Report
SCUDDER
INVESTMENTS(SM)
[LOGO]
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BOND/GLOBAL
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Scudder Emerging
Markets Income Fund
Fund #076
Annual Report
October 31, 1999
The fund's primary investment objective is to provide investors with high
current income. As a secondary investment objective, the fund seeks long-term
capital appreciation.
A no-load fund with no commissions to buy, sell, or exchange shares.
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Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
9 Portfolio Management Discussion
16 Glossary of Investment Terms
17 Investment Portfolio
21 Financial Statements
24 Financial Highlights
25 Notes to Financial Statements
29 Report of Independent Accountants
30 Tax Information
31 Officers and Directors
32 Investment Products and Services
34 Scudder Solutions
2 SCUDDER EMERGING MARKETS INCOME FUND
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Scudder Emerging Markets Income Fund
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ticket symbol SCEMX fund number 076
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Date of Inception:
12/31/93
o Scudder Emerging Markets Income Fund's return for its
most recent fiscal year ended October 31, 1999, was
16.70%. The fund emphasized higher credit quality
issuers over the 12 months ended October 31 given the
increased volatility which marked the period. The J.P.
Morgan Emerging Markets Bond Global Constrained Index
returned 19.37% during the same period. As of October
31, the Fund's 30-day net annualized yield was 8.36%.
Total Net Assets as of 10/31/99:
$192 million
o Attractive yields and credit improvements in several
areas allowed emerging markets to move higher despite
Brazil's early devaluation and Ecuador's Brady Bond
default.
o The fund benefited from its position in Asia early in
the year, as credit upgrades pushed prices higher. We
have since increased our weighting in Latin America as
we expect economic growth to shift to the region in
2000.
SCUDDER EMERGING MARKETS INCOME FUND 3
<PAGE>
Letter from the Fund's President
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[PHOTO]
Nicholas Bratt,
President,
Scudder Emerging
Markets Income Fund
Dear Shareholders,
During the 12-month period ended October 31, 1999, credit differentiation and
regional cycles played key roles in driving emerging market bond returns.
Investors increasingly draw a distinction between isolated trouble spots and the
overall soundness of the emerging market economy. Despite Brazil's devaluation,
Ecuador's Brady Bond default, and the U.S. Federal Reserve's three quarters of a
percentage point tightening, emerging markets took a positive step forward
during the period as Asia rebounded.
Over its most recent fiscal year ended October 31, 1999, your fund returned
16.70%. The fund emphasized higher credit quality issuers over the 12 months
ended October 31 given the heightened volatility which marked the period. The
J.P. Morgan Emerging Markets Bond Global Constrained Index returned 19.37%
during the same period. After taking a cautious approach to Latin America -- the
largest segment of our market -- we are prepared to expand our allocation there
as we believe that region of the world is poised to lead the market higher.
Flexible exchange rate regimes, strong commodity prices, and expanding global
economic growth are all positive signs for Latin America and the emerging
markets in general. For more information about Scudder Emerging Markets Income
Fund's investment environment, strategy, and outlook, please read the interview
that begins on page 9.
4 SCUDDER EMERGING MARKETS INCOME FUND
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It should be noted that Daniel Pierce retired in June of this year as Chairman
of Scudder Emerging Markets Income Fund, at which time I assumed his roles and
responsibilities. We are fortunate that Dan's long-standing affiliation with
Scudder is ongoing, and that we will continue to benefit from his counsel going
forward. I am pleased to join the Scudder Emerging Markets Income Fund team in
this capacity, and look forward to serving your interests.
As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your fund. Or visit Scudder's Web
site at www.scudder.com. Page 34 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/ Nicholas Bratt
Nicholas Bratt
President,
Scudder Emerging Markets Income Fund
SCUDDER EMERGING MARKETS INCOME FUND 5
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Performance Update
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October 31, 1999
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Growth of a $10,000 Investment
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THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE.
DATA:
Scudder J.P. Morgan
Emerging Markets Emerging Markets
Income Fund Bond Index Plus*
12/93** 10000 10000
'94 9646 8678
'95 9980 9326
'96 13951 13475
'97 15672 14933
'98 11345 13424
'99 13240 16109
Yearly periods ended October 31
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Fund Index Comparison
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Total Return
Growth of Average
Period ended 10/31/1999 $10,000 Cumulative Annual
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Scudder Emerging Markets Income Fund
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1 year $ 11,670 16.70% 16.70%
5 year $ 13,726 37.26% 6.54%
Life of Fund** $ 13,240 32.40% 4.93%
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J.P. Morgan Emerging Markets Bond Index Plus*
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1 year $ 12,000 20.00% 20.00%
5 year $ 18,563 85.63% 13.16%
Life of Fund** $ 16,109 61.09% 8.51%
* 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. Index returns assume reinvested dividends and, unlike
Fund returns, do not reflect any fees or expenses.
** The Fund commenced operations on December 31, 1993. Index comparisons
begin on December 31, 1993.
6 SCUDDER EMERGING MARKETS INCOME FUND
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Returns and Per Share Infomation
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THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE ILLUSTRATING TOTAL RETURNS
IN THE TABLE BELOW FOR THE FUND AND THE INDEX*.
Yearly periods ended October 31
1994** 1995 1996 1997 1998 1999
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Fund Total
Return (%) -3.54 3.46 39.78 12.34 -27.60 16.70
Index Total
Return (%) -13.22 7.46 44.49 10.82 -10.11 20.00
Net Asset Value ($) 11.05 10.26 12.98 12.22 7.04 7.46
Dividends ($) .51 1.11 1.19 1.10 1.01 .64
Capital Gains
Distributions ($) -- -- -- 1.18 1.50 --
Tax Return on
Capital -- -- -- -- -- .06
* 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. Index returns assume reinvested dividends and, unlike
Fund returns, do not reflect any fees or expenses.
** The Fund commenced operations on December 31, 1993. Index comparisons
begin on December 31, 1993.
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 five year and
life of Fund periods would have been lower.
SCUDDER EMERGING MARKETS INCOME FUND 7
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Portfolio Summary
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October 31, 1999
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Diversification
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[PIE CHART]
Debt Obligations 92%
Cash Equivalents 8%
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100%
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The Fund is largely invested in the income markets of emerging countries, with a
cash position of less than 10%.
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Geographical
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[PIE CHART]
(Excludes 8% Cash Equivalents)
Mexico 20%
Brazil 13%
Argentina 9%
Venezuela 8%
Russia 8%
Bulgaria 6%
Colombia 5%
Turkey 5%
Philippines 4%
Other 22%
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100%
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Mexico, our largest holding, has benefited from its strong link to the
U.S.economy.
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Currency Exposure
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United States 100%
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100%
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The Fund invests primarily in dollar-denominated sovereign issues.
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Average Life
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[PIE CHART]
(Excludes 8% Cash Equivalents)
0 < 3 years 4%
3 < 5 years 17%
5 < 10 years 41%
10+ years 38%
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100%
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Fund assets are invested in instruments with a range of maturities.
For more complete details about the Fund's investment portfolio, see page 17. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
8 SCUDDER EMERGING MARKETS INCOME FUND
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Portfolio Management Discussion
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October 31, 1999
For a discussion of Scudder Emerging Markets Income Fund's performance and
strategy over the fund's most recent fiscal year, we present an interview with
lead portfolio manager Susan E. Dahl and portfolio manager M. Isabel Saltzman.
Q: How did Scudder Emerging Markets Income Fund perform over the 12-month
period ended October 31?
A: For the 12-month period ended October 31, 1999, the fund posted a
16.70% total return. The fund emphasized higher credit quality issuers
over the 12 months ended October 31 given the increased level of
volatility in emerging markets during that time. The J.P. Morgan Emerging
Markets Bond Global Constrained Index returned 19.37% during the period.
The fund's 30-day net annualized yield was 8.36% as of October 31.
Q: Can you characterize the overall tone of the market during the period?
A: Over the most recent fiscal year, we believe that emerging markets debt
began to show signs of a new maturity. Despite turmoil in some key
countries during the past year, the market remained on course, yielding
attractive returns. And rather than indiscriminately selling all emerging
market credits at the first hint of bad news over the past 12 months,
investors differentiated among credits of various emerging markets
countries -- a promising sign.
Q: What were the key events around the globe over the past year?
A: A potentially troublesome event that actually presaged a positive turn
in the market was Brazil's currency devaluation in January 1999. Though
the market initially reacted to pressure on Brazil's fixed currency peg by
selling off in late 1998, it rebounded quickly following Brazil's decision
to float the real -- a de facto devaluation. Importantly, the Brazilian
government acted quickly to shore up support at the International Monetary
Fund (IMF) and the World Bank. It also appointed a central
SCUDDER EMERGING MARKETS INCOME FUND 9
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bank governor favored by the capital markets, and adopted stringent fiscal
and monetary policy stances. Three key factors aided Brazilian sovereign
debt's recovery: Brazil adopted tight monetary and fiscal policies; it
continued to receive significant foreign direct investment; and investors
can now be more confident that Brazil's reserves will be available to
finance external debt -- and will not be used up to defend its currency --
going forward. Following its float, we adopted a wait-and-see approach to
Brazil, remaining modestly underweight and watching intently for signs of
progress. We have gradually added to our position over the past several
quarters as Brazil appears to be making good on its promises to the IMF.
In addition, Brazil is receiving record levels of direct investment and is
showing signs of economic growth. The country's fiscal health should
receive a boost next year when tax revenues reflect a growing economy.
Asia's rebound was another top story this year. An impressive recovery in
economic growth has supported broad improvement in fundamentals, driving
several credit upgrades in the region. With the recent recovery in Japan
now taking hold, Asian countries should see another boost to exports which
until now have been largely sustained by U.S. demand. Finally, it's
interesting to note the increasing instances of active debt management by
emerging countries through debt exchanges and Brady bond buybacks. Brazil,
for example, recently exchanged some of their Brady debt for Eurobonds.
This transaction provided a huge boost for Brazilian debt. The
Philippines, Argentina, and Mexico have also undertaken active debt
management programs which have helped to boost the market.
Q: What was the effect of Brazil's devaluation on major Latin American
countries?
A: The effects were quite mixed. Argentine trade was negatively affected
because it is a major exporter to Brazil, while Mexico continued its
strong positive trend. In
10 SCUDDER EMERGING MARKETS INCOME FUND
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Mexico's case, much of its ability to avoid economic "contagion" results
from the country's strong link to the U.S. economy -- more than 85% of
Mexican exports go to the United States. Mexico's flexible exchange rate,
strong currency, tight fiscal discipline, and declining inflation have
also contributed to the country's strong performance and improving credit
fundamentals. Rising oil prices are also benefiting Mexico's balance
sheet, which relies on oil for one third of income. While presidential
elections in 2000 may add a risk premium to Mexican assets in the short
run, we believe that the country's strong fundamental story continues to
be compelling. Mexico remains one of the fund's largest positions.
Venezuela has also performed relatively well over the year, mostly on the
strength of oil prices. Unfortunately, President Chavez has continued to
focus on constitutional changes rather than on economic reform. Argentine
debt rallied strongly late in the third quarter, buoyed by the brightening
electoral chances of the market's favored presidential candidate, Fernando
de la Rua. We are currently awaiting de la Rua's cabinet appointments. His
challenge -- a difficult one -- is to demonstrate fiscal austerity to the
international markets and at the same time, promote economic growth
internally.
Q: On September 30th, the Ecuadoran government defaulted on its Brady
debt, the first time such a default has occurred. Did this event have a
major impact on emerging markets?
A: Though Ecuador took center stage during the third quarter, this
situation was priced into the market for months in advance. The actual
default had little lasting impact on other Latin American issuers. The
fund, having no Ecuadoran exposure at the time, was largely unaffected.
Ecuador needs to enact a fiscal austerity program that will satisfy the
IMF, improve its tax collection, and obtain agreements with private
investors to lengthen the maturity of its Eurobonds. We expect this to be
a drawn-out process.
SCUDDER EMERGING MARKETS INCOME FUND 11
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Q: What other major events moved the market during the period?
A: The U.S. Federal Reserve had a significant impact on global fixed
income markets during the period. Its move to a tightening bias in May,
and its three subsequent interest rate increases totaling three quarters
of a percentage point prompted emerging market investors to worry about
how high the Fed would raise interest rates. They also wondered where
economic growth would come from if Fed actions did considerably slow the
U.S. economy. At this point the market seems confident that the Fed is
managing a soft landing for the U.S. economy, an important consideration
for emerging markets.
Second, the market focused on issues related to Y2K beginning in the
second quarter. Uncertainty over what the market's appetite for new issues
would be during the last months of the year (with the approach of the Y2K
rollover) raised concerns that issuers would move their remaining 1999
financing needs forward. These concerns put significant pressure on global
credit spreads during the second quarter. With supply now declining as
year end approaches, volatility has also subsided.
Q: Please characterize the fund's overall strategy.
A: During the period we sought to identify regions where growth would
support credit fundamentals, thereby providing the portfolio with
competitive returns, as well as additional stability during periods of
market volatility. This led us to a strong weighting in Asia as we entered
the first quarter. The return of economic growth in Asia, which has
largely been driven by exports, has improved tax collection, external
balances, unemployment statistics, and hard currency reserves. All of
these factors are important in determining credit ratings, and helped to
drive several credit upgrades in the region. At the same time, our concern
over the effect that a negative outcome in Brazil might have on that
region's economy led us to underweight Latin America during the first
quarter.
12 SCUDDER EMERGING MARKETS INCOME FUND
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Our improved outlook for economic growth in Latin America during 2000 has
led us to increase the fund's exposure to this region over the final three
months of the period. This reallocation has coincided with an improvement
in commodity prices, a second important theme for the portfolio: As
commodity exporters, many emerging market economies benefit from
increasing commodity prices. The rebound in the prices of several key
commodities has reinforced our view that Latin America will offer superior
returns in the coming months.
Q: How do you account for the difference between the fund's return and
that of the index?
A: The difference between the performance of the fund and the index is
primarily due to the fund's strong underweight in Russia. Russian assets
have staged a sharp recovery during the period on what appear to be overly
optimistic assumptions regarding debt service capacity and debt
restructuring. The lack of transparency regarding important financial
matters in combination with an inability by the government to reduce
illegal capital flight leads us to maintain a cautious approach to Russia.
Q: What is your outlook for emerging market debt over the coming months?
A: While risks remain, we believe several key factors will create a
positive environment for many emerging market issuers during the coming
year. First, an expansion of growth outside the United States should put
global economic conditions on a firmer footing. Second, since many
emerging market economies export commodities, a firming of commodity
prices will help to improve economic fundamentals. And third, the
attractive yield on emerging market securities should continue to attract
new investors to the asset class.
Overall, we remain optimistic about the markets, and we will continue to
emphasize credit quality and liquidity. Global fundamentals remain
supportive, and underlying economic trends make us believe that emerging
market
SCUDDER EMERGING MARKETS INCOME FUND 13
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credit spreads will tighten further. Among the regions we favor, we
believe that Latin America remains poised to lead the market higher. With
room for further cuts in interest rates, and increasing foreign direct
investment in this region, we expect Latin America to continue its
economic turnaround. We are, however, mindful of the risks that remain. A
sharp downturn in U.S. equities or a significant uptick in U.S. inflation
could adversely affect spread levels and emerging market bond prices.
Scudder Emerging Markets Income Fund will continue to search for
opportunities throughout the world to provide our shareholders with high
current income as well as long-term capital appreciation.
14 SCUDDER EMERGING MARKETS INCOME FUND
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Scudder Emerging Markets Income Fund:
A Team Approach to Investing
Scudder Emerging Markets Income Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an important
role in the fund's management process. Team members work together to develop
investment strategies and select securities for the fund's portfolio. They are
supported by the Adviser's large staff of economists, research analysts,
traders, and other investment specialists who work in our offices across the
United States and abroad. We believe our team approach benefits fund investors
by bringing together many disciplines and leveraging our extensive resources.
[PHOTO]
Susan E. Dahl
Lead portfolio manager Susan E. Dahl assumed responsibility for the fund's
investment strategies and day-to-day management in 1996. Ms. Dahl, who has eight
years of investment experience in emerging markets, joined the fund's team in
1994 and the Adviser in 1987.
[PHOTO]
M. Isabel Saltzman
Portfolio manager M. Isabel Saltzman assists with the development and execution
of investment strategy. Ms. Saltzman, who joined the Adviser in 1990, has been
involved in foreign finance and investing since 1979 and contributes special
expertise in Latin America.
SCUDDER EMERGING MARKETS INCOME FUND 15
<PAGE>
Glossary of Investment Terms
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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 $1,000 each year.
Inflation
An overall increase in the prices of goods and services, as happens when
business and consumer spending increases relative to the supply of goods
available in the marketplace -- in other words, when too much money is chasing
too few goods. High inflation has a negative impact on the prices of
fixed-income securities.
30-day SEC Yield
The standard yield reference for bond funds since the SEC required all bond
funds to quote yields based on a prescribed formula. This yield calculation
reflects the 30-day average of the net annualized income earnings capability of
every holding in a given fund's portfolio, assuming each is held to maturity.
Total Return
The most common yardstick to measure the performance of a fund. Total return --
annualized or compounded -- is based on a combination of capital return plus
income and capital gain distributions, if any, expressed as a percentage gain or
loss in value.
Yield Spread
The difference in yield between various types of bonds. An emerging market
bond's yield is generally measured against the yield of a Treasury bond of
similar maturity as a market yardstick. If yield spreads are "narrow," for
example, it often means that emerging market bond yields have been declining,
and prices rising, compared with Treasury bonds of similar maturity.
(Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
16 SCUDDER EMERGING MARKETS INCOME FUND
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Investment Portfolio as of October 31, 1999
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<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
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<S> <C> <C>
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Repurchase Agreements 2.9%
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Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 10/29/1999 at 5.2%, to be repurchased at
$5,932,570 on 11/1/1999, collateralized by a $5,936,000
U.S. Treasury Bond Inflationary Index, 3.625%, 1/15/2008
(Cost $5,930,000) ........................................... 5,930,000 5,930,000
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U.S. Government Agency Debt Obligations 5.0%
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Federal Home Loan Mortgage Corp., 11/1/1999
(Cost $10,000,000) .......................................... 10,000,000 10,000,000
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U.S. Dollar Denominated Debt Obligations 92.1%
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Argentina 8.2%
Argentine Republic , Collateralized Discount Bond, Floating
Rate Bond, Series L, LIBOR plus .8125% (6.8125%),
3/31/2023 ................................................... 1,850,000 1,403,688
Argentine Republic, Floating Rate Bond, Series L, LIBOR
plus .8125%, (6.8125%), 3/31/2005 ........................... 8,866,000 7,848,183
Republic of Argentina, 11%, 12/4/2005 ......................... 7,650,000 7,305,750
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16,557,621
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Brazil 11.9%
Federative Republic of Brazil, "New" Money Bond, Floating
Rate Bond, LIBOR plus .875% (7%), 4/15/2009 ................. 5,700,000 4,189,500
Federative Republic of Brazil, Debt Conversion Bond,
Series L, LIBOR plus .875% (7%), 4/15/2012 .................. 6,405,000 4,203,281
Federative Republic of Brazil, 9.375%, 4/7/2008 ............... 7,300,000 5,986,000
Federative Republic of Brazil Global Bond, 10.125%,
5/15/2027 ................................................... 3,500,000 2,747,500
Federative Republic of Brazil, 11.625%, 4/15/2004 ............. 7,070,000 6,787,200
-----------
23,913,481
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Bulgaria 5.4%
Republic of Bulgaria, Interest Arrears Bond, LIBOR
plus .8125% (6.5%), 7/28/2011 ............................... 9,780,000 7,457,250
Republic of Bulgaria, Collateralized Floating Rate Interest
Reduction Bond, "A", Step-up Coupon, 2.75%,
7/28/2012 ................................................... 3,680,000 2,479,400
Republic of Bulgaria, Collateralized Discount Bond,
Tranche A, LIBOR plus .8125% (6.5%), 7/28/2024 .............. 1,220,000 904,325
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10,840,975
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</TABLE>
The accompanying notes are an integral part of the financial statements.
SCUDDER EMERGING MARKETS INCOME FUND 17
<PAGE>
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<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
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<S> <C> <C>
Colombia 4.8%
Republic of Colombia, 7.625%, 2/15/2007 ....................... 6,060,000 4,988,168
Republic of Columbia, 8.375%, 2/15/2027 ....................... 1,900,000 1,415,500
Republic of Columbia, 8.625%, 4/1/2008 ........................ 450,000 383,625
Republic of Columbia, 9.75%, 4/23/2009 ........................ 3,045,000 2,770,950
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9,558,243
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Jamaica 1.7%
Government of Jamaica, 10.875%, 6/10/2005 ..................... 3,690,000 3,450,150
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Korea 0.6%
Republic of Korea, 8.875%, 4/15/2008 .......................... 1,055,000 1,097,200
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Malaysia 3.0%
Government of Malaysia, 8.75%, 6/1/2009 ....................... 5,560,000 5,712,900
Petroliam Nasional BHD, 8.875%, 8/1/2004 ...................... 250,000 256,950
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5,969,850
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Mexico 18.2%
Petroleos Mexicanos S.A., 9.5%, 9/15/2027 ..................... 12,395,000 10,659,700
United Mexican States Global Bond, 11.375%, 9/15/2016 ......... 150,000 159,975
United Mexican States, Floating Rate Discount Bond
(Detachable Oil Priced Indexed Value Recovery Rights),
Series A, LIBOR plus .8125%, (6.9325%), 12/31/2019 .......... 6,000,000 5,250,000
United Mexican States, Floating Rate Discount Bond
(Detachable Oil Priced Indexed Value Recovery Rights),
Series D, LIBOR plus .8125% (6.0675%), 12/31/2019 ........... 13,150,000 11,506,250
United Mexican States, Floating Rate Discount Note
(Detachable Oil Priced Indexed Value Recovery Rights),
Series B, LIBOR plus .8125% (5.875%), 12/31/2019 ............ 2,725,000 2,384,375
United Mexican States, Floating Rate Discount Note
(Detachable Oil Priced Indexed Value Recovery Rights),
Series C, LIBOR plus .8125% (5.874%), 12/31/2019 ............ 7,500,000 6,562,500
-----------
36,522,800
-----------
Morocco 2.4%
Kingdom of Morocco, Restructuring and Consolidation
Agreement, Tranche A, Floating Rate Bond, LIBOR plus
.8125% (5.906%), 1/1/2009 ................................... 5,529,226 4,844,984
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Nigeria 1.9%
Central Bank of Nigeria, 6.25%, 11/15/2020 .................... 6,500,000 3,818,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
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<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Panama 2.8%
Republic of Panama, Interest Reduction Bond, Step-up
Coupon, 4.25%, 7/17/2014 .................................... 2,875,000 2,141,875
Republic of Panama, Past Due Interest Bond, 6.5%,
7/17/2016 ................................................... 4,708,626 3,531,469
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5,673,344
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Peru 3.3%
Republic of Peru, Floating Rate Interest Reduction Bond,
3.75%, 3/7/2017 ............................................. 9,950,000 5,472,500
Republic of Peru, Past Due Interest Bond, 4.5%, 3/7/2017 ...... 1,870,000 1,159,400
-----------
6,631,900
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Philippines 4.0%
Republic of the Philippines, 8.875%, 4/15/2008 ................ 4,600,000 4,490,750
Republic of the Philippines, 9.875%, 1/15/2019 ................ 3,700,000 3,589,000
-----------
8,079,750
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Poland 0.6%
Republic of Poland, 7.75%, 7/1/2017 ........................... 1,350,000 1,292,625
-----------
Russia 7.0%
Russian Federation Principal Loan, Floating Rate Bond,
LIBOR plus .8125% (6.0625%), 12/15/2020* .................... 33,045,000 3,056,663
Russian Ministry of Finance, 10%, 6/26/2007 ................... 15,014,000 7,431,930
Russian Ministry of Finance, 11.75%, 6/10/2003 ................ 5,990,000 3,653,900
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14,142,493
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Slovak Republic 1.7%
Slovak Republic, 9.5%, 5/28/2003 .............................. 3,290,000 3,331,125
-----------
South Africa 2.6%
Republic of South Africa, 8.375%, 10/17/2006 .................. 890,000 867,750
Republic of South Africa, 8.5%, 6/23/2017 ..................... 3,100,000 2,720,250
Republic of South Africa, 9.125%, 5/19/2009 ................... 1,720,000 1,730,750
-----------
5,318,750
-----------
Turkey 4.7%
Republic of Turkey, 11.875%, 11/5/2004 ........................ 2,885,000 2,874,268
Republic of Turkey, 12%, 12/15/2008 ........................... 3,855,000 3,903,187
Republic of Turkey, 12.375%, 6/15/2009 ........................ 2,625,000 2,651,250
-----------
9,428,705
-----------
Venezuela 7.3%
Republic of Venezuela, Collateralized Front Loaded Interest
Reduction Bond, Series A, LIBOR plus .875% (6.875%),
3/31/2007 ................................................... 2,321,410 1,845,521
</TABLE>
The accompanying notes are an integral part of the financial statements.
SCUDDER EMERGING MARKETS INCOME FUND 19
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Republic of Venezuela, Collateralized Front Loaded Interest
Reduction Bond, Series B, LIBOR plus .875% (6.875%),
3/31/2007 ................................................... 1,249,990 993,742
Republic of Venezuela, Debt Conversion Bond, Floating
Rate Bond, Series DL, LIBOR plus .875% (6.3125%),
12/18/2007 .................................................. 12,749,967 10,242,049
Republic of Venezuela Global, 9.25%, 9/15/2027 ................ 2,240,000 1,507,520
-----------
14,588,832
-----------
- ----------------------------------------------------------------------------------------------
Total U.S. Dollar Denominated Debt Obligations
(Cost $179,285,535) ......................................... 185,061,578
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100% (Cost $195,215,535) ........ 200,991,578
- ----------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security
(a) The cost for federal income tax purposes was $198,255,261. At October 31,
1999, net unrealized appreciation for all securities based on tax cost was
$2,736,317. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $5,711,415 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$2,975,098.
The accompanying notes are an integral part of the financial statements.
20 SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Financial Statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities as of October 31, 1999
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Investments, at market (identified cost $195,215,535) ......... $ 200,991,578
Cash .......................................................... 555
Receivable for investments sold ............................... 3,139,889
Interest receivable ........................................... 4,684,497
Receivable for Fund shares sold ............................... 303,876
Other assets .................................................. 1,376
--------------
Total assets .................................................. 209,121,771
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased ............................. 15,569,043
Payable for Fund shares redeemed .............................. 943,443
Accrued management fee ........................................ 152,997
Other payables and accrued expenses ........................... 412,743
--------------
Total liabilities ............................................. 17,078,226
- --------------------------------------------------------------------------------
Net assets, at market value $ 192,043,545
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation (depreciation) on investments ......... 5,776,043
Accumulated net realized gain (loss) .......................... (118,240,200)
Paid-in capital ............................................... 304,507,702
- --------------------------------------------------------------------------------
Net assets, at market value $ 192,043,545
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
NetAsset Value, offering and redemption price per
share ($192,043,545 / 25,730,471 shares of
capital stock outstanding, $.01 par value, --------------
100,000,000 shares authorized) ............................. $ 7.46
--------------
The accompanying notes are an integral part of the financial statements.
SCUDDER EMERGING MARKETS INCOME FUND 21
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Operations for the year ended October 31, 1999
- --------------------------------------------------------------------------------
Investment Income
- --------------------------------------------------------------------------------
Income:
Interest ...................................................... $ 20,836,245
---------------
Expenses:
Management fee ................................................ 1,971,328
Services to shareholders ...................................... 830,992
Directors' fees and expenses .................................. 49,560
Custodian and accounting fees ................................. 322,468
Auditing ...................................................... 100,323
Reports to shareholders ....................................... 64,616
Legal ......................................................... 12,877
Registration fees ............................................. 55,557
Amortization of organization expense .......................... 2,645
Other ......................................................... 39,993
---------------
3,450,359
- --------------------------------------------------------------------------------
Net investment income 17,385,886
- --------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- --------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ................................................... (42,476,961)
Foreign currency related transactions ......................... 1,062
---------------
(42,475,899)
Net unrealized appreciation (depreciation) during the period on:
Investments ................................................... 54,250,141
Foreign currency related transactions ......................... 1,503
---------------
54,251,644
- --------------------------------------------------------------------------------
Net gain (loss) on investment transactions 11,775,745
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 29,161,631
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
22 SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended October 31,
Increase (Decrease) in Net Assets 1999 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .................................. $ 17,385,886 $ 30,428,293
Net realized gain (loss) from investment transactions .. (42,475,899) (78,736,321)
Net unrealized appreciation (depreciation) on investment
transactions during the period ...................... 54,251,644 (30,037,229)
------------- -------------
Net increase (decrease) in net assets resulting from
operations .......................................... 29,161,631 (78,345,257)
------------- -------------
Distributions to shareholders from:
Net investment income .................................. (17,161,638) (29,195,726)
------------- -------------
Net realized gains ..................................... -- (40,190,416)
------------- -------------
Tax return capital ..................................... (1,702,384) --
------------- -------------
Fund share transactions:
Proceeds from shares sold .............................. 99,257,682 208,978,681
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................... 16,206,909 60,819,849
Cost of shares redeemed ................................ (147,457,888) (231,955,980)
------------- -------------
Net increase (decrease) in net assets from Fund share
transactions ........................................ (31,993,297) 37,842,550
------------- -------------
Increase (decrease) in net assets ...................... (21,695,688) (109,888,849)
Net assets at beginning of period ...................... 213,739,233 323,628,082
------------- -------------
Net assets at end of period ............................ $ 192,043,545 $ 213,739,233
------------- -------------
Other Information
- -----------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .............. 30,361,903 26,485,043
------------- -------------
Shares sold ............................................ 13,712,051 21,734,209
Shares issued to shareholders in reinvestment of
distributions ....................................... 2,279,508 5,912,049
Shares redeemed ........................................ (20,622,991) (23,769,398)
------------- -------------
Net increase (decrease) in Fund shares ................. (4,631,432) 3,876,860
------------- -------------
Shares outstanding at end of period .................... 25,730,471 30,361,903
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
SCUDDER EMERGING MARKETS INCOME FUND 23
<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>
- -----------------------------------------------------------------------------------------------------
Years Ended October 31, 1999(a) 1998(a) 1997(a) 1996(a) 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.04 $ 12.22 $ 12.98 $ 10.26 $ 11.05
------------------------------------------------------
Income from investment operations:
Net investment income .63 1.04 1.06 1.20 1.14
Net realized and unrealized gain (loss) on
investments .49 (3.71) .46 2.71 (.82)
------------------------------------------------------
Total from investment operations 1.12 (2.67) 1.52 3.91 .32
Less distributions:
From net investment income (.64) (1.01) (1.10) (1.19) (1.11)
From net realized gains on investment
transactions -- (1.50) (1.18) -- --
From tax return on capital (.06) -- -- -- --
------------------------------------------------------
Total distributions (.70) (2.51) (2.28) (1.19) (1.11)
Net asset value, end of period $ 7.46 $ 7.04 $ 12.22 $ 12.98 $ 10.26
------------------------------------------------------
Total Return (%) 16.70 (27.60) 12.34 39.78(b) 3.46(b)
Ratios and Supplemental Data
- -----------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 192 214 324 305 169
Ratio of operating expenses to average daily
net assets (%) 1.75 1.56 1.49 1.44 1.50
Ratio of net investment income to average
daily net assets (%) 8.82 9.97 8.03 10.05 12.83
Portfolio turnover rate (%) 326.8 239.7 409.5 430.0 302.2
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total returns are higher due to maintenance of Fund expenses.
24 SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
October 31, 1999
A. Significant Accounting Policies
Scudder Emerging Markets Income Fund (the "Fund") is a non-diversified series of
the Global/International Fund, Inc. (the "Corporation") which is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end management investment company organized as a Maryland Corporation.
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 purchased with an original
maturity greater than sixty days are valued by pricing agents approved by the
officers of the Corporation, whose 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 instruments purchased with 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.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
SCUDDER EMERGING MARKETS INCOME FUND 25
<PAGE>
- --------------------------------------------------------------------------------
sub-custodian bank, receives delivery of the underlying securities, the amount
of which at the time of purchase and each subsequent business day is required to
be maintained at such a level that the market value is equal to at least the
principal amount of the repurchase price plus accrued interest.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, 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.
At October 31, 1999 the Fund had a net tax basis capital loss carryforward of
approximately $115,201,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2006 ($60,953,000) or October 31, 2007 ($54,248,000), the respective expiration
dates.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made quarterly. 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 at least
annually.
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 primarily relate 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.
It appears likely that of the Fund's income distributions for the fiscal year
ending October 31, 1999, $1,702,384 will be treated as a non-taxable return of
capital.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Realized gains and losses from investment transactions are recorded on an
identified cost basis. All discounts are accreted for both tax and financial
reporting purposes.
26 SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
Organization Costs. Costs incurred by the Fund in connection with its
organization were deferred and amortized on a straight-line basis over a
five-year period. B. Purchases and Sales of Securities
For the year ended October 31, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $600,666,923 and
$620,077,184, respectively.
C. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. The management fee
payable under the Agreement is equal to an annual rate of 1.00% of the Fund's
average daily net assets, computed and accrued daily and payable monthly. For
the year ended October 31, 1999, the fee pursuant to these agreements amounted
to $1,971,328, of which $152,997 is unpaid at October 31, 1999.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended October 31, 1999, the amount charged to the Fund by SSC aggregated
$443,319, of which $61,881 is unpaid at October 31, 1999.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended October 31,
1999, the amount charged to the Fund by STC aggregated $56,013, of which $13,150
is unpaid at October 31, 1999.
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 year ended
October 31, 1999, the amount charged to the Fund by SFAC aggregated $163,968, of
which $26,591 is unpaid at October 31, 1999.
SCUDDER EMERGING MARKETS INCOME FUND 27
<PAGE>
- --------------------------------------------------------------------------------
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 year ended October 31,
1999, the Special Servicing Agreement expense charged to the Fund amounted to
$83,739.
The Fund pays each Director not affiliated with the Adviser an annual retainer,
plus specified amounts for attended board and committee meetings. For the year
ended October 31, 1999, Directors' fees and expenses aggregated $49,560.
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 Scudder Funds (the "Participants") share in a $850 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 pro rata 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 33 percent of its net assets under the agreement.
28 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:
In our opinion, the accompanying statement of assets and
liabilities, including the investment portfolio, and the related
statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the
financial position of Scudder Emerging Markets Income Fund (the
"Fund") at October 31, 1999, the results of its operations, the
changes in its net assets, and the financial highlights for the
periods indicated therein, in conformity with generally accepted
accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our
audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included
confirmation of securities at October 31, 1999 by correspondence
with the custodian and brokers, provide a reasonable basis for the
opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
December 16, 1999
SCUDDER EMERGING MARKETS INCOME FUND 29
<PAGE>
Tax Information
- --------------------------------------------------------------------------------
October 31, 1999
Please consult a tax adviser if you have questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have
specific questions about your account, please call 1-800-SCUDDER.
30 SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
Officers and Directors
- --------------------------------------------------------------------------------
Nicholas Bratt*
o President
Sheryle J. Bolton
o Director; Chief Executive Officer, Scientific Learning Corporation
William T. Burgin
o Director; General Partner, Bessemer Venture Partners
Keith R. Fox
o Director; Private Equity
Investor
William H. Luers
o Director; Chairman and President, U.N. Association of America
Kathryn L. Quirk*
o Director, Vice President and Assistant Secretary
Joan E. Spero
o Director; President, Doris Duke Charitable Foundation
Thomas J. Devine
o Honorary Director; Consultant
William H. Gleysteen, Jr.
o Honorary Director; Consultant; Guest Scholar, Brookings Institution
Robert G. Stone, Jr.
o Honorary Director; Chairman Emeritus of the Board and Director, Kirby
Corporation
Susan E. Dahl*
o Vice President
Ann M. McCreary*
o Vice President
Gerald J. Moran*
o Vice President
M. Isabel Saltzman*
o Vice President
John Millette*
o Vice President and Secretary
John R. Hebble*
o Treasurer
Caroline Pearson*
o Assistant Secretary
*Scudder Kemper Investments, Inc.
SCUDDER EMERGING MARKETS INCOME FUND 31
<PAGE>
Investment Products and Services
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
- --------------------------------------------------------------------------------
The Scudder Family of Funds[
- --------------------------------------------------------------------------------
Money Market
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Prime Reserve Shares*
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**
U.S. Income
Scudder Short Term Bond Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Corporate Bond 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
U.S. Growth and Income
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 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 Select 1000 Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and
Income Fund
Scudder International Fund++
Scudder International Growth 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 Heath Care Fund
Scudder Technology Fund
Preferred Series
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
32 SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
- --------------------------------------------------------------------------------
Retirement Programs and Educational Accounts
- --------------------------------------------------------------------------------
Retirement Programs
Traditional IRA
Roth IRA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**[[
Scudder Horizon Advantage**[[[
Educational 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.
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 or classes thereof 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.
++ Only the International 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.
[[[ A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold 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.
SCUDDER EMERGING MARKETS INCOME FUND 33
<PAGE>
Scudder Solutions
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Convenient ways to invest, quickly and reliably
Automatic Investment Plan
A convenient investment program in which money is electronically debited
from your bank account monthly to regularly purchase fund shares and
"dollar cost average" -- buy more shares when the fund's price is lower
and fewer when it's higher, which can reduce your average purchase price
over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to purchase shares -- use
distributions from one Scudder fund to purchase shares in another,
automatically (accounts with identical registrations or the same social
security or tax identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically, avoiding potential
mailing delays; money for each of your transactions is electronically
debited from a previously designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government checks -- invested in
up to four Scudder funds at one time.
* 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) -- 1-800-343-2890
Personalized account information, the ability to exchange or redeem
shares, and information on other Scudder funds and services via touchtone
telephone.
Scudder's Web Site -- www.scudder.com
Personal Investment Organizer: Offering account information and
transactions, interactive worksheets, prospectuses and applications for
all Scudder funds, plus your current asset allocation, whenever your need
them. Scudder's site also provides news about Scudder funds, retirement
planning information, and more.
34 SCUDDER EMERGING MARKETS INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Retirees and those who depend on investment proceeds for living enjoy these
convenient, timely, and reliable automated withdrawal programs
Automatic Withdrawal Plan
You designate the bank account, determine the schedule (as frequently as
once a month) and amount of the redemptions, and Scudder does the rest.
Distributions Direct
Automatically deposits your fund distributions into the bank account
expenses can you designate within three business days after each
distribution is paid.
QuickSell
Provides speedy access to your money by electronically crediting your
redemption proceeds to the bank account you previously designated.
For more information about these services
Call a Scudder representative at
1-800-SCUDDER
Or visit our Web site at
www.scudder.com
Please address all written correspondence to
The Scudder Funds
PO Box 2291
Boston, Massachusetts
02107-2291
SCUDDER EMERGING MARKETS INCOME FUND 35
<PAGE>
SCUDDER
INVESTMENTS(SM)
[LOGO]
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
About the Funds's Adviser
Scudder Kemper Investments, Inc. is one of the largest and most
experienced investment management organizations worldwide, managing more
than $290 billion in assets globally for mutual fund investors, retirement
and pension plans, institutional and corporate clients, insurance
companies, and private family and individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity,
and client-focused service. In 1997, Scudder, Stevens & Clark, Inc.,
founded over 80 years ago as one of the nation's first investment counsel
organizations, joined the Zurich Financial Services 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 Financial Services Group. The Zurich Financial
Services 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.
