since 1987 and helps set the
Fund's general investment strategies. Mr. Bratt has over 20 years of experience
in worldwide investing, including 19 years of experience as a portfolio manager,
and has been at Scudder since 1976. Seung Kwak, Portfolio Manager, has directed
our Tokyo-based research effort since he joined Scudder in 1988. Joyce E.
Cornell, Portfolio Manager, focuses on stock selection, a role she has played
since she joined Scudder in 1991. Ms. Cornell has eight years of investment
experience as a research analyst.
Dividend Reinvestment Plan
The Fund's Dividend Reinvestment and Cash Purchase Plan offers you a
convenient way to have your dividends and capital gain distributions reinvested
in shares of the Fund. You may obtain more detailed information by requesting a
copy of the Plan from the Plan Agent. All correspondence (including
notifications) should be directed to: Scudder New Asia Fund Dividend
Reinvestment and Cash Purchase Plan, c/o State Street Bank and Trust Company,
P.O. Box 8209, Boston, MA 02266-8209, (800) 426-5523.
Net Asset Value
The Fund's NAV is published every Monday in The Wall Street Journal under the
heading "Closed End Funds." The Fund's NAV is also published in The New York
Times and Barron's.
As a service to overseas shareholders, the Fund's NAV is listed daily in The
Financial Times ("FT"). For your information the NAV of the Fund and other
Scudder managed closed-end funds can be found in the "FT Managed Funds Service"
section under the heading "other offshore funds" below the Scudder, Stevens &
Clark, Inc. banner.
6
<PAGE>
SCUDDER NEW ASIA FUND, INC.
INVESTMENT SUMMARY AS OF JUNE 30, 1996
- -----------------------------------------------------------------
HISTORICAL
INFORMATION TOTAL RETURN (%)
LIFE OF FUND ---------------------------------------------------------------
MARKET VALUE NET ASSET VALUE (a)
------------------- --------------------
AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL
------------------- --------------------
QUARTERLY -11.36 - 1.39 -
FISCAL YEAR
TO DATE 1.37 - 5.57 -
ONE YEAR -0.58 -0.58 5.70 5.70
THREE YEAR 11.33 3.64 27.85 8.53
FIVE YEAR 58.69 9.68 54.20 9.05
LIFE OF FUND* 137.66 10.05 180.62 12.09
- -----------------------------------------------------------------
PER SHARE INFORMATION AND RETURNS (A)
YEARLY PERIODS ENDED JUNE 30
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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 1996
--------------------------------------------------------------------------------
NET ASSET VALUE... $11.07 $12.41 $12.93 $18.70 $15.68 $15.49 $17.93 $22.44 $16.00 $16.06
INCOME DIVIDENDS.. $ - $ .07 $ - $ - $ .08 $ .08 $ .08 $ .48 $ .02 $ .02
CAPITAL GAINS
DISTRIBUTIONS..... $ - - $ - $ 1.56 $ 1.93 $ .15 $ .52 $ - $ 5.06 $ .87
TOTAL RETURN (%).. -.81 12.75 4.19 59.40 -2.03 .28 20.28 27.88 -5.41 5.70
</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 JUNE 30, 1996
- ---------------------------------------------------------------------------
DIVERSIFICATION
Common Stocks 90%
Convertible Bonds 8%
Cash Equivalents 1%
Limited Partnership 1%
----
100%
====
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illustrating the exact data points in the
above table.
- ---------------------------------------------------------------------------
Geographical breakdown of the Fund's equity securities
Japan 30%
Hong Kong 13%
Malaysia 11%
Indonesia 10%
Philippines 8%
Thailand 7%
Korea 4%
Taiwan 4%
India 4%
Other 9%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the
above table.
Sector breakdown of the Fund's equity securities
Financial 30%
Manufacturing 14%
Service Industries 8%
Consumer Staples 7%
Metals & Minerals 7%
Construction 7%
Transportation 6%
Technology 6%
Durables 5%
Other 10%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the
above table.
- ---------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS (24% of Portfolio)
1. FIRST PACIFIC CO.
International management and investment company in Hong Kong
2. HUTCHISON WHAMPOA, LTD.
Container terminal and real estate company in Hong Kong
3. JAPAN ASSOCIATED FINANCE CO.
Venture capital company in Japan
4. CANON INC.
Leading producer of visual image and information equipment in Japan
5. UNITED ENGINEERS MALAYSIA
Holding company involved in expressway operations, project management,
engineering and construction in Malaysia
6. NICHIEI CO., LTD.
Finance company for small- and medium-sized firms in Japan
7. MATSUSHITA ELECTRICAL INDUSTRIAL CO., LTD.
Leading manufacturer of consumer electronic products in Japan
8. POHANG IRON & STEEL CO., LTD
Leading steel producer in Korea
9. HM SAMPOERNA
Tobacco company in Indonesia
10. RENONG BHD.
Holding company involved in engineering, construction, financial services,
telecommunication and information technology in Malaysia
8
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[Logo] Scudder New Asia Fund, Inc.
<TABLE>
Investment Portfolio as of June 30, 1996
=======================================================================================================================
<CAPTION>
Principal Market
Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS -- 0.8%
UNITED STATES 1,169,000 Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 6/28/96 at 5.45% to be repurchased at $1,169,531
on 7/1/96, collateralized by a $1,162,000 U.S. Treasury
Note, 5.625%, 1/31/98 (Cost $1,169,000) ..................... 1,169,000
-----------
- -----------------------------------------------------------------------------------------------------------------------
LIMITED PARTNERSHIP -- 0.7%
JAPAN 1 unit JAFCO #6 Investment Enterprise Partnership (Venture
capital company) (b)
TOTAL LIMITED PARTNERSHIP (Cost $773,606) ..................... 1,003,047
-----------
- -----------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS -- 8.7%
JAPAN 2.2% JPY 99,000,000 SMC Corp., 4.6%, 3/31/97 (Major manufacturer of
pneumatic equipment) .......................................... 1,414,868
JPY 140,000,000 Softbank Corp., 0.5%, 3/29/02 (Bank) .......................... 1,651,351
-----------
3,066,219
-----------
KOREA 0.9% 1,000,000 Ssangyong Cement Industrial Co., Ltd., 3%, 12/31/05
(Major cement producer) ..................................... 1,225,000
-----------
MALAYSIA 2.9% 820,000 Commerce Asset Holdings Bhd., 1.750%, 9/26/04 (Bank) .......... 975,800
MYR 213,000 Renong Bhd ICULS, 4%, 5/21/01 (Holding company
involved in engineering and construction, financial
services, telecommunications and information
technology) ................................................... 80,265
2,475,000 United Engineers Malaysia, 2%, 3/1/04 (Holding company
involved in expressway operations, project management,
engineering and construction) ............................... 2,970,000
-----------
4,026,065
-----------
PHILIPPINES 0.8% 718,000 AYALA International Finance Co., 3%, 6/8/00
(Industrial conglomerate) ................................... 1,155,980
-----------
TAIWAN 1.3% 2,040,000 TECO Electric & Machinery, 2.75%, 4/15/04 (Manufacturer
of household appliances and computer products) .............. 1,759,500
-----------
THAILAND 0.6% 1,000,000 TPI Polene Co., Ltd., 2.750%, 2/8/06 (Producer and
distributor of low density polyethylene plastic pellets) .... 925,000
-----------
TOTAL CONVERTIBLE BONDS (Cost $11,911,055) .................... 12,157,764
-----------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
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[Logo] Scudder New Asia Fund, Inc.
<TABLE>
Investment Portfolio (continued)
=======================================================================================================================
<CAPTION>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS -- 89.8%
CHINA 2.1% 94,900 China Yuchai International Ltd. (Holding company
which manufactures and sells diesel truck engines) .......... 723,613
113,000 Guangshen Railway Co. Ltd. (ADR) (Operator of only
railroad in the Pearl River delta) .......................... 2,161,125
-----------
2,884,738
-----------
HONG KONG 13.3% 3,683,486 First Pacific Co., Ltd. (International management and
investment company) ......................................... 5,686,485
154,736 HSBC Holdings Ltd. (Bank) ..................................... 2,338,806
168,000 Hang Seng Bank Ltd. (Commercial banking and related
financial services) ......................................... 1,692,859
608,000 Hutchison Whampoa, Ltd. (Container terminal and
real estate company) ........................................ 3,825,159
670,000 Jinhui Shipping and Transportation Co. Ltd. (Operator of
cargo fleet of ships transporting steel, iron ore,
non-ferrous metals and agricultural products) ............... 716,900
283,000 Shangri-La Asia Ltd. (Hotel and property holding company) ..... 396,673
137,500 Swire Pacific Ltd. "A" (General trading and real estate
company) .................................................... 1,176,808
570,000 Television Broadcasts, Ltd. (Television broadcasting) ......... 2,139,134
380,000 VTech Holdings Ltd. (Manufacturer of consumer
electronic products) ........................................ 620,999
-----------
18,593,823
-----------
INDIA 3.9% 46,100 Bajaj Auto (GDR) (Maker of two and three wheel vehicles) ...... 1,763,325
13,500 Housing Development Finance Corp. Ltd. (Housing finance
provider to individuals, corporations and developers) ...... 1,125,830
52,600 Indian Hotels & Resorts Co., Ltd. (GDR) (Hotel operator) ...... 1,506,990
51,800 Ranbaxy Laboratories (Pharmaceutical company) ................. 1,061,900
-----------
5,458,045
-----------
INDONESIA 9.7% 135,800 Asia Pulp & Paper Co., Ltd. (ADR) (Producer of pulp and
paper)* ..................................................... 1,663,550
1,207,000 Bakrie & Brothers (Manufacturer of industrial steel
products, steel pipes, corrugated sheet iron, asbestos
and fiber cements) .......................................... 1,711,321
1,163,600 Bank Bira (Foreign registered) (Commercial, corporate
and foreign exchange banking) ............................... 1,049,865
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================================
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
330,000 Ciputra Development Co. (Foreign registered) (Developer
of office properties, shopping and commercial centers,
industrial properties and sports facilities) ................ 669,925
249,000 HM Sampoerna (Tobacco company) ................................ 2,835,016
465,000 Indorama Synthetics (Producer of polyester fiber, yarn
and fabric) ................................................. 1,178,732
421,000 Jaya Real Properties (Property developer) ..................... 1,340,779
151,500 Kalbe Farma (IDR) (Pharmaceutical producer and distributor) ... 338,475
31,000 Kalbe Farma (Ordinary) ........................................ 69,259
130,000 Modern Photo Film Co. (Photographic film distributor) ......... 558,539
180,000 Modern Photo Film Co. (IDR) (New)** ........................... 773,362
2,274,000 Sekar Bumi (Producer of frozen raw shrimp, prawns and fish) ... 1,367,820
-----------
13,556,643
-----------
JAPAN 27.0% 36,000 Ariake Japan Co., Ltd. (Leading maker of natural seasonings
made from meat extracts) .................................... 1,362,776
100 Asahi Diamond Industrial Co., Ltd. (Leading manufacturer
of diamond-tipped tools, especially for use in electric
machinery and automobile industries) ........................ 1,307
156,000 Canon Inc. (Leading producer of visual image and
information equipment) ...................................... 3,252,229
80,000 Daito Trust Construction Co., Ltd. (Construction and
building management services) ............................... 1,199,652
278 East Japan Railway Co. (Railroad operator) .................... 1,461,619
17,600 FCC Co., Ltd. (Manufacturer of motorcycle and automobile
clutches) ................................................... 654,981
28,000 Japan Associated Finance Co. (Venture capital company) ........ 3,277,100
250,000 Kawasaki Steel Corp. (Major integrated steelmaker) ............ 902,940
29,000 Kyocera Corp. (Leading ceramic package manufacturer) .......... 2,055,045
36,800 Kyokuto Kaihatsu Kogyo Co., Ltd. (Leading maker of dump
trucks and other specialty vehicles) ........................ 777,287
19,000 Mabuchi Motor Co., Ltd. (Manufacturer of DC motors) ........... 1,212,637
154,000 Matsushita Electrical Industrial Co., Ltd. (Leading
manufacturer of consumer electronic products) ............... 2,872,583
44,326 Nichiei Co., Ltd. (Finance company for small-and
medium-sized firms) ......................................... 2,958,714
45,000 Nippon Electric Glass Co., Ltd. (Leading producer of
cathode-ray tube glass) ..................................... 769,442
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
[Logo] Scudder New Asia Fund, Inc.
<TABLE>
Investment Portfolio (continued)
=======================================================================================================================
<CAPTION>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
59,000 Pioneer Electronics Corp. (Leading manufacturer of
audio equipment) ............................................ 1,408,037
16,000 Riso Kagaku Corp. (Manufacturer of copying machines) .......... 1,287,432
680 Royal Ltd. (Wholesaler and retailer of automobile
equipment and parts) ........................................ 21,327
34,000 Shimamura Co., Ltd. (Discount retailer) ....................... 1,498,468
172,000 ShinMaywa Industries, Ltd. (Leading maker of dump
trucks and other specialty vehicles) ........................ 1,761,441
11,000 Shohkoh Fund & Co., Ltd. (Finance company for small
and medium-sized firms) ..................................... 2,313,354
28,000 Square Co., Ltd. (Producer of software for video games) ....... 1,646,231
60,000 Sumitomo Electric Industries, Ltd. (Leading manufacturer
of electric wires and cables) ............................... 861,336
601,000 Sumitomo Metal Industries, Ltd. (Leading integrated
crude steel producer) ....................................... 1,846,441
81,000 Takasago Thermal Engineering Co., Inc. (Leading
engineering firm, specializing in air conditioning) ......... 1,310,931
122,000 Toshiba Engineering & Construction Co., Ltd. (Leading
installer of thermal and nuclear power plants) .............. 1,193,618
-----------
37,906,928
-----------
KOREA 3.5% 29,450 Dong-A Pharmaceutical (Pharmaceutical company) ................ 755,128
1,027 Korea Mobile Telecom (Mobile telecommunication company)(c) .... 1,264,000
116,400 Pohang Iron & Steel Co., Ltd. (ADR) (Leading steel
producer) ................................................... 2,837,250
-----------
4,856,378
-----------
MALAYSIA 8.0% 145,000 AMMB Holdings Bhd. (Holding company for Arab
Malaysian Merchant Bank Bhd. which provides
financial, insurance and investment services) ............... 633,594
544,000 Arab-Malaysian Corp. (Investment holding company with
interests in financial services, infrastructure and
property) ................................................... 2,137,182
220,000 Malayan Banking Bhd. (Leading banking and financial
services group) ............................................. 2,116,657
126,000 Malaysia Assurance Alliance Bhd. (Multiline insurance
company) .................................................... 666,747
386,000 Rashid Hussain Bhd. (Securities dealer) ....................... 1,415,875
1,686,000 Renong Bhd (Holding company involved in engineering,
construction, financial services, telecommunication
and information technology) ................................. 2,690,030
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================================
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
133,125 Renong Bhd Warrants* .......................................... 60,305
930,000 TA Enterprises Bhd. (Investment holding company involved
in securities brokerage, property development, venture
capital and financing) ...................................... 1,453,999
-----------
11,174,389
-----------
PHILIPPINES 6.7% 7,561,000 Aboitiz Equity Ventures Inc. (Conglomerate: electricity,
infrastructure, shipbuilding) ............................... 1,414,080
1,710,200 C & P Homes, Inc. (Home construction company) ................. 1,485,002
2,014,300 DMCI Holdings, Inc. (Construction and property
development company)* ....................................... 1,441,531
562,440 First Philippine Holdings Corp. "B" (Holding company
involved in electric power distribution, construction
services and passenger bus transportation) .................. 1,373,966
1,250,000 International Container Terminal Services, Inc.
(Containerized cargo handling firm)* ........................ 846,851
5,657,000 Robinson's Land Corp. "B" (Developer of residential
and commercial real estate) ................................. 1,403,454
5,445,600 SM Prime Holdings Corp. (Leader in commercial center
operations) ................................................. 1,413,362
402,000 Southeast Asia Cement Holdings, Inc. (Cement producer)* ....... 52,168
-----------
9,430,414
-----------
SINGAPORE 3.9% 394,000 Overseas Union Bank Ltd. (Leading bank group) ................. 2,708,575
203,000 Singapore Airlines Ltd. (Foreign registered) (Scheduled
airline) .................................................... 2,143,657
324,000 Wing Tai Holdings Ltd. (Property investment and
development, garment manufacturing, trading in
fabric and architectural products) .......................... 688,873
-----------
5,541,105
-----------
TAIWAN 2.8% 245,000 Asia Cement Corp. (Cement producer) ........................... 476,290
195,000 Cathay Life Insurance Co. (Life insurance company) ............ 1,374,637
142,000 China Development Corp. (Provider of loan and guarantee
services to manufacturing and service industries) ........... 469,549
384,000 Far Eastern Department Store (Department store chain) ......... 492,558
532,800 Taiwan Semiconductor Manufacturing Co. (Manufacturer
of integrated circuits and other semiconductor devices) ..... 1,113,227
-----------
3,926,261
-----------
THAILAND 6.7% 59,600 Ban Pu Coal Public Co., Ltd. (Leading miner of
sub-bituminous coal in southeast Asia) ...................... 1,718,621
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
[Logo] Scudder New Asia Fund, Inc.
<TABLE>
Investment Portfolio (continued)
=======================================================================================================================
<CAPTION>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
108,700 Bangkok Bank Ltd. (Leading commercial bank) ................... 1,473,027
102,900 PTT Exploration and Production Co., Ltd. (Petroleum refinery) . 1,507,930
44,600 Siam Cement Co., Ltd. (Construction materials and
industrial conglomerate) .................................... 2,189,151
242,962 TPI Polene Co., Ltd. (Producer and distributor of low
density polyethylene plastic pellets) ....................... 1,100,675
128,960 Thai Farmers Bank (Commercial bank) ........................... 1,412,286
-----------
9,401,690
-----------
UNITED STATES 2.2% 77,200 Freeport McMoRan Copper & Gold, Inc. "A" (U.S.
company mining in Indonesia) ................................ 2,306,350
46,981 Pacific Basin Bulk Shipping Ltd. (Shipping company
specializing in the handysize dry bulk carrier segment
in the Pacific region) ...................................... 675,352
127,500 Pacific Basin Bulk Shipping Ltd. Warrants (expire 9/30/99)* ... 111,563
-----------
3,093,265
-----------
TOTAL COMMON STOCKS (Cost $106,235,674) ....................... 125,823,679
-----------
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0% (Cost $120,089,335)(a) ... 140,153,490
===========
<FN>
(a) The cost for federal income tax purposes was $121,291,252. At June 30, 1996, net unrealized appreciation for all
securities based on tax cost was $18,862,238. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of $24,618,300 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax cost over market value of
$5,756,062.
(b) Securities valued in good faith by the valuation committee of the Board of Directors. The cost for these
securities at June 30, 1996 aggregated $773,606. See Note A of the Notes to Financial Statements.
(c) Securities that have met the foreign-ownership limitation valued at a premium in good faith by the Valuation
Committee of the Board of Directors. The cost of these securities at June 30,1996 was $134,647. See Note A of the
Notes to Financial Statements.
* Non-income producing security.
** New shares issued during 1996, eligible for a pro rata share of 1996 dividends.
See page 8 for sector breakdown of the Fund's equity securities.
Currency abbreviations
----------------------
JPY Japanese Yen
MYR Malaysian Ringgit
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
Transactions in written call options during the six months ended June 30, 1996
were:
<CAPTION>
Options on Currencies
----------------------------
Japanese Premiums
Yen (000's) Received ($)
----------------------------
<S> <C> <C>
Outstanding at
December 31, 1995 ............ 1,500,000 352,500
Written ...................... -- --
Closed ....................... (1,500,000) (352,500)
Exercised .................... -- --
---------------------------
Outstanding at
June 30, 1996 ................ -- --
========= =======
</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, 1996
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
ASSETS
Investments, at market (identified cost $120,089,335)(Note A) ............... $140,153,490
Cash ........................................................................ 66,423
Foreign currency holdings, at market (identified cost $2,007,913)(Note A) ... 2,007,877
Other receivables:
Investments sold .................................................... 2,566,778
Dividends and interest .............................................. 384,350
Other assets ................................................................ 1,307
------------
Total assets ................................................ 145,180,225
LIABILITIES
Payables:
Investments purchased ............................................... $4,519,641
Accrued management fee (Note C) ..................................... 141,001
Other accrued expenses (Note C) ..................................... 190,681
Net payable on closed foreign currency exchange contracts (Note A) .. 46,709
----------
Total liabilities ........................................... 4,898,032
------------
Net assets, at market value ................................................. $140,282,193
============
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net investment income ........ $ (1,434,429)
Accumulated net realized gain ....................................... 3,271,868
Net unrealized appreciation (depreciation) on:
Investments ................................................. 20,064,155
Foreign currency related transactions ....................... (8,397)
Common stock ........................................................ 87,370
Additional paid-in capital .......................................... 118,301,626
------------
Net assets, at market value ................................................. $140,282,193
============
NET ASSET VALUE per share ($140,282,193 [Divided by] 8,737,037 shares
of common stock issued and outstanding, $.01 par value, 50,000,000
shares authorized) .................................................. $16.06
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
<TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of taxes withheld of $124,294) ............... $ 842,551
Interest (net of taxes withheld of $1,346) .................. 216,174
----------
1,058,725
Expenses:
Management fee (Note C) ..................................... $ 840,438
Custodian and accounting fees (Note C) ...................... 237,191
Directors' fees and expenses (Note C) ....................... 76,918
Reports to shareholders ..................................... 46,580
Auditing .................................................... 42,975
Services to shareholders .................................... 23,964
Other ....................................................... 20,446 1,288,512
---------- ----------
Net investment loss ................................................. (229,787)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments ................................................. 4,500,628
Options ..................................................... 342,000
Foreign currency related transactions ....................... (112,849) 4,729,779
----------
Net unrealized appreciation (depreciation) during the period on:
Investments ................................................. 3,088,721
Options ..................................................... (279,750)
Foreign currency related transactions ....................... (6,505) 2,802,466
---------- ----------
Net gain on investment transactions ................................. 7,532,245
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ $7,302,458
==========
</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 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment loss ................................................. $ (229,787) $ (90,715)
Net realized gain from investment transactions ...................... 4,729,779 6,334,507
Net unrealized appreciation (depreciation) on
investment transactions during the period ................... 2,802,466 (10,105,132)
------------ ------------
Net increase (decrease) in net assets resulting from operations ............. 7,302,458 (3,861,340)
------------ ------------
Distributions to shareholders:
From net investment income ($.02 per share) ......................... (174,619) --
------------ ------------
From net realized gain from investment transactions
($.06 and $1.51 per share, respectively) .................... (523,677) (13,083,441)
------------ ------------
In excess of net realized gain from investment transactions
($.16 per share) ............................................ -- (1,376,361)
------------ ------------
Reinvestment of distributions ............................................... 810,267 4,317,420
------------ ------------
INCREASE (DECREASE) IN NET ASSETS ........................................... 7,414,429 (14,003,722)
Net assets at beginning of period ........................................... 132,867,764 146,871,486
------------ ------------
NET ASSETS AT END OF PERIOD (including accumulated
distributions in excess of net investment income
of $1,434,429 and $1,030,023, respectively) ......................... $140,282,193 $132,867,764
============ ============
OTHER INFORMATION
INCREASE IN FUND SHARES
Shares outstanding at beginning of period ................................... 8,688,394 8,423,056
Shares issued to shareholders in reinvestment of distributions ...... 48,643 265,338
------------ ------------
Shares outstanding at end of period ......................................... 8,737,037 8,688,394
============ ============
</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 1996 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $15.29 $17.44 $25.06 $14.73 $14.94 $13.44
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) ............ (.03) (.01) .05 .10 .08 .08
Net realized and unrealized gain
(loss) on investments (b) ............. .88 (.47) (3.21) 10.63 .22 1.61
------ ------ ------ ------ ------ ------
Total from investment operations .......... .85 (.48) (3.16) 10.73 .30 1.69
------ ------ ------ ------ ------ ------
Dilution resulting from rights offering ... -- -- (.03) -- -- --
------ ------ ------ ------ ------ ------
Less distributions:
From net investment income .............. (.02) -- -- (.15) (.08) (.08)
In excess of net investment income ...... -- -- (.23) (.17) -- --
From net realized gains on investments .. (.06) (1.51) (4.20) -- (.43) (.11)
In excess of net realized gains
on investments ........................ -- (.16) -- (.08) -- --
------ ------ ------ ------ ------ ------
Total distributions ....................... (.08) (1.67) (4.43) (.40) (.51) (.19)
------ ------ ------ ------ ------ ------
Net asset value, end of period ............ $16.06 $15.29 $17.44 $25.06 $14.73 $14.94
====== ====== ====== ====== ====== ======
Market value, end of period ............... $14.63 $14.50 $16.16(d) $27.38 $14.25 $15.13
====== ====== ====== ====== ====== ======
TOTAL RETURN
Per share market value (%) .............. 1.37** (.04) (25.10) 95.71 (2.59) 27.60
Per share net asset value (%)(c) ........ 5.57** (2.36) (11.67) 73.32 1.94 12.54
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) .. 140 133 147 178 104 106
Ratio of operating expenses (excluding
interest) to average net assets (%) ... 1.86* 1.74 1.67 1.71 1.76 1.79
Ratio of net investment income (loss)
to average net assets (%) ............. (.33)* (.07) .21 .56 .50 .54
Portfolio turnover rate (%) ............. 88.7* 58.1 81.6 10.3 13.7 12.3
Average commission rate paid (e) ........ $.0129 $ -- $ -- $ -- $ -- $ --
<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.
(e) Average commission rate paid per share of common and preferred securities is calculated for
fiscal years beginning on or after September 1, 1995.
* Annualized ** Not Annualized
</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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the mean between the most recent bid and asked
quotations. If there are no such bid and asked quotations, the most recent bid
quotation is used. Securities quoted on the National Association of Securities
Dealers Automatic Quotation ("NASDAQ") System, for which there have been sales,
are valued at the most recent sale price reported on such system. If there are
no such sales, the value is the high or "inside" bid quotation. Securities which
are not quoted on the NASDAQ System but are traded in another over-the-counter
market are valued at the most recent sale price on such market. If no sale
occurred, the security is then valued at the calculated mean between the most
recent bid and asked quotations. If there are no such bid and asked quotations,
the most recent bid quotation shall be used.
Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the Officers of the Fund, which prices
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
All other securities are valued at fair value as determined in good faith by the
Valuation Committee of the Board of Directors, although the actual calculation
may be done by others, including certain investments in securities that have met
the limit for aggregate foreign ownership and for which premiums to the local
stock exchange prices are offered by prospective foreign investors. The
aggregate premium ($453,744) over the local share price ($810,256) for these
securities valued by the Valuation Committee was approximately 0.3% of the
Fund's net assets at June 30, 1996. All other securities valued in good faith by
the Valuation Committee amounted to $1,003,047 or 0.7% of the Fund's net assets
at June 30, 1996.
OPTIONS. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows
20
<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 and as a
hedge against changes in exchange rates relating to foreign currency denominated
assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
companies, and to distribute all of its taxable income to its shareholders. The
Fund accordingly paid no U.S. federal income taxes, and no federal income tax
provision was required.
In addition, from November 1, 1995 through December 31, 1995, the Fund incurred
approximately $1,405,000 of net realized capital losses. As permitted by tax
regulations, the Fund intends to elect to defer these losses and treat them as
arising in the fiscal year ended December 31, 1996.
DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made annually. Distributions of net realized gains from investment transactions
in excess of available capital loss carryforwards, which would be taxable to the
Fund if not distributed, will be distributed to shareholders annually. An
additional distribution may be made to the extent necessary to avoid the payment
of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences relate primarily to investments in Passive Foreign Investment
Companies, foreign denominated investments and certain securities sold at a
loss. As a result, net investment income and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
OTHER. Investment security transactions are accounted for on a trade-date basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis. Distributions to shareholders are recorded on the
ex-dividend date except in situations where, under New York Stock Exchange
rules, the ex-dividend date is deferred until after the payment date.
22
<PAGE>
================================================================================
B. PURCHASES AND SALES OF SECURITIES
---------------------------------
For the six months ended June 30, 1996, purchases and sales of investment
securities (excluding short-term investments) aggregated $61,162,207 and
$60,005,646, respectively.
C. RELATED PARTIES
---------------
Under the Investment Advisory and Management Agreement (the "Management
Agreement") with Scudder, Stevens & Clark, Inc. (the "Manager") the Fund has
agreed to pay the Manager a fee equal to an annual rate of 1.25% of the first
$75,000,000 of average weekly net assets of the Fund, 1.15% of the next
$125,000,000 and 1.10% of the excess over $200,000,000, payable monthly. As
manager of the assets of the Fund, the Manager directs the investments of the
Fund in accordance with its investment objectives, policies, and restrictions.
The Manager determines the securities, instruments, and other contracts relating
to investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Manager shall provide certain administrative
services in accordance with the Management Agreement. For the six months ended
June 30, 1996, the fee pursuant to the agreement amounted to $840,438, which is
equivalent to an annual effective rate of 1.21% of the Fund's average daily net
assets.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended June 30, 1996, the amount charged to the Fund by SFAC aggregated $63,410,
of which $21,445 is unpaid at June 30, 1996.
The Fund pays each Director not affiliated with the Manager, $6,000 annually,
plus specified amounts for attended board and committee meetings. For the six
months ended June 30, 1996, Directors' fees and expenses aggregated $76,918.
D. INVESTING IN FOREIGN MARKETS
----------------------------
Investing in foreign markets may involve special risks and considerations not
typically associated with investing in the United States. These risks include
revaluation of currencies and future adverse political and economic
developments. Moreover, securities issued in these markets may be less liquid
and their prices more volatile than those of securities of comparable U.S.
companies.
Foreign investment in the securities markets of several foreign countries is
restricted or controlled in varying degrees. These restrictions may limit
investment in certain foreign countries. In addition, the repatriation of both
investment income and capital from some foreign countries may be subject to
restrictions.
23
<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, 1996,
and the related statement of operations for the six months then ended, the
statements of changes in net assets for the six months then ended and for the
year ended December 31, 1995, and the financial highlights for the six months
ended June 30, 1996 and for each of the five years in the period ended December
31, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder New Asia Fund, Inc. as of June 30, 1996, the results of its operations
for the six months then ended, the changes in its net assets for the six months
then ended and for the year ended December 31, 1995, and the financial
highlights for the six months ended June 30, 1996 and for each of the five years
in the period ended December 31, 1995 in conformity with generally accepted
accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
August 26, 1996
24
<PAGE>
Directors and Officers
EDMOND D. VILLANI*
Chairman of the Board and Director
NICHOLAS BRATT*
President and Director
PAUL BANCROFT III
Director
ROBERT J. CALLANDER
Director
THOMAS J. DEVINE
Director
WILLIAM H. GLEYSTEEN, JR.
Director
JAMES W. MORLEY
Honorary Director
DR. WILSON NOLEN
Director
JURIS PADEGS*
Vice President, Assistant Secretary and Director
HUGH T. PATRICK
Director
DANIEL PIERCE*
Director
ROBERT G. STONE, JR.
Honorary Director
ELIZABETH J. ALLAN*
Vice President
JERARD K. HARTMAN*
Vice President
SEUNG KWAK*
Vice President
DAVID S. LEE*
Vice President
THOMAS F. McDONOUGH*
Secretary and Assistant Treasurer
PAMELA A. McGRATH*
Treasurer
EDWARD J. O'CONNELL*
Vice President and Assistant Treasurer
COLEEN DOWNS DINNEEN*
Assistant Secretary
* Scudder, Stevens & Clark, Inc.
25
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26
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27
