[LOGO]
SCUDDER
[LOGO]
FUND, INC.
Semiannual Report
June 30, 1999
A closed-end investment company seeking long-term capital appreciation through
investment primarily in the equity securities of Asian companies.
<PAGE>
[LOGO] 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
[LOGO] 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
EquiServe
P.O. Box 8200
Boston, MA 02266-8200
Custodian
Brown Brothers Harriman & Co.
Legal Counsel
Dechert Price & Rhoads
Independent Accountants
PricewaterhouseCoopers LLP
New York Stock Exchange Symbol -- SAF
[LOGO] Contents
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In Brief .............................................. 3
Letter to Stockholders ................................ 3
Other Information ..................................... 7
Investment Summary .................................... 8
Portfolio Summary ..................................... 9
Investment Portfolio .................................. 10
Financial Statements .................................. 15
Financial Highlights .................................. 18
Notes to Financial Statements ......................... 19
Report of Independent Accountants ..................... 23
Dividend Reinvestment and Cash
Purchase Plan ...................................... 24
Directors and Officers ................................ 26
- --------------------------------------------------------------------------------
This report is sent to the stockholders of Scudder New Asia Fund, Inc. for their
information. It is not a prospectus, circular, or representation intended for
use in the purchase or sale of shares of the Fund or of any securities mentioned
in the report.
- --------------------------------------------------------------------------------
2
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[LOGO] Scudder New Asia Fund, Inc.
In Brief
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o Stocks in Asia performed well in the first half of the year on the strength
of several positive developments in the region; most notably, the beginnings
of an economic recovery and the acceleration of corporate restructuring.
o Management made few significant changes to the portfolio over the period,
opting instead to allow the investments they made in the second half of 1998
to play out.
[LOGO] Letter to Stockholders
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Dear Stockholders:
The Asian stock markets staged a powerful rally in the first half of 1999, as
investors reacted to signs of stronger growth and an apparent end to the crises
that shocked the region over the previous eighteen months. An improving
macroeconomic outlook, the growing influence of corporate restructuring, and
signs of a revival in Japan have combined to spark substantial inflows of
investment capital to the region. On the strength of these trends, the net asset
value of New Asia Fund rose 45.43% to $17.03 in the six months ended June 30,
1999. In the same time period, the Fund's unmanaged benchmark, which is a blend
of the MSCI All Asia Free ex Japan Index (75%) and the MSCI Japan Index (25%),
rose 38.49%. The Fund's shares quoted on the New York Stock exchange appreciated
57.72% to 14 11/16, representing a 13.76% discount to net asset value. In
comparison, the discount stood at 20.47% on December 31, 1998.
Market Environment
The process of reform in Asia is proving to be an irresistible force that is
changing the way the entire region does business. While this process is just
beginning and there are still a great deal of problems that must be worked out
before Asia can embark on a full recovery, our visits to the area have confirmed
that a fundamental shift is underway. Corporate management teams have a positive
outlook on the future, and there is a palpable sense of optimism on the ground
that was absent just last year. These observations are supported by upward GDP
revisions, improving trade figures, and rising corporate earnings. As the
markets have taken note of these changes, the key barometers of economic health
- -- interest rates and currency exchange rates -- have strengthened to reflect
the region's fundamental improvements.
Beneath the surface, there is an even more important shift taking place: bank
managements are becoming more rational. The old model of Asian banking focused
on lending to corporations at the expense of the consumer, a practice that
stifled economic growth and facilitated the creation of industrial overcapacity.
Today, however, the leading banks are focusing on consumers, a group that is now
being viewed as a better risk. The most important aspect of this development is
that consumers, whose low savings rate has contributed to the region's
stagnation, are borrowing to spend. Consequently, if consumers increase their
propensity to spend by only a small margin, the powerful internal growth dynamic
that would be released could act as a powerful complement to Asia's export
model. In order for this potential to be unlocked, consumers will have to gain a
sense that the recession is over and that corporate cost cutting -- which leads
to layoffs and lower wages -- is reaching an end. Signs of the possibilities are
already emerging in Korea, where new car sales have gone through the roof. Once
the Asian consumer begins to spend, the economy will have a firmer base and a
3
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[LOGO] Scudder New Asia Fund, Inc.
Letter to Stockholders
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greater degree of independence from the rest of the world economy, particularly
that of the United States.
Against this backdrop, countries in which we found the most attractive
opportunities were Indonesia, Korea, and Taiwan. The common thread among all
three countries has been a significant drop in interest rates, which promotes
stock market investment by reducing the relative attractiveness of fixed income
instruments making debt less burdensome to corporations. In addition, lower
rates can act as a spark for higher levels of consumption. All three countries
have also benefited from a specific trait that has made them particularly
attractive in recent months. In Korea, the strong reform dynamic being promoted
by the government and the concurrent restructuring on the corporate level has
sparked an unprecedented interest in the stock market among retail investors. In
Indonesia, the return of political stability has allowed the crisis mentality to
evaporate from the market and enabled the compelling valuations in the country's
stock market to be unlocked. Finally, Taiwan has benefited from the rebound in
the global semiconductor cycle, providing a better environment for its
technology companies.
Japan -- Holding the Key to Recovery
While the recent developments in Asia are a cause for optimism, the key to
the future of the entire Pacific region lies in Japan's ability to mount a
sustainable recovery. If the performance of the Japanese stock market is any
indication, this process may already have begun. Japanese equities began to
rebound in the first quarter on the strength of lower interest rates, the
injection of public funds to the banking system, and several restructuring
announcements by major Japanese corporations. Although there is still a great
deal of skepticism regarding the country's ability to mount a sustained economic
recovery, investors were encouraged when the government announced that gross
domestic product had jumped 1.9% in the first quarter. The upturn in growth,
which was well above consensus expectations, was Japan's first in six quarters.
While it is likely that the GDP number exaggerates the magnitude of Japan's
recovery, other indicators such as machinery orders, housing starts, and the
June Tankan survey all seem to suggest that the country's recession may indeed
be reaching a bottom.
Rising profit expectations, which have been spurred by several important
restructuring announcements, have also played a role in the stock market's
surge. While the effects of the reform process will take time to be felt after a
nearly a decade of recession, the early results are encouraging. As companies
streamline their operations and become more profitable, the pressure on their
competitors to do the same is increased, creating a virtuous cycle. We believe
that although the market has priced in the near-term effects of these
developments, the long-term potential has yet to be factored into stock prices.
Fund Strategy
Our fundamental investment strategy remains essentially unchanged. We
continue to utilize a careful stock selection process that focuses on
fast-growing companies with superior management teams, dominant market
positions, clear competitive advantages, high-or-improving returns on equity,
strong balance sheets, and catalysts for positive change. In the last six months
we have not made any large moves in the portfolio; instead, we have let our
investments of the second half of 1998 play out. For instance, we continue to
hold a large position in the technology sector, which in our view still has
significant upside potential even after its recent gains. As global demand for
personal computers has remained firm, companies leveraged to the semiconductor
cycle have performed well. We maintained significant positions in Samsung
Electronics, the world's largest DRAM manufacturer, and Taiwan Semiconductor,
the largest chipmaker. We also continue to focus on stocks that stand to benefit
from the growing need of U.S. and European corporations to outsource their
production overseas. For instance, we hold Compal Electronics (Taiwan) and
Natsteel Electronics (Singapore), the leading
4
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[LOGO] Scudder New Asia Fund, Inc.
Letter to Stockholders
================================================================================
manufacturers of notebook PCs for overseas companies. Another longstanding facet
of our strategy is to invest in cyclical companies that are well-positioned to
benefit from the rebound in the Asian economies. Recently, we have found
compelling opportunities in Chinese petrochemical companies such as Shanghai
Petrochemical.
In Japan, we have focused on companies that are leading the reform process
and demonstrating a commitment to delivering value to their customers. We have
established positions in companies leveraged to increased domestic consumption
such as NTT Mobile Communications, Japan's dominant operator of wireless
communications networks, and Ryohin Keikaku, a retailer of clothing and retail
goods. We have also emphasized export-oriented global businesses such as Sony
and Nintendo, and banks with a growing consumer orientation, such as Sakura
Bank. We believe that by investing in companies that are well-positioned to take
advantage of the many positive changes occurring in Japan, we will be able to
capitalize on the ongoing recovery in the country's economy.
Year 2000 Issue
Like other registered investment companies and financial and business
organizations worldwide, the Fund could be adversely affected if computer
systems on which the Fund relies, which primarily include those used by the
Manager, its affiliates or other service providers, are unable to correctly
process date-related information on or after January 1, 2000. This risk is
commonly called the Year 2000 Issue (Y2K). Failure to successfully address the
Year 2000 Issue could result in interruptions to and other material adverse
effects on the Fund's business and operations, such as problems with calculating
net asset value. The Manager has commenced a review of the Year 2000 Issue as it
may affect the Fund and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the issuers whose securities are
held by the Fund or on global markets or economies generally. To the extent that
the impact on a fund holding or on markets or economies is negative, it could
seriously affect the fund's performance. The foregoing is a Year 2000 readiness
disclosure under the Year 2000 Information and Readiness Disclosure Act.
Soft Dollar Arrangements
We wish to inform you that the Board of Directors of the Fund has approved a
soft dollar policy that authorizes the Manager to enter into arrangements with
certain brokers or dealers. Pursuant to the policy, the Manager may, when it can
be done consistently with its policy of obtaining best execution, direct a
portion of the Fund's brokerage transactions to such brokers or dealers in
exchange for research services within the meaning of Section 28(e) of the
Securities and Exchange Act of 1934. Research services obtained by the Manager
may, in appropriate circumstances, be used for the benefit of other clients of
the Manager as well as the Fund. As permitted by Section 28(e), the Manager is
authorized when placing portfolio transactions for the Fund to pay a brokerage
commission in excess of that which another broker or dealer might charge for
executing the same transaction. Therefore, the Fund may pay higher brokerage
rates than could be obtained if the Manager were not entering into soft dollar
arrangements.
Outlook
Our long-term outlook for Asian equities remains positive. While the recent
rise in the region's markets has left them vulnerable to bad news in the
short-term, longer term trends such as restructuring, the growth of intra-Asian
trade, and the eventual rise of the Asian consumer should all contribute to
higher stock prices over time. We feel that the combination of top-line revenue
growth and the lower costs that will likely be
5
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[LOGO] Scudder New Asia Fund, Inc.
Letter to Stockholders
================================================================================
achieved through rationalization and reform will provide a powerful, two-pronged
boost to Asian companies in the years ahead. Going forward, we will continue to
use a research-driven approach and our strong stock selection capabilities to
pick the companies that we believe will be best able to profit from the rebirth
of the Asian economies.
Respectfully,
/s/Nicholas Bratt /s/Daniel Pierce
Nicholas Bratt Daniel Pierce
President Chairman of the Board
and Director
6
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[LOGO] Scudder New Asia Fund, Inc.
Other Information
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Investment Manager
The investment manager of Scudder New Asia Fund, Inc. is Scudder Kemper
Investments Inc. ("the Manager"), one of the most experienced investment
management firms in the world. Established in 1919, the firm manages investments
for institutional and corporate clients, retirement and pension plans, insurance
companies, mutual fund investors, and individuals. The Manager has offices
throughout the United States and has subsidiaries in the United Kingdom,
Switzerland, Hong Kong, and Japan.
The Manager has been a leader in international investment management for over
40 years. It manages Scudder International Fund, which was originally
incorporated in Canada in 1953 as the first foreign investment company
registered with the United States Securities and Exchange Commission. The
Manager's clients which invest primarily in foreign securities include thirty
open-end investment companies as well as portfolios for institutional investors.
The Manager also manages the assets of other closed-end investment companies
which invest primarily in foreign securities, including: The Argentina Fund,
Inc., The Brazil Fund, Inc., The Korea Fund, Inc., Scudder Global High Income
Fund, Inc., and Scudder New Europe Fund, Inc.
A Team Approach to Investing
Scudder New Asia Fund, Inc. is managed by a team of Scudder Kemper 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 the Manager's large
staff of economists, research analysts, traders, and other investment
specialists who work in the Manager's offices across the United States and
abroad. We believe our team approach benefits Fund investors by bringing
together many disciplines and leveraging its extensive resources.
Lead Portfolio Manager Tien-Yu Sieh assumed responsibility for the Fund's
day-to-day management and investment strategies in 1999. Mr. Sieh joined the
Manager in 1996, and has seven years of experience in the investment industry.
Portfolio Manager Theresa Gusman joined the Manager in 1995 and the team in
1996. Ms. Gusman has 16 years of investment industry experience. Portfolio
Manager Elizabeth J. Allan joined the Manager and the Fund in 1987. Ms. Allan
has 17 years of Pacific Basin research and investment management experience.
Nicholas Bratt, Portfolio Manager, has been a member of the Fund's team since
1987 and helps set the Fund's general investment strategies. Mr. Bratt has over
23 years of experience in worldwide investing, including 22 years of experience
as a portfolio manager, and has been with the Manager 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 EquiServe, 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 stockholders, 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 Kemper
Investments, Inc. banner.
7
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[LOGO] Scudder New Asia Fund, Inc.
Investment Summary as of June 30, 1999
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Historical
Information Total Return (%)
----------------------------------------------
Market Value Net Asset Value(a)
------------------- ----------------------
Average Average
Cumulative Annual Cumulative Annual
------------------- ----------------------
Quarterly 41.57 -- 40.28 --
Fiscal Year to Date 57.72 -- 45.43 --
One Year 65.49 65.49 65.66 65.66
Three Year 8.39 2.72 14.45 4.60
Five Year (1.03) (.21) 14.42 2.73
Ten Year 215.23 12.17 175.61 10.67
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Per Share Information and Returns (a)
Yearly periods ended June 30
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illustrating the Fund Total Return (%) with the exact
data points listed in the table below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
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Net Asset Value... $18.70 $15.68 $15.49 $17.93 $22.44 $16.00 $16.06 $17.26 $10.28 $17.03
Income Dividends.. $ -- $ .08 $ .08 $ .08 $ .48 $ .02 $ .02 $ .03 $ .15 $ --
Capital Gains
Distributions..... $ 1.56 $ 1.93 $ .15 $ .52 $ -- $ 5.06 $ .87 $ .37 $ .29 $ --
Total Return (%).. 59.40 -2.03 .28 20.28 27.88 -5.41 5.70 10.85 -37.67 65.66
</TABLE>
(a) Total investment returns reflect changes in net asset value per share
during each period and assume 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.
8
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Portfolio Summary as of June 30, 1999
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Diversification
Common Stocks 95%
Cash Equivalents 2%
Convertible Bonds 1%
Convertible Preferred
Stocks 1
Limited Partnership 1%
----
100%
====
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illustrating the exact data points in the
above table.
Geographical breakdown of the Fund's equity securities
- --------------------------------------------------------
Japan 27%
Taiwan 16%
Hong Kong 15%
Korea 13%
India 8%
Indonesia 6%
Singapore 6%
China 3%
Thailand 2%
Other 4%
----
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
- --------------------------------------------------------
Technology 28%
Manufacturing 19%
Financial 16%
Consumer Staples 7%
Consumer Discretionary 7%
Service Industries 5%
Communication 4%
Metals and Minerals 4%
Health 3%
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 (27% of Portfolio)
1. Nintendo Co., Ltd. Game equipment
manufacturer
2. Li & Fung, Ltd. Investment holding
company, engaged in export trading
3. Samsung Electronics Co., Ltd.
Electronics manufacturer
4. Megachips Corp. Manufacturer and
marketer of various types of LSI's
5. Samsung Securities Co., Ltd.
Securities company
6. Digital Equipment (India) Ltd.
Computer and software manufacturer
7. TDK Corp.
Magnetic tapes and floppy discs
manufacturer
8. Tokyo Electron Ltd. Leading
semiconductor production
equipment manufacturer
9. Asustek Computer Inc.
Computer mainboards, audio video
cards manufacturer
10. Infosys Technologies, Ltd. Financial
and industrial software developer
9
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[LOGO] Scudder New Asia Fund, Inc.
Investment Portfolio as of June 30, 1999
<TABLE>
<CAPTION>
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Principal Market
Amount ($) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT 2.2%
United States
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 6/30/1999 at 4.8%
to be repurchased at $3,338,445 on 7/1/1999, collateralized by
a $3,173,000 U.S. Treasury Note, 3.625%, 7/15/2002 (Cost $3,338,000) .............................. 3,338,000 3,338,000
------------
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Convertible Bond 1.2%
United Kingdom
APP Global Finance Ltd., 2%, 7/25/2000 (Manufacturer of pulp and paper products)
(Cost $1,836,396) ................................................................................. 1,898,000 1,888,510
------------
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Units
---------
Limited Partnership 0.4%
Japan
JAFCO #6 Investment Enterprise Partnership (Venture capital company)
(Cost $773,606)(b) ................................................................................ 1 625,620
------------
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Shares
---------
Convertible Preferred Stock 0.8%
Thailand
Siam Commercial Bank Public Company Ltd., 5.25% (Provider of financial services)
(Cost $633,579)(b) ................................................................................ 901,800 1,284,964
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COMMON STOCKS 95.4%
China 2.8%
Guangdong Kelon Electric Holdings, Ltd. (Refrigerator manufacturer) ................................. 1,655,000 1,919,780
Shanghai Petrochemical Co., Ltd., Series H (Manufacturer of petrochemical and
petroleum products) ............................................................................... 9,979,000 2,340,828
------------
4,260,608
------------
Hong Kong 14.4%
Cheung Kong Holdings Ltd. (Real estate company)(d) .................................................. 276,000 2,454,535
Citic Pacific Ltd. (Diversified holding company) .................................................... 615,000 1,961,830
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
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[LOGO] Scudder New Asia Fund, Inc.
Investment Portfolio
<TABLE>
<CAPTION>
====================================================================================================================
Market
Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dah Sing Financial Group (General banking and property investment holding
company) ............................................................................ 446,000 1,701,522
Giordano International Ltd. (Retailer of casual apparel) .............................. 2,920,000 2,051,117
Hengan International Group Co. Ltd., Series H* (Manufacturer and seller of personal
hygiene products) ................................................................... 2,684,000 1,366,440
Hutchison Whampoa, Ltd. (Diversified investment holding company) ...................... 284,000 2,571,436
Li & Fung Ltd. (Exporter of consumer products) ........................................ 1,484,000 3,548,043
New World Development Co., Ltd. (Property investment and development) ................. 737,676 2,210,546
New World Infrastructure Ltd.* (Investment in and operation of infrastructure projects) 859,800
1,617,936
SmarTone Telecommunications Holdings Ltd. (Cellular communication services) ........... 331,000 1,177,465
Wing Hang Bank Ltd. (Corporate and retail banking, foreign exchange) .................. 418,000 1,344,181
-----------
22,005,051
-----------
India 7.7%
Aptech Ltd. (Provider of professional education services)(b) .......................... 115,300 1,900,403
Digital Equipment (India) Ltd. (Manufacturer of computers and software)(b) ............ 321,500 3,168,309
Hero Honda Motors Ltd. (Manufacturer of motorized two wheelers)(b) .................... 66,416 1,653,510
Hindustan Lever Ltd. (Manufacturer of consumer products)(b) ........................... 400 21,946
ICICI Banking Corp. (Bank)(b) ......................................................... 100 83
Infosys Technologies Ltd. (Financial and industrial software developer)(b) ............ 35,800 2,992,700
NIIT Ltd. (Designer and distributor of computer software)(b) .......................... 40,800 1,912,089
-----------
11,649,040
-----------
Indonesia 6.0%
Asia Pulp & Paper Co., Ltd.* Warrants (Producer of pulp and paper) .................... 38,897 102,105
Asia Pulp & Paper Co., Ltd.* (ADR) (Producer of pulp and paper) ....................... 194,489 1,871,957
Indonesia Satellite Corp. (ADR) (International telecommunication services) ............ 64,600 1,259,700
Indorama Synthetics* (Producer of polyester yarn, fiber and fabric) ................... 7,482,000 1,656,531
PT Astra International, Inc. (Distributor of automobiles and related parts) ........... 2,627,000 1,221,410
PT Indah Kiat Pulp & Paper Corp., Tbk (Foreign registered) (Manufacturer of pulp and
paper products) ..................................................................... 2,536,000 1,197,816
PT Indofood Sukses Makmur Tbk* (Manufacturer of food products) ........................ 1,259,500 1,747,498
-----------
9,057,017
-----------
Japan 25.6%
Asahi Chemical Industry Co., Ltd. (Producer of synthetic fibers, industrial chemicals,
petrochemicals, plastics, rubber, and food products) ................................ 201,000 1,114,636
Asahi Glass Co., Ltd. (Manufacturer of glass products)(d) ............................. 163,000 1,057,479
Bank of Tokyo-Mitsubishi, Ltd. (Provider of financial services) ....................... 87,000 1,238,851
</TABLE>
The accompanying notes are an integtral part of the financial statements.
11
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[LOGO] Scudder New Asia Fund, Inc.
Investment Portfolio
<TABLE>
========================================================================================================================
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Benesse Corp. (Provider of educational services) ..................................... 14,000 1,521,488
Fujisawa Pharmaceutical Co. (Manufacturer of marketer of antibiotics) ................ 71,000 1,155,950
Kawasaki Steel Corp. (Major integrated steelmaker) ................................... 641,000 1,197,240
Laox (Discount retailer of household electric appliances) ............................ 69,000 598,760
Matsushita Electric Works, Ltd. (Leading maker of building materials and lighting
equipment) ......................................................................... 109,000 1,052,165
Megachips Corp. (Manufacturer and marketer of various types of LSI's) ................ 31,000 3,330,579
NEC Corp. (Manufacturer of telecommunication and computer equipment) ................. 227,000 2,823,430
NHK Spring Co., Ltd. (Manufacturer of suspension springs for automobiles) ............ 256,000 1,430,215
NTT Mobile Communications Network, Inc.* (Provider of various telecommunication
services and equipment) ............................................................ 130 1,744,794
Nintendo Co., Ltd. (Manufacturer of game equipment) .................................. 26,900 3,781,562
Rohm Company Ltd. (Maker of linear ICs and semiconductors) ........................... 10,000 1,566,116
Ryohin Keikaku Co., Ltd. (Wholesaler and retailer of clothing, household goods and
foodstuffs) ........................................................................ 7,000 1,761,570
Sakura Bank, Ltd. (Provider of banking services) ..................................... 381,000 1,445,281
Sangetsu Co., Ltd. (Developer and trader of home decoration products) ................ 70,000 1,489,669
Sony Corp. (Manufacturer of consumer electronic products)(d) ......................... 24,400 2,631,570
TDK Corp. (Manufacturer of magnetic tapes and floppy discs) .......................... 34,000 3,110,579
Tokyo Electron Ltd. (Leading semiconductor production equipment manufacturer) ........ 45,000 3,053,306
Yamanouchi Pharmaceutical Co., Ltd. (Leading manufacturer of ethical drugs) .......... 35,000 1,339,256
York-Benimaru Co., Ltd. (Operator of supermarket chain) .............................. 16,200 611,851
----------
39,056,347
----------
Korea 12.3%
Cheil Jedang Corp. (Korea's largest sugar refiner and major integrated food processor) 22,240
1,750,379
Korea Data System (Manufacturer and exporter of computer monitors) ................... 75,768 2,212,491
Korea Telecom Corp.*(ADR) (Telecommunication services) ............................... 64,562 2,582,480
Medison Co., Ltd. (Producer of medical equipment) .................................... 89,690 1,425,742
Pohang Iron & Steel Co., Ltd. (Steel producer)(c) .................................... 23,000 2,776,691
Samsung Electronics Co., Ltd. (Electronics manufacturer) ............................. 31,830 3,492,363
Samsung Securities Co., Ltd. (Securities company) .................................... 54,492 2,918,794
Samsung Securities Co., Ltd. Rights (Securities company)(b) .......................... 15,616 323,787
Shinhan Bank* (GDR) (Bank) ........................................................... 53,443 1,189,107
Sindo Ricoh Co., Ltd. (Manufacturer of office equipment) ............................. 597 31,978
----------
18,703,812
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
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Investment Portfolio
<TABLE>
<CAPTION>
==================================================================================================================
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Malaysia 1.2%
Malayan Banking Berhad (Leading banking and financial services group) ................. 297,000 891,000
Rothmans of Pall Mall Berhad (Manufacturer, importer and retailer of tobacco products) 122,800
929,079
----------
1,820,079
----------
Philippines 2.0%
Bank of the Philippine Islands (Commercial bank) ...................................... 360,460 1,288,372
International Container Terminal Services, Inc.* (Containerized cargo handling firm) .. 13,933,437 1,812,628
----------
3,101,000
----------
Singapore 5.4%
Allgreen Properties Limited* (Real estate development) ................................ 1,370,000 1,482,388
JIT Holdings Ltd. (Manufacturer and distributor of electronic products) ............... 1,045,000 1,905,028
Keppel Land Ltd. (Property investment and development) ................................ 688,000 1,294,678
Natsteel Electronics Ltd. (Manufacturer of telecommunication and network products) .... 577,000 2,527,874
Pacific Internet Ltd. (Provider of internet access services to Asia and pacific market) 20,700 980,663
----------
8,190,631
----------
Taiwan 15.0%
ASE Test Ltd.* (Testing services to semiconductor manufacturers) ...................... 87,700 1,885,550
Acer Peripherals, Inc. (Developer and distributor of computer peripherals)(d) ......... 892,463 2,210,435
Asustek Computer Inc. (Manufacturer of computer mainboards, audio, video and
network cards) ...................................................................... 266,807 3,006,741
Bank Sinopac (Commercial bank) ........................................................ 2,018,000 1,405,727
Compal Electronics Inc. (Manufacturer and marketer of notebook computers and
color monitors) ..................................................................... 400,399 1,574,324
Delta Electronic Industrial Co. (Manufacturer of power supply equipment) .............. 347,222 1,924,233
Far East Textile Ltd. (Manufacturer of natural and synthetic textile products) ........ 911,000 1,353,808
Formosa Plastics Corp. (Manufacturer of plastics materials) ........................... 975,000 2,052,632
Hon Hai Precision Industry Co., Ltd.* (Manufacturer of electronic connectors, cable
assemblies and memory chips) ........................................................ 302,200 2,731,963
Siliconware Corp.* (Testing and packaging of integrated circuits) ..................... 1,327,000 1,035,307
Siliconware Precision Industries Co.* (Manufacturer of packaging for integrated
circuits) ........................................................................... 648,210 1,234,208
Taiwan Semiconductor Manufacturing Co.* (Manufacturer of integrated circuits) ......... 635,910 2,431,421
----------
22,846,349
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Investment Portfolio
<TABLE>
<CAPTION>
===============================================================================================================
Market
Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thailand 2.0%
BEC World Public Co., Ltd. (Holding company involved in entertainment and
television broadcasting)(b) ..................................................... 173,300 1,072,395
Siam Cement Co., Ltd.* (Foreign registered) (Construction materials and industrial
conglomerate)(b) ................................................................ 44,900 1,364,853
Siam Commercial Bank Public Co., Ltd.* Warrants (Provider of financial services)(b) 901,800 581,293
-----------
3,018,541
-----------
United States 1.0%
Freeport McMoRan Copper & Gold, Inc. "A" (Mining company operating in
Indonesia) ...................................................................... 93,400 1,564,450
-----------
Total Common Stocks (Cost $90,773,310) ............................................ 145,272,925
-----------
- ---------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $97,354,891) (a) ........................ 152,410,019
===========
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $95,888,162. At June 30, 1999,
net unrealized appreciation for all securities based on tax cost was
$56,521,857. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $57,587,657 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$1,065,800.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $16,901,952 (11.27% 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, 1999 aggregated $7,784,489. These securities may
also have certain restrictions as to resale.
(c) Security that has met the foreign-ownership limitation valued at a premium
in good faith by the Valuation Committee of the Board of Directors. The
cost of the security at June 30, 1999 was $888,906. The aggregate premium
($54,625) over the local share price ($2,722,066) for the security valued
by the Valuation Committee was approximately .04% of the Portfolio's net
assets at June 30, 1999.
(d) At June 30, 1999, these securities, in part or in whole, have been
segregated to cover forward currency contracts. Scudder New Asia Fund, Inc.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
===========================================================================================
- -------------------------------------------------------------------------------------------
Statement of Assets and Liabilities
June 30, 1999
- -------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at market (identified cost $97,354,891) ..................... $ 152,410,019
Cash ..................................................................... 715
Foreign currency, at value (cost $157,453) ............................... 157,453
Receivable for investments sold .......................................... 31,624
Dividends and interest receivable ........................................ 311,986
Foreign taxes recoverable ................................................ 1,754
Unrealized appreciation on forward currency exchange contracts ........... 222,340
Other assets ............................................................. 2,300
-------------
Total assets ............................................................. 153,138,191
LIABILITIES
Payable for investments purchased ........................................ 1,268,060
Deferred foreign taxes ................................................... 1,466,731
Unrealized depreciation on forward currency exchange contracts ........... 188,224
Accrued management fee ................................................... 136,808
Other payables and accrued expenses ...................................... 146,423
-------------
Total liabilities ........................................................ 3,206,246
-------------
Net assets, at market value .............................................. $ 149,931,945
=============
NET ASSETS
Net assets consist of:
Undistributed net investment income ...................................... 420,589
Net unrealized appreciation (depreciation) on:
Investments .............................................................. 55,055,128
Foreign currency related transactions .................................... 34,244
Accumulated net realized gain (loss) ..................................... (24,454,220)
Paid-in capital .......................................................... 118,876,204
-------------
Net assets, at market value .............................................. $ 149,931,945
=============
Net asset value per share ($149,931,945 B 8,804,757 shares of common stock
issued and outstanding, 50,000,000 shares authorized, $.01 par value).. $ 17.03
=============
</TABLE>
the accompanying notes are an integral part of the financial statements.
15
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
===============================================================================================
- -----------------------------------------------------------------------------------------------
Statement of Operations
Six Months ended June 30, 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Income:
Dividends (net of taxes withheld of $91,895) .................................. $ 830,872
Interest ...................................................................... 355,622
------------
1,186,494
------------
Expenses:
Management fee ................................................................ 686,677
Custodian and accounting fees ................................................. 204,642
Directors' fees and expenses .................................................. 73,610
Reports to shareholders ....................................................... 19,301
Auditing ...................................................................... 40,132
Services to shareholders ...................................................... 19,975
Legal ......................................................................... 7,637
Other ......................................................................... 25,766
------------
1,077,740
------------
Net investment income ......................................................... 108,754
------------
Net realized and unrealized gain (loss) on investment transactions
Net realized gain (loss) from:
Investments ................................................................... 2,024,641
Foreign currency related transactions ......................................... (73,824)
------------
1,950,817
------------
Net unrealized appreciation (depreciation) during the period on:
Investments (net of deferred foreign tax $1,466,731) .......................... 44,375,231
Foreign currency related transactions ......................................... 403,142
------------
44,778,373
------------
Net gain (loss) on investment transactions .................................... 46,729,190
------------
Net increase (decrease) in net assets resulting from operations ............... $ 46,837,944
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Financial Statements
<TABLE>
<CAPTION>
==============================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended
Ended December 31,
Increase (Decrease) in Net Assets June 30, 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment gain (loss) .............................................................. $ 108,754 $ 303,154
Net realized gain (loss) from investment transactions ................................... 1,950,817 (18,078,128)
Net unrealized appreciation (depreciation) on investment transactions
during the period..................................................................... 44,778,373 21,623,470
------------- -------------
Net increase (decrease) in net assets resulting from operations ......................... 46,837,944 3,848,496
------------- -------------
Distributions to shareholders:
In excess of net investment income ...................................................... -- --
------------- -------------
In excess of net realized gain (loss) from investment transactions ...................... -- --
------------- -------------
Reinvestment of distributions ........................................................... -- 379,337
------------- -------------
Increase (decrease) in net assets ....................................................... 46,837,944 4,227,833
Net assets at beginning of period ....................................................... 103,094,001 98,866,168
------------- -------------
Net assets at end of period (including undistributed net investment
income of $420,589 and 311,835, respectively)......................................... $ 149,931,945 $ 103,094,001
============= =============
Other Information
Increase in Fund Shares
Shares outstanding at beginning of period ............................................... 8,804,757 8,764,601
Shares issued to shareholders in reinvestment of distributions .......................... -- 40,156
------------ ------------
Shares outstanding at end of period ..................................................... 8,804,757 8,804,757
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<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 Years Ended December 31,
Ended
June 30, 1999 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ....... $ 11.71 $ 11.28 $ 15.26 $ 15.29 $ 17.44 $ 25.06
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) ............... .01 .03 (.05) (.04) (.01) .05
Net realized and unrealized gain (loss) on
investments............................... 5.31 .40 (3.36) .36 (.47) (3.21)
---------- ------- ------ ------- ------ ------
Total from investment operations ........... 5.32 .43 (3.41) .32 (.48) (3.16)
---------- ------- ------ ------- ------ ------
Dilution resulting from rights offering .... -- -- -- -- -- (.03)
---------- ------- ------- ------- ------- ------
Less distributions:
In excess of net investment income ......... -- -- (.18) (.02) -- (.23)
From net realized gains on investments ..... -- -- -- (.33) (1.51) (4.20)
In excess of net realized gains on
investments............................... -- -- (.39) -- (.16) --
---------- ------- ------ ------- ------ -------
Total distributions ........................ -- -- (.57) (.35) (1.67) (4.43)
---------- ------- ------ ------ ------ ------
Net asset value, end of period ............. $ 17.03 $ 11.71 $ 11.28 $ 15.26 $ 15.29 $ 17.44
========= ======= ======= ======= ======= =======
Market value, end of period ................ $ 14.69 $ 9.31 $ 9.69 $ 12.50 $ 14.50 $16.16(c)
========= ======= ======= ======= ======= ======
Total Return
Per share market value (%) ................. 57.72** (3.87) (18.05) (11.56) (.66) (25.10)
Per share net asset value (%) (b) .......... 45.43** 3.81 (21.89) 2.46 (2.96) (11.67)
Ratios and Supplemental Data
Net assets, end of period ($ millions) ..... 150 103 99 133 133 147
Ratio of operating expenses to average net
assets (%) ............................... 1.91* 1.94 1.90 1.87 1.74 1.67
Ratio of net investment income (loss) to
average net assets (%) ................... .19* .31 (.31) (.27) (.07) .21
Portfolio turnover rate (%) ................ 82.1* 98.8 116.6 88.5 58.1 81.6
</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 assume 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 price.
(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.
* Annualized
** Not annualized
18
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Notes to Financial Statements
================================================================================
A. Significant Accounting Policies
-------------------------------
Scudder New Asia Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a closed-end, diversified
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. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. 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 calculated 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 Stock Market ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are not quoted on Nasdaq but are
traded in another over-the-counter market are valued at the most recent sale
price, or if no sale occurred, at the calculated mean between the most recent
bid and asked quotations on such market. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities purchased with an original maturity greater than sixty
days are valued by pricing agents approved by the officers of the Fund, whose
quotations 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. Money market instruments purchased with an original 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.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, 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 is equal to at least the
principal amount of the repurchase price plus accrued interest.
19
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Notes to Financial Statements
================================================================================
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 against changes in the exchange rates
relating to foreign currency denominated assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Sales and
purchases of 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 a forward contract to buy
and a 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.
Taxes. The Fund's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
At December 31, 1998, the Fund had a net tax basis capital loss carryforward of
approximately $24,280,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until December 31,
2006, the expiration date, whichever occurs first. In addition, from November 1,
1998 through December 31, 1998, the Fund incurred approximately $1,250,000 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, 1999.
Net realized and unrealized gains of the Fund derived in India are subject to
certain non-U.S. taxes. Additionally, principal amounts of cash and securities
invested in Malaysia are also subject to certain non-U.S. taxes.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed, and, therefore, will be distributed to shareholders at least
annually.
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. As a result, net
investment income (loss) and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during such
period. These differences relate primarily to investments in Passive Foreign
Investment Companies, foreign denominated investments and certain securities
sold at a loss. Accordingly, the Fund may periodically make reclassifications
among certain of its capital accounts without impacting the net asset value of
the Fund.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to the ex-dividend date as
soon as the Fund is
20
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Notes to Financial Statements
================================================================================
informed of such dividends. Realized gains and losses from investment
transactions are recorded on an identified cost basis.
B. Purchases and Sales of Securities
---------------------------------
For the six months ended June 30, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $47,832,767 and
$46,224,112, respectively.
C. Related Parties
---------------
Under the Investment Management Agreement (the "Management Agreement") with
Scudder Kemper Investments, Inc. ("Scudder Kemper" or the "Manager"), 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. The management fee payable under the agreement is 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. For the six months ended June 30, 1999, the fee
pursuant to this agreement amounted to $686,677, which is equivalent to an
annual effective rate of 1.22% of the Fund's average weekly net assets.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Manager, 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, 1999, the amount charged to the Fund by SFAC aggregated $48,534,
of which $8,460 is unpaid at June 30, 1999.
Scudder Service Corporation ("SSC"), a subsidiary of the Manager, provides
shareholder communications services for the Fund. For the six months ended June
30, 1999 the amount charged by SSC aggregated $7,500, of which $1,250 is unpaid
at June 30, 1999.
The Fund pays each Director not affiliated with the Manager an annual retainer,
plus specified amounts for attended board and committee meetings. For the six
months ended June 30, 1999, Directors' fees and expenses aggregated $73,610.
21
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Notes to Financial Statements
================================================================================
D. Commitments
-----------
As of June 30, 1999, the Fund had entered into the following foreign currency
exchange contracts resulting in net unrealized appreciation of $34,116.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
---------------------------------- --------------------------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
USD 1,200,134 KRW 1,646,584,000 8/4/1999 222,340
KRW 1,646,584,000 USD 1,236,174 8/4/1999 (186,300)
JPY 626,111,833 USD 5,207,617 8/17/1999 (1,924)
---------------
34,116
===============
</TABLE>
E. 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.
F. Line of Credit
--------------
The Fund and several Scudder Funds ("The Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes. The Participants
are charged an annual commitment fee which is allocated among each of the
Participants. Interest is calculated based on the market rates at the time of
the borrowing. The Fund may borrow up to a maximum of 5 percent of its net
assets under the agreement.
22
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Report of Independent Accountants
================================================================================
To the Board of Directors and Shareholders of Scudder New Asia Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder New Asia Fund, Inc. (the
"Fund") at June 30, 1999, the results of its operations, the changes in its net
assets, and the financial highlights for the periods indicated therein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
August 19, 1999
23
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
================================================================================
The Plan
The Fund's Dividend Reinvestment and Cash Purchase Plan (the "Plan") offers
you an automatic way to reinvest your dividends and capital gains distributions
in shares of the Fund. The Plan also provides for cash investments in Fund
shares of $100 to $3,000 semiannually through EquiServe, 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 stockholder of record is automatically a participant in the Plan unless
the stockholder 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.
Stockholders who do not participate in the Plan will receive all
distributions in cash paid by check in dollars mailed directly to the
stockholder by EquiServe, 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 stockholder of record, please consult your nominee (or any
successor nominee) to determine whether it is participating in the Plan on your
behalf. Many nominees are generally authorized to receive cash dividends unless
they are specifically instructed by a client to reinvest. If you would like your
nominee to participate in the Plan on your behalf, you should give your nominee
instructions to that effect as soon as possible.
Pricing of Dividends and Distributions
If the market price per share on the payment date for the dividend or
distribution (the "Valuation Date") equals or exceeds net asset value per share
on that date, the Fund will issue new shares to participants at the greater of
the following on the Valuation Date: (a) net asset value, or (b) 95% of the
market price. The Valuation Date will be the dividend or distribution payment
date or, if that date is not a New York Stock Exchange trading date, the next
preceding trading date. If the net asset value exceeds the market price of Fund
shares at such time, participants in the Plan are considered to have elected to
receive shares of stock from the Fund, valued at market price, on the Valuation
Date. In either case, for Federal income tax purposes, the stockholder 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
24
<PAGE>
[LOGO] Scudder New Asia Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
================================================================================
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 notless 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 stockholder 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 EquiServe, P.O. Box 8200, Boston, MA 02266-8200, (617) 328-5000, ext. 6406.
25
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[LOGO] Scudder New Asia Fund, Inc.
Directors and Officers
DANIEL PIERCE*
Chairman of the Board and Director
NICHOLAS BRATT*
President
PAUL BANCROFT III
Director
SHERYLE J. BOLTON
Director
ROBERT J. CALLANDER
Director
WILLIAM H. LUERS
Director
WILSON NOLEN
Director
HUGH T. PATRICK
Director
KATHRYN L. QUIRK*
Director, Vice President and Assistant Secretary
WILLIAM H. GLEYSTEEN, JR.
Honorary Director
JAMES W. MORLEY
Honorary Director
ROBERT G. STONE, JR.
Honorary Director
ELIZABETH J. ALLAN*
Vice President
BRUCE H. GOLDFARB*
Vice President and Assistant Secretary
THERESA GUSMAN*
Vice President
JUDITH A. HANNAWAY*
Vice President
ANN M. McCREARY*
Vice President
JOHN R. HEBBLE*
Treasurer
JOHN MILLETTE*
Vice President and Secretary
CAROLINE PEARSON*
Assistant Secretary
* Scudder Kemper Investments, Inc.
26
