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
Semiannual Report
April 30, 1996
o For investors seeking high current income and, secondarily, long-term
capital appreciation through investment primarily in high-yielding debt
securities issued in emerging markets.
o 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
9 Investment Portfolio
12 Financial Statements
15 Financial Highlights
16 Notes to Financial Statements
23 Report of Independent Accountants
25 Officers and Directors
26 Investment Products and Services
27 How to Contact Scudder
IN BRIEF
o Following difficult market conditions in early 1995, emerging market bonds
rebounded strongly as investors responded positively to austerity measures
taken by emerging countries in the wake of the Mexican peso devaluation.
o Reflecting these favorable developments, Scudder Emerging Markets Income
Fund posted a total return of 21.55% for the six-month period ended April
30, 1996. This compares favorably with the 19.99% total return of the
unmanaged J.P. Morgan Composite Emerging Markets Bond/Latin Eurobond Index
over the same time period. The Fund closed its fiscal year with a 30-day net
annualized SEC yield of 9.84%.
o The Fund continues to maintain a liquid, diversified portfolio of U.S.
dollar-denominated income securities -- with bonds issued in Latin America,
central and eastern Europe, northern Africa, and Asia -- that we believe is
well positioned to benefit from improving credit fundamentals while earning
a high level of current income.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
Dear Shareholders,
Emerging debt markets closed the first four months of 1996 on a strong
note, as improving country fundamentals began to drive emerging market asset
prices. Growth around the world is reviving as the effects of the past year's
declines in interest rates work through the economies of various countries. For
emerging economies, this global liquidity has strengthened capital inflows. This
movement of capital is essential in building direct investment while moderate
growth in OECD countries serves to ignite and maintain export-driven economic
recovery in Latin America and to keep growth high in central Europe and across
most of Asia. Additionally, rising commodity prices and continued U.S. growth
have improved the balance sheets of the many emerging countries that export
commodities to the United States and the rest of the world.
Credit conditions of many emerging market nations are improving,
especially in the major economies such as Argentina, Brazil, Mexico, and Poland.
Your Fund benefited from these conditions during its most recent semiannual
period, posting a six-month total return of 21.55%. Solid opportunities for
capital appreciation exist in the majority of Scudder Emerging Markets Income
Fund's portfolio "universe" of possible investments. At the same time, it is
probable that emerging market bond prices will remain volatile because of
concerns over the direction of the U.S. Treasury market. Our strategy going
forward is to continue to position your Fund to benefit from the brightening
economic and credit outlook in key emerging markets.
In closing, we would like to take this opportunity to introduce a new
member of the Scudder Family of Funds that invests primarily in the equity
securities of emerging markets. Scudder Emerging Markets Growth Fund offers
investors the opportunity to enhance the return potential and global
diversification of their investment portfolios. For more information about
Scudder products and services, please see page 26. If you have questions about
Scudder Emerging Markets Income Fund, please call a Scudder representative at
1-800-225-2470.
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 April 30, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER EMERGING MARKETS INCOME FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $13,696 36.96% 36.96%
Life of
Fund* $12,131 21.31% 8.64%
JP MORGAN COMPOSITE EMERGING
MARKETS BOND/LATIN EUROBOND INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $13,929 39.29% 39.29%
Life of
Fund* $11,351 13.51% 5.60%
*The Fund commenced operations on
December 31, 1993. Index comparisons
begin December 31, 1993.
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
- ----------------------
12/93* $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
1/96 $11,954
4/96 $12,131
JP MORGAN COMPOSITE EMERGING
MARKETS BOND/LATIN EUROBOND INDEX
Year Amount
- ----------------------
12/93* $10,000
1/94 $10,041
4/94 $8,341
7/94 $8,397
10/94 $8,771
1/95 $7,914
4/95 $8,149
7/95 $9,070
10/95 $9,460
1/96 $11,309
4/96 $11,351
The unmanaged JP Morgan Composite Emerging Markets Bond/Latin Eurobond
Index (EMBI/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 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 APRIL 30
1994* 1995 1996
-----------------------
NET ASSET VALUE... $10.67 $9.66 $11.85
INCOME DIVIDENDS.. $ .09 $ .92 $1.19
FUND TOTAL
RETURN (%)........ -10.83 -1.17 36.96
INDEX TOTAL
RETURN (%)........ -16.86 -1.98 39.29
Performance is historical, 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 April 30, 1996
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
The majority of Fund
holdings continue to be
Debt Obligations 85% invested in sovereign debt
Cash Equivalents 15% obligation because of their
---- attractive yields and higher
100% credit quality compared with
==== many emerging market
corporate bonds.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
MARKET EXPOSURE (EXCLUDES 15% CASH EQUIVALENTS)
- --------------------------------------------------------------------------
Geographical Currency
- ---------------------------- -----------------------------
Brazil 30% United States 93%
Morocco 16% Poland 6%
Mexico 13% Mexico 1%
Poland 12% ----
Ecuador 9% 100%
Argentina 8% ====
Venezuela 5%
Philippines 3%
Panama 2%
Other 2%
----
100%
====
We reduced our Latin American holdings to take some profits
and reduce the portfolio's interest-rate sensitivity.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
AVERAGE LIFE (EXCLUDES 15% CASH EQUIVALENTS)
- --------------------------------------------------------------------------
0-3 years 9%
3-5 years 8% The Fund continues to hold a
5-10 years 33% large percentage of
Greater than 10 years 50% longer-duration bonds to
---- capitalize on the current trend
100% of improving prices and declining
==== yields in the 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 9.
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,
We are pleased to present the Scudder Emerging Markets Income Fund
semiannual report for the six-month period ended April 30, 1996. Following
difficult market conditions in early 1995, emerging markets have rebounded
strongly on the basis of improving credit fundamentals. The adherence of many
emerging countries to austerity measures in the aftermath of the Mexican peso
crisis has renewed investors' confidence and resulted in renewed capital flows
into these economies.
During 1996, emerging markets bond prices largely decoupled from those
of U.S. Treasuries. This development reflects the notable structural improvement
that major emerging markets have continued to exhibit since the Mexican
devaluation. In addition, growth around the world is reviving, which for
emerging economies translates into improved growth through an increase in export
volumes. Furthermore, there is still ample global liquidity which has
strengthened capital inflows into emerging countries.
Fund performance
Scudder Emerging Markets Income Fund benefited from the recovery of
emerging market debt during its latest semiannual period. The Fund posted a
total return of 21.55% during the six months ended April 30, comparing favorably
with the 19.99% total return of the unmanaged J.P. Morgan Composite Emerging
Markets Bond/Latin Eurobond Index during the same time period. The Fund's
one-year total return as of April 30 was 36.96%. Contributing to the Fund's
impressive six-month total return were a net asset value increase of $10.26 to
$11.85 and income distributions totaling $0.58. The Fund's high yield remains
attractive to investors -- on April 30, 1996, the Fund's 30-day net annualized
SEC yield was 9.84%.
Benefiting from improving credits
Throughout the Fund's semiannual period, our strategy has been to
maintain a liquid, diversified portfolio that is well positioned to benefit from
improving credit fundamentals while at the same time earning a high level of
current income. An example of the positive credit developments from which the
Fund benefited is Poland, which received an investment grade rating at the
beginning of 1996 and saw its bonds appreciate 20.34% through April. Regional,
6
<PAGE>
country, and security selection proved increasingly important during the year as
investors began to discriminate more closely among emerging markets issuers. The
Fund's portfolio benefited from its overweighting in Poland and Eastern Europe.
In terms of regional and country distribution, Latin America
represented over 66% of the Fund's investments at the end of April, a reduction
from 72% last January. We reduced our Latin America holdings to take some
profits and also because of our concern that Latin America as a region would be
most negatively affected by higher U.S. interest rates. The Fund's core holdings
in Latin America continue to be in Brazil (30% of investments) followed by
Mexico (13%), Ecuador (9%), Argentina (8%), and Venezuela (5%). Brazil's debt
remains relatively inexpensive compared with other emerging markets given its
high level of international reserves and the positive direction of policy.
Although the pace of progress in enacting constitutional changes to shrink
government expenditures and enhance the performance of its capital markets has
been slow, the direction is positive, making Brazilian debt relatively
attractive. With $55 billion in foreign currency reserves, Brazil is well
positioned to defend the Real while pursuing the necessary internal reforms.
Venezuela's prospects continue to brighten. The country recently
completed the initial measures necessary to secure an agreement with the IMF,
where key measures include a reduction in the country's budget deficit, the
lifting of exchange and interest controls, and sharply increasing gasoline
prices. This has allowed the government to continue to build foreign exchange
reserves. Yields of uncollateralized Venezuelan bonds are roughly 10 percentage
points higher than those of comparable Treasuries, yet are substantially lower
than prior to the above-mentioned reforms.
Meanwhile, we increased our holdings in Eastern Europe to 14% of the
Fund's investments by April 30. Polish bonds were 12% of investments and
included Zloty instruments which provided solid returns for the Fund. The Fund
also held a 16% position in Morocco, where yields are roughly 7 percentage
points higher than U.S. Treasuries, and a 3% position in Asia.
One of our more recent strategies was to decrease the interest rate
sensitivity of the portfolio because of our concerns over the direction of U.S.
7
<PAGE>
interest rates. As of April 30, 1996, we had reduced fixed-rate instruments to
32% of investments from 39% on December 31, 1995, and increased floating-rate
instruments (assets with coupons that reset every six months in relation to the
London Interbank Offered Rate, or LIBOR) to 66% of investments from 54% over the
same time period. This strategy worked to the Fund's advantage as floating-rate
securities in the Fund's portfolio outperformed fixed-rate securities through
the first four months of 1996, with average total returns of 13.60% and 4.54%
respectively. The majority of Fund assets continue to be invested in sovereign
debt obligations because of their attractive yields and higher credit quality
versus many emerging market corporate bonds. As of April 30, 1996, sovereign
securities constituted 93% of debt obligations with the remaining 7% invested in
corporate instruments.
Outlook
We believe that improving balance sheets will continue to be the
dominant theme in our market for the remainder of 1996. Poland set the example
as the first emerging market country to receive an investment grade rating on
its Brady bonds. Other emerging countries could benefit similarly in the near
future.
Significant potential for further gains in bond prices exists in
emerging countries that demonstrate the commitment to address budget imbalances
and continue on the path of fiscal reform. We believe that ample global
liquidity and moderate economic growth will continue to create a positive
environment for emerging market debt over 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/Susan E. Gray /s/M. Isabel Saltzman
Susan E. Gray M. Isabel Saltzman
8
<PAGE>
INVESTMENT PORTFOLIO as of April 30, 1996
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount($)(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
14.5% COMMERCIAL PAPER
8,201,214 American Express Credit Corp., 5.33%,
5/1/96 (d) .............................................. 8,201,214
8,201,207 Associates Corp. of North America, 5.3%,
5/1/96 (d) .............................................. 8,201,207
2,663,986 Chevron Oil Finance Co., 5.25%, 5/1/96 (d) ................ 2,663,986
8,201,207 Ford Motor Credit Corp., 5.3%, 5/1/96 (d) ................. 8,201,207
8,201,200 Prudential Funding Corp., 5.27%, 5/1/96 (d) ............... 8,201,200
----------
TOTAL COMMERCIAL PAPER (Cost $35,468,814) ................. 35,468,814
----------
85.5% DEBT OBLIGATIONS
ARGENTINA 6.5% 8,554,094 Argentine Republic, Bonos de Consolidacion
de Deudas Previsionales Pre 2 (BOCON),
Variable Rate Interest Bond, (5.422%), 4/1/01 ........... 7,414,496
13,350,000 Argentine Republic, Collateralized Par Bond,
Series L, Step-up Coupon, 5.25%, 3/31/23 ................ 7,267,473
1,260,000 Cedulas Hipotecarias, Floating Rate Bond,
LIBOR plus 2.9% (8.978%), 9/1/00 ........................ 1,223,687
----------
15,905,656
----------
BRAZIL 25.6% 500,000 Minas Gerais, Series A, Without Warrants,
7.875%, 2/10/99 ......................................... 452,500
3,550,000 Minas Gerais, Series B, Without Warrants,
8.25%, 2/10/00 .......................................... 3,141,750
697,500 Federative Republic of Brazil, IDU Bond,
Floating Rate Bond, LIBOR plus .8125%
(6.375%), 1/1/01 ........................................ 640,392
5,000,000 Federative Republic of Brazil, "New" Money
Bond, Floating Rate Bond, LIBOR plus
.875% (6.563%), 4/15/09 ................................. 3,481,250
21,182,115 Federative Republic of Brazil C Bond, 4.5% with
3.5% Interest Capitalization, 4/15/14 ................... 12,696,136
50,750,000 Federative Republic of Brazil, Collateralized
Discount Bond, Floating Rate Bond, LIBOR
plus .8125% (6.5%), 4/15/24 ............................. 34,319,688
15,250,000 Federative Republic of Brazil, Collateralized
Par Bond, Series Z, Step-up Coupon, 5%,
4/15/24 ................................................. 8,006,250
----------
62,737,966
----------
BULGARIA 0.8% 6,750,000 Republic of Bulgaria, Floating Rate Interest
Reduction Bond, Series A, Step-up Coupon
2%, 7/28/12 ............................................. 2,008,125
----------
COSTA RICA 0.0% 200,000 Banco Central de Costa Rica, Principal B,
6.25%, 5/21/15 .......................................... 117,000
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount($)(b) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ECUADOR 7.4% 1,425,000 Republic of Ecuador, Interest Equalization
Bond, Floating Rate Bond, LIBOR plus
.8125% (6.5%), 12/21/04 ............................. 1,011,750
23,168,258 Republic of Ecuador (Bearer), Past Due Interest
Bond, Floating Rate Bond, LIBOR plus .8125%,
3% with 3.0625% Interest Capitalization,
2/27/15 ............................................. 10,049,232
10,673,017 Republic of Ecuador, Past Due Interest Bond,
Floating Rate Bond, LIBOR plus .8125%, 3%
with 3.0625% Interest Capitalization, 2/27/15 ....... 4,629,421
4,250,000 Republic of Ecuador, Collateralized Discount
Bond, Floating Rate Bond, LIBOR plus
.8125% (6.0625%), 2/28/25 ........................... 2,369,375
----------
18,059,778
----------
MEXICO 11.1% 18,121,000 Banco Nacional de Comercio Exterior S.N.C.,
7.25%, 2/2/04 ....................................... 14,995,128
MXN 15,487,010 Certificados de la Tesoreria, 8/22/96 ................. 1,884,879
2,500,000 United Mexican States, 9.75%, 2/6/01 .................. 2,475,000
6,000,000 United Mexican States, Collateralized Discount
Bond, Floating Rate Bond, Series A, LIBOR
plus .8125% (6.3984%), 12/31/19 ..................... 4,796,280
3,500,000 United Mexican States, Collateralized Discount
Bond, Floating Rate Bond, Series D, LIBOR
plus .8125% (6.547%), 12/31/19 ...................... 2,797,830
225,000 United Mexican States, Collateralized Par Bond,
(Detachable Oil Priced Indexed Value
Recovery Rights), Series B, 6.25%, 12/31/19 ......... 148,219
----------
27,097,336
----------
MOROCCO 13.8% 47,100,000 Kingdom of Morocco, Tranche A, Restructuring
and Consolidation Agreement, LIBOR plus
.8125% (6.594%) 1/1/09 (e) .......................... 33,735,375
----------
PANAMA 2.1% 3,750,000 Republic of Panama, Floating Rate Bond,
LIBOR plus 1% (6.75%), 5/10/02 ...................... 3,468,750
3,250,000 Republic of Panama, Interest Reduction Bond,
12/29/49 (c) ........................................ 1,661,563
----------
5,130,313
----------
PHILIPPINES 2.4% 6,650,000 Central Bank of the Philippines, Class B,
Step-up Coupon, 5%, 6/1/08 .......................... 5,793,813
----------
POLAND 9.9% PLZ 5,988,150 Morgan Guaranty Trust Co., Time Deposit
linked to Polish Zloty, 20.45%, 10/9/96 ............. 2,244,638
PLZ 17,565,240 Morgan Guaranty Trust Co., Time Deposit
linked to Polish Zloty, 20.25%, 4/16/97 ............. 6,448,662
PLZ 12,641,650 Morgan Guaranty Trust Co., Time Deposit
linked to Polish Zloty, 20.3%, 4/23/97 .............. 4,694,159
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount($)(b) Value ($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6,000,000 Republic of Poland, Collateralized Discount
Bond, Floating Rate Bond, LIBOR plus
.8125% (6.437%), 10/27/24 ................... 5,565,000
6,850,000 Republic of Poland, Past Due Interest Bond,
Step-up Coupon, 3.75%, 10/27/14 ............ 5,231,687
-----------
24,184,146
-----------
RUSSIA 1.6% 10,000,000 Vnesheconombank, Bilateral Non-performing
Loan Agreement, 12/31/96 (e) * ............. 4,012,500
-----------
UNITED STATES 0.2% 500,000 Penn Traffic Co., 9.625%, 4/15/05 ............ 428,750
-----------
VENEZUELA 4.1% 15,500,000 Republic of Venezuela, Debt Conversion Bond,
Floating Rate Bond, Series DL, LIBOR plus
.875% (6.5625%), 12/18/07 .................. 10,123,515
-----------
TOTAL DEBT OBLIGATIONS (Cost $204,588,974) ... 209,334,273
-----------
0.0% PREFERRED STOCKS
Shares
ARGENTINA 13,400 Nortel Inversora "A" (ADR) (Telecommunication)
services) (f) (Cost $129,980) ................ 105,458
-----------
----------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $240,187,768)(a) ....................... 244,908,545
===========
</TABLE>
(a) The cost for federal income tax purposes was $240,476,845. At April 30,
1996, net unrealized appreciation for all securities based on tax cost
was $4,431,700. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $6,119,352 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax
cost over market value of $1,687,652.
(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 April 30, 1996, these securities, in whole or in part, have been
segregated to cover loan participation and when-issued securities.
(e) These securities represent loan participations which are arranged
through private negotiations between the Fund and a lender. Due to the
nature of these securities they are typically purchased on a forward
delivery basis (Note A), some of which remain unsettled, in whole or in
part, at April 30, 1996.
(f) Security valued in good faith by the Valuation Committee of the Board
of Directors. The cost of this security at April 30, 1996 aggregated
$129,980. See Note A of the Notes to Financial Statements.
* Non-income producing security.
CURRENCY ABBREVIATIONS
- -----------------------------------------------------
MXN Mexican Peso PLZ Polish Zloty
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
ASSETS
<S> <C> <C>
Investments, at market (identified cost $240,187,768)
(Note A) ....................................... $244,908,545
Receivables:
Investments sold ............................... 10,461,412
When-issued and forward delivery securities
(Note A) ..................................... 5,336,875
Loan participations sold (Note A) .............. 5,233,594
Interest ....................................... 3,304,721
Fund shares sold ............................... 447,144
Deferred organization expenses (Note A) ................ 40,981
Unrealized appreciation of forward currency exchange
contracts (Note A & E) ......................... 160,113
------------
Total assets ................................... 269,893,385
LIABILITIES
Payables:
Investments purchased .......................... $ 10,170,252
When-issued and forward delivery securities
(Note A) ..................................... 5,895,241
Loan participations purchased (Note A) ......... 13,197,899
Fund shares redeemed ........................... 397,323
Accrued management fee (Note C) ................ 192,236
Other accrued expenses (Note C) ................ 144,706
------------
Total liabilities .............................. 29,997,657
------------
Net assets, at market value ............................ $239,895,728
============
NET ASSETS
Net assets consist of:
Undistributed net investment income ............ $ 811,006
Unrealized appreciation on:
Investments .................................. 4,720,777
Foreign currency related transactions ........ 123,134
Accumulated net realized gain .................. 13,729,248
Capital stock .................................. 202,394
Additional paid-in capital ..................... 220,309,169
------------
Net assets, at market value ............................ $239,895,728
============
NET ASSET VALUE, offering and redemption per price
($239,895,728 DIVIDED BY 20,239,424 shares of
capital stock outstanding, $.01 par value,
100,000,000 shares authorized) ............................. $11.85
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1996
<TABLE>
INVESTMENT INCOME
<S> <C> <C>
Interest ........................................... $12,011,146
Expenses:
Management fee (Note C) ............................ $ 1,040,457
Services to shareholders (Note C) .................. 187,128
Directors' fees and expenses (Note C) .............. 23,712
Custodian and accounting fees (Note C) ............. 171,405
Auditing ........................................... 40,950
Reports to shareholders ............................ 47,487
Federal registration ............................... 12,473
State registration ................................. 18,176
Legal .............................................. 5,603
Amortization of organization expense (Note A) ...... 7,635
Other .............................................. 13,740
------------
Total expenses before reductions ................... 1,568,766
Expense reductions (Note C) ........................ (31,566)
------------
Expenses, net ...................................... 1,537,200
-----------
Net investment income .............................. 10,473,946
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments ................................ 20,053,136
Written options ............................ 11,107
Foreign currency related transactions ...... (117,294) 19,946,949
------------
Net unrealized appreciation during the period on:
Investments ................................ 6,199,346
Written options ............................ 13,215
Foreign currency related transactions ...... 181,699 6,394,260
--------------------------
Net gain on investment transactions ................ 26,341,209
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $36,815,155
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
INCREASE (DECREASE) IN NET ASSETS 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ............................ $ 10,473,946 $ 16,109,985
Net realized gain (loss) on investment
transactions ................................. 19,946,949 (5,133,869)
Net unrealized appreciation (depreciation) on
investment transactions during the period ... 6,394,260 (77,188)
------------- -------------
Net increase in net assets resulting
from operations .............................. 36,815,155 10,898,928
------------- -------------
Distributions to shareholders from
net investment income ($.58 and $1.11
per share, respectively) ..................... (10,276,038) (14,649,724)
------------- -------------
Fund share transactions:
Proceeds from shares sold ........................ 112,971,003 141,506,487
Net asset value of shares issued to
shareholders in reinvestment of
distributions ................................ 8,678,859 12,247,689
Cost of shares redeemed .......................... (77,696,052) (75,352,525)
------------- -------------
Net increase in net assets from Fund share
transactions ................................. 43,953,810 78,401,651
------------- -------------
INCREASE IN NET ASSETS ........................... 70,492,927 74,650,855
Net assets at beginning of period ................ 169,402,801 94,751,946
------------- -------------
NET ASSETS AT END OF PERIOD (including
undistributed net investment income of
$811,006 and $613,098, respectively) ......... $ 239,895,728 $ 169,402,801
============= =============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ........ 16,511,433 8,577,789
------------- -------------
Shares sold ...................................... 9,890,192 14,123,224
Shares issued to shareholders in
reinvestment of distributions ................ 779,486 1,216,165
Shares redeemed .................................. (6,941,687) (7,405,745)
------------- -------------
Net increase in Fund shares ...................... 3,727,991 7,933,644
------------- -------------
Shares outstanding at end of period .............. 20,239,424 16,511,433
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS YEAR DECEMBER 31, 1993
ENDED ENDED (COMMENCEMENT
APRIL 30, OCTOBER 31, OF OPERATIONS) TO
1996 1995 OCTOBER 31, 1994
------------- ------------ ------------------
<S> <C> <C> <C>
Net asset value, beginning of period .......... $ 10.26 $11.05 $ 12.00
------- ------ -------
Income from investment operations:
Net investment income (a) ............. .58 1.14 0.60
Net realized and unrealized loss on investments 1.59 (.82) (1.04)
------- ------ -------
Total from investment operations .............. 2.17 .32 (.44)
------- ------ -------
Less distributions from net investment income . (.58) (1.11) (.51)
------- ------ -------
Net asset value, end of period ................ $ 11.85 $10.26 $ 11.05
======= ====== =======
TOTAL RETURN (%) .............................. 21.55** 3.46 (3.54)**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) ........ 240 169 95
Ratio of operating expenses, net to average
daily net assets (%) (a) .............. 1.49* 1.50 1.50*
Ratio of net investment income to average
daily net assets (%) .................. 10.13* 12.83 9.17*
Portfolio turnover rate (%) ................... 421.4(b)* 302.2 180.6*
(a) Reflects a per share amount of management
fee not imposed by the Adviser............. $ -- $ .02 $ .05
Operating expense ratio before expense
reductions (%) ............................ 1.52* 1.68 2.23*
(b) Economic and market conditions necessitated
more active trading, resulting in a higher
portfolio turnover rate.
</TABLE>
* Annualized
** Not annualized
15
<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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Portfolio 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 (.04% of net assets) and have been noted in the investment
portfolio as of April 30, 1996. 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.
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 six
months ended April 30, 1996, the Fund purchased put options on securities as a
hedge against potential adverse price movements in the value of portfolio
assets.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium paid. If the Fund elects to close out the option it
would recognize a gain or loss equal to the difference between the cost of
acquiring the option and the amount realized upon the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.
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.
17
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
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.
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.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies and as a
hedge against changes in exchange rates relating to foreign currency denominated
assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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.
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. The
Fund will establish a segregated account in which it will maintain cash and/or
liquid debt securities equal in value to commitments for when-issued or forward
delivery securities.
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, 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.
19
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
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 straight-line basis over a five-year 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 six months ended April 30, 1996, purchases and sales (including
maturities) of investment securities (excluding short-term investments)
aggregated $400,673,486 and $399,056,053, respectively.
In addition, the holder failed to exercise the written options during the
period, principal amount U.S. $1,255,000 on March 1996 German Deutschemark
(premiums received $11,107).
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
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 six months
ended April 30, 1996, the Adviser did not impose a portion of its fee amounting
to $31,566, and the portion imposed amounted to $1,008,891 of which $192,236 is
unpaid at April 30, 1996.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended April 30, 1996, the amount charged to the Fund by SSC
aggregated $143,165, of which $27,824 is unpaid at April 30, 1996.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the six months ended April 30,
1996, the amount charged to the Fund by STC aggregated $6,968.
Effective February 1, 1996, Scudder Fund Accounting Corporation ("SFAC"), a
subsidiary of the Adviser, assumed responsibility 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 April 30, 1996, the amount charged
to the Fund by SFAC aggregated $47,477, of which $17,060 is unpaid at April 30,
1996.
The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the six
months ended April 30, 1996, Directors' fees and expenses aggregated $23,712.
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
21
<PAGE>
SCUDDER EMERGING MARKETS INCOME FUND
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.
E. COMMITMENTS
- --------------------------------------------------------------------------------
As of April 30, 1996, the Fund had entered into the following forward
foreign currency exchange contracts resulting in net unrealized
appreciation of $160,113.
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (U.S.$)
- -------------------- ----------------- --------------- -------
<S> <C> <C> <C> <C> <C>
DEM 1,854,000 USD 1,250,000 10/9/96 27,335
DEM 5,398,149 USD 3,650,000 4/16/97 85,218
DEM 3,865,160 USD 2,600,000 4/23/97 47,560
-------
160,113
=======
</TABLE>
F. LINES OF CREDIT
- --------------------------------------------------------------------------------
The Fund and several affiliated Funds (the "Participants") share in a
$500 million revolving credit facility for temporary or emergency
purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. 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 25
percent of its net assets under the agreement. In addition, the Fund
also maintains an uncommitted line of credit.
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 April
30, 1996, and the related statement of operations for the six months then ended,
the statements of changes in net assets for the six months then ended and for
the year ended October 31 1995, and the financial highlights for the six months
ended April 30, 1996, for the year ended October 31, 1995 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 April
30, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Emerging Markets Income Fund as of April 30, 1996, the results of its
operations for the six months then ended, the changes in its net assets for the
six months then ended and for the year ended October 31, 1995 and the financial
highlights for the six months ended April 30, 1996, for the year ended October
31, 1995 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.
June 21, 1996
23
<PAGE>
(This page intentionally left blank.)
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; Consultant
William H. Luers
Director; President, The Metropolitan Museum of Art
Daniel Pierce*
Director and Vice President
Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor, Columbia
University Graduate School of Business
Robert G. Stone, Jr.
Honorary Director; Chairman of the Board and Director, Kirby Corporation
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 Global Bond Fund
Tax Free Money Market+ Scudder GNMA Fund
Scudder Tax Free Money Fund Scudder Income Fund
Scudder California Tax Free Money Fund* Scudder International Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Bond 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 Emerging Markets Growth Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Fund
Scudder Massachusetts Tax Free Fund* Scudder Global Discovery Fund
Scudder Medium Term Tax Free Fund Scudder Gold Fund
Scudder New York Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Ohio Tax Free Fund* Scudder International Fund
Scudder Pennsylvania Tax Free Fund* Scudder Latin America Fund
Growth and Income Scudder Pacific Opportunities Fund
Scudder Balanced Fund Scudder Quality Growth Fund
Scudder Growth and Income Fund Scudder Small Company Value 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.
-----------------------------------------------------------------------------------------------------------------
<FN>
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.
</FN>
</TABLE>
26
<PAGE>
HOW TO CONTACT SCUDDER
<TABLE>
<CAPTION>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
<S> <C>
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
-------------------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------------------
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------
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.
-------------------------------------------------------------------------------------------------------------
<FN>
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.
</FN>
</TABLE>
27
<PAGE>
Celebrating Over 75 Years of Serving Investors
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 38 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.
