Scudder
Emerging Markets
Income Fund
Semiannual Report
April 30, 1998
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>
Scudder Emerging Markets Income Fund
- --------------------------------------------------------------------------------
Total Net Assets as of
Date of Inception: 12/31/93 4/30/98: $352.2 million Ticker Symbol: SCEMX
- --------------------------------------------------------------------------------
o Scudder Emerging Markets Income Fund posted a strong 13.41% total return for
its most recent semiannual period ended April 30, 1998. The J.P. Morgan Emerging
Markets Bond Index Plus returned 14.27% over the same time period. As of April
30, the Fund's 30-day net annualized yield was 8.50%.
o Emerging markets weathered volatility during the fourth quarter of 1997, and
then posted gains in the first quarter of 1998 as positive developments in Asia
and fundamental improvements in other emerging economies resulted in a pickup in
market sentiment and asset prices.
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, 1998.*
Table of Contents
3 Letter from the Fund's Chairman 12 Financial Statements
4 Performance Update 15 Financial Highlights
5 Portfolio Summary 16 Notes to Financial Statements
6 Portfolio Management Discussion 20 Report of Independent Accountants
8 Glossary of Investment Terms 21 Investment Products and Services
9 Investment Portfolio 22 Scudder Solutions
* For your information, these ratings are subject to change every month and are
calculated from the Fund's average semiannual 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 1,418 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 to you concerning Scudder Emerging Markets Income
Fund's performance over its most recent semiannual period ended April 30, 1998.
In addition to the Fund's five-star Morningstar rating as of April 30 (see page
2), the Fund posted a strong 13.41% total return for the six-month period.
Please read the portfolio management discussion beginning on page 6 for more
information about the Fund's performance.
As of this writing, emerging markets have once again become jittery,
spurred on by economic malaise in Asia. Periods of uncertainty are not new to
emerging markets investors. The yield spread between emerging market debt and
U.S. Treasuries has now widened to 625 basis points. This implies that much of
the uncertainty of emerging markets is reflected in the price of emerging market
debt.
For those of you interested in new Scudder products, we recently introduced
two additions to Scudder's series of growth and income offerings. Scudder Real
Estate Investment Fund, launched on April 6, and Scudder Dividend & Growth Fund,
which will commence operations on July 17. Please see page 21 for more
information on Scudder products and services.
Lastly, at the start of 1998 the Fund's investment adviser changed its name
to Scudder Kemper Investments, Inc., from Scudder, Stevens & Clark, Inc.,
pursuant to the acquisition of a majority interest in Scudder by Zurich
Insurance Company, and the combining of Scudder's business with that of Zurich
Kemper Investments, Inc.
As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your Fund. Page 22 provides more
information on how to contact Scudder. Thank you for choosing Scudder Emerging
Markets Income Fund to help meet your investment needs.
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, 1998
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
- ------------------------------------------------
Period Ended Growth of Average
4/30/98 $10,000 Cumulative Annual
- ------------------------------------------------
SCUDDER EMERGING MARKETS INCOME FUND
- ------------------------------------------------
1 Year $ 11,417 14.17% 14.17%
3 Year $ 20,065 100.65% 26.13%
Life of Fund* $ 17,773 77.73% 14.20%
- ------------------------------------------------
J.P. MORGAN EMERGING MARKETS BOND INDEX PLUS**
- ------------------------------------------------
1 Year $ 11,486 14.86% 14.86%
3 Year $ 21,382 113.82% 28.80%
Life of Fund* $ 17,064 70.64% 13.13%
- ------------------------------------------------
J.P. MORGAN COMPOSITE EMERGING MARKETS
BOND/LATIN EUROBOND INDEX
- ------------------------------------------------
1 Year $ 11,563 15.63% 15.63%
3 Year $ 20,444 104.44% 26.89%
Life of Fund* $ 16,660 66.60% 12.51%
- ------------------------------------------------
*The Fund commenced operations on 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
10/97 $15,672
4/98 $17,773
J.P. MORGAN EMERGING MARKETS
BOND INDEX PLUS**
Year Amount
- ----------------------
12/93* $10,000
4/94 $ 7,734
10/94 $ 8,678
4/95 $ 7,981
10/95 $ 9,326
4/96 $11,269
10/96 $13,475
4/97 $14,856
10/97 $14,933
4/98 $17,064
J.P. 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
10/97 $14,605
4/98 $16,660
**The unmanaged J.P. Morgan Emerging Markets Bond Index Plus (EMBI+) tracks
total returns for traded external debt instruments in the emerging markets.
Included in the index are U.S. dollar and other external-currency-denominated
Brady bonds, loans, Eurobonds, and local market instruments.
With this report, the Fund has adopted the EMBI+ for its primary securities
market index over the J.P. Morgan Composite Emerging Markets Bond/Latin
Eurobond Index, as the EMBI+ better represents the securities and markets in
which the Fund typically invests.
- ----------------------------------------------------------------
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 1998
----------------------------------------------
NET ASSET VALUE........... $ 10.67 $ 9.66 $ 11.85 $ 12.66 $ 11.72
INCOME DIVIDENDS.......... $ .09 $ .92 $ 1.19 $ 1.19 $ 1.04
CAPITAL GAINS
DIVIDENDS................. -- -- -- $ 1.18 $ 1.50
FUND TOTAL RETURN (%)..... -10.38 -1.17 39.96 28.32 14.17
INDEX TOTAL RETURN (%)**.. -22.66 3.19 41.20 31.84 14.86
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 three year and life of Fund periods
would have been lower.
4 - Scudder Emerging Markets Income Fund
<PAGE>
PORTFOLIO SUMMARY as of April 30, 1998
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Debt Obligations 98%
Cash Equivalents 2%
- --------------------------------------
100%
- --------------------------------------
The Fund is largely
invested in the income
markets of emerging
economies, with a cash
position of less than 5%.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
GEOGRAPHICAL EXPOSURE
(Excludes 2% Cash Equivalents)
- --------------------------------------------------------------------------
Brazil 30%
Russia 17%
Mexico 16%
Bulgaria 9%
Venezuela 6%
Korea 4%
Morocco 4%
Panama 4%
Argentina 3%
Other 7%
- --------------------------------------
100%
- --------------------------------------
The Fund strongly
benefited from its
overweighting in Russia
during the period, using
volatility created by
budget and political
concerns to capture gains.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
CURRENCY EXPOSURE
(Excludes 2% Cash Equivalents)
- --------------------------------------------------------------------------
United States 98%
Philippines 2%
- --------------------------------------
100%
- --------------------------------------
The Fund invests primarily
in dollar-denominated
sovereign issues.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
AVERAGE LIFE
(Excludes 2% Cash Equivalents)
- --------------------------------------------------------------------------
0 - 3 years 4%
3 - 5 years 5%
5 - 10 years 29%
10+ years 62%
- --------------------------------------
100%
- --------------------------------------
During the semiannual
period, the Fund held a
large percentage of
longer-duration bonds to
capitalize on improving
prices and declining
yields in the emerging
markets.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
For more complete details about the Fund's Investment Portfolio, see page 9.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5 - Scudder Emerging Markets Income Fund
<PAGE>
Portfolio Management Discussion
For a discussion of Scudder Emerging Markets Income Fund's performance and
strategy over the Fund's most recent semiannual period, we are pleased to
present an interview with Lead Portfolio Manager Susan E. Dahl and Portfolio
Manager M. Isabel Saltzman.
Q: How did the Fund perform over the most recent semiannual period? What
accounted for the performance?
A: Scudder Emerging Markets Income Fund posted a strong 13.41% total return for
its most recent semiannual period ended April 30, 1998. During this time frame,
emerging markets shook off the effects of the Asian economic "flu" they had been
experiencing for some months and gained positive momentum. The J.P. Morgan
Emerging Markets Bond Index Plus returned 14.27% over the same time period. The
Fund also closed the period with a 30-day net annualized yield of 8.50%.
Q: Can you talk about what the market environment for emerging market bonds has
been like?
A: During the latter half of 1997 through the end of January 1998, emerging
market bonds had two major hurdles to overcome -- the Asian currency crisis and
falling commodity prices. The Asian currency crisis set a strong negative tone
in the market. Concern grew for a time that some emerging countries outside Asia
with significant current account deficits and overvalued currencies might have
to devalue their currencies, as several Asian countries had been forced to do.
Second, several emerging countries that rely heavily on healthy oil revenue to
fund their fiscal expenditures were hurt by significant declines in oil prices.
Starting with the latter part of January, volatility in the emerging markets
subsided as the news from Asia -- with the notable exception of Indonesia --
seemed more and more encouraging. South Korea and Thailand managed to post
current account surpluses while their currencies strengthened. Both countries,
along with the Philippines, have initiated significant economic and financial
reforms. At the same time, the outlook for commodities began to look somewhat
brighter.
Q: What were the strongest performing countries, and how did the Fund's
portfolio allocations change over the six-month period?
A: Our continuing strategy is to search for value among the vast array of
investment opportunities offered in emerging countries. The Fund strongly
benefited from its overweighting of Russia beginning in late January. The Fund
used volatility created by concerns such as tax and budget issues, the dismissal
of the Russian cabinet and the replacement of the Prime Minister to add to
positions as our fundamental investment opinion suggested that the risk premium
being attached to Russian assets was higher than the outlook justified. In each
case, however, investors' concerns subsided as the government announced
additional expenditure cuts, a renewed emphasis on tax collection, and a newly
appointed reform-oriented cabinet. These responses proved effective and the
Fund's overweight exposure to Russia reaped the rewards.
The Fund also increased its position in Brazil during the period as improvement
in the country's balance of payments and reductions in interest rates indicated
a more positive economic trend. Brazil's trade deficit declined to a
6 - Scudder Emerging Markets Income Fund
<PAGE>
better-than-anticipated $214 million through an 18% increase in exports over the
prior year, and the country is benefiting from robust demand from trading
partners such as Argentina, the United States, and Europe.
Bulgaria has proved to be a standout performer for the Fund since we added a
position there in November and increased it in April. Manageable public
financing, currency stability, and a parliamentary majority by the ruling
coalition continue to build a positive framework. In addition, the country's
bonds offer a very attractive yield, and are candidates for a credit upgrade.
The Fund initiated a dollar-denominated investment in South Korea during the
period, participating in the first post-crisis debt issue, as that country
continues its remarkable turnaround. We believe that this debt issue represents
substantial value at the levels purchased. Korea's balance of payments has
improved sharply as a result of a $21 billion debt restructuring, the IMF-led
support package, and an improvement in the country's current account and foreign
exchange reserves. The election of Kim Dae Jung -- who has committed to reform
the domestic economy and to a greater opening to foreign investment -- has
bolstered investor confidence and stabilized the won.
Q: Where did you reduce the Fund's weighting?
A: We reduced our position in Mexico during the period as concerns persist that
rising inflation and a widening trade deficit there could have a negative effect
on the peso. The wider-than-expected trade deficit reported in January reflected
falling oil revenues as well as strong consumer spending. We also reduced
exposure in Venezuela as political uncertainty surrounding the 1998 elections
heightened investor anxiety. In addition, Venezuela remains the largest net
exporter of oil in Latin America. As oil prices continued to weaken,
deterioration of its fiscal and external debts became a concern.
Q: How do you think emerging markets will fare over the next several months?
A: We believe that yield spreads between emerging market bonds and Treasuries
offer attractive relative value. Our view is based on the fact that, with the
notable exception of Japan, the world's industrialized nations are enjoying
lower inflation and strong growth. The possibilities for continued price
appreciation may be accompanied by short-term volatility as emerging countries
continue to seek economic and political stability. Over the coming months, we
will search for opportunities to provide high current income and long-term
capital appreciation to our shareholders.
7 - Scudder Emerging Markets Income Fund
<PAGE>
Glossary of Investment Terms
BOND An interest-bearing security issued by a
government or a corporation that obligates
the issuer to pay the bondholder a specified
amount of interest for a stated period --
usually a number of years -- and to repay the
face amount of the bond at its maturity date.
CAPITAL FLOWS The movement of capital from one country to
another in search of investment opportunities
and to accommodate trade.
COUPON The interest rate on a bond the issuer (in
the case of sovereign emerging market bonds,
a country) promises to pay to the holder of
the bond until maturity, expressed as a
semiannual percentage of face value. As an
example, a bond with a 10% coupon will pay
$100 of the face amount of $1,000 each year.
INFLATION An overall increase in the prices of goods
and services, as happens when business and
consumer spending increases relative to the
supply of goods available in the marketplace
-- in other words, when too much money is
chasing too few goods. High inflation has a
negative impact on the prices of fixed-income
securities.
30-DAY SEC YIELD The standard yield reference for bond funds
since the SEC required all bond funds to
quote yields based on a prescribed formula.
This yield calculation reflects the 30-day
average of the net annualized income earnings
capability of every holding in a given fund's
portfolio, assuming each is held to maturity.
TOTAL RETURN The most common yardstick to measure the
performance of a fund. Total return --
annualized or compound -- is based on a
combination of capital return plus income and
capital gain distributions, if any, expressed
as a percentage gain or loss in value.
YIELD SPREAD The difference in yield between various types
of bonds. An emerging market bond's yield is
generally measured against the yield of a
Treasury bond of similar maturity as a market
yardstick. If yield spreads are "narrow," for
example, it often means that emerging market
bond yields have been declining, and prices
rising, compared with Treasury bonds of
similar maturity.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
8 - Scudder Emerging Markets Income Fund
<PAGE>
Investment Portfolio as of April 30, 1998
<TABLE>
<CAPTION>
Principal Market
Amount ($) (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 1.6%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/98 at 5.5%, to
be repurchased at $5,481,837 on 5/1/98, collateralized by a $5,359,000 U.S. ------------
Treasury Note, 6.25%, 5/31/99 (Cost $5,481,000) .................................... 5,481,000 5,481,000
------------
Debt Obligations 98.4%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 3.0%
Argentine Republic, Floating Rate Bond, Series L, LIBOR plus .8125% (6.625%),
3/31/05 ............................................................................ 3,800,000 3,491,250
Argentine Republic, Collateralized Par Bond, Series L, Step-up Coupon, 5.75%,
3/31/23 ............................................................................ 9,000,000 6,856,920
------------
10,348,170
------------
Brazil 29.8%
Federative Republic of Brazil C Bond, 4.5% with 3.5% Interest Capitalization,
4/15/14 ............................................................................ 51,165,462 42,403,376
Federative Republic of Brazil, Collateralized Discount Bond, Floating Rate Bond,
LIBOR plus .8125% (6.625%), 4/15/24 ................................................ 10,000,000 8,400,000
Federative Republic of Brazil, Debt Conversion Bond, Series L, LIBOR plus .875%
(6.688%), 4/15/12 .................................................................. 8,750,000 6,939,888
Federative Republic of Brazil, Eligible Interest, Floating Rate Bond, LIBOR
plus .8125% (6.625%), 4/15/06 ...................................................... 10,912,500 9,746,281
Federative Republic of Brazil Global Bond, 10.125%, 5/15/27 .......................... 2,750,000 2,676,105
Federative Republic of Brazil, "New" Money Bond, Floating Rate Bond, LIBOR
plus .875% (6.688%), 4/15/09 ....................................................... 22,500,000 19,012,500
Ford Brazil, Series A, Tranche 1, 9.125%, 11/8/04 .................................... 500,000 497,500
Globo Comunicacoes e Participacoes, 10.625%, 12/5/08 ................................. 11,250,000 11,475,000
Republic National Bank of New York, 9.65%, 5/1/03 .................................... 2,500,000 2,500,000
------------
103,650,650
------------
Bulgaria 8.9%
Republic of Bulgaria, Floating Rate Interest Reduction, Step-up Coupon
Collateralized Bond "A", 2.25%, 7/28/12 ............................................ 18,750,000 12,539,063
Republic of Bulgaria, Interest Arrears Bond, LIBOR plus .8125% (6.563%), 7/28/11 ..... 23,250,000 18,309,375
------------
30,848,438
------------
Ecuador 0.1%
Republic of Ecuador, Collateralized Global Par Bond, Step-up Coupon, 3.5%,
2/28/25 ............................................................................ 750,000 408,750
------------
Ivory Coast 0.9%
Republic of the Ivory Coast, Floating Rate Interest Reduction Bond, 2%, 3/29/18 ...... 8,500,000 3,102,500
------------
Korea 3.7%
Republic of Korea, 8.75%, 4/15/03 .................................................... 1,470,000 1,475,586
Republic of Korea, 8.875%, 4/15/08 ................................................... 11,560,000 11,397,004
------------
12,872,590
------------
</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>
Mexico 16.0%
Petroleos Mexicanos S.A., 9.5%, 9/15/27 .............................................. 9,250,000 9,250,000
United Mexican States, Collateralized Par Bond (Detachable Oil Priced Indexed
Value Recovery Rights), Series A, 6.25%, 12/31/19 .................................. 28,500,000 24,082,500
United Mexican States, Collateralized Par Bond (Detachable Oil Priced Indexed
Value Recovery Rights), Series B, 6.25%, 12/31/19 .................................. 16,250,000 13,731,250
United Mexican States Global Bond, 11.375%, 9/15/16 .................................. 7,250,000 8,509,688
------------
55,573,438
------------
Morocco 3.9%
Kingdom of Morocco, Restructuring and Consolidation Agreement, Tranche A,
Floating Rate Bond, LIBOR plus .8125% (6.656%), 1/1/09 ............................. 13,600,000 12,104,000
SNAP Ltd., Kingdom of Morocco Repackaged Euro Note, Morocco Loan, Tranche A,
11.5%, 1/29/09 ..................................................................... DEM 2,520,834 1,522,887
------------
13,626,887
------------
Panama 4.3%
Republic of Panama, Interest Reduction Bond, Step-up Coupon, 3.75%, 7/17/14 .......... 19,000,000 14,915,000
------------
Peru 2.8%
Republic of Peru, Floating Rate Interest Reduction Bond, 3.25%, 3/7/17 ............... 9,250,000 5,735,000
Republic of Peru, Past Due Interest Bond, 4%, 3/7/17 ................................. 6,000,000 4,083,780
------------
9,818,780
------------
Philippines 2.0%
ING Structured Note linked to Philippine Treasury Bill, 2/11/99 ...................... 6,700,000 6,984,750
------------
Russia 16.9%
City of Moscow, 9.5%, 5/31/00 ........................................................ 6,250,000 6,148,438
Russian Federation Principal Loans, 6.719%, 12/15/20 ................................. 58,750,000 37,306,250
Russian Ministry of Finance, 10%, 6/26/07 ............................................ 15,750,000 15,120,000
------------
58,574,688
------------
Venezuela 6.1%
Republic of Venezuela, Collateralized Discount Floating Rate Bond, Series B,
6.75%, 3/31/20 ..................................................................... 1,750,000 1,540,000
Republic of Venezuela, Collateralized Front Loaded Interest Reduction Bond,
Series A, LIBOR plus .875% (6.625%), 3/31/07 ....................................... 2,785,720 2,493,220
Republic of Venezuela, Collateralized Front Loaded Interest Reduction Bond,
Series B, LIBOR plus .875% (6.625%), 3/31/07 ....................................... 3,857,143 3,452,143
Republic of Venezuela, Debt Conversion Floating Rate Bond, Series DL, LIBOR
plus .875% (6.813%), 12/18/07 ...................................................... 5,476,208 4,914,897
</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>
Republic of Venezuela, Discount Floating Rate Note, Series A, LIBOR plus .8125%
(6.75%), 3/31/20 ................................................................... 500,000 440,000
Republic of Venezuela Global Bond, 9.25%, 9/15/27 .................................... 9,283,000 8,209,700
------------
21,049,960
- ------------------------------------------------------------------------------------------------------------------------------
Total Debt Obligations (Cost $332,194,568) 341,774,601
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $337,675,568) (a) 347,255,601
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $338,894,058. At April 30,
1998, net unrealized appreciation for all securities based on tax cost was
$8,361,543. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $11,093,513 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$2,731,970.
(b) Principal amount is stated in U.S. dollars unless otherwise noted.
Currency Abbreviations
DEM Deutsche Mark
At April 30, 1998, open futures contracts purchased were as follows:
<TABLE>
<CAPTION>
Aggregate Market
Futures Expiration Date Contracts Face Value Value
------------------------ ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
US Treasury Bond June 1998 27 3,242,916 3,245,906
----------
Total net unrealized appreciation on open futures contracts purchased ................ 2,990
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Emerging Markets Income Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1998
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $337,675,568) ............... $ 347,255,601
Cash ................................................................ 54,188
Receivable for investments sold ..................................... 16,299,526
Interest receivable ................................................. 5,567,928
Receivable for Fund shares sold ..................................... 1,284,576
Receivable for daily variation margin on open futures contracts ..... 41,344
Deferred organization expenses ...................................... 10,364
Other assets ........................................................ 3,767
----------------
Total assets ........................................................ 370,517,294
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................... 17,430,254
Payable for Fund shares redeemed .................................... 382,814
Accrued management fee .............................................. 279,142
Other payables and accrued expenses ................................. 202,750
----------------
Total liabilities ................................................... 18,294,960
-------------------------------------------------------------------------------------------
Net assets, at market value $ 352,222,334
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................. 2,796,055
Unrealized appreciation (depreciation) on:
Investments ...................................................... 9,580,033
Futures .......................................................... 2,990
Foreign currency related transactions ............................ 465
Accumulated net realized gain (loss) ................................ (948,499)
Paid-in capital ..................................................... 340,791,290
-------------------------------------------------------------------------------------------
Net assets, at market value $ 352,222,334
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($352,222,334 / 30,061,832 shares of capital stock ----------------
outstanding, $.01 par value, 100,000,000 shares authorized) ....... $11.72
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Emerging Markets Income Fund
<PAGE>
Statement of Operations
six months ended April 30, 1998
<TABLE>
<S> <C> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Interest ............................................................ $ 18,132,095
----------------
Expenses:
Management fee ...................................................... 1,692,820
Services to shareholders ............................................ 464,541
Directors' fees and expenses ........................................ 27,962
Custodian and accounting fees ....................................... 195,177
Auditing ............................................................ 38,899
Reports to shareholders ............................................. 60,820
Legal ............................................................... 11,792
Registration fees ................................................... 35,699
Amortization of organization expense ................................ 7,593
Other ............................................................... 28,655
----------------
2,563,958
-------------------------------------------------------------------------------------------
Net investment income 15,568,137
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ......................................................... 262,304
Foreign currency related transactions ............................... (712,544)
----------------
(450,240)
Net unrealized appreciation (depreciation) during the period on:
Investments ......................................................... 27,454,767
Futures ............................................................. 2,990
Foreign currency related transactions ............................... 564,103
----------------
28,021,860
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 27,571,620
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 43,139,757
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - 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 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ...................................... $ 15,568,137 $ 28,598,154
Net realized gain (loss) from investment transactions ...... (450,240) 39,491,939
Net unrealized appreciation (depreciation) on
investment transactions during the period ................ 28,021,860 (31,999,926)
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ............................................... 43,139,757 36,090,167
---------------- ----------------
Distributions to shareholders from:
Net investment income ...................................... (14,367,753) (29,393,701)
---------------- ----------------
Net realized gains ......................................... (40,190,416) (27,924,210)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .................................. 97,139,209 316,479,213
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................ 48,597,914 49,926,221
Cost of shares redeemed .................................... (105,724,459) (326,157,592)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................. 40,012,664 40,247,842
---------------- ----------------
Increase (decrease) in net assets .......................... 28,594,252 19,020,098
Net assets at beginning of period .......................... 323,628,082 304,607,984
Net assets at end of period (including undistributed
net investment income of $2,796,055 and $1,595,671, ---------------- ----------------
respectively) ............................................ $352,222,334 $ 323,628,082
---------------- ----------------
Other Information
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................. 26,485,043 23,465,219
---------------- ----------------
Shares sold ................................................ 8,208,864 24,276,198
Shares issued to shareholders in reinvestment of
distributions ............................................ 4,398,795 3,969,587
Shares redeemed ............................................ (9,030,870) (25,225,961)
---------------- ----------------
Net increase (decrease) in Fund shares ..................... 3,576,789 3,019,824
---------------- ----------------
Shares outstanding at end of period ........................ 30,061,832 26,485,043
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - 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 Years Ended October 31, of operations) to
April 30, October 31,
1998(a) 1997(a) 1996(a) 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
Net asset value, beginning of period ... $12.22 $12.98 $10.26 $11.05 $12.00
Income from investment operations: -------------------------------------------------------------------------------
Net investment income .................. .54 1.06 1.20 1.14 0.60
Net realized and unrealized gain
(loss) on investments ............... .97 .46 2.71 (.82) (1.04)
-------------------------------------------------------------------------------
Total from investment operations ....... 1.51 1.52 3.91 .32 (.44)
Less distributions from: -------------------------------------------------------------------------------
Net investment income ............... (.51) (1.10) (1.19) (1.11) (.51)
Net realized gain on investment
transactions ...................... (1.50) (1.18) -- -- --
-------------------------------------------------------------------------------
Total distributions .................... (2.01) (2.28) (1.19) (1.11) (.51)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net asset value, end of period ......... $11.72 $12.22 $12.98 $10.26 $11.05
-------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ....................... 13.41** 12.34 39.78(b) 3.46(b) (3.54)(b)**
Ratios and Supplemental Data
Net assets, end of period
($ millions) ........................ 352 324 305 169 95
Ratio of operating expenses, net, to
average daily net assets (%) ........ 1.51* 1.49 1.44 1.50 1.50*
Ratio of operating expense, before
expense reductions, to average
daily net assets (%) ................ 1.51* 1.49 1.45 1.68 2.23*
Ratio of net investment income to
average daily net assets (%) ........ 9.20* 8.03 10.05 12.83 9.17*
Portfolio turnover rate (%) ............ 222.1* 409.5 430.0(c) 302.2 180.6*
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total returns are higher due to maintenance of Fund expenses.
(c) Economic and market conditions necessitated more active trading, resulting
in a higher portfolio turnover rate.
* Annualized
** Not annualized
15 - 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
the Global/International Fund, Inc. (formerly 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 original 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. Money market investments having an original maturity of sixty
days or less are valued at amortized cost. All other securities are valued at
their fair value as determined in good faith by the Valuation Committee of the
Board of Directors.
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.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased interest rate futures to manage the duration of the portfolio.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
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
16 - Scudder Emerging Markets Income Fund
<PAGE>
(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.
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.
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 of 1986, as amended, which are applicable to regulated
investment companies, and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes, and no federal
income tax provision was required.
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.
17 - Scudder Emerging Markets Income Fund
<PAGE>
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences relate primarily to foreign denominated investments and certain
securities sold at a loss. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. Accordingly, the
Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund.
The Fund uses the specific identified cost method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
Organization Costs. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are being
amortized on a straight-line basis over a five-year period.
Other. Investment security transactions are accounted for on a trade date basis.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. All
discounts are amortized/accreted for both tax and financial reporting purposes.
B. Purchases and Sales of Securities
For the six months ended April 30, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $362,499,398 and
$327,810,207, respectively.
The aggregate face value of futures contracts opened during the period ended
April 30, 1998 was $3,242,916.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Directors and by the Fund's Shareholders. The
Management Agreement, which is effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, 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 Management Agreement. The
management fee payable under the Management 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. For the six months ended April 30, 1998, the fee pursuant to
these agreements amounted to $1,692,820.
18 - Scudder Emerging Markets Income Fund
<PAGE>
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,
1998, the amount charged to the Fund by STC aggregated $18,547, of which $2,960
is unpaid at April 30, 1998.
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, 1998, the amount charged to the Fund by SFAC aggregated
$120,244, of which $20,871 is unpaid at April 30, 1998.
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, 1998, the amount charged to the Fund by SSC
aggregated $284,943, of which $47,461 is unpaid at April 30, 1998.
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be invested in the Underlying Funds. For the six months ended April
30, 1998, the Special Servicing Agreement expense charged to the Fund amounted
to $37,029.
The Fund pays each Director not affiliated with the Adviser an annual retainer,
plus specified amounts for attended board and committee meetings. For the six
months ended April 30, 1998, Directors' fees and expenses aggregated $27,962.
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.
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.
19 - Scudder Emerging Markets Income Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Global/International 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,
1998, 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, 1997 and the financial highlights for the six months
ended April 30, 1998, for each of the three years in the period ended October
31, 1997 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, 1998 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, 1998, 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, 1997 and the financial
highlights for the six months ended April 30, 1998, for each of the three years
in the period ended October 31, 1997 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 9, 1998
20 - 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
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
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
Scudder S&P 500 Index Fund
Scudder Real Estate Investment 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, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal 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. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. +++ +++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 Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
21 - Scudder Emerging Markets Income Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
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 QuickSell
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 previously designated.
Distributions Direct
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
- ------------------------------------------------------------------------------------------------------------------------------
22 - 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 8,000 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
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
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 Investor 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 Investor Centers. Check for an Investor 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
</TABLE>
23 - Scudder Emerging Markets Income Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
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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