SCUDDER
NEW ASIA
FUND, INC.
Semiannual Report
June 30, 1997
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.
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Investment objective and policies
o long-term capital appreciation through investment primarily in the 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
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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
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In Brief 3
Letter to Shareholders 3
Other Information 6
Investment Summary 7
Portfolio Summary 8
Investment Portfolio 9
Financial Statements 17
Financial Highlights 20
Notes to Financial Statements 21
Report of Independent Accountants 25
Directors and Officers 26
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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.
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2
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In Brief
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o Selected Asian markets recorded strong returns as the uneasiness overhanging
the Pacific Basin began to dissipate over the six-month period ended June 30,
1997.
o Scudder New Asia Fund provided a total return on net asset value of 14.21%
for the six-month period. Shares of the Fund, which trade on the New York
Stock Exchange, rose 18.22% over the same period. The unmanaged Morgan
Stanley Capital International Pacific Index (72% Japan) returned 7.38%, while
the Fund's composite benchmark (75% MSCI All Country Asia Free Index and 25%
MSCI Japan Index) returned 4.46%.
o The Fund continues to focus on company-specific rather than country-specific
characteristics in selecting stocks for the portfolio.
Letter to Shareholders
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Dear Shareholders:
For the six-month period ended June 30, 1997, Scudder New Asia Fund, Inc.
provided a 14.21% total return, reflecting an increase in net asset value from
$15.26 to $17.26, a three cent-per-share income distribution and a 10
cent-per-share long-term capital gain distribution. Shares of the Fund traded on
the New York Stock Exchange rose from $12.50 to $14.625, for a total return of
18.22%. The stock exchange price on June 30, 1997 represented a 15.3% discount
from the net asset value.
Market Summary
At the beginning of 1997, we projected that a rebound in export growth and
easier monetary policies following a period of restraint would power an upturn
in selected Asian equity markets. As the six months progressed, we began to see
signs that this scenario would be played out. The Indian, Taiwanese, Chinese,
South Korean, Japanese, and Hong Kong markets all posted solid gains in U.S.
dollar terms. Weakness in Thailand, where the Fund's current exposure is zero,
persisted as the market dropped 37% over the six months. Fears of a
"Thai-syndrome" spillover dragged down Malaysian and Philippine stock market
performance, each falling about 12%.
The period was marked by the historic handover of Hong Kong to the People's
Republic of China, which, through July, was conveyed without incident. We remain
cautiously optimistic on Hong Kong's fate. In contrast to the media's worries
about the possible effect of a sudden political shock on the stock market, we
are more concerned about the potential cumulative impact of more subtle changes
to Hong Kong's business environment. The maintenance of an environment in which
Hong Kong companies can be successful and profitable will be an important factor
determining the attractiveness of stocks there.
Another noteworthy event has been the turnaround in the Japanese stock market,
which rose 7.19% in local terms and 8.72% in U.S. dollar terms over the six
months thanks largely to a reversal of the weak yen. The yen stopped falling
versus the dollar as attention focused once again on a rising Japanese trade
surplus. Several key factors were behind the stock market's move. These included
a perception that government authorities and managements in the Japanese
financial industry were starting to take steps -- such as write-offs and
securitization -- to deal with the after-effects of economic excesses. Linked
with this perception is the developing consensus that Japanese real estate
prices have bottomed. Additional steps to deregulate the Japanese economy and
financial system, such as permitting share buybacks, stock options, and modified
holding companies, have raised hope of new profitability for shareholders of
Japanese companies.
3
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In Japan, our investment stance remains very much stock-driven, based on value
and visible earnings potential. Therefore, we remain focused on those companies
which are already competitive and profitable within a global context, such as in
the electronics and automotive industries, and those which can benefit from
increased pricing power in a global cyclical upswing, such as steel. At the end
of the period, 23% of portfolio assets were invested in Japan.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART TITLE:
Market Performance
(12/31/96 to 6/30/97)
BAR CHART DATA:
-------------------------------------
India 36.42%
Taiwan 26.59%
China 10.30%
Korea 9.70%
Japan 8.72%
Hong Kong 8.09%
Indonesia 6.21%
Australia 4.93%
New Zealand 3.95%
Singapore -8.08%
Philippines -11.92%
Malaysia -12.24%
Thailand -37.27%
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Source: Morgan Stanley Capital International indexes in U.S. dollars
Portfolio Strategy
We maintain our view that superior stock selection will be the key to
outstanding performance for the balance of 1997 and over the longer term. We
look for companies that are undervalued, fast-growing, and exceptionally
well-managed. Among these, we select companies with dominant positions in
clearly identifiable market niches and distinct competitive advantages. High or
improving returns on equity and operating margins, and strong balance sheets are
also key ingredients to selecting stocks for the portfolio.
Our bottom-up investment approach yielded no exposure to Bangkok stocks, which
fell sharply during the period. Our technology-related holdings, notably
holdings Advantest of Japan, as well as Asustek and Delta Electronics of Taiwan,
provided sparkle. Our Korean cyclical stocks delivered strong results, including
Pohang Steel and Samsung Electronics, as did selected Indian positions including
Housing Development Finance Corp., India's largest finance company. Among the
laggards were Malaysian financial-related companies, such as Arab Malaysian
Corp. and Public Bank, both victims of a government initiative to cool lending
growth.
Notable performers for the first six months of 1997 included financial stocks,
such as HSBC and Bank Bira, technology-related stocks, including China
Development, Delta Electronics, Advantest, Sony and Tokyo Electron, and selected
cyclicals including Asia Pulp and Paper and Astra International.
Recent portfolio additions and current holdings reflect our view that...
o The electronics cycle has bottomed. We believe nimble, niche-oriented
companies, such as Samsung Electronics (South Korea's DRAM behemoth), and
selected leading-edge Japanese technology companies (particularly those at
the forefront of the digitization of consumer electronics products), will be
key beneficiaries of a rebound. Our technology holdings were among our top
performers in the first half of 1997, and we continued to bolster our
positions in the second quarter.
o The environment remains unsettled in Thailand. We liquidated our remaining
holdings following an early March trip to Bangkok during which we concluded
that the economic crisis would get significantly worse before it improves. By
period-end, the market had fallen by more than 25% from where we sold.
Against this backdrop, our bottom-up investment approach continues to yield
no new opportunities.
o Europe and Japan could buoy global economic growth later this year. Holdings
which stand to benefit from cyclical growth also include Kawasaki Steel,
POSCO, the leading Korean steel producer, and selected Indonesian pulp and
paper companies.
4
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Outlook
The evidence suggesting long-term capital appreciation in Asian stocks remains
compelling. Economic growth throughout the region is robust by western
standards. While the past few years have shown that strong economic growth is no
guarantee of satisfying stock market performance, we see many attractive values
emerging. Our visits with company managements and our research suggest that
corporate earnings should be strong for many companies. Near-term market
volatility is always a risk when investing in Asia. However, in our view,
superior stock selection will be the key to outperformance in both the improving
trade and economic environment that we envision over the long term.
Respectfully,
/s/Nicholas Bratt /s/Daniel Pierce
Nicholas Bratt Daniel Pierce
President Chairman of the Board
5
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Other Information
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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, Scudder Spain and Portugal Fund, Inc. and Scudder
World Income Opportunities Fund are traded on the New York 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.
Co-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
13 years of Pacific Basin research and investment management experience. Theresa
Gusman, who became Co-Lead Portfolio Manager in 1997, helps set the Fund's
general investment strategies. Ms. Gusman, who joined Scudder in 1995 and the
Fund's team in 1996, has 14 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 21 years of experience in worldwide investing, including 20 years
of experience as a portfolio manager, and has been at Scudder since 1976.
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 8200, Boston, MA 02266-8200, (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
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SCUDDER NEW ASIA FUND, INC.
INVESTMENT SUMMARY AS OF JUNE 30, 1997
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HISTORICAL
INFORMATION TOTAL RETURN (%)
LIFE OF FUND --------------------------------------------
MARKET VALUE NET ASSET VALUE (a)
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AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL
------------------- --------------------
QUARTERLY -18.18 - 13.93 -
FISCAL YEAR
TO DATE 18.22 - 14.21 -
ONE YEAR 3.14 3.14 10.85 10.85
THREE YEAR -5.83 -1.98 10.82 3.48
FIVE YEAR 45.51 7.79 70.45 11.26
TEN YEAR* 132.98 8.83 213.58 12.11
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PER SHARE INFORMATION AND RETURNS (A)
YEARLY PERIODS ENDED JUNE 30
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) with the exact
data points listed in the table below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
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NET ASSET VALUE... $12.41 $12.93 $18.70 $15.68 $15.49 $17.93 $22.44 $16.00 $16.06 $17.26
INCOME DIVIDENDS.. $ .07 $ - $ - $ .08 $ .08 $ .08 $ .48 $ .02 $ .02 $ .03
CAPITAL GAINS
DISTRIBUTIONS..... $ - - $ 1.56 $ 1.93 $ .15 $ .52 $ - $ 5.06 $ .87 $ .37
TOTAL RETURN (%).. 12.75 4.19 59.40 -2.03 .28 20.28 27.88 -5.41 5.70 10.85
</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.
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, 1997
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DIVERSIFICATION
Common Stocks 89%
Convertible Bonds 5%
Cash Equivalents 5%
Limited Partnership 1%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the
above table.
Geographical breakdown of the Fund's equity securities
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Japan 23%
Hong Kong 13%
Malaysia 12%
Taiwan 12%
India 12%
Indonesia 10%
Korea 9%
China 4%
Philippines 2%
Other 3%
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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
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Financial 24%
Technology 17%
Manufacturing 12%
Consumer Staples 10%
Durables 9%
Transportation 6%
Metals and Minerals 5%
Construction 4%
Consumer Discretionary 4%
Other 9%
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100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the
above table.
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TEN LARGEST EQUITY HOLDINGS (24% of Portfolio)
1. POHANG IRON & STEEL CO., LTD.
Leading steel producer in Korea
2. ADVANTEST CORP.
Producer of measuring instruments and semiconductor testing devices in
Japan
3. ASTRA INTERNATIONAL
Producer and distributor of automobiles, motorcycles and related spare
parts in Indonesia
4. HOUSING DEVELOPMENT FINANCE CORP., LTD,
Housing finance provider to individuals, corporations and developers in
India
5. HUTCHISON WHAMPOA LTD.
Container terminal and real estate company in Hong Kong
6. SONY CORP.
Consumer electronic products manufacturer in Japan
7. CHINA DEVELOPMENT CORP.
Leading venture capital firm and investment bank in Taiwan
8. ASUSTEK COMPUTER INC.
Manufacturer of computer mainboards, audio/video cards and network cards
in Taiwan
9. SAMSUNG ELECTRONICS CO., LTD.
Major electronics manufacturer in Korea
10. GUANGSHEN RAILWAY CO., LTD.
Operator of only railroad in the Pearl River delta in China
8
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[LOGO] Scudder New Asia Fund, Inc.
Investment Portfolio as of June 30, 1997
<TABLE>
<CAPTION>
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Principal Market
Amount(d) Value($)
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<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS -- 4.6%
UNITED STATES 7,215,000 Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 6/30/97 at 5.9% to be repurchased at $7,216,182
on 7/1/97, collateralized by a $6,166,000 U.S. Treasury
Bond, 8.125%, 8/15/21 (Cost $7,215,000) .................. 7,215,000
---------
==========================================================================================================
CONVERTIBLE BONDS -- 5.3%
CHINA 1.2% 1,995,000 Qingling Motors Co., 3.5%, 1/22/02 (Producer of Isuzu
light duty pickup trucks and minibuses) ................... 1,950,113
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JAPAN 2.3% JPY 149,000,000 Minebea Co., Ltd., 0.65%, 3/31/05 (Leading manufacturer
of miniature bearings) .................................... 1,626,376
JPY 189,000,000 Softbank Corp., Zero Coupon, 3/31/00 (Computer software
wholesaler) ............................................... 1,949,202
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3,575,578
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MALAYSIA 0.2% MYR 250,000 Arab Malaysian Finance Berhad (ICUL), 7.5%, 5/25/02
(License and finance company) ............................. 80,725
MYR 396,000 Multi-Purpose Holdings Berhad (ICUL), 3%, 1/13/02,
(Investment company: property development, commercial
banking, ship charter, hotel and resort operator) ......... 130,734
MYR 213,000 Renong Berhad (ICUL), 4%, 5/21/01 (Holding company
involved in engineering and construction, financial
services, telecommunications and information
technology) ............................................... 66,354
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277,813
---------
TAIWAN 1.6% 1,794,000 Delta Electronic Industrial Co., 0.5%, 3/6/04
(Manufacturer of power supply equipment) .................. 2,430,870
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TOTAL CONVERTIBLE BONDS (Cost $7,910,570) ................... 8,234,374
---------
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LIMITED PARTNERSHIP -- 0.5%
Units
-----
JAPAN 1 JAFCO #6 Investment Enterprise Partnership (Venture
capital company) (Cost $773,606)(b) ....................... 710,016
---------
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</TABLE>
The accompanying notes are an integral part of the financial statements.
9
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[LOGO] Scudder New Asia Fund, Inc.
Investment Portfolio (continued)
<TABLE>
<CAPTION>
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Market
Shares Value($)
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<S> <C> <C> <C>
COMMON STOCKS -- 89.6%
CHINA 1.6% 113,000 Guangshen Railway Co. Ltd. (ADR) (Operator of only
railroad in the Pearl River delta) ....................... 2,471,875
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HONG KONG 13.0% 199,000 China Light & Power Co., Ltd. (Electric utility company) ... 1,127,632
89,000 Cosco Pacific Ltd. (Shipping containers leasing and
management company) ..................................... 206,207
55,000 Dah Sing Financial Group (General banking and property
investment holding company) ............................. 303,848
1,021,486 First Pacific Co., Ltd. (International management and
investment company) ..................................... 1,305,321
366,000 Great Eagle Holdings Ltd. (Property development company) ... 1,207,040
269,000 Guoco Group Ltd. (Investment holding company) .............. 1,416,648
31,958 HSBC Holdings Ltd. (Bank) .................................. 961,137
449,000 Hutchison Whampoa, Ltd. (Container terminal and real
estate company) ......................................... 3,897,519
582,000 Kerry Properties Ltd. (Real estate company) ................ 1,412,311
154,000 Liu Chong Hing Bank Ltd. (Commercial bank) ................. 405,509
382,000 New World Development Co., Ltd. (Property investment
and development, construction and engineering, hotels
and restaurants, telecommunications) .................... 2,292,799
1,046,200 Shangri-La Asia Ltd. (Hotel and property holding
company) ................................................ 1,255,878
658,000 Shenzhen Expressway Co.* (Highway developer) ............... 182,606
600,000 Shenzhen Fangda Co., Ltd. "B" (Manufacturer of metal
curtains and walls for shop fronts) ..................... 871,271
458,000 Television Broadcasts, Ltd. (Television broadcasting) ...... 2,057,284
456,000 VTech Holdings Ltd. (Manufacturer of consumer electronic
products) ............................................... 859,345
99,000 Wing Hang Bank Ltd. (Corporate and retail banking,
foreign exchange) ....................................... 603,152
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20,365,507
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INDIA 11.1% 46,100 Bajaj Auto (GDR) (Maker of two and three wheel vehicles) ... 1,583,535
506,150 Crompton Greaves Ltd. (Manufacturer of electrical
equipment) .............................................. 1,053,301
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
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Market
Shares Value($)
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<S> <C> <C> <C>
84,550 Hero Honda Motors Ltd. (Manufacturer of motorized two
wheelers) ............................................... 1,211,568
35,200 Housing Development Finance Corp. Ltd. (Housing
finance provider to individuals, corporations and
developers) ............................................. 4,014,324
52,600 Indian Hotels & Resorts Co., Ltd. (GDR) (Hotel operator) ... 1,249,250
1,124,600 Indorama Synthetics (Producer of polyester fibers,
yarn and fabric) ........................................ 801,042
1,639,000 Indorama Synthetics (Foreign registered) ................... 1,482,648
22,100 Infosys Technologies Ltd. (Financial and industrial
software developer) ..................................... 1,148,212
6,400 Madras Cements Ltd. (Cement producer) ...................... 1,443,575
171,800 Mahanagar Telephone Nigam Ltd. (Telecommunication
services in Delhi and Bombay) ........................... 1,457,661
2,980 Mahindra & Mahindra Ltd. (Manufacturer of automobiles,
farm equipment and automotive components) ............... 36,043
146,200 TVS Suzuki Ltd. (Manufacturer of motorcycles and
mopeds) ................................................. 1,898,966
----------
17,380,125
----------
INDONESIA 10.1% 987,500 Astra International Inc. (Foreign registered)
(Manufacturer and distributor of automobiles,
motorcycles and related spare parts) .................... 4,060,444
1,163,600 Bank Bira (Foreign registered) (Commercial, corporate
and foreign exchange banking) ........................... 1,710,473
1,283,000 Bank Danamon Indonesia (Commercial and foreign
exchange bank) .......................................... 672,625
944,000 Bank Internasional Indonesia (Foreign registered) (Bank) ... 815,132
755,000 Ciputra Development Co. (Foreign registered) (Developer
of office properties, shipping and commercial centers,
industrial properties and sports facilities) ............ 752,827
215,500 Gudang Garam (Foreign registered) (Cigarette producer) ..... 903,824
842,000 Jaya Real Properties (Foreign registered) (Property
developer) .............................................. 1,133,861
641,500 Lippobank (Foreign registered) (Private bank) .............. 659,437
472,500 London Sumatra Indonesia* (Producer of palm oil, cocoa,
coffee and tea)(b) ...................................... 1,495,991
190,500 Putra Surya Multidana* (Foreign registered) (Manufacturer
of motorcycles and automobile parts) .................... 303,531
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
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[LOGO] Scudder New Asia Fund, Inc.
Investment Portfolio (continued)
<TABLE>
<CAPTION>
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
Market
Shares Value($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1,817,000 Sekar Bumi (Foreign registered) (Producer of frozen raw
shrimp, prawns and fish) ................................. 2,297,399
246,500 United Tractors (Foreign registered) (Heavy construction
equipment assembly and leasing) .......................... 912,212
----------
15,717,756
----------
JAPAN 19.5% 62,200 Advantest Corp. (Producer of measuring instruments and
semiconductor testing devices) ............................ 4,775,849
36,000 Ariake Japan Co., Ltd. (Leading maker of natural seasonings
made from meat extracts) ................................. 1,375,796
40,000 Bridgestone Corp. (Leading automobile tire manufacturer) .... 928,366
47,960 FCC Co., Ltd. (Manufacturer of motorcycle and automobile
clutches) ................................................ 1,213,542
52,000 Fuji Software Inc. (Software developer) ..................... 2,268,563
116,000 Fujitsu Ltd. (Leading manufacturer of computers) ............ 1,609,284
80,000 Hitachi Ltd. (General electronics manufacturer) ............. 893,465
7,300 Hitachi Ltd. (ADR) .......................................... 824,900
52,000 Honda Motor Co., Ltd. (Leading automobile and
motorcycle manufacturer) ................................. 1,565,308
524,000 Kawasaki Steel Corp. (Major integrated steelmaker) .......... 1,705,366
118,000 NEC Corp. (Manufacturer of telecommunication and
computer equipment) ...................................... 1,647,326
26 Nichiei Co., Ltd. (Finance company for small and medium#
sized firms) ............................................. 3,017
17,600 Nidec Corp. (Manufacturer of small-scale motors for hard
disc drives) ............................................. 859,960
19,600 Nintendo Co., Ltd. (Game equipment manufacturer) ............ 1,641,742
15,000 Ryohin Keikaku Co., Ltd. (Wholesaler and retailer of
clothing, household goods and foodstuffs) ............... 1,183,143
29,000 Sony Corp. (Consumer electronic products manufacturer) ...... 2,527,790
12,800 Sony Corp. (ADR) ............................................ 1,126,400
11,900 Square Co., Ltd. (Producer of software for video games) ..... 586,642
60,000 Sumitomo Electric Industries, Ltd. (Leading manufacturer
of electric wires and cables) ............................ 1,005,148
24,200 Tokyo Electron Ltd. (Leading semiconductor production
equipment manufacturer) .................................. 1,157,107
26,400 Toyota Motor Corp. (ADR) (Leading automobile
manufacturer) ............................................ 1,564,200
----------
30,462,914
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
Market
Shares Value($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
KOREA 8.4% 54,549 Dong-A Pharmaceutical (Pharmaceutical company) ........... 1,431,297
70,310 Kolon Industries, Inc. (New) (Manufacturer of nylon,
polyester yarn and fabrics) .......................... 1,353,943
51,322 Kookmin Bank (GDS) (Major commercial bank) ............... 1,116,254
51,780 Korea Electric Power Co. (Electric utility) .............. 1,545,236
13,680 Pohang Iron & Steel Co., Ltd. (Leading steel
producer)(c) ......................................... 1,391,293
116,400 Pohang Iron & Steel Co., Ltd. (ADR) ...................... 3,724,800
23,923 Samsung Electronics Co., Ltd. (Major electronics
manufacturer)(c) ..................................... 2,621,023
----------
13,183,846
----------
MALAYSIA 11.1% 461,000 Arab Malaysian Finance Berhad (Foreign registered)
(Licensed finance company) ........................... 986,292
384,000 Arab-Malaysian Corp. (Investment holding company with
interests in financial services, infrastructure and
property) ............................................ 1,430,111
300,000 Guinness Anchor (Brewery) ................................ 665,610
660,000 IJM Corp. Berhad "A" (Construction and property
development company) ................................. 1,385,895
490,000 Linkaran Trans Kota Holdings Berhad*
(Toll road operator) ................................. 1,019,216
110,000 Malakoff Berhad (Cultivation and processing of natural
rubber, oil palm and cocoa) .......................... 479,398
220,000 Malayan Banking Berhad (Leading banking and financial
services group) ...................................... 2,309,826
118,000 Malaysia Assurance Alliance Berhad (Multiline insurance
company) ............................................. 687,242
18,500 Malaysia Assurance Alliance Berhad "A" (b) ............... 107,013
560,000 Malaysian Airline System Berhad (Air transportation and
related services) .................................... 1,397,781
388,000 Malaysian Resources Corp. (Property development and
investment) .......................................... 1,068,384
219,000 New Straits Times Press Berhad (Newspaper publisher and
property developer) .................................. 1,284,152
117,600 Oriental Holdings Berhad (Investment holding company) .... 885,261
623,000 Public Bank Berhad (Foreign registered) (Commercial
bank) ................................................ 972,512
287,000 Tenaga Nasional Berhad (Electric power generator and
distributor) ......................................... 1,398,613
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Investment Portfolio (continued)
<TABLE>
<CAPTION>
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
Market
Shares Value($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
169,000 United Engineers (Malaysia) Berhad (Leading
comprehensive contractor) .............................. 1,218,621
----------
17,295,927
----------
PHILIPPINES 2.3% 3,249,300 Aboitiz Equity Ventures Inc. (Conglomerate: electricity,
infrastructure, shipbuilding) .......................... 253,775
1,588,600 C & P Homes, Inc. (Home construction company) ............. 596,267
143,000 Equitable Banking Corp. (Universal bank) .................. 517,762
2,890,600 Filinvest Land, Inc.* (Developer of sub-division lots and
low-cost housing) ...................................... 723,308
233,800 First Philippine Holdings Corp. "B" (Holding company
involved in electric power distribution, construction
services and passenger bus transportation) ............. 323,540
2,208,750 International Container Terminal Services, Inc.
(Containerized cargo handling firm) .................... 1,130,502
----------
3,545,154
----------
SINGAPORE 2.1% 238,800 Overseas Union Bank Ltd. (Leading bank group) ............. 1,486,550
203,000 Singapore Airlines Ltd. (Foreign registered) (Scheduled
airline) ............................................... 1,817,444
----------
3,303,994
----------
TAIWAN 9.6% 56,700 ASE Test Ltd.* (Circuit testing services for semiconductor
manufacturers) ......................................... 2,395,575
714,844 Acer Peripherals Inc. (Certificates)* (Developer of computer
peripherals and communication products) ................ 1,787,624
100,500 Asustek Computer Inc. (Manufacturer of computer
mainboards, audio/video cards and network cards) ....... 1,330,360
159,700 Asustek Computer, Inc.* (GDR) ............................. 1,808,600
707,250 China Development Corp. (Leading venture capital firm
and investment bank) ................................... 3,650,733
89,000 Delta Electronic Industrial Co. (Manufacturer of
uninterruptable power supply equipment) ................ 550,647
1,175,930 Evergreen Marine Corp. (Operator of containerized
freighters) ............................................ 1,958,473
39,590 Evergreen Marine Corp. (GDR) .............................. 668,081
250,000 Pacific Construction Co.* (Land development and public
works construction) .................................... 267,086
239,200 United World Chinese Commercial Bank (Commercial
banking) ............................................... 572,187
----------
14,989,366
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
- ----------------------------------------------------------------------------------------------------------
Market
Shares Value($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES 0.8% 42,100 Freeport McMoRan Copper & Gold, Inc. "A"
(U.S. company mining in Indonesia) .................... 1,231,425
-----------
TOTAL COMMON STOCKS (Cost $116,080,608) ................... 139,947,889
-----------
==========================================================================================================
Principal
Amount(d)
---------
PURCHASED OPTIONS -- 0.0%
JPY 651,582,000 Put on Japanese Yen, strike price JPY125, expire 3/16/98
(Cost $104,253) ....................................... 16,941
-----------
==========================================================================================================
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $132,084,037)(a) ................................ 156,124,220
===========
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $132,089,118. At June 30, 1997,
net unrealized appreciation for all securities based on tax cost was
$24,035,102. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of
$28,174,636 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $4,139,534.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $2,313,020 (1.53% of net assets). Their
values have been estimated by the Board of Directors in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of these
securities at June 30, 1997 aggregated $2,056,617. These securities may also
have certain restrictions as to resale.
(c) Securities that have met the foreign-ownership limitation valued at a
premium in good faith by the Valuation Committee of the Board of Trustees.
The cost of the securities at June 30, 1997 were $2,726,226. The aggregate
premium ($1,580,332) over the local share price ($2,431,984) for the
securities valued by the Valuation Committee was approximately 2.65% of the
Portfolio's net assets at June 30, 1997.
(d) Principal amount is stated in U.S. dollars unless otherwise noted.
Currency abbreviations
- -------------------------------------------------
JPY Japanese Yen MYR Malaysian Ringgit
<TABLE>
<CAPTION>
At June 30, 1997, the outstanding written option was as follows (Note A):
Call Option Principal Expiration Strike Market
Amount (JPY) Date Price Value($)
- --------------------- ------------ ---------- ------ --------
<S> <C> <C> <C> <C>
Japanese Yen (Premium
received $104,253) ...... 651,582,000 3/16/98 JPY 109.88 189,610
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Investment Portfolio (continued)
<TABLE>
<CAPTION>
================================================================================
- --------------------------------------------------------------------------------
Transactions in written options during the six months ended June 30, 1997 were:
Options on Currencies
---------------------------
Japanese Yen Premiums
(000's) Received($)
---------------------------
<S> <C> <C>
Outstanding at
December 31, 1996 ............ 1,132,780 218,627
Written....................... 651,582 104,253
Closed ....................... (1,132,780) (218,627)
---------------------------
Outstanding at
June 30, 1997 ................ 651,582 104,253
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
=====================================================================================
- -------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $132,084,037) ........ $156,124,220
Cash ......................................................... 432,018
Foreign currency holdings, at market (identified
cost $2,676,991) .......................................... 2,682,275
Other receivables:
Investments sold .......................................... 1,478,932
Dividends and interest .................................... 294,927
Foreign taxes recoverable .................................... 1,161
Other assets ................................................. 3,622
------------
Total assets .......................................... 161,017,155
LIABILITIES
Payables:
Investments purchased ..................................... $9,203,647
Written option, at market (premium received $104,253) ..... 189,610
Accrued management fee .................................... 145,816
Other payables and accrued expenses ....................... 241,354
----------
Total liabilities ..................................... 9,780,427
------------
Net assets, at market value .................................. $151,236,728
============
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net
investment income ..................................... $(1,983,853)
Accumulated net realized gain ............................. 10,453,323
Net unrealized appreciation (depreciation) on:
Investments ........................................... 24,040,183
Written options ....................................... (85,357)
Foreign currency related transactions ................. 5,962
Paid-in capital ........................................... 118,806,470
------------
Net assets, at market value .................................. $151,236,728
============
Net asset value per share ($151,236,728/8,764,601
shares of common stock issued and outstanding,
$.01 par value, 50,000,000 shares authorized) ............. $ 17.26
============
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
================================================================================
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of taxes withheld of $88,431) .. $ 869,644
Interest (net of taxes withheld of $679) ...... 185,467
-----------
1,055,111
Expenses:
Management fee ................................ $ 827,079
Custodian and accounting fees ................. 275,564
Directors' fees and expenses .................. 77,337
Reports to shareholders ....................... 39,157
Auditing ...................................... 45,100
Services to shareholders ...................... 24,420
Legal ......................................... 2,067
Other ......................................... 12,236 1,302,960
---------- -----------
Net investment loss .............................. (247,849)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments (net of India tax $19,343) ........ 10,093,911
Options ....................................... 738,849
Foreign currency related transactions ......... (58,948) 10,773,812
----------
Net unrealized appreciation (depreciation)
during the period on:
Investments (net of India tax $499,644) ....... 8,398,278
Written Options ............................... (273,172)
Foreign currency related transactions ......... 6,362 8,131,468
---------- -----------
Net gain on investment transactions .............. 18,905,280
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $18,657,431
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
18
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Financial Statements (continued)
<TABLE>
<CAPTION>
=============================================================================================
- ---------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1997 1996
- ---------------------------------------------------------------------------------------------
Operations:
Net investment loss .................................... $ (247,849) $ (368,050)
Net realized gain from investment transactions ......... 10,773,812 4,534,972
Net unrealized appreciation (depreciation) on
investment transactions during the period .......... 8,131,468 (1,423,972)
------------ ------------
Net increase (decrease) in net assets resulting
from operations .................................... 18,657,431 2,742,950
------------ ------------
Distributions to shareholders:
In excess of net investment income ..................... (262,652) (174,619)
------------ ------------
From net realized gain from investment transactions .... (875,315) (2,882,677)
------------ ------------
Reinvestment of distributions .............................. 353,578 810,268
------------ ------------
Increase (decrease) in net assets .......................... 17,873,042 495,922
Net assets at beginning of period .......................... 133,363,686 132,867,764
------------ ------------
Net assets at end of period (including accumulated
distributions in excess of net investment income
of $1,983,853 and $1,473,352, respectively) ............ $151,236,728 $133,363,686
============ ============
Other Information
Increase in Fund Shares
Shares outstanding at beginning of period .................. 8,737,037 8,688,394
Shares issued to shareholders in reinvestment
of distributions ................................... 27,564 48,643
------------ ------------
Shares outstanding at end of period ........................ 8,764,601 8,737,037
============ ============
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Financial Highlights
<TABLE>
<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.
- --------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------
PER SHARE OPERATING PERFORMANCE 1997 1996 1994 1993 1995 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $15.26 $15.29 $17.44 $25.06 $14.73 $14.94
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) ............. (.03) (.04) (.01) .05 .10 .08
Net realized and unrealized gain (loss)
on investments ........................ 2.16 .36 (.47) (3.21) 10.63 .22
------ ------ ------ ------ ------ ------
Total from investment operations ............ 2.13 .32 (.48) (3.16) 10.73 .30
------ ------ ------ ------ ------ ------
Dilution resulting from rights offering ..... -- -- -- (.03) -- --
------ ------ ------ ------ ------ ------
Less distributions:
From net investment income ............... -- -- -- -- (.15) (.08)
In excess of net investment income ....... (.03) (.02) -- (.23) (.17) --
From net realized gains on investments ... (.10) (.33) (1.51) (4.20) -- (.43)
In excess of net realized gains
on investments ........................ -- -- (.16) -- (.08) --
------ ------ ------ ------ ------ ------
Total distributions ......................... (.13) (.35) (1.67) (4.43) (.40) (.51)
------ ------ ------ ------ ------ ------
Net asset value, end of period .............. $17.26 $15.26 $15.29 $17.44 $25.06 $14.73
====== ====== ====== ====== ====== ======
Market value, end of period ................. $14.63 $12.50 $14.50 $16.16(c) $27.38 $14.25
====== ====== ====== ====== ====== ======
Total Return
Per share market value (%) ............... 18.22** (11.56) (.66) (25.10) 95.71 (2.59)
Per share net asset value (%)(b) ......... 14.21** 2.46 (2.96) (11.67) 73.32 1.94
Ratios and Supplemental Data
Net assets, end of period ($ millions) ... 151 133 133 147 178 104
Ratio of operating expenses
to average net assets (%) ............. 1.91* 1.87 1.74 1.67 1.71 1.76
Ratio of net investment income (loss)
to average net assets (%) ............. (.36)* (.27) (.07) .21 .56 .50
Portfolio turnover rate (%) .............. 125.0 88.5 58.1 81.6 10.3 13.7
Average commission rate paid(d) ......... $.0134 $.0106 $ -- $ -- $ -- $ --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) 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.
(c) 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 purchased shares prior to January 18, 1995, the ex date of
the dividend, to be reimbursed by the seller in the amount of the
distribution.
(d) Average commission rate paid per share of common and preferred securities is
calculated for periods ending on or after December 31, 1996.
* Annualized
** Not Annualized
- --------------------------------------------------------------------------------
20
<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 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 their fair value as determined in good faith
by the Valuation Committee of the Board of Directors.
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 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.
21
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Notes to Financial Statements (continued)
================================================================================
- --------------------------------------------------------------------------------
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 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, is equal to at least 100.5% of the repurchase 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.
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.
22
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
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.
TAXATION. 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, 1996 through December 31, 1996, the Fund incurred
approximately $262,000 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 ending December 31, 1997.
Net realized gains of the Fund derived in India are subject to certain non
U.S. taxes.
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.
B. PURCHASES AND SALES OF SECURITIES
---------------------------------
For the six months ended June 30, 1997, purchases and sales of investment
securities (excluding short-term investments) aggregated $83,312,806 and
$86,841,883, respectively.
23
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
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, 1997, the fee pursuant to the agreement amounted to $827,079, which is
equivalent to an annual effective rate of 1.21% of the Fund's average daily net
assets.
On June 26, 1997, the Adviser entered into an agreement with The Zurich
Insurance Company ("Zurich"), an international insurance and financial services
organization, pursuant to which Zurich will acquire a majority interest in the
Adviser, and the Adviser will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc. and change
its name to Scudder Kemper Investments, Inc. Subject to the receipt of the
required regulatory and shareholder approvals, the transaction is expected to
close in the fourth quarter of 1997.
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, 1997, the amount charged to the Fund by SFAC aggregated $70,687,
of which $12,097 is unpaid at June 30, 1997.
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, 1997, Directors' fees and expenses aggregated $77,337.
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,
subject to government ownership controls, delayed settlements, 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.
24
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Report of Independent Accountants
================================================================================
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF SCUDDER NEW ASIA FUND, INC.:
We have audited the accompanying statement of assets and liabilities of Scudder
New Asia Fund, Inc., including the investment portfolio, as of June 30, 1997,
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, 1996, and the financial highlights for the six months
ended June 30, 1997 and for each of the five years in the period ended December
31, 1996. 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, 1997 by correspondence with the custodian. 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, 1997, 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, 1996, and the financial
highlights for the six months ended June 30, 1997 and for each of the five years
in the period ended December 31, 1996 in conformity with generally accepted
accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P
August 15, 1997
25
<PAGE>
Directors and Officers
================================================================================
- --------------------------------------------------------------------------------
DANIEL PIERCE*
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
HUGH T. PATRICK
Director
KATHRYN L. QUIRK*
Director, Vice President & Assistant Secretary
ROBERT G. STONE, JR.
Honorary Director
ELIZABETH J. ALLAN*
Vice President
THERESA GUSMAN*
Vice President
JERARD K. HARTMAN*
Vice President
SEUNG KWAK*
Vice President
DAVID S. LEE*
Vice President
THOMAS F. McDONOUGH*
Vice President, Secretary and Assistant Treasurer
PAMELA A. McGRATH*
Vice President and Treasurer
EDWARD J. O'CONNELL*
Vice President and Assistant Treasurer
* Scudder, Stevens & Clark, Inc.
26
