The Brazil Fund, Inc.
Semiannual Report
June 30, 1995
A closed-end investment company seeking long-term capital appreciation through
investment in securities, primarily equity securities, of Brazilian issuers.
<PAGE>
The Brazil Fund, Inc.
Investment objective and policies
o long-term capital appreciation through investment primarily in equity
securities of Brazilian issuers
Investment characteristics
o closed-end investment company investing in a broad spectrum of Brazilian
industries
o a vehicle for international diversification through participation in the
Brazilian economy
General Information
Executive offices
The Brazil Fund, Inc.
345 Park Avenue
New York, NY 10154
Telephone:
For Fund information: 1-800-349-4281
Transfer agent, registrar and dividend reinvestment plan agent
For account information: 617-575-3120
The First National Bank of Boston
Attn. Investor Relations Department
Mail Stop 45-02-09
P.O. Box 644
Boston, MA 02102-0644
Custodian
Brown Brothers Harriman & Co.
Legal counsel
Debevoise & Plimpton
Independent Accountants
Price Waterhouse LLP
New York Stock Exchange Symbol -- BZF
Contents
Letter to Shareholders 3
Investment Summary 6
Portfolio Summary 7
Investment Portfolio 8
Financial Statements 11
Financial Highlights 14
Notes to Financial Statements 15
Report of Independent Accountants 19
Dividend Reinvestment and Cash Purchase Plan 20
Investment Manager and Administrator 22
Directors and Officers 23
This report is sent to the shareholders of The Brazil Fund, Inc. for their
information. It is not a prospectus, circular, or representation intended for
use in the purchase or sale of shares of the Fund or of any securities mentioned
in the report.
2
<PAGE>
Letter to Shareholders
Dear Shareholders:
We are pleased to report on the investment activities of The Brazil Fund,
Inc. (the "Fund") for the six months ended June 30, 1995.
At that date, the Fund's net assets were $297 million, or $24.47 per share,
a 21.32% decline for the six months. Adjusting returns for the March cash
distribution of $0.24 per share, the Fund's net asset value fell 20.50% for the
first semester. Historical performance data is shown on page 6 of this report.
Financial markets were in a general uptrend throughout Latin America during
the second quarter. While investment valuations on June 30 were below beginning
year levels, stock prices in Brazil and elsewhere had clearly recovered from the
distressed valuations prevailing during the first quarter. The Fund's net asset
value on June 30, for example, had increased by 9.29% from the March 31 level of
$22.39 per share. The dollar market capitalization of the Sao Paulo Stock
Exchange, which had plunged from $189.1 billion at the beginning of 1995 to
$132.3 billion at the end of March, recovered to $148.9 billion at midyear.
Investment returns for the Fund have been importantly influenced by the
Real's exchange rate performance against the dollar since the introduction of
the new currency on July 1, 1994. The Fund's appreciation in net asset value in
the second semester of last year was assisted by the Real's 18.2% appreciation
against the dollar during the period. Shareholder returns received no benefit
from the Brazilian currency during the first half of 1995, since the Real
depreciated 8.1% against the dollar through June 30.
The exchange rate can be of great significance to shareholders. It
determines the dollar value of the companies in which the Fund has invested and
therefore establishes the Fund's dollar net asset value. Over time, it is
reasonable to expect the price of the Fund's stock to track the performance of
its net asset value, thus linking stock returns to the exchange rate.
Exchange rate considerations moved to center stage following the
devaluation of the Mexican peso last December. The Mexican currency crisis was
ignited by a massive flight of pesos into dollars and the sudden depletion of
that country's foreign exchange reserves. Brazil's foreign exchange reserve
position, by contrast, was then and remains today in a healthy state. The
country had in excess of $30 billion of hard currency reserves at midyear and
enjoys ready access to the Eurocurrency debt market. Investor concern for the
Real has not been prompted by foreign exchange reserve weakness, but rather by
the appreciation of the Real against the dollar in the face of comparatively
large inflation rate differentials between the U.S. and Brazil.
The Real appreciated 8.6% point-to-point against the dollar in the twelve
months following its introduction last July. During the same period, the
official inflation rate for Brazil was 35.3%. U.S. inflation was less than 3%
for the same period. The Brazilian inflation rate, moreover, had been
politically manipulated by virtue of the freeze of those prices administered by
the government, such as telephone tariffs, electricity rates, and prices for a
full range of petroleum products (gasoline, cooking gas, diesel fuel, etc.). To
some extent, measurable inflation in Brazil has not been fully reflective of
inflationary pressures. Price inflation experienced by middle class Brazilian
consumers, for example, is believed to have been significantly higher than the
official inflation rate, since the official rate does not fully measure the wide
range of non-tradable services consumed by the middle class and for which price
increases in excess of 100% were not uncommon.
It is understood, of course, that the Brazilian government has used an
overvalued exchange rate to exert pressure on the prices of domestically
produced goods which trade in competition with imported items. Inflation for
such tradable goods has been a fraction of the official inflation rate, and an
overvalued exchange rate has clearly assisted the government in its efforts to
help keep inflation under control. As a consequence of the government's exchange
3
<PAGE>
rate policy, however, the trade account has moved into deficit. For the first
half, the trade deficit amounted to $4.3 billion, and it is now uncertain if
Brazil will achieve a trade surplus for the full year. Last year, by comparison,
the country posted a $10.4 billion trade surplus.
Brazil's current account deficit may reach 2.3% of gross domestic product
this year, or approximately $11.5 billion. While the estimated 1995 deficit
would represent a substantial jump from 1994's current account deficit of $1.1
billion, it is easily financed out of available resources.
What seems to disturb investors about Brazil's current account deficit is
the realization, vividly highlighted by Mexico's exchange rate crisis, that
overvalued exchange rates do not persist forever. The endgame typically is a
maxidevaluation which can devastate the dollar value of the investor's assets.
Investors can and do protect their assets against the devaluation risk by
adjusting the price they are willing to pay in dollar terms for foreign currency
assets. The discounting of the risk of a maxidevaluation appears to have been
underway in the Brazilian stock market since last October, when the Real reached
its maximum rate of appreciation against the dollar. We believe the discounting
process has run its course and that investors now enjoy a margin of safety
against the devaluation risk in the current pricing of Brazilian stocks.
It is critical for the credibility of the Real Plan, and its eventual
success, that the government continue to maintain the monthly inflation rate at
as low a level as possible, preferably under 2%. The trend is more important
than any given month's inflation rate, and to date the Cardoso administration
has done an outstanding job in controlling inflation. This has allowed the
government to move to the second phase of the Real Plan, whereby it severs the
automatic link between past inflation and increases in wages and other prices.
Indexation has done much to protect the purchasing power of workers, although at
the cost of institutionalizing inflation.
The Cardoso administration's problem as it goes out to do battle with
inflation is that it has a limited range of weapons. It has frozen prices where
it can (such as electricity rates), and it has been able to maintain pressure on
the prices of domestically produced tradable goods through the so-called
"exchange rate anchor." These are stop-gap measures, however.
The government has also attempted to control domestic demand and therefore
the prices of non-tradable goods and services through the implementation of an
extraordinarily tight monetary policy. Money supply growth has been sharply
curtailed by the Central Bank and not allowed to accommodate consumer demand. As
a consequence, economic growth has slowed materially from the double-digit rate
of expansion witnessed in the first quarter. Retailers are suffering from the
involuntary accumulation of inventory and mounting delinquencies with their
consumer loans. The output of consumer durables such as automobiles has
declined, and unemployment has edged up in the Sao Paulo industrial center.
Brazil is not in a recession. The semi-official Institute of Applied
Economic Research projects a GDP growth rate for the year of 5.9%, a modest gain
over 1994's growth of 5.7%. Economic growth for the first half of 1995,
according to the Institute, was 7.4%, and the projected slowdown in the growth
rate for the year as a whole is attributable to the government's actions to
contain credit expansion and consumption.
The Fund's investment portfolio assumed a defensive posture earlier this
year in anticipation of softer demand, especially in the consumer durable
sector. Portfolio sales amounted to $12.3 million in the second quarter, and
most of the transactions were accounted for by companies which are sensitive to
4
<PAGE>
domestic economic conditions. Some of the important sales were: Brasmotor
(refrigerators, other white goods), $1.3 million; Klabin (paper, cartons, pulp),
$2.1 million; Belgo-Mineira (bar steel for auto and construction markets), $1.2
million; and Cia. Siderurgica Nacional (flat steel), $4.2 million.
Fund purchases during the second quarter totaled $8.2 million. The electric
utility industry accounted for $5.9 million of the total, including $5.1 million
invested in Eletrobras. The Fund also increased its investment in the Bradesco
financial services enterprise by $1.8 million of new stock purchases.
Perhaps the most encouraging development in Brazil has been the massive
increase in capital spending. The Institute of Applied Economic Research
forecasts that gross capital formation should reach a level equivalent to 20% of
gross domestic product by year-end, a remarkable recovery from the 1992 trough
of 13.7% of GDP. Capital formation is approaching rates achieved during Brazil's
economic "miracle" years of the 1960s and 1970s. Unlike that period, however,
the private sector and not the government accounts for the bulk of capital
spending today. Capital spending totals, in this sense, reflect an optimistic
attitude among businessmen regarding the future and suggest the economy will
maintain its forward progress in 1996.
Constitutional reform is the remaining important piece of unfinished
business. The 1988 Constitution greatly restricts the Executive's freedom of
action in the fiscal arena, and this is an important reason why President
Cardoso's pursuit of price stability has had to rely on a limited number of
crude and somewhat blunt instruments, such as credit controls and overvalued
exchange rates. The process of constitutional reform is moving forward in a
spirit of Executive and Legislative branch cooperation that was not thought
possible earlier in the year, although the complexity of the issues and their
political importance mean that the reform effort will be measured in years and
not months.
The efforts of those Brazilians seeking to modernize their government and
liberate private initiative from the bureaucratic embrace of Brasilia were
advanced by the illegal strike of the Petrobras workers in May. Shortages of
cooking gas, among other items, provoked great distress among all classes of
society. That 55,000 oil workers could hold hostage a $500 billion economy and
160 million consumers through a work stoppage twice judged illegal by the courts
undermines the case of those who might argue that State monopolies should be
preserved because of their unqualified public good.
We are quite optimistic about the investment opportunities in coming years.
Rising rates of capital formation will fuel economic growth and employment
opportunities. Constitutional reform should lead to an environment of stability
and predictability that should nurture the entrepreneurial talents of the
Brazilian businessman, while the onset of the Mercosul common market will open
profitable opportunities in new markets. We believe the Fund's fully invested
position in a diversified list of leading Brazilian companies provides solid
assurance that such opportunities will be translated into favorable investment
returns for the Fund's shareholders.
Respectfully,
/s/Nicholas Bratt /s/Juris Padegs
Nicholas Bratt Juris Padegs
President Chairman of the Board
5
<PAGE>
[LOGO] THE BRAZIL FUND, INC.
INVESTMENT SUMMARY AS OF JUNE 30, 1995
<TABLE>
==============================================================================================================
HISTORICAL
INFORMATION
LIFE OF FUND
<CAPTION>
TOTAL RETURN(%)
---------------------------------------------------------------------------
MARKET VALUE NET ASSET VALUE(a) INDEX(b)
--------------------- --------------------- ---------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
CURRENT QUARTER 1.01 -- 9.29 -- 17.55 --
FISCAL YEAR TO DATE -23.10 -- -20.50 -- -23.94 --
ONE YEAR 13.32 13.32 18.36 18.36 7.74 7.74
THREE YEAR 71.71 19.75 100.69 26.14 143.99 34.62
FIVE YEAR 190.53 23.78 192.96 23.98 393.06 37.59
LIFE OF FUND* 230.88 18.00 249.06 18.88 310.27 21.49
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
PER SHARE INFORMATION AND RETURNS(a)
YEARLY PERIODS ENDED JUNE 30
<CAPTION>
[FIGURE 1]
1988* 1989 1990 1991 1992 1993 1994 1995
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE............ $11.72 $16.42 $ 9.90 $14.03 $14.27 $18.44 $22.38 $24.47
INCOME DIVIDENDS........... $ -- $ .41 $ 1.01 $ -- $ -- $ -- $ .08 $ --
CAPITAL GAINS AND
OTHER DISTRIBUTIONS..... $ -- $ .39 $ 2.18 $ -- $ .28 $ .53 $ .93 $ 2.36
TOTAL RETURN (%)........... 1.56 54.68 -24.15 41.72 3.01 33.96 26.58 18.36
<FN>
(a) Total investment return based on per share net asset value reflects the effects of changes in net asset value on the performance
of the Fund during each period, and assumes dividends and capital gains distributions, if any, were reinvested. These
percentages are not an indication of the performance of a shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value of the Fund during each period.
(b) Sao Paulo Stock Exchange Index ($).
* The Fund commenced operations on April 8, 1988.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE OF THE FUND.
</FN>
</TABLE>
6
<PAGE>
[LOGO] THE BRAZIL FUND, INC.
PORTFOLIO SUMMARY AS OF JUNE 30, 1995
<TABLE>
==================================================================================================================================
<S> <C> <C>
DIVERSIFICATION / / Equity Securities 96%
/ / Cash Equivalents 4%
----
100% [Pie Chart Figure 2]
====
- ----------------------------------------------------------------------------------------------------------------------------------
SECTORS Sector breakdown of the Fund's equity securities
/ / Telecommunications 13%
/ / Food and Beverage 12%
/ / Forest Products 11%
/ / Banking 10%
/ / Mining 7%
/ / Petroleum 7%
/ / Utility 7% [Pie Chart Figure 3]
/ / Chemicals 7%
/ / Tobacco 5%
/ / Other 21%
----
100%
====
- ----------------------------------------------------------------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
1. Banco Itau S.A. 6. Telecomunicacoes Brasileiras
S.A.
2. Companhia Cervejaria Brahma
7. Companhia Souza Cruz
3. Petroleo Brasileiro S/A Industria e Comercio
4. Telecomunicacoes de Sao Paulo 8. Sadia Concordia S/A
S.A.
9. Aracruz Celulose S.A.
5. Companhia Vale do Rio Doce
10. S/A White Martins
</TABLE>
7
<PAGE>
[LOGO] THE BRAZIL FUND, INC.
INVESTMENT PORTFOLIO as of June 30, 1995
<TABLE>
======================================================================================================================
<CAPTION>
Industry Shares Company Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQUITY SECURITIES 96.0%
AUTO PARTS 0.9% 93,761,800 (pfd.) Metal Leve S.A. Industria e Comercio........ 2,648,351
----------
BANKING 9.9% 671,737,708 (pfd.) Banco Bradesco S.A. ........................ 5,692,074
76,294,208 (pfd.) Banco Itau S.A. ............................ 23,207,364
----------
28,899,438
----------
CHEMICALS 6.4% 28,647,000 (voting) Companhia Petroquimica do Sul S.A. ......... 1,117,249
5,039,400 (pfd.) COPENE Petroquimica do Nordeste S.A. "A".... 3,980,004
1,458,646,800 (voting) Ucar Carbon S.A. ........................... 1,774,779
12,833,921,463 (voting) S/A White Martins. ......................... 11,711,563
----------
18,583,595
----------
CONSTRUCTION 1.5% 4,476,300 (voting) Odebrecht S.A. ............................. 2,514,120
1,182,600 (voting) S/A Moinho Santista Industrias Gerais*...... 1,862,868
----------
4,376,988
----------
ELECTRICAL EQUIPMENT 4.9% 9,042,000 (pfd.) Brasmotor S.A. ............................. 1,669,897
5,813,800 (pfd.) Empresa Brasileira de Compressores S.A.(b).. 3,979,027
610,582 (voting) Pirelli Cabos S.A.*......................... 862,310
17,006,600 (pfd.) Weg S.A. ................................... 7,759,665
----------
14,270,899
----------
FOOD AND BEVERAGE 12.0% 56,096,254 (pfd.) Companhia Cervejaria Brahma ................ 18,403,593
1,001,659 (pfd.) Companhia Cervejaria Brahma (New (c)) ...... 299,246
6,314,433 (pfd.) Companhia Cervejaria Brahma Warrants
(expire 9/30/96)* (b) .................... 823,174
14,551,430 (pfd.) Sadia Concordia S/A. ....................... 13,595,035
1,768,900 (voting) Santista Alimentos S.A.*.................... 1,345,171
43,281,812 (pfd.) Sementes Agroceres S/A. .................... 728,808
----------
35,195,027
----------
FOREST PRODUCTS 10.2% 5,733,599 (pfd.) Aracruz Celulose S.A. "B"*.................. 13,391,893
2,199,600 (pfd.) Companhia Suzano de Papel e Celulose........ 11,230,983
3,623,792 (pfd.) Industrias Klabin de Papel e Celulose S/A... 5,117,794
----------
29,740,670
----------
GLASS 3.2% 2,270,236 (voting) Companhia Vidraria Santa Marina............. 9,310,311
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
=======================================================================================================================
<CAPTION>
Industry Shares Company Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IRON AND STEEL 3.2% 12,911,670 (voting) Companhia Siderurgica Belgo-Mineira ........ 1,280,647
7,200,000,000 (pfd.) Usinas Siderurgicas de Minas Gerais S/A .... 8,134,709
-----------
9,415,356
-----------
MINING 6.6% 113,888,000 (pfd.) Companhia Vale do Rio Doce ................. 17,197,645
10,368,389 (pfd.) S.A. Mineracao da Trindade ................. 259,069
36,396,800 (voting) S.A. Mineracao da Trindade ................. 1,779,311
-----------
19,236,025
-----------
PETROLEUM 6.4% 222,739,999 (pfd.) Petroleo Brasileiro S/A .................... 18,874,221
-----------
RETAILING 3.8% 15,408,041 (pfd.) Casa Anglo Brasileira S.A.* ................ 1,456,273
101,031,600 (pfd.) Lojas Americanas S.A. ...................... 2,250,025
247,237,800 (voting) Lojas Americanas S.A. ...................... 5,626,977
27,899,465 (pfd.) Mesbla S.A. ................................ 1,666,997
-----------
11,000,272
-----------
TELECOMMUNICATIONS 12.4% 511,256,600 (pfd.) Telecomunicacoes Brasileiras S.A. .......... 16,828,979
7,358,900 (pfd.) Telecomunicacoes do Parana S.A. ............ 2,046,582
141,212,067 (pfd.) Telecomunicacoes de Sao Paulo S.A. ......... 17,486,978
-----------
36,362,539
-----------
TEXTILES AND APPAREL 3.2% 457,766,740 (pfd.) Cia. Hering ................................ 3,978,418
92,193,348 (pfd.) Cia. Hering Textile (b) .................... 250,389
32,529,600 (pfd.) Sao Paulo Alpargatas S.A. .................. 5,124,163
-----------
9,352,970
-----------
TOBACCO 5.0% 1,943,043 (voting) Companhia Souza Cruz Industria e Comercio .. 14,670,450
-----------
UTILITY 6.4% 19,000,000 (pfd.) Centrais Eletricas Brasileiras S/A "B" ..... 5,057,034
540,740,952 (pfd.) Companhia Energetica de Minas Gerais ....... 10,573,968
45,510,000 (pfd.) Companhia Energetica de Sao Paulo .......... 1,799,635
217,211,500 (voting) Companhia Paranaense de Energia ............ 1,422,906
-----------
18,853,543
-----------
TOTAL EQUITY SECURITIES (Cost $120,276,286). 280,790,655
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
[LOGO] THE BRAZIL FUND, INC.
INVESTMENT PORTFOLIO (CONTINUED)
<TABLE>
=================================================================================================
<CAPTION>
Principal
Amount ($) Value ($)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE
AGREEMENT 4.0%
11,633,000 Repurchase Agreement with Donaldson,
Lufkin & Jenrette, dated 6/30/95 at
6.07%, to be repurchased at
$11,638,884 on 7/3/95, collateralized
by a $11,970,000 U.S. Treasury Note,
4.75%, 8/31/98 (Cost $11,633,000) ......... 11,633,000
-----------
- --------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $131,909,286) (a) ................... 292,423,655
===========
<FN>
(a) The cost of the investment portfolio for federal income tax purposes
was $131,928,453. At June 30, 1995, net unrealized appreciation for all
securities based on tax cost was $160,495,202. This consisted of aggregate
gross unrealized appreciation for all securities in which there was an
excess of market value over tax cost of $166,401,634 and aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over market value of $5,906,432.
(b) Securities valued in good faith by the Board of Directors. The cost of
these securities at June 30, 1995 aggregated $2,553,185. See Note A of the
Notes to Financial Statements.
(c) New shares issued during 1995, eligible for a pro rata share of 1995
dividends.
* Non-income producing security.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
[LOGO]THE BRAZIL FUND, INC.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
=================================================================================================================
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at value (identified cost $131,909,286) (Notes A and D)......... $ 292,423,655
Cash ........................................................................ 479
Foreign currency holdings, at market (identified cost $4,884,225) (Note A) .. 4,806,423
Receivable for investments sold ............................................. 65,770
Dividends and interest receivable ........................................... 666,390
Other assets ................................................................ 1,768
-------------
Total assets ................................................ 297,964,485
LIABILITIES
Payables:
Investments purchased ..................................................... $ 86,710
Accrued management fee (Note C) ........................................... 299,268
Accrued administrator's fee (Note C) ...................................... 8,333
Other accrued expenses (Note C) ........................................... 388,921
------------
Total liabilities ........................................... 783,232
-------------
Net assets .................................................................. $ 297,181,253
=============
NET ASSETS
Net assets consist of:
Undistributed net investment income ....................................... $ 3,143,646
Accumulated net realized gain ............................................. 10,221,173
Net unrealized appreciation (depreciation) on:
Investments ............................................................. 160,514,369
Foreign currency denominated transactions ............................... (83,646)
Common stock .............................................................. 121,463
Additional paid-in capital ................................................ 123,264,248
-------------
Net assets .................................................................. $ 297,181,253
=============
Net asset value per share ($297,181,253 divided by 12,146,285 shares of
common stock outstanding, 50,000,000 shares authorized, $.01 par value).... $ 24.47
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
[LOGO]THE BRAZIL FUND, INC.
FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
=================================================================================================================
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income
Income:
Dividends (net of withholding tax of $976,899) (Note A)...... $ 5,404,301
Interest..................................................... 329,470
---------------
5,733,771
Expenses:
Management fee (Note C)...................................... $ 1,813,742
Administrator's fee (Note C)................................. 28,660
Custodian and accounting fees (Note C)....................... 542,296
Directors' fees and expenses (Note C)........................ 43,692
Auditing and tax services.................................... 49,250
Reports to shareholders...................................... 26,541
Legal........................................................ 8,920
Other........................................................ 77,024 2,590,125
--------------- ---------------
Net investment income 3,143,646
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments (Note A)......................................... 10,626,743
Foreign currency denominated transactions.................... (302,140) 10,324,603
---------------
Net unrealized depreciation during the period on:
Investments.................................................. (91,018,976)
Foreign currency denominated transactions.................... (46,186) (91,065,162)
--------------- ---------------
Net loss on investment transactions............................ (80,740,559)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $ (77,596,913)
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
==================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS JUNE 30, 1995 JUNE 30,1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ............................................ $ 3,143,646 $ (2,009,799)
Net realized gain from investment transactions .......................... 10,324,603 28,598,195
Net unrealized appreciation (depreciation) on investment
transactions during the period ........................................ (91,065,162) 125,691,549
------------ -------------
Net increase (decrease) in net assets resulting from operations ........... (77,596,913) 152,279,945
------------ -------------
Distributions to shareholders from net realized gains from
investment transactions ($.24 and $2.46 per share, respectively) ...... (2,853,224) (29,783,356)
------------ -------------
Net asset value of shares issued to shareholders in reinvestment of
distributions ......................................................... 1,109,418 330,047
------------ -------------
INCREASE (DECREASE) IN NET ASSETS ......................................... (79,340,719) 122,826,636
Net assets at beginning of period ......................................... 376,521,972 253,695,336
------------ -------------
NET ASSETS AT END OF PERIOD (including undistributed net investment
income of $3,143,646 in 1995) ......................................... $297,181,253 $ 376,521,972
============ =============
OTHER INFORMATION
INCREASE IN FUND SHARES
Shares outstanding at beginning of period ................................. 12,107,722 12,093,826
Shares issued to shareholders in reinvestment of distributions ......... 38,563 13,896
------------ -------------
Shares outstanding at end of period........................................ 12,146,285 12,107,722
============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
[LOGO]THE BRAZIL FUND, INC.
FINANCIAL HIGHLIGHTS
=========================================================================================================
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS AND MARKET PRICE DATA.
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30, ----------------------------------------------
1995 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period........ $ 31.10 $ 20.98 $ 14.12 $ 13.80 $ 5.97 $ 18.85
------- ------- ------- ------- ------- -------
Net investment income (loss)(a)........... .26 (.17) .10 .19 .95 1.32
Net realized and unrealized gain
(loss) on investment transactions(a)..... (6.65) 12.75 7.58 .79 6.88 (14.08)
------- ------- ------- ------- ------- -------
Total from investment operations............ (6.39) 12.58 7.68 .98 7.83 (12.76)
------- ------- ------- ------- ------- -------
Less distributions from:
Net investment income..................... - - (.08) - - (.12)
Net realized gains on investments......... (.24) (2.46) (.74) (.66) - -
------- ------- ------- ------- ------- -------
Total distributions......................... (.24) (2.46) (.82) (.66) - (.12)
------- ------- ------- ------- ------- -------
Net asset value, end of period.............. $ 24.47 $ 31.10 $ 20.98 $ 14.12 $ 13.80 $ 5.97
======= ======= ======= ======= ======= =======
Market value, end of period................. $ 25.13 $ 33.00 $ 21.13 $ 13.63 $ 14.75 $ 6.63
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN
Per share market value (%)................ (23.10)** 69.81 60.89 (3.91) 122.64 (47.98)
Per share net asset value (%)(b).......... (20.50)** 61.09 54.19 6.43 131.16 (67.98)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions).... 297 377 254 171 167 72
Ratio of operating expenses to
average net assets (%)(c)................ 1.67* 1.71 1.84 2.22 2.15 2.25
Ratio of net investment income (loss)
to average net assets (%)................ 2.02* (.58) .56 1.13 8.13 11.27
Portfolio turnover rate (%)............... 9.91* 5.76 4.67 7.94 12.69 4.31
<FN>
(a) Realized and unrealized currency losses on the Fund's interest bearing
accounts amounted to $.31, $.86 and $2.96 per share in 1992, 1991 and
1990, respectively, of which $1.27 per share is included in net investment
income in 1990.
(b) Total investment return based on per share net asset value reflects the
effects of changes in net asset value on the performance of the Fund
during each period, and assumes dividends and capital gains distributions,
if any, were reinvested. These percentages are not an indication of the
performance of a shareholder's investment in the Fund based on market
value due to differences between the market price of the stock and the net
asset value of the Fund during each period.
(c) For the years ended December 31, 1993, 1992 and 1990 the ratio of
expenses, including the Brazilian repatriation tax, to average net assets
was 2.22%, 2.39% and 2.56%, respectively.
* Annualized
** Not annualized
</FN>
</TABLE>
14
<PAGE>
[LOGO]THE BRAZIL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The Brazil Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended, as a non-diversified, closed-end management investment
company. The policies described below are followed consistently by the Fund in
the preparation of its financial statements in conformity with generally
accepted accounting principles.
SECURITY VALUATION. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Directors. Securities valued in good
faith amounted to $5,052,590 (1.7% of net assets) and are noted in the
Investment Portfolio as of June 30, 1995.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) values of investment securities, other assets and liabilities
at the daily rate of exchange;
(ii) purchases and sales of investment securities, dividend and
interest income and expenses at the daily rate 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 ex and payment dates on dividends,
interest, and foreign withholding taxes.
TAXATION. The Fund's policy is to comply with the requirements of the Internal
Revenue Code which are applicable to regulated investment companies, and to
distribute all of its taxable income to its shareholders. The Fund accordingly
paid no U.S. federal income taxes, and no federal income tax provision was
required.
The Fund is subject to a 15% withholding tax on dividend and interest income.
DISTRIBUTION OF INCOME AND GAINS. The Fund intends to distribute to
shareholders, at least annually, all of its tax basis net investment income, any
net short-term capital gains in excess of net long-term capital losses
(including any capital loss carryover) and expects to distribute annually any
net long-term capital gains in excess of net short-term capital losses
(including any capital loss carryover), which would be taxable to the Fund if
not distributed. An additional distribution may be made to the extent necessary
to avoid the payment of a four percent federal excise tax.
15
<PAGE>
[LOGO]THE BRAZIL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
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 and foreign currency related 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.
OTHER. Investment security transactions are accounted for on a trade date basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis. Distributions to shareholders are recorded at the earlier
of ex or record date. The Fund uses the identified cost method for determining
realized gain or loss on investments and foreign currency for both financial and
federal income tax reporting purposes.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
During the six months ended June 30, 1995, purchases and sales of investment
securities (excluding short-term investments) aggregated $15,123,855 and
$26,922,255, respectively.
C. INVESTMENT ADVISORY AGREEMENTS AND
TRANSACTIONS WITH AFFILIATED PERSONS
- --------------------------------------------------------------------------------
Under the Fund's Investment Advisory and Management Agreement (the "Management
Agreement") with Scudder, Stevens & Clark, Inc. (the "Adviser"), the Fund agrees
to pay the Adviser a monthly fee at an annual rate equal to 1.30% of the first
$150,000,000 of the Fund's average weekly net assets, 1.25% of such assets over
$150,000,000 and up to and including $300,000,000, and 1.20% of such assets in
excess of $300,000,000. For the six months ended June 30, 1995, the fee pursuant
to the Management Agreement amounted to $1,813,742.
The Adviser has entered into a Research and Advisory Agreement (the "Advisory
Agreement") with Banco Icatu S/A (the "Brazilian Adviser"), whereby the
Brazilian Adviser provides such investment advice, research, and assistance as
the Adviser may from time to time reasonably request. Under the Advisory
Agreement, the Adviser pays the Brazilian Adviser a monthly fee, equal to 0.25%
of the first $150,000,000 of the Fund's average weekly net assets, 0.15% of such
assets over $150,000,000 and up to and including $300,000,000, and 0.05% of such
assets over $300,000,000. Additionally, the Brazilian Adviser has agreed to
waive approximately one half of their fees. The Adviser has agreed to pass this
waiver through to the Fund and has reduced its fees accordingly. For the six
months ended June 30, 1995, the fee pursuant to the Advisory Agreement
aggregated $299,142, of which $149,571 was waived and reflected as a reduction
of the management fee.
The Fund and the Adviser entered into an Administration Agreement with Banco de
Boston S.A. ("Banco de Boston"), pursuant to which Banco de Boston acts as the
Fund's Brazilian Administrator. The Fund has agreed to pay Banco de Boston, for
services rendered, an annual fee payable quarterly in Brazilian currency equal
to $50,000 per year plus out of pocket expenses. For the six months ended June
30, 1995, the Administrator fee amounted to $28,660.
Effective June 6, 1995, Scudder Fund Accounting Corporation ("SFAC"), a
wholly-owned subsidiary of the Adviser, assumed responsibility for determining
the daily net asset value per share and maintaining the portfolio and general
accounting records of the Fund. For the six months ended June 30, 1995, the
amount charged to the Fund by SFAC aggregated $12,744, all of which is unpaid at
June 30, 1995.
16
<PAGE>
================================================================================
The Fund pays each Director not affiliated with the Adviser an annual fee of
$6,000 except for two Directors who, as residents of Brazil, receive a fee of
$12,000, plus specified amounts for each Board of Directors or committee meeting
attended. For the six months ended June 30, 1995, Directors' fees and expenses
amounted to $43,692.
D. FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN
BRAZIL
- --------------------------------------------------------------------------------
Investing in Brazil may involve considerations not typically associated with
investing in securities issued by domestic companies such as more volatile
prices and less liquid securities.
The Brazilian Government has exercised and continues to exercise substantial
influence over many aspects of the private sector by legislation and regulation,
including regulation of prices and wages.
Brazilian law imposes certain limitations and controls which generally affect
foreign investors in Brazil. The Fund has obtained from the Brazilian Securities
Commission authorization, subject to certain restrictions, to invest in
Brazilian securities. Under current Brazilian law, the Fund may repatriate
income received from dividends and interest earned on, and net realized capital
gains from, its investments in Brazilian securities. Under its authorization,
the Fund may also repatriate capital, but only to the extent necessary to
distribute income and capital gains (as computed for U.S. federal income tax
purposes), to pay expenses incurred outside of Brazil, to repay borrowings made
for temporary or emergency purposes, and in connection with the termination of
the Fund (provided that the Fund's dissolution has been approved by holders of
at least two-thirds of the Fund's shares). Under current Brazilian law, whenever
there occurs a serious imbalance in Brazil's balance of payments or serious
reasons to foresee the imminence of such an imbalance, Brazil's National
Monetary Council may, for a limited period, impose restrictions on foreign
capital remittances abroad. Exchange control regulations, which may restrict
repatriation of investment income, capital or the proceeds of securities sales
by foreign investors, may limit the Fund's ability to make sufficient
distributions, within applicable time periods, to qualify for the favorable U.S.
tax treatment afforded to regulated investment companies.
The Fund is unable to predict whether further economic reforms or modifications
to the existing policies by the Brazilian Government may adversely affect the
liquidity of the Brazilian stock market in the future.
17
<PAGE>
<TABLE>
[LOGO]THE BRAZIL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
==================================================================================================================
E. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (000 OMITTED)
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
NET GAIN (LOSS) NET INCREASE
ON INVESTMENT AND (DECREASE)
FOREIGN CURRENCY IN NET ASSETS
INVESTMENT NET INVESTMENT DENOMINATED RESULTING
INCOME INCOME (LOSS) TRANSACTIONS FROM OPERATIONS
------------------ ------------------- ----------------------- ----------------------
PER PER PER PER
1995 TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
- ---- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, $ 3,337 $ .27 $ 2,007 $ .17 $ (104,842) $ (8.64) $ (102,835) $ (8.47)
June 30, 2,397 .20 1,137 .09 24,101 1.99 25,238 2.08
------- ----- ------- ----- ---------- ------- ---------- -------
Totals $ 5,734 $ .47 $ 3,144 $ .26 $ (80,741) $ (6.65) $ (77,597) $ (6.39)
======= ===== ======= ===== ========== ======= ========== =======
</TABLE>
<TABLE>
<CAPTION>
PER PER PER PER
1994 TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
- ---- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, $ 1,119 $ .09 $ (373) $(.03) $ 83,849 $ 6.93 $ 83,476 $ 6.90
June 30, 986 .08 (133) (.01) (62,259) (5.15) (62,392) (5.16)
September 30, 1,017 .09 (503) (.04) 182,768 15.11 182,265 15.07
December 31, 829 .07 (1,001) (.09) (50,068) (4.14) (51,069) (4.23)
------- ----- ------- ----- ---------- ------- ---------- -------
Totals $ 3,951 $ .33 $(2,010) $(.17) $ 154,290 $ 12.75 $ 152,280 $ 12.58
======= ===== ======= ===== ========== ======= ========== =======
</TABLE>
18
<PAGE>
[LOGO]BRAZIL FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To The Shareholders and the Board of Directors of The Brazil Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, 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 The Brazil Fund, Inc. (the "Fund")
at June 30, 1995, the results of its operations, the changes in its net assets
and the financial highlights for each of the periods indicated, 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 June 30, 1995 by
correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 16, 1995
<PAGE>
19
Dividend Reinvestment and Cash Purchase Plan
The Plan
The Fund's Dividend Reinvestment and Cash Purchase Plan (the "Plan") offers
you an automatic way to reinvest your dividends and capital gain distributions
in shares of the Fund. The Plan also provides for cash investments in Fund
shares of $100 to $3,000 semiannually through The First National Bank of Boston,
the Plan Agent.
Automatic Participation
Each shareholder of record is automatically a participant in the Plan unless
the shareholder has instructed the Plan Agent in writing otherwise. Such a
notice must be received by the Plan Agent not less than 10 days prior to the
record date for a dividend or distribution in order to be effective with respect
to that dividend or distribution. A notice which is not received by that time
will be effective only with respect to subsequent dividends and distributions.
Shareholders who do not participate in the Plan will receive all
distributions in cash paid by check in dollars mailed directly to the
shareholder by The First National Bank of Boston, as dividend paying agent.
Shares Held by a Nominee
If your shares are held in the name of a brokerage firm, bank, or other
nominee as the shareholder of record, please consult your nominee (or any
successor nominee) to determine whether it is participating in the Plan on your
behalf. Many nominees are generally authorized to receive cash dividends unless
they are specifically instructed by a client to reinvest. If you would like your
nominee to participate in the Plan on your behalf, you should give your nominee
instructions to that effect as soon as possible.
Pricing of Dividends and Distributions
If the market price per share on the payment date for the dividend or
distribution or, if that date is not a New York Stock Exchange trading date, the
next preceding trading date (the "Valuation Date") equals or exceeds net asset
value per share on that date, the Fund will issue new shares to participants at
the greater of the following on the Valuation Date: (a) net asset value, or (b)
95% of the market price. If the net asset value exceeds the market price of Fund
shares at such time, participants in the Plan are considered to have elected to
receive shares of stock from the Fund, valued at market price, on the Valuation
Date. In either case, for Federal income tax purposes, the shareholder receives
a distribution equal to the market value on the Valuation Date of new shares
issued. State and local taxes may also apply. If the Fund should declare an
income dividend or net capital gain distribution payable only in cash, the Plan
Agent will, as agent for the participants, buy Fund shares in the open market,
on the New York Stock Exchange or elsewhere, for the participants' account on,
or shortly after, the payment date.
Voluntary Cash Purchases
Participants in the Plan have the option of making additional cash payments
to the Plan Agent, semiannually, in any amount from $100 to $3,000, for
investment in the Fund's shares. The Plan Agent will use all such monies
received from participants to purchase Fund shares in the open market on or
about February 15 and August 15. Any voluntary cash payments received more than
30 days prior to these dates will be returned by the Plan Agent, and interest
will not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations, and also to allow ample time for receipt and processing by the
Plan Agent, it is suggested that participants send in voluntary cash payments to
be received by the Plan Agent approximately ten days before February 15, or
August 15, as the case may be. A participant may withdraw a voluntary cash
payment by written notice, if the notice is received by the Plan Agent not less
than 48 hours before such payment is to be invested.
20
<PAGE>
Participant Plan Accounts
The Plan Agent maintains all participant accounts in the Plan and furnishes
written confirmation of all transactions in the account, including information
needed by participants for personal and tax records. Shares in the account of
each plan participant will be held by the Plan Agent in non-certificated form in
the name of the participant, and each participant will be able to vote those
shares purchased pursuant to the Plan at a shareholder meeting or by proxy.
No Service Fee to Reinvest
There is no service fee charged to participants for reinvesting dividends or
distributions from net realized capital gains. The Plan Agent's fees for the
handling of the reinvestment of dividends and capital gain distributions will be
paid by the Fund. There will be no brokerage commissions with respect to shares
issued directly by the Fund as a result of dividends or capital gain
distributions payable either in stock or in cash. However, participants will pay
a pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of any
dividends or capital gain distributions payable only in cash.
Costs for Cash Purchases
With respect to purchases of Fund shares from voluntary cash payments, the
Plan Agent will charge $1.00 for each such purchase for a participant. Each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases of Fund shares in connection
with voluntary cash payments made by the participant.
Brokerage charges for purchasing small amounts of stock for individual
accounts through the Plan are expected to be less than the usual brokerage
charges for such transactions, because the Plan Agent will be purchasing stock
for all participants in blocks and pro-rating the lower commission thus
attainable.
Amendment or Termination
The Fund and the Plan Agent each reserve the right to terminate the Plan.
Notice of the termination will be sent to the participants of the Plan at least
30 days before the record date for a dividend or distribution. The Plan also may
be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by giving at least 30 days' written notice to participants in
the Plan.
A participant may terminate his account under the Plan by written notice to
the Plan Agent. If the written notice is received 10 days before the record day
of any distribution, it will be effective immediately. If received after that
date, it will be effective as soon as possible after the reinvestment of the
dividend or distribution.
If a participant elects to sell his shares before the Plan is terminated, the
Plan Agent is authorized to deduct a fee of 5% of the gross proceeds, to a
maximum of $3.50, plus brokerage commissions from the sale transaction.
Plan Agent Address and Telephone Number
You may obtain more detailed information by requesting a copy of the Plan
from the Plan Agent. All correspondence (including notifications) should be
directed to: The Brazil Fund, Inc. Dividend Reinvestment and Cash Purchase Plan,
c/o The First National Bank of Boston, P.O. Box 1681, Boston, MA 02105, (617)
575-3120.
21
<PAGE>
Investment Manager and Administrator
The investment manager and administrator of The Brazil Fund, Inc. (the
"Fund") is Scudder, Stevens & Clark, Inc., one of the most experienced
investment management and investment counsel firms in the United States.
Established in 1919, the firm provides investment counsel for individuals,
investment companies and institutions. Scudder has offices throughout the United
States and subsidiaries in London and Tokyo.
Scudder has been a leader in international investment management for over 40
years. It manages Scudder International Fund, which was initially incorporated
in Canada in 1953 as the first foreign investment company registered with the
U.S. Securities and Exchange Commission. Scudder's investment company clients
include nine other open-end investment companies which invest primarily in
foreign securities.
In addition to the Fund, Scudder also manages the assets of seven other
closed-end investment companies which invest in foreign securities. The
Argentina Fund, Inc. (investing primarily in securities of Argentine issuers),
The Korea Fund, Inc. (investing in a broad spectrum of Korean companies), The
Latin America Dollar Income Fund, Inc. (investing principally in Latin American
debt instruments), Scudder New Asia Fund, Inc. (investing in a broad spectrum of
Asian companies), Scudder New Europe Fund, Inc. (investing in equity securities
traded in smaller or emerging European securities markets), and Scudder World
Income Opportunities Fund, Inc. (investing in global income and, to a limited
extent, equity securities) are traded on the New York Stock Exchange. The First
Iberian Fund, Inc. (investing primarily in Spanish and Portuguese securities) is
traded on the American Stock Exchange.
22
<PAGE>
Directors and Officers
JURIS PADEGS*
Chairman of the Board and Director
NICHOLAS BRATT*
President and Director
LINO OTTO BOHN
Honorary Director
EDGAR R. FIEDLER
Director
ROBERTO TEIXEIRA DA COSTA
Director and Resident Brazilian Director
RONALDO A. DA FROTA NOGUEIRA
Director and Resident Brazilian Director
WILSON NOLEN
Director
EDMOND D. VILLANI*
Director
EDMUND B. GAMES, JR.*
Vice President
JERARD K. HARTMAN*
Vice President
DAVID S. LEE*
Vice President
WILLIAM TRUSCOTT*
Vice President
PAMELA A. McGRATH*
Treasurer
KATHRYN L. QUIRK*
Vice President and Assistant Secretary
THOMAS F. McDONOUGH*
Secretary
EDWARD J. O'CONNELL*
Vice President and Assistant Treasurer
COLEEN DOWNS DINNEEN*
Assistant Secretary
* Scudder, Stevens & Clark, Inc.
23
<PAGE>
