Scudder
Emerging Markets
Income Fund
Annual Report
October 31, 1996
Pure No-Load(TM) Funds
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.
SCUDDER (logo)
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
13 Financial Statements
16 Financial Highlights
17 Notes to Financial Statements
22 Report of Independent Accountants
23 Tax Information
25 Officers and Directors
26 Investment Products and Services
27 How to Contact Scudder
In Brief
o Emerging market bonds posted strong gains for the past 12 months as emerging
countries benefited from a favorable global environment and improving credit
fundamentals.
o Reflecting this favorable environment, Scudder Emerging Markets Income Fund
posted a 39.78% total return for its most recent fiscal year ended October 31,
1996. This return exceeds the 36.46% total return of the 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 yield of 9.03%.
o The Fund continues to maintain a liquid, diversified portfolio -- with bonds
issued in Latin America, central and eastern Europe, the Middle East, northern
Africa, and Asia -- that we believe is well positioned to benefit from the
improving balance sheets of emerging countries while earning a higher level of
current income.
2 - Scudder Emerging Markets Income Fund
<PAGE>
Letter From the Fund's Chairman
Dear Shareholders,
We hope you enjoy our newly redesigned shareholder report. The new format,
which is being gradually introduced for all Scudder funds, is designed to
enhance the usefulness and readability of the reports.
Let us know what you think.
We are pleased to report on Scudder Emerging Markets Income Fund's
performance over its most recent fiscal year. The Fund posted a strong total
return of 39.78% over the 12 months ended October 31 as sovereign bonds issued
by emerging countries benefited from ample global liquidity, improving country
fundamentals, and heightened interest from non-traditional market participants
worldwide. The Fund continues to pursue a strategy of broad diversification and
careful security selection. Please read the discussion beginning on page 6 for
more information on the Fund's portfolio strategy and country allocations.
We would like to take this opportunity to highlight some additions made
this fall to the Scudder Family of Funds. Scudder 21st Century Growth Fund seeks
long-term growth by investing primarily in the securities of emerging growth
companies poised to be leaders in the 21st century. Scudder Classic Growth Fund
seeks long-term growth by investing primarily in common stocks of medium to
large U.S. companies; additionally, it seeks to keep the value of its shares
more stable than the typical capital growth mutual fund. Most recently, we
introduced the Scudder Pathway Series, four portfolios -- Conservative,
Balanced, Growth, and International -- which each comprise five or more Scudder
funds and which together are designed to meet a range of investor needs. For
more information on these and other Scudder products and services, please see
page 26.
Thank you for your continued investment in Scudder Emerging Markets Income
Fund. Please do not hesitate to call Scudder Investor Information at
1-800-225-2470 with any questions regarding your account.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Emerging Markets Income Fund
3 - Scudder Emerging Markets Income Fund
<PAGE>
PERFORMANCE UPDATE as of October 31, 1996
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/96 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER EMERGING MARKETS INCOME FUND
- --------------------------------------
1 Year $13,978 39.78% 39.78%
Life of
Fund* $13,951 39.51% 12.46%
- --------------------------------------
JP MORGAN COMPOSITE EMERGING MARKETS
BOND/LATIN EUROBOND INDEX
- --------------------------------------
1 Year $13,646 36.46% 36.46%
Life of
Fund* $12,909 29.09% 9.44%
- --------------------------------------
*The Fund commenced operations on December 31, 1993.
Index comparisons begin December 31, 1993.
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
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 MARKET INCOME FUND
Year Amount
- ----------------------
12/93* $10000
4/94 $ 8962
10/94 $ 9646
4/95 $ 8858
10/95 $ 9980
4/96 $12131
10/96 $13951
JP MORGAN COMPOSITE EMERGING MARKETS
BOND/LATIN EUROBOND INDEX
Year Amount
- ----------------------
12/93* $10000
4/94 $ 8314
10/94 $ 8771
4/95 $ 8149
10/95 $ 9460
4/96 $11351
10/96 $12909
The unmanaged JP Morgan 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 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 1996
NET ASSET VALUE... $11.05 $10.26 $12.98
INCOME DIVIDENDS.. $ .51 $ 1.11 $ 1.19
FUND TOTAL
RETURN (%)........ -3.54 3.46 39.78
INDEX TOTAL
RETURN (%)........ -12.23 7.85 36.46
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 - Scudder Emerging Markets Income Fund
<PAGE>
PORTFOLIO SUMMARY as of October 31, 1996
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Debt Obligations 99%
Cash Equivalents 1%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
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.
- --------------------------------------------------------------------------
GEOGRAPHICAL EXPOSURE
(Excludes 1% Cash Equivalents)
- --------------------------------------------------------------------------
Brazil 26%
Mexico 19%
Venezuela 12%
Argentina 12%
Ecuador 9%
Morocco 5%
Panama 5%
Philippines 4%
Poland 2%
Other 6%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
We temporarily reduced our Latin American
holdings to take some profits and then rebuilt
them as we continued to note favorable economic
signals in many Latin American countries.
- --------------------------------------------------------------------------
CURRENCY EXPOSURE
(Excludes 1% Cash Equivalents)
- --------------------------------------------------------------------------
United States 92%
Mexico 3%
New Zealand 2%
Argentina 2%
Chile 1%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund invests primarily in
dollar-denominated sovereign issues.
- --------------------------------------------------------------------------
Average Life
(Excludes 1% Cash Equivalents)
- --------------------------------------------------------------------------
0 - 3 years 7%
3 - 5 years 1%
5 - 10 years 36%
Greater than 10 years 56%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund continues to hold a large percentage
of longer-duration bonds to capitalize on the
current trend of improving prices and declining
yields in the emerging markets.
- -----------------------------------------------------------------------------
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 - Scudder Emerging Markets Income Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Three important trends helped emerging country bonds to perform extremely well
during Scudder Emerging Markets Income Fund's most recent fiscal year: a
favorable global environment of slow growth and low interest rates in OECD
countries, the improving credit quality of emerging countries, and increased
investor interest in emerging markets.
Scudder Emerging Markets Income Fund posted a strong 39.78% total return for its
most recent fiscal year ended October 31, 1996. This return exceeds the 36.46%
total return of the unmanaged J.P. Morgan Composite Emerging Markets Bond/Latin
Eurobond Index over the same time period. Contributing to the Fund's impressive
showing were a net asset value increase from $10.26 to $12.98 during the period,
and income distributions totaling $1.19. The Fund's yield, 9.03% as of October
31, remains attractive to investors.
Improved Balance Sheets and Fiscal Reform
Following difficult market conditions at the start of 1995, the picture for
emerging market bonds has become very positive. Over the past 12 months,
investors have returned to emerging market bonds in great numbers. European
funds, pension funds, insurance companies, local retail investors, emerging
country governments, and even high yield bond funds -- which typically purchase
only domestic corporate bonds -- have been attracted to this market because of
nearly across-the-board improvements in credit fundamentals among emerging
market countries. Following Poland's credit upgrade to investment grade last
February, several other countries, notably the Philippines and Venezuela, seem
poised for upgrades of their own. (Emerging countries such as Morocco, Panama,
and Croatia are seeking their initial credit rating.) In addition, investors
seeking higher yields are increasingly looking to emerging markets because of
their high yield relative to U.S. Treasuries.
For our overall strategy, we continue to maintain a liquid, diversified
portfolio that is well positioned to benefit from the improved economic picture
in many emerging countries while at the same time earning a high level of
current income. Region, country, and security selection remained extremely
important for the Fund as the decoupling of emerging markets from the U.S.
Treasury market continued and investors discriminated more closely among
emerging markets offerings during the period.
With respect to regional allocation, Latin America represented nearly 81% of the
Fund's holdings as of October 31, 1996, an increase from 74% one year ago.
During the past fiscal year our Latin American holdings were reduced for a time
as we took some profits but then were rebuilt as we continued to note favorable
economic signals in many Latin American countries. The Fund's core holdings in
Latin America are Brazil (25% of investments), followed by Mexico (19%),
Venezuela (12%), Argentina (12%), and Ecuador (9%). Brazil continues to make
slow but steady progress toward greater fiscal and administrative reform. These
steps are designed to reduce bureaucracy, shrink government expenditures, and
6 - Scudder Emerging Markets Income Fund
<PAGE>
enhance the performance of the country's capital markets. Such progress, along
with continuing tax and social security reform, makes Brazil's debt attractive
for investors.
Similar reforms are occurring in Mexico and Argentina. We increased our holdings
in Mexico over the period as the country's austerity and export programs began
to show results in an increase in bank reserves and a decline in inflation.
Mexico also reduced its debt service during the period by swapping high interest
Brady Bonds for lower coupon debt. In Argentina, progress on fiscal reform and
tax collection continues, but we reduced our holdings in October because of
potential volatility resulting from former Finance Minister Cavallo's charges of
government corruption.
We increased our position in Venezuelan bonds over the course of the period as
that country's prospects continue to brighten. Venezuela has benefited from a
substantial increase in oil revenues stemming from higher energy prices. These
revenues boosted the country's international reserves to $14 billion and enabled
the government to earmark substantial assets for debt service. We foresee
further progress in Venezuela given that country's increased privatization
efforts and the prospect of substantial debt retirement through government
buybacks.
We continue to diversify the Fund's holdings through investments in Eastern
Europe, Asia, and Africa. Additionally, during the year we chose to decrease the
interest rate sensitivity of the portfolio because of our concerns over the
direction of U.S. interest rates. As of October 31, 1996 we had reduced
fixed-rate instruments to 33% of investments from 37% a year earlier and
increased floating rate instruments (in general, assets with coupons that reset
every six months in relation to the London Interbank Offered Rate, or LIBOR) to
65% of investments from 60% 12 months before. This strategy worked to the Fund's
advantage as floating-rate securities in the Fund's portfolio outperformed
fixed-rate instruments over the 12-month period, with average total returns of
42.1% and 37.6%, respectively. The majority of Fund assets continue to be
invested in dollar-denominated sovereign debt obligations because of their
attractive yields versus many emerging market corporate bonds. On October 31,
1996, sovereign securities represented 99% of debt obligations with the
remaining 1% invested in corporate debt instruments.
Our Outlook
We believe improving credit fundamentals in many of the underlying countries
will remain the prevailing theme in emerging markets for some time to come. But
an ever-widening investor base, a significant yield advantage over other asset
classes, and ample global liquidity should also continue to create a positive
environment for emerging market debt over the coming months.
7 - Scudder Emerging Markets Income Fund
<PAGE>
We thank you for investing in Scudder Emerging Markets Income Fund. As portfolio
managers, we will continue to search 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/Maria Isabel Saltzman
Susan E. Gray M. Isabel Saltzman
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. Scudder believes its team approach benefits Fund investors by
bringing together many disciplines and leveraging Scudder's extensive
resources.
Lead Portfolio Manager Susan E. Gray assumed responsibility for the Fund's
investment strategies and day-to-day management in 1996. Susan, who has over
six years of investment experience in emerging markets, joined the Fund's team
in 1994 and has worked at Scudder since 1987. M. Isabel Saltzman, Portfolio
Manager, assists with the development and execution of investment strategy.
Isabel, who joined Scudder in 1990, has been involved in foreign finance and
investing since 1979 and contributes special expertise in Latin America.
8 - Scudder Emerging Markets Income Fund
<PAGE>
Investment Portfolio as of October 31, 1996
<TABLE>
<CAPTION>
Principal Market
Amount ($) (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreements 1.0%
- ----------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 10/31/96
at 5.52%, to be repurchased at $2,822,433 on 11/1/96, collateralized -----------
by a $2,610,000 U.S. Treasury Note, 8.5%, 2/15/00 (Cost $2,822,000) ..... 2,822,000 2,822,000
-----------
Short-Term Debt 7.2%
- ----------------------------------------------------------------------------------------------------------------
Argentina 1.7%
Letras del Tesoro (Argentine Republic Treasury Bill), 1/17/97 (c) ......... ARP 5,000,000 4,920,787
-----------
Chile 0.6%
Citibank Time Deposit linked to Chilean Peso, 13%, 5/28/97 ................ CLP 715,487,500 1,692,950
-----------
Mexico 2.8%
Certificados de la Tesoreria, 12/19/96 .................................... MXN 18,000,000 2,172,301
Certificados de la Tesoreria, 1/9/97 ...................................... MXN 21,538,460 2,554,888
Certificados de la Tesoreria, 1/16/97 ..................................... MXN 13,079,070 1,542,904
Certificados de la Tesoreria, 1/23/97 ..................................... MXN 15,944,060 1,870,676
-----------
8,140,769
-----------
New Zealand 2.1%
New Zealand Treasury Bill, 11/6/96 ........................................ NZD 8,800,000 6,214,715
- ----------------------------------------------------------------------------------------------------------------
Total Short-Term Debt (Cost $20,937,713) ................................. 20,969,221
- ----------------------------------------------------------------------------------------------------------------
Debt Obligations 91.7%
- ----------------------------------------------------------------------------------------------------------------
Argentina 10.1%
Argentine Republic, Floating Rate Bond, Series L, LIBOR plus .8125%
(6.625%), 3/31/05 ....................................................... 15,680,000 12,936,000
Argentine Republic, Collateralized Par Bond, Series L, Step-up Coupon,
5.25%, 3/31/23 .......................................................... 27,850,000 16,605,562
----------
29,541,562
----------
Brazil 25.3%
Federative Republic of Brazil, Eligible Interest Bond, LIBOR plus .8125%
(6.5%), 4/15/06 ......................................................... 13,500,000 11,475,000
Federative Republic of Brazil, Floating Rate Interest Reduction Bond,
Step-up Coupon, 4.5%, 4/15/09 ........................................... 17,000,000 11,730,000
Federative Republic of Brazil Investment Bond, Exit Bond, 6%, 9/15/13 ..... 5,500,000 3,774,375
Federative Republic of Brazil C Bond, 4.5% with 3.5% Interest
Capitalization, 4/15/14 ................................................. 32,566,535 22,552,325
Federative Republic of Brazil, Collateralized Discount Bond, Floating
Rate Bond, LIBOR plus .8125% (6.5%), 4/15/24 ............................ 33,250,000 24,521,875
----------
74,053,575
----------
Costa Rica 0.0%
Banco Central de Costa Rica Principal B, 6.25%, 5/21/15 ................... 200,000 147,000
----------
Croatia 0.6%
Republic of Croatia, Floating Rate Note, Series A, LIBOR plus .8125%
(6.875%), 7/30/10 ....................................................... 1,750,000 1,625,313
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ecuador 9.3%
Republic of Ecuador (Bearer), Past Due Interest Bond, Floating Rate Bond,
LIBOR plus .8125%, 3% with 3.5% Interest Capitalization, 2/27/15 ........ 32,250,429 18,019,927
Republic of Ecuador, Past Due Interest Bond, Floating Rate Bond, LIBOR
plus .8125%, 3% with 3.5% Interest Capitalization, 2/27/15 .............. 6,873,035 3,840,308
Republic of Ecuador, Collateralized Discount Bond, Floating Rate Bond,
LIBOR plus .8125% (6.5%), 2/28/25 ....................................... 8,250,000 5,445,000
----------
27,305,235
----------
Mexico 15.9%
United Mexican States, Collateralized Discount Bond, (Detachable Oil
Priced Indexed Value Recovery Rights), Series A, LIBOR plus .8125%
(6.453%),12/31/19 ....................................................... 8,500,000 6,991,250
United Mexican States, Collateralized Discount Bond, (Detachable Oil
Priced Indexed Value Recovery Rights), Series B, LIBOR plus .8125%
(6.391%), 12/31/19 ...................................................... 15,250,000 12,543,125
United Mexican States, Collateralized Discount Bond, (Detachable Oil
Priced Indexed Value Recovery Rights), Series D, LIBOR plus .8125%
(6.453%), 12/31/19 ...................................................... 2,250,000 1,850,625
United Mexican States, Collateralized Par Bond, (Detachable Oil Priced
Indexed Value Recovery Rights), Series A, 6.25%, 12/31/19 ............... 8,750,000 6,152,344
United Mexican States, Collateralized Par Bond, (Detachable Oil Priced
Indexed Value Recovery Rights), Series B, 6.25%, 12/31/19 (c) ........... 13,250,000 9,316,406
United Mexican States, 11.5%, 5/15/26 (c) ................................. 9,750,000 9,740,250
----------
46,594,000
----------
Morocco 5.1%
Kingdom of Morocco, Restructuring and Consolidation Agreement, Tranche A,
LIBOR plus .8125% (6.438%), 1/1/09 (d) .................................. 18,850,000 14,915,063
----------
Panama 4.8%
Republic of Panama, Interest Reduction Bond, Step-up Coupon, 3.5%, 7/17/14 16,000,000 10,520,000
Republic of Panama, Past-due Interest Bond, LIBOR plus .8125%, 4% with 2.5%
Interest Capitalization, 7/17/16 ........................................ 4,750,000 3,532,813
----------
14,052,813
----------
Philippines 4.3%
Republic of the Philippines, New Money Bond, LIBOR plus .8125% (6.563%),
1/5/05 .................................................................. 1,750,000 1,706,250
Republic of the Philippines, Debt Conversion Bond, LIBOR plus .8125%
(6.438%), 12/1/09 ....................................................... 1,750,000 1,675,625
Republic of the Philippines, 8.75%, 10/7/16 ............................... 9,522,000 9,319,658
----------
12,701,533
----------
Poland 2.4%
Republic of Poland, Collateralized Discount Bond, LIBOR plus .8125% (6.5%),
10/27/24 ................................................................ 7,500,000 7,162,500
----------
Russia 1.9%
Vnesheconombank, Bilateral Non-performing Loan Agreement, 12/31/96 * (d) .. 7,750,000 5,686,563
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Venezuela 12.0%
Republic of Venezuela, Front Loaded Interest Reduction Bond, Series A,
LIBOR plus .875% (6.625%), 3/31/07 ..................................... 6,250,000 5,203,125
Republic of Venezuela, Front Loaded Interest Reduction Bond, Series B,
LIBOR plus .875% (6.5%), 3/31/07 ....................................... 4,500,000 3,746,250
Republic of Venezuela, Debt Conversion Bond, Floating Rate Bond, Series DL,
LIBOR plus .875% (6.625%), 12/18/07 .................................... 32,000,000 26,280,000
-----------
35,229,375
- ----------------------------------------------------------------------------------------------------------------
Total Debt Obligations (Cost $255,248,971) 269,014,532
- ----------------------------------------------------------------------------------------------------------------
Shares
- ----------------------------------------------------------------------------------------------------------------
Preferred Stocks 0.0%
- ----------------------------------------------------------------------------------------------------------------
Argentina
Nortel Inversora "A" (ADR) (Telecommunication services) (e) (Cost $75,709) 7,805 96,860
-----------
Principal
Amount ($) (b)
- ----------------------------------------------------------------------------------------------------------------
Purchased Option 0.1%
- ----------------------------------------------------------------------------------------------------------------
Put Option on Ecuador Past Due Interest Bond, expires 11/4/96 ............ 16,458,289 164,583
Put Option on New Zealand Dollars, strike price .68, expiration date 11/5/96 NZD 8,800,000 --
- ----------------------------------------------------------------------------------------------------------------
Total Purchased Options (Cost $254,307) 164,583
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $279,338,700) (a) 293,067,196
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $279,806,826. At October 31,
1996, net unrealized appreciation for all securities based on tax cost was
$13,260,370. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $14,252,172 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$991,802.
(b) Principal amount is stated in U.S. dollars unless otherwise noted.
(c) At October 31, 1996, these securities, in whole or in part, have been
segregated to cover loan participation and when-issued securities.
(d) 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 October
31, 1996.
(e) Security valued in good faith by the Valuation Committee of the Board of
Directors. The cost of this security at October 31, 1996 aggregated
$75,709. See Note A of the Notes to Financial Statements.
The accompanying notes are an integral part of the financial statements.
11 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
Transactions in written call options during the year ended October 31,
1996 were:
<TABLE>
<CAPTION>
Premiums
Principal Amount Received ($)
--------------------------------------------------
<S> <C> <C>
Outstanding at
October 31, 1995 ......................... 1,255,000 11,107
Contracts written ........................ 8,800,000 19,360
Contracts closed ......................... (8,800,000) (19,360)
Contracts expired ........................ (1,255,000) (11,107)
--------------------------------------------------
Outstanding at
October 31, 1996 ......................... -- --
=========== =========
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Currency Abbreviations
MXN Mexican Peso CLP Chilean Peso
NZD New Zealand Dollar ARP Argentine Peso
The accompanying notes are an integral part of the financial statements.
12 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of October 31, 1996
<TABLE>
<S> <C> <C>
Assets
- ---------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $279,338,700) (Note A) ..... $ 293,067,196
Cash ............................................................... 399
Receivable for investments sold .................................... 10,101,013
Receivable for when-issued and forward delivery securities (Note A) 5,232,813
Receivable for loan participations sold (Note A) ................... 5,758,569
Interest receivable ................................................ 4,788,868
Receivable for Fund shares sold .................................... 502,928
Deferred organization expenses (Note A) ............................ 33,265
Net receivable on closed forward currency exchange contracts (Note A) 9,526
----------------
Total assets ...................................................... 319,494,577
----------------
Liabilities
----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased .................................. $ 5,772,013
Payable for when-issued and forward delivery securities (Note A) ... 5,024,128
Payable for loan participations purchased (Note A) ................. 3,283,338
Payable for Fund shares redeemed ................................... 360,954
Accrued management fee (Note C) .................................... 269,385
Other accrued expenses (Note C) .................................... 176,775
----------------
Total liabilities .................................................. 14,886,593
-------------------------------------------------------------------------------------------
Net assets, at market value ........................................ $ 304,607,984
-------------------------------------------------------------------------------------------
Net Assets
----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................ 226,767
Unrealized appreciation (depreciation) on:
Investments ..................................................... 13,728,496
Foreign currency related transactions ........................... (166,942)
Accumulated net realized gain ...................................... 30,276,620
Paid-in capital .................................................... 260,543,043
-------------------------------------------------------------------------------------------
Net assets, at market value ........................................ $ 304,607,984
-------------------------------------------------------------------------------------------
Net Asset Value
----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($304,607,984 / 23,465,219 shares of capital stock outstanding, ----------------
$.01 par value, 100,000,000 shares authorized) ..................... $12.98
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Statement of Operations
year ended October 31, 1996
<TABLE>
<S> <C>
Investment Income
------------------------------------------------------------------------------------------------------------------------------
Interest .................................................... $ 27,886,760
Dividend .................................................... 13,291
-----------------
27,900,051
-----------------
Expenses:
Management fee (Note C) ..................................... $ 2,427,833
Services to shareholders (Note C) ........................... 390,701
Directors' fees and expenses (Note C) ....................... 50,465
Custodian and accounting fees (Note C) ...................... 357,865
Auditing .................................................... 96,186
Reports to shareholders ..................................... 54,202
Federal registration ........................................ 36,421
State registration .......................................... 33,478
Legal ....................................................... 18,678
Amortization of organization expense (Note A) ............... 15,351
Other ....................................................... 44,626
-----------------
Total expenses before reductions ............................ 3,525,806
Expense reductions (Note C) ................................. (31,566)
-----------------
Expenses, net ............................................... 3,494,240
-------------------------------------------------------------------------------------------
Net investment income ....................................... 24,405,811
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ................................................. 36,001,161
Written options ............................................. 880
Foreign currency related transactions ....................... (324,667)
-----------------
35,677,374
Net unrealized appreciation (depreciation) during the period
on:
Investments ................................................. 15,207,065
Written options ............................................. 13,215
Foreign currency related transactions ....................... (108,377)
-----------------
15,111,903
-----------------
Net gain on investment transactions ......................... 50,789,277
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations ........ $ 75,195,088
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended October 31,
Increase (Decrease) in Net Assets 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ....................................... $ 24,405,811 $ 16,109,985
Net realized gain (loss) from investment transactions ....... 35,677,374 (5,133,869)
Net unrealized appreciation (depreciation) on investment
transactions during the period ........................... 15,111,903 (77,188)
-------------- --------------
Net increase in net assets resulting from operations ........ 75,195,088 10,898,928
-------------- --------------
Distributions to shareholders from net investment income .... (23,976,386) (14,649,724)
-------------- --------------
Fund share transactions:
Proceeds from shares sold ................................... 265,528,712 141,506,487
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................ 20,013,011 12,247,689
Cost of shares redeemed ..................................... (201,555,242) (75,352,525)
-------------- --------------
Net increase in net assets from Fund share transactions ..... 83,986,481 78,401,651
-------------- --------------
Increase in net assets ...................................... 135,205,183 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 $226,767 and $613,098, respectively) $304,607,984 $169,402,801
-------------- --------------
Other Information
------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ................... 16,511,433 8,577,789
-------------- --------------
Shares sold ................................................. 22,121,034 14,123,224
Shares issued to shareholders in reinvestment of
distributions ............................................ 1,624,014 1,216,165
Shares redeemed ............................................. (16,851,262) (7,405,745)
-------------- --------------
Net increase in Fund shares ................................. 6,953,786 7,933,644
-------------- --------------
Shares outstanding at end of period ......................... 23,465,219 16,511,433
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 -- SCUDDER EMERGING MARKETS INCOME FUND
<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
December 31, 1993
(commencement of
operations) to
Years Ended October 31, October 31,
1996 (a) 1995 1994
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period ............... $10.26 $11.05 $12.00
---------------------------------------------
Income from investment operations:
Net investment income .............................. 1.20 1.14 0.60
Net realized and unrealized gain (loss) on
investments ..................................... 2.71 (.82) (1.04)
---------------------------------------------
Total from investment operations ................... 3.91 .32 (.44)
---------------------------------------------
Less distributions from net investment income ...... (1.19) (1.11) (.51)
---------------------------------------------
Net asset value, end of period ..................... $12.98 $10.26 $11.05
----------------------------------------------------------------------------------------------------
Total Return (%) ................................... 39.78 3.46 (3.54)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............. 305 169 95
Ratio of operating expenses, net to average daily
net assets (%) (a) .............................. 1.44 1.50 1.50*
Ratio of operating expense before expense
reductions, to average daily net assets (%) ..... 1.45 1.68 2.23*
Ratio of net investment income to average daily
net assets (%) ................................. 10.05 12.83 9.17*
Portfolio turnover rate (%) 430.0(b) 302.2 180.6*
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Economic and market conditions necessitated more active trading, resulting
in a higher portfolio turnover rate.
* Annualized
** Not annualized
16 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
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 $96,860 (.03% of net assets) and have been noted in the investment
portfolio as of October 31, 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.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value is equal to at least 100.5% of the resale
price.
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, 1996, the Fund purchased put 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 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.
17 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked price are available. Over-the-counter written or purchased options are
valued using dealer supplied quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
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 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.
18 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
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.
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.
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 year ended October 31, 1996, purchases and sales (including maturities)
of investment securities (excluding short-term investments) aggregated
$983,538,295 and $918,913,514, respectively.
19 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
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 net 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, 1996, the Adviser did not impose a
portion of its fee amounting to $31,566, and the portion imposed amounted to
$2,396,267 of which $269,385 is unpaid at October 31, 1996.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended October 31, 1996, the amount charged to the Fund by SSC aggregated
$308,543, of which $29,059 is unpaid at October 31, 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 year ended October 31,
1996, the amount charged to the Fund by STC aggregated $15,479, of which $3,011
is unpaid at October 31, 1996.
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 year ended October 31, 1996, the amount charged to
the Fund by SFAC aggregated $150,781, of which $18,355 is unpaid at October 31,
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 year
ended October 31, 1996, Directors' fees and expenses aggregated $50,465.
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, high rates of inflation, repatriation restrictions on
income and capital, and future adverse political and economic developments.
Moreover, securities issued in these markets may be less liquid, subject to
government ownership controls, delayed settlements, and their prices more
volatile than those of comparable securities in the United States.
20 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
E. 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.
21 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder Emerging Markets Income Fund, Inc. and to
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, 1996, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years then ended and the
financial highlights for each of the two years in the period ended October 31,
1996 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, 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 October 31, 1996, the results of its
operations for the year then ended, the changes in net assets for each of the
two years then ended and the financial highlights for each of the two years in
the period ended October 31, 1996 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 17, 1996
22 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Tax Information
Pursuant to section 852 of the Internal Revenue Code, the Fund designates
$1,387,852 as capital gain dividends for the year ended October 31, 1996.
23 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
This Page
intentionally
left blank.
24 - Scudder Emerging Markets Income Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board, Director and Vice President
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
Dudley H. Ladd*
Director
William H. Luers
Director; President, The Metropolitan Museum of Art
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
Susan E. Gray*
Vice President
Adam Greshin*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Gerald J. Moran*
Vice President
M. Isabel Saltzman*
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
Kathryn L. Quirk*
Vice President and Assistant Secretary
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
25 - Scudder Emerging Markets Income Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund*
Scudder Massachusetts Limited Term
Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
U.S. Income
- ------------
Scudder Short Term Bond Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Zero Coupon 2000 Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
U.S. Growth
- -----------
Value
Scudder Capital Growth Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Quality Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Emerging Markets Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund
Retirement Programs
- -------------------
IRA
SEP IRA
SIMPLE IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan *+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities
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. +++Funds within categories are listed from expected
least to most risk. +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.
26 - Scudder Emerging Markets Income Fund
<PAGE>
How to Contact Scudder
Account Service and Information
- --------------------------------------------------------------------------------
For existing account services and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges,
and an overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For information about your Scudder accounts, exchanges and
redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information
- --------------------------------------------------------------------------------
For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment
questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services
To receive information about this discount brokerage service and
to obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
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 Chicago San Francisco
Boston New York
For information on Scudder Treasurers Trust(TM), an
institutional cash management service for corporations,
non-profit organizations and trusts which utilizes certain
portfolios of Scudder Fund, Inc.* ($100,000 minimum), call:
1-800-541-7703.
For information on Scudder Institutional Funds**, funds designed
to meet the broad investment management and service needs of
banks and other institutions, call: 1-800-854-8525.
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061--
Member NASD/SIPC
** 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 - Scudder Emerging Markets Income Fund
<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 over 40 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.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER (logo)
