SCUDDER INTERNATIONAL FUND INC, 497, 1995-03-10

SCUDDER INTERNATIONAL FUND INC
497, 1995-03-10

Previous: SCOTT PAPER CO, DEF 14A, 1995-03-10

Next: SCUDDER INVESTMENT TRUST, 497, 1995-03-10

This prospectus sets forth concisely the information about Scudder Latin
America Fund, a series of Scudder International Fund, Inc., an open-end
management investment company, that a prospective investor should know
before investing. Please retain it for future reference.

If you require more detailed information, a Statement of Additional
Information dated March 1, 1995, as amended from time to time, may be
obtained without charge by writing Scudder Investor Services, Inc., Two
International Place, Boston, MA 02110-4103 or calling 1-800-225-2470. The
Statement, which is incorporated by reference into this prospectus, has
been filed with the Securities and Exchange Commission.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

Contents-see page 4.

Scudder
Latin America
Fund

Prospectus
March 1, 1995

A pure no-load(tm) (no sales charges) mutual fund which seeks to provide
long-term capital appreciation through investment primarily in the
securities of Latin American issuers.

Expense information

How to compare a Scudder pure no-load(tm) fund

This information is designed to help you understand the various costs and
expenses of investing in Scudder Latin America Fund (the "Fund"). By
reviewing this table and those in other mutual funds' prospectuses, you can
compare the Fund's fees and expenses with those of other funds. With
Scudder's pure no-load(tm) funds, you pay no commissions to purchase or
redeem shares, or to exchange from one fund to another. As a result, all of
your investment goes to work for you.

1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.

Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Deferred sales charge NONE
Redemption fees payable to the Fund 2.00%*
Exchange fees payable to the Fund 2.00%*

2) Annual Fund operating expenses: (after state imposed expense
limitation) paid by the Fund before it distributed its net investment
income, expressed as a percentage of the Fund's average daily net
assets for the fiscal year ended October 31, 1994.

Investment management fee 1.21%**
12b-1 fees NONE
Other expenses 0.80%
-----
Total Fund operating expenses 2.01%**
=====

Example

Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not
pay these expenses directly; they are paid by the Fund before it
distributes its net investment income to shareholders.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$20 $63 $108 $234

See "Fund organization-Investment adviser" for further information about
the investment management fee. This example assumes reinvestment of all
dividends and distributions and that the percentage amounts listed under
"Annual Fund operating expenses" remain the same each year. This example
should not be considered a representation of past or future expenses or
return. Actual Fund expenses and return vary from year to year and may be
higher or lower than those shown.

* There is a 2% fee retained by the Fund which is imposed only on
redemptions or exchanges of shares held less than one year. If you
wish to receive your redemption proceeds via wire, there is a $5 wire
service fee. For additional information, please refer to "Transaction
information-Exchanging and redeeming shares."

** For the fiscal year ended October 31, 1994, the Adviser did not
impose a portion of its management fee. Without the state imposed
expense limitation , the total annualized expenses of the Fund
would have been 2.05% (of which 1.25% would have consisted of
investment management fees) for the fiscal year.

Financial highlights

The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
audited financial statements.

If you would like more detailed information concerning the Fund's
performance, a complete portfolio listing and audited financial statements
are available in the Fund's Annual Report dated October 31, 1994 and may be
obtained without charge by writing or calling Scudder Investor Services,
Inc.

For the Period
December 8, 1992
Year (commencement
Ended of operations) to
October 31, 1994 October 31, 1993
---------------- -----------------
<S> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . $18.41 $12.00
------ ------
Income from investment operations:
Net investment income (loss) (a) . . . . . . . . . . . . . . . . (.03) .03
Net realized and unrealized gain on investment transactions . . 6.18 6.38
------ ------
Total from investment operations . . . . . . . . . . . . . . . . 6.15 6.41
------ ------
Less distributions:
In excess of net investment income . . . . . . . . . . . . . . . (.06) --
From net realized gains on investment transactions . . . . . . . (.06) --
------ ------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (.12) --
------ ------
Net asset value, end of period . . . . . . . . . . . . . . . . . $24.44 $18.41
====== ======
TOTAL RETURN (%) (b) . . . . . . . . . . . . . . . . . . . . . . 33.43 53.42(c)**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) . . . . . . . . . . . . . 809 261
Ratio of operating expenses, net to average daily net
assets (%) (a) . . . . . . . . . . . . . . . . . . . . . . . . 2.01 2.00*
Ratio of net investment income (loss) to average daily
net assets (%) . . . . . . . . . . . . . . . . . . . . . . . . (.20) .44*
Portfolio turnover rate (%). . . . . . . . . . . . . . . . . . . . 22.4 4.6*
<FN>
(a) Reflects a per share amount of management fee not imposed by
the Adviser of . . . . . . . . . . . . . . . . . . . . . . . $.01 $.04
Operating expense ratio including management fee not
imposed (%) . . . . . . . . . . . . . . . . . . . . . . . . 2.05 2.69*

(b) Total returns are higher due to maintenance of the Fund's expenses.

* Annualized

** Not annualized

</TABLE>

A message from Scudder's chairman

Scudder, Stevens & Clark, Inc., investment adviser to the Scudder Family of
Funds, was founded in 1919. We offered America's first no-load mutual fund
in 1928. Today, we manage in excess of $90 billion for many private
accounts and over 50 mutual fund portfolios. We manage the mutual funds in
a special program for the American Association of Retired Persons, as well
as the fund options available through Scudder Horizon Plan, a
tax-advantaged variable annuity. We also advise The Japan Fund and nine
closed-end funds that invest in countries around the world.

The Scudder Family of Funds is designed to make investing easy and less
costly. It includes money market, tax free, income and growth funds as well
as IRAs, 401(k)s, Keoghs and other retirement plans.

Services available to all shareholders include toll-free access to
the professional service representatives of Scudder
Investor Relations , easy exchange among funds, shareholder
reports, informative newsletters and the walk-in convenience of Scudder
Funds Centers.

All Scudder mutual funds are pure no-load(tm). This means you pay no
commissions to purchase or redeem your shares or to exchange from one fund
to another. There are no "12b-1" fees either, which many other funds now
charge to support their marketing efforts. All of your investment goes to
work for you. We look forward to welcoming you as a shareholder.

/s/Daniel Pierce

Scudder Latin America Fund

Investment objective

* long-term capital appreciation through investment primarily in the
securities of Latin American issuers

Investment characteristics

* convenient, low-cost access to emerging investment opportunities in
Latin America

* professional management of a broad range of equity securities, debt
securities and other investments in a rapidly growing region of the
world

* above-average investment risk

Contents

Investment objective and policies 5
Why invest in the Fund? 7
Latin American investment experience 7
Additional information about policies and investments 7
Risk factors 9
Purchases 12
Exchanges and redemptions 13
Distribution and performance information 14
Fund organization 15
Transaction information 16
Shareholder benefits 19
Directors and Officers 22
Investment products and services 23
How to contact Scudder Back cover

Investment objective and policies

Scudder Latin America Fund (the "Fund"), a non-diversified series of
Scudder International Fund, Inc., seeks to provide long-term capital
appreciation through investment primarily in the securities of Latin
American issuers.

The Fund seeks to benefit from economic and political trends emerging
throughout Latin America. These trends are supported by governmental
initiatives designed to promote freer trade and market-oriented economies.
The Fund's investment adviser, Scudder, Stevens & Clark, Inc. (the
"Adviser"), believes that efforts by Latin American countries to, among
other things, reduce government spending and deficits, control inflation,
lower trade barriers, stabilize currency exchange rates, increase foreign
and domestic investment and privatize state-owned companies, will set the
stage for attractive investment returns over time.

The Fund involves above-average investment risk. It is designed as a
long-term investment and not for short-term trading purposes, and should
not be considered a complete investment program. A 2% redemption and
exchange fee, described more fully below, is payable to the Fund for the
benefit of remaining shareholders on shares held less than one year.

Except as otherwise indicated, the Fund's investment objective and policies
are not fundamental and may be changed without a vote of shareholders.
Shareholders will receive written notice of any changes in the Fund's
objective. If there is a change in investment objective, shareholders
should consider whether the Fund remains an appropriate investment in light
of their then current financial position and needs. There can be no
assurance that the Fund's objective will be met.

Investments

At least 65% of the Fund's total assets will be invested in the securities
of Latin American issuers, and 50% of the Fund's total assets will be
invested in Latin American equity securities. To meet its objective to
provide long-term capital appreciation, the Fund normally invests at least
65% of its total assets in equity securities. For purposes of this
prospectus, Latin America is defined as Mexico, Central America, South
America and the Spanish-speaking islands of the Caribbean. The Fund defines
securities of Latin American issuers as follows:

* Securities of companies organized under the laws of a Latin American
country or for which the principal securities trading market is in
Latin America;

* Securities issued or guaranteed by the government of a country in
Latin America, its agencies or instrumentalities, political
subdivisions or the central bank of such country;

* Securities of companies, wherever organized, when at least 50% of an
issuer's non-current assets, capitalization, gross revenue or profit
in any one of the two most recent fiscal years represents (directly or
indirectly through subsidiaries) assets or activities located in Latin
America; or

* Securities of Latin American issuers, as defined above, in the form of
depositary shares.

Although the Fund may participate in markets throughout Latin America,
under present conditions the Fund expects to focus its investments in
Argentina, Brazil, Chile, Mexico and Venezuela. In the opinion of the
Adviser, these five countries offer the most developed capital markets in
Latin America. The Fund may invest in other countries in Latin America when
the Adviser deems it appropriate. The Fund intends to allocate investments
among at least three countries at all times and does not expect to
concentrate investments in any particular industry.

The Fund's equity investments are common stock, preferred stock (either
convertible or non-convertible), depositary receipts and warrants. These
may be restricted securities and may also be purchased through rights.
Securities may be listed on securities exchanges, traded over-the-counter,
or have no organized market.

The Fund may invest in debt securities when management anticipates that the
potential for capital appreciation is likely to equal or exceed that of
equity securities. Capital appreciation in debt securities may arise from a
favorable change in relative foreign exchange rates, in relative interest
rate levels, or in the creditworthiness of issuers. Receipt of income from
such debt securities is incidental to the Fund's objective of long-term
capital appreciation. Most debt securities in which the Fund invests are
not rated. When debt securities are rated, it is expected that such ratings
will generally be below investment grade; that is, rated below Baa by
Moody's Investors Service, Inc. ("Moody's") or below BBB by Standard &
Poor's ("S&P"). For more information about the debt securities in which the
Fund may invest, including risks, please see "Additional information about
policies and investments."

In selecting companies for investment, the Fund typically
evaluate s industry trends, a company's financial strength, its
competitive position in domestic and export markets, technology, recent
developments and profitability, together with overall growth prospects.
Other considerations generally include quality and depth of
management, government regulation, and availability and cost of labor and
raw materials. Investment decisions are made without regard to arbitrary
criteria as to minimum asset size, debt-equity ratios or dividend history
of portfolio companies.

The allocation between equity and debt, and among countries in Latin
America, var ies based on a number of factors, including?:
expected rates of economic and corporate profit growth; past performance
and current and comparative valuations in Latin American capital markets;
the level and anticipated direction of interest rates; changes or
anticipated changes in Latin American government policy; and the condition
of the balance of payments and changes in the terms of trade. The Fund, in
seeking undervalued markets or individual securities, also
consider s the effects of past economic crises or ongoing financial
and political uncertainties.

To provide for redemptions, or in anticipation of investment in Latin
American securities, the Fund may hold cash or cash equivalents (in U.S.
dollars or foreign currencies) and other short-term securities, including
money market securities denominated in U.S. dollars or foreign currencies.
In addition, to provide for redemptions or distributions, the Fund may
borrow from banks in an amount not exceeding the value of one-third of the
Fund's total assets. The Fund does not expect to borrow for investment
purposes. The Fund may assume a defensive position when, due to political
or other factors, the Adviser determines that opportunities for capital
appreciation in Latin American markets would be significantly limited over
an extended period or that investing in those markets poses undue risk to
investors. The Fund may, for temporary defensive purposes, invest up to
100% of its assets in cash and money market instruments or invest all or a
portion of its assets in securities of U.S. or other non-Latin American
issuers. The Fund may also invest in closed-end investment companies
investing primarily in Latin America. In addition, the Fund may engage in
strategic transactions. See "Additional information about policies and
investments" for more information about these investment techniques.

Why invest in the Fund?

The Fund seeks to take advantage of evolving economic and political trends
in Latin America. These trends are largely a result of efforts by Latin
American governments to institute democratic and market-oriented economic
reforms.

Although the pace and success in accomplishing these objectives vary
significantly throughout Latin America, there has been a general trend in
recent years towards reducing government's role in economic affairs and
creating a business environment conducive to investment and growth. To take
better advantage of Latin America's abundant natural resources and other
strengths, many countries in the region have established policies to
control inflation, reduce government deficits and external debt, stabilize
currency exchange rates, reduce taxes and interest rates, and modernize and
open securities markets. Governments have also privatized state-owned
enterprises, including telephone companies, utilities, banks, petrochemical
concerns and railroads, and are beginning to invest heavily in
infrastructure, which is necessary for a strong economy. In some Latin
American countries these initiatives have already led to more stable
economic conditions, stronger economic growth, reduction of capital
outflows, and increased interest by foreign investors in Latin America, all
of which have helped boost capital market returns in recent years.

Investors should be aware that participation in the Fund involves special
considerations and risks not typically associated with a mutual fund
investing principally in the securities of U.S. issuers. However, for
investors who can accept the risks of Latin American investing and have a
long-term investment horizon, the Fund offers the potential for substantial
capital appreciation over time. See "Additional information about policies
and investments-Risk factors."

The Fund is the first pure no-load fund to invest in Latin America. In
addition, the Fund offers all the benefits of the Scudder Family of Funds.
Scudder, Stevens & Clark, Inc. manages a diverse family of pure no-load(tm)
funds and provides a wide range of services to help investors meet their
investment needs. Please refer to "Investment products and services" for
additional information.

Latin American investment experience

The Adviser has been active in international investment for over 40
years . The Adviser manages a number of offshore and U.S. investment
companies that invest in all or select regions of Latin America, including
three closed-end funds trading on the New York Stock Exchange: The
Argentina Fund, Inc., The Brazil Fund, Inc., and The Latin America Dollar
Income Fund, Inc.

Additional information about policies and investments

Investment restrictions

The Fund has adopted certain fundamental policies which may not be changed
without a vote of shareholders and which are designed to reduce the Fund's
investment risk.

The Fund may not invest more than 25% of its total assets in securities of
companies in the same industry.

In addition, as a matter of nonfundamental policy, the Fund may not invest
more than 10% of its net assets in securities which are not readily
marketable, in restricted securities or in repurchase agreements
maturing in more than seven days. The Fund may not invest more than 5% of
its total assets in restricted securities.

A complete description of these and other policies and restrictions is
contained under "Investment Restrictions" in the Fund's Statement of
Additional Information.

Loan participations and assignments

The Fund may invest in fixed and floating rate loans arranged through
private negotiations between an issuer of emerging market debt instruments
and one or more financial institutions ("lenders"). Generally, the Fund's
investments in loans are expected to take the form of loan participations
and assignments of portions of loans from third parties.

When investing in a participation, the Fund will typically have the right
to receive payments only from the lender to the extent the lender receives
payments from the borrower, and not from the borrower itself. Likewise, the
Fund typically will be able to enforce its rights only through the lender,
and not directly against the borrower. As a result, the Fund will assume
the credit risk of both the borrower and the lender that is selling the
participation.

When the Fund purchases assignments from lenders, it will acquire direct
rights against the borrower, but these rights and the Fund's obligations
may differ from, and be more limited than, those held by the assigning
lender.

Loan participations and assignments may be illiquid. Please refer to "Risk
factors-Illiquid investments" for more information.

When-issued securities

The Fund may purchase equity and debt securities on a when-issued or
forward delivery basis, for payment and delivery at a later date. The price
and yield are generally fixed on the date of commitment to purchase. During
the period between purchase and settlement, no interest accrues to the
Fund. At the time of settlement, the market value of the security may be
more or less than the purchase price.

Convertible securities

The Fund may invest in convertible securities which may offer higher income
than the common stocks into which they are convertible. The convertible
securities in which the Fund may invest include fixed-income or zero
coupon debt securities which may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock.
Prior to their conversion, convertible securities may have characteristics
similar to non-convertible securities.

Repurchase agreements

As a means of earning income for periods as short as overnight, the Fund
may enter into repurchase agreements with selected banks and
broker/dealers. Under a repurchase agreement, the Fund acquires securities,
subject to the seller's agreement to repurchase at a specified time and
price. The Fund may also enter into repurchase commitments for investment
purposes for periods of 30 days or more. Such commitments involve
investment risk similar to that of debt securities. Please see "Risk
factors-Repurchase agreements" for more information.

Strategic Transactions and derivatives

The Fund may, but is not required to, utilize various other investment
strategies as described below to hedge various market risks (such as
interest rates, currency exchange rates, and broad or specific equity or
fixed-income market movements), to manage the effective maturity or
duration of fixed-income securities in the Fund's portfolio or to enhance
potential gain. These strategies may be executed through the use of
derivative contracts. Such strategies are generally accepted as a part of
modern portfolio management and are regularly utilized by many mutual funds
and other institutional investors. Techniques and instruments may change
over time as new instruments and strategies are developed or regulatory
changes occur.

In the course of pursuing these investment strategies, the Fund may
purchase and sell exchange-listed and over-the-counter put and call options
on securities, equity and fixed-income indices and other financial
instruments, purchase and sell financial futures contracts and options
thereon, enter into various interest rate transactions such as swaps, caps,
floors or collars, and enter into various currency transactions such as
currency forward contracts, currency futures contracts, currency swaps or
options on currencies or currency futures (collectively, all the above are
called "Strategic Transactions").

Strategic Transactions may be used without limit to attempt to protect
against possible changes in the market value of securities held in or to be
purchased for the Fund's portfolio resulting from securities markets or
currency exchange rate fluctuations, to protect the Fund's unrealized gains
in the value of its portfolio securities, to facilitate the sale of such
securities for investment purposes, to manage the effective maturity or
duration of fixed-income securities in the Fund's portfolio, or to
establish a position in the derivatives markets as a temporary substitute
for purchasing or selling particular securities. Some Strategic
Transactions may also be used to enhance potential gain although no more
than 5% of the Fund's assets will be committed to Strategic Transactions
entered into for non-hedging purposes. Any or all of these investment
techniques may be used at any time and in any combination, and there is no
particular strategy that dictates the use of one technique rather than
another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Fund to utilize
these Strategic Transactions successfully will depend on the Adviser's
ability to predict pertinent market movements, which cannot be assured. The
Fund will comply with applicable regulatory requirements when implementing
these strategies, techniques and instruments. Strategic Transactions
involving financial futures and options thereon will be purchased, sold or
entered into only for bona fide hedging, risk management or portfolio
management purposes and not for speculative purposes. Please refer to "Risk
factors-Strategic Transactions and derivatives" for more information.

Risk factors

The Fund's risks are determined by the nature of the securities held and
the portfolio management strategies used by the Adviser. The following are
descriptions of certain risks related to the investments and techniques
that the Fund may use from time to time.

Non-diversified investment company. The Fund is classified as a
non-diversified investment company under the Investment Company Act of 1940
(the "1940 Act"), which means that the Fund is not limited by the 1940 Act
in the proportion of its assets that it may invest in the obligations of a
single issuer. The investment of a large percentage of the Fund's assets in
the securities of a small number of issuers may cause the Fund's share
price to fluctuate more than that of a diversified investment company.

Investing in Latin America. The Adviser believes that investment
opportunities may result from recent trends in Latin America encouraging
greater market orientation and less governmental intervention in economic
affairs. Investors, however, should be aware that the Latin American
economies have experienced considerable difficulties in the past decade.
Although there have been significant improvements in recent years, the
Latin American economies continue to experience challenging problems,
including high inflation rates and high interest rates relative to the U.S.
The emergence of the Latin American economies and securities markets will
require continued economic and fiscal discipline which has been lacking at
times in the past, as well as stable political and social conditions.
Recovery may also be influenced by international economic conditions,
particularly those in the U.S., and by world prices for oil and other
commodities. There is no assurance that recent economic initiatives will be
successful.

Certain risks associated with international investments and investing in
smaller, developing capital markets are heightened for investments in Latin
American countries. For example, some of the currencies of Latin American
countries have experienced steady devaluations relative to the U.S. dollar,
and major adjustments have been made in certain of these currencies
periodically. In addition, although there is a trend toward less
government involvement in commerce, governments of many Latin American
countries have exercised and continue to exercise substantial influence
over many aspects of the private sector. In certain cases, the government
still owns or controls many companies, including some of the largest in the
country. Accordingly, government actions in the future could have a
significant effect on economic conditions in Latin American countries,
which could affect private sector companies and the Fund, as well as the
value of securities in the Fund's portfolio.

Most Latin American countries have experienced substantial, and in some
periods, extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have
negative effects on the economies and securities markets of certain Latin
American countries.

Certain Latin American countries are among the largest debtors to
commercial banks and foreign governments. Some of these countries have in
the past defaulted on their sovereign debt. Holders of sovereign debt
(including the Fund) may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental
entities have defaulted may be collected in whole or in part.

The limited size of many Latin American securities markets and limited
trading volume in issuers compared to the volume of trading in U.S.
securities could cause prices to be erratic for reasons apart from factors
that affect the quality of securities.

The portion of the Fund's assets invested directly in Chile may be less
than the portions invested in other countries in Latin America because, at
present, capital invested in Chile normally cannot be repatriated for as
long as five years. As such, direct investments in Chile will be limited by
the Fund's nonfundamental policy of not investing more than 10% of net
assets in securities which are not readily marketable.

Foreign securities. Investments in foreign securities involve special
considerations due to more limited information, higher brokerage costs,
different accounting standards, thinner trading markets and the likely
impact of foreign taxes on the income from securities. They may also entail
certain other risks, such as the possibility of one or more of the
following: imposition of dividend or interest withholding or confiscatory
taxes; currency blockages or transfer restrictions; expropriation,
nationalization, military coups or other adverse political or economic
developments; less government supervision and regulation of securities
exchanges, brokers and listed companies; and the difficulty of enforcing
obligations in other countries. Further, it may be more difficult for the
Fund's agents to keep currently informed about corporate actions which may
affect the prices of portfolio securities. Communications between the U.S.
and foreign countries may be less reliable than within the U.S., increasing
the risk of delayed settlements of portfolio transactions or loss of
certificates for portfolio securities. Certain markets may require payment
for securities before delivery. The Fund's ability and decisions to
purchase and sell portfolio securities may be affected by laws or
regulations relating to the convertibility of currencies and repatriation
of assets. Some countries restrict the extent to which foreigners may
invest in their securities markets.

The Fund invests in securities denominated in currencies of Latin American
countries. Accordingly, changes in the value of these currencies against
the U.S. dollar will result in corresponding changes in the U.S. dollar
value of the Fund's assets denominated in those currencies.

Some Latin American countries also may have managed currencies, which are
not free floating against the U.S. dollar. In addition, there is risk that
certain Latin American countries may restrict the free conversion of their
currencies into other currencies. Further, it generally will not be
possible to reduce the Fund's Latin American currency risk through hedging.
Any devaluations in the currencies in which the Fund's portfolio securities
are denominated may have a detrimental impact on the Fund's net asset
value.

Convertible securities. While convertible securities generally offer lower
yields than non-convertible debt securities of similar quality, their
prices may reflect changes in the value of the underlying common stock.
Convertible securities entail less credit risk than the issuer's common
stock.

Repurchase agreements. If the seller under a repurchase agreement becomes
insolvent, the Fund's right to dispose of the securities may be restricted.
In the event of the commencement of bankruptcy or insolvency proceedings
with respect to the seller of the securities before repurchase of the
securities under a repurchase agreement, the Fund may encounter delay and
incur costs before being able to sell the securities. Also, if a seller
defaults, the value of such securities may decline before the Fund is able
to dispose of them.

Debt securities. The Fund may invest in debt securities which are unrated,
rated or the equivalent of those rated below investment grade (commonly
referred to as "junk bonds"). The lower the ratings of such debt
securities, the greater their risks render them like equity securities. The
Fund will invest no more than 10% of its net assets in securities rated B
or lower by Moody's or S&P, and may invest in securities rated C by Moody's
or D by S&P, which may be in default with respect to payment of principal
or interest. Also, longer maturity bonds tend to fluctuate more in price as
interest rates change than do short-term bonds, providing both opportunity
and risk.

Illiquid investments. The absence of a trading market can make it difficult
to ascertain a market value for illiquid investments. Disposing of illiquid
investments may involve time-
consuming negotiation and legal expenses, and it may be difficult or
impossible for the Fund to sell them promptly at an acceptable price.

(Continued on page 14)

Purchases

Opening an account

Minimum initial investment: $1,000; IRAs $500

Group retirement plans (401(k), 403(b), etc.) have similar or lower
minimums. See appropriate plan literature.

Make checks payable to "The Scudder Funds."

* By Mail

Send your completed and signed application and check

by regular mail to: or by express,
registered,
or certified mail to:

The Scudder Funds The Scudder Funds
P.O. Box 2291 1099 Hingham Street
Boston, MA Rockland, MA
02107-2291 02370-1052

* By Wire

Please see Transaction information-Purchasing shares-By wire following
these tables for details, including the ABA wire transfer number. Then
call 1-800-225-5163 for instructions.

* In Person

Visit one of our Funds Centers to complete your application with the
help of a Scudder representative. Funds Center locations are listed
under Shareholder benefits.

Purchasing additional shares

Minimum additional investment: $100; IRAs $50

Group retirement plans (401(k), 403(b), etc.) have similar or lower
minimums. See appropriate plan literature.

Make checks payable to "The Scudder Funds."

* By Mail

Send a check with a Scudder investment slip, or with a letter of
instruction including your account number and the complete Fund name,
to the appropriate address listed above.

* By Wire

Please see Transaction information-Purchasing shares-By wire following
these tables for details, including the ABA wire transfer number.

* In Person

Visit one of our Funds Centers to make an additional investment in
your Scudder fund account. Funds Center locations are listed under
Shareholder benefits.

* By Telephone

You may purchase additional shares in an amount of $10,000 or more.
Please call 1-800-225-5163 for more details.

* By Automatic Investment Plan ($50 minimum)

You may arrange to make investments on a regular basis through
automatic deductions from your bank checking account. Please call
1-800-225-5163 for more information and an enrollment form.

Exchanges and redemptions

Exchanging shares

Minimum investments: $1,000 to establish a new account; $100 to exchange
among existing accounts

There is a 2% fee payable to the Fund for exchanges of shares held less
than one year.

* By Telephone

To speak with a service representative, call 1-800-225-5163 from 8
a.m. to 8 p.m. eastern time or to access SAIL(tm), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).

* By Mail or Fax

Print or type your instructions and include:
- the name of the Fund and the account number you are exchanging
from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to exchange;
- the name of the Fund you are exchanging into; and
- your signature(s) as it appears on your account and a daytime
tele phone number.

Send your instructions

by regular mail to: or by express, or by fax to:
registered, or
certified mail to:

The Scudder Funds The Scudder Funds 1-800-821-6234
P.O. Box 2291 1099 Hingham Street
Boston, MA Rockland, MA
02107-2291 02370-1052

Redeeming shares

There is a 2% fee payable to the Fund for redemption of shares held less
than one year.

* By Telephone

To speak with a service representative, call 1-800-225-5163 from 8
a.m. to 8 p.m. eastern time or to access SAIL(tm), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day). You may have
redemption proceeds sent to your predesignated bank account, or
redemption proceeds of up to $50,000 sent to your address of record.

* By Mail or Fax

Send your instructions for redemption to the appropriate address or
fax number above and include:
- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem; and
- your signature(s) as it appears on your account and a daytime
tele phone number.

A signature guarantee is required for redemptions over $50,000. See
Transaction information-Redeeming shares following these tables.

* By Automatic Withdrawal Plan

You may arrange to receive automatic cash payments periodically if the
value of your account is $10,000 or more. Call 1-800-225-5163 for more
information and an enrollment form.

(Continued from page 11)

Borrowing. Although the principal of the Fund's borrowing will be fixed,
the Fund's assets may change in value during the time a borrowing is
outstanding, increasing exposure to capital risk.

Strategic Transactions and derivatives. Strategic Transactions, including
derivative contracts, have risks associated with them including possible
default by the other party to the transaction, illiquidity and, to the
extent the Adviser's view as to certain market movements is incorrect, the
risk that the use of such Strategic Transactions could result in losses
greater than if they had not been used. Use of put and call options may
result in losses to the Fund, force the sale or purchase of portfolio
securities at inopportune times or for prices higher than (in the case of
put options) or lower than (in the case of call options) current market
values, limit the amount of appreciation the Fund can realize on its
investments or cause the Fund to hold a security it might otherwise sell.
The use of currency transactions can result in the Fund incurring losses as
a result of a number of factors including the imposition of exchange
controls, suspension of settlements or the inability to deliver or receive
a specified currency. The use of options and futures transactions entails
certain other risks. In particular, the variable degree of correlation
between price movements of futures contracts and price movements in the
related portfolio position of the Fund creates the possibility that losses
on the hedging instrument may be greater than gains in the value of the
Fund's position. In addition, futures and options markets may not be liquid
in all circumstances and certain over-the-counter options may have no
markets. As a result, in certain markets, the Fund might not be able to
close out a transaction without incurring substantial losses, if at all.
Although the use of futures contracts and options transactions for hedging
should tend to minimize the risk of loss due to a decline in the value of
the hedged position, at the same time they tend to limit any potential gain
which might result from an increase in value of such position. Finally, the
daily variation margin requirements for futures contracts would create a
greater ongoing potential financial risk than would purchases of options,
where the exposure is limited to the cost of the initial premium. Losses
resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the
Strategic Transactions had not been utilized. The Strategic Transactions
that the Fund may use and some of their risks are described more fully in
the Fund's Statement of Additional Information.

Distribution and performance information

Dividends and capital gains distributions

The Fund intends to distribute any dividends from its net investment income
and any net realized capital gains after utilization of capital loss
carryforwards, if any, in December. An additional distribution may be
made if necessary. Any dividends or capital gains distributions
declared in October, November or December with a record date in such a
month and paid during the following January will be treated by shareholders
for federal income tax purposes as if received on December 31 of the
calendar year declared. According to preference, shareholders may receive
distributions in cash or have them reinvested in additional shares of the
Fund. Distributions are not subject to the 2% redemption fee, whether paid
in cash or reinvested. If the investment is in the form of a retirement
plan, all dividends and capital gains distributions must be reinvested into
the shareholder's account.

Generally, dividends from net investment income are taxable to shareholders
as ordinary income. Long-term capital gains distributions, if any, are
taxable as long-term capital gains regardless of the length of time
shareholders have owned their shares. Short-term capital gains and any
other taxable distributions are taxable as ordinary income.

Shareholders may be able to claim a credit or deduction on their income tax
returns for their pro rata portion of qualified taxes paid by the Fund to
foreign countries.

The Fund sends detailed tax information about the amount and type of its
distributions to its shareholders by January 31 of the following year.

Performance information

From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance
figures are historical, show the performance of a hypothetical investment
and are not intended to indicate future performance. "Total return" is the
change in value of an investment in the Fund for a specified period. The
"average annual total return" of the Fund is the average annual compound
rate of return of an investment in the Fund assuming the investment has
been held for one year, and the life of the Fund as of a stated ending
date. "Cumulative total return" represents the cumulative change in value
of an investment in the Fund for various periods. Total return calculations
assume that all dividends and capital gains distributions during the period
were reinvested in shares of the Fund. "Capital change" measures return
from capital, including reinvestment of any capital gains distributions but
does not include the reinvestment of dividends. Performance will vary based
upon, among other things, changes in market conditions and the level of the
Fund's expenses.

Fund organization

Scudder Latin America Fund is a non-diversified series of Scudder
International Fund, Inc. (the "Corporation"), an open-end, management
investment company registered under the 1940 Act. The Corporation was
organized as a Maryland corporation in July 1975.

The Fund's activities are supervised by the Corporation's Board of
Directors. Shareholders have one vote for each share held on matters on
which they are entitled to vote. The Fund is not required to and has no
current intention of holding annual shareholder meetings, although special
meetings may be called for purposes such as electing or removing Directors,
changing fundamental investment policies or approving an investment
advisory contract. Shareholders will be assisted in communicating with
other shareholders in connection with removing a Director as if Section
16(c) of the 1940 Act were applicable.

Investment adviser

The Fund retains the investment management firm of Scudder, Stevens &
Clark, Inc., a Delaware corporation, to manage the Fund's daily investment
and business affairs subject to the policies established by the Board of
Directors. The Directors have overall responsibility for the management of
the Fund under Maryland law.

The Fund pays the Adviser an annual fee of 1.25% of the Fund's average
daily net assets. The fee is payable monthly, provided that the Fund will
make such interim payments as may be requested by the Adviser not to exceed
75% of the amount of the fee then accrued on the books of the Fund and
unpaid. The fee is higher than that charged by many funds which invest
primarily in U.S. securities but not necessarily higher than the fees
charged to funds with investment objectives similar to that of the Fund.

For the fiscal year ended October 31, 1994, the Adviser did not
impose a portion of its management fee, maintaining the annualized expenses
for the Fund at 2.01% and, accordingly, received an investment management
fee of 1.21% of the Fund's daily net assets.

All the Fund's expenses are paid out of gross investment income.
Shareholders pay no direct charges or fees for investment or administrative
services.

Scudder, Stevens & Clark, Inc., is located at
345 Park Avenue, New York, New York.

Transfer agent

Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts
02107-2291, a wholly-owned subsidiary of the Adviser, is the transfer,
shareholder servicing and dividend-paying agent for the Fund.

Underwriter

Scudder Investor Services, Inc., a wholly-owned subsidiary of the Adviser,
is the Fund's principal underwriter. Scudder Investor Services, Inc.
confirms, as agent, all purchases of shares of the Fund. Scudder Investor
Relations is a telephone information service provided by Scudder
Investor Services, Inc.

Transaction information

Purchasing shares

Purchases are executed at the next calculated net asset value per share
after the Fund's transfer agent in Boston receives the purchase request in
good order. Purchases are made in full and fractional shares. (See "Share
price.")

By check. If you purchase shares with a check that does not clear, your
purchase will be canceled and you will be subject to any losses or fees
incurred in the transaction. Checks must be drawn on or payable through a
U.S. bank. If you purchase shares by check and redeem them within seven
business days of purchase, the Fund may hold redemption proceeds until the
purchase check has cleared, which may take up to seven business days. If
you purchase shares by federal funds wire, you may avoid this delay.
Redemption or exchange requests by telephone prior to the expiration of the
seven-day period will not be accepted.

By wire. To open a new account by wire, first call Scudder at
1-800-225-5163 to obtain an account number. A representative will instruct
you to send a completed, signed application to the transfer agent in
Boston. Accounts cannot be opened without a completed, signed application
and a Scudder fund account number. Contact your bank to arrange a wire
transfer to:

The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552

Your wire instructions must also include:

_ the name of the fund in which the money is to be invested,

_ the account number of the fund, and

_ the name(s) of the account holder(s).

The account will be established once the application and money order are
received in good order.

You may also make additional investments of $100 or more to your existing
account by wire.

By telephone order. Existing shareholders may purchase shares at a certain
day's price by calling 1-800-225-5163 before the close of regular trading
on the New York Stock Exchange (the "Exchange"), normally 4 p.m. eastern
time, on that day. Orders must be for $10,000 or more and cannot be for an
amount greater than four times the value of your account at the time the
order is placed. A confirmation with complete purchase information is
sent shortly after your order is received. You must include with your
payment the order number given at the time the order is placed. If
payment by check or wire is not received within seven business days, the
order will be canceled and the shareholder will be responsible for any loss
to the Fund resulting from this cancellation. Telephone orders are not
available for shares held in Scudder IRA accounts and most other Scudder
retirement plan accounts.

Exchanging and redeeming shares

Upon the redemption or exchange of shares held less than a year, a fee of
2% of the lower of the cost or the current net asset value of the shares
will be assessed and retained by the Fund for the benefit of the remaining
shareholders. This fee is intended to encourage long-term investment in the
Fund, to avoid transaction and other expenses caused by early redemptions,
and to facilitate portfolio management. The fee is not a deferred sales
charge, is not a commission paid to the Adviser or its subsidiaries, and
does not benefit the Adviser in any way. The fee applies to redemptions
from the Fund and exchanges to other Scudder funds, but not to dividend or
capital gains distributions which have been automatically reinvested in the
Fund. The fee is applied to the shares being redeemed or exchanged in the
order in which they were purchased. See "Exchanges and Redemptions" in the
Fund's Statement of Additional Information for a more detailed description
of the redemption fee.

Exchanges. Your new account will have the same registration and address as
your existing account.

The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call 1-800-225-5163 for
more information, including information about the transfer of special
account features.

You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.

Redemptions by telephone. This is the quickest and easiest way to sell Fund
shares. If you elected telephone redemption to your bank on your
application, you can call to request that federal funds be sent to your
authorized bank account. If you did not elect telephone redemption to your
bank on your application, call 1-800-225-5163 for more information.

Redemption proceeds will be wired to your bank unless otherwise requested.
If your bank cannot receive federal reserve wires, redemption proceeds will
be mailed to your bank. There will be a $5 charge for all wire redemptions.
You can also make redemptions from your Scudder fund account on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.

If you open an account by wire, you cannot redeem shares by telephone until
the Fund's transfer agent has received your completed and signed
application. Telephone redemption is not available for shares held in
Scudder IRA accounts and most other Scudder retirement plan accounts.

In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.

Signature guarantees. For your protection and to prevent fraudulent
redemptions, on written redemption requests in excess of $50,000 we require
an original signature and an original signature guarantee for each person
in whose name the account is registered. (The Fund reserves the right,
however, to require a signature guarantee for all redemptions.) You can
obtain a signature guarantee from most banks, credit unions or savings
associations, or from broker/dealers, municipal securities broker/dealers,
government securities broker/dealers, national securities exchanges,
registered securities associations, or clearing agencies deemed eligible by
the Securities and Exchange Commission. Signature guarantees by notaries
public are not acceptable. Redemption requirements for corporations, other
organizations, trusts, fiduciaries, agents, institutional investors and
retirement plans may be different from those for regular accounts. For more
information, please call 1-800-225-5163.

Telephone transactions

Shareholders automatically receive the ability to exchange by telephone and
the right to redeem by telephone up to $50,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be
sent to a predesignated bank account. The Fund uses procedures designed to
give reasonable assurance that telephone instructions are genuine,
including recording telephone calls, testing a caller's identity and
sending written confirmation of telephone transactions. If the Fund does
not follow such procedures, it may be liable for losses due to unauthorized
or fraudulent telephone instructions. The Fund will not be liable for
acting upon instructions communicated by telephone that it reasonably
believes to be genuine.

Share price

Purchases and redemptions, including exchanges, are made at net asset
value. There is a 2% fee payable to the Fund for exchanges or redemptions
of shares held less than one year. The Fund's custodian, Brown Brothers
Harriman & Co., determines net asset value per share as of the close of
regular trading on the Exchange, normally 4 p.m. eastern time, on each day
the Exchange is open for trading. Net asset value per share is calculated
by dividing the value of total Fund assets, less all liabilities, by the
total number of shares outstanding.

Processing time

All purchase and redemption requests received in good order by the Fund's
transfer agent in Boston by the close of regular trading on the Exchange
are executed at the net asset value per share calculated at the close of
regular trading that day.

Purchase and redemption requests received after the close of regular
trading on the Exchange will be executed the following business day.

If you wish to make a purchase of $500,000 or more you should notify
Scudder Investor Relations by calling 1-800-225-5163.

The Fund will normally send your redemption proceeds within one business
day following the redemption request, but may take up to seven days (or
longer in the case of shares recently purchased by check).

Short-term trading

Purchases and sales should be made for long-term investment purposes only.
The Fund and Scudder Investor Services, Inc. each reserves the right to
restrict purchases of Fund shares (including exchanges) when a pattern of
frequent purchases and sales made in response to short-term fluctuations in
the Fund's share price appears evident.

Tax information

A redemption of shares, including an exchange into another Scudder fund, is
a sale of shares and may result in a gain or loss for income tax purposes.

Tax identification number

Be sure to complete the Tax Identification Number section of the Fund's
application when you open an account. Federal tax law requires the Fund to
withhold 31% of taxable dividends, capital gains distributions and
redemption and exchange proceeds from accounts (other than those of certain
exempt payees) without a certified Social Security or tax identification
number and certain other certified information or upon notification from
the IRS or a broker that withholding is required. The Fund reserves the
right to reject new account applications without a certified Social
Security or tax identification number. The Fund also reserves the right,
following 30 days' notice, to redeem all shares in accounts without a
certified Social Security or tax identification number. A shareholder may
avoid involuntary redemption by providing the Fund with a tax
identification number during the 30-day notice period. Redemptions for
failure to provide a tax identification number are not subject to the 2%
redemption fee.

Minimum balances

Shareholders should maintain a share balance worth at least $1,000, which
amount may be changed by the Board of Directors. Scudder retirement plans
have similar or lower minimum share balance requirements. The Fund reserves
the right, following 60 days' written notice to shareholders, to redeem all
shares in sub-minimum accounts, including accounts of new investors, where
a reduction in value has occurred due to a redemption or exchange out of
the account. Reductions in value that result solely from market activity
will not trigger an involuntary redemption. The Fund will mail the proceeds
of the redeemed account to the shareholder. The shareholder may restore the
share balance to $1,000 or more during the 60-day notice period and must
maintain it at no lower than that minimum to avoid involuntary redemption.

Third party transactions

If purchases and redemptions of Fund shares are arranged and settlement is
made at an investor's election through a member of the National Association
of Securities Dealers, Inc., other than Scudder Investor Services, Inc.,
that member may, at its discretion, charge a fee for that service.

Redemption-in-kind

The Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order by
making payment in whole or in part in readily marketable securities chosen
by the Fund and valued as they are for purposes of computing the Fund's net
asset value (a redemption-in-kind). If payment is made in securities, a
shareholder may incur transaction expenses in converting these securities
to cash. The Corporation has elected, however, to be governed by Rule 18f-1
under the 1940 Act, as a result of which the Fund is obligated to redeem
shares, with respect to any one shareholder during any 90-day period,
solely in cash up to the lesser of $250,000 or 1% of the net asset value of
the Fund at the beginning of the period.

Shareholder benefits

Experienced professional management

Scudder, Stevens & Clark, Inc., one of the nation's most experienced
investment management firms, actively manages your Scudder fund investment.
Professional management is an important advantage for investors who do not
have the time or expertise to invest directly in individual securities.

A team approach to investing

Scudder Latin America Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management
process. Team members work together to develop investment strategies and
select securities for the Fund's portfolio. They are supported by Scudder's
large staff of economists, research analysts, traders and other investment
specialists who work in Scudder's offices across the United States and
abroad. Scudder believes its team approach benefits Fund investors by
bringing together many disciplines and leveraging Scudder's extensive
resources.

Lead Portfolio Manager Edmund B. Games, Jr. has set the Fund's investment
strategy and overseen its daily operation since the Fund was introduced in
1992. Mr. Games joined Scudder's equity research area in 1960 and has
focused on Latin American stocks since 1988. Joyce E. Cornell, Portfolio
Manager, has focused on stock selection since 1993. Ms. Cornell, who has
eight years of investment experience as a research analyst, joined
Scudder in 1991. William F. Truscott, Portfolio Manager, contributes
expertise on the Fund's Latin American investments, a role he has filled
since the Fund commenced operations. Mr. Truscott joined Scudder in 1992
and has 11 years of experience in the financial industry, including seven
years specifically focused on Latin American investments.

SAIL(tm)-Scudder Automated Information Line

For touchtone access to account information, prices and yields, or to
perform transactions in existing Scudder fund accounts, shareholders can
call Scudder's Automated Information Line (SAIL) at 1-800-343-2890. During
periods of extreme economic or market changes, or other conditions, it may
be difficult for you to effect telephone transactions in your account. In
such an event you should write to the Fund; please see "How to contact
Scudder" for the address.

Investment flexibility

Scudder offers toll-free telephone exchange between funds at current net
asset value. You can move your investments among money market, income,
growth , tax-free and growth and income funds with a simple
toll-free call or, if you prefer, by sending your instructions through the
mail or by fax. Telephone and fax redemptions and exchanges are subject to
termination and their terms are subject to change at any time by the Fund
or the transfer agent. In some cases, the transfer agent or Scudder
Investor Services, Inc. may impose additional conditions on telephone
transactions.

Dividend reinvestment plan

You may have dividends and distributions automatically reinvested in
additional Fund shares. Please call 1-800-225-5163 to request this feature.

Shareholder statements

You receive a detailed account statement every time you purchase or redeem
shares. All of your statements should be retained to help you keep track of
account activity and the cost of shares for tax purposes.

Shareholder reports

In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a
review of portfolio changes.

To reduce the volume of mail you receive, only one copy of most Fund
reports, such as the Fund's Annual Report, may be mailed to your household
(same surname, same address). Please call 1-800-225-5163 if you wish to
receive additional shareholder reports.

Newsletters

Four times a year, Scudder sends you At the Helm, an informative newsletter
covering economic and investment developments, service enhancements and
other topics of interest to Scudder fund investors.

Scudder Funds Centers

As a convenience to shareholders who like to conduct business in person,
Scudder Investor Services, Inc. maintains Funds Centers in Boca Raton,
Boston, Chicago, Cincinnati, Los Angeles, New York, Portland (OR), San
Diego, San Francisco and Scottsdale.

T.D.D. service for the hearing impaired

Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D.
(Telephone Device for the Deaf) service. If you have access to a T.D.D.,
call 1-800-543-7916 for investment information or specific account
questions and transactions.

Scudder tax-advantaged retirement plans

Scudder offers a variety of tax-advantaged retirement plans for
individuals, businesses and non-profit organizations. These flexible plans
are designed for use with the Scudder Family of Funds (except Scudder
tax-free funds, which are inappropriate for such plans). Scudder Funds
offer a broad range of investment objectives and can be used to seek almost
any investment goal. Using Scudder's retirement plans can help shareholders
save on current taxes while building their retirement savings.

* Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of $2,000 per person for anyone with earned income. Many
people can deduct all or part of their contributions from their
taxable income, and all investment earnings accrue on a tax deferred
basis. The Scudder No-Fee IRA charges no annual custodial fee.

* 401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee
communications and trustee services, as well as investment options.

* Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make
annual, tax-deductible contributions of up to $30,000 for each person
covered by the plans. Plans may be adopted individually or paired to
maximize contributions. These are sometimes known as Keogh plans.

* 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.

* SEP-IRAs. Easily administered retirement plans for small businesses
and self-employed individuals. The maximum annual contribution to
SEP-IRA accounts is adjusted each year for inflation.

* Scudder Horizon Plan. A no-load variable annuity that lets you build
assets by deferring taxes on your investment earnings. You can start
with $2,500 or more.

Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian
for some of these plans and is paid an annual fee for some of the above
retirement plans. For information about establishing a Scudder No-Fee IRA,
SEP-IRA, Profit Sharing Plan, Money Purchase Pension Plan or a Scudder
Horizon Plan, please call 1-800-225-2470. For information about 401(k)s or
403(b)s please call 1-800-323-6105. To effect transactions in existing IRA,
SEP-IRA, Profit Sharing or Pension Plan accounts, call 1-800-225-5163.

The variable annuity contract is provided by Charter National Life
Insurance Company (in New York State, Intramerica Life Insurance Company
(S 1802)). The contract is offered by Scudder Insurance Agency, Inc. (in New
York State, Nevada and Montana, Scudder Insurance Agency of New York,
Inc.). CNL, Inc. is the Principal Underwriter. Scudder Horizon Plan is not
available in all states.

Directors and Officers

Edmond D. Villani*
Chairman of the Board and Director

Nicholas Bratt*
President and Director

Paul Bancroft III
Director; Venture Capitalist and Consultant

Thomas J. Devine
Director; Consultant

William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.

William H. Luers
Director; President, The Metropolitan Museum of Art

Wilson Nolen
Director; Consultant

Juris Padegs*
Director, Vice President and Assistant Secretary

Daniel Pierce*
Director

Gordon Shillinglaw
Director; Professor Emeritus of Accounting, Columbia University
Graduate School of Business

Robert G. Stone, Jr.
Director; Chairman of the Board and
Director, Kirby Corporation

Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business

Carol L. Franklin*
Vice President

Edmund B. Games, Jr.*
Vice President

Jerard K. Hartman*
Vice President

William E. Holzer*
Vice President

Thomas W. Joseph*
Vice President

William F. Truscott*
Vice President

Thomas F. McDonough*
Vice President and Secretary

Pamela A. McGrath*
Vice President and Treasurer

David S. Lee*
Vice President and Assistant Treasurer

Edward J. O'Connell*
Vice President and Assistant Treasurer

Kathryn L. Quirk*
Vice President and Assistant Secretary

Richard W. Desmond*
Assistant Secretary

Coleen Downs Dinneen*
Assistant Secretary

* Scudder, Stevens & Clark, Inc.

Investment products and services

The Scudder Family of Funds

Money market
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
Tax free money market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax free+
Scudder California Tax Free Fund*
Scudder High Yield Tax Free Fund
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited Term Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder Medium Term Tax Free Fund
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund
Income
Scudder Emerging Markets Income Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Scudder Short Term Global Income Fund
Scudder Zero Coupon 2000 Fund
Growth
Scudder Capital Growth Fund
Scudder Development Fund
Scudder Global Fund
Scudder Global Small Company Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Latin America Fund
Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Value Fund
The Japan Fund

Retirement Plans and Tax-Advantaged Investments
IRAs
Keogh Plans
Scudder Horizon Plan*+++ (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase Pension Plans

Closed-end Funds#
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities Fund, Inc.

Institutional Cash Management
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(tm)++

For complete information on any of the above Scudder funds, including
management fees and expenses, call or write for a free prospectus. Read it
carefully before you invest or send money. +A portion of the income from
the tax-free funds may be subject to federal, state and local taxes. *Not
available in all states. +++A no-load variable annuity contract provided by
Charter National Life Insurance Company and its affiliate, offered by
Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder, Stevens & Clark, Inc., are traded on various stock exchanges.
++For information on Scudder Treasurers Trust(tm), an institutional cash
management service that utilizes certain portfolios of Scudder Fund, Inc.
($100,000 minimum), call: 1-800-541-7703.

How to contact Scudder

Account Service and Information:

For existing account service and transactions

Scudder Investor Relations
1-800-225-5163

For account updates, prices, yields, exchanges and redemptions

Scudder Automated Information Line (SAIL)
1-800-343-2890

Investment Information:

To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions

Scudder Investor Relations
1-800-225-2470

For establishing 401(k) and 403(b) plans

Scudder Defined Contribution Services
1-800-323-6105

Please address all correspondence to:

The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291

Or Stop by a Scudder Funds Center:

Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you-they can be
found in the following cities:

Boca Raton
Boston
Chicago
Cincinnati
Los Angeles
New York
Portland, OR
San Diego
San Francisco
Scottsdale

For information on Scudder Treasurers Trust(tm), an institutional cash
management service for corporations, non-profit organizations and trusts
which utilizes certain portfolios of Scudder Fund, Inc.* ($100,000
minimum), call: 1-800-541-7703.

For information on Scudder Institutional Funds*, funds designed to meet the
broad investment management and service needs of banks and other
institutions, call: 1-800-854-8525.

Scudder Investor Relations and Scudder Funds Centers are services
provided through Scudder Investor Services, Inc., Distributor.

* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees
and expenses. Please read it carefully before you invest or send
money.

<PAGE>

This prospectus sets forth concisely the information about Scudder Pacific
Opportunities Fund, a series of Scudder International Fund, Inc., an
open-end management investment company, that a prospective investor should
know before investing. Please retain it for future reference.

Contents-see page 4.

Scudder Pacific Opportunities Fund

Prospectus
March 1, 1995

A pure no-load(tm) (no sales charges) mutual fund which seeks long-term
growth of capital through investment primarily in the equity securities of
Pacific Basin companies, excluding Japan.

Expense information

How to compare a Scudder pure no-load(tm) fund

This information is designed to help you understand the various costs and
expenses of investing in Scudder Pacific Opportunities Fund (the "Fund").
By reviewing this table and those in other mutual funds' prospectuses, you
can compare the Fund's fees and expenses with those of other funds. With
Scudder's pure no-load(tm) funds, you pay no commissions to purchase or
redeem shares, or to exchange from one fund to another. As a result, all of
your investment goes to work for you.

1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.

Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE

2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributed its net investment income, expressed as a percentage of
the Fund's average daily net assets for the fiscal year ended October
31, 1994.

Investment management fee 1.10%
12b-1 fees NONE
Other expenses 0.71%
------
Total Fund operating expenses 1.81%
======

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$18 $57 $98 $213

* You may redeem by writing or calling the Fund. If you wish to receive
your redemption proceeds via wire, there is a $5 wire service fee. For
additional information, please refer to "Transaction
information-Redeeming shares."

Financial highlights

The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
audited financial statements.

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR DECEMBER 8, 1992
ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS) TO
1994 OCTOBER 31, 1993
----------- -----------------
<S> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . . $16.21 $12.00
------ ------
Income from investment operations:
Net investment income (a) . . . . . . . . . . . . . . . . . . . . . . .04 .04
Net realized and unrealized gain on investment transactions . . . . . 1.41 4.17
------ ------
Total from investment operations . . . . . . . . . . . . . . . . . . . 1.45 4.21
------ ------
Less distributions from:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . (.08) --
Net realized gains on investment transactions . . . . . . . . . . . . (.01) --
------ ------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . . . . (.09) --
------ ------
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . $17.57 $16.21
====== ======
TOTAL RETURN (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.97 35.08**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) . . . . . . . . . . . . . . . . 499 270
Ratio of operating expenses, net to average daily net assets (%) (a) . 1.81 1.75*
Ratio of net investment income to average daily net assets (%) . . . . .28 1.41*
Portfolio turnover rate (%) . . . . . . . . . . . . . . . . . . . . . . 38.5 9.9*
<FN>
(a) Reflects a per share amount of management fee and other fees
not imposed by the Adviser of . . . . . . . . . . . . . . . . . -- .03
Operating expense ratio including expenses reimbursed, management
fee and other expenses not imposed (%) . . . . . . . . . . . . . -- 2.90*
* Annualized
** Not annualized

</TABLE>

A message from Scudder's chairman

Services available to all shareholders include toll-free access to the
professional service representatives of Scudder Investor
Relations , easy exchange among funds, shareholder reports,
informative newsletters and the walk-in convenience of Scudder Funds
Centers.

/s/Daniel Pierce

Scudder Pacific Opportunities Fund

Investment objective

* long-term growth of capital through investment primarily in the equity
securities of Pacific Basin companies, excluding Japan

Investment characteristics

* convenient, low-cost access to investment opportunities in the Pacific
Basin

* participation in a professionally managed portfolio of securities in a
region of the world that few investors have the time, resources or
experience to research

* increased international diversification

* daily liquidity at net asset value

* above-average investment risk

Contents

Investment objective and policies 5
Why invest in the Fund? 6
International investment experience 7
Additional information about policies and investments 7
Distribution and performance information 10
Fund organization 11
Purchases 12
Exchanges and redemptions 13
Transaction information 14
Shareholder benefits 17
Directors and Officers 20
Investment products and services 21
How to contact Scudder 22

Investment objective and policies

Scudder Pacific Opportunities Fund (the "Fund"), a non-diversified series
of Scudder International Fund, Inc., seeks long-term growth of capital
through investment primarily in the equity securities of Pacific Basin
companies, excluding Japan. The Fund's investment program focuses on the
smaller, emerging markets in this region of the world. The Fund is
appropriate for no-load investors seeking to benefit from economic growth
in the Pacific Basin, but who do not want direct exposure to the Japanese
market. An investment in the Fund entails above-average investment risk.

Investments

The Fund invests, under normal market conditions, at least 65% of its
assets in the equity securities of Pacific Basin companies. Pacific Basin
countries include Australia, the Peoples Republic of China, India,
Indonesia, Malaysia, New Zealand, the Philippines, Sri Lanka, Pakistan and
Thailand, as well as Hong Kong, Singapore, South Korea and Taiwan-the
so-called "four tigers." The Fund may invest in other countries in the
Pacific Basin when their markets become sufficiently developed. The Fund
will not, however, invest in Japanese securities. The Fund intends to
allocate investments among at least three countries at all times and does
not expect to concentrate investments in any particular industry.

The Fund defines securities of Pacific Basin companies as follows:

* Securities of companies organized under the laws of a Pacific Basin
country or for which the principal securities trading market is in the
Pacific Basin; or

* Securities of companies, wherever organized, when at least 50% of a
company's non-current assets, capitalization, gross revenue or profit in
any one of the two most recent fiscal years represents (directly or
indirectly through subsidiaries) assets or activities located in the
Pacific Basin.

The Fund's equity investments are common stock, preferred stock (either
convertible or non-convertible), depositary receipts and warrants. These
may be restricted securities. Equity securities may also be purchased
through rights. Securities may be listed on securities exchanges, traded
over-the-counter or have no organized market.

The Fund may invest up to 35% of its total assets in foreign and domestic
debt securities if the Fund's investment adviser, Scudder, Stevens & Clark,
Inc. (the "Adviser") determines that the capital appreciation of debt
securities is likely to equal or exceed the capital appreciation of equity
securities. The Fund may purchase bonds rated Aaa, Aa or A by Moody's
Investors Service, Inc. ("Moody's"), or AAA, AA or A by Standard & Poor's
("S&P") or, if unrated, of equivalent quality as determined by the Adviser.
Should the rating of a security in the Fund's portfolio be downgraded, the
Adviser will determine whether it is in the best interest of the Fund to
retain or dispose of such security.

Under normal market conditions, the Fund may invest up to 35% of its assets
in equity securities of U.S. and other non-Pacific Basin issuers (excluding
Japan). In evaluating non-Pacific Basin investments, the Adviser seeks
investments where an issuer's Pacific Basin business activities and the
impact of developments in the Pacific Basin may have a positive effect on
the issuer's business results. The Fund may also purchase shares of
closed-end investment companies that invest primarily in the Pacific Basin.
In addition, the Fund may engage in strategic transactions. For temporary
defensive purposes and to maintain liquidity, the Fund may hold without
limit debt instruments as well as cash and cash equivalents, including
foreign and domestic money market instruments, short-term government and
corporate obligations, and repurchase agreements. More information about
investment techniques is provided under "Additional information about
policies and investments."

Investment strategy

The Adviser seeks to identify companies with favorable potential for
appreciation through growing earnings or market recognition over time.
While these companies may be among the largest in their local markets, they
may be small by the standards of U.S. market capitalization.

The Adviser evaluates investments for the Fund from both a macroeconomic
and a microeconomic perspective, using extensive field research.
Macroeconomic research includes a study of the economic fundamentals of
each country and an examination of regional themes such as growing trade,
increases in direct foreign investment and deregulation of capital markets.
Understanding regional themes allows the Adviser to identify the industries
and sectors most likely to benefit from the political, social and economic
changes taking place across the Pacific Basin. Microeconomic analysis
identifies individual companies with exceptional business prospects, which
may be due to market dominance, unique franchises, high growth potential,
or innovative services, products or technologies.

Why invest in the Fund?

The Fund is designed for investors wishing to participate in the investment
opportunities afforded by the smaller, emerging markets in the Pacific
Basin. The Adviser believes that the economies of the Pacific Basin will
continue to have among the world's fastest rates of economic growth over
the next decade. These economies are generally characterized by large,
hard-working labor pools, a well-educated and growing middle class and high
savings rates. They are benefiting from rapid growth of intra-regional
trade, one of the most important economic developments in this part of the
world in recent years, and a high level of infrastructure development. Many
companies in the Pacific Basin are experiencing rising productivity and
profit growth due to increased focus on higher value added, more profitable
product lines and enhanced capital investment in technology. In addition,
governments are opening capital markets to foreign investors region-wide.
This combination of factors is attracting foreign capital to the region and
fueling growth that is presently more rapid than that of Japan, the U.S.
and other more developed countries. As a result, the stock markets in many
of these countries have, in recent years, outperformed our own.

The Fund involves above-average risk. It is designed as a long-term
investment and not for short-term trading purposes, and should not be
considered a complete investment program. However, movements in the Fund's
share price may have a low correlation with movements in the U.S. markets,
so adding shares of the Fund to an investor's portfolio may increase the
investor's portfolio diversification, and moderate overall portfolio risk.

Investing directly in foreign securities is usually impractical for
individual investors. Investors frequently find it difficult to arrange
purchases and sales, obtain current market, industry or corporate
information, hold securities for safekeeping and convert profits from
foreign currencies to U.S. dollars. The Fund manages these tasks for the
investor. The Adviser has had long experience in dealing in foreign markets
and believes the Fund affords a convenient and cost-effective method of
investing in the more dynamic, developing countries in the Pacific Basin
region. See "Additional information about policies and investments-Risk
factors."

In addition, the Fund offers all the benefits of the Scudder Family of
Funds. Scudder, Stevens & Clark, Inc. manages a diverse family of pure
no-load(tm) funds and provides a wide range of services to help investors
meet their investment needs. Please refer to "Investment products and
services" for additional information.

International investment experience

The Adviser, a leader in international investment management, has been
investing in the Pacific Basin for over 35 years. The Adviser
manages a number of offshore and U.S. investment companies that invest in
all or select regions of the Pacific Basin, including two closed-end funds
that trade on the New York Stock Exchange: Scudder New Asia Fund, Inc. and
The Korea Fund, Inc. The Adviser also manages The Japan Fund, Inc., an
open-end investment company investing primarily in securities of Japanese
companies.

Additional information about policies and investments

Investment restrictions

The Fund has adopted certain fundamental policies which may not be changed
without a vote of shareholders and which are designed to reduce the Fund's
investment risk.

The Fund may not borrow money except as a temporary measure for
extraordinary or emergency purposes and may not make loans except through
the lending of portfolio securities, the purchase of debt securities or
through repurchase agreements. The Fund may not invest more than 25% of its
total assets in securities of companies in the same industry.

In addition, as a matter of nonfundamental policy, the Fund may not invest
more than 10% of its net assets in securities which are not readily
marketable, in restricted securities or in repurchase agreements maturing
in more than seven days. The Fund may not invest more than 5% of its total
assets in restricted securities.

A complete description of these and other policies and restrictions is
contained under "The Fund's Investment Objective and Policies" in the
Fund's Statement of Additional Information.

When-issued securities

Convertible securities

The Fund may invest in convertible securities which may offer higher income
than the common stocks into which they are convertible. The convertible
securities in which the Fund may invest consist of bonds, notes, debentures
and preferred stocks which may be converted or exchanged at a stated or
determinable exchange ratio into underlying shares of common stock. Prior
to their conversion, convertible securities may have characteristics
similar to non-convertible securities.

Repurchase agreements

Strategic Transactions and derivatives

Risk factors

Investing in the Pacific Basin. The Fund is susceptible to political and
economic factors affecting issuers in Pacific Basin countries. Although the
Fund will not invest in Japanese companies, some Pacific Basin economies
are directly affected by Japanese capital investment in the region and by
Japanese consumer demands. Many of the countries of the Pacific Basin are
developing both economically and politically. Pacific Basin countries may
have relatively unstable governments, economies based on only a few
commodities or industries, and securities markets trading infrequently or
in low volumes. Some Pacific Basin countries restrict the extent to which
foreigners may invest in their securities markets. Securities of issuers
located in some Pacific Basin countries tend to have volatile prices and
may offer significant potential for loss as well as gain. Further, certain
companies in the Pacific Basin may not have firmly established product
markets, may lack depth of management, or may be more vulnerable to
political or economic developments such as nationalization of their own
industries.

Foreign securities. Investments in foreign securities involve special
considerations due to more limited information, higher brokerage costs,
different accounting standards, thinner trading markets and the likely
impact of foreign taxes on the income and gains from securities. They may
also entail certain other risks, such as the possibility of one or more of
the following: imposition of dividend or interest withholding or
confiscatory taxes; currency blockages or transfer restrictions;
expropriation, nationalization, military coups or other adverse political
or economic developments; less government supervision and regulation of
securities exchanges, brokers and listed companies; and the difficulty of
enforcing obligations in other countries. Purchases of foreign securities
are usually made in foreign currencies and, as a result, the Fund may incur
currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar.
Further, it may be more difficult for the Fund's agents to keep currently
informed about corporate actions which may affect the prices of portfolio
securities. Communications between the U.S. and foreign countries may be
less reliable than within the U.S., thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. Certain markets may require payment for securities before
delivery. The Fund's ability and decisions to purchase and sell portfolio
securities may be affected by laws or regulations relating to the
convertibility of currencies and repatriation of assets.

Repurchase agreements. If the seller under a repurchase agreement becomes
insolvent, the Fund's right to dispose of the securities may be restricted.
In the event of the commencement of bankruptcy or insolvency proceedings
with respect to the seller of the security under a repurchase agreement,
the Fund may encounter delay and incur costs before being able to sell the
security. Also, if a seller defaults, the value of such securities may
decline before the Fund is able to dispose of them.

Distribution and performance information

Dividends and capital gains distributions

The Fund intends to distribute dividends from its net investment income and
any net realized capital gains after utilization of capital loss
carryforwards, if any, in December. An additional distribution may be
made if necessary. Any dividends or capital gains distributions
declared in October, November or December with a record date in such a
month and paid the following January will be treated by shareholders for
federal income tax purposes as if received on December 31 of the calendar
year declared. According to preference, shareholders may receive
distributions in cash or have them reinvested in additional shares of the
Fund. If the investment is in the form of a retirement plan, all dividends
and capital gains distributions must be reinvested into the shareholder's
account.

Shareholders may be able to claim a credit or deduction on their income tax
returns for their pro rata portion of qualified taxes paid by the Fund to
foreign countries.

The Fund sends detailed tax information about the amount and type of its
distributions to its shareholders by January 31 of the following year.

Performance information

From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance
figures are historical, show the performance of a hypothetical investment
and are not intended to indicate future performance. "Total return" is the
change in value of an investment in the Fund for a specified period. The
"average annual total return" of the Fund is the average annual compound
rate of return of an investment in the Fund assuming the investment has
been held for one year, and the life of the Fund as of a stated ending
date. "Cumulative total return" represents the cumulative change in value
of an investment in the Fund for various periods. Total return calculations
assume that all dividends and capital gains distributions during the period
were reinvested in additional shares of the Fund. "Capital change" measures
return from capital, including reinvestment of any capital gains
distributions but does not include the reinvestment of dividends.
Performance will vary based upon, among other things, changes in market
conditions and the level of the Fund's expenses.

Fund organization

Scudder Pacific Opportunities Fund is a non-diversified series of Scudder
International Fund, Inc. (the "Corporation"), an open-end, management
investment company registered under the 1940 Act. The Corporation was
organized as a Maryland corporation in July 1975.

Investment adviser

The Fund pays the Adviser an annual fee of 1.10% of the Fund's average
daily net assets. The fee is payable monthly, provided that the Fund will
make such interim payments as may be requested by the Adviser not to exceed
75% of the amount of the fee then accrued on the books of the Fund and
unpaid. The fee is higher than that charged by many funds which invest
primarily in U.S. securities but not necessarily higher than the fees
charged to funds with investment objectives similar to that of the Fund.

All the Fund's expenses are paid out of gross investment income.
Shareholders pay no direct charges or fees for investment or administrative
services.

Scudder, Stevens & Clark, Inc., is located at 345 Park Avenue, New York,
New York.

(Continued on page 14)

Purchases

Opening an account

Minimum initial investment: $1,000; IRAs $500

Group retirement plans (401(k), 403(b), etc.) have similar or lower
minimums. See appropriate plan literature.

Make checks payable to "The Scudder Funds."

* By Mail

Send your completed and signed application and check

by regular mail to: or by express,
registered,
or certified mail to:

The Scudder Funds The Scudder Funds
P.O. Box 2291 1099 Hingham Street
Boston, MA Rockland, MA
02107-2291 02370-1052

* By Wire

Please see Transaction information-Purchasing shares-By wire following
these tables for details, including the ABA wire transfer number. Then
call 1-800-225-5163 for instructions.

* In Person

Visit one of our Funds Centers to complete your application with the
help of a Scudder representative. Funds Center locations are listed
under Shareholder benefits.

Purchasing additional shares

Minimum additional investment: $100; IRAs $50

Group retirement plans (401(k), 403(b), etc.) have similar or lower
minimums. See appropriate plan literature.

Make checks payable to "The Scudder Funds."

* By Mail

Send a check with a Scudder investment slip, or with a letter of
instruction including your account number and the complete Fund name,
to the appropriate address listed above.

* By Wire

Please see Transaction information-Purchasing shares-By wire following
these tables for details, including the ABA wire transfer number.

* In Person

Visit one of our Funds Centers to make an additional investment in
your Scudder fund account. Funds Center locations are listed under
Shareholder benefits.

* By Telephone

You may purchase additional shares in an amount of $10,000 or more.
Please call 1-800-225-5163 for more details.

* By Automatic Investment Plan ($50 minimum)

You may arrange to make investments on a regular basis through
automatic deductions from your bank checking account. Please call
1-800-225-5163 for more information and an enrollment form.

Exchanges and redemptions

Exchanging shares

Minimum investments: $1,000 to establish a new account; $100 to exchange
among existing accounts

* By Telephone

To speak with a service representative, call 1-800-225-5163 from 8
a.m. to 8 p.m. eastern time or to access SAIL(tm), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).

* By Mail or Fax

Print or type your instructions and include:

- the name of the Fund and the account number you are exchanging
from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to exchange;
- the name of the Fund you are exchanging into; and
- your signature(s) as it appears on your account and a daytime
telephone number.

Send your instructions

by regular mail to: or by express, or by fax to:
registered, or
certified mail to:

The Scudder Funds The Scudder Funds 1-800-821-6234
P.O. Box 2291 1099 Hingham Street
Boston, MA Rockland, MA
02107-2291 02370-1052

Redeeming shares

* By Telephone

* By Mail or Fax

Send your instructions for redemption to the appropriate address or
fax number above and include:

- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem; and
- your signature(s) as it appears on your account and a daytime
telephone number.

A signature guarantee is required for redemptions over $50,000. See
Transaction information-Redeeming shares following these tables.

* By Automatic Withdrawal Plan

You may arrange to receive automatic cash payments periodically if the
value of your account is $10,000 or more. Call 1-800-225-5163 for more
information and an enrollment form.

(Continued from page 11)

Transfer agent

Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts
02107-2291, a wholly-owned subsidiary of the Adviser, is the transfer,
shareholder servicing and dividend-paying agent for the Fund.

Underwriter

Transaction information

Purchasing shares

The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552

Your wire instructions must also include:

_ the name of the fund in which the money is to be invested,
_ the account number of the fund, and
_ the name(s) of the account holder(s).

The account will be established once the application and money order are
received in good order.

You may also make additional investments of $100 or more to your existing
account by wire.

By exchange. Your new account will have the same registration and address
as your existing account.

You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.

Redeeming shares

The Fund allows you to redeem shares (i.e., sell them back to the Fund)
without redemption fees.

By telephone. This is the quickest and easiest way to sell Fund shares. If
you elected telephone redemption to your bank on your application, you can
call to request that federal funds be sent to your authorized bank account.
If you did not elect telephone redemption to your bank on your application,
call 1-800-225-5163 for more information.

You can also make redemptions from your Scudder fund account on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.

In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.

Telephone transactions

Share price

Purchases and redemptions, including exchanges, are made at net asset
value. The Fund's custodian, Brown Brothers Harriman & Co., determines net
asset value per share as of the close of regular trading on the Exchange,
normally 4 p.m. eastern time, on each day the Exchange is open for trading.
Net asset value per share is calculated by dividing the value of total Fund
assets, less all liabilities, by the total number of shares outstanding.

Processing time

Purchase and redemption requests received after the close of regular
trading on the Exchange will be executed the following business day.

If you wish to make a purchase of $500,000 or more you should notify
Scudder Investor Relations by calling 1-800-225-5163.

Short-term trading

Tax information

A redemption of shares, including an exchange into another Scudder fund, is
a sale of shares and may result in a gain or loss for income tax purposes.

Tax identification number

Minimum balances

Third party transactions

Redemption-in-kind

Shareholder benefits

Experienced professional management

A team approach to investing

Scudder Pacific Opportunities Fund is managed by a team of Scudder
investment professionals who each play an important role in the Fund's
management process. Team members work together to develop investment
strategies and select securities for the Fund's portfolio. They are
supported by Scudder's large staff of economists, research analysts,
traders and other investment specialists who work in Scudder's offices
across the United States and abroad. Scudder believes its team approach
benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.

Lead Portfolio Manager Elizabeth J. Allan assumed responsibility for the
Fund's day-to-day management and investment strategies in February 1994.
Ms. Allan joined Scudder in 1987 as a member of the portfolio management
team of a Scudder closed-end mutual fund concentrating its investments in
Asia. Nicholas Bratt, Portfolio Manager, has been a member of the Fund's
team since 1992 and has over 20 years of experience in global investing.
Joyce E. Cornell, Portfolio Manager since 1993, has focused on stock
selection, a role she has played since the Fund's introduction in 1992. Ms.
Cornell, who has eight years of investment experience as a research
analyst, joined Scudder in 1991 in this capacity. Eileen O. Gerspach,
Portfolio Manager, helps set the Fund's general investment strategies. Ms.
Gerspach, who joined the team in March 1995, has worked in the investment
industry since 1984 and has eight years of experience as a portfolio
manager.

SAIL(tm)-Scudder Automated Information Line

Investment flexibility

Dividend reinvestment plan

You may have dividends and distributions automatically reinvested in
additional Fund shares. Please call 1-800-225-5163 to request this feature.

Shareholder statements

Shareholder reports

In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a
review of portfolio changes.

Newsletters

Four times a year, Scudder sends you At the Helm, an informative newsletter
covering economic and investment developments, service enhancements and
other topics of interest to Scudder fund investors.

Scudder Funds Centers

T.D.D. service for the hearing impaired

Scudder tax-advantaged retirement plans

* Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of $2,000 per person for anyone with earned income. Many
people can deduct all or part of their contributions from their taxable
income, and all investment earnings accrue on a tax deferred basis. The
Scudder No-Fee IRA charges no annual custodial fee.

* Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make annual,
tax-deductible contributions of up to $30,000 for each person covered by
the plans. Plans may be adopted individually or paired to maximize
contributions. These are sometimes known as Keogh plans.

* 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.

* SEP-IRAs. Easily administered retirement plans for small businesses
and self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation.

* Scudder Horizon Plan. A no-load variable annuity that lets you build
assets by deferring taxes on your investment earnings. You can start with
$2,500 or more.

Directors and Officers

Edmond D. Villani*
Chairman of the Board and Director

Nicholas Bratt*
President and Director

Paul Bancroft III
Director; Venture Capitalist and Consultant

Thomas J. Devine
Director; Consultant

William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.

William H. Luers
Director; President, The Metropolitan Museum of Art

Wilson Nolen
Director; Consultant

Juris Padegs*
Director, Vice President and Assistant Secretary

Daniel Pierce*
Director

Gordon Shillinglaw
Director; Professor Emeritus of Accounting, Columbia University
Graduate School of Business

Robert G. Stone, Jr.
Director; Chairman of the Board and Director, Kirby Corporation

Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business

Carol L. Franklin*
Vice President

Edmund B. Games, Jr.*
Vice President

Jerard K. Hartman*
Vice President

William E. Holzer*
Vice President

Thomas W. Joseph*
Vice President

William F. Truscott*
Vice President

Thomas F. McDonough*
Vice President and Secretary

Pamela A. McGrath*
Vice President and Treasurer

David S. Lee*
Vice President and Assistant Treasurer

Edward J. O'Connell*
Vice President and Assistant Treasurer

Kathryn L. Quirk*
Vice President and Assistant Secretary

Richard W. Desmond*
Assistant Secretary

Coleen Downs Dinneen*
Assistant Secretary

* Scudder, Stevens & Clark, Inc.

Investment products and services

The Scudder Family of Funds

Retirement Plans and Tax-Advantaged Investments
IRAs
Keogh Plans
Scudder Horizon Plan*+++ (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase Pension Plans

Institutional Cash Management
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(tm)++

How to contact Scudder

Account Service and Information:

For existing account service and transactions

Scudder Investor Relations
1-800-225-5163

For account updates, prices, yields, exchanges and redemptions

Scudder Automated Information Line (SAIL)
1-800-343-2890

Investment Information:

To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions

Scudder Investor Relations
1-800-225-2470

For establishing 401(k) and 403(b) plans

Scudder Defined Contribution Services
1-800-323-6105

Please address all correspondence to:

The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291

Or Stop by a Scudder Funds Center:

Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you-they can be
found in the following cities:

Boca Raton
Boston
Chicago
Cincinnati
Los Angeles
New York
Portland, OR
San Diego
San Francisco
Scottsdale

For information on Scudder Institutional Funds*, funds designed to meet the
broad investment management and service needs of banks and other
institutions, call: 1-800-854-8525.

Scudder Investor Relations and Scudder Funds Centers are services
provided through Scudder Investor Services, Inc., Distributor.

* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.

<PAGE>

SCUDDER LATIN AMERICA FUND

A Pure No-Load(tm) (No Sales Charges) Mutual Fund Seeking
Long-Term Capital Appreciation Through Investment
Primarily in the Securities of
Latin American Issuers

and

SCUDDER PACIFIC OPPORTUNITIES FUND

A Pure No-Load(tm) (No Sales Charges) Mutual Fund Seeking
Long-Term Growth of Capital Through Investment
Primarily in the Equity Securities of
Pacific Basin Companies,
Excluding Japan

STATEMENT OF ADDITIONAL INFORMATION

March 1, 1995

This combined Statement of Additional Information is not a prospectus and should
be read in conjunction with the prospectuses of Scudder Latin America Fund and
Scudder Pacific Opportunities Fund dated March 1, 1995, as amended from time to
time, a copy of which may be obtained without charge by writing to Scudder
Investor Services, Inc., Two International Place, Boston, Massachusetts
02110-4103.

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES 1
General Investment Objective and Policies of Scudder Latin 1
America Fund
Special Considerationd 3
General Investment Objective and Policies of Scudder Pacific 4
Opportunities Fund
Special Considerations 5
Investing in Foreign Securities 6
Specialized Investment Techniques 6
Investment Restrictions 18

PURCHASES 21
Additional Information About Opening An Account 21
Additional Information About Making Subsequent Investments 21
Checks 21
Wire Transfer of Federal Funds 22
Share Price 22
Share Certificates 22
Other Information 22

EXCHANGES AND REDEMPTIONS 22
Exchanges 22
Special Redemption and Exchange Information for Scudder 23
Latin America Fund
Redemption by Telephone 24
Redemption by Mail or Fax 25
Redemption-in-Kind 25
Other Information 25

FEATURES AND SERVICES OFFERED BY THE FUNDS 26
The Pure No-Load(tm) Concept 26
Distribution Plans 27
Scudder Funds Centers 27
Reports to Shareholders 27
Transaction Summaries 28

THE SCUDDER FAMILY OF FUNDS 28

SPECIAL PLAN ACCOUNTS 31
Scudder Retirement Plans: Profit-Sharing and Money Purchase 31
Pension Plans for Corporations and Self-Employed Individuals
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for 32
Corporations and Self-Employed Individuals
Scudder IRA: Individual Retirement Account 32
Scudder 403(b) Plan 33
Automatic Withdrawal Plan 33
Group or Salary Deduction Plan 33
Automatic Investment Plan 34
Uniform Transfers/Gifts to Minors Act 34
Scudder Trust Company 34

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS 34

PERFORMANCE INFORMATION 35
Average Annual Total Return 35
Cumulative Total Return 36
Total Return 36
Capital Change 36
Comparison of Fund Performance 36

ORGANIZATION OF THE FUNDS 41

INVESTMENT ADVISER 42
Personal Investments by Employees of the Adviser 45

DIRECTORS AND OFFICERS 45

REMUNERATION 48

DISTRIBUTOR 49

TAXES 50

PORTFOLIO TRANSACTIONS 54
Brokerage Commissions 54
Portfolio Turnover 55

NET ASSET VALUE 55

ADDITIONAL INFORMATION 56
Experts 56
Other Information 56

FINANCIAL STATEMENTS 57
Scudder Latin America Fund 57
Scudder Pacific Opportunities Fund 57

APPENDIX

</TABLE>

THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES

(See "Investment objective and policies" in the Funds' prospectuses.)

Scudder Latin America Fund and Scudder Pacific Opportunities Fund (each a
"Fund," collectively, the "Funds"), are each series of Scudder International
Fund, Inc. (the "Corporation"), a pure no-load(tm), non-diversified, open-end
management investment company which continuously offers and redeems its shares
at net asset value. They are companies of the type commonly known as mutual
funds.

General Investment Objective and Policies of Scudder Latin America Fund

Scudder Latin America Fund's ("Latin America Fund") investment objective is to
seek long-term capital appreciation through investment primarily in the
securities of Latin American issuers.

Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a shareholder vote. There can be no
assurance that the Fund will achieve its objective.

The Fund seeks to benefit from economic and political trends emerging throughout
Latin America. These trends are supported by governmental initiatives designed
to promote freer trade and market-oriented economies. The Fund's investment
adviser, Scudder, Stevens & Clark, Inc. (the "Adviser"), believes that efforts
by Latin American countries to, among other things, reduce government spending
and deficits, control inflation, lower trade barriers, stabilize currency
exchange rates, increase foreign and domestic investment, and privatize state-
owned companies, will set the stage for attractive investment returns over time.

At least 65% of the Fund's total assets will be invested in the securities of
Latin American issuers, and 50% of the Fund's total assets will be invested in
Latin American equity securities. To meet its objective to provide long-term
capital appreciation, the Fund normally invests 65% of its total assets in
equity securities. For purposes of this Statement of Additional Information,
Latin America is defined as Mexico, Central America, South America, and the
Spanish-speaking islands of the Caribbean. The Fund defines securities of Latin
American issuers as follows:

* Securities of companies organized under the laws of a Latin American
country or for which the principal securities trading market is in Latin
America;

* Securities issued or guaranteed by the government of a country in Latin
America, its agencies or instrumentalities, political subdivisions or the
central bank of such a country;

* Securities of companies, wherever organized, when at least 50% of an
issuer's non-current assets, capitalization, gross revenue or profit in any
one of the two most recent fiscal years represents (directly or indirectly
through subsidiaries) assets or activities located in Latin America; or,

* Securities of Latin American issuers, as defined herein, in the form of
depositary shares.

Although the Fund may participate in markets throughout Latin America, under
present conditions the Fund expects to focus its investments in Argentina,
Brazil, Chile, Mexico, and Venezuela. In the opinion of the Adviser, these five
countries offer the most developed capital markets in Latin America. The Fund
may invest in other countries in Latin America when the Adviser deems it
appropriate. The securities may be listed on securities exchanges, traded over-
the-counter, or have no organized market. The Fund's equity investments are
common stock, preferred stock (either convertible or non-convertible),
depositary receipts and warrants. These may be restricted securities and/or
securities purchased through rights.

The Fund may invest up to 35% of its total assets in the equity securities of
U.S. and other non-Latin American issuers. In evaluating non-Latin American
investments, the Adviser seeks investments where an issuer's Latin American
business activities and the impact of developments in Latin America may have a
positive effect on the issuer's business results. The Fund's assets may be
invested in debt securities when management anticipates that the potential for
capital appreciation is likely to equal or exceed that of equity securities.
Capital appreciation in debt securities may arise from a favorable change in
relative foreign exchange rates, in relative interest rate levels, or in the
creditworthiness of issuers. Receipt of income from such debt securities is
incidental to the Fund's objective of long-term capital appreciation. Most debt
securities in which the Fund will invest are not rated; when rated, it is
expected that such ratings will generally be below investment grade.

The Fund intends to spread its holdings of Latin American securities of private
issuers across a number of industries. In selecting companies for investment,
consideration will be given to industry trends, a company's financial position,
its competitive position in domestic and export markets, technology, recent
developments and profitability, together with overall growth prospects. Other
considerations generally include quality and depth of management, government
regulation, and availability and cost of labor and raw materials. In determining
the location of the principal activities and interests of a company, the Adviser
takes into account such factors as the location of the company's assets,
personnel, sales and earnings. In selecting securities for the Fund's
portfolio, the Adviser seeks to identify companies whose securities prices do
not adequately reflect their established positions in their fields. In
analyzing companies for investment, the Adviser ordinarily looks for one or more
of the following characteristics: above-average earnings growth per share, high
return on invested capital, healthy balance sheets and overall financial
strength, strong competitive advantages, strength of management and general
operating characteristics which will enable the companies to compete
successfully in the marketplace. Investment decisions are made without regard
to arbitrary criteria as to minimum asset size, debt-equity ratios or dividend
history of portfolio companies.

The percentage allocation between equity and debt, and among countries in Latin
America, will vary based on a number of factors: expected rates of economic and
corporate profit growth; past performance and current/comparative valuations in
Latin American capital markets; level and anticipated direction of interest
rates; changes or anticipated changes in Latin American government policy; and,
the condition of the balance of payments and changes in the terms of trade. The
Fund, in seeking undervalued markets or individual securities, will also
consider the effect of past economic crises or ongoing financial and political
uncertainties. The Fund may also invest, as part of its Latin American
holdings, in closed-end investment companies investing primarily in Latin
America. In addition, the Fund may engage in strategic transactions.

Under exceptional economic or market conditions abroad, the Fund may, for
temporary defensive purposes, until normal conditions return, invest all or a
major portion of its assets in Canadian or U.S. Government obligations or
currencies, or securities of companies incorporated in and having their
principal activities in such countries.

Foreign securities such as those purchased by the Fund may be subject to foreign
government taxes which could reduce the yield on such securities, although a
shareholder of the Fund may, subject to certain limitations, be entitled to
claim a credit or deduction for U.S. federal income tax purposes for his or her
proportionate share of such foreign taxes paid by the Fund. (See "TAXES.")

From time to time, the Fund may be a purchaser of restricted debt or equity
securities (i.e., securities which may require registration under the Securities
Act of 1933, or an exemption therefrom, in order to be sold in the ordinary
course of business) in a private placement. The Fund has undertaken not to
purchase or acquire any such securities if, solely as a result of such purchase
or acquisition, more than 5% of the value of the Fund's total assets would be
invested in restricted securities (securities subject to legal or contractual
restrictions on resales).

Special Considerations

Investing in Latin America. Investing in securities of Latin American issuers
may entail risks relating to the potential political and economic instability of
certain Latin American countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment and on repatriation of capital invested. In the event of
expropriation, nationalization or other confiscation by any country, the Fund
could lose its entire investment in any such country.

The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the U.S. Disclosure and regulatory standards are in many respects less
stringent than U.S. standards. Furthermore, there is a lower level of monitoring
and regulation of the markets and the activities of investors in such markets.

The limited size of many Latin American securities markets and limited trading
volume in the securities of Latin American issuers compared to volume of trading
in the securities of U.S. issuers could cause prices to be erratic for reasons
apart from factors that affect the soundness and competitiveness of the
securities issuers. For example, limited market size may cause prices to be
unduly influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on in-depth fundamental analysis,
may decrease the value and liquidity of portfolio securities.

The Fund invests in securities denominated in currencies of Latin American
countries. Accordingly, changes in the value of these currencies against the
U.S. dollar will result in corresponding changes in the U.S. dollar value of the
Fund's assets denominated in those currencies.

Some Latin American countries also may have managed currencies, which are not
free floating against the U.S. dollar. In addition, there is risk that certain
Latin American countries may restrict the free conversion of their currencies
into other currencies. Further, certain Latin American currencies may not be
internationally traded. Certain of these currencies have experienced a steep
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund's net asset value.

The economies of individual Latin American countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. Certain Latin American
countries have experienced high levels of inflation which can have a
debilitating effect on an economy. Furthermore, certain Latin American countries
may impose withholding taxes on dividends payable to the Fund at a higher rate
than those imposed by other foreign countries. This may reduce the Fund's
investment income available for distribution to shareholders.

Certain Latin American countries such as Argentina, Brazil and Mexico are among
the world's largest debtors to commercial banks and foreign governments. At
times, certain Latin American countries have declared moratoria on the payment
of principal and/or interest on outstanding debt. Investment in sovereign debt
can involve a high degree of risk. The governmental entity that controls the
repayment of sovereign debt may not be able or willing to repay the principal
and/or interest when due in accordance with the terms of such debt. A
governmental entity's willingness or ability to repay principal and interest due
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the governmental entity's policy
towards the International Monetary Fund, and the political constraints to which
a governmental entity may be subject. Governmental entities may also be
dependent on expected disbursements from foreign governments, multilateral
agencies and others abroad to reduce principal and interest arrearages on their
debt. The commitment on the part of these governments, agencies and others to
make such disbursements may be conditioned on a governmental entity's
implementation of economic reforms and/or economic performance and the timely
service of such debtor's obligations. Failure to implement such reforms, achieve
such levels of economic performance or repay principal or interest when due may
result in the cancellation of such third parties' commitments to lend funds to
the governmental entity, which may further impair such debtor's ability or
willingness to service its debts in a timely manner. Consequently, governmental
entities may default on their sovereign debt.

Holders of sovereign debt, including the Fund, may be requested to participate
in the rescheduling of such debt and to extend further loans to governmental
entities. There is no bankruptcy proceeding by which defaulted sovereign debt
may be collected in whole or in part.

Latin America is a region rich in natural resources such as oil, copper, tin,
silver, iron ore, forestry, fishing, livestock and agriculture. The region has
a large population (roughly 300 million) representing a large domestic market.
Economic growth was strong in the 1960's and 1970's, but slowed dramatically
(and in some instances was negative) in the 1980's as a result of poor economic
policies, higher international interest rates, and the denial of access to new
foreign capital. Although a number of Latin American countries are currently
experiencing lower rates of inflation and higher rates of real growth in gross
domestic product than they have in the past, other Latin American countries
continue to experience significant problems, including high inflation rates and
high interest rates. Capital flight has proven a persistent problem and
external debt has been forcibly rescheduled. Political turmoil, high inflation,
capital repatriation restrictions, and nationalization have further exacerbated
conditions.

Governments of many Latin American countries have exercised and continue to
exercise substantial influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in
those countries. As a result, government actions in the future could have a
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. Expropriation, confiscatory taxation,
nationalization, political, economic or social instability or other similar
developments, such as military coups, have occurred in the past and could also
adversely affect the Fund's investments in this region.

Changes in political leadership, the implementation of market oriented economic
policies, such as the North American Free Trade Agreement ("NAFTA"),
privatization, trade reform and fiscal and monetary reform are among the recent
steps taken to renew economic growth. External debt is being restructured and
flight capital (domestic capital that has left home country) has begun to
return. Inflation control efforts have also been implemented. Latin American
equity markets can be extremely volatile and in the past have shown little
correlation with the U.S. market. Currencies are typically weak, but most are
now relatively free floating, and it is not unusual for the currencies to
undergo wide fluctuations in value over short periods of time due to changes in
the market.

The Fund is intended to provide individual and institutional investors with an
opportunity to invest a portion of their assets in a broad range of securities
of Latin American issuers. Management of the Fund believes that allocation of
assets on an international basis decreases the degree to which events in any one
country, including the United States, will affect an investor's entire
investment holdings. In certain periods since World War II, many leading
foreign economies and foreign stock market indices have grown more rapidly than
the United States economy and leading U.S. stock market indices, although there
can be no assurance that this will be true in the future. Because of the Fund's
investment policy, it is not intended to provide a complete investment program
for an investor.

General Investment Objective and Policies of Scudder Pacific Opportunities Fund

Scudder Pacific Opportunities Fund's ("Pacific Opportunities Fund") investment
objective is to seek long-term growth of capital through investment primarily in
the equity securities of Pacific Basin companies, excluding Japan.

The Fund invests, under normal market conditions, at least 65% of its assets in
the equity securities of Pacific Basin companies. Pacific Basin countries
include Australia, The Peoples Republic of China, India, Indonesia, Malaysia,
New Zealand, the Philippines, Sri Lanka, Pakistan and Thailand, as well as Hong
Kong, Singapore, South Korea and Taiwan - the so-called "four tigers." The Fund
may invest in other countries of the Pacific Basin when their markets become
sufficiently developed. The Fund will not, however, invest in Japanese
securities. The Fund has no current intention of investing more than 5% of its
assets in the equity securities of The Peoples Republic of China. The Fund
intends to allocate investments among at least three countries at all times, and
does not expect to concentrate investments in any particular industry.

The Fund will invest in securities that may be listed on securities exchanges,
traded over-the-counter, or have no organized market. The Fund's equity
investments are common stock, preferred stock (either convertible or non-
convertible), depositary receipts and warrants. These may be restricted
securities. Equity securities may also be purchased through rights.

Under normal market conditions, the Fund may invest up to 35% of its assets in
the equity securities of U.S. and other non-Pacific Basin issuers (excluding
Japan). In evaluating non-Pacific Basin investments, the Adviser seeks
investments where an issuer's Pacific Basin business activities and the impact
of developments in the Pacific Basin may have a positive effect on the issuer's
business results. The Fund may also purchase debt securities for capital
appreciation, invest in closed-end investment companies, and may engage in
strategic transactions. For temporary defensive purposes and to maintain
liquidity, the Fund may hold without limit debt instruments as well as cash and
cash equivalents, including foreign and domestic money market instruments,
short-term government and corporate obligations and repurchase agreements.

Special Considerations

Investing in the Pacific Basin. Economies of individual Pacific Basin countries
may differ favorably or unfavorably from the U.S. economy in such respects as
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency, interest rate levels, and balance of payments
position. Of particular importance, most of the economies in this region of the
world are heavily dependent upon exports, particularly to developed countries,
and, accordingly, have been and may continue to be adversely affected by trade
barriers, managed adjustments in relative currency values, and other
protectionist measures imposed or negotiated by the U.S. and other countries
with which they trade. These economies also have been and may continue to be
negatively impacted by economic conditions in the U.S. and other trading
partners, which can lower the demand for goods produced in the Pacific Basin.

With respect to the Peoples Republic of China and other markets in which the
Fund may participate, there is the possibility of nationalization, expropriation
or confiscatory taxation, political changes, government regulation, social
instability or diplomatic developments that could adversely impact a Pacific
Basin country or the Fund's investment in that country.

Trading volume on Pacific Basin stock exchanges outside of Japan, although
increasing, is substantially less than in the U.S. stock market. Further,
securities of some Pacific Basin companies are less liquid and more volatile
than securities of comparable U.S. companies. Fixed commissions on Pacific
Basin stock exchanges are generally higher than negotiated commissions on U.S.
exchanges, although the Fund endeavors to achieve the most favorable net results
on its portfolio transactions and may be able to purchase securities in which
the Fund may invest on other stock exchanges where commissions are negotiable.

Foreign companies, including Pacific Basin companies, are not generally subject
to uniform accounting, auditing and financial reporting standards, practices and
disclosure requirements comparable to those applicable to U.S. companies.
Consequently, there may be less publicly available information about such
companies than about U.S. companies. Moreover, there is generally less
government supervision and regulation of Pacific Basin stock exchanges, brokers,
and listed companies than in the U.S.

Investing in Foreign Securities

Investors should recognize that investing in foreign securities involves certain
special considerations, including those set forth below, which are not typically
associated with investing in United States securities and which may favorably or
unfavorably affect the Funds' performance. As foreign companies are not
generally subject to uniform accounting and auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
companies, there may be less publicly available information about a foreign
company than about a domestic company. Many foreign stock markets, while
growing in volume of trading activity, have substantially less volume than the
New York Stock Exchange (the "Exchange"), and securities of some foreign
companies are less liquid and more volatile than securities of domestic
companies. Similarly, volume and liquidity in most foreign bond markets are
less than the volume and liquidity in the United States and at times, volatility
of price can be greater than in the United States. Further, foreign markets
have different clearance and settlement procedures and in certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions making it difficult to conduct such transactions.
Delays in settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause that Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems either could result in losses to a Fund
due to subsequent declines in value of the portfolio security or, if a Fund has
entered into a contract to sell the security, could result in possible liability
to the purchaser. Payment for securities without delivery may be required in
certain foreign markets. Fixed commissions on some foreign stock exchanges are
generally higher than negotiated commissions on U.S. exchanges, although the
Funds will endeavor to achieve the most favorable net results on their portfolio
transactions. Further, a Fund may encounter difficulties or be unable to pursue
legal remedies and obtain judgments in foreign courts. There is generally less
government supervision and regulation of business and industry practices, stock
exchanges, brokers and listed companies than in the United States. It may be
more difficult for the Funds' agents to keep currently informed about corporate
actions such as stock dividends or other matters which may affect the prices of
portfolio securities. Communications between the United States and foreign
countries may be less reliable than within the United States, thus increasing
the risk of delayed settlements of portfolio transactions or loss of
certificates for portfolio securities. In addition, with respect to certain
foreign countries, there is the possibility of nationalization, expropriation,
the imposition of withholding or confiscatory taxes, political, social, or
economic instability, or diplomatic developments which could affect United
States investments in those countries. Investments in foreign securities may
also entail certain risks, such as possible currency blockages or transfer
restrictions, and the difficulty of enforcing rights in other countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the United States economy in such respects as growth of gross national product,
rate of inflation, capital reinvestment, resource self-sufficiency and balance
of payments position.

These considerations generally are more of a concern in developing countries.
For example, the possibility of revolution and the dependence on foreign
economic assistance may be greater in these countries than in developed
countries. The management of each Fund seeks to mitigate the risks associated
with these considerations through diversification and active professional
management. Although investments in companies domiciled in developing countries
may be subject to potentially greater risks than investments in developed
countries, neither Fund will invest in any securities of issuers located in
developing countries if the securities, in the judgment of the Adviser, are
speculative.

Specialized Investment Techniques

Foreign Currencies. Because investments in foreign securities usually will
involve currencies of foreign countries, and because each Fund may hold foreign
currencies and forward contracts, futures contracts and options on futures
contracts on foreign currencies, the value of the assets of a Fund as measured
in U.S. dollars may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations, and a Fund may incur
costs in connection with conversions between various currencies. In particular,
many Latin American currencies have experienced significant devaluation relative
to the dollar. Although each Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign currencies into
U.S. dollars on a daily basis. It will do so from time to time, and investors
should be aware of the costs of currency conversion. Although foreign exchange
dealers do not charge a fee for conversion, they do realize a profit based on
the difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to a Fund at one rate, while offering a lesser rate of exchange should that Fund
desire to resell that currency to the dealer. Each Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
entering into forward or futures contracts to purchase or sell foreign
currencies.

Depositary Receipts. Each Fund may invest indirectly in securities of emerging
country issuers through sponsored or unsponsored American Depositary Receipts
("ADRs"), Global Depositary Receipts ("GDRs"), International Depositary Receipts
("IDRs") and other types of Depositary Receipts (which, together with ADRs, GDRs
and IDRs are hereinafter referred to as "Depositary Receipts"). Depositary
Receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. In addition, the
issuers of the stock of unsponsored Depositary Receipts are not obligated to
disclose material information in the United States and, therefore, there may not
be a correlation between such information and the market value of the Depositary
Receipts. ADRs are Depositary Receipts typically issued by a U.S. bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation. GDRs, IDRs and other types of Depositary Receipts are typically
issued by foreign banks or trust companies, although they also may be issued by
United States banks or trust companies, and evidence ownership of underlying
securities issued by either a foreign or a United States corporation.
Generally, Depositary Receipts in registered form are designed for use in the
United States securities markets and Depositary Receipts in bearer form are
designed for use in securities markets outside the United States. For purposes
of each Fund's investment policies, a Fund's investments in ADRs, GDRs and other
types of Depositary Receipts will be deemed to be investments in the underlying
securities. Depositary Receipts other than those denominated in U.S. dollars
will be subject to foreign currency exchange rate risk. Certain Depositary
Receipts may not be listed on an exchange and therefore may be illiquid
securities.

Loan Participations and Assignments. Latin America Fund may invest in fixed and
floating rate loans ("Loans") arranged through private negotiations between an
issuer of emerging market debt instruments and one or more financial
institutions ("Lenders"). The Fund's investments in Loans in Latin America are
expected in most instances to be in the form of participations in Loans
("Participations") and assignments of portions of Loans ("Assignments") from
third parties. Participations typically will result in the Fund having a
contractual relationship only with the Lender and not with the borrower. The
Fund will have the right to receive payments of principal, interest and any fees
to which it is entitled only from the Lender selling the Participation and only
upon receipt by the Lender of the payments from the borrower. In connection with
purchasing Participations, the Fund generally will have no right to enforce
compliance by the borrower with the terms of the loan agreement relating to the
Loan, nor any rights of set-off against the borrower, and the Fund may not
directly benefit from any collateral supporting the Loan in which it has
purchased the Participation. As a result, the Fund will assume the credit risk
of both the borrower and the Lender that is selling the Participation. In the
event of the insolvency of the Lender selling a Participation, the Fund may be
treated as a general creditor of the Lender and may not benefit from any set-off
between the Lender and the borrower. The Fund will acquire Participations only
if the Lender interpositioned between the Fund and the borrower is determined by
the Investment Manager to be creditworthy.

When the Fund purchases Assignments from Lenders, the Fund will acquire direct
rights against the borrower on the Loan. Because Assignments are arranged
through private negotiations between potential assignees and potential
assignors, however, the rights and obligations acquired by the Fund as the
purchaser of an Assignment may differ from, and may be more limited than, those
held by the assigning Lender.

The Fund may have difficulty disposing of Assignments and Participations.
Because no liquid market for these obligations typically exists, the Fund
anticipates that these obligations could be sold only to a limited number of
institutional investors. The lack of a liquid secondary market will have an
adverse effect on the Fund's ability to dispose of particular Assignments or
Participations when necessary to meet the Fund's liquidity needs or in response
to a specific economic event, such as a deterioration in the creditworthiness of
the borrower. The lack of a liquid secondary market for Assignments and
Participations may also make it more difficult for the Fund to assign a value to
those securities for purposes of valuing the Fund's portfolio and calculating
its net asset value.

Debt Securities. When the Adviser believes that it is appropriate to do so in
order to achieve each Fund's objective of long-term capital appreciation, a Fund
may invest in debt securities including bonds of foreign governments,
supranational organizations and private issuers. Portfolio debt investments
will be selected on the basis of, among other things, credit quality, and the
fundamental outlooks for currency, economic and interest rate trends, taking
into account the ability to hedge a degree of currency or local bond price risk.
Each Fund may purchase "investment-grade" bonds, which are those rated Aaa, Aa
or A by Moody's Investors Service, Inc. ("Moody's") or AAA, AA or A by Standard
& Poor's ("S&P") or, if unrated, judged to be of equivalent quality as
determined by the Adviser. Latin America Fund may also purchase bonds rated Baa
by Moody's or BBB by S&P. Bonds rated Baa or BBB may have speculative elements
as well as investment-grade characteristics.

Latin America Fund may also purchase debt securities which are rated below
investment-grade, that is, rated below Baa by Moody's or below BBB by S&P and
unrated securities ("high yield/high risk securities"), which usually entail
greater risk (including the possibility of default or bankruptcy of the issues
of such securities), generally involve greater volatility of price and risk of
principal and income, and may be less liquid, than securities in the higher
rating categories. The lower the ratings of such debt securities, the greater
their risks render them like equity securities. The Fund will invest no more
than 10% of its total assets in securities rated B or lower by Moody's or S&P,
but may invest in securities which are rated C by Moody's or D by S&P or
securities of comparable quality in the Adviser's judgment. Such securities may
be in default with respect to payment of principal or interest. Such securities
carry a high degree of risk and are considered speculative. See the Appendix to
this Statement of Additional Information for a more complete description of the
ratings assigned by ratings organizations and their respective characteristics.

Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. Trading in debt obligations ("sovereign debt")
issued or guaranteed by Latin American governments or their agencies or
instrumentalities ("governmental entities") involves a high degree of risk. The
governmental entity that controls the repayment of sovereign debt may not be
willing or able to repay the principal and/or interest when due in accordance
with the terms of such obligations. A governmental entity's willingness or
ability to repay principal and interest due in a timely manner may be affected
by, among other factors, its cash flow situation, dependence on expected
disbursements from third parties, the governmental entity's policy towards the
International Monetary Fund and the political constraints to which a
governmental entity may be subject. As a result, governmental entities may
default on their sovereign debt. Holders of sovereign debt (including Latin
America Fund) may be requested to participate in the rescheduling of such debt
and to extend further loans to governmental entities. There is no bankruptcy
proceeding by which sovereign debt on which governmental entities have defaulted
may be collected in whole or in part.

High-yield, high-risk securities are especially subject to adverse changes in
general economic conditions, to changes in the financial condition of their
issuers and to price fluctuations in response to changes in interest rates.
During an economic downturn or period of rising interest rates, highly leveraged
issues may experience financial stress which would adversely affect their
ability to service their principal and interest payment obligations. Prices and
yields of high yield securities will fluctuate over time and, especially during
periods of economic uncertainty, volatility of high yield securities may
adversely affect Latin America Fund's net asset value. In addition, investments
in high yield zero coupon or pay-in-kind bonds, rather than income-bearing high
yield securities, may be more speculative and may be subject to greater
fluctuations in value due to changes in interest rates.

The trading market for high yield securities may be thin to the extent that
there is no established retail secondary market. A thin trading market may
limit the ability of the Fund to accurately value high yield securities in its
portfolio and to dispose of those securities. Adverse publicity and investor
perceptions may decrease the values and liquidity of high yield securities.
These securities may also involve special registration responsibilities,
liabilities, costs and liquidity and valuation difficulties.

Credit quality in the high-yield securities market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it
is the policy of the Adviser not to rely exclusively on ratings issued by
established credit rating agencies, but to supplement such ratings with its own
independent and on-going review of credit quality. The achievement of Latin
America Fund's investment objective by investment in such securities may be more
dependent on the Adviser's credit analysis than is the case for higher quality
bonds. Should the rating of a portfolio security be downgraded, the Adviser
will determine whether it is in the best interest of Latin America Fund to
retain or dispose of such security. For information concerning tax issues
related to high yield/high risk securities, see "TAXES."

Strategic Transactions and Derivatives. The Funds may, but are not required to,
utilize various other investment strategies as described below to hedge various
market risks (such as interest rates, currency exchange rates, and broad or
specific equity or fixed-income market movements), to manage the effective
maturity or duration of the fixed-income securities in each Fund's portfolio, or
to enhance potential gain. These strategies may be executed through the use of
derivative contracts. Such strategies are generally accepted as a part of modern
portfolio management and are regularly utilized by many mutual funds and other
institutional investors. Techniques and instruments may change over time as new
instruments and strategies are developed or regulatory changes occur.

In the course of pursuing these investment strategies, the Funds may purchase
and sell exchange-listed and over-the-counter put and call options on
securities, equity and fixed-income indices and other financial instruments,
purchase and sell financial futures contracts and options thereon, enter into
various interest rate transactions such as swaps, caps, floors or collars, and
enter into various currency transactions such as currency forward contracts,
currency futures contracts, currency swaps or options on currencies or currency
futures (collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for each Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect a Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of the fixed-income
securities in each Fund's portfolio, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance
potential gain although no more than 5% of a Fund's assets will be committed to
Strategic Transactions entered into for non-hedging purposes. Any or all of
these investment techniques may be used at any time and in any combination, and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Funds to utilize
these Strategic Transactions successfully will depend on the Adviser's ability
to predict pertinent market movements, which cannot be assured. The Funds will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. Strategic Transactions involving
financial futures and options thereon will be purchased, sold or entered into
only for bona fide hedging, risk management or portfolio management purposes and
not for speculative purposes.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Adviser's view as to certain market movements
is incorrect, the risk that the use of such Strategic Transactions could result
in losses greater than if they had not been used. Use of put and call options
may result in losses to a Fund, force the sale or purchase of portfolio
securities at inopportune times or for prices higher than (in the case of put
options) or lower than (in the case of call options) current market values,
limit the amount of appreciation a Fund can realize on its investments or cause
a Fund to hold a security it might otherwise sell. The use of currency
transactions can result in a Fund incurring losses as a result of a number of
factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of a Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
a Fund might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures
contracts would create a greater ongoing potential financial risk than would
purchases of options, where the exposure is limited to the cost of the initial
premium. Losses resulting from the use of Strategic Transactions would reduce
net asset value, and possibly income, and such losses can be greater than if the
Strategic Transactions had not been utilized.

General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of Fund assets in special accounts, as described
below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, a Fund's purchase of a put option on a security might be designed to
protect its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the Fund
the right to sell such instrument at the option exercise price. A call option,
upon payment of a premium, gives the purchaser of the option the right to buy,
and the seller the obligation to sell, the underlying instrument at the exercise
price. The Fund's purchase of a call option on a security, financial future,
index, currency or other instrument might be intended to protect the Fund
against an increase in the price of the underlying instrument that it intends to
purchase in the future by fixing the price at which it may purchase such
instrument. An American style put or call option may be exercised at any time
during the option period while a European style put or call option may be
exercised only upon expiration or during a fixed period prior thereto. The
Funds are authorized to purchase and sell exchange listed options and
over-the-counter options ("OTC options"). Exchange listed options are issued by
a regulated intermediary such as the Options Clearing Corporation ("OCC"), which
guarantees the performance of the obligations of the parties to such options.
The discussion below uses the OCC as an example, but is also applicable to other
financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options and Eurodollar
instruments are cash settled for the net amount, if any, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

Each Fund's ability to close out its position as a purchaser or seller of an OCC
or exchange listed put or call option is dependent, in part, upon the liquidity
of the option market. Among the possible reasons for the absence of a liquid
option market on an exchange are: (i) insufficient trading interest in certain
options; (ii) restrictions on transactions imposed by an exchange; (iii) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities including reaching daily
price limits; (iv) interruption of the normal operations of the OCC or an
exchange; (v) inadequacy of the facilities of an exchange or OCC to handle
current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. A Fund
will only sell OTC options (other than OTC currency options) that are subject to
a buy-back provision permitting the Fund to require the Counterparty to sell the
option back to the Fund at a formula price within seven days. The Funds expect
generally to enter into OTC options that have cash settlement provisions,
although they are not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with a Fund or fails to make a cash settlement
payment due in accordance with the terms of that option, a Fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Adviser must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. The Funds will engage in OTC option transactions only with U.S.
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers" or broker/dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-term credit rating of A-1 from S&P or P-1 from
Moody's or an equivalent rating from any nationally recognized statistical
rating organization ("NRSRO") or are determined to be of equivalent credit
quality by the Adviser. The staff of the Securities and Exchange Commission
(the "SEC") currently takes the position that OTC options purchased by a Fund,
and portfolio securities "covering" the amount of a Fund's obligation pursuant
to an OTC option sold by it (the cost of the sell-back plus the in-the-money
amount, if any) are illiquid, and are subject to a Fund's limitation on
investing no more than 10% of its assets in illiquid securities.

If a Fund sells a call option, the premium that it receives may serve as a
partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase a Fund's income. The sale of put options can also provide income.

Each Fund may purchase and sell call options on securities including U.S.
Treasury and agency securities, mortgage-backed securities, corporate debt
securities, equity securities (including convertible securities) and Eurodollar
instruments that are traded on U.S. and foreign securities exchanges and in the
over-the-counter markets, and on securities indices, currencies and futures
contracts. All calls sold by a Fund must be "covered" (i.e., a Fund must own
the securities or futures contract subject to the call) or must meet the asset
segregation requirements described below as long as the call is outstanding.
Even though a Fund will receive the option premium to help protect it against
loss, a call sold by a Fund exposes that Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying security or instrument and may require a Fund to hold a security or
instrument which it might otherwise have sold.

Each Fund may purchase and sell put options on securities including U.S.
Treasury and agency securities, mortgage-backed securities, foreign sovereign
debt, corporate debt securities, equity securities (including convertible
securities) and Eurodollar instruments (whether or not it holds the above
securities in its portfolio), and on securities indices, currencies and futures
contracts other than futures on individual corporate debt and individual equity
securities. Each Fund will not sell put options if, as a result, more than 50%
of a Fund's assets would be required to be segregated to cover its potential
obligations under such put options other than those with respect to futures and
options thereon. In selling put options, there is a risk that a Fund may be
required to buy the underlying security at a disadvantageous price above the
market price.

General Characteristics of Futures. Each Fund may enter into financial futures
contracts or purchase or sell put and call options on such futures as a hedge
against anticipated interest rate, currency or equity market changes, for
duration management and for risk management purposes. Futures are generally
bought and sold on the commodities exchanges where they are listed with payment
of initial and variation margin as described below. The sale of a futures
contract creates a firm obligation by a Fund, as seller, to deliver to the buyer
the specific type of financial instrument called for in the contract at a
specific future time for a specified price (or, with respect to index futures
and Eurodollar instruments, the net cash amount). Options on futures contracts
are similar to options on securities except that an option on a futures contract
gives the purchaser the right in return for the premium paid to assume a
position in a futures contract and obligates the seller to deliver such
position.

Each Fund's use of financial futures and options thereon will in all cases be
consistent with applicable regulatory requirements and in particular the rules
and regulations of the Commodity Futures Trading Commission and will be entered
into only for bona fide hedging, risk management (including duration management)
or other portfolio management purposes. Typically, maintaining a futures
contract or selling an option thereon requires the Fund to deposit with a
financial intermediary as security for its obligations an amount of cash or
other specified assets (initial margin) which initially is typically 1% to 10%
of the face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of a Fund. If
a Fund exercises an option on a futures contract it will be obligated to post
initial margin (and potential subsequent variation margin) for the resulting
futures position just as it would for any position. Futures contracts and
options thereon are generally settled by entering into an offsetting transaction
but there can be no assurance that the position can be offset prior to
settlement at an advantageous price, nor that delivery will occur.

Each Fund will not enter into a futures contract or related option (except for
closing transactions) if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open futures contracts and options thereon would
exceed 5% of a Fund's total assets (taken at current value); however, in the
case of an option that is in-the-money at the time of the purchase, the
in-the-money amount may be excluded in calculating the 5% limitation. The
segregation requirements with respect to futures contracts and options thereon
are described below.

Options on Securities Indices and Other Financial Indices. Each Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Currency Transactions. Each Fund may engage in currency transactions with
Counterparties in order to hedge the value of portfolio holdings denominated in
particular currencies against fluctuations in relative value. Currency
transactions include forward currency contracts, exchange listed currency
futures, exchange listed and OTC options on currencies, and currency swaps. A
forward currency contract involves a privately negotiated obligation to purchase
or sell (with delivery generally required) a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. A currency swap is
an agreement to exchange cash flows based on the notional difference among two
or more currencies and operates similarly to an interest rate swap, which is
described below. Each Fund may enter into currency transactions with
Counterparties which have received (or the guarantors of the obligations which
have received) a credit rating of A-1 or P-1 by S&P or Moody's, respectively, or
that have an equivalent rating from a NRSRO or (except for OTC currency options)
are determined to be of equivalent credit quality by the Adviser.

Each Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of a Fund, which will generally arise
in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.

Each Fund will not enter into a transaction to hedge currency exposure to an
extent greater, after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.

Each Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which a Fund has or in which a Fund expects to
have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Funds may also engage in proxy
hedging. Proxy hedging is often used when the currency to which a Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of a Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of a Fund's securities
denominated in correlated currencies. For example, if the Adviser considers
that the Austrian schilling is correlated to the German deutschemark (the
"D-mark"), the Fund holds securities denominated in schillings and the Adviser
believes that the value of schillings will decline against the U.S. dollar, the
Adviser may enter into a commitment or option to sell D-marks and buy dollars.
Currency hedging involves some of the same risks and considerations as other
transactions with similar instruments. Currency transactions can result in
losses to a Fund if the currency being hedged fluctuates in value to a degree or
in a direction that is not anticipated. Further, there is the risk that the
perceived correlation between various currencies may not be present or may not
be present during the particular time that a Fund is engaging in proxy hedging.
If a Fund enters into a currency hedging transaction, that Fund will comply with
the asset segregation requirements described below.

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to the Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Combined Transactions. Each Fund may enter into multiple transactions,
including multiple options transactions, multiple futures transactions, multiple
currency transactions (including forward currency contracts) and multiple
interest rate transactions and any combination of futures, options, currency and
interest rate transactions ("component" transactions), instead of a single
Strategic Transaction, as part of a single or combined strategy when, in the
opinion of the Adviser, it is in the best interests of a Fund to do so. A
combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Adviser's judgment that the combined strategies will
reduce risk or otherwise more effectively achieve the desired portfolio
management goal, it is possible that the combination will instead increase such
risks or hinder achievement of the portfolio management objective.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which
the Funds may enter are interest rate, currency and index swaps and the purchase
or sale of related caps, floors and collars. The Funds expect to enter into
these transactions primarily to preserve a return or spread on a particular
investment or portion of their portfolios, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Funds anticipate purchasing at a later
date. The Funds intend to use these transactions as hedges and not as
speculative investments and will not sell interest rate caps or floors where
they do not own securities or other instruments providing the income stream the
Funds may be obligated to pay. Interest rate swaps involve the exchange by a
Fund with another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating rate payments for fixed rate payments
with respect to a notional amount of principal. A currency swap is an agreement
to exchange cash flows on a notional amount of two or more currencies based on
the relative value differential among them and an index swap is an agreement to
swap cash flows on a notional amount based on changes in the values of the
reference indices. The purchase of a cap entitles the purchaser to receive
payments on a notional principal amount from the party selling such cap to the
extent that a specified index exceeds a predetermined interest rate or amount.
The purchase of a floor entitles the purchaser to receive payments on a notional
principal amount from the party selling such floor to the extent that a
specified index falls below a predetermined interest rate or amount. A collar
is a combination of a cap and a floor that preserves a certain return within a
predetermined range of interest rates or values.

Each Fund will usually enter into swaps on a net basis, i.e., the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with a Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, the Adviser
and the Funds believe such obligations do not constitute senior securities under
the Investment Company Act of 1940 (the "1940 Act") and, accordingly, will not
treat them as being subject to its borrowing restrictions. Each Fund will not
enter into any swap, cap, floor or collar transaction unless, at the time of
entering into such transaction, the unsecured long-term debt of the
Counterparty, combined with any credit enhancements, is rated at least A by S&P
or Moody's or has an equivalent rating from a NRSRO or is determined to be of
equivalent credit quality by the Adviser. If there is a default by the
Counterparty, the Fund may have contractual remedies pursuant to the agreements
related to the transaction. The swap market has grown substantially in recent
years with a large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized swap documentation. As a
result, the swap market has become relatively liquid. Caps, floors and collars
are more recent innovations for which standardized documentation has not yet
been fully developed and, accordingly, they are less liquid than swaps.

Eurodollar Instruments. Each Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. Each Fund might use Eurodollar futures contracts and options
thereon to hedge against changes in LIBOR, to which many interest rate swaps and
fixed income instruments are linked.

Risks of Strategic Transactions Outside the U.S. When conducted outside the
U.S., Strategic Transactions may not be regulated as rigorously as in the U.S.,
may not involve a clearing mechanism and related guarantees, and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the U.S. of data on which to
make trading decisions, (iii) delays in a Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the U.S., (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the U.S., and (v) lower trading volume and
liquidity.

Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that the Funds segregate liquid high
grade assets with their custodian, Brown Brothers Harriman & Company (the
"Custodian") to the extent Fund obligations are not otherwise "covered" through
ownership of the underlying security, financial instrument or currency. In
general, either the full amount of any obligation by a Fund to pay or deliver
securities or assets must be covered at all times by the securities, instruments
or currency required to be delivered, or, subject to any regulatory
restrictions, an amount of cash or liquid high grade securities at least equal
to the current amount of the obligation must be segregated with the custodian.
The segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. For
example, a call option written by a Fund will require that Fund to hold the
securities subject to the call (or securities convertible into the needed
securities without additional consideration) or to segregate liquid high-grade
securities sufficient to purchase and deliver the securities if the call is
exercised. A call option sold by a Fund on an index will require that Fund to
own portfolio securities which correlate with the index or to segregate liquid
high grade assets equal to the excess of the index value over the exercise price
on a current basis. A put option written by a Fund requires that Fund to
segregate liquid high grade assets equal to the exercise price.

Except when a Fund enters into a forward contract for the purchase or sale of a
security denominated in a particular currency, which requires no segregation, a
currency contract which obligates a Fund to buy or sell currency will generally
require a Fund to hold an amount of that currency or liquid securities
denominated in that currency equal to a Fund's obligations or to segregate
liquid high grade assets equal to the amount of a Fund's obligation.

OTC options entered into by a Fund, including those on securities, currency,
financial instruments or indices and OCC issued and exchange listed index
options, will generally provide for cash settlement. As a result, when a Fund
sells these instruments it will only segregate an amount of assets equal to its
accrued net obligations, as there is no requirement for payment or delivery of
amounts in excess of the net amount. These amounts will equal 100% of the
exercise price in the case of a non cash-settled put, the same as an OCC
guaranteed listed option sold by a Fund, or the in-the-money amount plus any
sell-back formula amount in the case of a cash-settled put or call. In
addition, when a Fund sells a call option on an index at a time when the
in-the-money amount exceeds the exercise price, a Fund will segregate, until the
option expires or is closed out, cash or cash equivalents equal in value to such
excess. OCC issued and exchange listed options sold by a Fund other than those
above generally settle with physical delivery, and a Fund will segregate an
amount of assets equal to the full value of the option. OTC options settling
with physical delivery, or with an election of either physical delivery or cash
settlement will be treated the same as other options settling with physical
delivery.

In the case of a futures contract or an option thereon, each Fund must deposit
initial margin and possible daily variation margin in addition to segregating
assets sufficient to meet its obligation to purchase or provide securities or
currencies, or to pay the amount owed at the expiration of an index-based
futures contract. Such assets may consist of cash, cash equivalents, liquid
debt or equity securities or other acceptable assets.

With respect to swaps, a Fund will accrue the net amount of the excess, if any,
of its obligations over its entitlements with respect to each swap on a daily
basis and will segregate an amount of cash or liquid high grade securities
having a value equal to the accrued excess. Caps, floors and collars require
segregation of assets with a value equal to the Fund's net obligation, if any.

Strategic Transactions may be covered by other means when consistent with
applicable regulatory policies. Each Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, a Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by that Fund. Moreover, instead of segregating assets if a Fund held a
futures or forward contract, it could purchase a put option on the same futures
or forward contract with a strike price as high or higher than the price of the
contract held. Other Strategic Transactions may also be offset in combinations.
If the offsetting transaction terminates at the time of or after the primary
transaction no segregation is required, but if it terminates prior to such time,
assets equal to any remaining obligation would need to be segregated.

Each Fund's activities involving Strategic Transactions may be limited by the
requirements of Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for qualification as a regulated investment company. (See
"TAXES.")

Convertible Securities. Each Fund may invest in convertible securities which
are bonds, notes, debentures, preferred stocks, and other securities which are
convertible into common stocks. Investments in convertible securities can
provide income through interest and dividend payments and/or an opportunity for
capital appreciation by virtue of their conversion or exchange features.
Latin America Fund will limit its purchases of convertible securities to debt
securities convertible into common stocks.

The convertible securities in which a Fund may invest may be converted or
exchanged at a stated or determinable exchange ratio into underlying shares of
common stock. The exchange ratio for any particular convertible security may be
adjusted from time to time due to stock splits, dividends, spin-offs, other
corporate distributions, or scheduled changes in the exchange ratio.
Convertible debt securities and convertible preferred stocks, until converted,
have general characteristics similar to both debt and equity securities.
Although to a lesser extent than with debt securities generally, the market
value of convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because
of the conversion or exchange feature, the market value of convertible
securities typically changes as the market value of the underlying common stocks
changes, and, therefore, also tends to follow movements in the general market
for equity securities. A unique feature of convertible securities is that as
the market price of the underlying common stock declines, convertible securities
tend to trade increasingly on a yield basis and so may not experience market
value declines to the same extent as the underlying common stock. When the
market price of the underlying common stock increases, the prices of the
convertible securities tend to rise as a reflection of the value of the
underlying common stock, although typically not as much as the underlying common
stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.

As fixed income securities, convertible securities are investments which provide
for a stream of income (or in the case of zero coupon securities, accretion of
income) with generally higher yields than common stocks. Of course, like all
fixed income securities, there can be no assurance of income or principal
payments because the issuers of the convertible securities may default on their
obligations. Convertible securities generally offer lower yields than
non-convertible securities of similar quality because of their conversion or
exchange features.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities.

Convertible securities may be issued as fixed income obligations that pay
current income or as zero coupon notes and bonds, including Liquid Yield Option
Notes (LYONs). Zero coupon securities pay no cash income and are sold at
substantial discounts from their value at maturity. When held to maturity,
their entire income, which consists of accretion of discount, comes from the
difference between the purchase price and their value at maturity. Zero coupon
convertible securities offer the opportunity for capital appreciation as
increases (or decreases) in market value of such securities closely follow the
movements in the market value of the underlying common stock. Zero coupon
convertible securities generally are expected to be less volatile than the
underlying common stocks as they usually are issued with shorter maturities (15
years or less) and are issued with options and/or redemption features
exercisable by the holder of the obligation entitling the holder to redeem the
obligation and receive a defined cash payment.

Repurchase Agreements. Each Fund may enter into repurchase agreements with
member banks of the Federal Reserve System, any foreign bank or with any
domestic or foreign broker-dealer which is recognized as a reporting government
securities dealer if the creditworthiness of the bank or broker-dealer has been
determined by the Adviser to be at least as high as that of other obligations a
Fund may purchase.

A repurchase agreement provides a means for each Fund to earn income on funds
for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., the Funds) acquires a security ("Obligation") and the seller
agrees, at the time of sale, to repurchase the Obligation at a specified time
and price. Securities subject to a repurchase agreement are held in a
segregated account and the value of such securities kept at least equal to the
repurchase price on a daily basis. The repurchase price may be higher than the
purchase price, the difference being income to a Fund, or the purchase and
repurchase prices may be the same, with interest at a stated rate due to a Fund
together with the repurchase price upon repurchase. In either case, the income
to a Fund is unrelated to the interest rate on the Obligation itself.
Obligations will be held by the Custodian or in the Federal Reserve Book Entry
system.

For purposes of the 1940 Act a repurchase agreement is deemed to be a loan from
a Fund to the seller of the Obligation subject to the repurchase agreement and
is therefore subject to a Fund's investment restriction applicable to loans. It
is not clear whether a court would consider the Obligation purchased by a Fund
subject to a repurchase agreement as being owned by a Fund or as being
collateral for a loan by a Fund to the seller. In the event of the commencement
of bankruptcy or insolvency proceedings with respect to the seller of the
Obligation before repurchase of the Obligation under a repurchase agreement, a
Fund may encounter delay and incur costs before being able to sell the security.
Delays may involve loss of interest or decline in price of the Obligation. If
the court characterizes the transaction as a loan and a Fund has not perfected a
security interest in the Obligation, a Fund may be required to return the
Obligation to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, a Fund would be at risk of losing some or all
of the principal and income involved in the transaction. As with any unsecured
debt instrument purchased for a Fund, the Adviser seeks to minimize the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
obligor, in this case the seller of the Obligation. Apart from the risk of
bankruptcy or insolvency proceedings, there is also the risk that the seller may
fail to repurchase the Obligation, in which case a Fund may incur a loss if the
proceeds to that Fund of the sale to a third party are less than the repurchase
price. However, if the market value of the Obligation subject to the repurchase
agreement becomes less than the repurchase price (including interest), a Fund
will direct the seller of the Obligation to deliver additional securities so
that the market value of all securities subject to the repurchase agreement will
equal or exceed the repurchase price. It is possible that a Fund will be
unsuccessful in seeking to enforce the seller's contractual obligation to
deliver additional securities. A repurchase agreement with foreign banks may be
available with respect to government securities of the particular foreign
jurisdiction, and such repurchase agreements involve risks similar to repurchase
agreements with U.S. entities.

Repurchase Commitments. Latin America Fund may enter into repurchase
commitments with any party deemed creditworthy by the Adviser, including foreign
banks and broker/dealers, if the transaction is entered into for investment
purposes and the counterparty's creditworthiness is at least equal to that of
issuers of securities which the Fund may purchase. Such transactions may not
provide the Fund with collateral marked-to-market during the term of the
commitment.

Borrowing. Latin America Fund is authorized to borrow money from banks and
other entities in an amount equal to up to 33 1/3% of the Fund's net assets for
purposes of liquidity and to provide for redemptions and distributions. The
Fund will borrow only when the Adviser believes that borrowing will benefit the
Fund after taking into account considerations such as the costs of the
borrowing. The Fund does not expect to borrow for investment purposes, to
increase return or leverage the portfolio. Borrowing by the Fund will involve
special risk considerations. Although the principal of the Fund's borrowings
will be fixed, the Fund's assets may change in value during the time a borrowing
is outstanding, thus increasing exposure to capital risk.

Illiquid Securities. Each Fund may occasionally purchase securities other than
in the open market. While such purchases may often offer attractive
opportunities for investment not otherwise available on the open market, the
securities so purchased are often "restricted securities" or "not readily
marketable," i.e., securities which cannot be sold to the public without
registration under the Securities Act of 1933 or the availability of an
exemption from registration (such as Rules 144 or 144A) or because they are
subject to other legal or contractual delays in or restrictions on resale.

Generally speaking, restricted securities may be sold only to qualified
institutional buyers, or in a privately negotiated transaction to a limited
number of purchasers, or in limited quantities after they have been held for a
specified period of time and other conditions are met pursuant to an exemption
from registration, or in a public offering for which a registration statement is
in effect under the Securities Act of 1933. A Fund may be deemed to be an
"underwriter" for purposes of the Securities Act of 1933 when selling restricted
securities to the public, and in such event a Fund may be liable to purchasers
of such securities if the registration statement prepared by the issuer, or the
prospectus forming a part of it, is materially inaccurate or misleading.

Each Fund may invest up to 10% of its net assets in securities which are not
readily marketable, the disposition of which is restricted under Federal
securities laws or in repurchase agreements not terminable within seven days,
and each Fund may invest up to 5% of its total assets in restricted securities.

When-Issued Securities. Each Fund may from time to time purchase equity and
debt securities on a "when-issued" or "forward delivery" basis. The price of
such securities, which may be expressed in yield terms, is fixed at the time the
commitment to purchase is made, but delivery and payment for the when-issued or
forward delivery securities takes place at a later date. During the period
between purchase and settlement, no payment is made by a Fund to the issuer and
no interest accrues to a Fund. To the extent that assets of a Fund are held in
cash pending the settlement of a purchase of securities, a Fund would earn no
income; however, it is each Fund's intention to be fully invested to the extent
practicable and subject to the policies stated above. While when-issued or
forward delivery securities may be sold prior to the settlement date, each Fund
intends to purchase such securities with the purpose of actually acquiring them
unless a sale appears desirable for investment reasons. At the time a Fund
makes the commitment to purchase a security on a when-issued or forward delivery
basis, it will record the transaction and reflect the value of the security in
determining its net asset value. The market value of the when-issued or forward
delivery securities may be more or less than the purchase price. Each Fund does
not believe that its net asset value or income will be adversely affected by its
purchase of securities on a when-issued or forward delivery basis.

Lending of Portfolio Securities. Each Fund may seek to increase its income by
lending portfolio securities. Under present regulatory policies, including
those of the Board of Governors of the Federal Reserve System and the SEC, such
loans may be made to member firms of the Exchange, and would be required to be
secured continuously by collateral in cash, U.S. Government securities or other
high grade debt obligations maintained on a current basis at an amount at least
equal to the market value and accrued interest of the securities loaned. Each
Fund would have the right to call a loan and obtain the securities loaned on no
more than five days' notice. During the existence of a loan, a Fund would
continue to receive the equivalent of the interest paid by the issuer on the
securities loaned and would also receive compensation based on investment of the
collateral. As with other extensions of credit there are risks of delay in
recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. However, the loans would be made only to firms
deemed by the Adviser to be of good standing, and when, in the judgment of the
Adviser, the consideration which can be earned currently from securities loans
of this type justifies the attendant risk. If a Fund determines to make
securities loans, the value of the securities loaned will not exceed 30% of the
value of a Fund's total assets at the time any loan is made.

Investment Restrictions

The policies set forth below are fundamental policies of each Fund and may not
be changed without the approval of a majority of each Fund's outstanding shares.
As used in this Statement of Additional Information, "majority of the Fund's
outstanding shares" means the lesser of (1) more than 50% of the outstanding
shares of the Fund or (2) 67% or more of the shares present at such meeting, if
the holders of more than 50% of the outstanding shares are present or
represented by proxy.

As a matter of fundamental policy, each Fund may not:

(1) purchase any securities which would cause more than 25% of the market value
of its total assets at the time of such purchase to be invested in the
securities of one or more issuers having their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (for the purposes of this
restriction, telephone companies are considered to be in a separate
industry from gas and electric public utilities, and wholly-owned finance
companies are considered to be in the industry of their parents if their
activities are primarily related to financing the activities of their
parents);

(2) borrow money except as a temporary measure for extraordinary or emergency
purposes or except in connection with reverse repurchase agreements
provided that the Fund maintains asset coverage of 300% for all borrowings;

(3) make loans to other persons, except (a) loans of portfolio securities,
provided collateral is maintained at not less than 100% by marking to
market daily, and (b) to the extent the entry into repurchase agreements
and the purchase of debt securities in accordance with its investment
objective and investment policies may be deemed to be loans;

(4) act as underwriter of securities issued by others, except to the extent
that it may be deemed an underwriter in connection with the disposition of
portfolio securities of the Fund;

(5) purchase or sell real estate (except that the Fund may invest in (i)
securities of companies which deal in real estate or mortgages, and (ii)
securities secured by real estate or interests therein, and that the Fund
reserves freedom of action to hold and to sell real estate acquired as a
result of the Fund's ownership of securities); or purchase or sell physical
commodities or contracts relating to physical commodities;

(6) issue senior securities, except as appropriate to evidence indebtedness
which it is permitted to incur, and except for shares of the separate
classes or series of the Corporation; provided that collateral arrangements
with respect to currency-related contracts, futures contracts, options or
other permitted investments, including deposits of initial and variation
margin, are not considered to be the issuance of senior securities for
purposes of this restriction.

The Funds may not deviate from the above policies without a vote of a majority
of the outstanding shares as provided by the 1940 Act.

As a matter of nonfundamental policy, each Fund may not:

(a) purchase or retain securities of any open-end investment company, or
securities of closed-end investment companies except by purchase in the
open market where no commission or profit to a sponsor or dealer results
from such purchases, or except when such purchase, though not made in the
open market, is part of a plan of merger, consolidation, reorganization or
acquisition of assets; in any event the Fund may not purchase more than 3%
of the outstanding voting securities of another investment company, may not
invest more than 5% of its total assets in another investment company, and
may not invest more than 10% of its total assets in other investment
companies;

(b) pledge, mortgage or hypothecate its assets in excess, together with
permitted borrowings, of 1/3 of its total assets;

(c) purchase or retain securities of an issuer any of whose officers,
directors, trustees or security holders is an officer, director or trustee
of the Fund or a member, officer, director or trustee of the investment
adviser of the Fund if one or more of such individuals owns beneficially
more than one-half of one percent (1/2%) of the outstanding shares or
securities or both (taken at market value) of such issuer and such
individuals owning more than one-half of one percent (1/2%) of such shares
or securities together own beneficially more than 5% of such shares or
securities or both;

(d) invest more than 10% of its net assets in securities which are not readily
marketable, the disposition of which is restricted under Federal securities
laws, or in repurchase agreements not terminable within 7 days, and the
Fund will not invest more than 5% of its total assets in restricted
securities;

(e) purchase securities of any issuer with a record of less than three years
continuous operations, including predecessors, or equity securities which
are not readily marketable if such purchase would cause the investments of
the Fund in all such issuers to exceed 5% of the total assets of the Fund
taken at market value; except U.S. Government securities, securities of
such issuers which are rated by at least one nationally recognized
statistical rating organization, municipal obligations and obligations
issued or guaranteed by any foreign government or its agencies or
instrumentalities;

(f) buy options on securities or financial instruments, unless the aggregate
premiums paid on all such options held by the Fund at any time do not
exceed 20% of its net assets; or sell put options on securities if, as a
result, the aggregate value of the obligations underlying such put options
would exceed 50% of the Fund's net assets;

(g) enter into futures contracts or purchase options thereon unless immediately
after the purchase, the value of the aggregate initial margin with respect
to all futures contracts entered into on behalf of the Fund and the
premiums paid for options on futures contracts does not exceed 5% of the
Fund's total assets provided that in the case of an option that is in-the-
money at the time of purchase, the in-the-money amount may be excluded in
computing the 5% limit;

(h) invest in oil, gas or other mineral leases or exploration or development
programs (although it may invest in issuers which own or invest in such
interests);

(i) purchase warrants if as a result warrants taken at the lower of cost or
market value would represent more than 5% of the value of the Fund's net
assets or more than 2% of its net assets in warrants that are not listed on
the New York or American Stock Exchanges or on an exchange with comparable
listing requirements (for this purpose, warrants attached to securities
will be deemed to have no value);

(j) purchase or sell real estate limited partnership interests;

(k) make securities loans if the value of such securities loaned exceeds 30% of
the value of the Fund's total assets at the time the loan is made; all
loans of portfolio securities will be fully collateralized and marked to
market daily. The Fund has no current intention of making loans of
portfolio securities that would amount to greater than 5% of the Fund's
total assets;

(l) purchase or retain securities of an issuer if, with respect to 75% of the
Fund's total assets, such purchase would result in more than 10% of the
outstanding voting securities of such issuers being held by the Fund; or

(m) purchase securities on margin or make short sales unless, by virtue of its
ownership of other securities, it has the right to obtain securities
equivalent in kind and amount to the securities sold at no added cost and,
if the right is conditional, the sale is made upon the same conditions,
except in connection with arbitrage transactions and except that the Fund
may obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities.

In addition, as a matter of nonfundamental policy, Latin America Fund may not:

(1) purchase any securities which would cause more than 25% of the market value
of its total assets at the time of such purchase to be invested in the
securities of one or more issuers having their principal business
activities in the same industry (for the purposes of this restriction, the
governments of each country in Latin America in which the Fund invests are
considered to be separate industries).

In addition, as a matter of nonfundamental policy, Pacific Opportunities Fund
may not:

(1) borrow money, including reverse repurchase agreements, in excess of 5% of
its total assets (taken at market value) except for temporary or emergency
purposes or borrow other than from banks.

Any investment restrictions herein which involve a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after, and is caused by, an acquisition
or encumbrance of securities or assets of, or borrowings by, each Fund.

PURCHASES

(See "Purchases" and "Transaction information" in the Funds' prospectuses.)

Additional Information About Opening An Account

Clients having a regular investment counsel account with the Adviser or its
affiliates and members of their immediate families, officers and employees of
the Adviser or of any affiliated organization and their immediate families,
members of the National Association of Securities Dealers, Inc. ("NASD") and
banks may, if they prefer, subscribe initially for at least $1,000 of Fund
shares through Scudder Investor Services, Inc. by letter, fax, TWX, or
telephone.

Shareholders of other Scudder funds who have submitted an account application
and have certified a Tax Identification Number, clients having a regular
investment counsel account with the Adviser or its affiliates and members of
their immediate families, officers and employees of the Adviser or of any
affiliated organization and their immediate families, members of the NASD, and
banks may open an account by wire. These investors must call 1-800-225-5163 to
get an account number. During the call the investor will be asked to indicate
the Fund name, amount to be wired ($1,000 minimum), name of bank or trust
company from which the wire will be sent, the exact registration of the new
account, the tax identification or social security number, address and telephone
number. The investor must then call the bank to arrange a wire transfer to The
Scudder Funds, Boston, MA 02110, ABA Number 011000028, DDA Account Number 9903-
5552. The investor must give the Scudder fund name, account name and the new
account number. Finally, the investor must send the completed and signed
application to the Fund promptly.

The minimum initial purchase amount is less than $1,000 under certain special
plan accounts.

Additional Information About Making Subsequent Investments

Subsequent purchase orders for $10,000 or more and for an amount not greater
than four times the value of the shareholder's account may be placed by
telephone, fax, etc. by established shareholders (except by Scudder Individual
Retirement Account (IRA), Scudder pension and profit sharing, Scudder 401(k) and
Scudder 403(b) Plan holders), members of the NASD, and banks. Orders placed in
this manner may be directed to any Scudder Investor Services, Inc. office listed
in each Fund's prospectus. A two-part invoice of the purchase will be mailed
out promptly following receipt of a request to buy. Payment should be attached
to a copy of the invoice for proper identification. Federal regulations require
that payment be received within seven business days. If payment is not received
within that time, the shares may be canceled. In the event of such cancellation
or cancellation at the purchaser's request, the purchaser will be responsible
for any loss incurred by a Fund or the principal underwriter by reason of such
cancellation. If the purchaser is a shareholder, each Fund shall have the
authority, as agent of the shareholder, to redeem shares in the account in order
to reimburse a Fund or the principal underwriter for the loss incurred. Net
losses on such transactions which are not recovered from the purchaser will be
absorbed by the principal underwriter. Any net profit on the liquidation of
unpaid shares will accrue to a Fund.

Checks

A certified check is not necessary, but checks are only accepted subject to
collection at full face value in U.S. funds and must be drawn on, or payable
through, a U.S. bank.

If shares of a Fund are purchased by a check which proves to be uncollectible,
each Fund reserves the right to cancel the purchase immediately and the
purchaser will be responsible for any loss incurred by a Fund or the principal
underwriter by reason of such cancellation. If the purchaser is a shareholder,
a Fund shall have the authority, as agent of the shareholder, to redeem shares
in the account in order to reimburse a Fund or the principal underwriter for the
loss incurred. Investors whose orders have been canceled may be prohibited from
or restricted in placing future orders in any of the Scudder funds.

Wire Transfer of Federal Funds

To obtain the net asset value determined as of the close of regular trading on
the Exchange, on a selected day, your bank must forward federal funds by wire
transfer and provide the required account information so as to be available to a
Fund prior to the close of regular trading on the Exchange (normally 4 p.m.
eastern time).

The bank sending an investor's federal funds by bank wire may charge for the
service. Presently, each Fund pays a fee for receipt by the Custodian of "wired
funds," but the right to charge investors for this service is reserved.

Boston banks are closed on certain local holidays although the Exchange may be
open. These holidays include Martin Luther King, Jr. Day (the 3rd Monday in
January), Columbus Day (the 2nd Monday in October) and Veterans Day (November
11). Investors are not able to purchase shares by wiring federal funds on such
holidays because the Custodian is not open to receive such funds on behalf of a
Fund.

Share Price

Purchases will be filled without sales charge at the net asset value next
computed after receipt of the application in good order. Net asset value
normally will be computed as of the close of regular trading on each day the
Exchange is open for trading. Orders received after the close of regular
trading on the Exchange will be executed at the next business day's net asset
value. If the order has been placed by a member of the NASD, other than Scudder
Investor Services, Inc., it is the responsibility of that member broker, rather
than a Fund, to forward the purchase order to Scudder Service Corporation (the
"Transfer Agent") in Boston by the close of regular trading on the Exchange.

Share Certificates

Due to the desire of Fund management to afford ease of redemption, certificates
will not be issued to indicate ownership in a Fund.

Other Information

If purchases or redemptions of a Fund's shares are arranged and settlement is
made through a member of the NASD, other than Scudder Investor Services, Inc.,
that member may, at its discretion, charge a fee for that service.

The Board of Directors and Scudder Investor Services, Inc., the Funds' principal
underwriter, each has the right to limit the amount of purchases and to refuse
to sell to any person and each may suspend or terminate the offering of shares
of a Fund at any time.

The Tax Identification Number section of the application must be completed when
opening an account. Applications and purchase orders without a certified tax
identification number and certain other certified information (e.g.,
certification of exempt status from exempt investors), will be returned to the
investor.

Each Fund may issue shares at net asset value in connection with any merger or
consolidation with, or acquisition of the assets of, any investment company or
personal holding company, subject to the requirements of the 1940 Act.

EXCHANGES AND REDEMPTIONS

(See "Exchanges and redemptions" and "Transaction information" in the Funds'
prospectuses.)

Exchanges

Exchanges are comprised of a redemption from one Scudder fund and a purchase
into another Scudder fund. The purchase side of the exchange either may be an
additional investment into an existing account or may involve opening a new
account in the other fund. When an exchange involves a new account, the new
account will be established with the same registration, tax identification
number, address, telephone redemption option, "Scudder Automated Information
Line" (SAIL) transaction authorization and dividend option as the existing
account. Other features will not carry over automatically to the new account.
Exchanges to a new fund account must be for a minimum of $1,000. When an
exchange represents an additional investment into an existing account, the
account receiving the exchange proceeds must have identical registration,
address, and account options/features as the account of origin. Exchanges into
an existing account must be for $100 or more. If the account receiving the
exchange proceeds is to be different in any respect, the exchange request must
be in writing and must contain an original signature guarantee as described
under "Transaction Information--Redeeming shares--Signature guarantees" in each
Fund's prospectus.

Exchange orders received before the close of regular trading on the Exchange on
any business day ordinarily will be executed at the respective net asset values
determined on that day. Exchange orders received after the close of regular
trading on the Exchange will be executed on the following business day.

Investors may also request, at no extra charge, to have exchanges automatically
executed on a predetermined schedule from one Scudder fund to an existing
account in another Scudder fund through Scudder's Automatic Exchange Program.
Exchanges must be for a minimum of $50. Shareholders may add this free feature
over the phone or in writing. Automatic exchanges will continue until the
shareholder requests by phone or in writing to have the feature removed, or
until the originating account is depleted. The Corporation and the
Transfer Agent each reserves the right to suspend or terminate the privilege of
the Automatic Exchange Program at any time.

There is no charge to the shareholder for any exchange described above.
However, shares that are exchanged from Latin America Fund may be subject to the
Fund's 2% redemption fee. (See "Special Redemption and Exchange Information for
Latin America Fund.") An exchange into another Scudder fund is a redemption of
shares, and therefore may result in tax consequences (gain or loss) to the
shareholder, and the proceeds of such an exchange may be subject to backup
withholding. (See "TAXES.")

Investors currently receive the exchange privilege, including exchange by
telephone, automatically without having to elect it. Each Fund employ
procedures, including recording telephone calls, testing a caller's identity,
and sending written confirmation of telephone transactions, designed to give
reasonable assurance that instructions communicated by telephone are genuine,
and to discourage fraud. To the extent that the Funds do not follow such
procedures, they may be liable for losses due to unauthorized or fraudulent
telephone instructions. Each Fund will not be liable for acting upon
instructions communicated by telephone that they reasonably believe to be
genuine. The Funds and the Transfer Agent each reserves the right to suspend or
terminate the privilege of exchanging by telephone or fax at any time.

The Scudder funds into which investors may make an exchange are listed under
"THE SCUDDER FAMILY OF FUNDS" herein. Before making an exchange, shareholders
should obtain from Scudder Investor Services, Inc. a prospectus of the Scudder
fund into which the exchange is being contemplated.

Scudder retirement plans may have different exchange requirements. Please refer
to appropriate plan literature.

Special Redemption and Exchange Information for Scudder Latin America
Fund

In general, shares of Latin America Fund may be exchanged or redeemed at net
asset value. However, shares of the Fund held for less than one year are
redeemable at a price equal to the greater of 98% of the then current net asset
value per share or such higher percentage of current net asset value per share
that represents the then current net asset value minus an amount equal to 2% of
the cost of the shares. This 2% discount, referred to in the prospectus and
this statement of additional information as a redemption fee, directly affects
the amount a shareholder who is subject to the discount receives upon exchange
or redemption. It is intended to encourage long-term investment in the Fund, to
avoid transaction and other expenses caused by early redemptions and to
facilitate portfolio management. The fee is not a deferred sales charge, is not
a commission paid to the Adviser or its subsidiaries, and does not benefit the
Adviser in any way.

The redemption discount will not be applied to (a) a redemption of shares of the
Fund outstanding for one year or more, (b) a redemption of reinvestment shares
(i.e., shares purchased through the reinvestment of dividends or capital gains
distributions paid by the Fund), or (c) a redemption of shares by the Fund upon
exercise of its right to liquidate accounts (i) falling below the minimum
account size by reason of shareholder redemptions or (ii) when the shareholder
has failed to provide tax identification information. For this purpose and
without regard to the shares actually redeemed, shares will be redeemed as
follows: first, reinvestment shares; second, purchased shares held one year or
more; and third, purchased shares held for less than one year. Finally, if a
redeeming shareholder acquires Fund shares through a transfer from another
shareholder, applicability of the discount, if any, will be determined by
reference to the date the shares were originally purchased, and not from the
date of transfer between shareholders.

Redemption by Telephone

Shareholders currently receive the right, automatically without having to elect
it, to redeem by telephone up to $50,000 and have the proceeds mailed to their
address of record. Shareholders may request to have the proceeds mailed or
wired to their predesignated bank account. In order to request redemptions by
telephone, shareholders must have completed and returned to the Transfer Agent
the application, including the designation of a bank account to which the
redemption proceeds are to be sent.

(a) NEW INVESTORS wishing to establish telephone redemption to a predesignated
bank account must complete the appropriate section on the application.

(b) EXISTING SHAREHOLDERS (except those who are Scudder IRA, Scudder Pension
and Profit-Sharing, Scudder 401(k) and Scudder 403(b) Planholders) who wish
to establish telephone redemption to a predesignated bank account or who
want to change the bank account previously designated to receive redemption
proceeds should either return a Telephone Redemption Option Form (available
upon request) or send a letter identifying the account and specifying the
exact information to be changed. The letter must be signed exactly as the
shareholder's name(s) appears on the account. An original signature and an
original signature guarantee are required for each person in whose name the
account is registered.

If a request for redemption to a shareholder's bank account is made by telephone
or fax, payment will be by Federal Reserve bank wire to the bank account
designated on the application, unless a request is made that the redemption
check be mailed to the designated bank account. There will be a $5 charge for
all wire redemptions.

Note: Investors designating a savings bank to receive their telephone
redemption proceeds are advised that if the savings bank is not a
participant in the Federal Reserve System, redemption proceeds must be
wired through a commercial bank which is a correspondent of the savings
bank. As this may delay receipt by the shareholder's account, it is
suggested that investors wishing to use a savings bank discuss wire
procedures with their bank and submit any special wire transfer information
with the telephone redemption authorization. If appropriate wire
information is not supplied, redemption proceeds will be mailed to the
designated bank.

Each Fund employs procedures, including recording telephone calls, testing a
caller's identity, and sending written confirmation of telephone transactions,
designed to give reasonable assurance that instructions communicated by
telephone are genuine, and to discourage fraud. To the extent that the Funds do
not follow such procedures, they may be liable for losses due to unauthorized or
fraudulent telephone instructions. Each Fund will not be liable for acting upon
instructions communicated by telephone that it reasonably believes to be
genuine.

Redemption requests by telephone (technically a repurchase by agreement between
a Fund and the shareholder) of shares purchased by check will not be accepted
until the purchase check has cleared which may take up to seven business days.

Redemption by Mail or Fax

In order to ensure proper authorization before redeeming shares, the Transfer
Agent may request documents such as, but not restricted to, stock powers, trust
instruments, certificates of death, appointments as executor, certificates of
corporate authority and waivers of tax required in some states when settling
estates.

It is suggested that shareholders holding shares registered in other than
individual names contact the Transfer Agent prior to any redemptions to ensure
that all necessary documents accompany the request. When shares are held in the
name of a corporation, trust, fiduciary agent, attorney or partnership, the
Transfer Agent requires, in addition to the stock power, certified evidence of
authority to sign. These procedures are for the protection of shareholders and
should be followed to ensure prompt payment. Redemption requests must not be
conditional as to date or price of the redemption. Proceeds of a redemption
will be sent within seven business days after receipt by the Transfer Agent of a
request for redemption that complies with the above requirements. Delays of
more than seven days of payment for shares tendered for repurchase or redemption
may result, but only until the purchase check has cleared.

The requirements for IRA redemptions are different from those for regular
accounts. For more information call 1-800-225-5163.

Redemption-in-Kind

The Corporation reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order by making
payment in whole or in part in readily marketable securities chosen by a Fund
and valued as they are for purposes of computing a Fund's net asset value (a
redemption-in-kind). If payment is made in securities, a shareholder may incur
transaction expenses in converting these securities into cash. The Corporation
has elected, however, to be governed by Rule 18f-1 under the 1940 Act as a
result of which each Fund is obligated to redeem shares, with respect to any one
shareholder during any 90 day period, solely in cash up to the lesser of
$250,000 or 1% of the net asset value of that Fund at the beginning of the
period.

Other Information

Clients, officers or employees of the Adviser or of an affiliated organization,
and members of such clients', officers' or employees' immediate families, banks
and members of the NASD may direct repurchase requests to the Fund through
Scudder Investor Services, Inc. at Two International Place, Boston,
Massachusetts 02110-4103 by letter, fax, TWX, or telephone. A two-part
confirmation will be mailed out promptly after receipt of the repurchase
request. A written request in good order with a proper original signature
guarantee, as described in the Funds' Prospectuses under "Transaction
information--Signature guarantees," should be sent with a copy of the invoice to
Scudder Funds, c/o Scudder Confirmed Processing, Two International Place,
Boston, Massachusetts 02110-4103. Failure to deliver shares or required
documents (see above) by the settlement date may result in cancellation of the
trade and the shareholder will be responsible for any loss incurred by the Fund
or the principal underwriter by reason of such cancellation. Net losses on such
transactions which are not recovered from the shareholder will be absorbed by
the principal underwriter. Any net gains so resulting will accrue to the Fund.
For this group, repurchases will be carried out at the net asset value next
computed after such repurchase requests have been received. The arrangements
described in this paragraph for repurchasing shares are discretionary and may be
discontinued at any time.

If a shareholder redeems all shares in the account after the record date of a
dividend, the shareholder receives in addition to the net asset value thereof,
all declared but unpaid dividends thereon. The value of shares redeemed or
repurchased may be more or less than the shareholder's cost depending on the net
asset value at the time of redemption or repurchase. Each Fund does not impose
a repurchase charge, although a wire charge may be applicable for redemption
proceeds wired to an investor's bank account. Redemption of shares, including
redemptions undertaken to effect an exchange for shares of another Scudder fund,
may result in tax consequences (gain or loss) to the shareholder and the
proceeds of such redemptions may be subject to backup withholding. (See
"TAXES.")

Shareholders who wish to redeem shares from Special Plan Accounts should contact
the employer, trustee or custodian of the Plan for the requirements.

The determination of net asset value and a shareholder's right to redeem shares
and to receive payment may be suspended at times (a) during which the Exchange
is closed, other than customary weekend and holiday closings, (b) during which
trading on the Exchange is restricted for any reason, (c) during which an
emergency exists as a result of which disposal by a Fund of securities owned by
it is not reasonably practicable or it is not reasonably practicable for a Fund
fairly to determine the value of its net assets, or (d) during which the SEC by
order permits a suspension of the right of redemption or a postponement of the
date of payment or of redemption; provided that applicable rules and regulations
of the SEC (or any succeeding governmental authority) shall govern as to whether
the conditions prescribed in (b), (c) or (d) exist.

If transactions at any time reduce a shareholder's account balance in the
Corporation to below $1000 in value, the Corporation will notify the shareholder
that, unless the account balance is brought up to at least $1000, the
Corporation will redeem all shares and close the account by sending redemption
proceeds to the shareholder. The shareholder has sixty days to bring the
account balance up to $1000 before any action will be taken by the Corporation.
(This policy applies to accounts of new shareholders, but does not apply to
certain Special Plan Accounts.) The Directors have the authority to change the
minimum account size.

FEATURES AND SERVICES OFFERED BY THE FUNDS

(See "Shareholder benefits" in the Funds' prospectuses.)

The Pure No-Load(tm) Concept

Investors are encouraged to be aware of the full ramifications of mutual fund
fee structures, and of how Scudder distinguishes its funds from the vast
majority of mutual funds available today. The primary distinction is between
load and no-load funds.

Load funds generally are defined as mutual funds that charge a fee for the sale
and distribution of fund shares. There are three types of loads: front-end
loads, back-end loads, and asset-based 12b-1 fees. 12b-1 fees are distribution-
related fees charged against fund assets and are distinct from service fees,
which are charged for personal services and/or maintenance of shareholder
accounts. Asset-based sales charges and service fees are typically paid
pursuant to distribution plans adopted under 12b-1 under the 1940 Act.

A front-end load is a sales charge, which can be as high as 8.50% of the amount
invested. A back-end load is a contingent deferred sales charge, which can be as
high as 8.50% of either the amount invested or redeemed. The maximum front-end
or back-end load varies, and depends upon whether or not a fund also charges a
12b-1 fee and/or a service fee or offers investors various sales-related
services such as dividend reinvestment. The maximum charge for a 12b-1 fee is
0.75% of a fund's average annual net assets, and the maximum charge for a
service fee is 0.25% of a fund's average annual net assets.

A no-load fund does not charge a front-end or back-end load, but can charge a
small 12b-1 fee and/or service fee against fund assets. Under the NASD Rules of
Fair Practice, a mutual fund can call itself a "no-load" fund only if the 12b-1
fee and/or service fee does not exceed 0.25% of a fund's average annual net
assets.

Because Scudder funds do not pay any asset-based sales charges or service fees,
Scudder developed and trademarked the phrase pure no-load(tm) to distinguish
Scudder funds from other no-load mutual funds. Scudder pioneered the no-load
concept when it created the nation's first no-load fund in 1928, and later
developed the nation's first family of no-load mutual funds.

The following chart shows the potential long-term advantage of investing $10,000
in a Scudder pure no-load fund over investing the same amount in a load fund
that collects an 8.50% front-end load, a load fund that collects only a 0.75%
12b-1 and/or service fee, and a no-load fund charging only a 0.25% 12b-1 and/or
service fee. The hypothetical figures in the chart show the value of an account
assuming a constant 10% rate of return over the time periods indicated and
reinvestment of dividends and distributions.

<TABLE>
<CAPTION>
Scudder Load Fund No-Load Fund
YEARS Pure No- 8.50% Load with 0.75% with 0.25%
----- Load(tm) Fund Fund 12b-1 Fee 12b-1 Fee
------------- ---- --------- ---------
<C> <C> <C> <C> <C>
10 $25,937 $23,733 $24,222 $25,354
15 41,772 38,222 37,698 40,371
20 67,275 61,557 58,672 64,282
</TABLE>

Investors are encouraged to review the fee tables on page 2 of each Fund's
prospectus for more specific information about the rates at which management
fees and other expenses are assessed.

Distribution Plans

Investors have freedom to choose whether to receive cash or to reinvest any
dividends from net investment income or distributions from realized capital
gains in additional shares of the Fund. A change of instructions for the method
of payment must be given to the Transfer Agent in writing at least five days
prior to a dividend record date. Shareholders may change their dividend option
by calling 1-800-225-5163.

Reinvestment is usually made at the closing net asset value determined on the
business day following the record date. Investors may leave standing
instructions with the Transfer Agent designating their option for either
reinvestment or cash distribution of any income dividends or capital gains
distributions. If no election is made, dividends and distributions will be
invested in additional shares of the Fund.

Investors may also have dividends and distributions automatically deposited to
their predesignated bank account through Scudder's DistributionsDirect Program.
Shareholders who elect to participate in the DistributionsDirect Program, and
whose predesignated checking account of record is with a member bank of the
Automated Clearing House Network (ACH) can have income and capital gain
distributions automatically deposited to their personal bank account usually
within three business days after the Fund pays its distribution. A
DistributionsDirect request form can be obtained by calling 1-800-225-5163.
Confirmation statements will be mailed to shareholders as notification that
distributions have been deposited.

Investors choosing to participate in Scudder's Automatic Withdrawal Plan must
reinvest any dividends or capital gains. For most retirement plan accounts, the
reinvestment of dividends and capital gains is also required.

Scudder Funds Centers

Investors may visit any of the Centers maintained by Scudder Investor Services,
Inc. listed in the Funds' prospectuses. The Centers are designed to provide
individuals with services during any business day. Investors may pick up
literature or find assistance with opening an account, adding monies or special
options to existing accounts, making exchanges within the Scudder Family of
Funds, redeeming shares or opening retirement plans. Checks should not be
mailed to the Centers but should be mailed to "The Scudder Funds" at the address
listed under "How to contact Scudder" in the prospectuses.

Reports to Shareholders

The Corporation issues to its shareholders audited semiannual financial
statements, including a list of investments held and statements of assets and
liabilities, operations, changes in net assets and financial highlights. The
Corporation presently intends to distribute to shareholders informal quarterly
reports during the intervening quarters, containing a statement of the
investments of a Fund. Each distribution will be accompanied by a brief
explanation of the source of the distribution.

Transaction Summaries

Annual summaries of all transactions in each Fund account are available to
shareholders. The summaries may be obtained by calling 1-800-225-5163.

THE SCUDDER FAMILY OF FUNDS

(See "Investment products and services" in the Funds' prospectuses.)

The Scudder Family of Funds is America's first family of mutual funds and the
nation's oldest family of no-load mutual funds. To assist investors in choosing
a Scudder fund, descriptions of the Scudder funds' objectives follow. Initial
purchases in each Scudder fund must be at least $1,000 or $500 in the case of
IRAs. Subsequent purchases must be for $100 or more. Minimum investments for
special plan accounts may be lower.

MONEY MARKET

Scudder Cash Investment Trust ("SCIT") seeks to maintain the stability of
capital, and consistent therewith, to maintain the liquidity of capital and
to provide current income through investment in a supervised portfolio of
short-term debt securities. SCIT intends to seek to maintain a constant
net asset value of $1.00 per share, although in certain circumstances this
may not be possible.

Scudder U.S. Treasury Money Fund seeks to provide safety, liquidity and
stability of capital and consistent therewith to provide current income
through investment in a supervised portfolio of U.S. Government and U.S.
Government guaranteed obligations with maturities of not more than 762
calendar days. The Fund intends to seek to maintain a constant net asset
value of $1.00 per share, although in certain circumstances this may not be
possible.

INCOME

Scudder Emerging Markets Income Fund seeks to provide high current income
and, secondarily, long-term capital appreciation through investments
primarily in high-yielding debt securities issued in emerging markets.

Scudder GNMA Fund seeks to provide investors with high current income from
a portfolio of high-quality GNMA securities.

Scudder Income Fund seeks to earn a high level of income consistent with
the prudent investment of capital through a flexible investment program
emphasizing high-grade bonds.

Scudder International Bond Fund seeks to provide income from a portfolio of
high-grade bonds denominated in foreign currencies. As a secondary
objective, the Fund seeks protection and possible enhancement of principal
value by actively managing currency, bond market and maturity exposure and
by security selection.

Scudder Short Term Bond Fund seeks to provide a higher and more stable
level of income than is normally provided by money market investments, and
more price stability than investments in intermediate-and long-term bonds.

Scudder Short Term Global Income Fund seeks to provide high current income
from a portfolio of high-grade money market instruments and short-term
bonds denominated in foreign currencies and the U.S. dollar.

Scudder Zero Coupon 2000 Fund seeks to provide as high an investment return
over a selected period as is consistent with the minimization of
reinvestment risks through investments primarily in zero coupon securities.

TAX FREE MONEY MARKET

Scudder Tax Free Money Fund ("STFMF") is designed to provide investors with
income exempt from regular federal income tax while seeking stability of
principal. STFMF seeks to maintain a constant net asset value of $1.00 per
share, although in certain circumstances this may not be possible.

Scudder California Tax Free Money Fund* is designed to provide California
taxpayers income exempt from California state and regular federal income
taxes, and seeks stability of capital and the maintenance of a constant net
asset value of $1.00 per share, although in certain circumstances this may
not be possible.

Scudder New York Tax Free Money Fund* is designed to provide New York
taxpayers income exempt from New York state, New York City and regular
federal income taxes, and seeks stability of capital and the maintenance of
a constant net asset value of $1.00 per share, although in certain
circumstances this may not be possible.

TAX FREE

Scudder High Yield Tax Free Fund seeks to provide high income which is
exempt from regular federal income tax by investing in investment-grade
municipal securities.

Scudder Limited Term Tax Free Fund seeks to provide as high a level of
income exempt from regular federal income tax as is consistent with a high
degree of principal stability.

Scudder Managed Municipal Bonds seeks to provide income which is exempt
from regular federal income tax primarily through investments in long-term
municipal securities with an emphasis on high quality.

Scudder Medium Term Tax Free Fund seeks to provide a high level of income
free from regular federal income taxes and to limit principal fluctuation
by investing in high-grade municipal securities of intermediate maturities.

Scudder California Tax Free Fund* seeks to provide income exempt from both
California and regular federal income taxes through the professional and
efficient management of a portfolio consisting of California state,
municipal and local government obligations.

Scudder Massachusetts Limited Term Tax Free Fund* seeks to provide as high
a level of income exempt from Massachusetts personal and regular federal
income tax as is consistent with a high degree of principal stability.

Scudder Massachusetts Tax Free Fund* seeks to provide income exempt from
both Massachusetts and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
Massachusetts state, municipal and local government obligations.

Scudder New York Tax Free Fund* seeks to provide income exempt from New
York state, New York City and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
investments in New York state, municipal and local government obligations.

Scudder Ohio Tax Free Fund* seeks to provide income exempt from both Ohio
and regular federal income taxes through the professional and efficient
management of a portfolio consisting of Ohio state, municipal and local
government obligations.

Scudder Pennsylvania Tax Free Fund* seeks to provide income exempt from
both Pennsylvania and regular federal income taxes through a portfolio
consisting of Pennsylvania state, municipal and local government
obligations.

GROWTH AND INCOME

Scudder Balanced Fund seeks to provide a balance of growth and income, as
well as long-term preservation of capital, from a diversified portfolio of
equity and fixed income securities.

Scudder Growth and Income Fund seeks to provide long-term growth of
capital, current income, and growth of income through a portfolio invested
primarily in common stocks and convertible securities by companies which
offer the prospect of growth of earnings while paying current dividends.

GROWTH

Scudder Capital Growth Fund seeks to maximize long-term growth of capital
through a broad and flexible investment program emphasizing common stocks.

Scudder Development Fund seeks to achieve long-term growth of capital
primarily through investments in marketable securities, principally common
stocks, of relatively small or little-known companies which in the opinion
of management have promise of expanding their size and profitability or of
gaining increased market recognition for their securities, or both.

Scudder Global Fund seeks long-term growth of capital primarily through a
diversified portfolio of marketable equity securities selected on a
worldwide basis. It may also invest in debt securities of U.S. and foreign
issuers. Income is an incidental consideration.

Scudder Global Small Company Fund seeks above-average capital appreciation
over the long term by investing primarily in the equity securities of small
companies located throughout the world.

Scudder Gold Fund seeks maximum return (principal change and income)
consistent with investing in a portfolio of gold-related equity securities
and gold.

Scudder Greater Europe Growth Fund seeks long-term growth of capital
through investments primarily in the equity securities of European
companies.

Scudder International Fund seeks long-term growth of capital through
investment principally in a diversified portfolio of marketable equity
securities selected primarily to permit participation in non-U.S. companies
and economies with prospects for growth. It also invests in fixed-income
securities of foreign governments and companies, with a view toward total
investment return.

Scudder Latin America Fund seeks to provide long-term capital appreciation
through investment primarily in the securities of Latin American issuers.

Scudder Pacific Opportunities Fund seeks long-term growth of capital
through investment primarily in the equity securities of Pacific Basin
companies, excluding Japan.

Scudder Quality Growth Fund seeks to provide long-term growth of capital
through investment primarily in the equity securities of seasoned,
financially strong U.S. growth companies.

Scudder Value Fund seeks long-term growth of capital through investment in
undervalued equity securities.

The Japan Fund, Inc. seeks capital appreciation through investment in
Japanese securities, primarily in common stocks of Japanese companies.

* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.

The net asset values of most Scudder Funds can be found daily in the "Mutual
Funds" section of The Wall Street Journal under "Scudder Funds," and in other
leading newspapers throughout the country. Investors will notice the net asset
value and offering price are the same, reflecting the fact that no sales
commission or "load" is charged on the sale of shares of the Scudder Funds. The
latest seven-day yields for the money-market funds can be found every Monday and
Thursday in the "Money-Market Funds" section of The Wall Street Journal. This
information also may be obtained by calling the Scudder Automated Information
Line (SAIL) at 1-800-343-2890.

The Scudder Family of Funds offers many conveniences and services, including:
active professional investment management; broad and diversified investment
portfolios; pure no-load funds with no commissions to purchase or redeem shares
or Rule 12b-1 distribution fees; individual attention from a Scudder Service
Representative; easy telephone exchanges into Scudder money market, tax free,
income, and growth funds; shares redeemable at net asset value at any time.

SPECIAL PLAN ACCOUNTS

(See "Scudder tax-advantaged retirement plans," "Purchases--By Automatic
Investment Plan"
and "Exchanges and redemptions--By Automatic Withdrawal Plan" in the Funds'
prospectuses.)

Detailed information on any Scudder investment plan, including the applicable
charges, minimum investment requirements and disclosures made pursuant to
Internal Revenue Service (the "IRS") requirements, may be obtained by contacting
Scudder Investor Services, Inc., Two International Place, Boston, Massachusetts
02110-4103 or by calling toll free, 1-800-225-2470. It is advisable for an
investor considering the funding of the investment plans described below to
consult with an attorney or other investment or tax adviser with respect to the
suitability requirements and tax aspects thereof.

Shares of the Fund may also be a permitted investment under profit sharing and
pension plans and IRA's other than those offered by the Fund's distributor
depending on the provisions of the relevant plan or IRA.

None of the plans assures a profit or guarantees protection against
depreciation, especially in declining markets.

Scudder Retirement Plans: Profit-Sharing and Money Purchase
Pension Plans for Corporations and Self-Employed Individuals

Shares of the Fund may be purchased as the investment medium under a plan in the
form of a Scudder Profit-Sharing Plan (including a version of the Plan which
includes a cash-or-deferred feature) or a Scudder Money Purchase Pension Plan
(jointly referred to as the Scudder Retirement Plans) adopted by a corporation,
a self-employed individual or a group of self-employed individuals (including
sole proprietorships and partnerships), or other qualifying organization. Each
of these forms was approved by the IRS as a prototype. The IRS's approval of an
employer's plan under Section 401(a) of the Code will be greatly facilitated if
it is in such approved form. Under certain circumstances, the IRS will assume
that a plan, adopted in this form, after special notice to any employees, meets
the requirements of Section 401(a) of the Code.

Scudder 401(k): Cash or Deferred Profit-Sharing Plan
for Corporations and Self-Employed Individuals

Shares of the Fund may be purchased as the investment medium under a plan in the
form of a Scudder 401(k) Plan adopted by a corporation, a self-employed
individual or a group of self-employed individuals (including sole proprietors
and partnerships), or other qualifying organization. This plan has been
approved as a prototype by the IRS.

Scudder IRA: Individual Retirement Account

Shares of the Fund may be purchased as the underlying investment for an
Individual Retirement Account which meets the requirements of Section 408(a) of
the Code.

A single individual who is not an active participant in an employer-maintained
retirement plan, a simplified employee pension plan, or a tax-deferred annuity
program (a "qualified plan"), and a married individual who is not an active
participant in a qualified plan and whose spouse is also not an active
participant in a qualified plan, are eligible to make tax deductible
contributions of up to $2,000 to an IRA prior to the year such individual
attains age 70 1/2. In addition, certain individuals who are active
participants in qualified plans (or who have spouses who are active
participants) are also eligible to make tax-deductible contributions to an IRA;
the annual amount, if any, of the contribution which such an individual will be
eligible to deduct will be determined by the amount of his, her, or their
adjusted gross income for the year. Whenever the adjusted gross income
limitation prohibits an individual from contributing what would otherwise be the
maximum tax-deductible contribution he or she could make, the individual will be
eligible to contribute the difference to an IRA in the form of nondeductible
contributions.

An eligible individual may contribute as much as $2,000 of qualified income
(earned income or, under certain circumstances, alimony) to an IRA each year (up
to $2,250 for married couples if one spouse has earned income of no more than
$250). All income and capital gains derived from IRA investments are reinvested
and compound tax-deferred until distributed. Such tax-deferred compounding can
lead to substantial retirement savings.

The table below shows how much individuals would accumulate in a fully tax-
deductible IRA by age 65 (before any distributions) if they contribute $2,000 at
the beginning of each year, assuming average annual returns of 5, 10, and 15%.
(At withdrawal, accumulations in this table will be taxable.)

Value of IRA at Age 65
Assuming $2,000 Deductible Annual Contribution
<TABLE>
<CAPTION>
Starting
Age of Annual Rate
of Return
Contributions 5% 10% 15%
- ------------- ---- ---- ----
<S> <C> <C> <C>
25 $253,680 $973,704 $4,091,908
35 139,522 361,887 999,914
45 69,439 126,005 235,620
55 26,414 35,062 46,699
</TABLE>

This next table shows how much individuals would accumulate in non-IRA accounts
by age 65 if they start with $2,000 in pretax earned income at the beginning of
each year (which is $1,380 after taxes are paid), assuming average annual
returns of 5, 10 and 15%. (At withdrawal, a portion of the accumulation in this
table will be taxable.)

Value of a Non-IRA Account at
Age 65 Assuming $1,380 Annual Contributions
(post tax, $2,000 pretax) and a 31% Tax Bracket
<TABLE>
<CAPTION>
Starting
Age of Annual Rate
of Return
Contributions 5% 10% 15%
- ------------- ---- ---- ----
<S> <C> <C> <C>
25 $119,318 $287,021 $741,431
35 73,094 136,868 267,697
45 40,166 59,821 90,764
55 16,709 20,286 24,681
</TABLE>

Scudder 403(b) Plan

Shares of the Fund may also be purchased as the underlying investment for tax
sheltered annuity plans under the provisions of Section 403(b)(7) of the Code.
In general, employees of tax-exempt organizations described in Section 501(c)(3)
of the Code (such as hospitals, churches, religious, scientific, or literary
organizations and educational institutions) or a public school system are
eligible to participate in a 403(b) plan.

Automatic Withdrawal Plan

Non-retirement plan shareholders who currently own or purchase $10,000 or more
of shares of the Fund may establish an Automatic Withdrawal Plan. The investor
can then receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Payments are mailed at the
end of each month. The check amounts may be based on the redemption of a fixed
dollar amount, fixed share amount, percent of account value or declining
balance. The Plan provides for income dividends and capital gains
distributions, if any, to be reinvested in additional shares. Shares are then
liquidated as necessary to provide for withdrawal payments. Since the
withdrawals are in amounts selected by the investor and have no relationship to
yield or income, payments received cannot be considered as yield or income on
the investment and the resulting liquidations may deplete or possibly extinguish
the initial investment. Requests for increases in withdrawal amounts or to
change payee must be submitted in writing, signed exactly as the account is
registered and contain signature guarantee(s) as described under "Transaction
information--Redeeming shares--Signature guarantees" in each Fund's prospectus.
Any such requests must be received by the Funds' transfer agent by the 15th of
the month in which such change is to take effect. An Automatic Withdrawal Plan
may be terminated at any time by the shareholder, the Corporation or its agent
on written notice, and will be terminated when all shares of a Fund under the
Plan have been liquidated or upon receipt by the Corporation of notice of death
of the shareholder.

An Automatic Withdrawal Plan request form can be obtained by calling 1-
800-225-5163.

Group or Salary Deduction Plan

An investor may join a Group or Salary Deduction Plan where satisfactory
arrangements have been made with Scudder Investor Services, Inc. for forwarding
regular investments through a single source. The minimum annual investment is
$240 per investor which may be made in monthly, quarterly, semiannual or annual
payments. The minimum monthly deposit per investor is $20. Except for trustees
or custodian fees for certain retirement plans, at present there is no separate
charge for maintaining group or salary deduction plans; however, the Corporation
and its agents reserve the right to establish a maintenance charge in the future
depending on the services required by the investor.

The Corporation reserves the right, after notice has been given to the
shareholder, to redeem and close a shareholder's account in the event that the
shareholder ceases participating in the group plan prior to investment of $1,000
per individual or in the event of a redemption which occurs prior to the
accumulation of that amount or which reduces the account value to less than
$1,000 and the account value is not increased to $1,000 within a reasonable time
after notification. An investor in a plan who has not purchased shares for six
months shall be presumed to have stopped making payments under the plan.

Automatic Investment Plan

Shareholders may arrange to make periodic investments through automatic
deductions from checking accounts by completing the appropriate form and
providing the necessary documentation to establish this service. The minimum
investment is $50.

The Automatic Investment Plan involves an investment strategy called dollar cost
averaging. Dollar cost averaging is a method of investing whereby a specific
dollar amount is invested at regular intervals. By investing the same dollar
amount each period, when shares are priced low the investor will purchase more
shares than when the share price is higher. Over a period of time this
investment approach may allow the investor to reduce the average price of the
shares purchased. However, this investment approach does not assure a profit or
protect against loss. This type of regular investment program may be suitable
for various investment goals such as, but not limited to, college planning or
saving for a home.

Uniform Transfers/Gifts to Minors Act

Grandparents, parents or other donors may set up custodian accounts for minors.
The minimum initial investment is $1,000 unless the donor agrees to continue to
make regular share purchases for the account through Scudder's Automatic
Investment Plan. In this case, the minimum initial investment is $500.

The Corporation reserves the right, after notice has been given to the
shareholder and Custodian, to redeem and close a shareholder's account in the
event that regular investments to the account cease before the $1,000 minimum is
reached.

Scudder Trust Company

Annual service fees are paid by the Fund to Scudder Trust Company, an affiliate
of the Adviser, for certain retirement plan accounts and are included in the
fees paid to the Transfer Agent.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

(See "Distribution and performance information--Dividends and
capital gains distributions" in the Funds' prospectuses.)

Each Fund intends to follow the practice of distributing all of its investment
company taxable income, which includes any excess of net realized short-term
capital gains over net realized long-term capital losses. A Fund may follow the
practice of distributing the entire excess of net realized long-term capital
gains over net realized short-term capital losses. However, a Fund may retain
all or part of such gain for reinvestment after paying the related federal
income taxes for which the shareholders may then be asked to claim a credit
against their federal income tax liability. (See "TAXES.")

If a Fund does not distribute an amount of capital gain and/or ordinary income
required to be distributed by an excise tax provision of the Code, it may be
subject to such tax. (See "TAXES.") In certain circumstances, a Fund may
determine that it is in the interest of shareholders to distribute less than
such an amount.

Earnings and profits distributed to shareholders on redemptions of Fund shares
may be utilized by the Fund, to the extent permissible, as part of the Fund's
dividend paid deduction on its federal tax return.

The Corporation intends to distribute the Funds' investment company taxable
income and any net realized capital gains in December to avoid federal excise
tax, although an additional distribution may be made if necessary. Both types
of distributions will be made in shares of the Funds and confirmations will be
mailed to each shareholder unless a shareholder has elected to receive cash, in
which case a check will be sent. Distributions of investment company taxable
income and net realized capital gains are taxable (See "TAXES"), whether made in
shares or cash.

Each distribution is accompanied by a brief explanation of the form and
character of the distribution. The characterization of distributions on such
correspondence may differ from the characterization for federal tax purposes.
In January of each year the Funds issue to each shareholder a statement of the
federal income tax status of all distributions in the prior calendar year.

PERFORMANCE INFORMATION

(See "Distribution and performance information--Performance information" in the
Funds' prospectuses.)

From time to time, quotations of the Funds' performance may be included in
advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures will be calculated in the following
manner:

Average Annual Total Return

Average Annual Total Return is the average annual compound rate of return for
the periods of one year and the life of a Fund, ended on the last day of a
recent calendar quarter. Average Annual Total Return quotations reflect changes
in the price of the Funds' shares and assume that all dividends and capital
gains distributions during the respective periods were reinvested in Fund
shares. Average annual total return is calculated by finding the average annual
compound rates of return of a hypothetical investment over such periods,
according to the following formula (average annual total return is then
expressed as a percentage):

T = (ERV/P)^1/n - 1
Where:

T = Average Annual Total Return
P = a hypothetical initial payment of $1,000
n = number of years
ERV = ending redeemable value: ERV is the value, at
the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.

Average Annual Total Return for the periods ended October 31, 1994

One year Life of Fund (1)
--------- ----------------

Latin America Fund 33.43%* 45.90%*
Pacific Opportunities Fund 8.97% 22.62%*

(1) For the period beginning December 8, 1992 (commencement of operations for
each Fund).

* The Adviser maintained Fund expenses for the period December 8, 1992
through October 31, 1993 for both Funds and for the fiscal year ended
October 31, 1994 for Latin America Fund. For Latin America Fund, the
Average Annual Total Return for one year and for the life of the Fund, had
the Adviser not maintained the Fund's expenses, would have been
approximately 33.37% and 45.65%, respectively. For Pacific Opportunities
Fund, the Average Annual Total Return for the life of the Fund had the
Adviser not maintained the Fund's expenses would have been approximately
22.47%.

As described above, average annual total return is based on historical earnings
and is not intended to indicate future performance. Average annual total return
for a Fund will vary based on changes in market conditions and the level of a
Fund's expenses.

In connection with communicating its average annual total return to current or
prospective shareholders, a Fund also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.

Cumulative Total Return

Cumulative Total Return is the compound rate of return on a hypothetical initial
investment of $1,000 for a specified period. Cumulative Total Return quotations
reflect changes in the price of the Funds' shares and assume that all dividends
and capital gains distributions during the period were reinvested in Fund
shares. Cumulative Total Return is calculated by finding the cumulative rates
of return of a hypothetical investment over such periods, according to the
following formula (cumulative total return is then expressed as a percentage):

C = (ERV/P) -1
Where:

C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the value, at
the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.

Cumulative Total Return for the periods ended October 31, 1994

One year Life of Fund (1)

Latin America Fund 33.43% 104.70%

Pacific Opportunities Fund 8.97% 47.20%

(1) For the period beginning December 8, 1992 (commencement of operations for
each Fund).

Total Return

Total return is the rate of return on an investment for a specified period of
time calculated in the same manner as cumulative total return.

Capital Change

Capital change measures the return from invested capital including reinvested
capital gains distributions. Capital change does not include the reinvestment
of income dividends.

Quotations of the Funds' performance are historical and are not intended to
indicate future performance. An investor's shares when redeemed may be worth
more or less than their original cost. Performance of a Fund will vary based on
changes in market conditions and the level of the Funds' expenses.

Comparison of Fund Performance

A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner.
Since there are different methods of calculating performance, investors should
consider the effects of the methods used to calculate performance when comparing
performance of a Fund with performance quoted with respect to other investment
companies or types of investments.

In connection with communicating its performance to current or prospective
shareholders, a Fund also may compare these figures to the performance of
unmanaged indices which may assume reinvestment of dividends or interest but
generally do not reflect deductions for administrative and management costs.
Examples include, but are not limited to the Dow Jones Industrial Average, the
Consumer Price Index, Standard & Poor's 500 Composite Stock Price Index (S&P
500), the NASDAQ OTC Composite Index, the NASDAQ Industrials Index, the Russell
2000 Index, and statistics published by the Small Business Administration.

Because some or all each Fund's investments are denominated in foreign
currencies, the strength or weakness of the U.S. dollar as against these
currencies may account for part that Fund's investment performance. Historical
information on the value of the dollar versus foreign currencies may be used
from time to time in advertisements concerning the Funds. Such historical
information is not indicative of future fluctuations in the value of the U.S.
dollar against these currencies. In addition, marketing materials may cite
country and economic statistics and historical stock market performance for any
of the countries in which either Fund invests, including, but not limited to,
the following: population growth, gross domestic product, inflation rate,
average stock market price-earnings ratios and the total value of stock markets.
Sources for such statistics may include official publications of various foreign
governments and exchanges.

From time to time, in advertising and marketing literature, a Fund's performance
may be compared to the performance of broad groups of mutual funds with similar
investment goals, as tracked by independent organizations such as, Investment
Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc. ("Lipper"), CDA
Investment Technologies, Inc. ("CDA"), Morningstar, Inc., Value Line Mutual Fund
Survey and other independent organizations. When these organizations' tracking
results are used, a Fund will be compared to the appropriate fund category, that
is, by fund objective and portfolio holdings, or to the appropriate volatility
grouping, where volatility is a measure of a fund's risk. For instance, a
Scudder growth fund will be compared to funds in the growth fund category; a
Scudder income fund will be compared to funds in the income fund category; and
so on. Scudder funds (except for money market funds) may also be compared to
funds with similar volatility, as measured statistically by independent
organizations. In addition, a Fund's performance may also be compared to the
performance of broad groups of comparable mutual funds. Indices with which a
Fund's performance may be compared include, but are not limited to, the
following:

The Europe/Australia/Far East (EAFE) Index
Morgan Stanley Capital International World Index
J.P. Morgan Global Traded Bond Index
Salomon Brothers World Government Bond Index
NASDAQ Composite Index
Wilshire 5000 Stock Index

The following graph illustrates the historical risks and returns of selected
indices which track the performance of various combinations of United States and
international securities for the ten year period ended December 31, 1994;
results for other periods may vary. The graph uses ten year annualized
international returns represented by the Morgan Stanley Capital International
Europe, Australia and Far East (EAFE) Index and ten year annualized United
States returns represented by the S&P 500 Index. Risk is measured by the
standard deviation in overall portfolio performance within each index.
Performance of an index is historical, and does not represent the performance of
a Fund, and is not a guarantee of future results.

(X-Y CHART TITLE) EFFICIENT FRONTIER

MSCI EAFE vs. S&P 500 (12/31/84-12/31/94)
(CHART DATA)
<TABLE>
<CAPTION>
Data Point Labels X-Axis Y-Axis
Standard Deviation Total Return
<S> <C> <C>
100% Int'l MSCI EAFE 19.35 17.55
10 US/90 Int'l 18.13 17.23
20/80 17.03 16.91
30 U.S./70 Int'l 16.07 16.59
40/60 15.29 16.27
50 U.S./50Int'l 14.70 15.96
60/40 14.34 15.64
70 U.S./30 Int'l 14.21 15.32
80/20 14.33 15.00
90 U.S./10 Int'l 14.69 14.68
100% U.S. S&P 500 15.27 14.36
</TABLE>

Source: Lipper Analytical Services, Inc. (Data as of 12/31/94)

From time to time, in marketing and other Fund literature, Directors and
officers of the Funds, the Funds' portfolio manager, or members of the portfolio
management team may be depicted and quoted to give prospective and current
shareholders a better sense of the outlook and approach of those who manage the
Funds. In addition, the amount of assets that the Adviser has under management
in various geographical areas may be quoted in advertising and marketing
materials.

The Funds may be advertised as an investment choice in Scudder's college
planning program. The description may contain illustrations of projected future
college costs based on assumed rates of inflation and examples of hypothetical
fund performance, calculated as described above.

Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.

Marketing and other Fund literature may include a description of the potential
risks and rewards associated with an investment in the Funds. The description
may include a "risk/return spectrum" which compares the Funds to other Scudder
funds or broad categories of funds, such as money market, bond or equity funds,
in terms of potential risks and returns. Money market funds are designed to
maintain a constant $1.00 share price and have a fluctuating yield. Share
price, yield and total return of a bond fund will fluctuate. The share price
and return of an equity fund also will fluctuate. The description may also
compare the Funds to bank products, such as certificates of deposit. Unlike
mutual funds, certificates of deposit are insured up to $100,000 by the U.S.
government and offer a fixed rate of return.

Because bank products guarantee the principal value of an investment and money
market funds seek stability of principal, these investments are considered to be
less risky than investments in either bond or equity funds, which may involve
the loss of principal. However, all long-term investments, including
investments in bank products, may be subject to inflation risk, which is the
risk of erosion of the value of an investment as prices increase over a long
time period. The risks/returns associated with an investment in bond or equity
funds depend upon many factors. For bond funds these factors include, but are
not limited to, a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.

A risk/return spectrum generally will position the various investment categories
in the following order: bank products, money market funds, bond funds and
equity funds. Shorter-term bond funds generally are considered less risky and
offer the potential for less return than longer-term bond funds. The same is
true of domestic bond funds relative to international bond funds, and bond funds
that purchase higher quality securities relative to bond funds that purchase
lower quality securities. Growth and income equity funds are generally
considered to be less risky and offer the potential for less return than growth
funds. In addition, international equity funds usually are considered more
risky than domestic equity funds but generally offer the potential for greater
return.

Risk/return spectrums also may depict funds that invest in both domestic and
foreign securities or a combination of bond and equity securities.

Evaluation of Fund performance or other relevant statistical information made by
independent sources may also be used in advertisements concerning the Funds,
including reprints of, or selections from, editorials or articles about these
Funds. Sources for Fund performance information and articles about the Funds
may include the following:

American Association of Individual Investors' Journal, a monthly publication of
the AAII that includes articles on investment analysis techniques.

Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.

Banxquote, an on-line source of national averages for leading money market and
bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.

Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.

Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.

CDA Investment Technologies, Inc., an organization which provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate market
indices.

Consumer Digest, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.

Financial Times, Europe's business newspaper, which features from time to time
articles on international or country-specific funds.

Financial World, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.

Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.

Fortune, a national business publication that periodically rates the performance
of a variety of mutual funds.

The Frank Russell Company, a West-Coast investment management firm that
periodically evaluates international stock markets and compares foreign equity
market performance to U.S. stock market performance.

Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.

IBC/Donoghue's Money Fund Report, a weekly publication of the Donoghue
Organization, Inc., of Holliston, Massachusetts, reporting on the performance of
the nation's money market funds, summarizing money market fund activity and
including certain averages as performance benchmarks, specifically "Donoghue's
Money Fund Average," and "Donoghue's Government Money Fund Average."

Ibbotson Associates, Inc., a company specializing in investment research and
data.

Investment Company Data, Inc., an independent organization which provides
performance ranking information for broad classes of mutual funds.

Investor's Daily, a daily newspaper that features financial, economic, and
business news.

Kiplinger's Personal Finance Magazine, a monthly investment advisory publication
that periodically features the performance of a variety of securities.

Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a weekly
publication of industry-wide mutual fund averages by type of fund.

Money, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.

Morgan Stanley International, an integrated investment banking firm that
compiles statistical information.

Mutual Fund Values, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance, risk and portfolio
characteristics.

The New York Times, a nationally distributed newspaper which regularly covers
financial news.

The No-Load Fund Investor, a monthly newsletter, published by Sheldon Jacobs,
that includes mutual fund performance data and recommendations for the mutual
fund investor.

No-Load Fund*X, a monthly newsletter, published by DAL Investment Company, Inc.,
that reports on mutual fund performance, rates funds and discusses investment
strategies for the mutual fund investor.

Personal Investing News, a monthly news publication that often reports on
investment opportunities and market conditions.

Personal Investor, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.

Smart Money, a national personal finance magazine published monthly by Dow Jones
and Company, Inc. and The Hearst Corporation. Focus is placed on ideas for
investing, spending and saving.

Success, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.

United Mutual Fund Selector, a semi-monthly investment newsletter, published by
Babson United Investment Advisors, that includes mutual fund performance data
and reviews of mutual fund portfolios and investment strategies.

USA Today, a leading national daily newspaper.

U.S. News and World Report, a national business weekly that periodically reports
mutual fund performance data.

Wall Street Journal, a Dow Jones and Company, Inc. newspaper which regularly
covers financial news.

Wiesenberger Investment Companies Services, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records and price ranges.

Working Woman, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.

Worth, a national publication put out 10 times per year by Capital Publishing
Company, a subsidiary of Fidelity Investments. Focus is placed on personal
financial journalism.

ORGANIZATION OF THE FUNDS

(See "Fund organization" in the Funds' prospectuses.)

The Corporation was organized as Scudder Fund of Canada Ltd. in Canada in 1953
by the investment management firm of Scudder, Stevens & Clark. On March 16,
1964, the name of the Corporation was changed to Scudder International
Investments Ltd. On July 31, 1975, the corporate domicile of the Corporation
was changed to the United States through the transfer of its net assets to a
newly formed Maryland corporation, Scudder International Fund, Inc., in exchange
for shares of the Corporation which then were distributed to the shareholders of
the Corporation.

The authorized capital stock of the Corporation consists of 400 million shares
of a par value of $.01 each, all of one class and all having equal rights as to
voting, redemption, dividends and liquidation. Shareholders have one vote for
each share held. The Corporation's capital stock is comprised of four series:
Scudder International Fund, the original series; Scudder Latin America Fund and
Scudder Pacific Opportunities Fund, both organized in December, 1992 and Scudder
Greater Europe Growth Fund, organized in August, 1994. Each series consists of
100 million shares. The Directors have the authority to issue additional series
of shares and to designate the relative rights and preferences as between the
different series. All shares issued and outstanding are fully paid and
non-assessable, transferable, and redeemable at net asset value at the option of
the shareholder. Shares have no pre-emptive or conversion rights.

The shares of the Corporation have non-cumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
Directors can elect 100% of the Directors if they choose to do so, and, in such
event, the holders of the remaining less than 50% of the shares voting for the
election of Directors will not be able to elect any person or persons to the
Board of Directors. The assets of the Corporation received for the issue or
sale of the shares of each series and all income, earnings, profits and proceeds
thereof, subject only to the rights of creditors, are specifically allocated to
such series and constitute the underlying assets of such series. The underlying
assets of each series are segregated on the books of account, and are to be
charged with the liabilities in respect to such series and with such a share of
the general liabilities of the Corporation. If a series were unable to meet its
obligations, the assets of all other series may in some circumstances be
available to creditors for that purpose, in which case the assets of such other
series could be used to meet liabilities which are not otherwise properly
chargeable to them. Expenses with respect to any two or more series are to be
allocated in proportion to the asset value of the respective series except where
allocations of direct expenses can otherwise be fairly made. The officers of
the Corporation, subject to the general supervision of the Directors, have the
power to determine which liabilities are allocable to a given series, or which
are general or allocable to two or more series. In the event of the dissolution
or liquidation of the Corporation or any series, the holders of the shares of
any series are entitled to receive as a class the underlying assets of such
shares available for distribution to shareholders.

Shares of the Corporation entitle their holders to one vote per share; however,
separate votes are taken by each series on matters affecting an individual
series. For example, a change in investment policy for a series would be voted
upon only by shareholders of the series involved. Additionally, approval of the
investment advisory agreement is a matter to be determined separately by each
series. Approval by the shareholders of one series is effective as to that
series whether or not enough votes are received from the shareholders of the
other series to approve such agreement as to the other series.

The Directors, in their discretion, may authorize the division of shares of the
Corporation (or shares of a series) into different classes permitting shares of
different classes to be distributed by different methods. Although shareholders
of different classes of a series would have an interest in the same portfolio of
assets, shareholders of different classes may bear different expenses in
connection with different methods of distribution. The Directors have no
present intention of taking the action necessary to effect the division of
shares into separate classes (which under present regulations would require the
Corporation first to obtain an exemptive order of the SEC) nor of changing the
method of distribution of shares of the Fund.

The Corporation's Amended and Restated Certificate of Incorporation (the
"Articles") provide that the Directors of the Corporation, to the fullest extent
permitted by Maryland General Corporation Law and the 1940 Act, shall not be
liable to the Corporation or its shareholders for damages. Maryland law
currently provides that Directors shall be immune from liability for any action
taken by them in good faith, in a manner reasonably believed to be in the best
interests of the Corporation and with the care that an ordinarily prudent person
in a like position would use under similar circumstances. In so acting, a
Director shall be fully protected in relying in good faith upon the records of
the Corporation and upon reports made to the Corporation by persons selected in
good faith by the Directors as qualified to make such reports. The Articles and
the By-Laws provide that the Corporation will indemnify its Directors, officers,
employees or agents against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their offices with the
Corporation consistent with applicable law. Nothing in the Articles or the
By-Laws protects or indemnifies a Director, officer, employee or agent against
any liability to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.

INVESTMENT ADVISER

(See "Fund organization--Investment adviser" in the Funds' prospectuses.)

Scudder, Stevens & Clark, Inc., an investment counsel firm, acts as investment
adviser to the Funds. This organization is one of the most experienced
investment management firms in the United States. It was established as a
partnership in 1919 and pioneered the practice of providing investment counsel
to individual clients on a fee basis. In 1928 it introduced the first no-load
mutual fund to the public. In 1953, the Adviser introduced the Scudder
International Fund, the first mutual fund available in the U.S. investing
internationally in securities of issuers in several foreign countries. As of
September 30, 1994, the Adviser was responsible for managing more than $20
billion in non-U.S. securities, including approximately $3 billion in Latin
American debt and equity securities and $4 billion in Pacific Basin debt and
equity securities. The Adviser manages a number of offshore and U.S. investment
companies that invest in all or select regions of Latin America and the Pacific
Basin.

The principal source of the Adviser's income is professional fees received from
providing continuous investment advice, and the firm derives no income from
brokerage or underwriting of securities. Today, it provides investment counsel
for many individuals and institutions, including insurance companies, colleges,
industrial corporations, and financial and banking organizations. In addition,
it manages Montgomery Street Income Securities, Inc., Scudder California Tax
Free Trust, Scudder Cash Investment Trust, Scudder Development Fund, Scudder
Equity Trust, Scudder Fund, Inc., Scudder Funds Trust, Scudder Global Fund,
Inc., Scudder GNMA Fund, Scudder Portfolio Trust, Scudder Institutional Fund,
Inc., Scudder International Fund, Inc., Scudder Investment Trust, Scudder
Municipal Trust, Scudder Mutual Funds, Inc., Scudder New Asia Fund, Inc.,
Scudder New Europe Fund, Inc., Scudder State Tax Free Trust, Scudder Tax Free
Money Fund, Scudder Tax Free Trust, Scudder U.S. Treasury Money Fund, Scudder
Variable Life Investment Fund, Scudder World Income Opportunities Fund, Inc.,
The Argentina Fund, Inc., The Brazil Fund, Inc., The First Iberian Fund, Inc.,
The Korea Fund, Inc., The Japan Fund, Inc. and The Latin America Dollar Income
Fund, Inc. Some of the foregoing companies or trusts have two or more series.

The Adviser also provides investment advisory services to the mutual funds which
comprise the AARP Investment Program from Scudder. The AARP Investment Program
from Scudder has assets over $11 billion and includes the AARP Growth Trust,
AARP Income Trust, AARP Tax Free Income Trust and AARP Cash Investment Funds.

The Adviser maintains a large research department, which conducts continuous
studies of the factors that affect the position of various industries, companies
and individual securities. The Adviser receives published reports and
statistical compilations from issuers and other sources, as well as analyses
from brokers and dealers who may execute portfolio transactions for the
Adviser's clients. However, the Adviser regards this information and material
as an adjunct to its own research activities. Scudder's international
investment management team travels the world, researching hundreds of companies.
In selecting the securities in which a Fund may invest, the conclusions and
investment decisions of the Adviser with respect to a Fund are based primarily
on the analyses of its own research department.

Certain investments may be appropriate for the Funds and also for other clients
advised by the Adviser. Investment decisions for the Funds and other clients
are made with a view to achieving their respective investment objectives and
after consideration of such factors as their current holdings, availability of
cash for investment and the size of their investments generally. Frequently, a
particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients on the same day. In
such event, such transactions will be allocated among the clients in a manner
believed by the Adviser to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities purchased
or sold by a Fund. Purchase and sale orders for a Fund may be combined with
those of other clients of the Adviser in the interest of achieving the most
favorable net results to a Fund.

The Investment Management Agreements between the Corporation, on behalf of Latin
America Fund and Pacific Opportunities Fund, and the Adviser was last approved
by the Directors on September 7, 1994. Each Agreement (collectively, the
"Agreements") is dated December 8, 1992 and will continue in effect until
September 30, 1995 and from year to year thereafter only if their continuance is
approved annually by the vote of a majority of those Directors who are not
parties to such Agreement or interested persons of the Adviser or the
Corporation, cast in person at a meeting called for the purpose of voting on
such approval, and either by a vote of the Corporation's Directors or of a
majority of the outstanding voting securities of each Fund. The Agreements may
be terminated at any time without payment of penalty by either party on sixty
days' written notice, and automatically terminates in the event of their
assignment.

Under the Agreements, the Adviser regularly provides a Fund with continuing
investment management for a Fund's portfolio consistent with each Fund's
investment objective, policies and restrictions and determines what securities
shall be purchased, held or sold and what portion of a Fund's assets shall be
held uninvested, subject to a Fund's Articles, By-Laws, the 1940 Act, the Code
and to the Fund's investment objective, policies and restrictions, and subject,
further, to such policies and instructions as the Board of Directors of each
Fund may from time to time establish.

Under the Agreements, the Adviser renders significant administrative services
(not otherwise provided by third parties) necessary for a Fund's operations as
an open-end investment company including, but not limited to, preparing reports
and notices to the Directors and shareholders; supervising, negotiating
contractual arrangements with, and monitoring various third-party service
providers to the Funds (such as the Funds' transfer agent, pricing agents,
Custodian, accountants and others); preparing and making filings with the SEC
and other regulatory agencies; assisting in the preparation and filing of the
Funds' federal, state and local tax returns; preparing and filing the Funds'
federal excise tax returns; assisting with investor and public relations
matters; monitoring the valuation of securities and the calculation of net asset
value; monitoring the registration of shares of the Fund under applicable
federal and state securities laws; maintaining the Funds' books and records to
the extent not otherwise maintained by a third party; assisting in establishing
accounting policies of the Funds; assisting in the resolution of accounting and
legal issues; establishing and monitoring the Funds' operating budget;
processing the payment of the Funds' bills; assisting the Funds in, and
otherwise arranging for, the payment of distributions and dividends and
otherwise assisting the Funds in the conduct of their business, subject to the
direction and control of the Directors.

The Adviser pays the compensation and expenses of all Directors, officers and
executive employees (except expenses incurred attending Board and committee
meetings outside New York, New York or Boston, Massachusetts) of the Corporation
affiliated with the Adviser and makes available, without expense to the Funds,
the services of such Directors, officers and employees of the Adviser as may
duly be elected officers of the Corporation, subject to their individual consent
to serve and to any limitations imposed by law, and provides the Funds' office
space and facilities.

For these services Latin America Fund pays the Adviser an annual fee equal to
1.25% of the Fund's average daily net assets, payable monthly, provided the Fund
will make such interim payments as may be requested by the Adviser not to exceed
75% of the amount of the fee then accrued on the books of the Fund and unpaid.
For the period December 8, 1992 (commencement of operations) to October 31,
1993, the Adviser did not impose a portion of its management fee amounting to
$544,287 and the amount imposed amounted to $445,720. The Agreements provide
that if a Fund's expenses, exclusive of taxes, interest, and extraordinary
expenses, exceed specified limits, such excess, up to the amount of the
management fee, will be paid by the Adviser. The Adviser retains the ability to
be repaid by a Fund if expenses fall below the specified limit prior to the end
of the fiscal year. These expense limitation arrangements can decrease a Fund's
expenses and improve its performance. During the fiscal year ended October 31,
1994, these agreements resulted in a reduction of management fees paid by the
Latin America Fund of $229,325. During the fiscal year ended October 31, 1994,
the Adviser imposed a portion of its management fee amounting to $7,169,711.

For these services Pacific Opportunities Fund pays the Adviser an annual fee
equal to 1.10% of the Fund's average daily net assets payable monthly, provided
the Fund will make interim payments as may be requested by the Adviser not to
exceed 75% of the amount of the fee then accrued on the books of the Fund and
unpaid. For the period December 8, 1992 (commencement of operations) to October
31, 1993 the Adviser did not impose any of its management fee which amounted to
$531,572. For the fiscal year ended October 31, 1994 the fee imposed amounted
to $4,662,015.

Under the Agreements the Funds are responsible for all of their other expenses
including: organizational costs, fees and expenses incurred in connection with
membership in investment company organizations; brokers' commissions; legal,
auditing and accounting expenses; taxes and governmental fees; the fees and
expenses of the Transfer Agent; any other expenses of issue, sale, underwriting,
distribution, redemption or repurchase of shares; the expenses of and the fees
for registering or qualifying securities for sale; the fees and expenses of
Directors, officers and employees of the Funds who are not affiliated with the
Adviser; the cost of printing and distributing reports and notices to
stockholders; and the fees and disbursements of custodians. The Funds may
arrange to have third parties assume all or part of the expenses of sale,
underwriting and distribution of shares of the Funds. Each Fund is also
responsible for its expenses of shareholders' meetings, the cost of responding
to shareholders' inquiries, and its expenses incurred in connection with
litigation, proceedings and claims and the legal obligation it may have to
indemnify its officers and Directors of the Funds with respect thereto. The
custodian agreement provides that the Custodian shall compute the net asset
value. Each Agreement expressly provides that the Adviser shall not be required
to pay a pricing agent of any Fund for portfolio pricing services, if any.

Each Agreement requires the Adviser to reimburse that Fund for all or a portion
of advances of its management fee to the extent annual expenses of a Fund
(including the management fee stated above) exceed the limitations prescribed by
any state in which such Fund's shares are offered for sale. Management has been
advised that, while most states have eliminated expense limitations, the lowest
of such limitations is presently 2 1/2% of average daily net assets up to $30
million, 2% of the next $70 million of average daily net assets and 1 1/2% of
average daily net assets in excess of that amount. Certain expenses such as
brokerage commissions, taxes, extraordinary expenses and interest are excluded
from such limitations. Any such fee advance required to be returned to a Fund
will be returned as promptly as practicable after the end of the Funds' fiscal
year. However, no fee payment will be made to the Adviser during any fiscal
year which will cause year to date expenses to exceed the cumulative pro rata
expense limitations at the time of such payment.

The Agreements also provide that the Funds may use any name derived from the
name "Scudder, Stevens & Clark" only as long as an Agreement or any extension,
renewal or amendment thereof remains in effect.

In reviewing the terms of the Agreements and in discussions with the Adviser
concerning such Agreements, the Directors of the Corporation who are not
"interested persons" of the Adviser are represented by independent counsel at
the Funds' expense.

The Agreements provide that the Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by a Fund in connection with
matters to which the Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by the Adviser of its
obligations and duties under the Agreement.

Officers and employees of the Adviser from time to time may have transactions
with various banks, including the Fund's custodian bank. It is the Adviser's
opinion that the terms and conditions of those transactions which have occurred
were not influenced by existing or potential custodial or other Fund
relationships.

None of the officers or Directors of the Corporation may have dealings with a
Fund as principals in the purchase or sale of securities, except as individual
subscribers to or holders of shares of a Fund.

Personal Investments by Employees of the Adviser

Employees of the Adviser are permitted to make personal securities transactions,
subject to requirements and restrictions set forth in the Adviser's Code of
Ethics. The Code of Ethics contains provisions and requirements designed to
identify and address certain conflicts of interest between personal investment
activities and the interests of investment advisory clients such as the Funds.
Among other things, the Code of Ethics, which generally complies with standards
recommended by the Investment Company Institute's Advisory Group on Personal
Investing, prohibits certain types of transactions absent prior approval,
imposes time periods during which personal transactions may not be made in
certain securities, and requires the submission of duplicate broker
confirmations and monthly reporting of securities transactions. Additional
restrictions apply to portfolio managers, traders, research analysts and others
involved in the investment advisory process. Exceptions to these and other
provisions of the Code of Ethics may be granted in particular circumstances
after review by appropriate personnel.

<TABLE>
<CAPTION>
DIRECTORS AND OFFICERS

Position with
Underwriter,
Position Principal Scudder Investor
Name and Address with Fund Occupation** Services, Inc.
- ---------------- ---------- ------------ ------------------
<C> <C> <C> <C>

Edmond D. Villani #@* Chairman of the President and --
Board and Managing Director
Director of Scudder,
Stevens & Clark,
Inc.

Nicholas Bratt #@* President and Managing Director --
Director of Scudder,
Stevens & Clark,
Inc.

Paul Bancroft III Director Venture Capitalist --
1120 Cheston Lane and Consultant to
Queenstown, MD 21658 Bessemer
Securities
Corporation;
President, Chief
Executive Officer
and Director,
Bessemer
Securities
Corporation (until
1988)

Thomas J. Devine Director Consultant --
641 Lexington Avenue
New York, NY 10022

William H. Gleysteen, Director President, The --
Jr. Japan Society,
The Japan Society, Inc. (1989 to
Inc. present); Vice
333 East 47th Street President of
New York, NY 10017 Studies, Council
on Foreign
Relations
(1986-1989)

William H. Luers Director President, The --
The Metropolitan Metropolitan
Museum of Art Museum of Art
1000 Fifth Avenue (1986 to present)
New York, NY 10028

Wilson Nolen Director Consultant (1989 --
1120 Fifth Avenue to present);
New York, NY 10128 Corporate Vice
President, Becton,
Dickinson &
Company,
(manufacturer of
medical and
scientific
products) until
1989

Juris Padegs #@* Director, Vice Managing Director Vice President &
President and of Scudder, Director
Assistant Stevens & Clark,
Secretary Inc.

Daniel Pierce +@* Director Chairman of the Vice President,
Board and Managing Director &
Director of Assistant
Scudder, Stevens & Treasurer
Clark, Inc.

Gordon Shillinglaw Director Professor Emeritus --
196 Villard Avenue of Accounting,
Hastings-on-Hudson, Columbia
NY 10706 University
Graduate School of
Business

Robert G. Stone, Jr. Director Chairman of the --
405 Lexington Avenue Board and
New York, NY 10174 Director, Kirby
Corporation,
(marine
transportation,
diesel repair and
property and
casualty insurance
in Puerto Rico)

Robert W. Lear Honorary Executive-in-Resid --
429 Silvermine Road Director ence, Visiting
New Canaan, CT 06840 Professor,
Columbia
University
Graduate School of
Business

Carol L. Franklin# Vice President Principal of --
Scudder, Stevens &
Clark, Inc.

Edmund B. Games, Jr. Vice President Principal of --
+ Scudder, Stevens &
Clark, Inc.

Jerard K. Hartman # Vice President Managing Director --
of Scudder,
Stevens & Clark,
Inc.

William E. Holzer # Vice President Managing Director --
of Scudder,
Stevens & Clark,
Inc.

Thomas W. Joseph + Vice President Principal of Vice President,
Scudder, Stevens & Director,
Clark, Inc. Treasurer &
Assistant Clerk

David S. Lee + Vice President Managing Director President,
and Assistant of Scudder, Assistant
Treasurer Stevens & Clark, Treasurer and
Inc. Director

Thomas F. McDonough + Vice President Principal of Clerk
and Secretary Scudder, Stevens &
Clark, Inc.

Pamela A. McGrath + Vice President Principal of --
and Treasurer Scudder, Stevens &
Clark, Inc.

Edward J. O'Connell # Vice President Principal of Assistant
and Assistant Scudder, Stevens & Treasurer
Treasurer Clark, Inc.

Kathryn L. Quirk # Vice President Managing Director Vice President
and Assistant of Scudder,
Secretary Stevens & Clark,
Inc.

William F. Truscott+ Vice President Vice President of --
Scudder, Stevens &
Clark, Inc.

Richard W. Desmond # Assistant Vice President of Vice President
Secretary Scudder, Stevens &
Clark, Inc.

Coleen Downs Dinneen+ Assistant Vice President of Assistant Clerk
Secretary Scudder, Stevens &
Clark, Inc.

* Messrs. Villani, Bratt, Padegs and Pierce are considered by
each Fund and its counsel to be persons who are "interested
persons" of the Adviser or of the Fund within the meaning of
the 1940 Act, as amended.
** Unless otherwise stated, all officers and directors have been
associated with their respective companies for more than five
years, but not necessarily in the same capacity.
@ Messrs. Villani and Padegs are members of the Executive
Committee which may exercise substantially all of the powers
of the Board of Directors when it is not in session.
+ Address: Two International Place, Boston, Massachusetts
02110
# Address: 345 Park Avenue, New York, New York 10154

</TABLE>

As of January 31, 1995 all Directors and officers as a group owned
beneficially (as the term is defined in Section 13(d) under the Securities
Exchange Act of 1934) less than 1% of the shares of Latin America Fund and
454,490 shares, or 1.74% of the shares of Pacific Opportunities Fund outstanding
on such date.

Certain accounts for which the Adviser acts as investment adviser owned
2,371,297 shares in the aggregate, or 9.09% of the outstanding shares of Pacific
Opportunities Fund on January 31, 1995. The Adviser may be deemed to be the
beneficial owner of such shares but disclaims any beneficial ownership in such
shares.

To the best of each Fund's knowledge, as of January 31, 1995 no person
owned beneficially more than 5% of a Fund's outstanding shares, except as
stated above.

The Directors and officers of the Corporation also serve in similar capacities
with other Scudder funds.

REMUNERATION

Several of the officers and Directors of the Corporation may be officers or
employees of the Adviser, Scudder Service Corporation, Scudder Trust Company or
of Scudder Investor Services, Inc. and participate in the fees paid by the
Corporation. The Corporation pays no direct remuneration to any officer of the
Corporation. However, each of the Corporation's Directors who is not affiliated
with the Adviser will be paid by the Corporation. Each of these unaffiliated
Directors receives an annual director's fee of $4,000 from the Fund and fees of
$400 for each attended Directors meeting, audit committee meeting or meeting
held for the purpose of considering arrangements between the Funds and the
Adviser or any of its affiliates. Each unaffiliated Director also receives $150
per committee meeting other than those set forth above. For the fiscal year
ended October 31, 1994, Latin America Fund paid such Directors $61,215 and
Pacific Opportunities Fund paid such Directors $61,190.

The following Compensation Table, provides in tabular form, the following data.

Column (1) All Directors who receive compensation from the Corporation.
Column (2) Aggregate compensation received by a Director from all series of the
Corporation - Scudder International Fund Inc., which is comprised of Scudder
International Fund, Scudder Latin America Fund, Scudder Pacific Opportunities
Fund and Scudder Greater Europe Growth Fund.
Columns (3) and (4) Pension or retirement benefits accrued or proposed to be
paid by the Corporation. Scudder International Fund, Inc. does not pay its
Directors such benefits.
Column (5) Total compensation received by a Director from Scudder International
Fund, Scudder Latin America Fund, Scudder Pacific Opportunities Fund and Scudder
Greater Europe Growth Fund, plus compensation received from all funds managed by
the Adviser for which a Director serves. The total number of funds from which a
Director receives such compensation is also provided in column (5).

<TABLE>
<CAPTION>
Compensation Table
for the year ended December 31, 1994

(1) (2) (3) (4) (5)
Aggregate
Compensation from
the Corporation
(consisting of four
funds: Scudder
International Fund,
Scudder Latin
America Fund, Pension or Total Compensation
Scudder Pacific Retirement Estimated From the
Opportunities Fund Benefits Accrued Annual Corporation and
Name of Person, and Scudder Greater As Part of Fund Benefits Upon Fund Complex Paid
Position Europe Growth Fund) Expenses Retirement to Director
- ---------------- ------------------ --------------- ------------ ------------------
<S> <C> <C> <C> <C>

Paul Bancroft III, $ 26,600 N/A N/A $ 120,238
Director (14 funds)

Thomas J. Devine, $ 26,600 N/A N/A $ 115,656
Director (16 funds)

William H. Gleysteen, Jr., $ 26,150 $ 3,804 $3,000 $ 110,213
Director (12 funds)

William H. Luers, $ 26,150 N/A N/A $ 83,713
Director (10 funds)

Wilson Nolen, $ 26,600 N/A N/A $ 132,023.43
Director (15 funds)

Gordon Shillinglaw, $ 29,000 N/A N/A $ 89,570
Director (14 funds)

Robert G. Stone, Jr., $ 26,600 $ 6,289 $ 6,000 $ 134,438
Director (15 funds)

</TABLE>
DISTRIBUTOR

The Corporation has an underwriting agreement with Scudder Investor Services,
Inc. (the "Distributor"), a Massachusetts corporation, which is a wholly-owned
subsidiary of the Adviser, a Delaware corporation. The Corporation's
underwriting agreement dated July 15, 1985 will remain in effect until September
30, 1995 and from year to year thereafter only if its continuance is approved
annually by a majority of the members of the Board of Directors who are not
parties to such agreement or interested persons of any such party and either by
vote of a majority of the Board of Directors or a majority of the outstanding
voting securities of each Fund. The underwriting agreement was last approved by
the Directors on September 7, 1994.

Under the underwriting agreement, the Funds are responsible for: the payment of
all fees and expenses in connection with the preparation and filing with the SEC
of its registration statement and prospectus and any amendments and supplements
thereto; the registration and qualification of shares for sale in the various
states, including registering each Fund as a broker or dealer in various states,
as required; the fees and expenses of preparing, printing and mailing
prospectuses annually to existing shareholders (see below for expenses relating
to prospectuses paid by the Distributor); notices, proxy statements, reports or
other communications to shareholders of a Fund; the cost of printing and mailing
confirmations of purchases of shares and any prospectuses accompanying such
confirmations; any issuance taxes and/or any initial transfer taxes; a portion
of shareholder toll-free telephone charges and expenses of shareholder service
representatives; the cost of wiring funds for share purchases and redemptions
(unless paid by the shareholder who initiates the transaction); the cost of
printing and postage of business reply envelopes; and a portion of the cost of
computer terminals used by both the Funds and the Distributor.

The Distributor will pay for printing and distributing prospectuses or reports
prepared for its use in connection with the offering of the Fund's shares to the
public and preparing, printing and mailing any other literature or advertising
in connection with the offering of shares of each Fund to the public. The
Distributor will pay all fees and expenses in connection with its qualification
and registration as a broker or dealer under federal and state laws, a portion
of the cost of toll-free telephone service and expenses of shareholder service
representatives, a portion of the cost of computer terminals, and expenses of
any activity which is primarily intended to result in the sale of shares issued
by a Fund, unless a Rule 12b-1 Plan is in effect which provides that a Fund
shall bear some or all of such expenses.

Note: Although each Fund does not currently have a 12b-1 Plan, and the Directors
have no current intention of adopting one, a Fund would also pay those fees
and expenses permitted to be paid or assumed by a Fund pursuant to a 12b-1
Plan, if any, were adopted by a Fund, notwithstanding any other provision
to the contrary in the underwriting agreement.

As agent, the Distributor currently offers shares of each Fund on a continuous
basis to investors in all states in which shares of a Fund may from time to time
be registered or where permitted by applicable law. The underwriting agreement
provides that the Distributor accepts orders for shares at net asset value as no
sales commission or load is charged to the investor. The Distributor has made
no firm commitment to acquire shares of each Fund.

TAXES

(See "Distribution and performance information--Dividends and capital
gains distributions" and "Transaction information--Tax information,
Tax identification number" in the Funds' prospectuses.)

Each Fund has elected to be treated as a regulated investment company under
Subchapter M of the Code, or a predecessor statute and has qualified as such
since its inception. It intends to continue to qualify for such treatment.
Such qualification does not involve governmental supervision or management of
investment practices or policy.

A regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90 percent of its investment
company taxable income (including net short-term capital gain) and generally is
not subject to federal income tax to the extent that it distributes annually its
investment company taxable income and net realized capital gains in the manner
required under the Code.

Each Fund is subject to a 4% nondeductible excise tax on amounts required to be
but not distributed under a prescribed formula. The formula requires payment to
shareholders during a calendar year of distributions representing at least 98%
of a Fund's ordinary income for the calendar year, at least 98% of the excess of
its capital gains over capital losses (adjusted for certain ordinary losses)
realized during the one-year period ending October 31 during such year, and all
ordinary income and capital gains for prior years that were not previously
distributed.

Investment company taxable income generally is made up of dividends, interest
and net short-term capital gains in excess of net long-term capital losses, less
expenses. Net realized capital gains for a fiscal year are computed by taking
into account any capital loss carryforward of a Fund.

If any net realized long-term capital gains in excess of net realized short-term
capital losses are retained by a Fund for reinvestment, requiring federal income
taxes to be paid thereon by a Fund, that Fund intends to elect to treat such
capital gains as having been distributed to shareholders. As a result, each
shareholder will report such capital gains as long-term capital gains, will be
able to claim a proportionate share of federal income taxes paid by a Fund on
such gains as a credit against the shareholder's federal income tax liability,
and will be entitled to increase the adjusted tax basis of the shareholder's
Fund shares by the difference between the shareholder's pro rata share of such
gains and the shareholder's tax credit. If a Fund makes such an election, it
may not be treated as having met the excise tax distribution requirement.

Distributions of investment company taxable income are taxable to shareholders
as ordinary income.

Dividends from domestic corporations are not expected to comprise a substantial
part of a Fund's gross income. If any such dividends constitute a portion of a
Fund's gross income, a portion of the income distributions of that Fund may be
eligible for the 70% deduction for dividends received by corporations.
Shareholders will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent the shares of a Fund with
respect to which the dividends are received are treated as debt-financed under
federal income tax law and is eliminated if the shares are deemed to have been
held for less than 46 days.

Distributions of the excess of net long-term capital gain over net short-term
capital loss are taxable to shareholders as long-term capital gain, regardless
of the length of time the shares of a Fund have been held by such shareholders.
Such distributions are not eligible for the dividends-received deduction. Any
loss realized upon the redemption of shares held at the time of redemption for
six months or less will be treated as a long-term capital loss to the extent of
any amounts treated as distributions of long-term capital gain during such
six-month period.

Distributions of investment company taxable income and net realized capital
gains will be taxable as described above, whether received in shares or in cash.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received
equal to the net asset value of a share on the reinvestment date.

All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder on his or her federal income tax return. Dividends declared in
October, November or December with a record date in such a month will be deemed
to have been received by shareholders on December 31, if paid during January of
the following year. Redemptions of shares, including exchanges for shares of
another Scudder fund, may result in tax consequences (gain or loss) to the
shareholder and are also subject to these reporting requirements.

An individual may make a deductible IRA contribution of up to $2,000 or, if
less, the amount of the individual's earned income for any taxable year only if
(i) neither the individual nor his or her spouse (unless filing separate
returns) is an active participant in an employer's retirement plan, or (ii) the
individual (and his or her spouse, if applicable) has an adjusted gross income
below a certain level ($40,050 for married individuals filing a joint return,
with a phase-out of the deduction for adjusted gross income between $40,050 and
$50,000; $25,050 for a single individual, with a phase-out for adjusted gross
income between $25,050 and $35,000). However, an individual not permitted to
make a deductible contribution to an IRA for any such taxable year may
nonetheless make nondeductible contributions up to $2,000 to an IRA (up to
$2,250 to IRAs for an individual and his or her nonearning spouse) for that
year. There are special rules for determining how withdrawals are to be taxed
if an IRA contains both deductible and nondeductible amounts. In general, a
proportionate amount of each withdrawal will be deemed to be made from
nondeductible contributions; amounts treated as a return of nondeductible
contributions will not be taxable. Also, annual contributions may be made to a
spousal IRA even if the spouse has earnings in a given year if the spouse elects
to be treated as having no earnings (for IRA contribution purposes) for the
year.

Distributions by a Fund result in a reduction in the net asset value of that
Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital.
In particular, investors should consider the tax implications of buying shares
just prior to a distribution. The price of shares purchased at that time
includes the amount of the forthcoming distribution. Those purchasing just
prior to a distribution will then receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.

Each Fund intends to qualify for and may make the election permitted under
Section 853 of the Code so that shareholders may (subject to limitations) be
able to claim a credit or deduction on their federal income tax returns for, and
will be required to treat as part of the amounts distributed to them, their pro
rata portion of qualified taxes paid by a Fund to foreign countries (which taxes
relate primarily to investment income). Each Fund may make an election under
Section 853 of the Code, provided that more than 50% of the value of the total
assets of a Fund at the close of the taxable year consists of securities in
foreign corporations. The foreign tax credit available to shareholders is
subject to certain limitations imposed by the Code.

If a Fund does not make the election permitted under section 853 any foreign
taxes paid or accrued will represent an expense to the Fund which will reduce
its investment company taxable income. Absent this election, shareholders will
not be able to claim either a credit or a deduction for their pro rata portion
of such taxes paid by a Fund, nor will shareholders be required to treat as part
of the amounts distributed to them their pro rata portion of such taxes paid.

Equity options (including covered call options written on portfolio stock) and
over-the-counter options on debt securities written or purchased by a Fund will
be subject to tax under Section 1234 of the Code. In general, no loss will be
recognized by a Fund upon payment of a premium in connection with the purchase
of a put or call option. The character of any gain or loss recognized (i.e.
long-term or short-term) will generally depend, in the case of a lapse or sale
of the option, on a Fund's holding period for the option, and in the case of the
exercise of a put option, on a Fund's holding period for the underlying
property. The purchase of a put option may constitute a short sale for federal
income tax purposes, causing an adjustment in the holding period of any property
in a Fund's portfolio similar to the property underlying the put option. If a
Fund writes an option, no gain is recognized upon its receipt of a premium. If
the option lapses or is closed out, any gain or loss is treated as short-term
capital gain or loss. If the option is exercised, the character of the gain or
loss depends on the holding period of the underlying stock.

Positions of a Fund which consist of at least one stock and at least one stock
option or other position with respect to a related security which substantially
diminishes that Fund's risk of loss with respect to such stock could be treated
as a "straddle" which is governed by Section 1092 of the Code, the operation of
which may cause deferral of losses, adjustments in the holding periods of stocks
or securities and conversion of short-term capital losses into long-term capital
losses. An exception to these straddle rules exists for certain "qualified
covered call options" on stock written by the relevant Fund.

Many futures and forward contracts entered into by a Fund and listed nonequity
options written or purchased by a Fund (including options on debt securities,
options on futures contracts, options on securities indices and options on
currencies), will be governed by Section 1256 of the Code. Absent a tax
election to the contrary, gain or loss attributable to the lapse, exercise or
closing out of any such position generally will be treated as 60% long-term and
40% short-term capital gain or loss, and on the last trading day of the Fund's
fiscal year, all outstanding Section 1256 positions will be marked to market
(i.e., treated as if such positions were closed out at their closing price on
such day), with any resulting gain or loss recognized as 60% long-term and 40%
short-term capital gain or loss. Under Section 988 of the Code, discussed
below, foreign currency gain or loss from foreign currency-related forward
contracts, certain futures and options and similar financial instruments entered
into or acquired by a Fund will be treated as ordinary income or loss.

Subchapter M of the Code requires each Fund to realize less than 30% of its
annual gross income from the sale or other disposition of stock, securities and
certain options, futures and forward contracts held for less than three months.
Each Fund's options, futures and forward transactions may increase the amount of
gains realized by the Fund that are subject to this 30% limitation.
Accordingly, the amount of such transactions that a Fund may undertake may be
limited.

Positions of a Fund which consist of at least one position not governed by
Section 1256 and at least one futures or forward contract or nonequity option or
other position governed by Section 1256 which substantially diminishes that
Fund's risk of loss with respect to such other position will be treated as a
"mixed straddle." Although mixed straddles are subject to the straddle rules of
Section 1092 of the Code, the operation of which may cause deferral of losses,
adjustments in the holding periods of securities and conversion of short-term
capital losses into long-term capital losses, certain tax elections exist for
them which reduce or eliminate the operation of these rules. Each Fund will
monitor its transactions in options, foreign currency futures and forward
contracts and may make certain tax elections in connection with these
investments.

Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time a Fund accrues interest or other receivables or
accrues expenses or other liabilities denominated in a foreign currency and the
time that Fund actually collects such receivables or pays such liabilities
generally are treated as ordinary income or ordinary loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of certain options, futures and forward contracts, gains or losses
attributable to fluctuations in the value of foreign currency between the date
of acquisition of the security or contract and the date of disposition are also
treated as ordinary gain or loss. These gains or losses, referred to under the
Code as "Section 988" gains or losses, may increase or decrease the amount of a
Fund's investment company taxable income to be distributed to its shareholders
as ordinary income.

If a Fund invests in stock of certain foreign investment companies, that Fund
may be subject to U.S. federal income taxation on a portion of any "excess
distribution" with respect to, or gain from the disposition of, such stock. The
tax would be determined by allocating such distribution or gain ratably to each
day of a Fund's holding period for the stock. The distribution or gain so
allocated to any taxable year of a Fund, other than the taxable year of the
excess distribution or disposition, would be taxed to that Fund at the highest
ordinary income rate in effect for such year, and the tax would be further
increased by an interest charge to reflect the value of the tax deferral deemed
to have resulted from the ownership of the foreign company's stock. Any amount
of distribution or gain allocated to the taxable year of the distribution or
disposition would be included in a Fund's investment company taxable income and,
accordingly, would not be taxable to that Fund to the extent distributed by the
Fund as a dividend to its shareholders.

Each Fund may be able to make an election, in lieu of being taxable in the
manner described above, to include annually in income its pro rata share of the
ordinary earnings and net capital gain of the foreign investment company,
regardless of whether it actually received any distributions from the foreign
company. These amounts would be included in a Fund's investment company taxable
income and net capital gain which, to the extent distributed by that Fund as
ordinary or capital gain dividends, as the case may be, would not be taxable to
the Fund. In order to make this election, a Fund would be required to obtain
certain annual information from the foreign investment companies in which it
invests, which in many cases may be difficult to obtain. Each Fund may make an
election with respect to those foreign investment companies which provide a Fund
with the required information.

If a Fund invests in certain high yield original issue discount obligations
issued by corporations, a portion of the original issue discount accruing on the
obligation may be eligible for the deduction for dividends received by
corporations. In such event, dividends of investment company taxable income
received from a Fund by its corporate shareholders, to the extent attributable
to such portion of accrued original issue discount, may be eligible for this
deduction for dividends received by corporations if so designated by a Fund in a
written notice to shareholders.

Each Fund will be required to report to the Internal Revenue Service all
distributions of investment company taxable income and capital gains as well as
gross proceeds from the redemption or exchange of Fund shares, except in the
case of certain exempt shareholders. Under the backup withholding provisions of
Section 3406 of the Code, distributions of investment company taxable income and
capital gains and proceeds from the redemption or exchange of the shares of a
regulated investment company may be subject to withholding of federal income tax
at the rate of 20% in the case of non-exempt shareholders who fail to furnish
the investment company with their taxpayer identification numbers and with
required certifications regarding their status under the federal income tax law.
Withholding may also be required if a Fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.

Shareholders of each Fund may be subject to state and local taxes on
distributions received from a Fund and on redemptions of a Fund's shares.

The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is
not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of a Fund, including the possibility that such a shareholder
may be subject to a U.S. withholding tax at a rate of 30% (or at a lower rate
under an applicable income tax treaty) on amounts constituting ordinary income
received by him or her, where such amounts are treated as income from U.S.
sources under the Code.

Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular tax situations.

PORTFOLIO TRANSACTIONS

Brokerage Commissions

To the maximum extent feasible, the Adviser places orders for portfolio
transactions for each Fund through the Distributor which in turn places orders
on behalf of a Fund with issuers, underwriters or other brokers and dealers.
The Distributor receives no commissions, fees or other remuneration from the
Funds for this service. Allocation of brokerage is supervised by the Adviser.

The primary objective of the Adviser in placing orders for the purchase and sale
of securities for the Funds' portfolio is to obtain the most favorable net
results taking into account such factors as price, commission where applicable
(negotiable in the case of U.S. national securities exchange transactions but
which is generally fixed in the case of foreign exchange transactions) size of
order, difficulty of execution and skill required of the executing
broker/dealer. The Adviser seeks to evaluate the overall reasonableness of
brokerage commissions paid (to the extent applicable) through the familiarity of
the Distributor with commissions charged on comparable transactions, as well as
by comparing commissions paid by the Fund to reported commissions paid by
others. The Adviser reviews on a routine basis commission rates, execution and
settlement services performed, making internal and external comparisons.

When it can be done consistently with the policy of obtaining the most favorable
net results, it is the Adviser's practice to place such orders with brokers and
dealers who supply market quotations to the Custodian for appraisal purposes, or
who supply research, market and statistical information to the Funds. The term
"research, market and statistical information" includes advice as to the value
of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; and analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts.
The Adviser is not authorized when placing portfolio transactions for a Fund to
pay a brokerage commission (to the extent applicable) in excess of that which
another broker might have charged for executing the same transaction solely on
account of the receipt of research, market or statistical information. The
Adviser will not place orders with brokers or dealers on the basis that the
broker or dealer has or has not sold shares of a Fund. Except for implementing
the policy stated above, there is no intention to place portfolio transactions
with particular brokers or dealers or groups thereof. In effecting transactions
in over-the-counter securities, orders are placed with the principal market
makers for the security being traded unless, after exercising care, it appears
that more favorable results are available otherwise.

Each Fund's purchases of securities which are traded in the over-the-counter
market are generally placed by the Adviser with primary market makers for these
securities on a net basis, without any brokerage commission being paid by a
Fund. Such trading does, however, involve transaction costs. Transactions with
dealers serving as primary market makers reflect the spread between the bid and
asked prices. Purchases of underwritten issues may be made which will include
an underwriting fee paid to the underwriter.

Although certain research, market and statistical information from brokers and
dealers can be useful to a Fund and to the Adviser, it is the opinion of the
Adviser that such information will only supplement the Adviser's own research
effort since the information must still be analyzed, weighed, and reviewed by
the Adviser's staff. Such information may be useful to the Adviser in providing
services to clients other than the Funds, and not all such information will be
used by the Adviser in connection with each Fund. Conversely, such information
provided to the Adviser by brokers and dealers through whom other clients of the
Adviser effect securities transactions may be useful to the Adviser in providing
services to the Funds.

Subject also to obtaining the most favorable net results, the Adviser may place
brokerage transactions through the Funds' custodian and a credit will be given
against the custodian fee due to the custodian equal to one-half of the
commission on any such transaction.

For the period December 8, 1992 (commencement of operations) to October 31, 1993
and for the fiscal year October 31, 1994 Latin America Fund paid brokerage
commissions of $664,710 and $1,959,556, respectively. For the fiscal year ended
October 31, 1994, $1,372,094 (70%) of the total brokerage commissions paid by
the Fund resulted from orders placed, consistent with the policy of obtaining
the most favorable net results, with brokers and dealers who provided
supplementary research, market and statistical information to the Fund or the
Adviser. The amount of such transactions aggregated $369,715,762 (69%) of all
brokerage transactions. Such brokerage was not allocated to any particular
brokers or dealers or with any regard to the provision of market quotations for
purposes of valuing the Fund's portfolio or to any other special factors.

For the period December 8, 1992 (commencement of operations) to October 31, 1993
and for the fiscal year ended October 31, 1994 Pacific Opportunities Fund paid
brokerage commissions of $1,024,534 and $2,485,807, respectively. For the
fiscal year ended October 31, 1994, $584,892 (24%) of the total brokerage
commissions paid by the Fund resulted from orders placed, consistent with the
policy of obtaining the most favorable net results, with brokers and dealers who
provided supplementary research, market and statistical information to the Fund
or the Adviser. The amount of such transactions aggregated $167,177,745 (38%)
of all brokerage transactions. Such brokerage was not allocated to any
particular brokers or dealers or with any regard to the provision of market
quotations for purposes of valuing the Fund's portfolio or to any other special
factors.

The Directors review from time to time whether the recapture for the benefit of
a Fund of some portion of the brokerage commissions or similar fees paid by a
Fund on portfolio transactions is legally permissible and advisable.

Portfolio Turnover

Latin America Fund's average annual portfolio turnover rate, i.e. the ratio of
the lesser of sales or purchases to the monthly average value of the portfolio
(excluding from both the numerator and the denominator all securities with
maturities at the time of acquisition of one year or less), for the period
December 8, 1992 (commencement of operations) to October 31, 1993 and for the
fiscal year ended October 31, 1994 was 4.6% (annualized) and 22.4%,
respectively. For the period December 8, 1992 (commencement of operations) to
October 31, 1993 and for the fiscal year ended October 31, 1994, Pacific
Opportunities Fund had a portfolio turnover rate of 9.9% (annualized) and 38.5%,
respectively. Higher levels of activity by the Funds result in higher
transaction costs and may also result in taxes on realized capital gains to be
borne by the Funds' shareholders. Purchases and sales are made for a Fund
whenever necessary, in management's opinion, to meet the Funds' objectives.

NET ASSET VALUE

The net asset value of shares of a Fund is computed as of the close of regular
trading on the Exchange on each day the Exchange is open for trading. The
Exchange is scheduled to be closed on the following holidays: New Year's Day,
Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. Net asset value per share is determined by dividing
the value of the total assets of the Fund, less all liabilities, by the total
number of shares outstanding.

An exchange-traded equity security is valued at its most recent sale price.
Lacking any sales, the security is valued at the calculated mean between the
most recent bid quotation and the most recent asked quotation (the "Calculated
Mean"). Lacking a Calculated Mean, the security is valued at the most recent
bid quotation. An equity security which is traded on the National Association
of Securities Dealers Automated Quotation ("NASDAQ") system is valued at its
most recent sale price. Lacking any sales, the security is valued at the high
or "inside" bid quotation. The value of an equity security not quoted on the
NASDAQ System, but traded in another over-the-counter market, is its most recent
sale price. Lacking any sales, the security is valued at the Calculated Mean.
Lacking a Calculated Mean, the security is valued at the most recent bid
quotation.

Debt securities, other than short-term securities, are valued at prices supplied
by the Fund's pricing agent(s) which reflect broker/dealer supplied valuations
and electronic data processing techniques. Short-term securities with remaining
maturities of sixty days or less are valued by the amortized cost method, which
the Board believes approximates market value. If it is not possible to value a
particular debt security pursuant to these valuation methods, the value of such
security is the most recent bid quotation supplied by a bona fide marketmaker.
If it is not possible to value a particular debt security pursuant to the above
methods, the Adviser may calculate the price of that debt security, subject to
limitations established by the Board.

An exchange traded options contract on securities, currencies, futures and other
financial instruments is valued at its most recent sale price on such exchange.
Lacking any sales, the options contract is valued at the Calculated Mean.
Lacking any Calculated Mean, the options contract is valued at the most recent
bid quotation in the case of a purchased options contract, or the most recent
asked quotation in the case of a written options contract. An options contract
on securities, currencies and other financial instruments traded over-the-
counter is valued at the most recent bid quotation in the case of a purchased
options contract and at the most recent asked quotation in the case of a written
options contract. Futures contracts are valued at the most recent settlement
price. Foreign currency exchange forward contracts are valued at the value of
the underlying currency at the prevailing exchange rate.

If a security is traded on more than one exchange, or upon one or more exchanges
and in the over-the-counter market, quotations are taken from the market in
which the security is traded most extensively.

If, in the opinion of the Funds' Valuation Committee, the value of a portfolio
asset as determined in accordance with these procedures does not represent the
fair market value of the portfolio asset, the value of the portfolio asset is
taken to be an amount which, in the opinion of the Valuation Committee,
represents fair market value on the basis of all available information. The
value of other portfolio holdings owned by the Fund is determined in a manner
which, in the discretion of the Valuation Committee most fairly reflects fair
market value of the property on the valuation date.

Following the valuations of securities or other portfolio assets in terms of the
currency in which the market quotation used is expressed ("Local Currency"), the
value of these portfolio assets in terms of U.S. dollars is calculated by
converting the Local Currency into U.S. dollars at the prevailing currency
exchange rate on the valuation date.

ADDITIONAL INFORMATION

Experts

The Financial Highlights of each Fund included in the Funds' prospectuses and
the Financial Statements incorporated by reference in this Statement of
Additional Information have been so included or incorporated by reference in
reliance on the report of Coopers & Lybrand, L.L.P., One Post Office Square,
Boston, Massachusetts 02109, independent accountants, and given on the authority
of that firm as experts in accounting and auditing.

Other Information

Many of the investment changes in each Fund will be made at prices different
from those prevailing at the time they may be reflected in a regular report to
shareholders of a Fund. These transactions will reflect investment decisions
made by the Adviser in the light of its other portfolio holdings and tax
considerations and should not be construed as recommendations for similar action
by other investors.

The CUSIP number of Latin America Fund is 811165 20 8.

The CUSIP number of Pacific Opportunities Fund is 811165 30 7.

Each Fund has a fiscal year end of October 31.

Dechert Price & Rhoads acts as general counsel for the Funds.

Each Fund employs Brown Brothers Harriman & Company, 40 Water Street, Boston,
Massachusetts 02109 as Custodian. Brown Brothers Harriman & Company has entered
into agreements with foreign subcustodians approved by the Directors of the
Corporation pursuant to Rule 17f-5 of the 1940 Act.

Costs of $80,462 and $58,141 incurred by Latin America Fund and Pacific
Opportunities Fund, respectively, in conjunction with their organization are
amortized over the five year period beginning December 8, 1992.

Scudder Service Corporation ("Service Corporation"), P.O. Box 2291, Boston,
Massachusetts, 02107-2291, a wholly-owned subsidiary of the Adviser, is the
transfer and dividend disbursing agent for each Fund. Service Corporation also
serves as shareholder service agent and provides subaccounting and recordkeeping
services for shareholder accounts in certain retirement and employee benefit
plans. The Funds pay Service Corporation an annual fee of $17.55 for each
account maintained for a participant.

The Funds' prospectuses and this Statement of Additional Information omit
certain information contained in the Registration Statement which the Funds have
filed with the SEC under the Securities Act of 1933 and reference is hereby made
to the Registration Statement for further information with respect to a Fund and
the securities offered hereby. This Registration Statement and its amendments
are available for inspection by the public at the SEC in Washington, D.C.

FINANCIAL STATEMENTS

Latin America Fund

The financial statements, including the Investment Portfolio of Latin America
Fund, together with the Report of Independent Accountants, Financial Highlights
and notes to financial statements, are incorporated by reference and attached
hereto in the Annual Report to the Shareholders of the Fund dated October 31,
1994, and are hereby deemed to be part of this Statement of Additional
Information.

Pacific Opportunities Fund

The financial statements, including the Investment Portfolio of Pacific
Opportunities Fund, together with the Report of Independent Accountants,
Financial Highlights and notes to financial statements, are incorporated by
reference and attached hereto in the Annual Report to the Shareholders of the
Fund dated October 31, 1994, and are hereby deemed to be part of this Statement
of Additional Information.

APPENDIX

The following is a description of the ratings given by Moody's and S&P to
corporate bonds.

Ratings of Corporate Bonds

S&P:

Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest
and repay principal is extremely strong. Debt rated AA has a very strong
capacity to pay interest and repay principal and differs from the highest rated
issues only in small degree. Debt rated A has a strong capacity to pay interest
and repay principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in higher
rated categories. Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.

Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal.
BB indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.

Debt rated BB has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The BB rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating. Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied BB or BB- rating.

Debt rated CCC has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating. The rating CC typically is applied to debt subordinated to
senior debt that is assigned an actual or implied CCC rating. The rating C
typically is applied to debt subordinated to senior debt which is assigned an
actual or implied CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued. The rating C1 is reserved for income bonds on which no interest
is being paid. Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date due
even if the applicable grace period had not expired, unless S&P believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Moody's:

Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Bonds which are rated Aa are
judged to be of high quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long term risks appear
somewhat larger than in Aaa securities. Bonds which are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.

Bonds which are rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated Ba are
judged to have speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this class. Bonds
which are rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.

Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest. Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

<PAGE>

This information must be preceded or accompanied by a current prospectus.

Portfolio changes should not be considered recommendations for action by
individual investors.

Scudder
Latin America
Fund

Annual Report
October 31, 1994

* For investors seeking long-term growth of capital from a portfolio
investing primarily in the securities of Latin American issuers.

* A pure no-load(tm) fund with no commissions to buy, sell, or exchange
shares.

SCUDDER LATIN AMERICA FUND

CONTENTS

2 Highlights

3 Letter from the Fund's Chairman

4 Performance Update

5 Portfolio Summary

6 Portfolio Management Discussion

12 Investment Portfolio

17 Financial Statements

20 Financial Highlights

21 Notes to Financial Statements

27 Report of Independent Accountants

28 Tax Information

29 Officers and Directors

30 Investment Products and Services

31 How to Contact Scudder

HIGHLIGHTS

* Scudder Latin America Fund provided a strong 33.43% total return for
the fiscal year ended October 31, 1994. By comparison, the unmanaged
IFC Global Latin America Index gained 48.17% during the period, with
strong performance from Chilean stocks boosting returns compared to
those of the Fund. Since December 31, 1992, however, the Fund
outperformed the Index, providing an average annual return of 45.90%
through October 31, 1994.

(BAR CHART TITLE) Total Returns Through October 31, 1994

(CHART DATA)
Scudder Latin America Fund IFC Global Latin America
(from 10/31/93) Index (from 10/31/93)
33.43% 48.17%

* A slower rate of economic growth in Latin America, combined with
political uncertainties in several countries and rising interest
rates, created substantial volatility in Latin American markets over
the past 12 months.

* The Fund's holdings continue to be concentrated in what we view are
the region's strongest and most liquid markets: Mexico, Brazil, and
Argentina.

LETTER FROM THE FUND'S CHAIRMAN
Dear Shareholders,

Encouraged by indications of stronger economic growth and strong
corporate profits, investors pushed many of the Latin American markets
sharply higher during the late summer and autumn, providing contrast to the
falling prices of this year's first half. Yet the financial community
continues to cast a wary eye on the prospects for inflation and is taking
its cues to a large extent from U.S. central bank activity and the
direction of interest rates. The Fed continues to push U.S. interest rates
higher, which has put upward pressure on global rates, resulting in
persistent volatility in both developed and emerging financial markets.

Looking ahead, we expect global expansion to continue at a moderate
pace. But interest rates are likely to remain relatively high as countries
compete for investment capital to fuel the world's financial markets and
growing economies. We believe, however, that Latin America generally offers
potential for strong growth over the next several years. In the near term,
we intend to use any further market volatility to our advantage by adding
companies with discounted stock prices and, in our view, above-average
growth potential.

If you have questions about your Fund or your investments, contact a
Scudder Investor Information representative at 1-800-225-2470. Page 31
provides more information on how to contact Scudder. Thank you for choosing
Scudder Latin America Fund to help meet your investment needs.

In closing, we would like to take this opportunity to announce that on
October 10, 1994, in keeping with our pioneering tradition in international
investing, we introduced Scudder Greater Europe Growth Fund, a pure
no-load(tm) mutual fund, designed to invest both in Western and Eastern
Europe. For more information about Scudder Greater Europe Growth Fund and
other investment products and services, see page 30.

Sincerely,

/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder Latin America Fund

<PAGE>
Scudder Latin America Fund
Performance Update as of October 31, 1994
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder Latin America Fund
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
10/31/94 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $13,343 33.43% 33.43%
Life of
Fund* $20,470 104.70% 45.90%

IFC Global Latin America Index
- --------------------------------------
Total Return
Period Growth -------------
Ended of Average
10/31/94 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $14,817 48.17% 48.17%
Life of
Fund* $19,129 91.29% 42.61%

*The Fund commenced operations on December 8, 1992.
Index comparisons begin December 31, 1992.

A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:

Scudder Latin America Fund
Year Amount
- ----------------------
12/31/92 10000
1/93 9968
4/93 10560
7/93 11984
10/93 14728
1/94 19595
4/94 16604
7/94 17496
10/94 19651

IFC Global Latin America Fund
Year Amount
- ----------------------
12/31/92 10000
1/93 9788
4/93 9995
7/93 11268
10/93 12910
1/94 17980
4/94 15013
7/94 15894
10/94 19129

The IFC Global Latin America Composite Total Return Index (IFC Global
Latin America Index) is prepared by International Finance Corporation.
The Index is an unmanaged, market capitalization-weighted representation
of stock performance in seven Latin American markets. Unlike the Fund,
Index returns do not reflect fees or expenses.

- -----------------------------------------------------------------
Returns and Per Share Information
- -------------------------------------------------------------------

A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.

Yearly periods ended October 31
- ----------------------------------
<TABLE>
<S> <C> <C>
1993* 1994
-----------------
Net Asset Value... $18.41 $24.44
Income Dividends.. $ -- $ .06
Capital Gains
Distributions..... $ -- $ .06
Fund Total
Return (%)........ 53.42** 33.43
Index Total
Return (%)........ 28.72 48.17
</TABLE>

Performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results. Total return and
principal value will fluctuate, so an investor's shares, when redeemed,
may be worth more or less than when purchased. If the Adviser had not
maintained the Fund's expenses, the average annual total return for the
one year and life of Fund would have been approximately 33.73% and 45.65%,
respectively.
**Total return does not reflect the effect of the applicable redemption fees.

Scudder Latin America Fund
Portfolio Summary as of October 31, 1994
- ---------------------------------------------------------------------------
Geographical (Excludes 12% Cash Equivalents)
- ---------------------------------------------------------------------------

Mexico 39% The Fund's heavy weighting in Brazil
Brazil 33% provided strong returns throughout
Argentina 18% the year.
Chile 8%
Peru 2%
----
100%
====

A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.

- --------------------------------------------------------------------------
Sectors (Excludes 12% Cash Equivalents)
- --------------------------------------------------------------------------
Consumer Staples 25% The Fund's large position in consumer
Communications 16% staples stocks reflects our view that
Manufacturing 13% the surge in personal incomes throughout
Energy 13% Latin America will translate into stronger
Metals and Minerals 10% consumer spending.
Construction 8%
Consumer Discretionary 7%
Financial 5%
Utilities 3%
----
100%
====

A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.

- --------------------------------------------------------------------------
Top Largest Equity Holdings
- --------------------------------------------------------------------------
1. Telefonos de Mexico S.A. de C.V. "L" (ADR)
Telecommunication services
2. Compania de Telefonos de Chile, S.A. (ADR)
Telecommunication services
3. Grupo Carso, S.A. de C.V. "A"
Industrial conglomerate in Mexico
4. Perez Companc S.A. "B"
Industrial conglomerate in Argentina
5. Telecomunicacoes de Sao Paulo S.A. (pfd.)
Telecommunication services in Brazil
6. YPF S.A. "D" (ADR)
Petroleum company in Argentina
7. Grupo CIFRA S.A. de C.V. "C"
Retailer in Mexico
8. Companhia Vale de Rio Doce (pfd.)
Diverse mining and industrial complex in Brazil
9. Petroleo Brasileiro S.A. (pfd.)
Petroleum company in Brazil
10. Kimberly-Clark de Mexico S.A. de C.V. "A"
Consumer paper products company

The addition of Companhia Vale do Rio Doce to the Fund's list of
ten largest holdings is indicative of our enthusiasm for the future
of Brazil's metals and mining industries.

For more complete details about the Fund's Investment Portfolio
see page 12.
A monthly investment portfolio summary is available upon request.
<PAGE>

PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,

We are pleased to report on the investment activities of Scudder Latin
America Fund for the fiscal year ended October 31, 1994. The Fund continued
to enjoy satisfactory growth in its market acceptance and net assets during
the year. Shareholder accounts totaled 93,401 at the end of the fiscal year
and net assets were $809.4 million. By comparison, the Fund had less than
32,000 shareholder accounts and $261 million of net assets on October 31,
1993.

In a year when many financial markets were under pressure, the Fund
reported a gratifying 33.43% total return through October 31, 1994, which
includes $0.12 per share of income dividends and capital gain
distributions. The Fund's return lagged the 48.17% increase in the
unmanaged IFC Global Latin America Index. However, as performance data on
page 4 indicate, the Fund has modestly outperformed this index since the
end of 1992. The IFC Global Latin America Index is compiled by the
International Finance Corporation, an affiliate of the World Bank.

Latin American stock market returns were not uniform from country to
country. The table below shows the investment returns for each of the
country components of the Index.

(BAR CHART TITLE) Total Returns in Latin American Stock Markets
(For the year ended October 31, 1994)

(CHART DATA)
Argentina Global Index 13.56%
Brazil Global Index 105.31%
Chile Global Index 84.16%
Colombia Global Index 60.26%
Mexico Global Index 17.29%
Peru Global Index 61.14%
Venezuela Global Index -19.49%
IFC Global Latin America Index 48.17%

Source: IFC Emerging Markets Database
Past performance is no indication of future results.

(CALLOUT NEXT TO CHART) - The Fund benefited from Brazil's soaring stock
market, although it was underweighted in Chilean stocks, which also
provided exceptional returns during the period.

Index weightings and stock market returns for individual countries are
only a few of the factors explaining short-term investment performance. The
Fund's return for the year clearly would have been enhanced had it had a
greater participation in the dynamic Chilean stock market. (The Fund's
participation in Chile was limited due to Chilean market restrictions.) On
the other hand, its strong emphasis on Brazil and negligible exposure to
Venezuela contributed positively to the year's investment results. Also,
due to market restrictions, the Fund did not begin investing in the
Colombian stock market until after the close of its 1994 fiscal year.

A simple point-to-point view of the Fund's price performance for
fiscal 1994 masks what was truly a volatile year for the region's principal
stock markets. Within a 12-month period, for example, the Fund's net asset
value (NAV) experienced two bull markets and one bear market. The Fund's
fiscal year began on a bullish note, triggered by the U.S. Congress's
ratification of the NAFTA treaty in November. In just four months, the
Fund's NAV rose 39.8%, closing at $25.73 on February 16, the high for the
year. Over the next two months, however, net asset value fell 28.3%, to the
year's low of $18.45 on April 20, before beginning a 32.5% recovery to the
October 31, 1994 closing NAV of $24.44. Volatility of this nature is
extreme, even for Latin America.

The Fund's volatile performance mirrored the waves of euphoria and
despair that alternately swamped the region's financial markets. Virtually
straight-line increases in many stock markets for years prior to 1994 may
have lulled investors into believing that Latin America was a blessed
combination of Swiss stability and Asian growth. Any illusions of this
nature were done in by the year's unexpected fluctuations in global
fixed-income markets, unanticipated incidences of civil unrest and
politically motivated violence, uncertain outcomes for critical
presidential elections in Brazil and Mexico, and unstable exchange rates.
Negative investor psychology pulled prices lower, but company profits
remained above the fray of political and financial market turmoil. In fact,
reported earnings to date for most of the Fund's portfolio holdings equaled
or exceeded expectations.

Economic Growth Should Continue

With the exception of Venezuela, we expect all the principal Latin
American countries to show positive rates of economic growth for 1994 and
1995. (See table on page 8.)

<TABLE>
<CAPTION>
Economic Growth Forecasts
1993 1994* 1995*
<S> <C> <C> <C>
Argentina 6.0% 5.0% 4.0%
Brazil 4.1 3.4 4.5
Chile 6.0 4.5 6.0
Columbia 5.3 5.0 4.5
Mexico 0.4 3.0 4.0
Peru 7.0 7.5 6.0
Venezuela -1.0 -4.0 -1.5
* Estimated
Source: Scudder Latin America Group
</TABLE>

(CALLOUT NEXT TO TABLE) - Based on our forecasts, economic growth in most
Latin American countries should remain strong in 1995.

We believe Peru will enjoy the most dynamic economic performance
within the region, and it is interesting in this regard to contrast the
fruits of Peru's free-market policies with the negative effects of
Venezuela's retrograde populism. The Fund increased its investments in Peru
throughout the year, and the country accounted for 2.0% of the equity
portfolio at the end of fiscal 1994. The Peruvian stock market is
comparatively illiquid, but we anticipate broadening the Fund's exposure as
opportunities arise.

Mexico is clearly the comeback story of the year. Against a threadbare
0.4% rate of economic growth in 1993, we expect the Mexican economy to
expand by 3% this year and 4% in 1995. We believe growth beyond next year
will accelerate as the economy begins to draw benefits from rising capital
investment and expanding Mexican-U.S. trade. NAFTA has opened to Mexican
business a U.S. market that is some 20 times larger than its own. The
country's economic history provides no clue as to just how profitable NAFTA
may be for the Mexican corporate sector, and in our view the risk is that
the benefits of NAFTA will be underestimated. As Mexican entrepreneurs
learn to sell successfully in the U.S. market, reported earnings for many
companies are likely to grow at a much higher rate than could be achieved
by a purely Mexican commercial orientation.

The recent economic performance of Mexico and other Latin American
countries has been less robust than the economic growth rates we anticipate
these countries achieving over the next few years. The modernization
process and opening of traditionally closed markets to global competition
have been detrimental to short-term economic growth. This is not
surprising, given the economic costs entailed by the adjustment process:
Privatized companies shed redundant workers, newly balanced government
budgets eliminate the stimulative and inflationary consequences of massive
deficits, real interest rates place enormous pressure on the financial
health of leveraged small- and medium-sized companies that lack access to
low-cost external capital, appreciating exchange rates stimulate import
demand at the expense of locally produced goods, and global competition
forces hitherto protected local industry to undergo a painful process of
corporate restructuring.

Growth rates have also been affected by the varied pace of reforms in
the region. Chile, for example, has completed its modernization, and its
economy is growing solidly. In Mexico, the adjustment process is just
drawing to a close, setting the stage for Mexico to resume growing at a
reasonably consistent 5% to 6% rate. The Zedillo administration is expected
to continue the reforms of the Salinas government, and we anticipate no
discontinuities in economic policy.

Promising Developments in Brazil

The Fund's exposure to Brazilian companies has increased significantly
since the April 30 semiannual report to shareholders. Brazil's share of the
equity portfolio increased from 21% to 33%, mainly at the expense of
reduced weightings for Mexico and Argentina. Given this shift in
geographical emphasis, two Brazilian companies displaced the Argentine
telephone companies on the Fund's list of its ten largest equity holdings.
They are Companhia Vale do Rio Doce, a diversified mining and forest
products company, and Telecomunicacoes de Sao Paulo, the country's largest
telephone company. The Brazilian government holds voting control of these
companies, and it is possible they may be privatized at some point by the
Cardoso government.

As a result of the Fund's purchases of Companhia Vale do Rio Doce and
Brazil's two leading flat steel producers-Companhia Siderugica Nacional and
Usinas Siderugicas de Minas Gerais-the metals and minerals industry
accounted for 10% of the equity portfolio at year-end, versus 6% at
midyear.

Economic modernization is still in its early stages in Brazil. The
private sector went through an extensive restructuring early in the decade
and currently enjoys a high degree of efficiency and productivity. The
public sector has made only limited advances in stabilizing its finances,
due principally to the inability of congress to reach a consensus on the
redistribution of economic and political power. We believe, however, that
the public sector modernization process will accelerate under newly elected
president Fernando Henrique Cardoso.

Cardoso was the architect of Brazil's highly successful anti-inflation
program-the Real Plan-during his tenure as Minister of Finance. His
economic stabilization program met with outstanding success. Inflation fell
from 50% in June, the month immediately preceding the conversion of
Brazil's currency to the Real, to monthly rates of approximately 3% at
year-end. Public approval of the Real Plan was enthusiastic and carried
Cardoso to the presidency in October with over 54% of the valid votes cast,
more than double the share of votes received by the second-place candidate.

Cardoso will assume the presidency with an unambiguous mandate from
the public to bring to Brazil price stability, policy predictability,
rising investment and employment, and efficiency and productivity-qualities
that have been achieved by every Latin American nation that has gotten back
on the track of economic expansion and rising living standards. Because the
outcome of the congressional and gubernatorial elections also favored
Cardoso, he should easily receive the legislative support his
administration will require in order to secure the goals that Brazilians
have clearly articulated.

The Next 12 Months

We are optimistic about the Fund's outlook for fiscal 1995. Economic
activity and corporate earnings should remain favorable for those Latin
American countries in which the Fund has established important investment
stakes. The so-called southern cone common market (Mercosul) will have its
formal launch in January, and this will stimulate trade among its members:
Argentina, Brazil, Paraguay, and Uruguay. Chile may be invited to join
Mercosul and has recently been asked to join the North America Free Trade
Zone. Mexico should enjoy improved economic growth, despite investor
concern for political violence, current account deficits, and the exchange
rate. Argentina and Peru will have presidential elections in 1995, but no
change is expected in the free-market policies of the incumbent
administrations.

We have no idea if fiscal 1995 will be as volatile as 1994 for global
financial markets. We hope not. The lesson to be learned from 1994,
however, is that stock markets can be volatile for reasons that have very
little to do with a nation's underlying growth and corporate earnings.

Scudder Latin America Fund enters fiscal 1995 with strong cash
reserves and is prepared to take advantage of opportunities that volatility
might expose. As usual, we will favor investing in companies that generate
strong levels of cash and reinvest heavily in expanding and modernizing
their businesses. It is this high rate of cash flow put back into the
business that sets the stage for earnings growth and future investment
returns.

Sincerely,

Your Portfolio Management Team

/s/Edmund B. Games /s/Joyce E. Cornell
Edmund B. Games Joyce E. Cornell

/s/William F. Truscott
William F. Truscott

Scudder Latin America Fund:
A Team Approach to Investing

Scudder Latin America Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management
process. Team members work together to develop investment strategies and
select securities for the Fund. They are supported by Scudder's large staff
of economists, research analysts, traders, and other investment specialists
who work in Scudder's offices across the United States and abroad. We
believe our team approach benefits Fund investors by bringing together many
disciplines and leveraging Scudder's extensive resources.

Lead Portfolio Manager Edmund B. Games has set the Fund's investment
strategy and overseen its daily operation since the Fund was introduced in
1992. Ed joined Scudder's equity research area in 1960 and has focused on
Latin American stocks since 1988. Joyce E. Cornell, Portfolio Manager, has
focused on stock selection since 1993. Joyce, who has seven years of
investment experience as a research analyst, joined Scudder in 1991.
William F. Truscott, Portfolio Manager, contributes expertise on the Fund's
Latin American investments, a role he has filled since the Fund commenced
operations. Ted joined Scudder in 1992 and has 11 years of experience in
the financial industry, including seven years specifically focused on Latin
American investments.

<PAGE>

<TABLE>
SCUDDER LATIN AMERICA FUND
INVESTMENT PORTFOLIO as of October 31, 1994
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount (U.S.$) Value ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6.6% REPURCHASE AGREEMENT
---------------------------------------------------------------------------------
53,952,000 Repurchase Agreement with Donaldson,
Lufkin & Jenrette dated 10/31/94 at 4.7%,
to be repurchased at $53,959,044 on 11/1/94,
collateralized by a $45,019,000 U.S. Treasury
Bond, 10.375%, 11/15/09 (Cost $53,952,000) . . . . 53,952,000
-------------
5.5% SHORT-TERM NOTES
---------------------------------------------------------------------------------
25,000,000 Federal Home Loan Mortgage Corp.,
Discount Note, 4.92%, 11/2/94 . . . . . . . . . . 24,996,583
20,000,000 Federal National Mortgage Association,
Discount Note, 4.82%, 11/23/94 . . . . . . . . . . 19,941,089
-------------
TOTAL SHORT-TERM NOTES (Cost $44,937,672) . . . . . 44,937,672
-------------
87.9% EQUITY SECURITIES

Shares
---------------------------------------------------------------------------------
ARGENTINA 15.7% 4,758,938 Astra Corporacion (Petroleum company) . . . . . . . 9,996,266
1,222,021 Bagley y Cia Ltd. S.A. "B" (Producer of
cookies and biscuits) . . . . . . . . . . . . . . 4,889,306
3,000,000 BI S.A. "A" (Venture capital company) (b) (c) (d). . 3,000,000
1,200 Buenos Aires Embotelladora S.A. "B"
(Soft drink bottler and distributor) . . . . . . . 2,298,575
50,000 Buenos Aires Embotelladora S.A. "B" (ADR) . . . . . 1,918,750
396,701 Corporacion Cementera Argentina "B"
(Cement producer) (c) . . . . . . . . . . . . . . 3,293,442
399,326 Juan Minetti y Cia "B" (Cement company) . . . . . . 2,456,469
516,034 Molinos Rio de la Plata "B" (Food producer) (c) . . 4,506,103
1,445,536 Nobleza Piccardo (Tobacco company) . . . . . . . . 7,012,603
5,182,000 Perez Companc S.A. "B" (Industrial
conglomerate) . . . . . . . . . . . . . . . . . . 27,989,797
500,000 Quilmes Industrial S.A. (Leading beer
distributor) . . . . . . . . . . . . . . . . . . 13,125,000
1,691,550 Telecom de Argentina "B"
(Telecommunication services) . . . . . . . . . . . 10,287,196
1,670,089 Telefonica de Argentina "B" (Telecommunication
services) . . . . . . . . . . . . . . . . . . . . 10,307,026
1,120,000 YPF SA "D" (ADR) (Petroleum company) . . . . . . . . 27,020,000
-------------
128,100,533
-------------

The accompanying notes are an integral part of the financial statements.
</TABLE>

<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BRAZIL 29.4% 50,539,600 Banco Itau S.A. (pfd.) (Bank) . . . . . . . . . . 16,227,763
3,093,785 COPENE Petroquimica do Nordeste S.A. "A"
(pfd.) (Leading producer of petrochemicals) (c). . 2,895,841
58,475,145 Companhia Cervejaria Brahma (pfd.)
(Leading beer producer and distributor) . . . . . 20,577,154
1,957,888 Companhia Cervejaria Brahma (pfd.)
Warrants (expire 9/30/96) (c) . . . . . . . . . 185,582
216,200,000 Companhia Energetica de Minas Gerais
(pfd.) (Electric utility) . . . . . . . . . . . . 22,029,858
42,289,500 Companhia Paranaense de Energia
(voting) (Electric utility) . . . . . . . . . . . 419,889
15,347,000 Companhia Petroquimica do Sul S.A.
(Chemical producer) . . . . . . . . . . . . . . 1,091,019
17,400,000 Companhia Sidercrgica Belgo-Mineira (pfd.)
(Steel wires and wire products) . . . . . . . . . 2,845,024
310,300,000 Companhia Siderurgica Nacional
(voting) (Steel producer) . . . . . . . . . . . . 14,264,976
662,500 Companhia Souza Cruz S.A. (voting) (Holding
company: cigarettes and tobacco,
fiber cellulose) . . . . . . . . . . . . . . . . 6,279,621
1,446,840 Companhia Suzano de Papel e Celulose S.A.
(pfd.) (Paper products) . . . . . . . . . . . . . 9,171,320
122,000,000 Companhia Vale do Rio Doce (pfd.) (Diverse
mining and industrial complex) . . . . . . . . . 26,524,882
406,388 Companhia Vidraria Santa Marina
(voting) (Glass producer) . . . . . . . . . . . . 2,287,136
2,112,000 Empresa Brasileira de Compressores S.A. (pfd.)
(Manufacturer of electrical equipment) . . . . 2,122,009
1,611,829 Indcstrias Klabin de Papel e Celulose S.A. (pfd.)
(Producer of papers and paper products,
newsprint, and cardboard boxes) . . . . . . . . 2,826,430
215,867,360 Lojas Americanas S.A. (pfd.) (Discount
department store chain) . . . . . . . . . . . . 6,649,942
142,888,380 Lojas Americanas S.A. (voting) . . . . . . . . . . 4,926,602
9,250,000 Metal Leve S.A. Industria e Comercio (pfd.)
(Manufacturer of automobile parts) . . . . . . . 482,227
166,999,999 Petroleo Brasileiro S.A. (pfd.)
(Petroleum company) . . . . . . . . . . . . . . 25,722,749
10,440,000 Sadia Concordia S.A. (pfd.) (Processed
poultry and meat) . . . . . . . . . . . . . . . 15,895,024
53,500,000 Telecomunicacoes de Sao Paulo S.A. (pfd.)
(Telecommunication services) . . . . . . . . . 27,257,109
791,176 Telecomunicacoes de Sao Paulo S.A.
Rights (expire 11/24/94) (b) (c) . . . . . . . . 8,709
2,270,986 Telecomunicacoes do Parana S.A. (pfd.)
(Telecommunication services) . . . . . . . . . . 834,130

The accompanying notes are an integral part of the financial statements.
</TABLE>

<PAGE>

<TABLE>
SCUDDER LATIN AMERICA FUND
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11,600,000,000 Usinas Siderurgicas de Minas Gerais S.A.
(pfd.) (Non-coated flat products and
electrolytic galvanized products) . . . . . . 19,104,265
692,676,920 White Martins S.A. (voting) (Chemical
company) . . . . . . . . . . . . . . . . . . 9,167,300
-------------
239,796,561
-------------
CHILE 6.7% 350,000 Compania de Telefonos de Chile, S.A.
(ADR) (Telecommunication services) . . . . . . 32,943,750
342,800 Cristalerias de Chile (ADR) (Glassworks) . . . . 7,370,200
250,300 Embotelladora Adina (ADR) (Soft drink
producer) . . . . . . . . . . . . . . . . . . 6,914,538
281,200 Maderas y Sinteticos S.A. (ADR) (Manufacturer
of particle board and veneers) . . . . . . . . 7,873,600
-------------
55,102,088
-------------
MEXICO 33.9% 1,250,000 Apasco, S.A. de C.V. "A" (Cement producer) . . . 11,638,056
300,000 Coca-Cola FEMSA, S.A. de C.V. "L" (ADR)
(Soft drink bottler and distributor) . . . . . 9,262,500
600,000 Empresa ICA Sociedad Controladora S.A.
(ADR) (Construction company) . . . . . . . . 17,775,000
2,402,000 Fomento Economico Mexicano, S.A. de C.V. "B"
(Producer of beer and soft drinks) . . . . . . 10,552,866
2,800,000 Grupo Carso, S.A. de CV "A" (Diversified
industrial group) (c) . . . . . . . . . . . . 29,775,967
10,002,000 Grupo CIFRA S.A. de C.V. "C" (Retailer) . . . . 26,947,489
1,859,000 Grupo Continental, S.A. "B" (Soft drink bottler) 9,735,816
2,191,500 Grupo Embotellador de Mexico S.A. de
C.V. "B" (Soft drink bottler) . . . . . . . . 10,010,634
71,150 Grupo Embotellador de Mexico S.A. de C.V.
(GDR) . . . . . . . . . . . . . . . . . . . . 1,805,431
1,000,000 Grupo Embotelladora Unidas "B"
(Soft drink producer) . . . . . . . . . . . . 4,358,452
700,000 Grupo Financiero Banamex-Accival,
S.A. de C.V. "B" (Commercial bank) . . . . . . 4,276,986
794,000 Grupo Financiero Banamex-Accival, S.A.
de C.V. "L" . . . . . . . . . . . . . . . . . 5,267,152
1,320,000 Grupo Financiero Bancomer S.A. de
C.V. "B" (Commercial bank) . . . . . . . . . 1,267,384
1,000,000 Grupo Financiero Bancomer S.A. de
C.V. "C" . . . . . . . . . . . . . . . . . . . 1,157,987
1,160,000 Grupo Financiero Inversiones
Bursatiles S.A. "C" (Banking and insurance). . 4,995,054
7,362,000 Grupo Herdez S.A. de C.V. "A" (Producer of
packaged foods) . . . . . . . . . . . . . . . 6,425,953

The accompanying notes are an integral part of the financial statements.

</TABLE>

<PAGE>

<TABLE>
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
530,000 Grupo Industrial Alfa S.A. "A"
(Conglomerate: steel, petrochemicals,
packaged food) . . . . . . . . . . . . . . . . . 7,247,600
1,300,000 Grupo Industrial Bimbo, S.A. de C.V. "A"
(Producer of bread and other baked goods) . . . . 10,552,808
6,000,000 Grupo Industrial Maseca S.A. de C.V. "B"
(Food producer) . . . . . . . . . . . . . . . . 9,775,967
1,296,000 Kimberly-Clark de Mexico S.A. de C.V. "A"
(Consumer paper products company) . . . . . . . 25,716,381
7,700,000 Organizacion Soriana S.A. "A" (Retailer) (c) . . . 11,425,662
367,800 Panamerican Beverages Inc. "A" (Soft drink
bottler) . . . . . . . . . . . . . . . . . . . . 12,689,100
600,000 Telefonos de Mexico S.A. de C.V. "L" (ADR)
(Telecommunication services) . . . . . . . . . . 33,075,000
550,500 Tolmex S.A. de C.V. "B2" (Cement producer) . . . . 8,008,438
150,000 Vitro SA (ADR) (Manufacturer of glass
containers) . . . . . . . . . . . . . . . . . . 3,093,750
------------
276,837,433
------------
PERU 2.1% 1,225,319 Banco de Credito del Peru (Bank) . . . . . . . . . 2,905,112
1,262,594 Cementos Lima S.A. "T" (Cement producer) . . . . . 2,914,115
1,216,487 Cerveceria Backus & Johnston S.A. "T"
(Brewery) . . . . . . . . . . . . . . . . . . . 2,993,421
312,077 Embotelladora de Lima S.A. "T" (Bottler) . . . . . 1,261,200
1,227,980 Indcstrias Pacocha S.A. "T" (Food producer) . . . 1,885,807
1,029,665 La Fabril S.A. "T" (Food producer). . . . . . . . 1,965,010
535,168 Southern Peru Copper Corp. "T" (Mining
company) . . . . . . . . . . . . . . . . . . . . 3,292,232
------------
17,216,897
------------
VENEZUELA 0.1% 120,000 Mavesa SA (ADR) (Food processor) . . . . . . . . . 690,000
------------
TOTAL EQUITY SECURITIES (Cost $582,582,922) . . . 717,743,512
------------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $681,472,594) (a) . . . . . . . . . . . . 816,633,184
============

The accompanying notes are an integral part of the financial statements.
</TABLE>

<PAGE>
SCUDDER LATIN AMERICA FUND
- --------------------------------------------------------------------------------

(a) The cost for federal income tax purposes was $681,647,454. At
October 31, 1994, net unrealized appreciation for all securities
based on tax cost was $134,985,730. This consisted of aggregate
gross unrealized appreciation for all securities in which there
was an excess of market value over tax cost of $152,963,978 and
aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of
$17,978,248.

(b) Securities valued in good faith by the Valuation Committee of the
Board of Directors. The cost of these securities at October 31,
1994 aggregated $3,000,000. See Note A of the Notes to Financial
Statements.

(d) This security has certain restrictions as to resale. Information
concerning such security holding at October 31, 1994 is as follows:

<TABLE>
<CAPTION>
Acquisition Date Cost ($) % of Total Assets
---------------- -------- -----------------
<S> <C> <C>
10/22/93 3,000,000 0.4

See page 5 for sector diversification.

</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>

FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------

STATEMENT OF ASSETS AND LIABILITIES

OCTOBER 31, 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $681,472,594)
(Note A) . . . . . . . . . . . . . . . . . . . . . . . . $ 816,633,184
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 298
Foreign currency holdings, at market
(identified cost $144,651) (Note A) . . . . . . . . . . 145,157
Forward foreign currency exchange contracts
to buy, at market (contract cost $2,630,048)
(Notes A and D) . . . . . . . . . . . . . . . . . . . . 2,624,060
Receivable on forward foreign currency
exchange contracts to sell (Notes A and D) . . . . . . . 4,866
Receivable on Fund shares sold . . . . . . . . . . . . . . 1,900,687
Dividends and interest receivable . . . . . . . . . . . . . 314,065
Deferred organization expenses (Note A) . . . . . . . . . . 49,867
Other assets . . . . . . . . . . . . . . . . . . . . . . . 11,079
-------------
Total assets . . . . . . . . . . . . . . . . . . . . 821,683,263
LIABILITIES
Payables:
Investments purchased . . . . . . . . . . . . . . . . . $ 6,976,075

Fund shares redeemed . . . . . . . . . . . . . . . . . . 1,018,167
Accrued management fee (Note C) . . . . . . . . . . . . 914,164
Other accrued expenses (Note C) . . . . . . . . . . . . 773,302
Forward foreign currency exchange
contracts to buy (Notes A and D) . . . . . . . . . . 2,630,048
Forward foreign exchange contracts to sell, at
market (contract cost $4,866) (Notes A and D) . . . . 4,860
-----------
Total liabilities . . . . . . . . . . . . . . . . . . 12,316,616
-------------
Net assets, at market value . . . . . . . . . . . . . . . . $ 809,366,647
=============
NET ASSETS
Net assets consist of:
Unrealized appreciation (depreciation) on:
Investments . . . . . . . . . . . . . . . . . . . . . $ 135,160,590
Foreign currency related transactions . . . . . . . . (6,807)
Accumulated net realized gain (Note F) . . . . . . . . . 24,874,564
Capital stock . . . . . . . . . . . . . . . . . . . . . 331,224
Additional paid-in capital . . . . . . . . . . . . . . . 649,007,076
-------------
Net assets, at market value . . . . . . . . . . . . . . . . $ 809,366,647
=============
NET ASSET VALUE, offering and redemption price
(Note A) per share ($809,366,647 / 33,122,382
shares of capital stock outstanding, $.01 par
value, 100,000,000 shares authorized) . . . . . . . . . $24.44
======
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>

SCUDDER LATIN AMERICA FUND
- ---------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS

YEAR ENDED OCTOBER 31, 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $422,931) . . $ 7,586,499
Interest . . . . . . . . . . . . . . . . . . . . . . . . 3,113,427
------------
10,699,926

Expenses:
Management fee (Note C) . . . . . . . . . . . . . . . . . $ 7,169,711
Services to shareholders (Note C) . . . . . . . . . . . . 2,051,168
Directors' fees and expenses (Note C) . . . . . . . . . . 61,215
Custodian fees . . . . . . . . . . . . . . . . . . . . . 1,561,208
Federal registration . . . . . . . . . . . . . . . . . . 144,529
Reports to shareholders . . . . . . . . . . . . . . . . . 381,256
Brazilian transaction tax . . . . . . . . . . . . . . . . 288,753
Auditing . . . . . . . . . . . . . . . . . . . . . . . . 80,897
Legal . . . . . . . . . . . . . . . . . . . . . . . . . . 32,680
State registration . . . . . . . . . . . . . . . . . . . 81,371
Amortization of organization expenses (Note A). . . . . . 16,156
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 27,253 11,896,197
----------- ------------
Net investment loss . . . . . . . . . . . . . . . . . . (1,196,271)
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENT TRANSACTIONS
Net realized gain from:
Investments . . . . . . . . . . . . . . . . . . . . . 25,693,336
Foreign currency related transactions . . . . . . . . 37,679 25,731,015
-----------
Net unrealized appreciation during the
period on:
Investments . . . . . . . . . . . . . . . . . . . . . 90,367,185
Foreign currency related transactions . . . . . . . . 34,514 90,401,699
------------ ------------
Net gain on investment transactions . . . . . . . . . . . 116,132,714
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . $114,936,443
============
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>

FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------
<CAPTION>
FOR THE PERIOD
DECEMBER 8, 1992
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, OCTOBER 31,
INCREASE (DECREASE) IN NET ASSETS 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) . . . . . . . . . . $ (1,196,271) $ 354,648

Net realized gain from investment
transactions . . . . . . . . . . . . . . . . . 25,731,015 1,275,791
Net unrealized appreciation on
investment transactions during the period . . 90,401,699 44,752,084
------------- ------------
Net increase in net assets resulting
from operations . . . . . . . . . . . . . . . 114,936,443 46,382,523
------------- ------------
Distributions to shareholders:
In excess of net investment income
($.055 per share) . . . . . . . . . . . . . (1,013,185) --
------------- ------------
From net realized gains from investment
transactions ($.055 per share) . . . . . . (1,013,185) --
------------- ------------
Fund share transactions:
Proceeds from shares sold . . . . . . . . . . . . 635,744,643 225,096,645
Net asset value of shares issued to
shareholders in reinvestment of
distributions . . . . . . . . . . . . . . . . 1,910,655 --
Cost of shares redeemed (Note A) . . . . . . . . (201,760,965) (10,918,127)
------------- ------------
Net increase in net assets from Fund share
transactions . . . . . . . . . . . . . . . . . 435,894,333 214,178,518
------------- ------------
INCREASE IN NET ASSETS . . . . . . . . . . . . . 548,804,406 260,561,041
Net assets at beginning of period . . . . . . . . 260,562,241 1,200
------------- ------------
NET ASSETS AT END OF PERIOD (including
undistributed net investment income of
$354,648 at October 31, 1993) . . . . . . . . $ 809,366,647 $260,562,241
============= ============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period . . . . 14,153,599 100
------------ ------------
Shares sold . . . . . . . . . . . . . . . . . . . 28,213,736 14,836,006
Shares issued to shareholders in
reinvestment of distributions . . . . . . . . 88,171 --
Shares redeemed . . . . . . . . . . . . . . . . . (9,333,124) (682,507)
------------- ------------
Net increase in Fund shares . . . . . . . . . . . 18,968,783 14,153,499
------------- ------------
Shares outstanding at end of period . . . . . . . 33,122,382 14,153,599
============= ============

</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>

SCUDDER LATIN AMERICA FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL STATEMENTS.
<CAPTION>

(b) Total returns are higher due to maintenance of the Fund's expenses.

* Annualized

** Not annualized

</TABLE>

<PAGE>

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Latin America Fund (the "Fund") is a non-diversified series of Scudder
International Fund, Inc. (the "Corporation"). The Corporation is organized as a
Maryland corporation and is registered under the Investment Company Act of
1940, as amended, as an open-end, management investment company. The policies
described below are followed consistently by the Fund in the preparation of its
financial statements in conformity with generally accepted accounting
principles.

SECURITY VALUATION. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the National Association of
Securities Dealers Automatic Quotation ("NASDAQ") System, for which there have
been sales, are valued at the most recent sale price reported on such system.
If there are no such sales, the value is the high or "inside" bid quotation.
Securities which are not quoted on the NASDAQ System but are traded in another
over-the-counter market are valued at the most recent sale price on such
market. 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 shall be used.

Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the Officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.

All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Directors. Securities valued in good
faith by the Valuation Committee of the Board of Directors at fair value
amounted to $3,008,709 (0.4% of net assets) and have been noted in the
investment portfolio as of October 31, 1994.

<PAGE>
SCUDDER LATIN AMERICA FUND
- --------------------------------------------------------------------------------

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement and the underlying collateral, is equal to at least 100.5% of the
resale price.

FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:

(i) market value of investment securities, other assets and
liabilities at the daily rates of exchange, and

(ii) purchases and sales of investment securities, dividend and
interest income and certain expenses at the daily rates of exchange
prevailing on the respective dates of such transactions.

The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes
in market prices of the investments. Such fluctuations are included with the
net realized and unrealized gains and losses from investments.

Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest and foreign withholding taxes.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. In connection with portfolio
purchases and sales of securities denominated in a foreign currency, the Fund
may enter into forward foreign currency exchange contracts ("contracts").
Additionally, the Fund may enter into contracts to hedge certain other foreign
currency denominated assets. Contracts are recorded at market value. Certain
risks may arise upon entering into these contracts from the potential inability
of counter-parties to meet the terms of their contracts. Realized and
unrealized gains and losses arising from such transactions are included in net
realized and unrealized gain from investment and foreign currency related
transactions.

<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, the Fund paid no federal income taxes and no federal income tax
provision was required.

REDEMPTION FEES. In general, shares of the Fund may be redeemed at net asset
value. However, upon the redemption or exchange of shares held by shareholders
for less than one year, a fee of 2% of the lower of cost or the current net
asset value of the shares will be assessed and retained by the Fund for the
benefit of the remaining shareholders. The redemption fee is accounted for as
an addition to paid-in capital. Total redemption fees received by the Fund for
the year ended October 31, 1994 amounted to $3,109,377.

DISTRIBUTION OF INCOME AND GAINS. Distribution of net investment income is made
annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax. Earnings
and profits distributed to shareholders on redemption of Fund shares ("tax
equalization") may be utilized by the Fund, to the extent permissible, as part
of the Fund's dividends paid deduction on its federal tax returns.

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 investments in foreign denominated
investments and passive foreign investment companies and certain securities
sold at a loss. As a result, net investment income (loss) and net realized gain
(loss) on investment transactions for a reporting period may differ
significantly from distributions during such period. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting the net asset value of the Fund. The net investment loss for
the year ended October 31, 1994, is not available as a carryforward by the Fund
and therefore has been charged to additional paid-in capital.

<PAGE>
SCUDDER LATIN AMERICA FUND
- --------------------------------------------------------------------------------

The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.

ORGANIZATION COSTS. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are
being amortized on a straight-line basis over a five-year period.

OTHER. Investment security transactions are accounted for on a trade-date
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.

B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
During the year ended October 31, 1994, purchases and sales of investment
securities (excluding short-term investments) aggregated $483,093,969 and
$115,261,022, respectively.

C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Management Agreement") with
Scudder, Stevens & Clark, Inc. (the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides
certain administrative services in accordance with the Management Agreement.
The management fee payable under the Management Agreement is equal to an annual
rate of 1.25% of the Fund's average daily net assets, computed and accrued
daily and payable monthly. The Management Agreement provides that if the Fund's
expenses, exclusive of taxes, interest, and extraordinary expenses, exceed
specified limits, such excess, up to the amount of the management fee, will be
paid by the Adviser. As a result, for the year ended October 31, 1994, the
Adviser did not impose a portion of its management fee amounting to $229,325,
and the portion imposed amounted to $7,169,711.

<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend paying and shareholder service agent for the Fund.
For the year ended October 31, 1994, the amount charged to the Fund by SSC
aggregated $1,644,233 of which $158,437 is unpaid at October 31, 1994.

The Fund pays each of its Directors not affiliated with the Adviser $4,000
annually, plus specified amounts for attended board and committee meetings. For
the year ended October 31, 1994, Directors' fees and expenses aggregated
$61,215.

D. COMMITMENTS
- --------------------------------------------------------------------------------
As of October 31, 1994, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of $5,982.

<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
SETTLEMENT (DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR DATE (U.S.$)
- ------------------------- -------------------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
U.S. Dollar 389,248 Brazilian Real 328,135 11/1/94 (461)
U.S. Dollar 973 Brazilian Real 820 11/1/94 (1)
U.S. Dollar 3,892 Brazilian Real 3,281 11/1/94 (5)
U.S. Dollar 245,462 Argentinean Peso 245,217 11/1/94 (184)
U.S. Dollar 250,538 Argentinean Peso 250,488 11/2/94 13
U.S. Dollar 246,854 Argentinean Peso 246,483 11/3/94 (309)
U.S. Dollar 86,007 Mexican Peso 295,176 11/3/94 (125)
U.S. Dollar 231,780 Mexican Peso 795,469 11/3/94 (337)
U.S. Dollar 797,392 Mexican Peso 2,738,243 11/4/94 (696)
U.S. Dollar 103,805 Peruvian New Sol 229,929 11/2/94 (559)
U.S. Dollar 274,097 Peruvian New Sol 603,014 11/4/94 (3,324)
Brazilian Real 820 U.S. Dollar 973 11/1/94 1
Brazilian Real 3,281 U.S. Dollar 3,893 11/1/94 5
------
(5,982)
======
</TABLE>

<PAGE>
SCUDDER LATIN AMERICA FUND
- --------------------------------------------------------------------------------

E. INVESTING IN EMERGING MARKETS
- --------------------------------------------------------------------------------
Investing in emerging markets may involve special risks and considerations not
typically associated with investing in the United States. These risks include
revaluation of currencies and future adverse political and economic
developments. Moreover, securities issued in these markets may be less liquid
and their prices more volatile than those of comparable securities in the
United States.

F. RECLASSIFICATION OF CAPITAL ACCOUNTS
- --------------------------------------------------------------------------------
As required, effective November 1, 1993, the Fund has adopted the provisions of
Statement of Position 93-2 "Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital Distributions by
Investment Companies" (SOP). In implementing the SOP, the Fund has reclassified
$317,980 to increase undistributed net investment income and to decrease
accumulated net realized gain. These reclassifications, which have no impact on
the net asset value of the Fund, are primarily attributable to certain
differences in the computation of distributable income and capital gains under
federal income tax regulations versus generally accepted accounting principles.
The statement of changes in net assets and financial highlights for the prior
period have not been restated to reflect this change in presentation.

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

TO THE BOARD OF DIRECTORS OF SCUDDER INTERNATIONAL FUND, INC. AND TO THE
SHAREHOLDERS OF SCUDDER LATIN AMERICA FUND:

We have audited the accompanying statement of assets and liabilities of Scudder
Latin America Fund including the investment portfolio, as of October 31, 1994,
and the related statement of operations for the year then ended, the statements
of changes in net assets, and the financial highlights for the year then ended
and for the period December 8, 1992 (commencement of operations) to October 31,
1993. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Latin America Fund as of October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and for the period December 8,
1992 (commencement of operations) to October 31, 1993 in conformity with
generally accepted accounting principles.

Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 15, 1994

<PAGE>
SCUDDER LATIN AMERICA FUND
TAX INFORMATION
- --------------------------------------------------------------------------------

For its fiscal year ended October 31, 1994, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was $.013 per share (representing a total of $422,931). The total amount
of taxes paid by the Fund to such countries was $.013 per share (representing a
total of $422,931).

Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$18,188,852 as a long-term capital gain dividend for the fiscal year ended
October 31, 1994.
<PAGE>

OFFICERS AND DIRECTORS

Edmond D. Villani*
Chairman of the Board and Director

Nicholas Bratt*
President and Director

Paul Bancroft III
Director; Venture Capitalist and Consultant

Thomas J. Devine
Director; Consultant

William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.

William H. Luers
Director; President, The Metropolitan Museum of Art

Wilson Nolen
Director; Consultant

Juris Padegs*
Director, Vice President and Assistant Secretary

Daniel Pierce*
Director

Gordon Shillinglaw
Director; Professor Emeritus of Accounting, Columbia University
Graduate School of Business

Robert G. Stone, Jr.
Director; Chairman of the Board and Director, Kirby Corporation

Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business

Carol L. Franklin*
Vice President

Edmund B. Games*
Vice President

Jerard K. Hartman*
Vice President

William E. Holzer*
Vice President

Thomas W. Joseph*
Vice President

William F. Truscott*
Vice President

David S. Lee*
Vice President and Assistant Treasurer

Thomas F. McDonough*
Vice President and Secretary

Pamela A. McGrath*
Vice President and Treasurer

Edward J. O'Connell*
Vice President and Assistant Treasurer

Kathryn L. Quirk*
Vice President and Assistant Secretary

Richard W. Desmond*
Assistant Secretary

Coleen Downs Dinneen*
Assistant Secretary

* Scudder, Stevens & Clark, Inc.

INVESTMENT PRODUCTS AND SERVICES

The Scudder Family of Funds

Retirement Plans and Tax-Advantaged Investments
IRAs
Keogh Plans
Scudder Horizon Plan+++* (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase Pension Plans

Institutional Cash Management
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(tm)++

HOW TO CONTACT SCUDDER

Account Service and Information

For existing account service and transactions

SCUDDER SERVICE CORPORATION
1-800-225-5163

For account updates, prices, yields, exchanges and redemptions

SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890

Investment Information

To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions

SCUDDER INVESTOR INFORMATION
1-800-225-2470

For establishing Keogh, 401(k) and 403(b) plans

SCUDDER GROUP RETIREMENT SERVICES
1-800-323-6105

Please address all correspondence to

THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291

Or stop by a Scudder Funds Center

Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you-they can be
found in the following cities:

Boca Raton
Boston
Chicago
Cincinnati
Los Angeles
New York
Portland, OR
San Diego
San Francisco
Scottsdale

For information on Scudder Institutional Funds,* funds designed to meet the
broad investment management and service needs of banks and other
institutions, call: 1-800-854-8525.

Scudder Investor Information and Scudder Funds Centers are services
provided through Scudder Investor Services, Inc., Distributor.

Celebrating 75 Years of Serving Investors

This year marks the 75th anniversary of the founding of Scudder,
Stevens & Clark, Inc., investment adviser for the Scudder Funds.
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder was the first independent investment counsel firm in the
United States. Since its birth, Scudder's pioneering spirit and commitment
to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load
mutual fund. Today we offer 36 pure no load(tm) funds, including the first
international mutual fund offered to U.S. investors.

Over the years, Scudder's global investment perspective and dedication
to research and fundamental investment disciplines have helped Scudder
become one of the largest and most respected investment managers in the
world. Though times have changed since our beginnings, we remain committed
to our longstanding principles: managing money with integrity and
distinction, keeping the interests of our clients first; providing access
to investments and markets that may not be easily available to individuals;
and making investing as simple and convenient as possible through friendly,
comprehensive service.

<PAGE>

This information must be preceded or accompanied by a current prospectus.

Portfolio changes should not be considered recommendations for action by
individual investors.

Scudder
Pacific Opportunities
Fund

Annual Report
October 31, 1994

* Offers opportunities for long-term capital appreciation through
investment primarily in the equity securities of Pacific Basin
companies, excluding Japan.

* A pure no-load(tm) fund with no commissions to buy, sell, or exchange
shares.

CONTENTS

2 Highlights

3 Letter from the Fund's Chairman

4 Performance Update

5 Portfolio Summary

6 Portfolio Management Discussion

11 Investment Portfolio

17 Financial Statements

20 Financial Highlights

21 Notes to Financial Statements

27 Report of Independent Accountants

28 Tax Information

29 Officers and Directors

30 Investment Products and Services

31 How to Contact Scudder

HIGHLIGHTS

* Scudder Pacific Opportunities Fund provided an 8.97% total return
(capital change plus income) for the 12 months ended October 31, 1994.

* After posting strong gains in 1993, stock markets in the Pacific Rim
dropped sharply in the first half of 1994, reacting to concerns about
rising interest rates and their potential impact on corporate
earnings.

* During the period, the Fund targeted companies benefiting from
increased infrastructure investment and greatly enhanced consumer
spending in Asia -- the result of rapidly rising incomes and dramatic
economic growth.

LETTER FROM THE FUND'S CHAIRMAN
Dear Shareholders,

The combination of modest global economic growth and low inflation
caused stock prices to move higher in the summer months, and many of the
Pacific Rim markets were up sharply after performing poorly in the first
half of the year. Yet the financial community continues to cast a wary eye
on the prospects for inflation and is taking its cues to a large extent
from central bank activity and the direction of interest rates.

We expect higher interest rates to limit economic growth in the United
States to a more sustainable pace than in recent quarters. Global economic
expansion is also expected to continue at a moderate overall pace, as the
scarcity of capital available to invest in economies and financial markets
keeps upward pressure on interest rates. However, we believe that the
Pacific Basin generally offers potential for strong growth over the next
several years. In the near term, we intend to use any further market
volatility to our advantage by adding companies with discounted stock
prices and, in our view, above-average growth potential.

If you have questions about your Fund or your investments, contact a
Scudder Investor Information representative at 1-800-225-2470. Page 31
provides more information on how to contact Scudder. Thank you for choosing
Scudder Pacific Opportunities Fund to help meet your investment needs.

Sincerely,

/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder Pacific Opportunities Fund

<PAGE>
Scudder Pacific Opportunities Fund
Performance Update as of October 31, 1994
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder Pacific Opportunities Fund
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
10/31/94 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,897 8.97% 8.97%
Life of
Fund* $14,720 47.20% 22.62%

MSCI Pacific Index (excluding Japan)
- --------------------------------------
Total Return
Period Growth -------------
Ended of Average
10/31/94 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $11,093 10.93% 10.93%
Life of
Fund* $17,031 70.31% 33.83%

*The Fund commenced operations on December 8, 1992.
Index comparisons begin December 31, 1992.

A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:

Scudder Pacific Opportunities Fund
Year Amount
- ----------------------
12/92* 10000
1/93 9967
4/93 11019
7/93 11195
10/93 13542
1/94 15563
4/94 13498
7/94 13867
10/94 14757

MSCI Pacific Index (excluding Japan)
Year Amount
- ----------------------
12/92* 10000
1/93 10071
4/93 11583
7/93 12063
10/93 15352
1/94 17482
4/94 15544
7/94 16141
10/94 17031

The Morgan Stanley Capital International (MSCI) Pacific Index
is an unmanaged capitalization-weighted measure of stock markets
in the Pacific Basin countries, excluding Japan. Index returns
assume dividends reinvested net of withholding tax and, unlike
Fund returns, do not reflect any fees or expenses.

- -----------------------------------------------------------------
Returns and Per Share Information
- -------------------------------------------------------------------

A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.

Yearly periods ended October 31
- ----------------------------------
<TABLE>
<S> <C> <C>
1993* 1994
---------------
Net Asset Value... $16.21 $17.57
Income Dividends.. -- .08
Capital Gains
Distributions..... -- .01
Fund Total
Return (%)........ 35.08 8.97
Index Total
Return (%)........ 53.52 10.93
</TABLE>

All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not maintained the Fund's expenses, the average
annual total return for the one year and life of Fund would have been
8.97% and 22.47%, respectively.

Scudder Pacific Opportunities Fund
Portfolio Summary as of October 31, 1994
- ---------------------------------------------------------------------------
Geographical (Excludes 24% Cash Equivalents)
- ---------------------------------------------------------------------------
Hong Kong 19% Throughout the period, we reduced
Korea 15% holdings in Hong Kong to help avoid
Malaysia 14% recent market volatility.
Thailand 10%
Australia 8%
India 8%
Indonesia 7%
Other 19%
----
100%
====

A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.

- --------------------------------------------------------------------------
Sectors (Excludes 24% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 21%
Consumer Staples 12% The Fund's large cash position reflects
Manufacturing 11% our defensive investment strategy and
Construction 10% our reluctance to invest assets this
Metals & Minerals 8% year as rapidly as they have accumulated
Utilities 8% in the Fund.
Energy 8%
Communications 7%
Durables 3%
Other 12%
----
100%
====

A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.

- --------------------------------------------------------------------------
Ten Largest Equity Holdings
- --------------------------------------------------------------------------
1. PTT Exploration and Production Co., Ltd.
Petroleum refinery in Thailand
2. Korea Electric Power Co.
Korean electric utility
3. Aokam Perdana Bhd.
Malaysian forest products company
4. YTL Corp.
Malaysian general construction company
5. Samsung Fire and Marine Insurance
Korean insurance company
6. Swire Pacific Ltd.
General trading and real estate company in Hong Kong
7. M.I.M. Holdings Ltd.
Nonferrous metals and coal in Australia
8. Siam Cement Co., Ltd.
Construction materials and industrial conglomerate in Thailand
9. Kalbe Farma
Indonesian pharmaceutical producer and distributor
10. Hong Kong Telecommunications, Ltd.
Telecommunication services in Hong Kong

The Fund's ten largest holdings reflect our desire to capitalize
on the region's financial and physical development.

For more complete details about the Fund's Investment Portfolio,
see page 11.
A monthly Investment Portfolio Summary is available upon request.
<PAGE>

PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,

The explosive advances that in recent years characterized investment
markets in the Pacific Rim have been followed in 1994 by challenging market
conditions and, in some cases, steep declines. The markets of Hong Kong and
Indonesia, for example, suffered double-digit losses in the first 10 months
of 1994. The catalyst for this change was a reversal in the direction of
global interest rates. After several years of lowering short-term rates,
the U.S. Federal Reserve began raising interest rates in February to
prevent inflation from accelerating in the face of strong economic growth.
Local interest rates in some Asian economies move closely with U.S. rates
due to ties in currency, and market participants worried that higher rates
would slow corporate growth in Asia and reduce the potential for stock
price appreciation.

The performance of Scudder Pacific Opportunities Fund in 1994 reflects
this generally difficult investment environment, although the Fund's
results for the 12-month period were buoyed by a strong 18.21% return in
the final two months of 1993. For the fiscal year ended October 31, 1994,
the Fund returned 8.97%, reflecting a $1.36 increase in share price to
$17.57, from $16.21 a year earlier, and $0.09 per share of income and
capital gain distributions. During the same period, the unmanaged MSCI
Pacific Index (excluding Japan) returned 10.93%.

Investment Risks in the Pacific Rim

Rising interest rates were not the only factor affecting Asian
markets this year. Emerging markets in the Pacific Rim have long been
characterized by volatility resulting from political uncertainty, inflation
(often a byproduct of dynamic economic growth), and currency fluctuation.
This year was no different.

China is still dogged by high (20+%) inflation, despite attempts to
cool its torrid pace of economic growth to a manageable level. In fact,
U.S. Federal Reserve Chairman Alan Greenspan visited Beijing in October to
counsel Chinese government officials on how best to balance strong economic
growth (estimated at nearly 10% this year) and inflation. Meanwhile,
renewed official control of some key prices have cast shadows on China's
laudable economic reforms. Although Deng Hsiao-Ping is no longer "calling
the shots" on a day-to-day basis, his death, which is expected soon, will
represent the end of the old guard and inevitably set off a power struggle
to determine policy direction as China moves into a new age. In our
opinion, much, but perhaps not all, of this uncertainty is already built
into current stock valuations.

Elsewhere, fears surrounding North Korea's nuclear capability and the
death of Kim Il Sung focused attention on that peninsula. Nevertheless, the
South Korean stock market shook off these fears during the year and reached
an all time high. Finally, uncertainty is growing in Indonesia regarding
political succession as the Suharto era draws to a close.

Strong Economic Growth Creates Opportunities

Despite short-term setbacks, we remain optimistic about the long-term
development of Pacific Rim economies. The investment climate in Southeast
Asia has improved dramatically over the past several years, and we expect
investment opportunities to continue to unfold. Economic output in East
Asia now accounts for 25% of the world total, with individual countries
averaging 6.5% to 7.5% growth annually versus 2.5% to 3% for the United
States and Europe. Corporate privatizations and expanded economic capacity
have come to characterize Asian markets in recent years, and personal
incomes have risen throughout the region. Equally important, East Asian
central banks now hold close to 45% of the world's foreign reserves. While
available savings in the United States and the major European countries
continue to dwindle, Taiwan, Singapore, and Hong Kong have capital
surpluses and are virtually debt free. As competition for investment
capital heats up worldwide, the Pacific Rim nations may very well become
the chief source of funds for financial markets and growing economies.

Fund's Investment Strategy Balances Risk and Reward

While we believe the stock markets of the smaller Pacific Rim
countries are well suited to satisfying the Fund's objective of long-term
capital appreciation, we recognize the risks native to emerging markets and
are committed to balancing those risks with potential rewards. Over the
last 12 months, we stuck with our basic philosophy of diversifying assets
to avoid too large an exposure in any one country (see accompanying chart).
In light of uncertain markets, we also increased the Fund's cash position
to 24% from a low of 3% in January. At the same time, we maintained our
exposure to companies benefiting from infrastructure investment in the
region and heightened consumer spending-the result of rapidly rising
incomes and dramatic social change.

(BAR CHART TITLE) Geographic Diversification of
Common Stock and Convertible Holdings
(as a percentage of the Fund's equity portfolio)
(CHART DATA)
10/31/94 10/31/93
Hong Kong 18.5% 31.8%
Malaysia 14.2 18.5
Korea 15.2 5.0
Australia 8.3 9.7
Thailand 9.4 9.2
United States 0.4 1.5
Indonesia 6.9 2.6
New Zealand 3.9 5.2
Taiwan 3.4 2.5
China 3.8 3.8
Philippines 4.7 2.2
Other 11.3 8.0

Our holdings in Hong Kong were reduced during the year to 19% of the
equity portfolio, from 32% at the start of the period. The Hong Kong
market, sensitive to changes in U.S. interest rates, took its cues from the
U.S. bond and equity markets during the year, selling off sharply in early
1994, then trading in a range for several months. Although economic
developments in the area bode well for equity investments, we are concerned
about the health of the local property market. Moreover, political
uncertainty surrounding the country's union with China in 1997 has
restrained markets and could create further market volatility in the months
to come. As a result, we are now underweighted in both Hong Kong and China.

The Korean economy is experiencing rapid growth (in excess of 7% this
year) and its stock market has shown impressive gains -- 36% since December
31. Korean steel, shipbuilding, autos, and consumer electronics are highly
competitive in world markets, particularly now that Japanese competitors
are handicapped by the strong yen. Inflation has not yet become a problem
in Korea, and its interest rates remain stable. In the most recent quarter,
the government fueled market gains by announcing it was raising the ceiling
on foreign participation in the Korean stock market from 10% to 12%. During
the fiscal year, we increased our Korean holdings to 15% of the equity
portfolio from 5% a year earlier, adding the stocks of such companies as
Samsung Heavy Industries Co. and LG Merchant Banking Corporation (formerly
Pusan Investment and Finance Co.) to capitalize on developments in the
country's physical and financial infrastructure.

Investments in the Philippines have also attracted attention. This
year, the Philippine government moved to deregulate its financial industry
and liberalize banking laws. Supported by declining interest rates,
corporate earnings have improved this year by as much as 30%. We have
increased equity portfolio holdings in the region to 5% from 2% at the
start of the period, adding new positions in Ayala Corp., an industrial
conglomerate; Manila Electric Co., an electric utility; and San Miguel
Corp., a brewery.

Outlook

Though volatility is likely to remain a hallmark of the region's stock
markets, we believe the Pacific Basin offers the potential for some of the
strongest economic growth in the world for the balance of the 1990s. In the
months to come, we will continue to invest in what we believe are exciting
growth opportunities in the various countries and industries of the region,
maintaining broad exposure to companies benefiting from infrastructure
investment, increased consumption, and economic expansion.

Sincerely,

Your Portfolio Management Team

/s/Elizabeth J. Allan /s/Nicholas Bratt
Elizabeth J. Allan Nicholas Bratt

/s/Joyce E. Cornell
Joyce E. Cornell

Scudder Pacific Opportunities Fund: A Team Approach to Investing

Scudder Pacific Opportunities Fund is managed by a team of Scudder
investment professionals who each play an important role in the Fund's
management process. Team members work together to develop investment
strategies and select securities for the Fund. They are supported by
Scudder's large staff of economists, research analysts, traders, and other
investment specialists who work in Scudder's offices across the United
States and abroad. We believe our team approach benefits Fund investors by
bringing together many disciplines and leveraging Scudder's extensive
resources.

Lead Portfolio Manager Elizabeth J. Allan assumed responsibility for
the Fund's day-to-day management and investment strategies in February
1994. Elizabeth joined Scudder in 1987 as a member of the portfolio
management team of a Scudder closed-end mutual fund concentrating its
investments in Asia. Nicholas Bratt, Portfolio Manager, has been a member
of the Fund's team since 1992 and has over 20 years of experience in global
investing. Joyce E. Cornell, Portfolio Manager, focuses on stock selection,
a role she has played since the Fund's introduction in 1992. Joyce, who has
seven years of investment experience as a research analyst, joined Scudder
in 1991 in this capacity.

<PAGE>
<TABLE>
INVESTMENT PORTFOLIO as of October 31, 1994
- ------------------------------------------------------------------------------------------------------------------

<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4.4% REPURCHASE AGREEMENT
---------------------------------------------------------------------
22,627,000 Repurchase Agreement with Donaldson,
Lufkin & Jenrette dated 10/31/94
at 4.77%, to be repurchased at
$22,629,998 on 11/1/94,
collateralized by a $22,626,000
U.S. Treasury Note, 7%, 9/30/96
(Cost $22,627,000) . . . . . . . . . . . 22,627,000
------------
14.7% COMMERCIAL PAPER
---------------------------------------------------------------------
10,000,000 American Express Credit Corp.,
4.95%, 11/14/94 . . . . . . . . . . . . 10,000,000
22,626,000 CIT Group Holdings Inc., 4.8%, 11/1/94 . . 22,626,000
20,000,000 General Electric Capital Corp., 5.08%,
11/17/94 . . . . . . . . . . . . . . . 20,000,000
10,550,000 Rincon Securities Inc., 5.03%, 11/14/94 . 10,530,837
8,150,000 Rincon Securities Inc., 5.03%, 12/5/94 . . 8,111,283
4,450,000 Rincon Securities Inc., 4.97%, 11/18/94 . 4,450,000
------------
TOTAL COMMERCIAL PAPER (Cost $75,718,120). 75,718,120
------------
4.9% SHORT-TERM NOTES
---------------------------------------------------------------------
5,000,000 Federal Home Loan Mortgage Corp.
Discount Note, 4.74%, 11/2/94 . . . . . 4,999,342
10,000,000 Federal National Mortgage Association
Discount Note, 3.28%, 11/7/94 . . . . . 9,994,528
10,000,000 Federal Home Loan Mortgage Corp.
Discount Note, 4.92%, 12/2/94 . . . . . 9,957,637
------------
TOTAL SHORT-TERM NOTES (Cost $24,951,507). 24,951,507
------------
4.9% CONVERTIBLE BONDS
---------------------------------------------------------------------
INDIA 3.3% 3,510,000 Essar Gujarat, 5.5%, 8/5/98
(Steel producer) . . . . . . . . . . . 7,125,300
500,000 Industrial Credit & Investment Corp. of
India, Ltd., 2.5%, 4/3/00
(Development bank) . . . . . . . . . . . 427,500
3,310,000 Jindal, 4.25%, 3/31/99
(Steel manufacturer) . . . . . . . . . . 4,303,000
3,850,000 Reliance Industries, 3.5%, 11/3/99
(Producer of textiles, synthetic fibers
and plastics) . . . . . . . . . . . . . . 5,159,000
------------
17,014,800
------------
KOREA 0.7% 3,050,000 Cheil Food and Chemical Co., Ltd., 3%,
12/31/06 (Leading sugar refiner and major
integrated food processor) . . . . . . . 3,690,500
------------

The accompanying notes are an integral part of the financial statements.

</TABLE>

<PAGE>

<TABLE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- ------------------------------------------------------------------------------------------------------------------

<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MALAYSIA 0.9% 4,350,000 Telekom Malaysia Bhd., 4%, 10/3/04
(Telecommunication services) . . . . . . . 4,333,688
138,000 United Engineers, 4%, 5/22/99 (Leading
comprehensive contractor) . . . . . . . . 65,894
-----------
4,399,582
-----------
TOTAL CONVERTIBLE BONDS (Cost $22,567,183). 25,104,882
-----------
1.1% CONVERTIBLE PREFERRED STOCKS
----------------------------------------------------------------------
Shares
----------------------------------------------------------------------
AUSTRALIA 3,150,000 TNT Ltd. (International transportation
company) (Cost $3,756,786) . . . . . . . 5,801,191
-----------
70.0% COMMON STOCKS
----------------------------------------------------------------------
AUSTRALIA 5.2% 2,241,600 Ampol Exploration Ltd. (Oil and gas
exploration company) . . . . . . . . . . 6,791,618
912,398 Coca Cola Amatil Ltd. (Soft drink bottler
and distributor) . . . . . . . . . . . . 5,759,147
3,430,300 M.I.M. Holdings Ltd. (Nonferrous metals
and coal) . . . . . . . . . . . . . . . . 7,463,708
105,702 TNT Ltd. (International transportation
company) . . . . . . . . . . . . . . . . 189,171
1,709,000 Woodside Petroleum Ltd. (Major oil and
gas producer) . . . . . . . . . . . . . 6,370,899
-----------
26,574,543
-----------
CHINA 2.9% 132,500 Huaneng Power International, Inc.
Series N (ADR) (Developer and operator
of large coal-fired power plants) . . . . 2,451,250
17,728,000 Maanshan Iron & Steel Co. "H"
(Steel producer) . . . . . . . . . . . . 5,620,653
202,300 Shandong Huaneng Power Co. (ADR)
(Electric power utility) . . . . . . . . 2,174,725
5,044,000 Tsingtao Brewery "H" (Leading brewery) . . 3,785,856
2,100,000 Yi Zheng Chemical Fibre Co. (Leading
polyester producer)* . . . . . . . . . . 842,446
-----------
14,874,930
-----------
HONG KONG 14.0% 6,810,000 B & B Asia Ltd. (General construction
company) . . . . . . . . . . . . . . . . 2,599,741
937,200 China Light & Power Co., Ltd.
(Electric utility) . . . . . . . . . . . 4,887,630
547,996 HSBC Holdings Ltd. (Bank) . . . . . . . . 6,506,455
972,000 Henderson Land Development Co., Ltd
(Property developer) . . . . . . . . . . 6,352,119

The accompanying notes are an integral part of the financial statements.
</TABLE>

<PAGE>

<TABLE>
INVESTMENT PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
734,000 Hong Kong Aircraft Engineering Co., Ltd.
(Commercial aircraft maintenance company) . . . . 3,182,012
1,900,000 Hong Kong Electric Holdings, Ltd. (Electric
utility and real estate) . . . . . . . . . . . 5,974,765
3,331,200 Hong Kong Telecommunications, Ltd.
(Telecommunication services) . . . . . . . . . . 7,134,437
1,036,000 Hutchison Whampoa, Ltd. (Container terminal
and real estate company) . . . . . . . . . . . 4,786,179
2,065,000 Hysan Development Co. (Real estate
developer) . . . . . . . . . . . . . . . . . . 5,504,885
1,471,800 Jinhui Holdings Ltd. (Operator of dry bulk
cargo ships in southern China) . . . . . . . . 2,671,317
1,717,000 Peregrine Investment Holdings Ltd. (Leading
financial services group) . . . . . . . . . . . . 2,999,612
451,000 S. Megga International (Manufacturer
and distributor of telecommunications
hardware) . . . . . . . . . . . . . . . . . . . . 69,452
984,000 Swire Pacific Ltd. "A" (General trading
and real estate company) . . . . . . . . . . . 7,512,908
1,543,000 Television Broadcasts, Ltd. (Television
broadcasting) . . . . . . . . . . . . . . . . . 6,988,677
14,011,744 Yips Hang Cheung (Manufacturer of
mixed solvents and paints) . . . . . . . . . . . 5,031,717
-----------
72,201,906
-----------
INDIA 2.8% 192,125 Bajaj Auto (GDR) (Maker of two and three
wheel vehicles) . . . . . . . . . . . . . . . . 4,947,219
154,000 Ranbaxy Laboratories (Pharmaceutical
company) . . . . . . . . . . . . . . . . . . . . 3,118,500
830,000 The India Fund (Investment company) . . . . . . . 6,323,851
-----------
14,389,570
-----------
INDONESIA 5.2% 2,715,000 Gadjah Tunggal (Tire manufacturer)* . . . . . . . 4,626,864
8,700 Indonesia Satellite Corp. (ADR) (International
telecommunication services) . . . . . . . . . . 341,475
1,020,000 Jaya Real Properties (Real estate developer) . . 4,005,066
3,122,000 Kabelmetal Indonesia (Foreign registered)
(Cable manufacturer) . . . . . . . . . . . . . . 4,493,638
1,662,000 Kalbe Farma (Foreign registered)
(Pharmaceutical producer and distributor) . . . 7,348,817
741,250 Modern Photo Film Co. (Foreign registered)
(Photographic film distributor) . . . . . . . . 3,738,471
135,000 Unilever-Indonesia (Foreign registered)
(Consumer products manufacturer) . . . . . . . . 2,425,010
-----------
26,979,341
-----------

The accompanying notes are an integral part of the financial statements.
</TABLE>

<PAGE>

<TABLE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KOREA 10.8% 20,115 Dae Young Electronics (Telecommunications
equipment manufacturer and distributor) . . . . . 918,505
263,882 Daewoo Heavy Industries Ltd. (Leading
manufacturer of heavy industrial equipment) . . . 4,833,064
5,146 Daewoo Heavy Industries Ltd. (New(c))* . . . . . . . 92,959
90,860 Goldstar Co. (GDR) (Leading maker of
consumer electronics and electric appliances) . . 1,590,050
302,500 Korea Electric Power Co. (Electric utility) . . . . 11,498,373
50,000 Pohang Iron & Steel Co. (Korea's leading
steel producer) (b)* . . . . . . . . . . . . . . 5,872,170
81,990 LG Merchant Banking Corp. (Financial
services company)* . . . . . . . . . . . . . . . 4,268,438
37,000 Samchully (Producer and distributor of
anthracite and gas) . . . . . . . . . . . . . . . 2,808,129
104,664 Samsung Electronics Co., Ltd. (GDS)
(Major electronics manufacturer) . . . . . . . . 6,332,172
3,782 Samsung Electronics Co., Ltd. (b) . . . . . . . . . 730,192
156 Samsung Electronics Co., Ltd. (New(c)) (b) . . . . . 29,522
20,000 Samsung Fire and Marine Insurance (Insurance
company) (b)* . . . . . . . . . . . . . . . . . . 8,008,279
137,138 Samsung Heavy Industries Co., Ltd.
(Machinery manufacturer) . . . . . . . . . . . . 7,105,061
56,000 Yukong, Ltd. (GDR) (Leading oil refiner) . . . . . 1,414,000
-----------
55,500,914
-----------
MALAYSIA 10.0% 828,000 Aokam Perdana Bhd. (Forest products company) . . . 6,837,887
331,200 Aokam Perdana Bhd. (New(c)) . . . . . . . . . . . . 2,592,564
1,573,000 Arab-Malaysian Corp. (Investment holding
company with interests in financial services,
infrastructure and property) . . . . . . . . . . 5,171,507
597,000 Genting Bhd. (Operator of tourist resorts,
hotels and restaurants) . . . . . . . . . . . . . 5,490,998
405,000 Kim Hin Industries (Ceramic tile manufacturer) . . . 2,203,327
920,000 Malayan Banking Bhd. (Leading banking
and financial services group) . . . . . . . . . . 6,265,362
510,000 Malaysian Helicopter Bhd. (Aviation
transport services) . . . . . . . . . . . . . . 1,257,534
1,690,000 Technology Resources Industries (Mobile
telephone operator)* . . . . . . . . . . . . . . 6,581,409
700,000 United Engineers (Leading comprehensive
contractor)* . . . . . . . . . . . . . . . . . . 3,780,822
285,000 Westmont Bhd. (Manufacturer and trader
of garments in Hong Kong) . . . . . . . . . . . . 2,018,982
1,584,000 YTL Corp. (General construction company) . . . . . 8,989,432
-----------
51,189,824
-----------

The accompanying notes are an integral part of the financial statements.
</TABLE>

<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NEW ZEALAND 3.0% 2,153,300 Carter Holt Harvey Ltd. (Resource conglomerate) . . 5,221,904
2,445,000 Lion Nathan Ltd. (Beverage bottler) . . . . . . . . 4,635,085
1,542,400 Telecom Corp. of New Zealand
(Telecommunication services) . . . . . . . . . . 5,373,306
-----------
15,230,295
-----------
PHILIPPINES 3.6% 2,668,000 Ayala Corp. "B" (Industrial conglomerate) . . . . 4,718,328
458,000 Benpres Holding Corp. (GDR) . . . . . . . . . . . 5,239,520
412,500 Manila Electric Co. "B" (Electric utility) . . . . 5,802,854
500,000 San Miguel Corp. "B" (Brewery) . . . . . . . . . . 2,713,023
-----------
18,473,725
-----------
SINGAPORE 2.5% 562,000 Development Bank of Singapore (Foreign
Registered) (Banking and financial services) . . 5,970,174
450,000 Overseas Union Bank Ltd. (Bank) . . . . . . . . . 2,574,055
526,000 Sembawang Corp. (Ship repair and maritime
services group) . . . . . . . . . . . . . . . . 4,083,350
-----------
12,627,579
-----------
TAIWAN 2.6% 70,000 China Steel Corp. (ADR) (Integrated steel mill)*. . 1,242,500
40,000 China Steel Corp. (GDS)* . . . . . . . . . . . . . 730,000
356,676 President Enterprises Corp. (GDR)
(Food and beverage conglomerate)* . . . . . . . . 6,509,337
58 units Taipei Fund IDR (Investment company) (d) . . . . . 4,843,000
-----------
13,324,837
-----------
THAILAND 7.1% 41,400 American Standard Sanitaryware (Foreign
registered) (Manufacturer of bathroom
fixtures) . . . . . . . . . . . . . . . . . . . 784,047
158,500 Bangkok Insurance Co., Ltd. (Foreign
registered) (Insurance company) . . . . . . . . 3,586,807
607,000 Bangkok Steel Industry Co., Ltd. (Manufacturer
of metal products, machinery and equipment) . . 1,558,721
1,076,000 PTT Exploration and Production Co., Ltd.
(Foreign registered) (Petroleum refinery) . . . 12,174,778
128,500 Siam Cement Co., Ltd. (Construction materials
and industrial conglomerate) . . . . . . . . . 7,414,156
302,500 TPI Polene Co., Ltd. (Producer of plastic
pellets used in bags, bottles, water pipes
and coating materials) . . . . . . . . . . . . 3,277,094
450,000 Telecomasia, Ltd. (Foreign registered)
(Telecommunication services)* . . . . . . . . . 1,823,617
692,600 Thai Farmers Bank (Foreign registered)
(Commercial bank) . . . . . . . . . . . . . . . 6,113,710
-----------
36,732,930
-----------

The accompanying nottes are an integral part of the financial statements.
</TABLE>

<PAGE>

(b) Securities valued in good faith by the Valuation Committee of the Board of Directors. The cost
of these securities at October 31, 1994 aggregated $11,248,384. See Note A of the Notes to
Financial Statements.

(d) 1,000 shares = 1 IDR unit for Taipei Fund.

* Non-income producing security.

Sector breakdown of the Fund's equity securities is noted on page 5.

The accompanying notes are an integral part of the financial statements.

</TABLE>

<PAGE>

<TABLE>
FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------------------------

STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $453,000,983)
(Note A) . . . . . . . . . . . . . . . . . . . . . . . $513,889,094
Foreign currency holdings, at market
(identified cost $536,574) (Note A) . . . . . . . . . 536,576
Forward foreign currency exchange contracts to buy,
at market (contract cost $8,469,457) (Notes A and D) . 8,468,902
Receivable on forward foreign currency
exchange contracts to sell (Notes A and D) . . . . . 7,126,985
Other receivables:
Investments sold . . . . . . . . . . . . . . . . . . . 8,312,284
Fund shares sold . . . . . . . . . . . . . . . . . . . 2,441,276
Dividends and interest . . . . . . . . . . . . . . . . 980,329
Deferred organization expenses (Note A) . . . . . . . . . 36,048
------------
Total assets . . . . . . . . . . . . . . . . . . . . . 541,791,494

LIABILITIES
Payables:
Due to custodian bank . . . . . . . . . . . . . . . . $ 1,997,347
Investments purchased . . . . . . . . . . . . . . . . 21,651,441
Fund shares redeemed . . . . . . . . . . . . . . . . . 2,513,705
Accrued management fee (Note C) . . . . . . . . . . . 451,777
Other accrued expenses (Note C) . . . . . . . . . . . 424,875
Forward foreign currency exchange contracts to buy
(Notes A and D) . . . . . . . . . . . . . . . . . . 8,469,457
Forward foreign currency exchange contracts to sell,
at market (contract cost $7,126,985)
(Notes A and D) . . . . . . . . . . . . . . . . . . 7,131,485
-----------
Total liabilities . . . . . . . . . . . . . . . . . . 42,640,087
------------
Net assets, at market value . . . . . . . . . . . . . . . $499,151,407
============
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net
investment income (Note F) . . . . . . . . . . . . $ (471,044)
Unrealized appreciation (depreciation) on:
Investments . . . . . . . . . . . . . . . . . . . . 60,888,111
Foreign currency related transactions . . . . . . . (2,430)
Accumulated net realized loss (Note F) . . . . . . . . (3,151,658)
Capital stock . . . . . . . . . . . . . . . . . . . . 284,059
Additional paid-in capital . . . . . . . . . . . . . . 441,604,369
------------
Net assets, at market value . . . . . . . . . . . . . . . $499,151,407
============
NET ASSET VALUE, offering and redemption price per
share ($499,151,407 / 28,405,889 shares of
capital stock outstanding, $.01 par value,
100,000,000 shares authorized) . . . . . . . . . . . . $17.57
======

The accompanying notes are an integral part of the financial statements.

</TABLE>

<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, 1994
- ------------------------------------------------------------------------------------------
<C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $560,833) . . $ 5,570,557
Interest . . . . . . . . . . . . . . . . . . . . . . . . 3,295,900
-----------
8,866,457
Expenses:
Management fee (Note C) . . . . . . . . . . . . . . . . . $ 4,662,015
Services to shareholders (Note C) . . . . . . . . . . . . 1,397,999
Directors' fees (Note C) . . . . . . . . . . . . . . . . 61,190
Custodian fees . . . . . . . . . . . . . . . . . . . . . 1,033,714
Reports to shareholders . . . . . . . . . . . . . . . . . 254,925
Auditing . . . . . . . . . . . . . . . . . . . . . . . . 90,870
Federal registration . . . . . . . . . . . . . . . . . . 71,299
State registration . . . . . . . . . . . . . . . . . . . 61,118
Legal . . . . . . . . . . . . . . . . . . . . . . . . . . 25,622
Amortization of organization expense (Note A) . . . . . . 11,658
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 13,857 7,684,267
-----------------------------
Net investment income . . . . . . . . . . . . . . . . . . 1,182,190
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized loss from:
Investments . . . . . . . . . . . . . . . . . . . . . (3,153,243)
Foreign currency related transactions . . . . . . . . (280,699) (3,433,942)
-----------
Net unrealized appreciation (depreciation) during the
period on:
Investments . . . . . . . . . . . . . . . . . . . . . 26,541,632
Foreign currency related transactions . . . . . . . . (15,809) 26,525,823
-----------------------------
Net gain on investment transactions . . . . . . . . . . . 23,091,881
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . $24,274,071
===========

The accompanying notes are an integral part of the financial statements.

</TABLE>

<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR DECEMBER 8, 1992
ENDED (COMMENCEMENT OF
OCTOBER 31, OPERATIONS) TO
INCREASE (DECREASE) IN NET ASSETS 1994 OCTOBER 31, 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income . . . . . . . . . . . . . . . $ 1,182,190 $ 685,401
Net realized gain (loss) from investment
transactions . . . . . . . . . . . . . . . . . . (3,433,942) 25,250
Net unrealized appreciation on investment
transactions during the period . . . . . . . . . 26,525,823 34,359,858
------------ ------------
Net increase in net assets resulting
from operations . . . . . . . . . . . . . . . . 24,274,071 35,070,509
------------ ------------
Distributions to shareholders from:
Net investment income ($.08 per share) . . . . . . (1,850,366) --
------------ ------------
Net realized gains ($.01 per share) . . . . . . . (231,296) --
------------ ------------
Fund share transactions:
Proceeds from shares sold . . . . . . . . . . . . . 526,344,940 248,769,043
Net asset value of shares issued to
shareholders in reinvestment of distributions . 1,853,767 --
Cost of shares redeemed . . . . . . . . . . . . . . (321,356,695) (13,723,766)
------------ ------------
Net increase in net assets from Fund share
transactions . . . . . . . . . . . . . . . . . . 206,842,012 235,045,277
------------ ------------
INCREASE IN NET ASSETS . . . . . . . . . . . . . . 229,034,421 270,115,786
Net assets at beginning of period . . . . . . . . . 270,116,986 1,200
------------ ------------
NET ASSETS AT END OF PERIOD (including
accumulated distributions in excess of
net investment income of $471,044
and undistributed net investment income
of $685,401, respectively) . . . . . . . . . . . $499,151,407 $270,116,986
============ ============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period . . . . . 16,662,536 100
------------ ------------
Shares sold . . . . . . . . . . . . . . . . . . . . 30,394,493 17,646,963
Shares issued to shareholders in
reinvestment of distributions . . . . . . . . . 98,710 --
Shares redeemed . . . . . . . . . . . . . . . . . . (18,749,850) (984,527)
------------ ------------
Net increase in Fund shares . . . . . . . . . . . . 11,743,353 16,662,436
------------ ------------
Shares outstanding at end of period . . . . . . . . 28,405,889 16,662,536
============ ============

The accompanying notes are an integral part of the financial statements.

</TABLE>

<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR DECEMBER 8, 1992
ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS) TO
1994 OCTOBER 31, 1993
----------- -----------------
<S> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . . $16.21 $12.00
------ ------
Income from investment operations:
Net investment income (a) . . . . . . . . . . . . . . . . . . . . . . .04 .04
Net realized and unrealized gain on investment transactions . . . . . 1.41 4.17
------ ------
Total from investment operations . . . . . . . . . . . . . . . . . . . 1.45 4.21
------ ------
Less distributions from:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . (.08) --
Net realized gains on investment transactions . . . . . . . . . . . . (.01) --
------ ------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . . . . (.09) --
------ ------
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . $17.57 $16.21
====== ======
TOTAL RETURN (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.97 35.08**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) . . . . . . . . . . . . . . . . 499 270
Ratio of operating expenses, net to average daily net assets (%) (a) . 1.81 1.75*
Ratio of net investment income to average daily net assets (%) . . . . .28 1.41*
Portfolio turnover rate (%) . . . . . . . . . . . . . . . . . . . . . . 38.5 9.9*
<FN>
(a) Reflects a per share amount of management fee and other fees
not imposed by the Adviser of . . . . . . . . . . . . . . . . . -- .03
Operating expense ratio including expenses reimbursed, management
fee and other expenses not imposed (%) . . . . . . . . . . . . . -- 2.90*
* Annualized
** Not annualized

</TABLE>

<PAGE>

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Pacific Opportunities Fund (the "Fund") is a non-diversified series of
Scudder International Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements in conformity with generally accepted
accounting principles.

Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.

All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Directors. Securities valued in good
faith by the Valuation Committee of the Board of Directors at fair value
amounted to $14,640,163 (2.93% of net assets) and have been noted in the
investment portfolio as of October 31, 1994.

<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. In connection with portfolio
purchases and sales of securities denominated in a foreign currency, the Fund
may enter into forward foreign currency exchange contracts ("contracts").
Additionally, the Fund may enter into contracts to hedge certain other foreign
currency denominated assets. Contracts are recorded at market value. Certain
risks may arise upon entering into these contracts from the potential inability
of counterparties to meet the terms of their contracts. Realized and
unrealized gains and losses arising from such transactions are included in net
realized and unrealized gain (loss) from foreign currency related transactions.

FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:

(i) market value of investment securities, other assets and liabilities
at the daily rates of exchange, and

(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on
the respective dates of such transactions.

<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
companies, and to distribute all of its taxable income to its shareholders.
Accordingly, the Fund paid no federal income taxes, and no federal income tax
provision was required.

At October 31, 1994, the Fund had a net tax basis capital loss carryforward
of approximately $3,151,658, which may be applied against any realized net
taxable capital gains of each succeeding year until fully utilized or until
October 31, 2002, whichever occurs first.

DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made annually. During any particular year, net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. 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 investments in passive foreign investment
companies. As a result, net investment income (loss) and net realized gain
(loss) on investment transactions for a reporting period may differ
significantly from distributions during such period. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting the net asset value of the Fund.

The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.

OTHER. Investment security transactions are accounted for on a trade date
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. All original issue discounts are accreted for both tax and
financial reporting purposes. Interest income is recorded on the accrual
basis.

<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------

B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
For the year ended October 31, 1994, purchases and sales of investment
securities (excluding short-term investments) aggregated $290,820,696 and
$135,858,267, respectively.

C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Management Agreement") with
Scudder, Stevens & Clark, Inc. (the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides
certain administrative services in accordance with the Management Agreement.
The management fee payable under the Management Agreement is equal to an annual
rate of 1.10% of the Fund's average daily net assets, computed and accrued
daily and payable monthly. The Management Agreement provides that if the Fund's
expenses exceed specified limits, such excess, up to the amount of the
management fee, will be paid by the Adviser. For the year ended October 31,
1994, the fee pursuant to the Agreement amounted to $4,662,015.

Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend paying and shareholder service agent for the Fund.
For the year ended October 31, 1994, the amount charged to the Fund by SSC
aggregated $1,111,154 of which $91,339 is unpaid at October 31, 1994.

The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the year
ended October 31, 1994, Directors' fees aggregated $61,190.

<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
SETTLEMENT (DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR DATE (U.S.$)
- ------------------------------ ------------------------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
U.S. Dollars 6,497,504 Hong Kong Dollars 50,204,263 11/2/94 (673)
U.S. Dollars 1,971,953 Australian Dollars 2,655,631 11/8/94 118
Hong Kong Dollars 1,672,634 U.S. Dollars 216,438 11/1/94 (14)
Malaysian Ringgits 478,597 U.S. Dollars 187,488 11/1/94 170
Singapore Dollars 611,535 U.S. Dollars 415,610 11/1/94 (824)
Hong Kong Dollars 2,806,966 U.S. Dollars 363,281 11/2/94 38
Malaysian Ringgits 149,662 U.S. Dollars 58,649 11/2/94 73
New Zealand Dollars 151,141 U.S. Dollars 92,604 11/2/94 (423)
New Zealand Dollars 374,794 U.S. Dollars 230,086 11/3/94 (600)
Singapore Dollars 81,534 U.S. Dollars 55,435 11/3/94 (87)
Thailand Bahts 85,387,490 U.S. Dollars 3,423,991 11/3/94 (2,061)
Malaysian Ringgits 630,628 U.S. Dollars 247,063 11/4/94 242
New Zealand Dollars 748,241 U.S. Dollars 460,243 11/4/94 (299)
Singapore Dollars 274,947 U.S. Dollars 186,950 11/4/94 (280)
Malaysian Ringgits 408,756 U.S. Dollars 159,936 11/7/94 (47)
New Zealand Dollars 1,672,783 U.S. Dollars 1,029,211 11/7/94 (388)
------
(5,055)
======
</TABLE>

<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------

F. RECLASSIFICATION OF CAPITAL ACCOUNTS
- --------------------------------------------------------------------------------
As required, effective November 1, 1993, the Fund has adopted the provisions of
Statement of Position 93-2 "Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital Distributions by
Investment Companies (SOP)." In implementing the SOP, the Fund has reclassified
$169,533 to decrease undistributed net investment income and $169,533 to
increase accumulated net realized gain. These reclassifications, which have no
impact on the net asset value of the Fund, are primarily attributable to
certain differences in the computation of distributable income and capital
gains under federal income tax regulations versus generally accepted accounting
principles. The statement of changes in net assets and financial highlights for
the prior period have not been restated to reflect this change in presentation.

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

TO THE BOARD OF DIRECTORS OF SCUDDER INTERNATIONAL FUND, INC. AND TO
THE SHAREHOLDERS OF SCUDDER PACIFIC OPPORTUNITIES FUND:

We have audited the accompanying statement of assets and liabilities of Scudder
Pacific Opportunities Fund including the investment portfolio, as of October
31, 1994, and the related statement of operations for the year then ended, the
statements of changes in net assets and the financial highlights for the year
then ended and for the period December 8, 1992 (commencement of operations) to
October 31, 1993. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Pacific Opportunities Fund as of October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and for the period December 8,
1992 (commencement of operations) to October 31, 1993 in conformity with
generally accepted accounting principles.

Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 9, 1994

<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
TAX INFORMATION
- --------------------------------------------------------------------------------

The Fund paid foreign taxes of $560,833 and the Fund recognized $1,055,918 of
foreign source income during the taxable year ended October 31, 1994. Pursuant
to section 853 of the Internal Revenue Code, the Fund designates $.020 per
share of foreign taxes and $.037 of gross income from foreign sources as having
been paid in the taxable year ended October 31, 1994.

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 Scudder Fund account, please call a Scudder Service
Representative at 1-800-225-5163.
<PAGE>

OFFICERS AND DIRECTORS

Edmond D. Villani*
Chairman of the Board and Director

Nicholas Bratt*
President and Director

Paul Bancroft III
Director; Venture Capitalist and Consultant

Thomas J. Devine
Director; Consultant

William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.

William H. Luers
Director; President, The Metropolitan Museum of Art

Wilson Nolen
Director; Consultant

Juris Padegs*
Director, Vice President and Assistant Secretary

Daniel Pierce*
Director

Gordon Shillinglaw
Director; Professor Emeritus of Accounting, Columbia University
Graduate School of Business

Robert G. Stone, Jr.
Director; Chairman of the Board and Director, Kirby Corporation

Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business

Carol L. Franklin*
Vice President

Edmund B. Games*
Vice President

Jerard K. Hartman*
Vice President

William E. Holzer*
Vice President

Thomas W. Joseph*
Vice President

William F. Truscott*
Vice President

David S. Lee*
Vice President and Assistant Treasurer

Thomas F. McDonough*
Vice President and Secretary

Pamela A. McGrath*
Vice President and Treasurer

Edward J. O'Connell*
Vice President and Assistant Treasurer

Kathryn L. Quirk*
Vice President and Assistant Secretary

Richard W. Desmond*
Assistant Secretary

Coleen Downs Dinneen*
Assistant Secretary

* Scudder, Stevens & Clark, Inc.

INVESTMENT PRODUCTS AND SERVICES

The Scudder Family of Funds

Retirement Plans and Tax-Advantaged Investments
IRAs
Keogh Plans
Scudder Horizon Plan+++* (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase Pension Plans

Institutional Cash Management
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(tm)++

HOW TO CONTACT SCUDDER

Account Service and Information

For existing account service and transactions

SCUDDER SERVICE CORPORATION
1-800-225-5163

For account updates, prices, yields, exchanges and redemptions

SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890

Investment Information

To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions

SCUDDER INVESTOR INFORMATION
1-800-225-2470

For establishing Keogh, 401(k) and 403(b) plans

SCUDDER GROUP RETIREMENT SERVICES
1-800-323-6105

Please address all correspondence to

THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291

Or stop by a Scudder Funds Center

Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you-they can be
found in the following cities:

Boca Raton
Boston
Chicago
Cincinnati
Los Angeles
New York
Portland, OR
San Diego
San Francisco
Scottsdale

For information on Scudder Institutional Funds,* funds designed to meet the
broad investment management and service needs of banks and other
institutions, call: 1-800-854-8525.

Scudder Investor Information and Scudder Funds Centers are services
provided through Scudder Investor Services, Inc., Distributor.

Celebrating 75 Years of Serving Investors