This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder
Emerging Markets
Income Fund
Annual Report
October 31, 1995
* For investors seeking high current income and, secondarily, long-term
capital appreciation through investment primarily in high-yielding debt
securities issued in emerging markets.
* A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
- --------------------------------------------------------------------------------
CONTENTS
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
23 Report of Independent Accountants
24 Shareholder Meeting Results
25 Officers and Directors
26 Investment Products and Services
27 How to Contact Scudder
IN BRIEF
* The favorable momentum previously established in emerging country debt
markets was halted at the end of 1994 when Mexico devalued and subsequently
floated its currency. This action provoked a sharp sell-off in emerging
market debt securities, with prices declining through January and February
1995.
* In early March, emerging market debt began a sustained rally after decisive
action by economic leaders in Argentina and Mexico bolstered investor
confidence. Solid positive monthly returns in emerging debt markets were
posted through September before easing somewhat in October.
* Despite difficult market conditions, Scudder Emerging Markets Income Fund
posted a total return of 3.46% for its fiscal year ended October 31, 1995.
The Fund closed its fiscal year with a 30-day net annualized SEC yield of
13.08%, up substantially from 9.13% a year earlier.
* The Fund continues to hold a well-diversified portfolio, with investments in
Latin America, eastern Europe, and northern Africa.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
- --------------------------------------------------------------------------------
Dear Shareholders,
It has been an eventful 12 months for emerging market bonds, featuring
the early 1995 turmoil after Mexico's currency devaluation followed by a strong
rally for emerging market debt that began in March. At this juncture, what is
the outlook for emerging market bonds?
We believe the long-term outlook is positive, based on several factors.
Emerging countries are becoming much more competitive in the world marketplace
as a result of lower domestic costs and currency adjustments. A number of the
major emerging countries have taken strict measures to ensure their fiscal
stability. In addition, the ability of many of these countries to service their
external debt has been improved as exports have surged and international reserve
positions have been strengthened. Furthermore, the demonstrated determination of
these countries to honor their external obligations has permitted their rapid
return to the international capital markets following the Mexican peso crisis.
Currently, countries such as Mexico and Argentina are in recession, a
condition which is usually favorable for bond markets of developed countries,
but not as helpful in emerging countries where resulting improvements in
external accounts can be offset by pressures on government finances and the
banking sector. We foresee a return to growth in both Mexico and Argentina in
early 1996 that should further support the market for emerging country issues. A
positive political environment in Latin American and Eastern European countries
would also be a big plus for their bond markets in 1996. Our strategy going
forward is to position your Fund to benefit from the brightening economic
outlook in emerging countries. The Fund's high yield should help provide a
buffer against price volatility in those markets.
We would also like to take this opportunity to announce that on October
6, 1995, we introduced Scudder Small Company Value Fund, a pure no-load(TM)
mutual fund designed to seek long-term growth of capital through a disciplined,
value-oriented approach to small-stock investing. For more information about
this Fund and other investment products, see page 26.
Sincerely,
/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder Emerging Markets Income Fund
3
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
PERFORMANCE UPDATE as of October 31, 1995
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER EMERGING MARKETS INCOME FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,346 3.46% 3.46%
Life of
Fund* $ 9,980 -.20% -.11%
JP MORGAN COMPOSITE EMERGING MARKETS
BOND/LATIN EUROBOND INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,785 7.85% 7.85%
Life of
Fund* $ 9,460 -5.40% -2.99%
* The Fund commenced operations on
December 31, 1995
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Scudder Emerging Markets Income Fund
Year Amount
- ----------------------
12/31/93* $10,000
1/94 $10,058
4/94 $ 8,962
7/94 $ 9,067
10/94 $ 9,646
1/95 $ 8,756
4/95 $ 8,858
7/95 $ 9,507
10/95 $ 9,980
JP Morgan Composite Emerging Markets
Bond/Latin Eurobond Index
Year Amount
- ----------------------
12/31/93* $10,000
1/94 $10,041
4/94 $ 8,314
7/94 $ 8,397
10/94 $ 8,771
1/95 $ 7,914
4/95 $ 8,149
7/95 $ 9,070
10/95 $ 9,460
The unmanaged JP Morgan Composite Emerging Markets Bond/Latin
Eurobond Index (EMB/LEI) tracks the performance of U.S.
dollar-denominated sovereign restructured bonds (mostly Brady
bonds) and Latin-issued Eurobonds. The composite includes debt
issues from five countries in Latin America, plus Bulgaria,
Nigeria, the Philippines and Poland. Index returns assume
reinvested dividends and, unlike Fund returns, do not reflect
any fees or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED OCTOBER 31
1994* 1995
--------------------
NET ASSET VALUE... $11.05 $10.26
INCOME DIVIDENDS.. $ .51 $ 1.11
FUND TOTAL
RETURN (%)........ -3.54 3.46
INDEX TOTAL
RETURN (%)........ -12.23 7.85
Performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results.
Total return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not maintained the Fund's expenses, the total return
for the one year and life of Fund periods would have been lower.
4
<PAGE>
PORTFOLIO SUMMARY as of October 31, 1995
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Debt Obligations 95% Through challenging market
Cash Equivalents 5% conditions, we have continued
---- to maintain a well-diversified
100% portfolio of the highest quality
==== and most liquid securities
available in the emerging markets.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
MARKET EXPOSURE (Excludes 5% Cash Equivalents)
- --------------------------------------------------------------------------
Geographical Currency
- --------------------------- -------------------------
Brazil 28% United States 95%
Argentina 19% Argentina 2%
Poland 14% Mexico 2%
Mexico 10% Poland 1%
Panama 7% ----
Venezuela 6% 100%
Bulgaria 4% ====
Ecuador 4%
Morocco 4% Consistent with the Fund's strategy to
Other 4% maintain a regionally diversified portfolio,
---- 26% of portfolio assets were invested
100% outside of Latin America as of the close of
==== the period.
Graphs in the form of pie charts appears here,
illustrating the exact data points in the above tables.
- --------------------------------------------------------------------------
AVERAGE LIFE (Excludes 5% Cash Equivalents)
- --------------------------------------------------------------------------
0 - 3 years 5% We continue to hold a large
3 - 5 years 15% percentage of longer-duration
5 - 10 years 27% bonds to capitalize on the
Greater than 10 years 53% current trend of improving prices
---- and declining yields in the
100% emerging markets.
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 10.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Dear Shareholders,
The 12 months ended October 31, 1995, have marked a challenging period for
the emerging country debt markets. The favorable momentum previously achieved in
Latin America and other emerging countries was abruptly halted in late December
1994, when Mexico devalued and subsequently floated its currency. The resulting
sell-off in Mexico's financial markets quickly spilled over into the debt and
equity markets of other emerging countries. Delays in the development of both an
effective Mexican economic program and a U.S.-led support package for Mexico put
additional pressure on emerging financial markets and capital flows to emerging
countries during most of the first quarter of 1995.
In March, decisive action by economic leaders in Argentina and Mexico to
deepen economic reform bolstered investor confidence and sparked a strong rally
in emerging market debt. First quarter losses in these markets were erased by
May and solid positive returns were posted for six consecutive months through
September, before the markets eased slightly in October over concerns about the
lingering recessions in Argentina and Mexico. Increased investor confidence was
evidenced by a return of local capital to many emerging economies and renewed
access by a number of emerging countries to the international capital markets.
The market recovery was further enhanced by declining long-term U.S. interest
rates, which were particularly helpful for the many U.S.-dollar fixed-rate bonds
in which the Fund invests.
Fund Performance and Strategy
Despite difficult market conditions, Scudder Emerging Markets Income Fund
posted a total return of 3.46% during the fiscal year ended October 31, 1995.
This compares with a total return of 7.85% during the same period for the
unmanaged J.P. Morgan Composite Emerging Markets Bond/Latin Eurobond Index. The
Fund underperformed the J.P. Morgan Index largely because we chose to maintain a
defensive stance by holding a significant cash position through the early spring
of 1995 in view of the winter's events. As market conditions improved in the
second half of its fiscal year, however, the Fund was fully invested.
Even with our conservative approach to these volatile markets, the Fund's
net asset value declined from $11.05 to $10.26 during the period. But the change
in price was more than offset by income distributions of $1.11 per share. The
Fund's high yield
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
remains attractive to investors. On October 31, 1995, the Fund's 30-day net
annualized SEC yield was 13.08%, up substantially from 9.13% at the beginning of
the fiscal year.
Through challenging market conditions, we have continued to maintain a
well-diversified portfolio, seeking the highest quality and most liquid
securities available in the emerging markets consistent with the Fund's
objectives and policies. Although the Fund may invest up to 50% of its assets in
corporate obligations, only 2% of the Fund's assets were invested in such
securities as of October 31, 1995, while 93% of assets were invested in
sovereign debt. Despite having generally lower yields, sovereign obligations
tend to be of higher credit quality than corporate debt. In addition, we often
favor sovereign Brady bonds because their large volume greatly enhances their
liquidity and because many are backed by U.S. Treasury bonds, a defensive
characteristic which aids their performance in poor markets. As market
conditions improved during the spring, we increased our holdings in
uncollateralized Brady bonds, which tend to perform better than their
collateralized counterparts as economic conditions improve in the issuer
countries.
In June, we substantially increased the Fund's holdings in fixed-rate
securities because we believed the U.S. Federal Reserve would soon begin to
lower short-term interest rates, which it did in early July. By the end of
October, however, in light of the significant declines that had taken place in
long-term U.S.-dollar interest rates, we took some profits and reduced
fixed-rate holdings to approximately 37% of the Fund's assets.
Securities denominated in local currencies can offer relatively high yields
as well as the opportunity to benefit from currency appreciation in developing
countries with improving economies. As the Mexican peso crisis demonstrated,
however, local currencies can also be susceptible to dramatic devaluations when
there is a loss of confidence in a country's economic policies. We have
therefore continued to take a cautious and opportunistic approach with respect
to the Fund's exposure to foreign currencies, limiting it to countries where we
foresee a stable or improving exchange rate. As of October 31, 1995, only 5% of
the Fund's assets was invested in securities denominated in local currencies,
with the balance held in U.S.-dollar denominated obligations.
In line with the Fund's strategy to maintain a regionally diversified
portfolio, 24% of portfolio assets were invested outside of Latin America as of
October 31, 1995. In particular, we
7
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
- --------------------------------------------------------------------------------
increased holdings in eastern Europe from 6% to 18% of assets during the
12-month period. In early 1995, many investors seemed unable to differentiate
among emerging markets on the basis of fundamentals and sold assets
indiscriminately, thereby undercutting the benefits of our diversification
strategy. However, our strategy began to pay off beginning in the second quarter
of 1995, as confidence returned to the markets and investors began to
distinguish among issuers once again. The Fund's holdings of Polish bonds (13%
of assets) in particular have benefited performance. Bolstered by an
investment-grade rating from Moody's for Poland's Eurobond issue in June, Polish
debt markets rallied strongly and have been among the best performing emerging
markets in 1995. Poland has experienced strong growth in 1995 and its manageable
debt profile is buttressed by high international reserves.
A Positive Outlook for Argentina and Brazil
The Fund's core Latin American holdings continue to be in Argentina (18% of
assets) and Brazil (26% of assets). The Argentine government deftly handled the
spill-over effects of the Mexican peso crisis in early 1995, cutting government
spending to ensure fiscal stability. In addition, exports have grown rapidly,
enhancing the country's ability to pay back its debt. President Menem's
first-round re-election in May signaled popular approval of the economic
measures undertaken by the government over the last several years. Recently,
however, the Argentine debt markets have experienced heightened volatility over
the uncertainty of highly regarded Economy Minister Cavallo's tenure within the
Menem administration. Nonetheless, our long-term outlook for Argentina remains
positive.
The Fund modestly increased its holdings in Brazil during the fiscal year
as the country's fundamental outlook improved. Brazil successfully slowed the
torrid pace of economic growth exhibited early in 1995, reducing the risk of an
overheated economy, and has improved its external accounts. High real interest
rates have also bolstered international reserves. Moreover, President Cardoso
has made gradual but steady progress on advancing important financial and
constitutional reforms through Congress.
8
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Throughout the fiscal year, the Fund held underweight positions in Mexico
(10% of assets) and Venezuela (6% of assets) on October 31. The Mexican
government has steadfastly adhered to sound economic policies implemented in the
aftermath of the peso crisis, but lingering political concerns and a significant
economic contraction have recently created some uneasiness in Mexico's financial
markets. Venezuelan government bonds offer attractive yields, but at the end of
the fiscal year investors were still awaiting progress on an International
Monetary Fund program to address the serious imbalances in that country's
economy.
Looking Ahead
The effects of the Mexican peso crisis in early 1995 proved a daunting
challenge for economic leaders in many emerging countries. To preserve their
countries' creditworthiness and to safeguard their hard-won access to the
international capital markets, leaders in Argentina and Mexico imposed further
fiscal discipline and accelerated the pace of economic reforms. In the near
term, these measures have created difficult domestic conditions in some emerging
economies, but we believe that they will improve the long-term fundamentals in
these countries. These developments, coupled with a constructive global
environment for the U.S. dollar, interest rates, and bond markets, should be
reflected in improving prices for emerging market debt in the coming months. In
keeping with Scudder Emerging Markets Income Fund's objectives, we will continue
to look for opportunities to provide high current income and long-term capital
appreciation for our shareholders.
Sincerely,
Your Portfolio Management Team
/s/M. Isabel Saltzman /s/Susan E. Gray
M. Isabel Saltzman Susan E. Gray
/s/Lincoln Y. Rathnam
Lincoln Y. Rathnam
Scudder Emerging Markets Income Fund:
A Team Approach to Investing
Scudder Emerging Markets Income Fund is managed by a team of Scudder
investment professionals who each play an important role in the Fund's
management process. Team members work together to develop investment strategies
and select securities for the Fund's portfolio. They are supported by Scudder's
large staff of economists, research analysts, traders, and other investment
specialists who work in Scudder's offices across the United States and abroad.
We believe our team approach benefits Fund investors by bringing together many
disciplines and leveraging Scudder's extensive resources.
Lead Portfolio Manager M. Isabel Saltzman has responsibility for the Fund's
investment strategies. Isabel, who joined Scudder in 1990, has been involved in
foreign finance and investing since 1979 and contributes special expertise in
Latin America. Lincoln Y. Rathnam, Portfolio Manager, is responsible for the
Fund's day-to-day management. Lincoln, who joined Scudder in 1984, has over 15
years of experience in international investing. Susan E. Gray, Portfolio
Manager, has responsibility for developing the Fund's trading strategies. Susan,
who has over four years of investment trading experience, has worked at Scudder
since 1987.
9
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
INVESTMENT PORTFOLIO as of October 31, 1995
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
5.0% COMMERCIAL PAPER
-------------------------------------------------------------------------------------------
4,000,000 Associates Corp. of North America,
5.82%, 11/1/95 . . . . . . . . . . . . . . . . . . 4,000,000
4,432,000 Household Finance Corp., 5.82%, 11/1/95. . . . . . . 4,432,000
-----------
Total Commercial Paper (Cost $8,432,000) . . . . . . 8,432,000
-----------
94.9% DEBT OBLIGATIONS
-------------------------------------------------------------------------------------------
Argentina 18.1% ARP 7,886,744 Argentine Republic, Bonos de Consolidacion
de Deudas Previsionales Pre 1 (BOCON),
Variable Rate Interest Bond, 3.5%, 4/1/01. . . . . 3,693,780
1,500,000 Argentine Republic, Collateralized Discount
Bond, Series L, Floating Rate Bond, LIBOR plus
.8125% (6.875%), 3/31/23 . . . . . . . . . . . . . 841,875
23,600,000 Argentine Republic, Collateralized Par
Bond, Series L, Step-up Coupon, 5%, 3/31/23 (d). . 11,224,632
20,800,000 Argentine Republic, Floating Rate Bond,
Series L, LIBOR plus .8125% (6.8125%), 3/31/05 (d) 12,310,896
3,150,000 Cedulas Hipotecarias, Floating Rate Bond,
LIBOR plus 2.9% (8.9781%), 9/1/00. . . . . . . . . 2,767,991
-----------
30,839,174
-----------
Brazil 26.4% 500,000 Minas Gerais, Series A, Without Warrants,
7.875%, 2/10/99. . . . . . . . . . . . . . . . . . 418,750
3,550,000 Minas Gerais, Series B, Without Warrants,
8.25%, 2/10/00 . . . . . . . . . . . . . . . . . . 2,902,125
11,250,000 Federative Republic of Brazil, Collateralized
Par Bond, Series Z, Step-up Coupon, 4.25%, 4/15/24 5,428,125
18,305,838 Federative Republic of Brazil C Bond, 4% with
4% Interest Capitalization, 4/15/14. . . . . . . . 9,290,213
8,875,000 Federative Republic of Brazil, Debt Conversion
Bond, Series L, Floating Rate Bond, LIBOR
plus .875% (6.875%), 4/15/12 . . . . . . . . . . . 4,859,063
14,500,000 Federative Republic of Brazil, Eligible Interest
Bond, Floating Rate Bond, LIBOR plus
.8125% (6.8125%), 4/15/06. . . . . . . . . . . . . 9,588,125
10,212,500 Federative Republic of Brazil, IDU Bond,
Floating Rate Bond, LIBOR plus .8125%
(6.6875%), 1/1/01. . . . . . . . . . . . . . . . . 8,725,254
714,287 Federative Republic of Brazil, New Money
Bond, LIBOR plus .8125% (6.75%), 10/15/99. . . . . 664,287
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- --
10
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
5,000,000 Federative Republic of Brazil, New Money
Bond, LIBOR plus .875% (6.875%), 4/15/09 . . . . . 2,950,000
-----------
44,825,942
-----------
Bulgaria 3.3% 5,000,000 Republic of Bulgaria, Collateralized Discount
Bond, Tranche A, LIBOR plus .8125%
(6.75%), 7/28/24 . . . . . . . . . . . . . . . . . 2,525,000
5,500,000 Republic of Bulgaria, Floating Rate Interest
Reduction Bond, Series A, Step-up Coupon,
2%, 7/28/12. . . . . . . . . . . . . . . . . . . . 1,533,125
3,500,000 Republic of Bulgaria, Interest Arrears Bond,
Series PDI, LIBOR plus .8125% (6.75%),
7/28/11. . . . . . . . . . . . . . . . . . . . . . 1,544,375
-----------
5,602,500
-----------
Colombia 0.3% 500,000 Banco de Colombia, 7.5%, 10/21/98. . . . . . . . . . 482,500
-----------
Costa Rica 0.1% 200,000 Banco Central de Costa Rica, Principal B,
6.25%, 5/21/15 . . . . . . . . . . . . . . . . . . 104,000
-----------
Ecuador 3.9% 6,500,000 Republic of Ecuador, Collateralized Discount
Bond, Floating Rate Bond, LIBOR plus
.8125% (6.8125%), 2/28/25. . . . . . . . . . . . . 3,221,530
1,250,000 Republic of Ecuador, Collateralized Global
Par Bond, Step-up Coupon, 3%, 2/28/25. . . . . . . 414,062
9,193,375 Republic of Ecuador, Past Due Interest Bond,
LIBOR plus .8125% (6.8125%), 2/28/15 . . . . . . . 3,010,830
-----------
6,646,422
-----------
Jamaica 0.6% 1,500,000 Government of Jamaica Refinancing
Agreement, Tranche B, Floating Rate Bond,
LIBOR plus .8125% (7.125%), 11/15/04 . . . . . . . 990,000
-----------
Mexico 9.8% MXN 22,533,700 Certificados de la Tesoreria,12/21/95. . . . . . . . 3,020,723
14,750,000 United Mexican States, Collateralized Fixed
Par Bond, Series A, 6.25%, 12/31/19. . . . . . . . 8,665,625
3,250,000 United Mexican States, Collateralized Fixed
Par Bond, Series B, 6.25%, 12/31/19. . . . . . . . 1,909,375
4,500,000 United Mexican States, Collateralized
Discount Bond, Series A, Floating Rate Bond,
LIBOR plus .8125% (6.76563%), 12/31/19 . . . . . . 3,009,375
-----------
16,605,098
-----------
Morocco 3.9% 11,250,000 Kingdom of Morocco, Tranche A,
Restructuring and Consolidation Agreement,
LIBOR plus .8125% (6.6875%), 1/1/09. . . . . . . . 6,693,750
-----------
Panama 6.5% 9,250,000 Republic of Panama, Floating Rate Bond,
LIBOR plus 1% (7.25%), 5/10/02 . . . . . . . . . . 7,561,875
9,000,000 Republic of Panama, Interest Reduction
Bond, 3.5%, 12/29/49 (c) . . . . . . . . . . . . . 3,465,000
-----------
11,026,875
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
--
11
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Poland 13.4% 26,100,000 Republic of Poland, Past Due Interest Bond,
Step-up Coupon, 3.75%, 10/27/14. . . . . . . . . . 16,769,250
6,000,000 Republic of Poland, Collateralized Discount
Bond, LIBOR plus .8125% (6.875%), 10/27/24 . . . . 4,590,000
PLZ 3,712,032 Morgan Guaranty Trust Company Time
Deposit, 24.5%, 3/20/96. . . . . . . . . . . . . . 1,520,223
-----------
22,879,473
-----------
Russia 1.9% 10,000,000 Vnesheconombank, Bilateral Non-Performing
Loan Agreement, 3.25%, 12/29/95* . . . . . . . . . 3,250,000
-----------
United States 0.8% 500,000 Comcast Corp., 9.5%, 1/15/08 (d) . . . . . . . . . . 515,000
500,000 Penn Traffic Co., 9.625%, 4/15/05 (d). . . . . . . . 362,500
500,000 Westpoint Stevens Inc., 9.375%, 12/15/05 . . . . . . 500,000
-----------
1,377,500
-----------
Venezuela 5.9% 20,500,000 Republic of Venezuela, Debt Conversion
Bond, Series DL, LIBOR plus .875%
(6.8125%), 12/18/07. . . . . . . . . . . . . . . . 10,096,250
-----------
Total Debt Obligations (Cost $162,686,923) . . . . . 161,419,484
-----------
0.1% PREFERRED STOCKS
Shares
-------------------------------------------------------------------------------------------
Argentina 13,400 Nortel Inversora "A" (ADR)
(Telecommunication services) (e)
(Cost $129,980). . . . . . . . . . . . . . . . . . 105,458
-----------
0.0% PURCHASED OPTIONS
Principal
Amount ($) (b)
-------------------------------------------------------------------------------------------
1,255,000 Put on German Deutschemark, strike price
1.5542, expires 3/14/96. . . . . . . . . . . . . . 3,279
20,500,000 Put on Venezuela Debt Conversion Bond,
strike price 47.625, expires 11/13/95. . . . . . . 67,220
-----------
Total Purchased Options (Cost $257,107). . . . . . . 70,499
-----------
- --------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0%
(Cost $171,506,010) (a). . . . . . . . . . . . . . 170,027,441
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- --
12
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $172,690,463. At October 31,
1995, net unrealized depreciation for all securities based on tax cost was
$2,663,022. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $2,466,492 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$5,129,514.
(b) Principal amount is stated in U.S. dollars unless otherwise noted.
(c) When-issued or forward delivery securities (See Note A in Notes to
Financial Statements).
(d) At October 31, 1995, these securities, in part, have been segregated to
cover when-issued or forward delivery securities.
(e) Securities valued in good faith by the Valuation Committee of the Board of
Directors. The cost of these securities at October 31, 1995 aggregated
$129,980. See Note A of the Notes to Financial Statements.
* Non-income producing security.
WRITTEN OPTIONS
----------------------------------------------------------------------
At October 31, 1995 outstanding written options were as follows (Note
A):
<TABLE>
<CAPTION>
Principal
Amount Expiration Strike Market
Call Options (U.S.$) Date Price Value($)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DEM 1,255,000 3/14/96 DEM 1.39 . . . . . 24,322
------
Total outstanding written options (Premiums received $11,107). . . . 24,322
======
</TABLE>
CURRENCY ABBREVIATIONS
----------------------------------------------------------------------
ARP Argentine Peso DEM German Deutschemark
MXN Mexican Peso PLZ Polish Zloty
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
--
13
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $171,506,010)
(Note A) . . . . . . . . . . . . . . . . . . . . . . . $ 170,027,441
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 778
Receivables:
Investments sold . . . . . . . . . . . . . . . . . . . 1,792,484
Interest . . . . . . . . . . . . . . . . . . . . . . . 2,815,590
Fund shares sold . . . . . . . . . . . . . . . . . . . 439,001
Deferred organization expenses (Note A). . . . . . . . . 48,616
-------------
Total assets . . . . . . . . . . . . . . . . . . . . . 175,123,910
LIABILITIES
Payables:
Investments purchased. . . . . . . . . . . . . . . . . $ 1,762,484
When-issued and forward delivery securities
(Note A). . . . . . . . . . . . . . . . . . . . . . 3,490,781
Fund shares redeemed . . . . . . . . . . . . . . . . . 121,707
Written options, at market (premium received $11,107)
(Note A). . . . . . . . . . . . . . . . . . . . . . 24,322
Accrued management fee (Note C). . . . . . . . . . . . 166,497
Other accrued expenses (Note C). . . . . . . . . . . . 155,318
-------------
Total liabilities. . . . . . . . . . . . . . . . . . . 5,721,109
-------------
Net assets, at market value. . . . . . . . . . . . . . . $169,402,801
-------------
-------------
NET ASSETS
Net assets consist of:
Undistributed net investment income. . . . . . . . . . $ 613,098
Unrealized depreciation on:
Investments . . . . . . . . . . . . . . . . . . . . (1,478,569)
Options . . . . . . . . . . . . . . . . . . . . . . (13,215)
Foreign currency related transactions . . . . . . . (58,565)
Accumulated net realized loss. . . . . . . . . . . . . (6,217,701)
Capital stock. . . . . . . . . . . . . . . . . . . . . 165,114
Additional Brazilian capital . . . . . . . . . . . . . . 176,392,639
-------------
Net assets, at market value. . . . . . . . . . . . . . . $169,402,801
-------------
-------------
NET ASSET VALUE, offering and redemption per price
($169,402,801 DIVIDED BY 16,511,433 shares of
capital stock outstanding, $.01 par value, 100,000,000
shares authorized) . . . . . . . . . . . . . . . . . . $10.26
------
------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- --
14
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 14,103
Interest (net of withholding taxes of $7,436). . . . . . 17,981,225
-------------
17,995,328
Expenses:
Management fee (Note C). . . . . . . . . . . . . . . . . $ 1,037,443
Services to shareholders (Note C). . . . . . . . . . . . 320,210
Directors' fees and expenses (Note C). . . . . . . . . . 54,889
Custodian fees . . . . . . . . . . . . . . . . . . . . . 258,217
Auditing . . . . . . . . . . . . . . . . . . . . . . . . 44,555
Reports to shareholders. . . . . . . . . . . . . . . . . 69,042
Federal registration . . . . . . . . . . . . . . . . . . 24,020
State registration . . . . . . . . . . . . . . . . . . . 34,951
Legal. . . . . . . . . . . . . . . . . . . . . . . . . . 17,119
Amortization of organization expense (Note A). . . . . . 15,312
Other. . . . . . . . . . . . . . . . . . . . . . . . . . 9,585 1,885,343
---------------------------------
Net investment income. . . . . . . . . . . . . . . . . . 16,109,985
-------------
Net realized and unrealized loss on investment
transactions
Net realized loss from:
Investments. . . . . . . . . . . . . . . . . . . . . . (4,681,454)
Foreign currency related transactions. . . . . . . . . (452,415) (5,133,869)
-------------
Net unrealized depreciation during the period on:
Investments. . . . . . . . . . . . . . . . . . . . . . (28,985)
Written options. . . . . . . . . . . . . . . . . . . . (13,215)
Foreign currency related transactions. . . . . . . . . (34,988) (77,188)
------------- -------------
Net loss on investment transactions. . . . . . . . . . . (5,211,057)
-------------
Net increase in net assets resulting from operations . . $ 10,898,928
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
--
15
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Period
December 31, 1993
Year (commencement of
Ended operations) to
October 31, October 31,
INCREASE (DECREASE) IN NET ASSETS 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income. . . . . . . . . . . . . . . . $ 16,109,985 $ 4,571,406
Net realized loss on investment transactions . . . . (5,133,869) (2,784,125)
Net unrealized depreciation on investment
transactions during the period . . . . . . . . . . (77,188) (1,473,161)
------------- -------------
Net increase in net assets resulting
from operations. . . . . . . . . . . . . . . . . . 10,898,928 314,120
------------- -------------
Distributions to shareholders from
net investment income ($1.11 and $.51
per share, respectively) . . . . . . . . . . . . . (14,649,724) (3,742,297)
------------- -------------
Fund share transactions:
Proceeds from shares sold. . . . . . . . . . . . . . 141,506,487 126,227,847
Net asset value of shares issued to
shareholders in reinvestment of distributions. . . 12,247,689 3,183,825
Cost of shares redeemed. . . . . . . . . . . . . . . (75,352,525) (31,232,749)
------------- -------------
Net increase in net assets from Fund share
transactions . . . . . . . . . . . . . . . . . . . 78,401,651 98,178,923
------------- -------------
Increase in net assets . . . . . . . . . . . . . . . 74,650,855 94,750,746
Net assets at beginning of period. . . . . . . . . . 94,751,946 1,200
------------- -------------
Net assets at end of period (including
undistributed net investment income of
$613,098 and $743,590, respectively) . . . . . . . $ 169,402,801 $ 94,751,946
------------- -------------
------------- -------------
Other Information
Increase (decrease) in Fund shares
Shares outstanding at beginning of period. . . . . . 8,577,789 100
------------- -------------
Shares sold. . . . . . . . . . . . . . . . . . . . . 14,123,224 11,083,394
Shares issued to shareholders in
reinvestment of distributions. . . . . . . . . . . 1,216,165 294,323
Shares redeemed. . . . . . . . . . . . . . . . . . . (7,405,745) (2,800,028)
------------- -------------
Net increase in Fund shares. . . . . . . . . . . . . 7,933,644 8,577,689
------------- -------------
Shares outstanding at end of period. . . . . . . . . 16,511,433 8,577,789
------------- -------------
------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- --
16
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL STATEMENTS.
FOR THE PERIOD
YEAR DECEMBER 31, 1993
ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS) TO
1995 OCTOBER 31, 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . $ 11.05 $ 12.00
------- -------
Income from investment operations:
Net investment income (a). . . . . . . . . . . . . . . . . . . 1.14 0.60
Net realized and unrealized loss on investments. . . . . . . . (.82) (1.04)
------- -------
Total from investment operations . . . . . . . . . . . . . . . . .32 (.44)
------- -------
Less distributions from net investment income. . . . . . . . . . (1.11) (.51)
------- -------
Net asset value, end of period . . . . . . . . . . . . . . . . . $ 10.26 $ 11.05
------- -------
------- -------
Total Return (%) . . . . . . . . . . . . . . . . . . . . . . . . 3.46 (3.54)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) . . . . . . . . . . . . . 169 95
Ratio of operating expenses, net to average daily net assets (%) (a) 1.50 1.50*
Ratio of net investment income to average daily net assets (%) . 12.83 9.17*
Portfolio turnover rate (%). . . . . . . . . . . . . . . . . . . 302.2 180.6*
(a)Reflects a per share amount of management fee not imposed
by the Adviser. . . . . . . . . . . . . . . . . . . . . . . . $ .02 $ .05
Operating expense ratio including management fee
not imposed (%) . . . . . . . . . . . . . . . . . . . . . . . 1.68 2.23*
* Annualized
* * Not annualized
--
17
</TABLE>
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
Scudder Emerging Markets Income Fund (the "Fund") is a non-diversified
series of Scudder Global Fund, Inc., a Maryland corporation registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company. The policies described below are followed consistently
by the Fund in the preparation of its financial statements in conformity
with generally accepted accounting principles.
SECURITY VALUATION. Portfolio debt securities with remaining maturities
greater than sixty days are valued by pricing agents approved by the
Officers of the Fund, which 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. 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. Securities
valued in good faith by the Valuation Committee of the Board of Directors at
fair value amounted to $105,458 (.06% of net assets) and have been noted in
the investment portfolio as of October 31, 1995.
OPTIONS. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or
sell to (put option), the writer a designated instrument at a specified
price within a specified period of time. Certain options, including options
on indices, will require cash settlement by the Fund if the option is
exercised. During the year ended October 31, 1995, the Fund purchased put
options and wrote call options on securities and currencies 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
- --
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
- ----
paid. If the Fund elects to close out the option it would recognize a gain
or loss equal to the difference between the cost of acquiring the option and
the amount realized upon the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call
or purchased put option is adjusted for the amount of option premium. If a
written put or purchased call option is exercised the Fund's cost basis of
the acquired security or currency would be the exercise price adjusted for
the amount of the option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last
sale price or, in the absence of a sale, the mean between the closing bid
and asked price or at the most recent asked price (bid for purchased
options) if no bid and asked price are available. Over-the-counter written
or purchased options are valued using dealer supplied quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange
for the premium, the opportunity to profit during the option period from an
increase in the market value of the underlying security or currency above
the exercise price. When the Fund writes a put option it accepts the risk of
a decline in the market value of the underlying security or currency below
the exercise price. Over-the-counter options have the risk of the potential
inability of counterparties to meet the terms of their contracts. The Fund's
maximum exposure to purchased options is limited to the premium initially
paid. In addition, certain risks may arise upon entering into option
contracts including the risk that an illiquid secondary market will limit
the Fund's ability to close out an option contract prior to the expiration
date and, that a change in the value of the option contract may not
correlate exactly with changes in the value of the securities or currencies
hedged.
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, interest income and
certain expenses at the daily rates of exchange prevailing on the
respective dates of such transactions.
--
19
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
- -------------------------------------------------------------------------------
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 accrual and payment dates on
interest and foreign withholding taxes.
WHEN-ISSUED AND FORWARD DELIVERY SECURITIES. The Fund may purchase
securities on a when-issued or forward delivery basis, for payment and
delivery at a later date. The price of such securities, which may be
expressed in yield terms, is fixed at the time the commitment to purchase is
made, but delivery and payment take place at a later time.
At the time the Fund makes the commitment to purchase a security on a when-
issued basis or forward delivery basis, it will record the transaction and
reflect the value of the security in determining its net asset value. During
the period between purchase and settlement, no payment is made by the Fund
to the issuer and no interest accrues to the Fund. At the time of
settlement, the market value of the security may be more or less than the
purchase price.
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.
Accordingly, the Fund paid no federal income taxes, and no federal income
tax provision was required.
At October 31, 1995, the Fund had a net tax basis capital loss carryforward
of approximately $5,033,000, which may be applied against any realized net
taxable capital gains of each succeeding year until fully utilized or until
October 31, 2002 ($1,611,000), and October 31, 2003 ($3,422,000) the
respective expiration dates, whichever occurs first.
DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made quarterly. During any particular year, net realized gains from
investment transactions, in excess of available capital loss carryforwards,
would be taxable to the Fund if not distributed and,
- --
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
therefore, will be distributed to shareholders. 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 foreign denominated investments and
certain securities sold at a loss. 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.
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 specific identified cost method for determining realized
gain or loss on investments for both financial and federal income tax
reporting purposes.
ORGANIZATION COSTS. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are
being amortized on a trade-date basis over a trade-date period.
Other. Investment security transactions are accounted for on a trade date
basis. Distributions of net realized gains to shareholders are recorded on
the ex-dividend date. Interest income is recorded on the accrual basis. All
discounts are amortized/accreted for both tax and financial reporting
purposes.
B. PURCHASES AND SALES OF SECURITIES
- -------------------------------------------------------------------------------
For the year ended October 31, 1995, purchases and sales (including
maturities) of investment securities (excluding SSC investments)
aggregated $420,326,658 and $329,623,762, respectively.
In addition, the Fund wrote and the holder exercised options during the
period, principal amount U.S. $5,500,000 on Republic of Argentina Floating
Rate Bonds, 3/31/05 (premium received $91,500) and wrote options during the
period, principal amount U.S. $1,255,000 on March 1996 German Deutschemark
(premium received $11,107).
--
21
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
- -------------------------------------------------------------------------------
C. RELATED PARTIES
- -------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Adviser directs the investments
of the Fund in accordance with its investment objectives, policies, and
restrictions. The Adviser 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 Adviser provides
certain administrative services in accordance with the Agreement. The
management fee payable under the Agreement is equal to an annual rate of
1.00% of the Fund's average daily nets assets, computed and accrued daily
and payable monthly. The Agreement also provides that if the Fund's expenses
exceed specified limits, such excess, up to the amount of the management
fee, will be paid by the Adviser. In addition, the Adviser agreed not to
impose all or a portion of its management fee until February 29, 1996, and
during such period to maintain the annualized expenses of the Fund at not
more than 1.50% of average daily net assets. For the year ended October 31,
1995, the Adviser did not impose a portion of its fee amounting to $223,375,
and the portion imposed amounted to $1,037,443.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the
Adviser, is the transfer, dividend paying and shareholder service agent for
the Fund. For the year ended October 31, 1995, the amount charged by SSC
aggregated $260,181, of which $23,796 is unpaid at October 31, 1995.
The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the
year ended October 31, 1995, Directors' fees aggregated $54,889.
D. INVESTING IN EMERGING MARKETS
- -------------------------------------------------------------------------------
Investing in emerging markets may involve special risks and considerations
not typically associated with investing in the United States. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities issued in these markets may be less
liquid and their prices more volatile than those of comparable securities in
the United States.
- --
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS OF SCUDDER GLOBAL FUND, INC. AND THE SHAREHOLDERS
OF SCUDDER EMERGING MARKETS INCOME FUND:
We have audited the accompanying statement of assets and liabilities of
Scudder Emerging Markets Income Fund, including the investment portfolio, as
of October 31, 1995, and the related statements of operations for the year
then ended, the statement of changes in net assets, and the financial
highlights for the year then ended and for the period December 31, 1993
(commencement of operations) to October 31, 1994. 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 October 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Scudder Emerging Markets Income Fund as of October 31, 1995, the results of
its operations for the year then ended, the changes in its net assets and
the financial highlights for the year then ended and for the period December
31, 1993 (commencement of operations) to October 31, 1994 in conformity with
generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 8, 1995
--
23
<PAGE>
SHAREHOLDER MEETING RESULTS
- --------------------------------------------------------------------------------
A Special Meeting of Shareholders of Scudder Global Fund, Inc., consisting
of Scudder Emerging Markets Income Fund, Scudder Global Fund, Scudder Global
Small Company Fund, Scudder International Bond Fund and Scudder Short Term
Global Income Fund was held on Wednesday, December 6, 1995, at the offices of
Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue, New York, New York
10154. The two matters voted upon by Shareholders of Scudder Emerging Markets
Income Fund and the resulting votes for each matter are presented below.
<TABLE>
<CAPTION>
1. The election of eight Directors to hold office until their respective successors shall have been
duly elected and qualified.
Director: Number of Votes:
For Withheld Broker Non-Votes*
<S> <C> <C> <C>
Edmond D. Villani 10,896,113 140,506 0
Nicholas Bratt 10,897,114 139,505 0
Daniel Pierce 10,894,862 141,757 0
Paul Bancroft III 10,883,917 152,702 0
Sheryle J. Bolton 10,851,231 185,388 0
Thomas J. Devine 10,863,922 172,697 0
William H. Gleysteen, Jr. 10,868,907 167,712 0
William H. Luers 10,856,319 180,299 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 October 31, 1996.
Number of Votes:
For Against Abstain Broker Non-Votes*
10,800,265 53,582 182,772 0
- --------------------------------------------------------------------------------------------------------------
* 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.
</TABLE>
24
<PAGE>
OFFICERS AND DIRECTORS
- --------------------------------------------------------------------------------
Edmond D. Villani*
Chairman of the Board and Director
Nicholas Bratt*
President and Director
Paul Bancroft III
Director; Venture Capitalist and Consultant
Sheryle J. Bolton
Director; Consultant
Thomas J. Devine
Director; Consultant
William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.
William H. Luers
Director; President, The Metropolitan Museum of Art
Daniel Pierce*
Director and Vice President
Robert G. Stone, Jr.
Honorary Director; Chairman of the Board and Director, Kirby Corporation
Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business
Adam Greshin*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Douglas M. Loudon*
Vice President
Gerald J. Moran*
Vice President
M. Isabel Saltzman*
Vice President
Cornelia Small*
Vice President
David S. Lee*
Vice President and Assistant Treasurer
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Juris Padegs*
Vice President and Assistant Secretary
Kathryn L. Quirk*
Vice President and Assistant Secretary
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
25
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Small Company Value Fund
Scudder Growth and Income Fund Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc. Scudder Treasurers Trust(TM)++
Scudder Fund, Inc.
-----------------------------------------------------------------------------------------------------------------
For complete information on any of the above Scudder funds, including management fees and expenses, call or
write for a free prospectus. Read it carefully before you invest or send money. +A portion of the income
from the tax-free funds may be subject to federal, state, and local taxes. *Not available in all states. +++A
no-load variable annuity contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark,
Inc. are traded on various stock exchanges. ++For information on Scudder Treasurers Trust,(TM) an institutional
cash management service that utilizes certain portfolios of Scudder Fund, Inc. ($100,000 minimum), call
1-800-541-7703.
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26
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HOW TO CONTACT SCUDDER
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<TABLE>
<CAPTION>
<C> <C>
Account Service and Information
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For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your Scudder accounts;
exchanges and redemptions; or information on any Scudder fund
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
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To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
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THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
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Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
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For information on Scudder For information on Scudder
Treasurers Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
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Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
27
<PAGE>
Celebrating Over 75 Years of Serving Investors
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Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the first independent investment counsel
firm in the United States. Since its birth, Scudder's pioneering spirit and
commitment to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load mutual
fund. Today we offer 37 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
