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, 1995
o Offers opportunities for long-term capital appreciation through investment
primarily in the equity securities of Pacific Basin companies, excluding
Japan.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
CONTENTS
2 In Brief
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
26 Report of Independent
Accountants
27 Tax Information
29 Officers and Directors
30 Investment Products
and Services
31 How to Contact
Scudder
IN BRIEF
* The price volatility that characterized Pacific Region markets in 1994
continued into 1995 due to a variety of factors, including a general
wariness of emerging markets in the wake of the Mexican peso devaluation.
The attractive returns provided by U.S. stocks this year also drew many U.S.
investors away from emerging markets, and stock prices in Asia suffered as a
result.
* Scudder Pacific Opportunities Fund posted a -10.73% total return for its
1995 fiscal year ended October 31, largely reflecting the poor performance
of emerging Asian markets in the first few months of 1995. Morgan Stanley's
unmanaged Combined Asia Free Index (ex-Japan), which includes many of these
markets, returned -10.14%, about in line with the performance of your Fund.
* In a period of generally negative investor sentiment, your portfolio
managers targeted companies selling at attractive prices despite positive
fundamentals and strong earnings gains. Purchases generally were made in
companies that were likely to benefit from the region's infrastructure
spending, manufacturing, rising standards of living, and increase in
financing.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
- --------------------------------------------------------------------------------
Dear Shareholders,
The past two years have been difficult for investors in Pacific Rim
markets. The interest rate increases of 1994, the volatility in all emerging
markets following the Mexican peso devaluation, and this year's standout returns
in the United States have compelled many investors to withdraw their savings
from Pacific markets, dampening the region's stock performance.
The market volatility of the past two years has not lessened our belief
in the Pacific region's long-term investment potential. Most Pacific Rim
countries continue to experience strong economic growth. Should the U.S. stock
market cool in anticipation of slower economic activity, global portfolio
allocations may again be directed to the east. Meanwhile, the price declines of
the past two years have provided your portfolio managers opportunities to
purchase fast-growing Asian companies at attractive valuations.
While we remain optimistic about long-term investment prospects in the
Pacific Rim, we recognize that the region periodically is prone to substantial
price volatility. For that reason, we wish to remind investors that Scudder
Pacific Opportunities Fund is best used as a long-term investment vehicle and as
part of a diversified portfolio of domestic and international investments.
As always, please contact a Scudder Investor Relations representative
at 1-800-225-2470 if you have any questions. 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
3
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
PERFORMANCE UPDATE as of October 31, 1995
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER PACIFIC OPPORTUNITIES FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $ 8,927 -10.73% -10.73%
Life of
Fund* $13,141 31.41% 9.89%
MSCI PACIFIC INDEX (EXCLUDING JAPAN)
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $ 9,756 -2.44% -2.44%
Life of
Fund* $16,615 66.15% 19.67%
* 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* $10,000
4/93 $11,019
10/93 $13,542
4/94 $13,498
10/94 $14,757
4/95 $12,811
10/95 $13,174
MSCI Pacific Index (excluding Japan)
Year Amount
- ----------------------
12/92* $10,000
4/93 $11,583
10/93 $15,352
4/94 $15,544
10/94 $17,031
4/95 $15,750
10/95 $16,615
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
1993* 1994 1995
------------------------
NET ASSET VALUE... $16.21 $17.57 $15.59
INCOME DIVIDENDS.. $ -- $ .08 $ .10
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ .01 $ --
FUND TOTAL
RETURN (%)........ 35.08 8.97 -10.73
INDEX TOTAL
RETURN (%)........ 53.52 10.93 -2.44
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 periods would have been
lower.
4
<PAGE>
PORTFOLIO SUMMARY as of October 31, 1995
- ---------------------------------------------------------------------------
GEOGRAPHICAL (Excludes 4% Cash Equivalents)
- ---------------------------------------------------------------------------
Hong Kong 17%
Thailand 12% Indonesia became the Fund's
Indonesia 12% third-largest country weighting
Korea 11% this year, based on strong
Australia 11% corporate profit growth and
Malaysia 9% attractive economic fundamentals.
India 7%
Other 21%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS (Excludes 4% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 23%
Consumer Staples 12%
Construction 10% The Fund's sector allocation
Metals & Minerals 10% reflects what we believe are
Manufacturing 9% the most promising investment
Energy 8% opportunities in the Pacific
Utilities 5% region, including massive
Technology 5% infrastructure development and
Media 4% a rising standard of living.
Other 14%
----
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. HUTCHISON WHAMPOA, LTD.
Container terminal and real estate company in Hong Kong.
2. KOREA ELECTRIC POWER CO.
Korean electric utility
3. UNITED ENGINEERS
Leading Malaysian comprehensive contractor
4. HSBC HOLDINGS LTD.
Bank in Hong Kong
5. TELEVISION BROADCASTS, LTD.
Television broadcasting in Hong Kong
6. SWIRE PACIFIC LTD.
General trading and real estate company in Hong Kong
7. PTT EXPLORATION AND PRODUCTION CO., LTD.
Petroleum refinery in Thailand
8. OVERSEAS UNION BANK LTD.
Leading bank group in Singapore
9. TELECOM CORP. OF NEW ZEALAND
Telecommunication services
10. WOODSIDE PETROLEUM LTD.
Major Australian oil and gas producer
Increasingly, the Fund has emphasized companies in Hong Kong that
can benefit from regional growth.
- --------------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 11.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Dear Shareholders,
Fiscal year 1995 provided serious challenges for investors in the Pacific
Rim. As we mentioned in previous reports, disappointing stock market returns
have been the result of a number of factors. Interest-rate worries in the
region's dollar-linked markets dominated investor sentiment at the start of the
Fund's fiscal year. In December, the Mexican peso devaluation led investors to
flee all potential "next Mexicos" in emerging markets around the world, slamming
stock prices. Later, the earthquake in Kobe, Japan, brought the possibility of
supply disruptions for Asian assemblers of Japanese products, as well as the
fear of a liquidity crunch in Asia as Japan repatriated investment capital
needed for construction.
The Fund's -10.73% total return for the 12 months ended October 31, which
is in line with the -10.14% return of the Morgan Stanley Combined Asia Free
Index (ex-Japan), largely reflects the negative performance experienced by the
region's emerging markets during the first quarter. For example, India and the
Philippines returned -28.78% and -22.36%, respectively, for the 12-month period,
based largely on declines in early 1995. By contrast, the unmanaged Morgan
Stanley Capital International Pacific Index (ex-Japan), which does not include
emerging markets, returned -2.44%.
Returns for the full year mask substantial recoveries in some cases. Strong
levels of internal savings combined with a strong Japanese yen fueled continued
economic growth in the developing Asian markets. The yen's strength had positive
implications for companies that competed directly with Japanese exporters in
such key markets as automobiles, steel, shipbuilding, and electronics. In
addition, Southeast Asian countries have benefited from heavy and accelerating
direct investment from Japan, as Japanese manufacturers move plants to cheaper
operating environs. Market returns for the six-month period ended October 31,
1995, as well as the full 12-month period, are shown on the following page.
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
(BAR CHART TITLE)
Total Returns in Various Markets
(BAR CHART DATA)
Returns 10/31/94 - 10/31/95 Returns 4/30/95 - 10/31/95
--------------------------- --------------------------
Hong Kong* 0.77% 16.68%
Thailand -16.41 4.95
Indonesia -10.92 12.34
Korea -1.96 12.65
Australia* 4.92 4.82
Malaysia* -10.80 -2.38
India -28.78 -4.37
Phillipines -22.36 -3.83
Singapore* -7.75 -2.35
New Zealand 13.37 1.67
Taiwan -26.99 -20.04
China+ 1.41 17.00
* Markets included in the MSCI Pacific Index (ex-Japan).
Source: Morgan Stanley, +Hang Seng: Hong Kong$ Index
As long-term investors, we generally view market declines as
an opportunity to "buy low." Throughout the year, we continued to invest in
companies benefiting from the economic, political, and cultural trends of
Southeast Asia. For example, most Asian countries outside of Japan are in the
process of building physical and communications infrastructures. Accordingly,
the Fund owns several fast-growing construction and telecommunications
companies. Other investment themes relate to the manufacturing strength of
relatively low-cost labor markets, the need for adequate financing to provide
necessary investment in new plants and equipment, and the rising standards of
living in some of the world's most populous countries.
While our focus remains on long-term investments rather than market
timing, the severe price volatility of early 1995 prompted us to maintain a
relatively large cash position (14% of total assets at the end of April). We
have since deployed that cash
7
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
in new investments, careful to diversify portfolio holdings across companies,
industries, and countries. A more detailed discussion of the Fund's three
largest country weightings follows.
Hong Kong
Through the year just ended we have maintained a neutral to underweight
position in Hong Kong (17% of portfolio equity holdings on October 31, 1995). A
growing concern is whether the Beijing government will show favoritism toward
Chinese competitors of Hong Kong businesses when Hong Kong reverts to Chinese
rule in 1997. Companies with ties to Britain, for example, may encounter a
difficult business climate if Beijing wishes to stamp out reminders of Hong
Kong's colonial past. On a more immediate level, corporate and economic
fundamentals have been weakening. This year's GDP growth is expected to be one
percentage point below last year's. Retail sales growth slowed to 6.9% in the
first quarter of 1995 from 14.2% in the first quarter of 1994, and residential
property prices continue to decline. Meanwhile, corporate profit growth slowed
from almost 24% in 1993 to 15% in 1994, and is expected to decelerate to 10%-12%
over the next two years.
Our Hong Kong portfolio reflects these concerns. For example, we have
avoided pure property-related holdings and are focusing on companies that we
believe will benefit from regional growth. First Pacific Company Limited is a
good example. First Pacific is a fast-growing and well-managed conglomerate
involved in the telecommunications, marketing and distribution, banking, and
real estate management businesses of the Pacific region. With strong market
positions in these sectors, we believe the company is poised to benefit from the
general economic growth and rising living standards not only in Hong Kong, but
also in Australia, China, India, Indonesia, the Philippines, Singapore, and
Thailand.
Thailand
Thailand replaced Korea as the Fund's second-largest country weighting this
year (12% of portfolio equity holdings on October 31, 1995). For most of the
year, we were reasonably optimistic about Thailand's economic and market
prospects. The country has won a reputation for extraordinary monetary and
fiscal management in a region where inflation historically has been a concern.
The Bank of Thailand moved in the spring to cool the country's
8
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
overheated economy by dramatically lowering bank loan growth, among other
measures. Thus far, government revenue has slowed along with exports, credit
growth, manufacturing, and private investment.
More recently, some negatives have come to light including the selection of
a politically well-connected but inexperienced Minister of Finance, a rising
current account deficit, and weaker corporate earnings resulting from serious
flooding and the slower economy. As a result of these factors, we have decided
to reduce our Thailand exposure somewhat, retaining companies we believe will
prosper regardless of a slowdown in economic activity. One such company is PTT
Exploration and Production. PTT has demonstrated rapid growth in oil and gas
production, earnings, and cash flow that we expect will continue for several
years. The company's asset base is centered on its share of two world-class gas
fields (Bongkot and Moattama), production and reserves onshore in Thailand, and
exploration potential offshore.
Indonesia
Indonesia is now the Fund's third-largest country weighting, and at 12% of
portfolio equity holdings reflects an overweight position relative to the Morgan
Stanley Combined Asia Free Index (ex-Japan). Corporate profit growth is
accelerating sharply on the heels of strong GDP growth (estimated at 7.0%-7.5%
this year), increased exports, and a flourishing consumer sector. We estimate
that average growth in corporate profits will surge to more than 40% over last
year's levels. Meanwhile, we are encouraged that short-term interest rates
appear to have peaked at 14%.
One example of an attractive Indonesian company, in our view, is Bakrie &
Brothers. A fast-growing holding company, Bakrie has leadership positions in the
Indonesian telecommunications services, construction and building materials,
plantations, and rubber trading industries. Given that Indonesia has one of the
lowest telephone penetration rates in Asia (1.6 fixed lines per 100 people)
Bakrie's telecommunications business is particularly exciting. The company is
licensed to construct, own, and operate 250,000 "Fixed Overlay Network"
telephone lines in Jakarta, which could provide substantial growth in earnings
over the next two years. The new network eliminates the need to lay the physical
lines required by conventional telephone systems.
9
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
Outlook
The evidence suggesting long-term capital appreciation in Asian stocks
remains compelling. Economic growth throughout the region is very strong by
western standards, with some economies likely to grow by more than 7% in 1996.
Our visits with company managements and other research suggest that corporate
earnings should also be strong. Near-term market volatility is always a risk in
Asia. For example, continued economic strength in some countries could translate
into higher interest rates, which would undoubtedly affect stock prices in the
short run. Over the longer-term, however, we believe investors in the Pacific
Region will be rewarded for their commitment.
Sincerely,
Your Portfolio Management Team
/s/Elizabeth J. Allan /s/ Nicholas Bratt
Elizabeth J. Allan Nicholas Bratt
/s/Joyce E. Cornell /s/Eileen O. Gerspach
Joyce E. Cornell Eileen O. Gerspach
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. Eileen O. Gerspach,
Portfolio Manager, helps set the Fund's general investment strategies. Eileen,
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.
10
<PAGE>
INVESTMENT PORTFOLIO as of October 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4.4% REPURCHASE AGREEMENT
16,787,000 Repurchase Agreement with Donaldson,
Lufkin & Jenrette dated 10/31/95 at 5.875%
to be repurchased at $16,789,740 on 11/1/95,
collateralized by a $11,514,000 U.S. Treasury
Note, 12.375%, 5/15/04 (Cost $16,787,000)............. 16,787,000
----------
6.7% CONVERTIBLE BONDS
INDIA 3.3% 4,810,000 Jindal, 4.25%, 3/31/99 (Steel manufacturer)............. 4,569,500
7,750,000 Reliance Industries, 3.5%, 11/3/99 (Producer
of textiles, synthetic fibers and plastics)........... 7,866,250
----------
12,435,750
----------
MALAYSIA 1.7% 2,260,000 Renong Berhad, 2.5%, 1/15/05 (Holding
company involved in engineering and
construction, financial services,
telecommunication and information
technology)........................................... 2,457,750
3,660,000 United Engineers Malaysia, 2%, 3/1/04,
(Leading comprehensive contractor).................... 4,026,000
----------
6,483,750
----------
TAIWAN 1.7% 5,940,000 TECO Electric & Machinery, 2.75%, 4/15/04
(Manufacturer of household appliances and
computer products).................................... 4,603,500
1,461,000 United Microelectronics Corp., Ltd., 1.25%,
6/8/04 (Semiconductor manufacturer)................... 1,972,350
----------
6,575,850
----------
Total Convertible Bonds (Cost $29,115,040).............. 25,495,350
----------
<CAPTION>
88.9% COMMON STOCKS
Shares
----------------------------------------------------------------------------------
AUSTRALIA 10.1% 3,389,043 Ampol Exploration Ltd. (Oil and gas
exploration company).................................. 6,712,167
951,200 Australia & New Zealand Banking Group Ltd.
(General trading and savings bank).................... 3,985,170
580,893 Broken Hill Proprietary Co. Ltd. (Petroleum,
minerals and steel)................................... 7,867,563
1,201,735 Coca Cola Amatil Ltd. (Soft drink bottler
and distributor)...................................... 9,300,681
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9 M.I.M. Holdings Ltd. (Nonferrous metals and
coal)................................................. 12
63,000 Qantas Airways Ltd.* (International airline with
mainly Asian and Pacific routes)...................... 1,102,500
1,969,300 Woodside Petroleum Ltd. (Major oil and gas
producer)............................................. 9,435,716
----------
38,403,809
----------
CHINA 0.6% 225,800 China Yuchai International Ltd.* (Holding
company for Guangxi Yuchai Machinery
Co., which manufactures and sells diesel
truck engines)........................................ 2,258,000
1,000 Tsingtao Brewery "H" (Leading brewery).................. 265
----------
2,258,265
----------
HONG KONG 16.3% 200 China Light & Power Co., Ltd. (Electric utility)........ 1,066
3,590,300 First Pacific Co., Ltd. (International
management and investment company).................... 4,132,813
802,726 HSBC Holdings Ltd. (Bank)............................... 11,680,054
1,861,500 Hong Kong Electric Holdings, Ltd. (Electric
utility and real estate).............................. 6,332,042
2,306,000 Hutchison Whampoa, Ltd. (Container
terminal and real estate company)..................... 12,705,563
1,842,800 Jinhui Shipping and Transportation Ltd.
(Operator of cargo fleet of ships transporting
steel, iron ore, non-ferrous metals and
agricultural products)................................ 2,441,710
1,469,000 Swire Pacific Ltd. "A" (General trading and
real estate company).................................. 11,019,827
2,887,000 Television Broadcasts, Ltd. (Television
broadcasting)......................................... 11,575,333
12,075,744 Yips Hang Cheung (Manufacturer of mixed
solvents and paints).................................. 1,874,218
----------
61,762,626
----------
INDIA 3.8% 222,015 Bajaj Auto (GDR) (Maker of two and three
wheel vehicles)....................................... 5,994,405
366,920 Ranbaxy Laboratories (GDR)
(Pharmaceutical company).............................. 8,439,160
----------
14,433,565
----------
INDONESIA 11.2% 4,340,500 Bakrie & Brothers (Manufacturer of industrial
steel products, steel pipes, corrugated
sheet iron, asbestos and fiber cements)............... 7,716,763
935,000 Gadjah Tunggal (Tire manufacturer)...................... 596,984
775,000 HM Sampoerna (Foreign registered)
(Tobacco company)..................................... 7,166,446
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2,097,500 Indorama Synthetics (Producer of polyester
chips, staple fibers and texturized yarn)............. 6,950,105
1,214,000 Jaya Real Properties (Foreign registered)
(Property developer) (b).............................. 3,461,317
309,000 Kabelmetal Indonesia (Cable manufacturer)............... 280,631
127,000 Kabelmetal Indonesia (Foreign registered)............... 115,340
1,606,000 Kalbe Farma* (Foreign registered)
(Pharmaceutical producer and distributor)............. 5,091,678
1,365,000 Modern Photo Film Co. (Foreign registered)
(Photographic film distributor)....................... 8,294,584
133,750 Modern Photo Film Co. (Foreign registered)
(New (c))............................................. 812,748
135,000 Unilever-Indonesia (Foreign registered)
(Consumer products manufacturer) (b).................. 1,902,246
----------
42,388,842
----------
KOREA 10.1% 302,500 Korea Electric Power Co. (Electric utility)............. 12,453,440
90,860 LG Electronics, Inc.* (GDR) (Major
electronics manufacturer)............................. 1,340,185
5,300 LG Electronics, Inc.* (GDR) (New(c)) (b)................ 104,192
81,990 LG Merchant Banking Corp. (Financial
services company)..................................... 4,093,339
53,030 Pohang Iron & Steel Co., Ltd. (Korea's largest
steel producer) (b)................................... 5,354,356
7 Samsung Electronics Co., Ltd. (Major electronics
manufacturer) (b)..................................... 1,583
31 Samsung Electronics Co., Ltd. (New (c)) (b)............. 7,032
2 Samsung Electronics Co., Ltd. (New (c)) (b)............. 446
1,520 Samsung Electronics Co., Ltd. (GDS)
(Voting) (b).......................................... 159,977
397 Samsung Electronics Co., Ltd. (GDS) (Voting)
(New (c)) (b)......................................... 41,836
100,500 Samsung Electronics Co., Ltd. (GDS)
(Non-voting).......................................... 6,582,750
19,889 Samsung Electronics Co., Ltd. (GDS)
(Non-voting) (New (c))................................ 1,193,340
12,040 Samsung Fire & Marine Insurance Co.
(Insurance company) (b)............................... 6,243,208
8 Samsung Heavy Industries Co., Ltd.
(Machinery manufacturer).............................. 244
3,988 Samsung Heavy Industries Co., Ltd. (New (c))............ 118,314
56,000 Yukong, Ltd.* (GDS) (Leading oil refiner)............... 616,000
6,710 Yukong, Ltd.* (GDS) (New (c))........................... 114,070
----------
38,424,312
----------
MALAYSIA 6.6% 200 Aokam Perdana Bhd. (Forest products
company).............................................. 335
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1,210,000 Arab-Malaysian Corp. (Investment holding
company with interests in financial services,
infrastructure and property).......................... 4,071,429
853,000 Kim Hin Industries (Ceramic tile manufacturer).......... 1,745,612
555,000 Malayan Banking Bhd. (Leading banking
and financial services group)......................... 4,477,568
1,687,000 Renong Berhad (Holding company involved
in engineering and construction, financial
services, telecommunication and information
technology)........................................... 2,575,978
1,942,000 United Engineers (Leading comprehensive
contractor)........................................... 12,075,403
----------
24,946,325
----------
NEW ZEALAND 2.6% 2,401,800 Telecom Corp. of New Zealand
(Telecommunication services).......................... 9,968,566
----------
PHILIPPINES 6.1% 5,122,060 Ayala Corp. "B" (Industrial conglomerate)............... 5,218,554
2,064,400 Bacnotan Cement Corp. (Producer of
portland and pozzolan cements)........................ 1,984,237
528,330 Benpres Holdings Corp. (GDR) (Media
and infrastructure conglomerate)...................... 3,169,980
5,623,000 C&P Homes, Inc.* (Home construction
company).............................................. 3,621,117
43,800 First Philippine Holdings Corp. "B" (Holding
company involved in electric power
distribution, construction services,
passenger bus transportation)......................... 92,618
2,342,500 Petron Corp. (Refiner and marketer of
petroleum products)................................... 1,035,707
70,400 Philippine Long Distance Telephone Co.
(GDR) (Telecommunication services).................... 2,288,000
13,214,000 SM Prime Holdings Corp.* (Leader in
commercial center operations)......................... 3,556,248
16,711,800 Southeast Asia Cement Holdings, Inc.*
(Cement producer)..................................... 2,184,549
----------
23,151,010
----------
SINGAPORE 4.9% 709,000 Development Bank of Singapore (Foreign
Registered) (Banking and financial services).......... 8,128,662
39 Jardine Matheson Holdings, Ltd.
(Conglomerate: real estate, merchandising,
engineering).......................................... 238
1,661,000 Overseas Union Bank Ltd. (Leading bank
group)................................................ 10,344,515
----------
18,473,415
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAIWAN 1.4% 1,662,000 Taiwan Semiconductor Manufacturing Co.
(Manufacturer of integrated circuits and
other semiconductor devices).......................... 5,173,157
-----------
THAILAND 11.9% 274,500 Ban Pu Coal Public Co., Ltd. (Foreign
registered) (Leading miner of sub-bituminous
coal in southeast Asia)............................... 6,762,964
402,500 Bangkok Bank Ltd. (Foreign registered)
(Leading commercial bank, providing full
range of financial services).......................... 4,158,554
1,169,300 PTT Exploration and Production Co., Ltd.
(Foreign registered) (Petroleum refinery)............. 10,594,095
1,467,000 Sahavirya Steel Industry (Foreign registered)
(Steel producer)...................................... 2,244,367
128,500 Siam Cement Co., Ltd. (Foreign registered)
(Construction materials and industrial
conglomerate)......................................... 7,005,841
751,000 TPI Polene Co., Ltd. (Foreign registered)
(Producer and distributor of low density
polyethylene plastic pellets)......................... 5,073,316
1,103,500 Thai Farmers Bank (Foreign registered)
(Commercial bank)..................................... 9,120,922
-----------
44,960,059
-----------
UNITED STATES 3.3% 385,800 Freeport McMoRan Copper & Gold, Inc. "A"*
(U.S. company mining in Indonesia).................... 8,825,175
259,600 Pacific Basin Bulk Shipping Ltd. (Shipping
company specializing in the handysize dry
bulk carrier segment in the Pacific region)........... 3,666,850
75,300 Pacific Basin Bulk Shipping Ltd. Warrants*
(expire 9/30/99)...................................... 51,769
-----------
12,543,794
-----------
Total Common Stocks (Cost $316,159,585)................. 336,887,745
-----------
- -------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0%
(Cost $362,061,625) (a)............................... 379,170,095
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $362,061,625. At
October 31, 1995, net unrealized appreciation for all securities
based on tax cost was $17,108,470. This consisted of aggregate
gross unrealized appreciation for all securities in which there
was an excess of market value over tax cost of $44,317,160 and
aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of
$27,208,690.
(b) Securities valued in good faith by the Valuation Committee of the
Board of Directors. The cost of these securities at October 31,
1995 aggregated $14,779,018. See Note A of the Notes to Financial
Statements.
(c) New shares issued during 1995, eligible for a pro rata share of
1995 dividends.
* Non-income producing security.
Sector breakdown of the Fund's equity securities is noted on
page 5.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
OCTOBER 31, 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $362,061,625)
(Note A) .............................................. $ 379,170,095
Cash ..................................................... 32,389
Foreign currency holdings, at market
(identified cost $454,375) (Note A) ................... 453,890
Receivables:
Investments sold ...................................... 12,892,842
Dividends and interest ................................ 770,448
Fund shares sold ...................................... 78,260
Foreign taxes recoverable ............................. 21,926
Other assets ............................................. 24,424
-------------
Total assets .......................................... 393,444,274
LIABILITIES
Payables:
Investments purchased ................................. $ 8,517,310
Fund shares redeemed .................................. 721,107
Accrued management fee (Note C) ....................... 368,494
Other accrued expenses (Note C) ....................... 272,207
-------------
Total liabilities ..................................... 9,879,118
-------------
Net assets, at market value .............................. $ 383,565,156
=============
NET ASSETS
Net assets consist of:
Undistributed net investment income ................... $ 2,313,689
Unrealized appreciation (depreciation) on:
Investments ......................................... 17,108,470
Foreign currency related transactions ............... (3,941)
Accumulated net realized loss ......................... (15,989,144)
Capital stock ......................................... 245,954
Additional paid-in capital ............................ 379,890,128
-------------
Net assets, at market value .............................. $ 383,565,156
=============
NET ASSET VALUE, offering and redemption price per
share ($383,565,156 / 24,595,415 shares of
capital stock outstanding, $.01 par value,
100,000,000 shares authorized) ........................ $ 15.59
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $489,565).. $ 6,308,404
Interest .............................................. 3,671,542
------------
9,979,946
Expenses:
Management fee (Note C) ............................... $ 4,590,699
Services to shareholders (Note C) ..................... 1,248,389
Custodian and accounting fees (Note C) ................ 869,480
Directors' fees and expenses (Note C) ................. 62,705
Reports to shareholders ............................... 252,958
Auditing .............................................. 119,376
Legal ................................................. 18,472
State registration .................................... 77,501
Amortization of organization expense (Note A) ......... 11,625
Other ................................................. 13,157 7,264,362
-----------------------------
Net investment income ................................. 2,715,584
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized loss from:
Investments ....................................... (10,024,429)
Foreign currency related transactions ............. (201,590) (10,226,019)
------------
Net unrealized depreciation during the period on:
Investments ....................................... (43,779,641)
Foreign currency related transactions ............. (1,511) (43,781,152)
------------------------------
Net loss on investment transactions ................... (54,007,171)
------------
Net decrease in net assets resulting from operations... $(51,291,587)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
----------------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ....................... $ 2,715,584 $ 1,182,190
Net realized loss from investment
transactions ........................... (10,226,019) (3,433,942)
Net unrealized appreciation (depreciation)
on investment transactions during
the period ............................. (43,781,152) 26,525,823
------------- -------------
Net increase (decrease) in net assets
resulting from operations .............. (51,291,587) 24,274,071
------------- -------------
Distributions to shareholders from:
Net investment income ($.10 and
$.08 per share, respectively) ........ (2,548,920) (1,850,366)
------------- -------------
Net realized gains ($.01 per share) .... -- (231,296)
------------- -------------
Fund share transactions:
Proceeds from shares sold ................... 224,335,340 526,344,940
Net asset value of shares issued to
shareholders in reinvestment of
distributions .......................... 2,255,971 1,853,767
Cost of shares redeemed ..................... (288,337,055) (321,356,695)
------------- -------------
Net increase (decrease) in net assets from
Fund share transactions ................ (61,745,744) 206,842,012
------------- -------------
INCREASE (DECREASE) IN NET ASSETS ........... (115,586,251) 229,034,421
Net assets at beginning of period ........... 499,151,407 270,116,986
------------- -------------
NET ASSETS AT END OF PERIOD (including
undistributed net investment income of
$2,313,689 and accumulated distributions
in excess of net investment income of
$471,044) .............................. $ 383,565,156 $ 499,151,407
============= =============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ... 28,405,889 16,662,536
------------- -------------
Shares sold ................................. 14,244,117 30,394,493
Shares issued to shareholders in
reinvestment of distributions .......... 142,964 98,710
Shares redeemed ............................. (18,197,555) (18,749,850)
------------- -------------
Net increase (decrease) in Fund shares ...... (3,810,474) 11,743,353
------------- -------------
Shares outstanding at end of period ......... 24,595,415 28,405,889
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<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
DECEMBER 8, 1992
YEARS ENDED OCTOBER 31, (COMMENCEMENT
--------------------- OF OPERATIONS) TO
1995 1994 OCTOBER 31, 1993
------- ------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period ................................... $ 17.57 $ 16.21 $ 12.00
------- ------- -------
Income from investment operations:
Net investment income (a) ........................................ .10 .04 .04
Net realized and unrealized gain (loss) on investment
transactions...................................................... (1.98) 1.41 4.17
------- ------- -------
Total from investment operations ....................................... (1.88) 1.45 4.21
------- ------- -------
Less distributions from:
Net investment income ............................................ (.10) (.08) --
Net realized gains on investment transactions .................... -- (.01) --
------- ------- -------
Total distributions .................................................... (.10) (.09) --
------- ------- -------
Net asset value, end of period ......................................... $ 15.59 $ 17.57 $ 16.21
======= ======= =======
TOTAL RETURN (%) ....................................................... (10.73) 8.97 35.08**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) ................................. 384 499 270
Ratio of operating expenses, net to average daily net assets (%) (a) ... 1.74 1.81 1.75*
Ratio of net investment income to average daily net assets (%) ......... .65 .28 1.41*
Portfolio turnover rate (%) ............................................ 64.0 38.5 9.9*
(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*
</TABLE>
* Annualized
** Not annualized
20
<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.
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 $17,276,193 (4.5% of net assets) and have been noted in the
investment portfolio as of October 31, 1995.
21
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES 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.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
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.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
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, 1995, the Fund had a net tax basis capital loss carryforward
of approximately $16,000,000, which may be applied against any realized net
taxable capital gains of each succeeding year until fully utilized or until
October 31, 2002 ($3,200,000) and October 31, 2003 ($12,800,000), the respective
expiration dates, 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.
23
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES 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. All original issue discounts are accreted for both tax and
financial reporting purposes. Interest income is recorded on the accrual basis.
B. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities (excluding short-term investments) aggregated $262,839,463 and
$237,599,513, 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, 1995, the fee
pursuant to the Agreement amounted to $4,590,699.
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, 1995, the amount charged to the Fund by SSC
aggregated $1,047,442 of which $80,873 is unpaid at October 31, 1995.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Effective May 5, 1995, Scudder Fund Accounting Corporation ("SFAC"), a
wholly-owned subsidiary of the Adviser, assumed responsibility for determining
the daily net asset value per share and maintaining the portfolio and general
accounting records of the Fund. For the year ended October 31, 1995, the amount
charged to the Fund by SFAC aggregated $121,156, of which $20,685 is unpaid at
October 31, 1995.
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, 1995, Directors' fees and expenses aggregated $62,705 .
D. INVESTING IN EMERGING MARKETS
Investing in emerging markets may involve special risks and considerations not
typically associated with investing in the United States. These risks include
revaluation of currencies 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 securities of comparable U.S.
companies.
25
<PAGE>
SCUDDER PACIFIC OPPORTUNITIES FUND
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, 1995, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the two years in the period
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, 1995 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, 1995, the results of its
operations for the year then ended, the changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the two years in the period 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 8, 1995
26
<PAGE>
TAX INFORMATION
- --------------------------------------------------------------------------------
The Fund paid foreign taxes of $489,565 and the Fund recognized $2,093,914 of
foreign source income during the taxable year ended October 31, 1995. Pursuant
to section 853 of the Internal Revenue Code, the Fund designates $.020 per share
of foreign taxes and $.085 of income from foreign sources as having been paid in
the taxable year ended October 31, 1995.
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.
27
<PAGE>
(This page intentionally left blank.)
28
<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
Keith R. Fox
Director; President, Exeter Capital Management Corporation
William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.
William H. Luers
Director; President, The Metropolitan Museum of Art
Dr. Wilson Nolen
Director; Consultant
Juris Padegs*
Director, Vice President and Assistant Secretary
Daniel Pierce*
Director
Dr. Gordon Shillinglaw
Director; Professor Emeritus of Accounting, Columbia University
Graduate School of Business
Robert G. Stone, Jr.
Honorary 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
Elizabeth J. Allan*
Vice President
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
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.
29
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
<C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Small Company Value Fund
Scudder Growth and Income Fund Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc. Scudder Treasurers Trust(TM)++
Scudder Fund, Inc.
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
For complete information on any of the above Scudder funds, including management fees and expenses, call or
write for a free prospectus. Read it carefully before you invest or send money. +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.
</TABLE>
30
<PAGE>
HOW TO CONTACT SCUDDER
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
<C> <C>
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your Scudder accounts;
exchanges and redemptions; or information on any Scudder fund
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 New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
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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.
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Celebrating Over 75 Years of Serving Investors
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Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark 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 37 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 us 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 long-standing
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.
