SCUDDER
NEW ASIA
FUND, INC.
Annual Report
December 31, 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
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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
- --------------------------------------------------------------------------------
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 16
Financial Highlights 19
Notes to Financial Statements 20
Report of Independent Accountants 24
Tax Information 25
Dividend Reinvestment and
Cash Purchase Plan 26
Shareholder Meeting Results 28
Directors and Officers 29
This report is sent to the shareholders of Scudder New Asia Fund, Inc. for their
information. It is not a prospectus, circular, or representation intended for
use in the purchase or sale of shares of the Fund or of any securities mentioned
in the report.
2
<PAGE>
In Brief
o For the 12 months ended December 31, 1996, Scudder New Asia Fund provided a
total return on net asset value of 2.46%. Shares of the Fund traded on the
New York Stock Exchange fell 11.56% over the same period. For purposes of
comparison, the unmanaged Morgan Stanley Capital International Pacific Index
(72% Japan) returned -8.58%, while our adjusted MSCI Asia Free Index (25%
Japan) returned 3.69%.
o Following three years of consolidation, we believe that Pacific Basin equity
markets as a whole are set for an upturn.
o Portfolio holdings include regional players, low-cost producers,
well-positioned local companies with globally-dominant partners, and
consumer-oriented companies with leading market positions.
Letter to Shareholders
- --------------------------------------------------------------------------------
Dear Shareholders:
For the 12 months ended December 31, 1996, Scudder New Asia Fund provided a
total return of 2.46%, based on a $0.03 decrease in the Fund's net asset value
per share, $0.33 per share in capital gain distributions, and $0.02 per share in
income distributions. Shares of the Fund traded on the New York Stock Exchange
fell 11.56% over the same period. For purposes of comparison, the unmanaged
Morgan Stanley Capital International Pacific Index (which weights Japan at 72%)
returned -8.58%, while our adjusted MSCI Asia Free Index (75% Morgan Stanley All
Country Asia Free Index; 25% MSCI Japan Index) returned 3.69%.
REGIONAL OVERVIEW
In the wake of the economic and asset booms of 1992-1993, Asian central
bankers tightened monetary policy to combat inflation. Recent inflation data
from China, Indonesia and the Philippines -- historically, the most
inflation-prone countries in the region -- suggests that they have won the war.
Interest rates have begun to decline in several countries, and we expect this
trend to continue.
We also have begun to see encouraging trade news. Accelerating economic
growth and improving trade flows -- particularly in the face of decelerating
inflation and falling interest rates -- lead us to believe that aggregate
corporate profit growth in the Pacific Basin (excluding Japan) should improve
significantly over the next two years. Improving profitability, combined with
attractive stock valuations following nearly three years of market stagnation,
portend a rebound in Pacific Basin equity markets.
JAPAN
Our view on Japan is less sanguine than for the rest of the region. Over the
next several years, we believe that the losers will outnumber the winners in the
Japanese equity market. Deregulation and greater foreign competition will speed
consolidation in heretofore sheltered industries including banking, insurance
and construction. Equity cross-holdings and long-term positions are being
liquidated to shore up sagging earnings. In addition, local investors have begun
to seek value and yield more easily found elsewhere. Against this backdrop, we
believe that conventional equity valuation measures will become increasingly
relevant. Consequently, globally competitive companies at globally attractive
valuations are well represented among our Japan holdings.
Japanese stocks, as a group, fell over the latter part of the year, as
investors began to discount slowing growth. Some economists have revised their
estimates for 1997 GDP growth down to 1% or less. Furthermore, looked-for
changes that might have offset near-term negatives, such as a cut in corporate
3
<PAGE>
tax rates, were not forthcoming. Instead, the government stuck with its plan to
raise the consumption tax, which is likely to depress spending.
In a development parallel but separate from Japan's economic problems, the
stock market is also in the midst of a difficult transition. As Japan opens up
both its physical and capital markets, competition will increase and the
justification for "Japanese" valuations will be eroded. There are two ways for
Japanese stock valuations to converge to levels typical of other markets:
earnings can rise while prices stagnate, or prices can fall to levels justified
by earnings or yield. When the outlook for Japanese economic and earnings
recovery following five years of sluggish growth was favorable, as it indeed
appeared to be in early 1996, one could hope for the former. Based on what
investors now glimpse ahead in 1997, fears that the market will take the second
route are intensifying.
We began trimming our Japanese holdings in the third quarter, and our
portfolio exposure to Japan remains light. We have increased our exposure to
blue chip companies for whom deregulation holds no threat, such as Honda and
Toyota. These stocks have been strong market leaders.
HONG KONG AND CHINA
Two of the best performing markets in the Pacific Basin universe as 1996 drew
to a close were, not coincidentally, China and Hong Kong. In China, low
inflation and declining interest rates were important positive factors, and
trade has picked up, brightening near term prospects for both China and Hong
Kong. In addition, Hong Kong financial and real estate companies benefited from
lower interest rates. As we near the June 30, 1997 handover of Hong Kong to
China, consensus opinion is turning increasingly optimistic that the transition
will be accomplished smoothly. Given our view that Hong Kong and China-related
stocks will continue to be strong in 1997, we have added new names, including
New World Development.
INDONESIA
In Indonesia, a calmer political environment following last summer's riots
has been a supportive factor for the stock market. We remain enthusiastic about
Indonesia going forward because we see it as one of the Asian economies that
stands to benefit most as interest rates fall. Stock price valuations in
Indonesia are among the most attractive in our universe.
On a "bottom-up" view we also find much to like. A number of holdings in
Indonesia, including Ciputra Development and Bakrie & Brothers performed well
towards the end of the year, as did 1996 addition Astra International. Our
holdings in the pulp and paper sector have lagged recently, as an upturn in
prices has been slower to materialize than expected. We remain confident that a
near-term cyclical upturn will lift margins and, longer term, we see the
Indonesian pulp and paper companies taking substantial global market share due
to their extremely competitive cost structure.
MALAYSIA
Malaysia has been one of the better-performing Asian markets. Following a
blistering rise in the secondary board, local investor interest returned to the
main board in the fourth quarter. The market was further encouraged by a series
of financial sector mergers, one of which involved portfolio holding Malayan
Banking. A growing consensus that a soft landing has been achieved by the
Malaysian economy and that interest rates will soon come down provided a
positive backdrop. Our Malaysian holdings remain heavily weighted in the finance
sector.
TAIWAN
Taiwan was one of the stars of 1996, rising 39% in U.S. dollar terms,
although fourth quarter performance was more muted. Relations with the People's
Republic of China have been relatively benign. In 1996, government policies were
supportive of stock valuations. These included easy liquidity and relaxed
criteria for government pension plan investments. The outlook improved for the
Taiwanese electronics sector, with notebook PC, component and peripheral
4
<PAGE>
manufacturers enjoying strong global demand. We remain enthusiastic about
Taiwan's prospects.
Our diversified Taiwan stock picks reflect our positive expectations for
Taiwanese domestic growth, particularly in the financial and construction
sectors (Cathay Life, UWCC Bank, Pacific Construction), as well as our
longer-term conviction that Taiwan will benefit from the growth of its neighbor
and estranged cousin, China. Our core holding in Evergreen Marine, a major
potential beneficiary of improved relations and growing Chinese trade with the
world, gives us exposure to these important changes.
The PHILIPPINES
The Philippine stock market has risen to new highs. We have taken this
opportunity to take some profits, for example, reducing longtime holding C&P
Homes. Earnings growth came through in most sectors (including property), export
growth remained strong, GDP growth came in ahead of expectations, and inflation
dropped to record lows. Although some political uncertainty exists concerning
the presidential elections coming up in 1998, we are encouraged that the first
stage of a comprehensive tax reform package was approved by the Senate.
LOOKING AHEAD
Following three years of consolidation, we believe that, with the exception
of Japan, the stage has been set for an upturn in the Pacific Basin equity
markets. Regional economic growth should accelerate. Current account deficits
should ease as export growth rebounds and authorities loosen monetary policy
after a prolonged period of restraint.
We believe that superior stock selection will be the key to performance in
the healthy economic and trade environment we envision for 1997 and over the
long term. In general, the Fund is investing in undervalued, fast-growing, and
well-managed companies that we believe will fare well in this climate. We have
found many such companies among regional players, low-cost producers,
well-positioned local companies with globally dominant partners, and
consumer-oriented companies with leading market positions. Going forward,
Scudder New Asia Fund will continue to seek to provide its shareholders with
maximum long-term capital appreciation.
In closing, we'd like to take this opportunity to announce that Joyce Cornell
has left the Scudder New Asia Fund's management team to assume new
responsibilities. Theresa Gusman has joined the team and will serve as co-lead
manager with Elizabeth Allan. Theresa has served since 1995 as an analyst
focusing on the Pacific Basin region in Scudder's Global Equity Group. Prior to
joining Scudder, Ms. Gusman spent 11 years as an equity research analyst with
other firms.
Thank you for your continued interest in the Fund, and do not hesitate to
call us at 1-800-349-4281 with any questions or suggestions.
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, 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.
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
12 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 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 DECEMBER 31, 1996
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HISTORICAL
INFORMATION TOTAL RETURN (%)
LIFE OF FUND ---------------------------------------------------------------
MARKET VALUE NET ASSET VALUE (a)
------------------- --------------------
AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL
------------------- --------------------
QUARTERLY -2.78 -- 2.41 --
ONE YEAR -11.56 -11.56 2.46 2.46
THREE YEAR -34.19 -13.02 -12.18 -4.24
FIVE YEAR 25.46 4.64 55.16 9.18
LIFE OF FUND* 107.35 7.94 172.36 11.07
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PER SHARE INFORMATION AND RETURNS (A)
YEARLY PERIODS ENDED DECEMBER 31
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) with the exact
data points listed in the table below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987* 1988 1989 1990 1991 1992 1993 1994 1995 1996
--------------------------------------------------------------------------------
NET ASSET VALUE... $10.81 $12.04 $16.36 $13.44 $14.94 $14.73 $25.06 $17.44 $15.29 $15.26
INCOME DIVIDENDS.. $ .02 $ .05 $ -- $ .08 $ .08 $ .08 $ .32 $ .23 $ -- $ .02
CAPITAL GAINS
DISTRIBUTIONS..... $ -- -- $ 1.38 $ 2.11 $ .11 $ .43 $ .08 $ 4.20 $ 1.67 $ .33
TOTAL RETURN (%).. -2.93 11.78 47.84 -2.77 12.54 1.94 73.32 -11.67 -2.96 2.46
</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
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SCUDDER NEW ASIA FUND, INC.
PORTFOLIO SUMMARY AS OF DECEMBER 31, 1996
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DIVERSIFICATION
Common Stocks 96%
Convertible Bonds 2%
Cash Equivalents 1%
Limited Partnership 1%
----
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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Geographical breakdown of the Fund's equity securities
Hong Kong 22%
Japan 17%
Indonesia 12%
Malaysia 12%
Taiwan 10%
India 6%
Thailand 6%
Singapore 4%
Korea 4%
Other 7%
----
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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Sector breakdown of the Fund's equity securities
Financial 38%
Manufacturing 15%
Transportation 8%
Consumer Staples 7%
Durables 7%
Consumer Discretionary 5%
Metals and Minerals 5%
Service Industries 4%
Construction 4%
Other 7%
----
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 (25% of Portfolio)
1. HUTCHISON WHAMPOA, LTD.
Container terminal and real estate company in Hong Kong
2. FIRST PACIFIC CO., LTD.
International management and investment company in Hong Kong
3. HSBC HOLDINGS LTD.
Bank in Hong Kong
4. SWIRE PACIFIC CO., LTD.
General trading and real estate company in Hong Kong
5. NICHIEI CO., LTD.
Finance company for small- and medium-sized firms in Japan
6. OVERSEAS UNION BANK LTD.
Leading bank group in Singapore
7. EVERGREEN MARINE CORP.
Operator of containerized freighters in Taiwan
8. ASTRA INTERNATIONAL INC.
Distributor of automobiles, motorcycles and related spare
parts in Indonesia
9. ARAB-MALAYSIAN CORP.
Investment holding company with interest in financial services,
infrastructure and property
10. MALAYAN BANKING BERHAD
Leading banking and financial services group
8
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.<TABLE>
<CAPTION>
[LOGO] SCUDDER NEW ASIA FUND, INC.
INVESTMENT PORTFOLIO AS OF DECEMBER 31, 1996
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PRINCIPAL MARKET
AMOUNT (C) VALUE ($)
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REPURCHASE AGREEMENTS - 1.6%
<S> <C> <C> <C> <C>
UNITED STATES 2,197,000 Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 12/31/96 at 6.7% to be repurchased at $2,197,818
on 1/2/97, collateralized by a $2,067,000 U.S. Treasury
Note, 8.25%, 7/15/98 (Cost $2,197,000)................... 2,197,000
-------------
- ----------------------------------------------------------------------------------------------------------------------
LIMITED PARTNERSHIP - 0.6%
JAPAN 1 unit JAFCO #6 Investment Enterprise Partnership
(Venture capital company) (Cost $773,606) (b)............. 799,244
-------------
- ----------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS - 1.7%
JAPAN 0.5% JPY 72,000,000 Softbank Corp., 3/31/00 (Computer software wholesaler)...... 635,386
-------------
MALAYSIA 0.2% MYR 379,000 Multi-Purpose Holdings Berhad ICUL, 3% 12/31/02
(Investment holding company) (b).......................... 167,123
MYR 213,000 Renong Berhad ICUL, 4%, 5/21/01 (Holding company
involved in engineering and construction, financial
services, telecommunications and information
technology)............................................... 89,400
-------------
256,523
-------------
PHILIPPINES 0.7% 654,000 AYALA International Finance Co., 3%, 6/8/00
(Industrial conglomerate)................................. 928,680
-------------
THAILAND 0.3% 835,000 Sahaviriya Steel Industries PCL, 3.5%, 7/26/05
(Manufacturer of hot rolled coils)........................ 388,275
-------------
TOTAL CONVERTIBLE BONDS (COST $2,153,701)................... 2,208,864
-------------
- ----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 95.8%
Shares
-----------
CHINA 2.0% 94,900 China Yuchai International Ltd. (Holding company which
manufactures and sells diesel truck engines).............. 450,775
113,000 Guangshen Railway Co. Ltd.* (ADR) (Operator of only
railroad in the Pearl River delta)........................ 2,330,625
-------------
2,781,400
-------------
HONG KONG 21.7% 89,000 Cosco Pacific Ltd. (Shipping containers leasing and
management)............................................... 103,562
The accompanying notes are an integral part of the financial statements.
9
</TABLE>
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<TABLE>
<CAPTION>
[LOGO] SCUDDER NEW ASIA FUND, INC.
INVESTMENT PORTFOLIO AS OF DECEMBER 31, 1996 (continued)
- ----------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3,337,486 First Pacific Co., Ltd. (International management and
investment company)....................................... 4,336,639
269,000 Guoco Group Ltd. (Investment holding company)............... 1,505,941
180,229 HSBC Holdings Ltd. (Bank)................................... 3,856,474
83,500 Hang Seng Bank Ltd. (Commercial banking and related
financial services)....................................... 1,014,804
608,000 Hutchison Whampoa, Ltd. (Container terminal and real
estate company)........................................... 4,775,486
670,000 Jinhui Shipping and Transportation Ltd. (Operator of
cargo fleet of ships transporting steel, iron ore,
non-ferrous metals and agricultural products)............. 670,000
7,274,000 Joyce Boutique Holdings (Designer fashion retailing
and distribution, housewares retailing)................... 1,843,305
582,000 Kerry Properties Ltd.* (Real estate company)................ 1,595,242
296,000 New World Development Co., Ltd. (Property investment
and development, construction and engineering, hotels
and restaurants, telecommunications)...................... 1,990,045
1,046,200 Shangri-La Asia Ltd. (Hotel and property holding company)... 1,548,774
384,000 Swire Pacific Co., Ltd. "A" (General trading and real estate
company).................................................. 3,673,929
458,000 Television Broadcasts, Ltd. (Television broadcasting)....... 1,829,750
456,000 VTech Holdings Ltd. (Manufacturer of consumer electronic
products)................................................. 819,497
-------------
29,563,448
-------------
INDIA 5.7% 46,100 Bajaj Auto (GDR) (Maker of two and three wheel vehicles).... 1,567,400
20,100 Housing Development Finance Corp. Ltd. (Housing finance
provider to individuals, corporations and developers)..... 1,262,487
52,600 Indian Hotels & Resorts Co., Ltd. (GDR) (Hotel operator).... 1,328,150
1,124,600 Indorama Synthecs (Producer of polyester fibers, yarn and
fabrics).................................................. 661,898
171,800 Mahanagar Telephone Nigam Ltd. (Telecommunication
services in Delhi and Bombay)............................. 1,135,749
111,900 Mahindra & Mahindra Ltd. (Manufacturer of automobiles,
farm equipment and automotive components)................. 1,033,944
51,800 Ranbaxy Laboratories (GDR) (Pharmaceutical company)......... 880,600
-------------
7,870,228
-------------
INDONESIA 12.0% 135,800 Asia Pulp & Paper Co., Ltd.* (ADR) (Producer of pulp
and paper)................................................ 1,544,725
The accompanying notes are an integral part of the financial statements.
10
</TABLE>
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<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
986,500 Astra International Inc. (Foreign registered) (Distributor of
automobiles, motorcycles and related spare parts) 2,714,754
4,828,000 Bakrie & Brothers (Manufacturer of industrial steel products,
steel pipes, corrugated sheet iron, asbestos and fiber
cements).................................................. 1,992,930
1,163,600 Bank Bira (Foreign registered) (Commercial, corporate and
foreign exchange banking)................................. 1,379,373
1,414,500 Ciputra Development Co. (Foreign registered) (Developer
of office properties, shipping and commercial centers,
industrial, properties and sports facilities)............. 1,467,199
430,000 HM Sampoerna (Foreign registered) (Tobacco company)......... 2,293,819
1,674,000 Indorama Synthetics (Foreign registered) (Producer of
polyester fibers, yarn and fabrics)....................... 1,630,059
842,000 Jaya Real Properties (Foreign registered) (Property
developer)................................................ 1,176,376
233,500 Modern Photo Film Co. (Foreign registered) (Photographic
film distributor)......................................... 741,427
2,274,000 Sekar Bumi (Foreign registered) (Producer of frozen raw
shrimp, prawns and fish).................................. 1,444,115
-------------
16,384,777
-------------
JAPAN 16.0% 36,000 Ariake Japan Co., Ltd. (Leading maker of natural seasonings
made from meat extracts) (b).............................. 1,156,377
35,100 Asatsu Inc. (Advertising agency)............................ 1,115,344
43,600 FCC Co., Ltd. (Manufacturer of motorcycle and automobile
clutches)................................................. 1,185,908
52,000 Honda Motor Co., Ltd. (Leading automobile and
motorcycle manufacturer).................................. 1,486,227
21,000 Japan Associated Finance Co. (Venture capital company)...... 1,659,183
123,000 Mitsubishi Estate Co., Ltd. (Prestigious real estate co.)... 1,263,880
44,326 Nichiei Co., Ltd. (Finance company for small- and
medium-sized firms)....................................... 3,272,492
19,600 Nintendo Co., Ltd. (Game equipment manufacturer)............ 1,403,022
33,000 Pioneer Electronics Corp. (Leading manufacturer of audio
equipment)................................................ 629,738
16,000 Riso Kagaku Corp. (Manufacturer of copying machines)........ 1,027,891
15,000 Ryohin Keikaku Co., Ltd. (Wholesaler and retailer of
clothing, household goods and foodstuffs)................. 1,113,893
11,000 Shohkoh Fund & Co., Ltd. (Finance company for small- and
medium-sized firms)....................................... 2,393,576
The accompanying notes are an integral part of the financial statements.
11
</TABLE>
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<TABLE>
<CAPTION>
[LOGO] SCUDDER NEW ASIA FUND, INC.
INVESTMENT PORTFOLIO AS OF DECEMBER 31, 1996 (continued)
- ----------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
11,900 Square Co., Ltd. (Producer of software for video games)..... 601,114
60,000 Sumitomo Electric Industries, Ltd. (Leading manufacturer of
electric wires and cables)................................ 839,306
149,000 Toshiba Engineering & Construction Co., Ltd. (Leading
installer of thermal and nuclear power plants)............ 1,087,169
26,400 Toyota Motor Corp. (ADR) (Leading automobile
manufacturer)............................................. 1,518,000
-------------
21,753,120
-------------
KOREA 3.5% 53,480 Dong-A Pharmaceutical (Pharmaceutical company).............. 1,031,626
32,900 Kolon Industries, Inc.* New (Manufactures nylon, polyester
yarn and fabrics)......................................... 552,876
46,600 Kookmin Bank (GDR) (Major commercial bank).................. 856,275
116,400 Pohang Iron & Steel Co., Ltd. (ADR) (Leading steel
producer)................................................. 2,357,100
-------------
4,797,877
-------------
MALAYSIA 11.2% 145,000 AMMB Holdings Berhad (Holding company for Arab
Malaysian Merchant Bank Berhad which provides
financial, insurance and investment services)............. 809,543
544,000 Arab-Malaysian Corp. (Investment holding company with
interests in financial services, infrastructure and
property)................................................. 2,714,076
153,988 Commerce Asset Holdings (Bank).............................. 1,131,600
490,000 Linkaran Trans Kota Holdings Berhad* (Toll road operator)... 1,008,909
220,000 Malayan Banking Berhad (Leading banking and financial
services group)........................................... 2,439,121
126,000 Malaysia Assurance Alliance Berhad (Multi-line insurance
company).................................................. 613,661
560,000 Malaysian Airline System Berhad (Air transportation and
related services)......................................... 1,452,386
14,000 Malaysian Resources Corp. (Property development and
investment)............................................... 55,157
379,000 Multi-Purpose Holdings Berhad (Investment holding
company).................................................. 735,340
117,600 Oriental Holdings Berhad (Investment holding company)....... 800,919
621,000 Public Bank Berhad (Foreign registered) (Commercial bank)... 1,315,522
1,242,000 Renong Berhad (Holding company involved in
engineering, construction, financial services,
telecommunication and information technology)............. 2,203,191
-------------
15,279,425
-------------
The accompanying notes are an integral part of the financial statements.
12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PAKISTAN 0.0% 17 Adamjee Insurance Co., Ltd. (Insurance company)............. 37
PHILIPPINES 2.5% 3,249,300 Aboitiz Equity Ventures Inc. (Conglomerate: electricity, -------------
infrastructure, shipbuilding)............................. 327,401
1,474,000 C & P Homes, Inc. (Home construction company)............... 756,616
187,040 First Philippine Holdings Corp. "B" (Holding company
involved in electric power distribution, construction
services and passenger bus transportation)................ 426,707
2,208,750 International Container Terminal Services, Inc.
(Containerized cargo handling firm)....................... 1,154,765
3,873,000 RFM Corp. (Manufactures, wholesales, and distributes
food products)............................................ 662,681
440,600 SM Prime Holdings Corp. (Leader in commercial center
operations)............................................... 113,919
-------------
3,442,089
-------------
SINGAPORE 4.3% 394,000 Overseas Union Bank Ltd. (Leading bank group)............... 3,040,949
203,000 Singapore Airlines Ltd. (Foreign registered)
(Scheduled airline)....................................... 1,842,421
324,000 Wing Tai Holdings Ltd. (Property investment and
development, garment manufacturing, trading in fabric
and architectural products)............................... 926,177
-------------
5,809,547
-------------
TAIWAN 9.8% 1,133,000 Asia Cement Corp. (Cement producer)......................... 2,060,000
309,250 Cathay Life Insurance Co. (Life insurance company).......... 1,967,955
707,250 China Development Corp. (Provider of loan and guarantee
services to manufacturing and service industries)......... 2,160,327
1,099,000 Evergreen Marine Corp. (Operator of containerized freighters) 2,198,000
37,000 Evergreen Marine Corp.* (GDR) (Operator of containerized
freighters)............................................... 735,375
106,353 Far Eastern Department Store (Department store chain)....... 145,800
1,295,000 Pacific Construction Co..................................... 1,106,636
570,000 Sangyang Industrial Co. (Motorcycle manufacturer)........... 1,274,727
302,000 Umax Data Systems Inc. (Manufacturer of computer image
scanners)................................................. 1,076,218
239,200 United World Chinese Commercial Bank
(Commercial banking)...................................... 630,618
-------------
13,355,656
-------------
THAILAND 5.5% 59,600 Ban Pu Coal Public Co., Ltd. (Foreign registered) (Leading
miner of sub-bituminous coal in southeast Asia)........... 1,106,200
The accompanying notes are an integral part of the financial statements.
13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
[LOGO] SCUDDER NEW ASIA FUND, INC.
INVESTMENT PORTFOLIO AS OF DECEMBER 31, 1996 (continued)
- ----------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
108,700 Bangkok Bank Ltd. (Foreign registered) (Leading
commercial bank).......................................... 1,051,142
20,800 Berli Jucker PCL (Exports and import of cosmetics,
confectionery, and photographic industrial chemicals)..... 76,238
102,900 PTT Exploration and Production Co., Ltd. (Foreign
registered) (Petroleum refinery).......................... 1,484,559
27,300 Siam Cement Co., Ltd. (Foreign registered) (Construction
materials and industrial conglomerate).................... 855,853
62 TPI Polene Co., Ltd. (Foreign registered) (Producer and
distributor of low density polyethylene plastic pellets).. 115
128,960 Thai Farmers Bank PCL (Foreign registered)
(Commercial bank)......................................... 804,554
16,120 Thai Farmers Bank PCL Warrants* (expire 9/15/02)............ 15,243
229,600 Thai Military Bank PCL (Foreign registered)
(Commercial bank)......................................... 452,109
256,600 Tipco Asphalt PCL (Foreign registered) (Manufacturer of
asphalt emulsion and cement).............................. 1,560,852
-------------
7,406,865
UNITED STATES 1.6% 77,200 Freeport McMoRan Copper & Gold, Inc. "A" (U.S. company -------------
mining in Indonesia)...................................... 2,171,250
-------------
TOTAL COMMON STOCKS (COST $115,253,531)..................... 130,615,719
-------------
- ----------------------------------------------------------------------------------------------------------------------
PURCHASED OPTIONS 0.3%
PRINCIPAL
AMOUNT (C)
------------
Japan JPY 1,132,780,000 Put on Japanese Yen, strike price JPY 110, expire 7/8/97
(Cost $218,627)........................................... 417,543
-------------
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100% (COST $120,596,465) (a).. 136,238,370
=============
(a) The cost for federal income tax purposes was $122,235,620. At December 31, 1996, net unrealized
appreciation for all securities based on tax cost was $14,002,750. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of market value over tax cost
of $22,492,696 and aggregate gross unrealized depreciation for all securities in which there was an
excess of tax cost over market value of $8,489,946.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
(b) Securities valued in good faith by the Valuation Committee of the Board of Directors at fair value
amounted to $2,122,744 (1.6% 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 December 31, 1996 aggregated $1,966,569. These securities may also have certain restrictions as to resale.
(c) Principal amount is stated in U.S. dollars unless otherwise noted.
Currency abbreviations
------------------------
JPY Japanese Yen
MYR Malaysian Ringgit
* Non-income producing security.
See page 8 for sector breakdown of the Fund's equity securities.
At December 31, 1996, the outstanding written option was as follows (Note A):
<CAPTION>
Principal Expiration Strike Market
Call Option Amount (JPY) Date Price Value
------------------------- ------------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Japanese Yen (Premium
received $218,627) 1,132,780,000 7/8/97 JPY 100.73 30,812
Transactions in written call options during the year ended December 31, 1996 were:
Options on Currencies
------------------------------
Japanese Yen Premiums
(000's) Received ($)
------------------------------
Outstanding at
December 31, 1995 1,500,000 352,500
Written 1,132,780 218,627
Closed (1,500,000) (352,500)
------------------------------
Outstanding at
December 31 1996 1,132,780 218,627
The accompanying notes are an integral part of the financial statements.
15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
[LOGO] SCUDDER NEW ASIA FUND, INC.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $120,596,465) (Note A)................ $ 136,238,370
Cash.......................................................................... 785
Foreign currency holdings, at market (identified cost $2,176,866) (Note A).... 2,178,422
Other receivables:
Investments sold............................................................ 76,411
Dividends and interest...................................................... 118,988
Foreign taxes recoverable..................................................... 3,210
Other assets.................................................................. 1,307
---------------
Total assets................................................................ 138,617,493
LIABILITIES
Payables:
Investments purchased.......................................................$ 2,489,074
Dividends payable........................................................... 2,359,000
Written options, at market (premiums received $218,627)..................... 30,812
Accrued management fee (Note C)............................................. 134,837
Other accrued expenses (Note C)............................................. 240,084
Total liabilities.........................................................--------------- 5,253,807
---------------
Net assets, at market value................................................... $ 133,363,686
===============
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net investment income................ $ (1,473,352)
Accumulated net realized gain............................................... 554,826
Net unrealized appreciation (depreciation) on:
Investments............................................................... 15,641,905
Written options........................................................... 187,815
Foreign currency related transactions..................................... (400)
Paid-in capital............................................................. 118,452,892
---------------
Net assets, at market value................................................... $ 133,363,686
===============
NET ASSET VALUE per share ($133,363,686 / 8,737,037 shares of common stock
issued and outstanding, $.01 par value, 50,000,000 shares authorized)....... $ 15.26
=======
The accompanying notes are an integral part of the financial statements.
16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C>
Income:
Dividends (net of taxes withheld of $226,342)............................. $ 1,632,384
Interest (net of taxes withheld of $408).................................. 549,857
------------
2,182,241
Expenses:
Management fee (Note C)................................................... $ 1,644,838
Custodian and accounting fees (Note C).................................... 471,603
Directors' fees and expenses (Note C)..................................... 134,531
Reports to shareholders................................................... 85,219
Auditing.................................................................. 93,633
Services to shareholders.................................................. 45,826
Legal..................................................................... 19,172
Interest.................................................................. 3,031
Other..................................................................... 52,438 2,550,291
------------ ------------
Net investment loss......................................................... (368,050)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments............................................................... 4,380,510
Options................................................................... 342,000
Foreign currency related transactions..................................... (187,538) 4,534,972
------------
Net unrealized appreciation (depreciation) during the period on:
Investments............................................................... (1,333,529)
Written Options........................................................... (91,935)
Foreign currency related transactions..................................... 1,492 (1,423,972)
------------ ------------
Net gain on investment transactions......................................... 3,111,000
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... $ 2,742,950
============
The accompanying notes are an integral part of the financial statements.
17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
[LOGO] SCUDDER NEW ASIA FUND, INC.
FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31,
--------------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment loss.........................................................$ (368,050) $ (90,715)
Net realized gain from investment transactions.............................. 4,534,972 6,334,507
Net unrealized depreciation on investment transactions during
the period................................................................ (1,423,972) (10,105,132)
-------------- --------------
Net increase (decrease) in net assets resulting from operations............... 2,742,950 (3,861,340)
Distributions to shareholders:................................................-------------- --------------
In excess of net investment income.......................................... (174,619) --
-------------- --------------
From net realized gain from investment transactions......................... (2,882,677) (13,083,441)
-------------- --------------
In excess of net realized gain from investment transactions................. -- (1,376,361)
-------------- --------------
Reinvestment of distributions................................................. 810,268 4,317,420
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS............................................. 495,922 (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 $1,473,352 and $1,030,023, respectively).................................$ 133,363,686 $ 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
============== ==============
The accompanying notes are an integral part of the financial statements.
18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
[LOGO] SCUDDER NEW ASIA FUND, INC.
- -------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD (A) AND
OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL STATEMENTS AND MARKET PRICE DATA.
- -------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
-----------------------------------------------
PER SHARE OPERATING PERFORMANCE 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 15.29 $ 17.44 $ 25.06 $ 14.73 $ 14.94
Income from investment operations: ------- ------- ------- ------- -------
Net investment income (loss).................. (.04) (.01) .05 .10 .08
Net realized and unrealized gain (loss) on
investments................................. .36 (.47) (3.21) 10.63 .22
------- ------- ------- ------- -------
Total from investment operations................ .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............ (.02) -- (.23) (.17) --
From net realized gains on investments........ (.33) (1.51) (4.20) -- (.43)
In excess of net realized gains
on investments.............................. -- (.16) -- (.08) --
------- ------- ------- ------- -------
Total distributions............................. (.35) (1.67) (4.43) (.40) (.51)
------- ------- ------- ------- -------
Net asset value, end of period.................. $ 15.26 $ 15.29 $ 17.44 $ 25.06 $ 14.73
======= ======= ======= ======= =======
Market value, end of period..................... $ 12.50 $ 14.50 $ 16.16(c)$ 27.38 $ 14.25
TOTAL RETURN ======= ======= ======= ======= =======
Per share market value (%).................... (11.56) (.66) (25.10) 95.71 (2.59)
Per share net asset value (%) (b)............. 2.46 (2.96) (11.67) 73.32 1.94
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions)........ 133 133 147 178 104
Ratio of operating expenses (excluding
interest) to average net assets (%)......... 1.87 1.74 1.67 1.71 1.76
Ratio of net investment income (loss)
to average net assets (%)................... (.27) (.07) .21 .56 .50
Portfolio turnover rate (%)................... 88.5 58.1 81.6 10.3 13.7
Average commission rate paid (d).............. $0.0106 $ -- $ -- $ -- $ --
(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 fiscal
years ending on or after December 31, 1996.
The accompanying notes are an integral part of the financial statements.
19
</TABLE>
<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 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.
20
<PAGE>
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.
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.
21
<PAGE>
[LOGO]SCUDDER NEW ASIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ---------------------------------------------------------------------
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, 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 ended December 31,
1997.
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 year ended December 31, 1996, purchases and sales of investment
securities (excluding short-term investments) aggregated $117,169,226
and $116,781,094, respectively.
22
<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 year ended
December 31, 1996, the fee pursuant to the agreement amounted to
$1,644,838, 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 year ended December 31, 1996, the amount charged to
the Fund by SFAC aggregated $129,776, of which $11,065 is unpaid at
December 31, 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 year ended December 31, 1996, Directors' fees and
expenses aggregated $134,531.
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.
23
<PAGE>
[LOGO]SCUDDER NEW ASIA FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF SCUDDER NEW ASIA FUND,
INC.:
We have audited the accompanying statement of assets and liabilities of
Scudder New Asia Fund, Inc., including the investment portfolio, as of
December 31, 1996, and the related statement of operations for the year
then ended, the statements of changes in net assets for the two years in
the period then ended, and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements
and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996 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 December 31,
1996, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period
then ended in conformity with generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P
February 12, 1997
24
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[LOGO]SCUDDER NEW ASIA FUND, INC.
TAX INFORMATION
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By now shareholders for whom year end tax reporting is required by the
IRS should have received their Form 1099-DIV and tax information letter
from the Fund.
The Fund paid distributions of $.33 per share from long-term capital
gains during its year ended December 31, 1996. Pursuant to Section 852
of the Internal Revenue Code, the Fund designates $3,210,592 as a long-
term capital gain dividend for the fiscal year ended December 31, 1996.
Due to the nature of its investments, the Fund pays a variety of foreign
taxes throughout the year. As in prior years, the Fund intends to make
an election under section 853 of the Internal Revenue Code. This
election will allow shareholders to treat their proportionate share of
foreign taxes paid by the Fund as having been paid directly by them.
Additionally, shareholders will be required to report their
proportionate share of such taxes paid as gross income (in addition to
other amounts of reportable distributions paid by the Fund).
The total amount of income received by the Fund from sources within
foreign countries and possessions of the United States for its year
ended December 31, 1996 was $0.036 per share (representing a total of
$269,478). The total amount of taxes paid by the Fund to such countries
was $0.026 per share (representing a total of $226,750). The following
table provides a breakdown by country of ordinary income dividends and
foreign taxes paid by the Fund in 1996:
1996 Foreign Tax Credit Tables
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Country Foreign Income Foreign Taxes
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China 0.05% --%
Hong Kong 21.86 --
Indonesia 11.48 20.49
India 2.07 3.53
Japan 13.30 13.31
Korea 7.90 4.96
Malaysia 4.79 11.28
Philippines 1.48 1.76
Singapore 3.21 10.14
Taiwan 1.72 19.53
Thailand 5.62 3.90
United Kingdom 4.60 11.10
United States 21.92 --
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100.00% 100.00%
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Please consult a tax adviser if you have questions about federal or
state income tax laws, or on how to prepare your tax returns. If you
have specific questions about your account, please call (800) 426-5523.
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Scudder New Asia Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
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The Plan
The Fund's Dividend Reinvestment and Cash Purchase Plan (the "Plan") offers
you an automatic way to reinvest your dividends and capital gains distributions
in shares of the Fund. The Plan also provides for cash investments in Fund
shares of $100 to $3,000 semiannually through State Street Bank and Trust
Company, the Plan Agent. Note that the Fund's share price for purposes of the
Plan is calculated net of due-bills, if applicable.
Automatic Participation
Each shareholder of record is automatically a participant in the Plan unless
the shareholder has instructed the Plan Agent in writing otherwise. Such a
notice must be received by the Plan Agent not less than 10 days prior to the
record date for a dividend or distribution in order to be effective with respect
to that dividend or distribution. A notice which is not received by that time
will be effective only with respect to subsequent dividends and distributions.
Shareholders who do not participate in the Plan will receive all
distributions in cash paid by check in dollars mailed directly to the
shareholder by State Street Bank and Trust Company, as dividend paying agent.
Shares Held by a Nominee
If your shares are held in the name of a brokerage firm, bank, or other
nominee as the shareholder of record, please consult your nominee (or any
successor nominee) to determine whether it is participating in the Plan on your
behalf. Many nominees are generally authorized to receive cash dividends unless
they are specifically instructed by a client to reinvest. If you would like your
nominee to participate in the Plan on your behalf, you should give your nominee
instructions to that effect as soon as possible.
Pricing of Dividends andDistributions
If the market price per share on the payment date for the dividend or
distribution (the "Valuation Date") equals or exceeds net asset value per share
on that date, the Fund will issue new shares to participants at the greater of
the following on the Valuation Date: (a) net asset value, or (b) 95% of the
market price. The Valuation Date will be the dividend or distribution payment
date or, if that date is not a New York Stock Exchange trading date, the next
preceding trading date. If the net asset value exceeds the market price of Fund
shares at such time, participants in the Plan are considered to have elected to
receive shares of stock from the Fund, valued at market price, on the Valuation
Date. In either case, for Federal income tax purposes, the shareholder receives
a distribution equal to the market value on Valuation Date of new shares issued.
State and local taxes may also apply. If the Fund should declare an income
dividend or net capital gains distribution payable only in cash, the Plan Agent
will, as agent for the participants, buy Fund shares in the open market, on the
New York Stock Exchange or elsewhere, for the participants' account on, or
shortly after, the payment date.
Voluntary Cash Purchases
Participants in the Plan have the option of making additional cash payments
to the Plan Agent, semiannually, in any amount from $100 to $3,000, for
investment in the Fund's shares. The Plan Agent will use all such monies
received from participants to purchase Fund shares in the open market on or
about February 15 and August 15. Any voluntary cash payments received more than
30 days prior to these dates will be returned by the Plan Agent, and interest
will not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations, and also to allow ample time for receipt and processing by the
Plan Agent, it is suggested that participants send in voluntary cash payments to
be received by the Plan Agent approximately ten days before February 15, or
August 15, as the case may be. A participant may withdraw a voluntary cash
payment by written notice, if the notice is received by the Plan Agent not less
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than 48 hours before such payment is to be invested.
Participant Plan Accounts
The Plan Agent maintains all participant accounts in the Plan and furnishes
written confirmation of all transactions in the account, including information
needed by participants for personal and tax records. Shares in the account of
each plan participant will be held by the Plan Agent in non-certificated form in
the name of the participant, and each participant will be able to vote those
shares purchased pursuant to the Plan at a shareholder meeting or by proxy.
No Service Fee to Reinvest
There is no service fee charged to participants for reinvesting dividends or
distributions from net realized capital gains. The Plan Agent's fees for the
handling of the reinvestment of dividends and capital gains distributions will
be paid by the Fund. There will be no brokerage commissions with respect to
shares issued directly by the Fund as a result of dividends or capital gains
distributions payable either in stock or in cash. However, participants will pay
a pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of any
dividends or capital gains distributions payable only in cash.
Costs for Cash Purchases
With respect to purchases of Fund shares from voluntary cash payments, the
Plan Agent will charge $0.75 for each such purchase for a participant. Each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases of Fund shares in connection
with voluntary cash payments made by the participant.
Brokerage charges for purchasing small amounts of stock for individual
accounts through the Plan are expected to be less than the usual brokerage
charges for such transactions, because the Plan Agent will be purchasing stock
for all participants in blocks and prorating the lower commission thus
attainable.
Amendment or Termination
The Fund and the Plan Agent each reserve the right to terminate the Plan.
Notice of the termination will be sent to the participants of the Plan at least
30 days before the record date for a dividend or distribution. The Plan also may
be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by giving at least 30 days' written notice to participants in
the Plan.
A participant may terminate his account under the Plan by written notice to
the Plan Agent. If the written notice is received 10 days before the record day
of any distribution, it will be effective immediately. If received after that
date, it will be effective as soon as possible after the reinvestment of the
dividend or distribution.
If a participant elects to sell his shares before the Plan is terminated, the
Plan Agent will deduct a $2.50 fee plus brokerage commissions from the sale
transaction.
Plan Agent Address and Telephone Number
You may obtain more detailed information by requesting a copy of the Plan
from the Plan Agent. All correspondence (including notifications) should be
directed to: Scudder New Asia Fund Dividend Reinvestment and Cash Purchase Plan,
c/o State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-8200,
(617) 328-5000, ext. 6406.
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Shareholder Meeting Results
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The Annual Meeting of Shareholders of Scudder New Asia Fund, Inc. was held on
Monday, October 7, 1996, at the offices of Scudder, Stevens & Clark, Inc., 25th
Floor, 345 Park Avenue, New York, New York. The two matters voted upon by
Shareholders and the resulting votes for each matter are presented below.
1. The election of four Directors of the Fund to hold office until their
respective successors shall have been duly elected and qualified.
Director: Number of Votes:
For Withheld Broker Non-Votes*
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Nicholas Bratt 5,465,997 171,303 0
Dr. Wilson Nolen 5,461,693 175,607 0
Hugh T. Patrick 5,467,033 170,267 0
Kathryn L. Quirk 5,454,619 182,680 0
2. Ratification or rejection of the action taken by the Board of Directors in
selecting Coopers & Lybrand L.L.P. as independent accountants for the fiscal
year ending December 31, 1996.
Number of Votes:
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For Against Abstain Broker Non-Votes*
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5,551,324 36,685 49,291 0
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* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
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Directors and Officers
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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
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
*Scudder, Stevens & Clark, Inc.
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