(logo)
The Brazil Fund, Inc.
Annual Report
December 31, 1998
A closed-end investment company seeking long-term capital appreciation through
investment primarily in the equity securities of Brazilian issuers.
<PAGE>
(logo) 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
(logo) General Information
================================================================================
Executive offices
The Brazil Fund, Inc.
345 Park Avenue
New York, NY 10154
For Fund information: 1-800-349-4281
Transfer agent, registrar and dividend
reinvestment plan agent
For account information: 1-800-426-5523
EquiServe
Attn. Investor Relations Department
P.O. Box 8200
Boston, MA 02266-8200
Custodian
Brown Brothers Harriman & Co.
Legal counsel
Debevoise & Plimpton
Independent Accountants
PricewaterhouseCoopers LLP
New York Stock Exchange Symbol -- BZF
(logo) Contents
================================================================================
In Brief 3
Letter to Stockholders 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
Tax Information 20
Dividend Reinvestmen
and Cash Purchase Plan 21
Stockholder Meeting Results 23
Investment Manager and Administrator 24
Directors and Officers 24
- --------------------------------------------------------------------------------
This report is sent to the stockholders 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>
(logo) The Brazil Fund, Inc.
In Brief
================================================================================
o Economic turmoil, divisive politics, and fears of devaluation kept Brazilian
equities under pressure for most of 1998.
o While further volatility is inevitable following the devaluation of the real,
it remains crucial for the government to contain inflation, maintain currency
stability, and institute fiscal discipline.
o The Fund realigned its holdings in the telecommunications sector, taking
advantage of the privatization of Telebras to purchase the newly created
fixed-line telephone companies.
(logo) Letter to Stockholders
================================================================================
Dear Stockholders:
The wide range of problems affecting the Brazilian economy caused stocks to
plummet in 1998. Concerns about high interest rates, growing fiscal and current
account deficits, and pressure on the real all weighed heavily on investor
sentiment. After performing well in the first quarter, equities gradually lost
ground until August, when the Russian debt default sent the stock markets of
developing countries into a free fall. Brazilian equities eventually regained
their footing and rallied until mid-December, in part because of a $41 billion
aid package pledged by the International Monetary Fund (IMF), but proceeded to
give back most of their gains as the likelihood of devaluation increased.
In this difficult environment, the return on the net asset value of the Brazil
Fund declined 25.42% to $14.92 per share for the twelve-month period ended
December 31, 1998. In the same time period, the return on the price of the
Fund's shares trading on the New York Stock Exchange declined 31.61% to $10.875
per share, representing a discount of 27.11% to NAV. While poor on an absolute
basis, these returns outpaced the performance of the unmanaged benchmark indices
by a wide margin. In the period, the Sao Paulo Stock Exchange declined 38.55%,
and the International Finance Corporation (IFC) Index dropped 38.93%.
The Road to Devaluation
For the last four years, Brazil's Real Plan has resulted in low inflation,
steady economic growth, and a stable currency exchange rate. While the program
helped repair the economy following the crippling inflation of the early 90's,
the gradually depreciating band in which it placed the real proved insufficient
to compensate for the country's "twin deficits." Unable to make the necessary
adjustments to its fiscal policy, Brazil's government was forced to use billions
of dollars of foreign exchange reserves to defend the currency. In addition,
interest rates were raised to over 40%, an act that stifled economic growth but
failed to stem capital flight. Although the IMF package appeared to meet the
country's external financing needs for 1999, confidence in the government's
ability to attract foreign exchange flows or service the domestic debt steadily
deteriorated. When the governor of the state of Minas Gerais declared a debt
moratorium in early January 1999, what remained of investors' confidence in the
government's ability to achieve equilibrium evaporated. The Central Bank was
forced to attempt a controlled 9% devaluation vis-a-vis the dollar, prompting
the resignation of the Central Bank president, Gustavo Franco. Two days later,
Brazil abandoned the exchange rate band that had long been the anchor of the
Real Plan, allowing the currency to float freely.
3
<PAGE>
(logo) The Brazil Fund, Inc.
Letter to Stockholders
================================================================================
Regrettably, the re-election of President Fernando Henrique Cardoso and the
announcement of the IMF support program in the end did not prove sufficient to
address Brazil's precarious financial position, demonstrating that much deeper
changes will be needed. Although it is likely that the Brazilian Congress will
ultimately pass all of the proposed fiscal reforms, its failure to do so in a
timely fashion was one of the primary causes of the crisis. Going forward, it is
imperative for the government to develop a comprehensive plan to address the
public sector borrowing requirements of the country, while at the same time
avoiding the path of inflationary financing. While the devaluation and the
deepening recession will likely lead to a positive adjustment in the trade and
current account deficits, the government must act forcefully to instill
confidence in investors and the business community. In the process, it would
enable a significant reduction in interest rates, and help restore capital flows
from trade transactions and foreign direct investment.
On a more positive note, the catharsis that has accompanied the devaluation
may result in a more attractive environment for Brazilian companies. If the
government is able to reduce real interest rates without the return of high
inflation, the contraction in the economy could be short-lived, and possibly a
precursor to recovery in the latter half of 1999 or early 2000. A weaker real
should increase the competitiveness of Brazilian exports and reduce the flow of
imports, reducing the current account deficit in the process. Foreign direct
investment, which has been strong in the past, is likely to increase as long as
the demand for services and manufactured goods increases. In addition, any
strengthening in commodity prices would be beneficial to many of the listed
Brazilian companies in the paper and pulp, steel, mining, and petrochemical
sectors. The potential still exists for a more favorable market environment in
the year ahead, although many question marks are likely to dampen market
performance in the near-term.
Portfolio Strategy
As volatility is not likely to recede quickly from the Brazilian market, a
long-term approach helps the Fund to navigate through the periodic crises that
have occurred since the Fund's inception. The Fund's outperformance of its
benchmark in 1998 underscores our view that portfolios are best structured to
overcome stock market volatility when they emphasize companies with low balance
sheet leverage, a healthy rate of internal cash flow generation, and the ability
to finance their growth even during periods of economic turmoil.
The Fund finished 1998 with approximately 26% of investments in cash
equivalents, which served to cushion the blow of the continued decline in
Brazilian equities over the course of the year. While some of the cash buildup
was undertaken for defensive purposes, the majority of it was related to the
breakup of Telecomunicacoes Brasileiras S.A. ("Telebras") prior to the
privatization of the underlying operating companies. Under U.S. tax law, the
split was a taxable event to U.S. stockholders, requiring the realization of a
capital gain on the Fund's holding in Telebras. This capital gain was paid out
to stockholders in the form of a dividend on January 13, 1999.
In order to minimize the taxable impact to stockholders, the Fund realized
losses on holdings whose outlook had been negatively affected by the likelihood
of a prolonged recession and the extended period of high interest rates. Among
this group were the steel company Usinas Siderugicas de Minas Gerais S.A.
("Usiminas"), and the paper company Industrias Klabin de Papel e Celulose S.A.
The Fund also realigned its holdings in the telecommunications sector, reducing
its stake in Telebras prior to the privatization and selling down holdings in
Telecomunicacoes de Sao Paulo S.A. ("Telesp") and Telecomunicacoes de Sao Paulo
4
<PAGE>
(logo) The Brazil Fund, Inc.
Letter to Stockholders
================================================================================
S.A. Cellular ("Telesp Cellular"). Purchases made by the Fund include the newly
created fixed-line telephone companies that resulted from the Telebras
privatization: Tele Norte Leste, Telecentro Sul, and the long-distance company
Embratel. We favored these entities over the cellular companies created from the
breakup because they have the advantages of size, liquidity, financial strength,
and stronger near-term prospects. The creation of twelve new entities from the
Telebras privatization, six of which will have significant liquidity, should
benefit the stock market by creating a deeper base of individual companies in
place of a single, dominant stock.
Year 2000 Readiness
Like other registered investment companies and financial business
organizations worldwide, the Fund could be adversely affected if computer
systems on which the Fund relies, which primarily include those used by the
Fund's Manager, its affiliates or other service providers, are unable to
correctly process date-related information on and after January 1, 2000. This
risk is commonly called the Year 2000 Issue (Y2K). Failure to successfully
address the Y2K Issue could result in interruptions to and other material
adverse effects on the Fund's business and operations. Scudder Kemper
Investments has commenced a review of the Y2K Issue as it may affect the Fund
and is taking steps it believes are reasonably designed to address the Y2K
Issue, although there can be no assurances that these steps will be sufficient.
In addition, there can be no assurances that the Y2K Issue will not have any
adverse effect on the companies whose securities are held by the Fund or on
global markets or economies generally. The foregoing is a Year 2000 readiness
disclosure under the Year 2000 Information and Readiness Disclosure Act.
Outlook
The past eighteen months have been a difficult period for investors in the
Brazilian stock market, and it remains unclear when an economic recovery will
occur. However, liquidity is thin in the Brazilian market, so significant
changes in the economic prospects of individual companies must be anticipated
with a relatively long lead-time. Despite the numerous near-term difficulties,
we remain confident that the strength of the corporate sector will ultimately
lead to positive results for stockholders of the Fund, as it has over the past
ten years.
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 December 31, 1998
================================================================================
Historical
Information Total Return (%)
Life of Fund ----------------------------------------------------------------
Market Value Net Asset Value (a) Index (b)
------------------- -------------------- -------------------
Average Average Average
Cumulative Annual Cumulative Annual Cumulative Annual
------------------- -------------------- -------------------
Current Quarter 14.37 -- 11.06 -- 0.96 --
One Year -31.61 -31.61 -25.42 -25.42 -38.55 -38.55
Three Year -17.67 -6.28 15.11 4.80 26.91 8.27
Five Year 2.94 0.58 42.20 7.29 74.50 11.78
Ten Year 279.34 14.26 217.71 12.25 468.55 18.98
- --------------------------------------------------------------------------------
Per Share Information and Returns (a)
Yearly periods ended December 31
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE TOTAL RETURN (%)
CHART DATA:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value...... $18.85 $ 5.97 $13.80 $14.12 $20.98 $31.10 $20.73 $25.75 $26.42 $14.92
Income Dividends..... $ .89 $ .12 $ -- $ -- $ .08 $ -- $ .30 $ .55 $ .51 $ .75
Capital Gains and
Other Distributions.. $ 2.29 $ -- $ -- $ .66 $ .74 $ 2.46 $ 1.05 $ .32 $ 2.75 $ 2.27
Total Return (%)..... 83.96 -67.98 131.16 6.43 54.19 61.09 -23.31 28.89 19.75 -25.42
</TABLE>
(a) Total investment returns reflect changes in net asset value per share
during each period and assume that 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 price.
(b) Sao Paulo Stock Exchange Index ($).
Past results are not necessarily indicative of future performance of the
Fund.
6
<PAGE>
[LOGO] The Brazil Fund, Inc.
Portfolio Summary as of December 31, 1998
================================================================================
Diversification
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Equity Securities 74%
Cash Equivalents 26%
-----
100%
=====
- --------------------------------------------------------------------------------
Sectors
Sector breakdown of the Fund's equity securities
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Telecommunications 20%
Banking 20%
Utilities 16%
Food and Beverage 10%
Petroleum 10%
Mining 6%
Tobacco 5%
Electrical Equipment 4%
Forest Products 2%
Other 7%
-----
100%
-----
- --------------------------------------------------------------------------------
Ten Largest Equity Holdings
1. Banco Itau S.A.
2. Petroleo Brasileiro S.A.
3. Companhia Cervejaria Brahma
4. Telecomunicacoes de Sao Paulo S.A.
5. Banco Bradesco S.A.
6. Companhia Energetica de Minas
Gerais
7. Companhia Vale do Rio Doce
8. Companhia Souza Cruz
Industria e Comercio
9. Centrais Eletricas Brasileiras S.A.
10. Embratel Participacoes S.A.
7
<PAGE>
[LOGO] The Brazil Fund, Inc.
Investment Portfolio as of December 31, 1998
================================================================================
<TABLE>
<CAPTION>
Shares Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Equity Securities 74.3%
Banking 14.7%
Banco Bradesco S.A. (pfd.) .......................................................... 2,233,692,307 12,386,293
Banco Bradesco S.A. (pfd.) (Rights)* (b) ............................................ 92,584,629 53,639
Banco Itau S.A. (pfd.) .............................................................. 60,024,208 29,309,897
------------
41,749,829
------------
Chemicals 0.7%
S/A White Martins (voting) .......................................................... 4,273,846 2,051,588
------------
Construction 0.7%
Odebrecht S.A. (voting) (b) ......................................................... 575,630,000 1,896,137
------------
Containers 0.4%
Dixie Toga S.A. (pfd.) .............................................................. 4,349,000 1,277,794
------------
Electrical Equipment 3.1%
Empresa Brasileira de Compressores S.A. (pfd.) ...................................... 4,393,800 1,272,775
Weg S.A. (pfd.) (b) ................................................................. 16,026,600 7,428,008
------------
8,700,783
------------
Food & Beverages 7.7%
Companhia Cervejaria Brahma (pfd.) .................................................. 39,257,913 17,155,537
Sadia S.A. Industria e Comercio (pfd.) .............................................. 9,088,430 4,663,626
------------
21,819,163
------------
Forest Products 1.7%
Aracruz Celulose S.A. "B" (pfd.) (b) ................................................ 6,651,599 4,954,636
------------
Glass 1.3%
Companhia Vidraria Santa Marina (voting) ............................................ 2,340,236 3,680,073
------------
Mining 4.2%
Companhia Vale do Rio Doce (voting) (pfd.) .......................................... 906,104 11,473,943
Companhia Vale do Rio Doce "A" (debenture)* (b) ..................................... 922,104 0
S.A. Mineracao da Trindade (voting) ................................................. 38,392,104 460,737
------------
11,934,680
------------
Petroleum 7.3%
Petroleo Brasileiro S.A. (pfd.) ..................................................... 183,739,999 20,833,751
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
[LOGO] The Brazil Fund, Inc.
Investment Portfolio
================================================================================
<TABLE>
<CAPTION>
Shares Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retailing 1.3%
Companhia Brasileira de Distribuicao Grupo Pao de Acucar (voting) ................... 110,000,000 1,775,295
Lojas Americanas S.A. (Rights)* (b) ................................................. 55,268,850 0
Lojas Americanas S.A. (voting) (b) .................................................. 435,187,800 2,034,039
------------
3,809,334
------------
Telecommunications 15.0%
Embratel Participacoes S.A. (pfd.)* ................................................. 618,223,400 8,442,529
Tele Celular Participacoes S.A. (pfd.)* ............................................. 300,256,600 173,954
Tele Celular Sul Participacoes S.A. (pfd.)* ......................................... 300,256,600 506,951
Tele Centro Oeste Celular Participacoes S.A. (pfd.)* ................................ 300,256,600 315,602
Tele Centro Sul Participacoes S.A. (pfd.)* .......................................... 444,256,600 3,857,026
Telecomunicacoes de Sao Paulo S.A. (pfd.) ........................................... 94,212,067 12,842,315
Telecomunicacoes do Parana S/A (pfd.) ............................................... 15,242,900 2,712,246
Telemig Celular Participacoes S.A. (pfd.)* .......................................... 400,256,600 443,901
Tele Nordeste Celular Participacoes S.A. (pfd.)* .................................... 300,256,600 273,356
Tele Norte Leste Participacoes S.A. (pfd.) .......................................... 589,835,900 7,371,423
Telesp Participacoes S.A. (pfd.)* ................................................... 200,256,600 4,557,878
Tele Sudeste Celular Participacoes S.A. (pfd.)* ..................................... 300,256,600 1,267,377
------------
42,764,558
------------
Textiles and Apparel 0.7%
Sao Paulo Alpargatas S.A.* (pfd.) ................................................... 47,579,600 2,067,394
------------
Tobacco 3.8%
Companhia Souza Cruz Industria e Comercio (voting) (b) .............................. 1,657,543 10,700,464
------------
Utilities 11.7%
Centrais Eletricas Brasileiras S.A. "B" (pfd.) ...................................... 545,000,000 10,464,722
Companhia Energetica de Minas Gerais (pfd.) ......................................... 633,019,229 12,050,025
Companhia Paranaense de Energia "B" (pfd.) .......................................... 360,700,000 2,597,219
Companhia Paranaense de Energia (voting) ............................................ 841,742,700 4,806,973
Companhia Paulista de Forca e Luz (voting) .......................................... 42,770,000 3,079,652
Companhia Paulista de Forca e Luz (pfd.) ............................................ 2,746,700 181,864
Companhia Paulista de Forca e Luz (pfd.) Pro-rata shares* ........................... 182,301 12,070
------------
33,192,525
------------
Total Equity Securities (Cost $152,753,515).......................................... 211,432,709
------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
[LOGO] The Brazil Fund, Inc.
Investment Portfolio
================================================================================
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement 4.0%
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 12/31/1998 at 5.0%
to be repurchased at $11,267,256 on 1/4/1999, collateralized by a $8,814,000
U.S. Treasury Note, 10.375%, 11/15/2009
(Cost $11,261,000) ................................................................ 11,261,000 11,261,000
------------
- ----------------------------------------------------------------------------------------------------------------------
Short Term Notes 21.7%
Countrywide Home Loans Corp., 5.5%**, 1/14/1999 ..................................... 13,000,000 12,974,181
Dresdner Bank, 7.0%**, 1/4/1999 ..................................................... 12,000,000 12,000,000
Federal Home Loan Mortgage Corp., 4.7%**, 1/4/1999 .................................. 25,000,000 24,990,208
Royal Bank of Canada, 6.7%**, 1/4/1999 .............................................. 12,000,000 11,993,300
------------
Total Short Term Notes (Cost $61,957,689) ........................................... 61,957,689
------------
- ----------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $225,972,204) (a) ........................ 284,651,398
============
</TABLE>
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate. (Unaudited)
(a) The cost of the investment portfolio for federal income tax purposes was
$226,000,812. At December 31, 1998, net unrealized appreciation for all
securities based on tax cost was $58,650,586. This consisted of aggregate
gross unrealized appreciation for all securities in which there was an
excess of market value over tax cost of $93,795,885 and aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over market value of $35,145,299.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $27,066,923 (11.12% of net assets).
Their values have been estimated by the Board of Directors in the absence
of readily ascertainable market values as of December 31, 1998. However,
because of the inherent uncertainty of valuation, those estimated values
may differ significantly from the values that would have been used had a
ready market for the securities existed, and the difference could be
material. The cost of these securities at December 31, 1998 aggregated
$20,626,717. These securities may also have certain restrictions as to
resale.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
[LOGO] The Brazil Fund, Inc.
Financial Statements
================================================================================
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment securities, at value (identified cost $225,972,204) ...................... $ 284,651,398
Cash and foreign currency holdings, at market (identified cost $2,389,464) .......... 2,352,760
Dividends and interest receivable ................................................... 5,168,371
Other assets ........................................................................ 4,616
----------------
Total assets ........................................................................ 292,177,145
LIABILITIES
Dividends ........................................................................... 47,477,101
Accrued management fee .............................................................. 278,551
Other payables and accrued expenses ................................................. 1,078,529
----------------
Total liabilities ................................................................... 48,834,181
----------------
Net assets, at value ................................................................ $ 243,342,964
================
NET ASSETS
Net assets consist of:
Undistributed net investment income.................................................. 1,454,663
Net unrealized appreciation (depreciation) on:
Investment securities ............................................................ 58,679,194
Foreign currency related transactions ............................................ (139,647)
Accumulated net realized gain (loss) ................................................ (4,065,127)
Paid-in capital ..................................................................... 187,413,881
----------------
Net assets, at value ................................................................ $ 243,342,964
================
Net asset value per share ($243,342,964 B 16,315,155 shares of common stock
outstanding, 50,000,000 shares authorized, $.01 par value) ....................... $14.92
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
[LOGO] The Brazil Fund, Inc.
Financial Statements
================================================================================
- --------------------------------------------------------------------------------
Statement of Operations
Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Income:
Dividends (net of foreign taxes withheld of $2,174,664) ............................. $ 16,954,158
Interest ............................................................................ 2,347,769
----------------
19,301,927
Expenses:
Management fee ...................................................................... 4,127,270
Administrator's fee ................................................................. 50,000
Custodian and accounting fees ....................................................... 929,405
Directors' fees and expenses ........................................................ 165,518
Legal ............................................................................... 364,479
Auditing and tax services ........................................................... 85,003
Reports to shareholders ............................................................. 57,096
Services to shareholders ............................................................ 15,000
Other ............................................................................... 79,146
----------------
5,872,917
----------------
Net investment income ............................................................... 13,429,010
----------------
Net realized and unrealized gain (loss) on investment transactions Net realized
gain (loss) from:
Investments ......................................................................... 36,140,713
Foreign currency denominated transactions (net of CPMF tax $154,393) ................ (1,099,981)
----------------
35,040,732
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ......................................................................... (186,363,210)
Foreign currency denominated transactions ........................................... (131,830)
----------------
(186,495,040)
----------------
Net gain (loss) on investment transactions .......................................... (151,454,308)
----------------
Net increase (decrease) in net assets resulting from operations ..................... $ (138,025,298)
================
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
12
<PAGE>
[LOGO] The Brazil Fund, Inc.
Financial Statements
================================================================================
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended December 31
-------------------------------------
Increase (Decrease) in Net Assets 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................................ $ 13,429,010 $ 9,820,789
Net realized gain from investment transactions ....................... 35,040,732 34,941,748
Net unrealized appreciation (depreciation) on investment
transactions during the period .................................... (186,495,040) 19,046,094
---------------- ----------------
Net increase (decrease) in net assets resulting from operations ...... (138,025,298) 63,808,631
---------------- ----------------
Distributions to shareholders:
From net investment income ........................................... (12,154,425) (8,290,328)
---------------- ----------------
From net realized gains on investment transactions ................... (37,035,402) (44,702,055)
---------------- ----------------
Net asset value of shares issued to shareholders in reinvestment
of distributions .................................................. 1,128,338 631,634
---------------- ----------------
Increase (decrease) in net assets .................................... (186,086,787) 11,447,882
Net assets at beginning of period .................................... 429,429,751 417,981,869
---------------- ----------------
Net assets at end of period (including undistributed net investment
income of $1,454,663 and $1,280,001, respectively) ................ $ 243,342,964 $ 429,429,751
================ ================
Other Information
Increase in Fund Shares
Shares outstanding at beginning of period ............................ 16,256,783 16,229,987
Shares issued to shareholders in reinvestment of distributions ....... 58,372 26,796
---------------- ----------------
Shares outstanding at end of period .................................. 16,315,155 16,256,783
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
[LOGO] The Brazil Fund, Inc.
Financial Statements
================================================================================
- --------------------------------------------------------------------------------
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.
<TABLE>
<CAPTION>
Years Ended December 31,
1998(a) 1997(a) 1996(a) 1995(a) 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ..................... $ 26.42 $ 25.75 $ 20.73 $ 31.10 $ 20.98
------- ------- ------- ------- -------
Net investment income (loss) ............................. .82 .60 .55 .38 (.17)
Net realized and unrealized gain (loss) on
investment transactions ................................ (9.30) 3.33 5.34 (7.63) 12.75
------ ------- ------- ------ -------
Total from investment operations ......................... (8.48) 3.93 5.89 (7.25) 12.58
------ ------- ------- ------ -------
Less distributions:
From net investment income ............................... (.75) (.51) (.55) (.30) --
From net realized gains on investments ................... (2.27) (2.75) (.32) (.90) (2.46)
In excess of net realized gains on investments ........... -- -- -- (.15) --
------- ------- ------- ------ -------
Total distributions ...................................... (3.02) (3.26) (.87) (1.35) (2.46)
------ ------ ------ ------ ------
Dilution resulting from rights offering (d) .............. -- -- -- (1.73) --
------- ------- ------- ------ -------
Broker and dealer manager fees and offering
costs (d) .............................................. -- -- -- (.04) --
------- ------- ------- ------ -------
Net asset value, end of period ........................... $ 14.92 $ 26.42 $ 25.75 $ 20.73 $ 31.10
======= ======= ======= ======= =======
Market value, end of period .............................. $ 10.88 $ 21.00 $ 22.25 $ 21.13 $ 33.00
======= ======= ======= ======= =======
Total Investment Return
Per share market value (%) ............................... (31.61) 10.16 9.29 (26.37) 69.81
Per share net asset value (%) (b) ........................ (25.42) 19.75 28.89(c) (23.31)(c) 61.09
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................... 243 429 418 336 377
Ratio of operating expenses net, to average net
assets (%) ............................................. 1.56 1.46 1.60 1.62 1.71
Ratio of operating expenses before expense
reductions, to average net assets (%) .................. 1.56 1.46 1.62 1.67 1.71
Ratio of net investment income (loss) to average
net assets (%) ......................................... 3.57 1.91 2.22 1.54 (.58)
Portfolio turnover rate (%) .............................. 17.45 5.57 8.55 9.65 5.76
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total investment returns reflect changes in net asset value per share
during each period and assume that 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 price.
(c) Total returns would have been lower had certain expenses not been reduced.
(d) During the year ended December 31, 1995, the Fund issued 4,060,000 shares
in connection with a rights offering of the Fund's shares.
- --------------------------------------------------------------------------------
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 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 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.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, is equal to at least the repurchase price.
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, as amended, 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.
From November 1, 1998 through December 31, 1998, the Fund incurred approximately
$2,900,000 of net realized capital losses. As permitted by tax regulations, the
Fund intends to elect to defer these losses and treat them as arising in the
fiscal year ended December 31, 1999.
15
<PAGE>
[LOGO] The Brazil Fund, Inc.
Notes to Financial Statements
================================================================================
Effective January 1, 1996, the Brazilian withholding tax on dividend income was
reduced from 15% to 0%. This rate change applies to dividends paid from a
company's 1996 profits. Dividends paid from pre-1996 profits will continue to be
taxed at 15%.
The Fund is subject to a .20% Contribuicao Provisoria sobre Movimentacoes
Financeiras (CPMF) tax which is applied to foreign exchange transactions
representing capital inflows or outflows to the Brazilian market.
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.
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 dividend 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. All discounts are accreted
for both tax and financial reporting purposes.
B. Purchases and Sales of Securities
---------------------------------
During the year ended December 31, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $56,432,590 and
$120,476,821, respectively.
C. Investment Advisory Agreements and Transactions with Affiliated Persons
-----------------------------------------------------------------------
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Manager"), the Fund agrees to pay
the Manager a monthly fee at an annual rate equal to 1.20% per annum of the
value of the Fund's average weekly net assets up to $150 million; 1.05% per
annum of the value of the Fund's average weekly net assets on the next $150
million, 1.00% per annum of the value of the Fund's weekly net assets on the
next $200 million, and 0.90% per annum of the value of the Fund's weekly net
assets in excess of $500 million. For the year ended December 31, 1998, the fee
pursuant to the Agreement amounted to $4,127,270, which was equivalent to an
annual effective rate of 1.10%.
On September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner of the
Manager, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as
16
<PAGE>
[LOGO] The Brazil Fund, Inc.
Notes to Financial Statements
================================================================================
Zurich Financial Services. Upon consummation of the transaction, the Fund's
Management Agreement with Scudder Kemper was deemed to have been assigned and,
therefore, terminated. In December 1998, the shareholders of the Fund approved a
new investment management agreement with Scudder Kemper that had been previously
approved by the Fund's Board of Directors, which is substantially identical to
the former Management Agreement, except for the dates of execution and
termination.
The Fund and the Manager 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 year ended December 31,
1998, the Administrator fee amounted to $50,000, of which $46,002 was unpaid at
December 31, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Manager, 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
December 31, 1998, the amount charged to the Fund by SFAC aggregated $204,202,
of which $14,023 is unpaid at December 31, 1998.
Scudder Service Corporation ("SSC"), a subsidiary of the Manager, provides
shareholder communications services for the Fund. For the year ended December
31, 1998 the amount charged by SSC aggregated $15,000, of which $1,250 is unpaid
at December 31, 1998.
The Fund pays each Director not affiliated with the Manager 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 year ended December 31, 1998, Directors' fees and expenses
amounted to $165,518, of which $2,088 was unpaid at December 31, 1998.
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
17
<PAGE>
[LOGO] The Brazil Fund, Inc.
Notes to Financial Statements
================================================================================
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.
E. Line 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 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 5 percent of its net assets under the agreement.
F. Subsequent Event (Unaudited)
----------------------------
In early January, 1999, the Banco Central do Brasil, the Brazilian Central Bank
(BACEN) announced that it was widening the trading band upon which the Brazilian
real trades against the U.S. dollar. Two days later, the BACEN announced that it
had halted its intervention and allowed the real to float freely in the foreign
exchange market and would intervene on a limited basis to avoid major swings in
the exchange rate.
18
<PAGE>
[LOGO] The 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 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 The Brazil Fund, Inc. (the "Fund")
at December 31, 1998, the results of its operations, the changes in its net
assets, and the financial highlights for 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 December 31, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
February 19, 1999
19
<PAGE>
[LOGO] The Brazil Fund, Inc.
Tax Information (Unaudited)
================================================================================
By now shareholders for whom year-end tax reporting is required by the IRS
should have received their Form 1099-DIV and tax information letter from the
Fund.
The Fund paid distributions of $2.27 per share from net long-term capital gains
during the year ended December 31, 1998, 100% of which represents 20% rate
gains. Pursuant to section 852 of the Internal Revenue Code, the Fund designates
$40,000,000 as capital gain dividends for the year ended December 31, 1998, 100%
of which represents 20% rate gains.
The Fund paid foreign taxes of $1,770,000 and earned $13,700,000 of foreign
source income during the year ended December 31, 1998. Pursuant to section 853
of the Internal Revenue Code, the Fund designates $0.11 per share as foreign
taxes paid and $0.84 per share as income earned from foreign sources for the
year ended December 31, 1998.
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 Brazil Fund account, please call 1-800-426-5523.
20
<PAGE>
(logo) The Brazil Fund, Inc.
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 EquiServe, the Plan Agent.
Automatic Participation
Each stockholder of record is automatically a participant in the Plan unless
the stockholder 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.
Stockholders who do not participate in the Plan will receive all
distributions in cash paid by check in dollars mailed directly to the
shareholder by EquiServe, 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 stockholder 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 stockholder 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.
21
<PAGE>
(logo) The Brazil Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
===============================================================================
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 stockholder 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 EquiServe, P.O. Box 8209, Boston, MA 02266-8209, 1-800-426-5523.
22
<PAGE>
(logo) The Brazil Fund, Inc.
Stockholder Meeting Results
================================================================================
The Annual Meeting of Stockholders of The Brazil Fund, Inc. (the "Fund") was
held on July 28, 1998, at the office of Scudder Kemper Investments, Inc., 345
Park Avenue, New York, NY 10154. At the Meeting the following matters were voted
upon by the stockholders and the resulting votes are presented below.
1. To elect three Directors of the Fund to hold office for a term of three
years or until their respective successors shall have been duly elected and
qualified.
Number of Votes:
----------------
Director For Withheld Broker
-------- --- -------- ------
Non-Votes*
Juris Padegs 9,116,963 1,182,865 0
Ronaldo A. da Frota 9,116,963 1,182,865 0
Nogueira
Harold Williams 9,112,405 1,187,423 0
2. To ratify or reject the action taken by the Board of Directors in selecting
PricewaterhouseCoopers LLP as the Fund's independent accountants for the
fiscal year ending December 31, 1998.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
9,145,861 598,534 555,433 0
A Special Meeting of Stockholders (the "Meeting") of The Brazil Fund, Inc. (the
"Fund") was held on December 17, 1998, at the office of Scudder Kemper
Investments, Inc., Two International Place, Boston, Massachusetts 02110. At the
Meeting the following matter was voted upon by the stockholders and the
resulting votes are presented below.
1. To approve a new Investment Advisory, Management and
Administration Agreement for the Fund with Scudder Kemper
Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
9,279,556 1,489,711 45,613 0
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
23
<PAGE>
(logo) The Brazil Fund, Inc.
Investment Manager and Administrator
================================================================================
The investment manager of The Brazil Fund, Inc. is Scudder Kemper Investments
Inc. ("the Manager"), one of the most experienced investment management firms in
the world. Established in 1919, the firm manages investments for institutional
and corporate clients, retirement and pension plans, insurance companies, mutual
fund investors, and individuals. The Manager has offices throughout the United
States and has subsidiaries in the United Kingdom, Switzerland, Hong Kong, and
Japan.
The Manager has been a leader in international investment management for over
40 years. It manages Scudder International Fund, which was originally
incorporated in Canada in 1953 as the first foreign investment company
registered with the United States Securities and Exchange Commission. The
Manager's clients which invest primarily in foreign securities include thirty
open-end investment companies as well as portfolios for institutional investors.
The Manager also manages the assets of other closed-end investment
companies which invest primarily in foreign securities, including: The Argentina
Fund, Inc., The Korea Fund, Inc., Scudder Global High Income Fund, Inc., Scudder
New Asia Fund, Inc., and Scudder New Europe Fund, Inc. which are traded on the
New York Stock Exchange.
Directors and Officers
================================================================================
NICHOLAS BRATT*
President
JURIS PADEGS*
Chairman of the Board and Director
EDGAR R. FIEDLER
Director
KENNETH C. FROEWISS
Director
WILLIAM H. LUERS
Director
ROBERTO TEIXEIRA DA COSTA
Director and Resident Brazilian Director
RONALDO A. DA FROTA NOGUEIRA
Director and Resident Brazilian Director
WILSON NOLEN
Director
HAROLD WILLIAMS
Director
EDMUND B. GAMES, JR.*
Vice President
BRUCE H. GOLDFARB*
Vice President and Assistant Secretary
JUDITH A. HANNAWAY*
Vice President
PAUL ROGERS*
Vice President
KATHRYN L. QUIRK*
Vice President and Assistant Secretary
THOMAS F. McDONOUGH*
Vice President and Secretary
JOHN R. HEBBLE*
Treasurer
CAROLINE PEARSON*
Assistant Secretary
* Scudder Kemper Investments, Inc.
24
