Scudder Emerging Markets
Income Fund
Semiannual Report
April 30, 1997
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
24 Officers and Directors
25 Investment Products and Services
26 Scudder Solutions
In Brief
o Scudder Emerging Markets Income Fund received a five-star rating from
Morningstar, reflecting the highest possible rating for risk-adjusted
performance through April 30, 1997.*
o The Fund posted an 11.58% total return for its most recent semiannual period
ended April 30, 1997. This return is in keeping with the 11.49% 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 8.61%.
o The Fund continues to maintain a liquid, diversified portfolio--with bonds
issued in Latin America, 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 high level of current income.
* For your information, these ratings are subject to change every month and are
calculated from the Fund's three-year average annual return in excess of
90-day Treasury bill returns with appropriate fee adjustments, and a risk
factor that reflects fund performance below T-bill returns. The Fund received
five stars for three-year performance, and was rated among 1,193 taxable bond
funds for the period. Of the funds rated, 10% received five stars, and 22.5%
received four stars. Past performance is no guarantee of future returns.
2 - Scudder Emerging Markets Income Fund
<PAGE>
Letter From the Fund's Chairman
Dear Shareholders,
We are pleased to report on Scudder Emerging Markets Income Fund's
performance over its most recent semiannual period ended April 30, 1997.
Emerging market bonds performed extremely well over recent months, benefiting
from improving credit fundamentals and the slow growth, low inflation
environment that continues to prevail in most countries. Despite market
volatility in March, the only negative month of the period, the Fund posted a
solid total return of 11.58% over the six months. Scudder Emerging Markets
Income Fund continues to pursue a strategy of broad diversification and careful
security selection, providing an appropriate vehicle for investors seeking
exposure to the opportunities for income provided by less-developed investment
venues. Please read the discussion beginning on page 6 for more information on
the Fund's portfolio strategy and country allocations.
As part of Scudder's ongoing efforts to meet the needs of investors, last
fall we launched an innovative new product called Scudder Pathway Series. A
"fund of funds," Pathway Series is a collection of four distinct portfolios --
Conservative, Growth, Balanced, and International -- that offers flexibility,
diversification, and simplicity. Each portfolio invests in a diverse mix of
Scudder funds, and each is geared toward people with different investment goals
and risk tolerances. Moreover, a team of Scudder's investment professionals
rebalances the mix within the portfolios as market conditions warrant.
For information on the Pathway Series and other Scudder products and
services, please see pages 25 through 27. For questions about Scudder Emerging
Markets Income Fund, please call a Scudder Investor Information representative
at 1-800-225-2470. Thank you for investing with Scudder.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Emerging Markets Income Fund
3 - Scudder Emerging Markets Income Fund
<PAGE>
PERFORMANCE UPDATE as of April 30, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/97 $10,000 Cumulative Annual
- ------------------------------------------------
SCUDDER EMERGING MARKETS INCOME FUND
- ------------------------------------------------
1 Year $ 12,832 28.32% 28.32%
Life of Fund* $ 15,567 55.67% 14.21%
- ------------------------------------------------
JP MORGAN COMPOSITE EMERGING MARKETS
BOND/LATIN EUROBOND INDEX
- ------------------------------------------------
1 Year $ 12,693 26.93% 26.93%
Life of Fund* $ 14,408 44.08% 11.59%
- ------------------------------------------------
*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 MARKETS INCOME FUND
Year Amount
- ----------------------
12/93* $10,000
4/94 $ 8,962
10/94 $ 9,646
4/95 $ 8,858
10/95 $ 9,980
4/96 $12,131
10/96 $13,951
4/97 $15,567
JP MORGAN COMPOSITE EMERGING MARKETS BOND/
LATIN EUROBOND INDEX
Year Amount
- ----------------------
12/93* $10,000
4/94 $ 8,314
10/94 $ 8,771
4/95 $ 8,149
10/95 $ 9,460
4/96 $11,351
10/96 $12,923
4/97 $14,408
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 1997
----------------------------------------------
NET ASSET VALUE......... $ 10.67 $ 9.66 $ 11.85 $ 12.66
INCOME DIVIDENDS........ $ .09 $ .92 $ 1.19 $ 1.19
CAPITAL GAINS
DIVIDENDS............... $ -- -- -- 1.18
FUND TOTAL RETURN (%)... -10.38 -1.17 36.96 28.32
INDEX TOTAL RETURN (%).. -16.86 -1.98 39.29 26.93
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 April 30, 1997
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Debt Obligations 91%
Cash Equivalents 9%
- --------------------------------------
100%
- --------------------------------------
The Fund is largely
invested in the fixed
income markets of
emerging economies, with
a cash position of less
than 10%.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
GEOGRAPHICAL EXPOSURE
(Excludes 9% Cash Equivalents)
- --------------------------------------------------------------------------
Brazil 29%
Argentina 18%
Venezuela 10%
Mexico 8%
Russia 6%
South Africa 6%
Poland 5%
Greece 5%
Bulgaria 4%
Morocco 4%
Other 5%
- --------------------------------------
100%
- --------------------------------------
Latin American markets
continue to make up
the highest percentage
of Fund assets.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
CURRENCY EXPOSURE
(Excludes 9% Cash Equivalents)
- --------------------------------------------------------------------------
United States 79%
South Africa 6%
Poland 5%
Greece 5%
Chile 3%
Germany 1%
Egypt 1%
- --------------------------------------
100%
- --------------------------------------
The Fund's exposure to
emerging market
currencies is modest.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
AVERAGE LIFE
(Excludes 9% Cash Equivalents)
- --------------------------------------------------------------------------
0 - 3 years 34%
3 - 5 years 4%
5 - 10 years 25%
Greater than 10 years 37%
- --------------------------------------
100%
- --------------------------------------
Fund assets are invested
in instruments with a
range of maturities.
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 - SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Emerging debt markets posted positive returns during the six months ended April
30, 1997, as investor interest continued to broaden, and bonds benefited from
favorable economic conditions and the improving credit quality of emerging
countries. The Fund ended the semiannual period with a net asset value ("NAV")
of $12.66, down from $12.98 on October 31, 1996. Total distributions for the
period were $1.75, comprised of $0.57 in income distributions, $1.12 in
short-term capital gains and $0.06 in long-term capital gains. During the
period, Scudder Emerging Markets Income Fund posted a solid 11.58% total return,
roughly in keeping with the 11.49% total return of the unmanaged J.P. Morgan
Composite Emerging Markets Bond/Latin Eurobond Index.
The long-term environment for emerging market bonds appears to be fundamentally
favorable, and credit rating announcements concerning several emerging countries
during the past six months reflected the improving credit quality of the sector
as a whole. In January, both Croatia and Egypt received initial investment grade
credit ratings of BBB- from Standard and Poor's, and in February, Panama
received a credit rating of BB+, higher than anticipated by the market. In
addition, Argentina, Brazil, and the Philippines all received credit rating
upgrades from Standard and Poor's in 1997. The upgrades for Argentina and Brazil
were awarded earlier than was expected by market participants, and may help to
widen the investor base for both countries' sovereign bonds.
In April, Standard & Poor's also announced a major modification to its ratings
criteria for emerging market corporate bonds which for the first time allows the
ratings to exceed those of the country in which the issuer is headquartered.
This change in methodology is based on the rating agency's belief that corporate
exposure to sovereign risk in countries whose currencies are pegged to the U.S.
dollar is reduced if the governments are not expected to interfere with private
borrowers' access to foreign currency during a crisis. The move was welcomed in
Argentina, where 12 companies subsequently received investment-grade ratings.
The effect of the improvement in emerging market country credit quality was
reflected in lower interest rates and higher bond prices among emerging market
bonds as a whole. This favorable trend was interrupted in March and early April
as the U.S. Treasury market as well as emerging fixed income markets dipped due
to an increase in the Fed Funds rate in March and the anticipation of a further
interest rate hike in May. As the fear of an additional rate hike in May
subsided, the U.S. Treasury market rallied leading to a strong performance in
emerging market bonds.
Portfolio Strategy
Because of expected volatility in the U.S. Treasury market resulting from the
fear of interest rate hikes, we increased our emphasis on floating rate
instruments from 65% to 75% during the period. Floating rate assets generally
carry a shorter duration because their coupons reset every six months in
relation to the London Interbank Offered Rate, or LIBOR. (Duration is a measure
6 - Scudder Emerging Markets Income Fund
<PAGE>
of a bond's responsiveness to interest rate fluctuations; the shorter the
duration, the less sensitive the bond is to rate changes.) This strategy
continued to work to the Fund's advantage as floating-rate securities in the
Fund's portfolio outperformed fixed-rate instruments, with average total returns
of 12.91% and 10.54%, respectively.
As we've reported in the past, we continue to maintain a liquid portfolio --
with bonds issued in Latin America, eastern Europe, the Middle East, northern
Africa, and Asia -- 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 all remain
central to the Fund's strategy.
In terms of regional allocation, Latin America continued to make up the highest
percentage of Fund assets -- nearly 65%. The Fund's core Latin America holdings
are in Brazil (29%), Argentina (18%), Venezuela (10%), Chile (3%), and Costa
Rica (1%). We increased our holdings in Argentina during the period following
the announcement that the country fulfilled its first quarter 1997 International
Monetary Fund budget requirements. There was other good news from Argentina
during the period: Industrial production has been strong, debt requirements have
been dramatically reduced, and Argentine companies are already benefiting from
the above-mentioned change in Standard & Poor's corporate ratings criteria. We
are hopeful that much-needed labor reform to lift restrictions on employers,
reduce unemployment, and boost the "bottom line" of companies will take place
soon.
We were cautious with respect to Brazil and Mexico during the six-month period
for reasons also related to economic and political reform. Though we believe
Brazil's long-term prospects are extremely bright, the country faces delays in
needed administrative reforms and other short-term economic obstacles.
Legislative reform allowing President Cardoso to run for re-election has not yet
provided hoped-for momentum to administrative reforms. Brazil faces additional
challenges, including a fiscal deficit and a widening trade deficit fed by an
overexpansion of consumer credit.
In the case of Mexico, we reduced our holdings there following a period of solid
performance by Mexican sovereign bonds amid concerns that political uncertainty
stemming from upcoming elections could cause Mexican bonds to underperform in
the near term despite positive economic fundamentals such as decreasing
inflation, strong GDP growth, strict fiscal and monetary policies, and
government buybacks. For these reasons, we would look to add to our Mexican
position as valuations become more favorable.
Elsewhere in Latin America, we closed out our holdings in Ecuador and Panama for
contrasting reasons. The Ecuadorian parliament removed President Bucaram from
office during the period and replaced him with Fabion Alarcon, the head of
Ecuador's parliament. We are concerned that Interim President Alarcon may lack
the support to execute the austerity measures needed to solve the country's
fiscal problems. By contrast, we remain optimistic about Panama's economic
outlook, but took profits after a period of superior performance. We will look
for opportunities to add Panama sovereign bonds to the Fund's portfolio when
7 - Scudder Emerging Markets Income Fund
<PAGE>
valuations there are once again attractive.
In Eastern Europe, the Fund took a first-time position in Bulgarian bonds in
anticipation of an election victory by the UDF, a coalition party oriented
toward democracy. The UDF's stated objectives include active measures against
crime and corruption, NATO membership, and gradual steps toward membership in
the European Union. The UDF prevailed in convincing fashion, and while there can
be no guarantees, we believe the implementation of the party's initiatives and
clear progress toward economic reform should result in outperformance by
Bulgarian Brady bonds in the near term.
We also increased our position in Russia, where relations with the international
financial community have improved, as evidenced by the World Bank's commitment
to provide $6 billion in fiscal support for the next two years. Another sign
that Russia is headed for better fiscal health is the recent reintroduction of
reformers to President Yeltsin's cabinet.
In the past 12 months, we have added local currency assets to the portfolio.
Local currency instruments are a large, liquid, and growing asset class that
provides attractive yields and potential for currency appreciation. In addition,
these instruments tend to exhibit lower volatility than the currencies of G7
countries and Brady bonds. Because their prices and yields move independently of
emerging market bonds and other asset classes, local currency instruments can
also provide effective portfolio diversification. Currently, approximately 20%
of the portfolio is in local currency assets in countries such as Greece, Egypt,
South Africa, Chile, and Poland.
Our Outlook
We continue to believe that improving credit fundamentals in many emerging
countries will provide a strong foundation for the performance of emerging
country debt. A favorable global interest rate environment coupled with strong
demand for dollar assets will continue to support emerging market fixed income
assets. The adherence to tight fiscal policy and prudent monetary policy, the
strong flow of foreign direct investment and the active balance sheet management
by emerging countries in Latin America and Eastern Europe will result in
improving creditworthiness.
Once again, thank you for investing in Scudder Emerging Markets Income Fund. As
the Fund's managers, we will continue to search for opportunities to provide
high current income and long-term capital appreciation to our shareholders.
Sincerely,
Your Portfolio Management Team
/s/Susan E. Gray /s/Maria Isabel Saltzman
Susan E. Gray M. Isabel Saltzman
8 - Scudder Emerging Markets Income Fund
<PAGE>
Investment Portfolio as of April 30, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreements 4.0%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/97 at 5.375%,
to be repurchased at $13,708,046 on 5/1/97, collateralized by -------------
a $13,752,000 U.S. Treasury Note, 6.125%, 3/31/98 (Cost $13,706,000) ............... 13,706,000 13,706,000
-------------
Short-Term Debt 25.3%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 2.1%
Letras de Tesoro Discount Note, 10/17/97 ............................................. 6,000,000 5,826,084
Letras del Tesoro Discount Note, 8/15/97 ............................................. 1,500,000 1,473,600
-----------
7,299,684
-----------
Chile 2.7%
Citibank Time Deposit linked to Chilean Peso, 13%, 5/28/97 ........................... CLP 712,775,000 1,703,450
Citibank Time Deposit linked to Chilean Peso, 10.7%, 4/1/98 .......................... CLP 2,074,500,000 4,938,500
Citibank Time Deposit linked to Chilean Peso, 10.7%, 4/2/98 .......................... CLP 1,140,700,000 2,715,625
-----------
9,357,575
-----------
Egypt 0.7%
Citibank Time Deposit linked to Egyptian Pound, 9%, 7/7/97 ........................... EGP 7,627,500 2,248,875
Greece 4.1%
Bankers Trust Co. Time Deposit, 9.31%, 5/14/97 ....................................... GRD 1,920,900,000 6,990,683
Deutsche Bank Time Deposit, 9.45%, 5/14/97 ........................................... GRD 1,929,378,750 7,021,540
-----------
14,012,223
-----------
Poland 5.0%
Deutsche Morgan Grenfell Time Deposit linked to Polish Zloty, 20.45%, 5/12/97 ........ PLZ 15,010,000 4,742,900
ING Groep NV Time Deposit linked to Polish Zloty, 20.15%, 5/6/97 ..................... PLZ 3,004,300 948,896
ING Groep NV Time Deposit linked to Polish Zloty, 21.25%, 9/22/97 .................... PLZ 23,225,799 7,326,453
ING Groep NV Time Deposit linked to Polish Zloty, 21.5%, 8/4/97 ...................... PLZ 12,785,860 4,025,433
-----------
17,043,682
-----------
South Africa 5.4%
J.P. Morgan & Co. Time Deposit, 16.25%, 6/11/97 ...................................... ZAR 82,399,000 18,524,955
-----------
United States 5.3%
Student Loan Marketing Association Discount Note, 5/1/97 ............................. 18,000,000 18,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Debt (Cost $87,689,420) 86,486,994
- ------------------------------------------------------------------------------------------------------------------------------
Debt Obligations 70.7%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 14.1%
Argentine Republic, Bonos de Tesoreria (BOTE10) Floating Rate Note, 5.627%, 4/1/00 ... 1,190,798 1,162,090
Argentine Republic, Bonos de Consolidacion de Deudas Previsionales Pre 2 (BOCON),
Variable Rate Interest Bond, 5.5%, 4/1/01 .......................................... 18,012,796 17,448,387
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Argentine Republic, Floating Rate Bond, Series L, LIBOR plus .8125% (6.75%), 3/31/05 . 14,307,500 13,127,131
Argentine Republic, Collateralized Discount Floating Rate Note Series L, LIBOR+
.8125%, (6.375%), 3/31/23 (c) ...................................................... 17,000,000 14,046,250
Argentine Republic, Collateralized Par Bond, Series L, Step-up Coupon, 5.5%,
3/31/23 (c) ........................................................................ 3,600,000 2,349,000
-----------
48,132,858
-----------
Brazil 26.3%
Federative Republic of Brazil, IDU Bond, Floating Rate Bond, LIBOR plus .8125%
(6.5%), 1/1/01 ..................................................................... 19,140,000 18,776,340
Federative Republic of Brazil, Eligible Interest, Floating Rate Bond, LIBOR plus
.8125% (6.875%), 4/15/06 ........................................................... 39,352,500 35,466,441
Federative Republic of Brazil, "New" Money Bond, Floating Rate Bond, LIBOR plus
.875% (6.937%), 4/15/09 ............................................................ 7,750,000 6,577,813
Federative Republic of Brazil C Bond, 4.5% with 3.5% Interest Capitalization,
4/15/14............................................................................. 20,809,362 15,763,092
Federative Republic of Brazil, Collateralized Discount Bond, Floating Rate Bond,
LIBOR plus .8125% (6.875%), 4/15/24 ................................................ 16,500,000 13,261,875
-----------
89,845,561
-----------
Bulgaria 4%
Republic of Bulgaria, Interest Arrears Bond (IAB), LIBOR plus .8125% (6.563%),
7/28/11 ............................................................................ 10,000,000 6,275,000
Republic of Bulgaria, Floating Rate Interest Reduction Bond, "A", 2.25%, 7/28/12 ..... 9,000,000 4,286,250
Republic of Bulgaria, Collateralized Discount Bond, Tranche A, LIBOR plus .8125%
(6.563%), 7/28/24 .................................................................. 4,750,000 3,057,813
-----------
13,619,063
-----------
Costa Rica 0%
Banco Central de Costa Rica Principal Bond, Series B, 6.25%, 5/21/15 ................. 200,000 158,000
-----------
Mexico 7.3%
United Mexican States, Collaterized Floating Rate Note Discount Series B, (Detachable
Oil Price Indexed Value Recovery Rights) 6.375%, 12/31/19 .......................... 6,500,000 5,752,500
United Mexican States, Collateralized Discount Bond, (Detachable Oil Price Indexed
Value Recovery Rights) Floating Rate Bond, Series A, LIBOR plus .8125% (6.867%),
12/31/19 ........................................................................... 7,000,000 6,195,000
United Mexican States, Collateralized Discount Bond, (Detachable Oil Price Indexed
Value Recovery Rights) Floating Rate Bond, Series D, LIBOR plus .8125% (6.352%),
12/31/19 ........................................................................... 1,500,000 1,327,500
United Mexican States, Collateralized Par Bond, (Detachable Oil Price Indexed
Value Recovery Rights), Series B, 6.25%, 12/31/19 .................................. 8,500,000 6,162,500
United Mexican States, Collateralized Par Bond, (Detachable Oil Price Indexed
Value Recovery Rights) Series A, 6.25%, 12/31/19 ................................... 7,750,000 5,618,750
-----------
25,056,250
-----------
</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>
Morocco 3.8%
Kingdom of Morocco, Restructuring and Consolidation Agreement, Tranch A, Floating
Rate Bond, 6.375%, 1/1/09 .......................................................... 12,850,000 11,291,938
SNAP Limited, Morocco Repackaged Euro Note, Kingdom of Morocco, Morocco Loan
Tranch A, 11.5%, 1/29/09 ........................................................... DEM 2,750,000 1,671,352
-----------
12,963,290
-----------
Russia 5.9%
Russian Federation Principal Loans (When issued), 12/15/20 (d) ....................... 34,250,000 19,993,435
Venezuela 9.3%
Republic of Venezuela, Collateralized Par Bond, Series A, 6.75%, 3/31/20 ............. 11,750,000 8,533,438
Republic of Venezuela, Collateralized Front Loaded Interest Reduction Bond, Series A,
6.75%, 3/31/07 ..................................................................... 5,476,190 4,873,810
Republic of Venezuela, Collateralized Front Loaded Interest Reduction Bond, Series B,
6.75%, 3/31/07 (c) ................................................................. 4,285,714 3,814,286
Republic of Venezuela, Debt Conversion Bond, Floating Rate Bond, Series DL, LIBOR
plus .875% (6.5%), 12/18/07 (c) .................................................... 15,000,000 13,256,250
Republic of Venezuela, Collateralized Discount Bond, Floating Rate Note, Series B,
6.375%, 3/31/20 .................................................................... 1,750,000 1,437,187
-----------
31,914,971
- ------------------------------------------------------------------------------------------------------------------------------
Total Debt Obligations (Cost $236,797,877) 241,683,428
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Preferred Stocks 0.0%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina
-------------
Nortel Inversora "A" (ADR) (Telecommunication services) (e) (Cost $75,709) ........... 7,805 96,860
-------------
Purchased Options 0.0%
- ------------------------------------------------------------------------------------------------------------------------------
Japan
Put on Euroyen, strike price 98.75, expire 6/16/97 (Cost $270,263) ................... 2,000 -
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $338,539,269) (a) 341,973,282
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $338,879,968. At April 30,
1997, net unrealized appreciation for all securities based on tax cost was
$3,093,314. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $5,527,292 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$2,433,978.
(b) Principal amount is stated in U.S. dollars unless otherwise noted.
(c) At April 30, 1997, these securities, in whole or in part, have been
segregated to cover when-issued securities.
(d) When-issued or forward delivery securities.
(e) 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 April 30, 1997. Their values
have been estimated by the Board of Directors in the absence of readily
ascertainable market values. However, because of the inherent uncertainty
of valuation, those estimated values may differ significantly from the
values that would have been used had a ready market for the securities
existed, and the difference could be material. The cost of this security
at April 30, 1997 aggregated $75,709.
Currency Abbreviations
CLP Chilean Peso GRD Greek Drachma
DEM German Deutsche Mark PLZ Polish Zloty
EGP Egyptian Pound ZAR South African Rand
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 April 30, 1997
<TABLE>
<S> <C>
Assets
- -------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $338,539,269) ............... $ 341,973,282
Cash ................................................................ 709
Receivable for investments sold ..................................... 7,557,178
Receivable for when-issued and forward delivery securities .......... 67,745,253
Interest receivable ................................................. 4,775,293
Receivable for Fund shares sold ..................................... 4,313,043
Deferred organization expenses ...................................... 25,676
Unrealized appreciation on forward currency exchange contracts ...... 77,464
Other assets ........................................................ 5,882
----------------
Total assets ........................................................ 426,473,780
Liabilities
- -------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................... 7,496,749
Payable for when-issued and forward delivery securities ............. 85,490,783
Payable for Fund shares redeemed .................................... 435,234
Unrealized depreciation on forward currency exchange contracts ...... 98,861
Accrued management fee .............................................. 270,281
Other accrued expenses .............................................. 99,780
----------------
Total liabilities ................................................... 93,891,688
--------------------------------------------------------------------------------------------
Net assets, at market value $ 332,582,092
--------------------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income ........ (98,139)
Unrealized appreciation (depreciation) on:
Investments ...................................................... 3,434,013
Foreign currency related transactions ............................ (24,494)
Accumulated net realized gain ....................................... 33,261,655
Paid-in capital ..................................................... 296,009,057
--------------------------------------------------------------------------------------------
Net assets, at market value $ 332,582,092
--------------------------------------------------------------------------------------------
Net Asset Value
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($332,582,092 / 26,273,723 shares of capital stock outstanding, ----------------
$.01 par value, 100,000,000 shares authorized) .................... $12.66
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Statement of Operations
six months ended April 30, 1997
<TABLE>
<S> <C>
Investment Income
- -------------------------------------------------------------------------------------------------------------
Interest ............................................................ $ 16,559,258
Dividend ............................................................ 5,572
----------------
16,564,830
Expenses:
Management fee ...................................................... 1,703,850
Services to shareholders ............................................ 368,497
Directors' fees and expenses ........................................ 18,410
Custodian and accounting fees ....................................... 218,234
Auditing ............................................................ 40,635
Reports to shareholders ............................................. 56,714
Legal ............................................................... 11,926
Amortization of organization expense ................................ 7,593
Other ............................................................... 13,416
----------------
2,439,275
--------------------------------------------------------------------------------------------
Net investment income 14,125,555
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ......................................................... 29,986,565
Foreign currency related transactions ............................... 922,680
----------------
30,909,245
Net unrealized appreciation (depreciation) during the period on:
Investments ......................................................... (10,294,483)
Foreign currency related transactions ............................... 142,448
----------------
(10,152,035)
--------------------------------------------------------------------------------------------
Net gain on investment transactions 20,757,210
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 34,882,765
--------------------------------------------------------------------------------------------
</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>
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets 1997 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ...................................... $ 14,125,555 $ 24,405,811
Net realized gain (loss) from investment transactions ...... 30,909,245 35,677,374
Net unrealized appreciation (depreciation) on investment
transactions during the period .......................... (10,152,035) 15,111,903
-------------- --------------
Net increase in net assets resulting from operations ....... 34,882,765 75,195,088
-------------- --------------
Distributions to shareholders from:
Net investment income ...................................... (14,450,461) (23,976,386)
-------------- --------------
Net realized gains ......................................... (27,924,210) --
-------------- --------------
Fund share transactions:
Proceeds from shares sold .................................. 170,643,574 265,528,712
Net asset value of shares issued to shareholders in
reinvestment of distributions ........................... 37,543,049 20,013,011
Cost of shares redeemed .................................... (172,720,609) (201,555,242)
-------------- --------------
Net increase in net assets from Fund share transactions .... 35,466,014 83,986,481
-------------- --------------
Increase in net assets ..................................... 27,974,108 135,205,183
Net assets at beginning of period .......................... 304,607,984 169,402,801
Net assets at end of period (including accumulated
distributions in excess of net investment income of
$98,139 and undistributed net investment income -------------- --------------
of $226,767) ............................................ $332,582,092 $304,607,984
-------------- --------------
Other Information
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................. 23,465,219 16,511,433
-------------- --------------
Shares sold ................................................ 13,251,697 22,121,034
Shares issued to shareholders in reinvestment of
distributions ........................................... 3,034,442 1,684,014
Shares redeemed ............................................ (13,477,635) (16,851,262)
-------------- --------------
Net increase in Fund shares ................................ 2,808,504 6,953,786
-------------- --------------
Shares outstanding at end of period ........................ 26,273,723 23,465,219
-------------- --------------
</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
Six Months (commencement
Ended of operations) to
April 30, Years Ended October 31, October 31,
1997 (a) 1996 (a) 1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .............. $12.98 $10.26 $11.05 $12.00
-------------------------------------------------------------
Income from investment operations:
Net investment income ............................. .54 1.20 1.14 0.60
Net realized and unrealized gain (loss) on
investments .................................... .89 2.71 (.82) (1.04)
-------------------------------------------------------------
Total from investment operations .................. 1.43 3.91 .32 (.44)
-------------------------------------------------------------
Less distributions from:
Net investment income .......................... (.57) (1.19) (1.11) (.51)
Net realized gain on investment
transactions ................................. (1.18) -- -- --
-------------------------------------------------------------
Total distributions ............................... $(1.75) $(1.19) $(1.11) $(.51)
-------------------------------------------------------------
-------------------------------------------------------------
Net asset value, end of period .................... $12.66 $12.98 $10.26 $11.05
- --------------------------------------------------------------------------------------------------------------------
Total Return (%) .................................. 11.58** 39.78 3.46 (3.54)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............ 333 305 169 95
Ratio of operating expenses, net to average
daily net assets (%) ........................... 1.45* 1.44 1.50 1.50*
Ratio of operating expense before expense
reductions, to average daily net assets (%) .... 1.45* 1.45 1.68 2.23*
Ratio of net investment income to average
daily net assets (%) ........................... 8.38* 10.05 12.83 9.17*
Portfolio turnover rate (%) ....................... 428.5*(b) 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.
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, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities
at the daily rates of exchange, and
(ii) purchases and sales of investment securities, 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
17 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
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.
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.
18 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Options. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the
period ended April 30, 1997, 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.
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.
B. Purchases and Sales of Securities
For the six months ended April 30, 1997, purchases and sales (including
maturities) of investment securities (excluding short-term investments)
aggregated $634,461,352 and $686,123,193, respectively.
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
19 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
net assets, computed and accrued daily and payable monthly. For the six months
ended April 30, 1997, the fee pursuant to the Management Agreement amounted to
$1,703,850, of which $270,281 is unpaid at April 30, 1997.
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, 1997, the amount charged to the Fund by SSC
aggregated $298,007, of which $49,434 is unpaid at April 30, 1997.
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,
1997, the amount charged to the Fund by STC aggregated $16,292, of which $2,726
is unpaid at April 30, 1997.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended April 30, 1997, the amount charged to the Fund by SFAC aggregated
$126,336, of which $19,889 is unpaid at April 30, 1997.
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, 1997, Directors' fees and expenses aggregated $18,410.
D. Credit Risk
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.
E. Commitments
As of April 30, 1997, the Fund had entered into the following forward currency
exchange contracts resulting in net unrealized depreciation of $21,397.
Net Unrealized
Appreciation
(Depreciation)
Contracts to Deliver In Exchange For Settlement Date (U.S.$)
-------------------- --------------- --------------- ---------------
DEM 9,367,385 USD 5,477,522 5/6/97 60,377
DEM 2,723,905 USD 1,596,306 6/10/97 17,087
USD 5,494,067 DEM 9,367,385 5/6/97 (76,922)
USD 1,601,157 DEM 2,723,905 6/10/97 (21,939)
---------
(21,397)
=========
20 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
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.
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 April 30,
1997, 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, 1996 and the financial highlights for the six months then
ended, 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 April
30, 1997 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, 1997, the results of its
operations for the six months then ended, the changes in net assets for the six
months then ended and for the year ended October 31, 1996 and the financial
highlights for the six months then ended, 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.
June 24, 1997
22 -- SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
This Page
intentionally
left blank.
23 - Scudder Emerging Markets Income Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board, Director and Vice President
Nicholas Bratt*
Director and President
Paul Bancroft III
Director; Venture Capitalist and Consultant
Sheryle J. Bolton
Director; Chief Executive Officer, Scientific Learning Corporation
Thomas J. Devine
Director; Consultant
William H. Gleysteen, Jr.
Director; Consultant; Guest Scholar, Brookings Institute
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 Emeritus and Director, Kirby Corporation
Susan E. Gray*
Vice President
Adam Greshin*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Vice President and Assistant Treasurer
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Gerald J. Moran*
Vice President
Edward J. O'Connell*
Vice President and Assistant Treasurer
Kathryn L. Quirk*
Vice President and Assistant Secretary
M. Isabel Saltzman*
Vice President
*Scudder, Stevens & Clark, Inc.
24 - 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 Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income 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 Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund
Retirement Programs
- -------------------
IRA
SEP 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 in order from
expected least risk 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.
25 - Scudder Emerging Markets Income Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan AutoBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from that account.
fewer when it's higher, which can reduce your average
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan AutoSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you designate.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
26 - Scudder Emerging Markets Income Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
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Additional Information on How to Contact Scudder:
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For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Funds Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Funds Centers. Check for a Funds Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
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New From Scudder: Pathway Series
In a complex financial world, Scudder Pathway Series is a refreshingly simple concept. With one
investment, Pathway gives you instant access to broad diversification in U.S. markets and
across the globe. Select from four Portfolios -- Conservative, Balanced, Growth, or
International -- each with a distinct investment objective that can match your goals. Each
Portfolio, rather than investing in individual securities, invests in carefully selected
Scudder mutual funds.
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The share price of each Pathway Series portfolio will fluctuate and the risk associated with
each portfolio is determined by the securities held in each underlying Scudder fund. Contact
Scudder Investor Services, Inc., Distributor, for a prospectus which contains more complete
information, including management fees and other expenses. Please read it carefully before you
invest or send money.
</TABLE>
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
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