[LOGO]
The Brazil Fund, Inc.
Annual Report
June 30, 1999
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 Infomation
=========================================
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 .................................. 7
Portfolio Summary ................................... 8
Investment Portfolio ................................ 9
Financial Statements ................................ 12
Financial Highlights ................................ 15
Notes to Financial Statements ....................... 16
Report of Independent Accountants ................... 20
Tax Information ..................................... 21
Dividend Reinvestment
and Cash Purchase Plan ........................... 22
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 While currency stability, lower interest rates, and a lower than expected
drop in gross domestic product have led to an improvement of market sentiment
in the wake of Brazil's devaluation, the government still has yet to tackle
many of the country's economic problems.
o In the last six months, the Fund has reduced its cash position and increased
its weighting in fixed line telephone companies and consumer-oriented stocks,
and reduced its holdings in cellular operators.
[LOGO] Letter to Stockholders
================================================================================
Dear Stockholders:
The Brazilian stock market has experienced a high level of volatility in the
past year as investors have assessed the implications of the devaluation of the
real and the government's subsequent efforts at reform. The market, as measured
by the Sao Paolo Stock Exchange Index (the Bovespa), rallied sharply following
the devaluation, rising from a low of 5,057 on January 14 to a peak of 12,459 on
May 13. Since then, stocks have lost ground on concerns of higher interest rates
in the United States and fears of a currency devaluation in Argentina. Against
this backdrop, the Fund's net asset value rose 37.22% to $17.03 over the
six-month period ended June 30, 1999, while its share price quoted on the New
York Stock Exchange increased 15.48% to $14.75, which represented a discount of
13.39% to NAV. In comparison, the Bovespa rose 18.16% over the same time period,
while the International Finance Corporation Brazil Index increased 12.23%.
Please note that we have changed the Fund's fiscal year end from December 31 to
June 30, in an effort to create efficiencies and reduce production costs of
regulatory materials.
Market Environment
The attention of economists and politicians over the first half of 1999 was
dominated by the reaction of local and foreign investors to the resignation of
the then president of the Brazilian Central Bank Gustavo Franco, and the forced
flotation of the Brazilian currency, the real, in mid-January. While at first
the government attempted to manage a controlled adjustment of the currency, it
quickly became apparent that such an approach would be insufficient to reduce
capital flight. The acting president of the Brazilian Central Bank, Francisco
Lopes, also had to resign, and the real dropped from 1.21 to the U.S. dollar ($)
to 2.05/$ by the end of January, then weakened even further to 2.15/$ by March
as concerns increased over Brazil's ability to stem capital outflows and meet
its debt obligations. Stocks managed to stage a strong rebound in local currency
terms following the devaluation, however, since the realization of the market's
worst fear allowed investors to focus on the extremely attractive valuations
that had emerged in the wake of the market's severe correction.
Several developments that have unfolded following the devaluation have
provided investors with reasons for encouragement. The newly appointed Central
Bank Director, Armenio Fraga, was able to negotiate a $45.1 million support
package with the International Monetary Fund, and gradually restore the market's
confidence, due in part to his stature in the investment community both inside
and outside of
3
<PAGE>
[LOGO] The Brazil Fund, Inc.
Letter to Stockholders
================================================================================
Brazil. The currency stabilized at around 1.75/$ by mid-year and inflation
remained in check, particularly at the consumer level, as demand fell and
suppliers were unable to pass along price increases. The fact that inflation has
remained quiescent in the wake of the devaluation has been one of the most
important factors contributing to the restoration of confidence. As a result,
the Central Bank was able to reduce domestic interest rates to 21% by the end of
the period from a peak of 45% in March. The speed at which interest rates have
been brought down has contributed to a quicker rebound in gross domestic
product, which the IMF now expects to decline by only 1% versus an earlier
forecast of negative 3.8% growth.
While these factors helped provide a lift for the market, there are still
several reasons for investors to be cautious. The combination of higher interest
rates early in the year, currency volatility, and lack of demand took a toll on
industrial production, which fell during most of 1998 and has remained flat in
1999. For the first six months of 1999, gross domestic production fell by 0.6%
compared to the previous year, and the unemployment rate remained stubbornly
high. Another matter of concern is that the trade balance remains unfavorable,
as imports have not slowed significantly and exports have yet to respond to more
favorable currency levels. The current account deficit thus is anticipated to
remain close to -3% of GDP by year-end. While the Central Bank and Treasury
successfully negotiated the rollover of public sector debt during the first half
of the year when monthly amortizations were at their highest, the short-term
nature of Brazil's funding means that amortizations will continue to be large
over the rest of the year. In addition, delays in privatizations, particularly
in the electric utility and banking sectors, have contributed to a higher debt
level that is projected to reach 51% of GDP at year-end.
Effective Government Solutions Still Lacking
In 1994, at the beginning of the Real Plan, we cautioned investors that "the
political background is complex and President Cardoso seems to prefer building
consensus through negotiation rather than confrontation. Investors should not
expect a quick fix for problems that have developed over decades." The same
holds true in 1999. While many of the reforms that were required have been
passed into law, Congress and the President still must address key pending
structural reforms, the passage of which are crucial for the continued success
of his economic program. If passed, the Fiscal Responsibility Law,
administrative reform, tax reform, and social security reform will be positive
steps forward to addressing the burden that the government currently places on
the economy. Unfortunately, President Cardoso's popularity has plummeted to one
of the lowest levels in the history of the Brazilian presidency due to the
country's ongoing recession. As a result, his political power is compromised
with what appears to be an increasingly recalcitrant Congress.
The Brazilian government has made great strides in avoiding many of the
problems of the currency devaluation, and may be rounding the corner to renewed
growth in the economy. However, the successes of the Central Bank over the first
half of the year may have led to complacency within the government. Congress and
the President have yet to tackle many of the intrinsic problems that continue to
plague Brazil's economic development, including the country's continuing high
debt levels, its preference for consumption over savings, particularly at the
federal and state government levels, and the lack of consensus on critical
reform issues. Unlike in 1994, however, market participants appear much less
willing to give Brazil the time to address these issues. At the same time, many
Brazilian politicians seem to ignore the urgency of the situation, preferring
instead to address local issues and concerns. Until the
4
<PAGE>
[LOGO] The Brazil Fund, Inc.
Letter to Stockholders
================================================================================
structural issues of Brazil's economy are addressed and the benefits of the
reforms become apparent the future of the country's current economic program is
far from assured.
Portfolio Strategy
Over the course of the last six months, we reduced the Fund's cash position
and continued to raise its weighting in the fixed line telephone companies. We
increased our stake in Tele Centro Sul Participacoes and Tele Norte Leste
Participacoes, along with some smaller holdings in the sector. We also added to
our position in the state-owned electric utility Companhia Paranaense de Energia
(Copel) and increased our weighting in cyclicals through the purchase of
Votorantium Celulose e Papel, a paper producer, and Companhia Siderurgica
Nacional, the large flat steel company. We also added to the retail and consumer
segments with CBD Pao de Acucar, a supermarket chain, and Sadia S.A., the food
processor. The Fund's sales over the period were concentrated in the cellular
telephone industry, where we feel that the prospects for growth, and
consequently valuations, may be overstated.
We continue to believe that despite the difficult nature of Brazilian
politics and economics, many companies offer first rate management, healthy
balance sheets, strong cash flow generation capabilities, and attractive
valuations. We maintain a highly concentrated portfolio, with our top ten
holdings currently representing over 65% of assets. Some of these stocks have
been core holdings of the Fund for many years. Turnover is low, since we believe
that these companies offer excellent opportunities for growth during favorable
economic times, and good defensive capabilities in more turbulent periods. Over
75% of the portfolio is in companies that produce or sell nontradable and
petroleum products, which provides a more defensive stance in times of
volatility.
Year 2000 Issue
Like other registered investment companies and financial and business
organizations worldwide, the Fund could be adversely affected if computer
systems on which the Fund relies, which primarily include those used by the
Manager, its affiliates or other service providers, are unable to correctly
process date-related information on or after January 1, 2000. This risk is
commonly called the Year 2000 Issue (Y2K). Failure to successfully address the
Year 2000 Issue could result in interruptions to and other material adverse
effects on the Fund's business and operations, such as problems with calculating
net asset value. The Manager has commenced a review of the Year 2000 Issue as it
may affect the Fund and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the issuers whose securities are
held by the Fund or on global markets or economies generally. To the extent that
the impact on a fund holding or on markets or economies is negative, it could
seriously affect the fund's performance. The foregoing is a Year 2000 readiness
disclosure under the Year 2000 Information and Readiness Disclosure Act.
Soft Dollar Disclosure
We wish to inform you that the Board of Directors of the Fund has approved a
soft dollar policy that authorizes the Manager to enter into arrangements with
certain brokers or dealers. Pursuant to the policy, the Manager may, when it can
be done consistently with its policy of obtaining best execution, direct a
portion of the Fund's brokerage transactions to such brokers or dealers in
exchange for research services within the meaning of Section 28(e) of the
Securities Exchange Act of 1934. Research services obtained by the Manager may,
in appropriate circumstances, be used for the benefit of
5
<PAGE>
[LOGO] The Brazil Fund, Inc.
Letter to Stockholders
================================================================================
other clients of the Manager as well as the Fund. As permitted by Section 28(e),
the Manager is authorized when placing portfolio transactions for the Fund to
pay a brokerage commission in excess of that which another broker or dealer
might charge for executing the same transaction. Therefore, the Fund may pay
higher brokerage rates than could be obtained if the Manager were not entering
into soft dollar arrangements.
Outlook
We are cautious on the outlook for Brazilian equities over the rest of the
year. While valuations appear compelling from a long-term perspective, it is
questionable whether these values will be recognized by the market in the near
term. Brazil is particularly vulnerable to the ongoing slump in global
commodities prices and the weak economies of its Mercosur trading partners,
Argentina and Chile. In addition, the high level of dollar-denominated debt in
Latin America makes the region especially vulnerable to rising U.S. interest
rates, the likelihood of which appears to be increasing given the strength in
its economy. Furthermore, concerns over Y2K have led to a reduction in the
market's appetite for risk, which has caused credit spreads to widen and should
also contribute to a reduction in trading volume over the latter half of 1999.
Looking ahead to the year 2000, we believe that the obstacles that have hindered
Brazil's progress in 1999 should be removed as global growth expands outside the
United States, concerns over Y2K dissipate, and the political season in Latin
America passes.
Respectfully,
/s/Nicholas Bratt /s/Juris Padegs
Nicholas Bratt Juris Padegs
President Chairman of the Board
6
<PAGE>
[LOGO] The Brazil Fund, Inc.
Investment Summary as of June 30, 1999
================================================================================
Historical
Information Total Return (%)
----------------------------------------------------------------
Market Value Net Asset Value (a) Index (b)
------------------- -------------------- -------------------
Average Average Average
Cumulative Annual Cumulative Annual Cumulative Annual
------------------- -------------------- -------------------
Current Quarter 15.69 -- 8.61 -- 6.53 --
One Year 8.24 8.24 -4.31 -4.31 -20.72 -20.72
Three Year -0.04 -0.01 4.89 1.61 10.20 3.29
Five Year 22.58 4.16 51.77 8.70 83.12 12.86
Ten Year 321.00 15.46 184.92 11.04 403.66 17.55
- --------------------------------------------------------------------------------
Per Share Information and Returns (a)
Yearly periods ended June 30
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE TOTAL RETURN (%)
CHART DATA:
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value...... $ 9.90 $14.03 $14.27 $18.44 $22.38 $24.47 $26.27 $35.71 $23.67 $17.03
Income Dividends..... $ 1.01 $ -- $ -- $ -- $ .08 $ -- $ .30 $ .61 $ .56 $ .79
Capital Gains and
Other Distributions.. $ 2.18 $ -- $ .28 $ .53 $ .93 $ 2.36 $ .81 $ .75 $ 2.32 $ 2.27
Total Return (%)..... -24.15 41.72 3.01 33.96 26.58 18.36 22.24 43.88 -23.82 -4.31
</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) Bovespa Stock Index ($)
Past results are not necessarily indicative of future performance of the
Fund.
7
<PAGE>
[LOGO] The Brazil Fund, Inc.
Portfolio Summary as of June 30, 1999
================================================================================
Diversification
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Equity Securities 95%
Cash Equivalents 5%
-----
100%
=====
- --------------------------------------------------------------------------------
Sectors
Sector breakdown of the Fund's equity securities
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Telecommunications 21%
Banking 16%
Utilities 15%
Petroleum 11%
Food and Beverage 11%
Mining 8%
Forest Products 6%
Tobacco 4%
Electrical Equipment 2%
Other 6%
-----
100%
=====
- --------------------------------------------------------------------------------
Ten Largest Equity Holdings (66% of Portfolio)
1. Banco Itau S.A.
2. Petroleo Brasileiro S.A.
3. Companhia Cervejaria Brahma
4. Companhia Vale do Rio Doce
5. Tele Centro Sul Participacoes S.A.
6. Aracruz Celulose S.A.
7. Companhia Paranaense de Energia-Copel
8. Companhia Energetica de Minas
Gerais
9. Tele Norte Leste Participacoes S.A.
10. Telecomunicacoes de Sao Paulo S.A.
8
<PAGE>
[LOGO] The Brazil Fund, Inc.
Investment Portfolio as of June 30, 1999
================================================================================
Shares Value ($)
- --------------------------------------------------------------------------------
Equity Securities 95.4%
Banking 15.3%
Banco Bradesco S.A. (pfd.) ..................... 2,233,692,307 11,301,797
Banco Itau S.A. (pfd.) ......................... 60,024,208 31,052,888
------------
42,354,685
------------
Chemicals 0.7%
White Martins S.A. (voting) ................... 4,273,846 1,992,356
------------
Construction 0.2%
Odebrecht S.A. (voting) (b) .................... 575,630,000 494,145
------------
Containers 0.3%
Dixie Toga S.A. (pfd.) ......................... 4,349,000 840,625
------------
Electrical Equipment 2.4%
Weg S.A. (pfd.) ................................ 16,226,600 6,595,804
------------
Food & Beverages 10.2%
Companhia Cervejaria Brahma (pfd.) ............. 39,257,913 22,251,358
Sadia S.A. Industria e Comercio (pfd.) ......... 10,045,045 6,167,509
------------
28,418,867
------------
Forest Products 5.7%
Aracruz Celulose S.A. "B" (pfd.) ............... 6,651,599 14,823,346
Votorantim Celulose e Papel S.A. (pfd.) ........ 35,000,000 1,014,781
------------
15,838,127
------------
Glass 1.0%
Companhia Vidraria Santa Marina (voting) ....... 2,340,236 2,793,915
------------
Iron & Steel 1.0%
Companhia Siderurgica Nacional (voting) ........ 110,700,000 2,910,674
------------
Mining 6.6%
Companhia Vale do Rio Doce (voting) (pfd.) ..... 906,104 18,029,358
Companhia Vale do Rio Doce "A" (debenture) (b) . 922,104 0
S.A. Mineracao da Trindade-Samitri (voting) .... 38,392,104 381,957
------------
18,411,315
------------
Petroleum 10.4%
Petroleo Brasileiro S.A. (pfd.) ................ 183,739,999 28,725,696
------------
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
[LOGO] The Brazil Fund, Inc.
Investment Portfolio
<TABLE>
<CAPTION>
=================================================================================================
Shares Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Retailing 1.8%
Companhia Brasileira de Distribuicao Grupo Pao de Acucar (voting) 195,136,400 3,655,341
Lojas Americanas S.A. (voting)* (b) ............................. 435,187,800 1,358,261
-----------
5,013,602
-----------
Telecommunications 20.2%
Embratel Participacoes S.A.(pfd.)* .............................. 588,223,400 8,226,433
Tele Centro Sul Participacoes S.A. (pfd.)* ...................... 1,353,456,600 15,081,154
Telecomunicacoes de Sao Paulo S.A. (pfd.) ....................... 99,212,067 11,844,533
Telecomunicacoes do Parana S.A. (pfd.) .......................... 16,872,900 3,011,990
Tele Norte Leste Participacoes S.A. (pfd.)* ..................... 729,835,900 13,277,288
Telesp Participacoes S.A. (pfd.) ................................ 200,256,600 4,610,797
-----------
56,052,195
-----------
Textiles and Apparel 0.7%
Sao Paulo Alpargatas S.A. (pfd.)* ............................... 47,579,600 1,947,545
-----------
Tobacco 4.2%
Souza Cruz S.A. (voting) ........................................ 1,657,543 11,731,899
-----------
Utilities 14.7%
Centrais Eletricas Brasileiras S.A. "B" (pfd.) .................. 545,000,000 11,064,213
Companhia Energetica de Minas Gerais (pfd.) ..................... 633,019,229 13,387,331
Companhia Paranaense de Energia-Copel "B" (pfd.) ................ 1,140,700,000 9,273,457
Companhia Paranaense de Energia-Copel (voting) .................. 841,742,700 4,201,535
Companhia Paulista de Forca e Luz (voting) ...................... 42,770,000 2,771,904
-----------
40,698,440
-----------
Total Equity Securities (Cost $168,342,141) ..................... 264,819,890
-----------
- -------------------------------------------------------------------------------------------------
Principal
Amount ($) Value ($)
- -------------------------------------------------------------------------------------------------
Repurchase Agreements 1.0%
Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 6/30/1999 at 4.8% to be repurchased at $2,720,363
on 7/1/1999, collateralized by a $2,586,000
U.S. Treasury Note, 3.625%, 7/15/2002 (Cost $2,720,000) ....... 2,720,000 2,720,000
-----------
- -------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
[LOGO] The Brazil Fund, Inc.
Investment Portfolio
<TABLE>
<CAPTION>
=================================================================================================
Principal
Amount ($) Value ($)
- -------------------------------------------------------------------------------------------------
Short Term Notes 3.6%
<S> <C> <C>
Federal Home Loan Mortgage Corp., 4.6%**, 7/1/1999 (Cost $10,000,000) 10,000,000 10,000,000
------------
- -------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $181,062,141) (a) ......... 277,539,890
============
</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
$181,090,749. At June 30, 1999, net unrealized appreciation for all
securities based on tax cost was $96,449,141. This consisted of aggregate
gross unrealized appreciation for all securities in which there was an
excess of market value over tax cost of $125,493,026 and aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over market value of $29,043,885.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $1,852,406 (0.66% of net assets).
Their values have been estimated by the Board of Directors in the absence
of readily ascertainable market values as of June 30, 1999. 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 June 30, 1999 aggregated
$7,422,045. These securities may also have certain restrictions as to
resale.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
[LOGO] The Brazil Fund, Inc.
Financial Statements
================================================================================
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1999
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investment securities, at value (identified cost $181,062,141) ............ $ 277,539,890
Cash and foreign currency holdings, at market (identified cost $485,949) .. 545,586
Dividends and interest receivable ......................................... 3,057,285
Other assets .............................................................. 5,530
-------------
Total assets .............................................................. 281,148,291
LIABILITIES
Payable for investments purchased ......................................... 333,939
Accrued management fee .................................................... 243,026
Other payables and accrued expenses ....................................... 726,780
-------------
Total liabilities ......................................................... 1,303,745
-------------
Net assets, at value ...................................................... $ 279,844,546
=============
NET ASSETS
Net assets consist of:
Undistributed net investment income ....................................... 828,975
Net unrealized appreciation (depreciation) on:
Investment securities .................................................. 96,477,749
Foreign currency related transactions .................................. (254,493)
Accumulated net realized gain (loss) ...................................... (5,675,224)
Paid-in capital ........................................................... 188,467,539
-------------
Net assets, at value ...................................................... $ 279,844,546
=============
Net asset value per share ($279,844,546 / 16,429,333 shares of common stock
outstanding, 50,000,000 shares authorized, $.01 par value) ............. $17.03
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
[LOGO] The Brazil Fund, Inc.
Financial Statements
================================================================================
<TABLE>
<CAPTION>
Statements of Operations
- ---------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended
Ended June 30, December 31,
Investment Income 1999 (Note F) 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $621,434 and $2,174,664 for 1999
and 1998, respectively) ..................................................... $ 5,664,480 $ 16,954,158
Interest ...................................................................... 594,663 2,347,769
------------- -------------
6,259,143 19,301,927
Expenses:
Management fee ................................................................ 1,389,867 4,127,270
Administrator's fee ........................................................... 24,920 50,000
Custodian and accounting fees ................................................. 378,072 929,405
Directors' fees and expenses .................................................. 71,022 165,518
Legal ......................................................................... 17,800 364,479
Auditing and tax services ..................................................... 43,610 85,003
Reports to shareholders ....................................................... 34,710 57,096
Services to shareholders ...................................................... 20,826 15,000
Other ......................................................................... 51,774 79,146
------------- -------------
2,032,601 5,872,917
------------- -------------
Net investment income ......................................................... 4,226,542 13,429,010
------------- -------------
Net realized and unrealized gain (loss) on investment transactions
Net realized gain (loss) from:
Investments ................................................................... (1,640,244) 36,140,713
Foreign currency denominated transactions ..................................... (2,380,374) (1,099,981)
------------- -------------
(4,020,618) 35,040,732
------------- -------------
Net unrealized appreciation (depreciation) during the period on:
Investments ................................................................... 37,798,555 (186,363,210)
Foreign currency denominated transactions ..................................... (114,846) (131,830)
------------- -------------
37,683,709 (186,495,040)
------------- -------------
Net gain (loss) on investment transactions .................................... 33,663,091 (151,454,308)
------------- -------------
Net increase (decrease) in net assets resulting from operations ............... $ 37,889,633 $(138,025,298)
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
[LOGO] The Brazil Fund, Inc.
Financial Statements
================================================================================
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Six Months Years Ended December 31,
Ended June 30, -----------------------------
Increase (Decrease) in Net Assets 1999 (Note F) 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income .................................. $ 4,226,542 $ 13,429,010 $ 9,820,789
Net realized gain (loss) from investment transactions .. (4,020,618) 35,040,732 34,941,748
Net unrealized appreciation (depreciation) on investment
transactions during the period ...................... 37,683,709 (186,495,040) 19,046,094
------------- ------------- -------------
Net increase (decrease) in net assets resulting from
operations .......................................... 37,889,633 (138,025,298) 63,808,631
------------- ------------- -------------
Distributions to shareholders from:
Net investment income .................................. (2,463,256) (12,154,425) (8,290,328)
------------- ------------- -------------
Net realized gains on investment transactions .......... -- (37,035,402) (44,702,055)
------------- ------------- -------------
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................... 1,075,205 1,128,338 631,634
------------- ------------- -------------
Increase (decrease) in net assets ...................... 36,501,582 (186,086,787) 11,447,882
Net assets at beginning of period ...................... 243,342,964 429,429,751 417,981,869
------------- ------------- -------------
Net assets at end of period (including undistributed net
investment income of $828,975, $1,454,663, and
$1,280,001 for 1999, 1998, and 1997, respectively) .. $ 279,844,546 $ 243,342,964 $ 429,429,751
============= ============= =============
Other Information
Increase in Fund Shares
Shares outstanding at beginning of period .............. 16,315,155 16,256,783 16,229,987
Shares issued to shareholders in reinvestment of
distributions ....................................... 114,178 58,372 26,796
------------- ------------- -------------
Shares outstanding at end of period .................... 16,429,333 16,315,155 16,256,783
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
[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.
<TABLE>
<CAPTION>
Six Months
Ended Years Ended December 31,
June 30, 1999
(Note F)(a) 1998(a) 1997(a) 1996(a) 1995(a) 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ......... $ 14.92 $ 26.42 $ 25.75 $ 20.73 $ 31.10 $ 20.98
------- ------- ------- ------- ------- -------
Net investment income (loss) ................. .26 .82 .60 .55 .38 (.17)
Net realized and unrealized gain (loss) on
investment transactions .................... 2.00 (9.30) 3.33 5.34 (7.63) 12.75
------- ------- ------- ------- ------- -------
Total from investment operations ............. 2.26 (8.48) 3.93 5.89 (7.25) 12.58
------- ------- ------- ------- ------- -------
Less distributions from:
Net investment income ........................ (.15) (.75) (.51) (.55) (.30) --
Net realized gains on investments ............ -- (2.27) (2.75) (.32) (.90) (2.46)
In excess of net realized gains on investments -- -- -- -- (.15) --
------- ------- ------- ------- ------- -------
Total distributions .......................... (.15) (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 ............... $ 17.03 $ 14.92 $ 26.42 $ 25.75 $ 20.73 $ 31.10
======= ======= ======= ======= ======= =======
Market value, end of period .................. $ 14.75 $ 10.88 $ 21.00 $ 22.25 $ 21.13 $ 33.00
======= ======= ======= ======= ======= =======
Total Investment Return
Per share market value (%) ................... 37.22** (31.61) 10.16 9.29 (26.37) 69.81
Per share net asset value (%) (b) ............ 15.48** (25.42) 19.75 28.89(c) (23.31)(c) 61.09
Ratios and Supplemental Data
Net assets, end of period ($ millions) ....... 280 243 429 418 336 377
Ratio of operating expenses net, to average
net assets (%) ............................ 1.67* 1.56 1.46 1.60 1.62 1.71
Ratio of operating expenses before expense
reductions, to average net assets (%) ...... 1.67* 1.56 1.46 1.62 1.67 1.71
Ratio of net investment income (loss) to
average net assets (%) ..................... 3.47* 3.57 1.91 2.22 1.54 (.58)
Portfolio turnover rate (%) .................. 3.68* 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.
* Annualized
** Not annualized
15
<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 (the "1940 Act"), as a closed-end, non-diversified
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. Investments are stated at value as of the close of regular
trading on the New York Stock Exchange. 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.
Money market instruments purchased with an original maturity of sixty days or
less are valued at amortized cost. All other securities are valued at their fair
value as determined in good faith by the Valuation Committee of the Board of
Directors.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, receives delivery of the underlying securities, the amount
of which at the time of purchase and each subsequent business day is required to
be maintained at such a level that the market value is equal to at least the
principal amount of the repurchase price plus accrued interest.
Taxes. The Fund's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
At June 30, 1999, the Fund had a net tax basis capital loss carryforward of
approximately $4,361,000 which may be applied against any realized net taxable
gains of each succeeding year until fully utilized or until June 30, 2007.
16
<PAGE>
[LOGO] The Brazil Fund, Inc.
Notes to Financial Statements
================================================================================
The Fund is subject to a .20% Contribuicao Provisoria sobre Movimentacoes
Financieras (CPMF) tax which is applied to foreign exchange transactions
representing capital inflows or outflows to the Brazilian market.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed, and, therefore, will be distributed to shareholders at least
annually.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to foreign denominated investments and certain
securities sold at a loss. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. Accordingly, the
Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to the ex-dividend date as
soon as the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis. All discounts
are accreted for both tax and financial reporting purposes.
B. Purchases and Sales of Securities
---------------------------------
During the six months ended June 30, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $21,261,743 and
$4,032,874, respectively. During the year ended December 31, 1998, purchases and
sales of 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 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 six months ended June 30, 1999, the
fee pursuant to the Agreement amounted to $1,389,867, which was equivalent to an
annualized effective rate of 1.14%. For the year ended December 31, 1998, the
fee pursuant to the Agreement amounted to $4,127,270, which was equivalent to an
annualized effective rate of 1.10%.
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 six months ended June
30, 1999, the Administrator fee amounted to $24,920, all of which is unpaid at
June 30, 1999. For the year ended December 31, 1998, the Administrator fee
amounted to $50,000.
17
<PAGE>
[LOGO] The Brazil Fund, Inc.
Notes to Financial Statements
================================================================================
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 six months
ended June 30, 1999, the amount charged to the Fund by SFAC aggregated $73,209,
of which $12,967 is unpaid at June 30, 1999. For the year ended December 31,
1998, the amount charged to the Fund by SFAC aggregated $204,202.
Scudder Service Corporation ("SSC"), a subsidiary of the Manager, provides
shareholder communications services for the Fund. For the six months ended June
30, 1999, the amount charged to the Fund by SSC aggregated $8,750, of which
$1,250 is unpaid at June 30, 1999. For the year ended December 31, 1998, the
amount charged to the Fund by SSC aggregated $15,000.
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 six months ended June 30, 1999, Directors' fees and expenses
amounted to $71,022. For the year ended December 31, 1998, Directors' fees and
expenses amounted to $165,518.
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.
18
<PAGE>
[LOGO] The Brazil Fund, Inc.
Notes to Financial Statements
================================================================================
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. The Participants
are charged an annual commitment fee which is allocated pro rata among each of
the Participants. Interest is calculated based on the market rates at the time
of the borrowing. The Fund may borrow up to a maximum of 5 percent of its net
assets under the agreement.
F. Year End Change
---------------
On May 26, 1999, the Board of Directors of the Fund changed the fiscal year end
from December 31 to June 30.
19
<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 June 30, 1999, 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 June 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
August 13, 1999
20
<PAGE>
[LOGO] The Brazil Fund, Inc.
Tax Information
================================================================================
The Fund paid foreign taxes of $621,434 and earned $3,553,517 of foreign source
income during the six months ended June 30, 1999. Pursuant to section 853 of the
Internal Revenue Code, the Fund designates $0.03782 per share as foreign taxes
paid and $0.21629 per share as income earned from foreign sources for the six
months ended June 30, 1999.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your account, please call 1-800-SCUDDER.
21
<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.
22
<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.
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
================================================================================
JURIS PADEGS*
Chairman of the Board and Director
NICHOLAS BRATT*
President
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
ANN M. McCREARY*
Vice President
PAUL ROGERS*
Vice President
KATHRYN L. QUIRK*
Vice President and Assistant Secretary
JOHN MILLETTE*
Vice President and Secretary
JOHN R. HEBBLE*
Treasurer
CAROLINE PEARSON*
Assistant Secretary
* Scudder Kemper Investments, Inc.
24
<PAGE>
