Scudder
Emerging Markets
Growth Fund
Annual Report
October 31, 1996
Pure No-Load(TM) Funds
A fund designed to seek long-term growth of capital primarily through equity
investment in emerging markets around the globe.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
Scudder (logo)
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's Chairman
4 Portfolio Summary
5 Portfolio Management Discussion
8 Investment Portfolio
15 Financial Statements
18 Financial Highlights
19 Notes to Financial Statements
23 Report of Independent Accountants
25 Officers and Directors
26 Investment Products and Services
27 How to Contact Scudder
In Brief
o For the period of nearly six months beginning with the Fund's inception on May
8, 1996 and ending October 31, 1996, Scudder Emerging Markets Growth Fund
provided a strong total return of 7.08%.
o The outlook for Central Europe continues to be bright. We believe the region's
transition from command to free market economies presents an outstanding
investment opportunity.
o The rate of growth in emerging Asia is slowing. The region is transitioning
away from mercantilist economic models, which may lead to a period of lackluster
performance in those markets.
2 - Scudder Emerging Markets Growth Fund
<PAGE>
Letter From the Fund's Chairman
Dear Shareholders,
We are pleased to welcome you as an investor in Scudder Emerging Markets
Growth Fund and to present the first annual report for the Fund, covering the
abbreviated fiscal year which began with the commencement of operations on May
8, 1996 and ended October 31, 1996. Going forward, you can expect to receive
semiannual updates on the Fund's investments and strategy, with the next report
covering the six-month period ending April 30, 1997.
As detailed in the management discussion that follows, Scudder Emerging
Markets Growth Fund provided a total return of 7.08% for the period of roughly
six months covered by this report, comparing very favorably to the aggregate
performance of emerging markets. Going forward, we expect the higher growth
rates of many emerging market economies to attract increasing investor interest
as the U.S. economy slows, supporting a positive outlook. Scudder Emerging
Markets Growth Fund will continue to be appropriate for investors seeking broad
exposure to the equity markets of developing countries as part of a diversified
portfolio.
Finally, to update those of you who like to stay informed about new funds
from Scudder, we introduced two new equity funds in September. Scudder Classic
Growth Fund seeks long-term capital appreciation with a higher degree of
principal stability than the average growth fund. Scudder 21st Century Growth
Fund takes a more aggressive approach, focusing primarily on emerging companies
with the potential to benefit from the rapidly changing industrial and economic
landscape. For more information on these and other Scudder Fund products and
services, please turn to page 26.
Thank you for your continued investment in Scudder Emerging Markets Growth
Fund. Please do not hesitate to call Investor Relations at 1-800-225-2470 with
any questions regarding your account.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Emerging Markets Growth Fund
3 - Scudder Emerging Markets Growth Fund
<PAGE>
PORTFOLIO SUMMARY as of OCTOBER 31, 1996
- ---------------------------------------------------------------------------
GEOGRAPHICAL
(Excludes 5% Cash Equivalents)
- ---------------------------------------------------------------------------
Latin America 31%
Europe 29%
Pacific Basin 22%
Africa 11%
U.S.& Canada 5%
Other 2%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund has emphasized the emerging markets of Central
Europe while underweighting the Pacific Basin.
- --------------------------------------------------------------------------
SECTORS
(Excludes 5% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 23%
Manufacturing 14%
Consumer Staples 12%
Metals & Minerals 11%
Construction 8%
Consumer Discretionary 7%
Energy 5%
Health 4%
Communications 4%
Other 12%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Finance, Manufacturing, and Consumer Staples stocks are well-represented among
Fund holdings.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
(17% of portfolio)
- --------------------------------------------------------------------------
1. WIELKOPOLSKI BANK KREDYTOWY S.A.
Commercial bank in Poland
2. ZAGREBACKA BANKA
Commercial banking in Croatia
3. BANK PRZEMYSLOWO HANDLOWY
Bank in Poland
4. MINAS BUENAVENTURA SA
Mining company in Peru
5. C&P HOMES, INC.
Home construction company in Philippines
6. PLIVA D.D.
Pharmaceutical company in Croatia
7. MONDRAGON INTERNATIONAL PHILIPPINES, INC.
Wholesale and direct selling of consumer products and resort management
8. COMPUTERLAND POLAND S.A.
Provider of computer services and systems
9. PETROLEO BRASILEIRO S/A
Petroleum company
10.DMCI HOLDINGS, INC.
Construction and property development company in Philippines
Central European bank stocks are among the Fund's top holding
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 8. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
4 - Scudder Emerging Markets Growth Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
For the period of nearly six months beginning with the Fund's inception on May
8, 1996 and ending October 31, 1996, Scudder Emerging Markets Growth Fund
provided a total return of 7.08%. Adjusted for the 2% redemption fee assessed on
shares held less than one year, the Fund's total return was 4.94% for the
period. For purposes of rough comparison, the unmanaged MSCI Emerging Markets
Free Index returned a negative 6.03% between April 30, 1996 and the end of
October.
Country Weightings Key to Portfolio Performance
Poland and Egypt contributed strongly on the positive side to the Fund's
outperformance versus the benchmark Index over the period. Our 16.9% weight in
Poland versus 0.5% in the Index benefited the Fund greatly. The Fund also
carried over a 6% weight in Egypt, a country not presently in the Index. The
Egyptian holdings in the Fund appreciated sharply over the period.
Over a period when the Index lost 6%, avoiding the major downdrafts was key to
the Fund's outperformance. India, 6.4% of the Index, plunged; we held nothing
there. Korea fell sharply as well; being nearly out of that market was helpful.
The same holds true for Thailand. Finally, avoiding South Africa (11% of the
Index) continues to help the portfolio as the plunge in the Rand and
deteriorating fundamentals have made it very hard to make money there this year.
Of course, our country decisions over the period weren't perfect. Most notably,
our persistence in staying overweighted in Indonesia hurt us. Political
disturbances spooked the Indonesian market, and our stock selection within the
country further hurt Fund performance. We have concluded that Mr. Suharto's
advancing age and decades-long tenure in office bring us close enough to the end
of an era that political risk is escalating. The citizens' desire for democracy
is becoming apparent. Notwithstanding the attractive valuations carried by some
excellent companies, political issues will likely unsettle the market. We are
therefore moving to a somewhat underweight position in Indonesia.
Market Outlook: Central
Europe Favored
over Emerging Asia
Recent aggregate declines in emerging markets obscure a number of underlying
trends. The investment outlook for Central Europe continues to be bright while
emerging Asia has become less attractive. We believe Central Europe is only
mid-way through a process that will lead to a risk profile closer to Western
Europe's, as well as a move up to valuation levels found in Latin and Asian
emerging markets. As we believe the region's transition from command to free
market economies presents an outstanding investment opportunity, we continue to
shift the portfolio weightings to capture it. Currently, 27% of portfolio assets
are invested in Central Europe, well above the region's 4% representation in the
MSCI Emerging Markets Free Index.
5 - Scudder Emerging Markets Growth Fund
<PAGE>
We have just returned from a trip to Asia, where we saw fresh evidence of the
structural impediments which are in the process of slowing emerging Asia's rate
of growth. A transition away from mercantilist economic models will be forced by
the region's past over-investment in key exporting industries and by currency
rigidities which have caused a decade of accumulated distortions. We see
emerging Asia in the process of slowing from historic growth rates of 8-10% to a
more sustainable 5-6%. The transition will yield several years of pain or at
least dull markets, but in the end Asia will still likely have the highest
sustainable growth in the world. While the Fund's Asian exposure is
significantly underweighted at 22%, we are confident we will be shifting
portfolio assets back to the region some day.
The Philippines remains a glorious exception to Asia's doldrums. Our trip
provided encouraging evidence that the much needed tax reform program has a good
chance of being enacted. The reform proposal represents a massive overhaul which
will greatly broaden the now pitifully tiny tax base. It will make for a fairer
system and -- crucially -- one that will stabilize the fiscal situation and
enable much more investment in needed infrastructure. If the Philippines' young
democracy can enact this huge change in the face of powerful vested interests
(who stand to lose considerably) it will not only be a great victory for the
country, but will broadly challenge the conventional wisdom that only dictators
can push through difficult economic and social reforms in emerging markets.
Philippine GDP growth is accelerating gently, the proverbial "tide that lifts
all boats". The Central Bank is maintaining tight monetary policy and we came
away unconcerned that an asset bubble or other ills of overheating are on the
horizon.
Finally, with respect to Latin America (31% of assets), we see the
fundamentals and valuations as still attractive in select markets. We expect the
region to be a positive contributor to performance going forward.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART TITLE:
Region Weightings: (October 31, 1996)
Scudder Emerging Markets Growth Fund vs.
MSCI Emerging Markets Free Index
BAR CHART DATA:
Scudder Emerging Markets MSCI Emerging Markets
Growth Fund Free Index
------------------------ ---------------------
Asia 22% 51%
Latin America 31 30
Central Europe 27 4
Middle East/Africa 14 15
Other 6 0
We remain bullish on many of the world's emerging markets, and we see a
generally benign environment for this asset class going forward. The biggest
threat to emerging market performance would be a reduction in global liquidity.
We do not believe the U.S. Federal Reserve is likely to raise rates much, if at
6 - Scudder Emerging Markets Growth Fund
<PAGE>
all, and expect 1997 to bring a softening in U.S. growth which will keep
liquidity for financial assets supportive. As U.S. growth slows, the high
earnings growth produced by many emerging markets should prove all the more
attractive to investors.
Scudder Emerging Markets Growth Fund will continue to provide broad-based
exposure to the opportunities for capital appreciation presented by the equity
markets of developing countries. Thank you for your investment in the Fund.
Sincerely,
Your Portfolio Management Team
/s/Joyce E. Cornell /s/Elizabeth Allan
Joyce E. Cornell Elizabeth Allan
/s/Tara C. Kenney
Tara C. Kenney
Scudder Emerging Markets
Growth Fund: A Team Approach
to Investing
Scudder Emerging Markets Growth 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 quantitative 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.
Joyce E. Cornell, Portfolio Manager, has focused on stock selection since
1993. Joyce, who has nine years of investment experience as a research
analyst, joined Scudder in 1991. Elizabeth Allan has been a portfolio manager
at Scudder since 1991 and joined the firm in 1987. Tara C. Kenney, Portfolio
Manager, assists with the Fund's research and investment strategy. Tara, who
joined Scudder in 1995, has ten years of financial industry experience.
7 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO as of October 31, 1996
<CAPTION>
PRINCIPAL MARKET
AMOUNT($) VALUE($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS 2.3%
- ----------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 10/31/96 at 5.52%, to be
repurchased at $1,777,272 on 11/1/96, collateralized by a $1,606,000 U.S. Treasury Note, ---------
9.125%, 5/15/99 (Cost $1,777,000) ......................................................... 1,777,000 1,777,000
---------
SHORT TERM NOTES 2.6%
- ----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Discount Note, 11/1/96 (Cost $2,000,000) ............................ 2,000,000 2,000,000
---------
SHARES
- ----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 95.1%
ARGENTINA 4.8%
Astra CAPSA (Petroleum company) ............................................................ 115,800 208,470
Banco Frances del Rio de la Plata (ADR) (Commercial and private bank) ...................... 3,700 97,125
Banco de Galicia y Buenos Aires "B" (Commercial and private bank) .......................... 96,778 444,278
Banco de Galicia y Buenos Aires "B" Rights* (expiration 11/4/96) ........................... 96,778 97
Banco de Galicia y Buenos Aires (ADR) ...................................................... 15,572 282,243
Compania Interamericana de Automoviles S.A.* (Automobile manufacturer) ..................... 51,250 229,634
Cresud S.A. Comercial* (Agricultural company dealing in cattle and grains) ................. 580,723 1,039,650
Inversiones y Representaciones SA (Real estate developer) .................................. 150,100 459,375
Perez Companc S.A. "B" (Industrial conglomerate) ........................................... 94,600 600,800
Sevel Argentina SA "C"* (Automobile and truck manufacturer) ................................ 140,000 347,252
---------
3,708,924
---------
AUSTRALIA 0.7%
Orogen Minerals* (GDR) (Holding company involved in gold mining and oil development
in New Guinea) ............................................................................ 34,500 546,377
---------
BOLIVIA 0.5%
Compania Boliviana de Energia S.A.(Electric utility) ....................................... 9,400 397,150
---------
BOTSWANA 0.1%
Sechaba Investment Trust Co.* (Investment Co.) ............................................. 135,000 93,488
---------
BRAZIL 11.3%
Aracruz Celulose S.A. (ADR) (Producer of eucalyptus kraft pulp) ............................ 67,700 541,600
Centrais Eletricas de Santa Catarina S.A. "B"* (pfd.) (Electric power distributor) ......... 156,215 132,283
Centrais Electricas de Santa Catarina S.A. (GDR) ........................................... 3,700 310,800
Centrais Eletricas Brasileiras S.A. "B" (pfd.) (Electric utility) .......................... 950,000 307,913
Companhia Cervejaria Brahma (pfd.) (Leading beer producer and distributor) ................. 814,000 503,105
Companhia Siderurgica Paulista "B"* (pfd.) (Steel producer) ................................ 925,000 702,258
Companhia Vale do Rio Doce (pfd.) (Diverse mining and industrial complex) .................. 32,300 663,354
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrias Klabin de Papel e Celulose S/A (pfd.) (Producer of papers and paper products,
newsprint, and cardboard boxes) ........................................................... 378,000 375,277
Lojas Renner S.A. (pfd.) (Specialty retailer of apparel, cosmetics, electronics, household
appliances and furniture) ................................................................. 11,700,000 626,338
Multicanal Participacoes S.A.* (ADR) (Operator of cable television systems) ................ 57,000 798,000
Petroleo Brasileiro S/A (pfd.) (Petroleum company) ......................................... 9,085,000 1,176,080
Telecomunicacoes Brasileiras S.A. (ADR) (Telecommunication services) ....................... 5,200 387,400
Telecomunicacoes Brasileiras S.A. .......................................................... 9,200,000 560,561
Telecomunicacoes de Minas Gerais "B" (pfd.) (Telecommunication services) ................... 1,655,000 184,766
Telecomunicacoes de Minas Gerais (voting) .................................................. 15,530 1,859
Telecomunicacoes de Sao Paulo S.A. (pfd.) (Telecommunication services) ..................... 1,060,000 193,965
Telecomunicacoes do Parana S/A (pfd.) (Telecommunication services) ......................... 975,000 445,080
Usinas Siderurgicas de Minas Gerais S/A (pfd.) (Non-coated flat products and electrolytic
galvanized products) ...................................................................... 753,000,000 791,551
---------
8,702,190
---------
CANADA 2.1%
Corriente Resources, Inc.* (Mining and processing of gold, bismuth, tin and tungsten in
South America) ............................................................................ 247,600 784,742
Kazakhstan Minerals Corp.* (Mining and exploring of copper, gold, and other minerals
in Kazakhstan) ............................................................................ 41,500 280,125
Ourominas Minerals Inc.* (Gold exploration in Brazil) ...................................... 167,000 541,743
---------
1,606,610
---------
CHILE 3.4%
Laboratorio Chile S.A. (ADR)(Manufacturer and distributor of off-patent pharmaceutical
products) ................................................................................. 12,800 203,200
Madeco, SA (ADR) (Manufacturer of copper and aluminum products for various industrial and
consumer uses) ............................................................................ 21,900 525,600
Santa Isabel S.A. (ADR) (Supermarket chain) ................................................ 15,900 447,188
Sociedad Quimica y Minera de Chile SA (ADR) (Producer of fertilizer, iodine and industrial
chemicals) ................................................................................ 9,400 540,500
Vina Concha y Toro SA (ADR) (Wine producer) ................................................ 46,500 930,000
---------
2,646,488
---------
CROATIA 3.5%
Pliva D.D.* (GDR) (Pharmaceutical company) ................................................. 25,500 1,255,875
Zagrebacka Banka* (GDR) (Commercial banking) ............................................... 73,700 1,427,938
---------
2,683,813
---------
EGYPT 6.3%
Commercial International Bank (Commercial bank) ............................................ 1,550 203,094
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial International Bank (GDR) ......................................................... 47,200 684,400
Eastern Tobacco Company (Maker of tobacco products) ......................................... 49,160 694,017
Egypt Financial & Industrial Co.* (Fertilizer producer) ..................................... 2,550 45,750
Egyptian Starch & Glucose Co. (Food producer) ............................................... 5,000 57,058
Madinet Nasser City Housing Co.* (Real estate development company) .......................... 12,125 713,229
Misr International Bank (Bank) .............................................................. 3,485 379,267
North Cairo Mills, Ltd. (Textile manufacturer) .............................................. 18,200 588,818
Paints & Chemical Industries, Ltd. (Producer of paints and chemicals) ....................... 792 200,328
Suez Cement Co. (Cement producer) ........................................................... 18,925 267,675
Torrah Portland Cement Co. (Cement producer) ................................................ 56,060 997,529
---------
4,831,165
---------
GHANA 0.7%
Ashanti Goldfields Co., Ltd.* (Leading gold producer) (b) ................................... 10,177 153,571
Ashanti Goldfields Co., Ltd.* (Preference shares) (b) ....................................... 10,177 27,071
Ashanti Goldfields Co., Ltd. (GDR) .......................................................... 19,000 311,125
---------
491,767
---------
GREECE 0.3%
Ergo Bank S.A. (Commercial bank) ............................................................ 3,400 199,525
---------
HONG KONG 0.8%
Sinocan Holdings Ltd. (Manufacturer of three-piece cans for beverage and food
industries) ................................................................................ 1,351,000 642,110
---------
HUNGARY 4.1%
EGIS (Developer and manufacturer of pharmaceutical products) ................................ 13,100 807,950
Graboplast (Producer of home improvement materials, artificial leather and book bindings) ... 32,629 999,383
Inter-Europa Bank (Commercial bank) ......................................................... 900 222,959
Pannonplast (Manufacturer of plastic products from PVC, polypropylene, polyethylene
and other raw materials) ................................................................... 21,100 689,711
Pick Szeged (Ordinary) (Sausage manufacturer) ............................................... 10,000 450,421
---------
3,170,424
---------
INDONESIA 2.8%
Ciputra Development Co. (Foreign registered) (Developer of office properties, shipping and
commercial centers, industrial properties and sports facilities) ........................... 140,000 102,201
Darya Varia Laboratoria (Foreign registered) (Producer of medicines and pharmaceuticals) .... 133,000 199,893
HM Sampoerna (Foreign registered) (Tobacco company) ......................................... 84,500 785,582
Indah Kiat Pulp & Paper (Foreign registered) (Producer of pulp and paper) ................... 1,189,180 931,939
Panin Bank (Foreign registered) (Bank) ...................................................... 105,000 104,831
---------
2,124,446
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ISRAEL 0.7%
Check Point Software Technologies Ltd.* (Developer of network security software) ........... 19,000 522,500
---------
JORDAN 0.4%
Arab Potash Co.* (Salts and chemicals extraction) (b) ...................................... 14,000 110,461
Jordan Cement Factories* (Cement producer) (b) ............................................. 37,675 176,763
---------
287,224
---------
KOREA 1.4%
Chosun Brewery Co., Ltd.* (Brewery) ........................................................ 31,320 833,936
Korea Electric Power Co. (Electric utility) ................................................ 8,100 238,221
---------
1,072,157
---------
MALAYSIA 2.7%
ACP Industries Bhd. (Manufacturer of various precast concrete products and thermoplastic
roadmarking materials) .................................................................... 30,000 197,111
AMMB Holdings Bhd. (Holding company for Arab Malaysian Merchant Bank Bhd. which provides
financial, insurance and investment services) ............................................. 46,000 247,615
Crest Petroleum Bhd.* (Investment company involved in various oilfield services) ........... 19,200 63,835
Hong Leong Credit Bhd. (Investment holding company involved in financing, money market
dealings, investment trading, fund management) ............................................ 44,000 243,816
IOI Corporation Bhd. (Processor of oil palm, rubber and cocoa) ............................. 170,000 267,801
New Straits Times Press Bhd. (Newspaper publisher and property developer) .................. 39,000 205,304
SAP Holdings Bhd. (Property developer) ..................................................... 191,000 831,585
---------
2,057,067
---------
MEXICO 1.8%
Industrias Penoles S.A. (Exploration and marketing of minerals and non-ferrous metals
such as lead, zinc and silver) ............................................................ 207,100 822,726
Telefonos de Mexico S.A. de C.V. "L" (ADR) (Telecommunication services) .................... 19,100 582,550
---------
1,405,276
---------
MOROCCO 1.3%
Omnium Nord Africaine (Conglomerate) ....................................................... 11,200 644,864
Societe Nationale d'Investissements "V" (Conglomerate, various joint ventures) ............. 5,300 341,778
---------
986,642
---------
OMAN 1.0%
Oryx Fund, Ltd.* (Mutual fund domiciled in Guernsey, investing in the Middle East) ......... 70,300 764,513
---------
PERU 8.2%
CPT Telefonica del Peru S.A. (ADR) (Telecommunication services) ............................ 14,100 290,813
Cementos Lima S.A. "T" (Cement producer) ................................................... 50,000 681,897
Cementos Norte Pasasmayo SA (Cement producer) (b) .......................................... 38,472 55,120
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cerveceria Backus & Johnston S.A. "T" (Brewery) ............................................ 315,800 317,940
Compania Peruana de Telefonos S.A. "B" (Public and cellular telephone services) ............ 120,000 253,708
Credicorp Ltd (Holding company providing a full range of financial services) ............... 19,200 336,000
Edegel SA (Electric power utility) ......................................................... 1,463,601 787,766
Talleres Moyopampa S.A. "B" (Electric power utility) ....................................... 1,166 867
Enrique Ferreyros y Cia. (Machinery manufacturer) .......................................... 719,751 707,906
Minas Buenaventura SA "A" (Mining company) ................................................. 168,600 1,307,670
Minas Buenaventura SA* (ADR) (Mining company) .............................................. 2,300 38,525
Minsur S.A. "T" (Tin mining company) ....................................................... 61,700 553,090
Consorcio Alimertos Fabril Pacifico* (Food producer) ....................................... 669,413 977,226
---------
6,308,528
---------
PHILIPPINES 10.5%
Ayala Corp. "B" (Industrial conglomerate) .................................................. 336,000 319,635
C & P Homes, Inc. (Home construction company) .............................................. 2,885,000 1,317,352
DMCI Holdings, Inc.* (Construction and property development company) ....................... 1,615,000 1,167,618
Empire East Land Holdings, Inc.* (Property developer for low to middle income markets) ..... 1,025,000 497,289
Filinvest Development Corp.* (Developer of real estate properties) ......................... 58,000 21,629
HI Cement Corp.* (Manufactures two kinds of cement: portland cement and pozzolan cement) ... 900,000 277,397
International Container Terminal Services, Inc.* (Containerized cargo handling firm) ....... 1,279,000 839,526
Ionics Circuit Inc.* (Manufacturer of electronic components) ............................... 150,000 97,032
Manila Electric Co. "B" (Electric utility) ................................................. 48,100 353,246
Metropolitan Bank and Trust Company (Commercial bank and trust company) .................... 37,525 828,177
Mondragon International Philippines, Inc.* (Wholesale and direct selling of consumer
products and resort management ............................................................ 2,253,000 1,243,094
Philippine Savings Bank* (Bank) ............................................................ 230,000 498,858
Republic Glass Holdings Corp. (Maker of glass products for passenger cars and light
commercial vehicles) ...................................................................... 1,228,800 238,466
SM Prime Holdings Corp. (Leader in commercial center operations) ........................... 810,000 172,603
William Gothong & Aboitiz* (Inter-island passenger and cargo liner services) (b) ........... 658,000 142,717
---------
8,014,639
---------
POLAND 16.9%
Bank Przemyslowo Handlowy (Bank) ........................................................... 19,498 1,352,486
Bank Rozwoju Eksportu SA (Export bank) ..................................................... 28,700 852,465
Bank Slaski SA (Bank) ...................................................................... 10,600 980,364
Bydgoska Fabryka Kabli SA (Manufacturer of cables, wires and insulating materials) ......... 161,500 1,125,996
ComputerLand Poland S.A.* (Provider of computer services and systems) ...................... 65,500 1,199,932
Debica SA "A"* (Tire manufacturer) ......................................................... 31,400 636,668
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Elektrim Spolka Akcyjna SA (Manufacturer of power equipment, electrical machinery
and apparatus) ............................................................................ 67,800 578,828
Krosno S.A. (Manufacturer of wide range of glassware) ...................................... 39,800 750,356
Kutnowskie Zaklady Farmaceutyczne Polfa S.A. "A"* (Producer of pharmaceuticals,
veterinary medicines, food components) .................................................... 27,700 807,982
Mostostal Zabrze Holding SA (Construction company) ......................................... 136,500 558,391
Polifarb Wroclaw SA (Chemical producer) .................................................... 149,000 662,528
Polish Privatization Vouchers (Exchangeable into shares of National Investment
Funds) .................................................................................... 12,000 614,684
STALEXPORT S.A. "A"* (Importer/exporter of machinery and equipment, raw materials,
metallurgical products) ................................................................... 5,000 63,140
Wielkopolski Bank Kredytowy S.A. (Commercial bank) ......................................... 309,600 1,927,291
Zaklady Metali Lekkich Kety* (Manufacturer of aluminum casting alloys and products) ........ 11,400 892,146
----------
13,003,257
----------
PORTUGAL 1.3%
Cimentos de Portugal SA (Manufacturer of cement, ready mix concrete and aggregates) ........ 34,100 716,757
Portugal Telecom SA (Telecommunication services) ........................................... 11,800 306,854
----------
1,023,611
----------
SWITZERLAND 1.0%
Holderbank Financiere Glaris AG (Bearer) (Cement producer) ................................. 715 495,702
Phoenix Mecano AG (Bearer) (Manufacturer of hospital beds) ................................. 550 270,185
----------
765,887
----------
TAIWAN 0.6%
Far Eastern Department Stores Ltd. (Department store chain) ................................ 365,000 475,799
Far Eastern Department Stores Ltd. Rights* (b) (expiration 11/18/96) ....................... 24,455 6,127
----------
481,926
----------
THAILAND 1.4%
PTT Exploration and Production Co., Ltd. (Foreign registered) (Petroleum refinery) ......... 45,000 645,756
Siam Makro Co., Ltd. (Foreign registered) (Food supermarket chain) ......................... 99,000 423,094
----------
1,068,850
----------
UNITED STATES 1.7%
Benton Oil & Gas Co.* (Oil and gas exploration, development and production in Venezuela).... 41,100 1,006,950
Pioneer Group Inc. (Fund management company owning major gold producer in Ghana) ........... 11,300 271,200
----------
1,278,150
----------
ZIMBABWE 2.8%
Delta Corp. (Brewery) ...................................................................... 90,873 282,360
Meikles Africa Ltd.* (GDR) (Hotel operator) ................................................ 756,400 1,021,140
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wankie Colliery Co., Ltd. (Operator of coal mining activities at Hwange, Zimbabwe) ......... 1,270,000 418,530
Zimbabwe Sun (Operator of hotels and other tourist facilities) ............................. 1,180,847 455,861
----------
2,177,891
- ----------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $71,451,083) 73,062,595
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0% (Cost $75,228,083)(a) 76,839,595
- ----------------------------------------------------------------------------------------------------------------------
<FN>
(a) The cost for federal income tax purposes was $75,541,967. At October 31, 1996, net unrealized appreciation for
all securities based on tax cost was $1,297,628. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of $4,117,217 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax cost over market value of
$2,819,589.
(b) Securities valued in good faith by the Valuation Committee of the Board of Directors. The cost of these
securities at October 31, 1996 aggregated $798,067. See Note A of the Notes to Financial Statements.
* Non-income producing security.
Sector breakdown of the Fund's equity securities is noted on page 4.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
as of October 31, 1996
<S> <C> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------
Investments, at market (identified cost $75,228,083) (Note A) .......... $76,839,595
Cash ................................................................... 2,222
Foreign currency, at value, (cost $422,234) ............................ 422,125
Receivable for investments sold ........................................ 146,112
Dividends and interest receivable ...................................... 29,488
Receivable for Fund shares sold ........................................ 1,118,956
Foreign taxes recoverable .............................................. 2,184
Deferred organization expenses (Note A) ................................ 27,556
-----------
Total assets ........................................................... 78,588,238
LIABILITIES
- -----------------------------------------------------------------------------------------------------
Payable for investments purchased ...................................... 2,566,881
Payable for Fund shares redeemed ....................................... 42,024
Accrued expenses and other payables .................................... 185,640
-----------
Total liabilities ...................................................... 2,794,545
--------------------------------------------------------------------------------------
NET ASSETS, AT MARKET VALUE $75,793,693
--------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated net investment loss ........................................ $ (124,716)
Unrealized appreciation (depreciation) on:
Investment securities ............................................. 1,611,512
Foreign currency related transactions ............................. (1,478)
Accumulated net realized loss .......................................... (518,900)
Paid-in capital ........................................................ 74,827,275
--------------------------------------------------------------------------------------
NET ASSETS, AT MARKET VALUE $75,793,693
--------------------------------------------------------------------------------------
NET ASSET VALUE
NET ASSET VALUE, offering and redemption (Note A) price per share
($75,793,693/5,896,839 shares of capital stock outstanding, $.01
par value, 100,000,000 shares authorized) ............................. $12.85
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
Statement of Operations
for the period May 8, 1996
(commencement of operations) to October 31, 1996
<S> <C> <C>
INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $24,157) .................. $ 184,752
Interest .............................................................. 106,704
----------
291,456
----------
Expenses:
Management fee (Note C) ............................................... 215,973
Custodian and accounting fees (Note C) ................................ 191,714
Services to shareholders (Note C) ..................................... 89,666
Directors' fees and expenses (Note C) ................................. 36,072
Registration fees ..................................................... 58,513
Auditing .............................................................. 27,750
Reports to shareholders ............................................... 18,307
Legal ................................................................. 8,354
Amortization of organization expense (Note A) ......................... 2,944
Other ................................................................. 6,878
----------
Total expenses before reductions ...................................... 656,171
Expense reductions (Note C) ........................................... (309,636)
----------
Expenses, net ......................................................... 346,535
-------------------------------------------------------------------------------------
NET INVESTMENT LOSS (55,079)
-------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized loss from:
Investments ........................................................... (518,900)
Foreign currency related transactions ................................. (96,473)
----------
(615,373)
----------
Net unrealized appreciation (depreciation) during the period on:
Investments ........................................................... 1,611,512
Foreign currency related transactions ................................. (1,478)
----------
1,610,034
----------
Net gain on investment transactions ................................... 994,661
-------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 939,582
-------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
FOR THE PERIOD
MAY 8, 1996
(COMMENCEMENT
OF OPERATIONS
INCREASE (DECREASE) IN NET ASSETS OCTOBER 31,
1996)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment loss ................................................... $ (55,079)
Net realized loss ..................................................... (615,373)
Net unrealized appreciation on investment transactions during the
period ............................................................... 1,610,034
-----------
Net increase in net assets resulting from operations .................. 939,582
-----------
Fund share transactions:
Proceeds from shares sold ............................................. 76,964,590
Cost of shares redeemed ............................................... (2,135,475)
Redemption fees (Note A) .............................................. 23,796
-----------
Net increase in net assets from Fund share transactions ............... 74,852,911
-----------
Increase in net assets ................................................ 75,792,493
Net assets at beginning of period ..................................... 1,200
NET ASSETS AT END OF PERIOD (including accumulated net investment -----------
loss of $124,716) .................................................... $75,793,693
-----------
OTHER INFORMATION
- -----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ............................. 100
-----------
Shares sold ........................................................... 6,064,272
Shares redeemed ....................................................... (167,533)
-----------
Net increase in Fund shares ........................................... 5,896,739
-----------
Shares outstanding at end of period ................................... 5,896,839
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Emerging Markets Growth Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
The following table includes selected data for a share outstanding throughout the period (a) and
other performance information derived from the financial statements.
<CAPTION>
FOR THE PERIOD
MAY 8, 1996
(COMMENCEMENT)
OF OPERATIONS) TO
OCTOBER 31,
1996
- -------------------------------------------------------------------------------------------------
<S> <C>
------
Net asset value, beginning of period ...................................... $12.00
------
Income from investment operations:
Net investment loss ....................................................... (.02)
Net realized and unrealized gain on investments ........................... .86
------
Total from investment operations .......................................... .84
------
Redemption fees (Note A) .................................................. .01
------
Net asset value, end of period ............................................ $12.85
------
- -------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(C) ....................................................... 7.08(d)**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) .................................... 76
Ratio of operating expenses, net to average daily net assets (%) .......... 2.00*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ............................................................... 3.79*
Ratio of net investment loss to average daily net assets (%) .............. (.32)*
Portfolio turnover rate (%) ............................................... 19.5*
Average commission rate paid (b) .......................................... $.0006
<FN>
(a) Based on monthly average of shares outstanding during the period.
(b) Average commission rate paid per share of common and preferred stocks.
(c) Total return is higher due to maintenance of the Fund's expenses.
(d) Total return does not reflect the effect of the 2% redemption fee on shares held less than
one year.
* Annualized
** Not annualized
</FN>
</TABLE>
18 - Scudder Emerging Markets Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
A. Significant Accounting Policies
Scudder Emerging Markets Growth Fund ("the Fund") is a 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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. 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 $671,830 (0.9% of net assets) and have been noted in the investment
portfolio as of October 31, 1996. Their values have been estimated by the Board
of Directors in the absence of readily ascertainable market values. However,
because of the inherent uncertainty of valuation, those estimated values may
differ significantly from the values that would have been used had a ready
market for the securities existed, and the difference could be material.
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 other 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.
19 - Scudder Emerging Markets Growth Fund
<PAGE>
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. The Fund paid
no federal income taxes and no federal income tax provision was required.
At October 31, 1996, the Fund had a net tax basis capital loss carry forward of
approximately $481,000, which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2004, the expiration date, whichever occurs first.
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 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 included as an addition to
paid-in capital.
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. 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 income tax return.
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. The differences
primarily relate to investments in forward contracts, passive foreign investment
companies, foreign denominated investments, and certain securities sold at a
loss. As a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
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 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.
20 - Scudder Emerging Markets Growth Fund
<PAGE>
B. PURCHASES AND SALES OF SECURITIES
For the period May 8, 1996 (commencement of operations) to October 31, 1996,
purchases and sales of investment securities (excluding short-term investments)
aggregated $75,729,996 and $3,760,013, respectively.
C. RELATED PARTIES
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund pays the Adviser a fee equal to
an annual rate of 1.25% of the Fund's average daily net assets, computed and
accrued daily and payable monthly. As manager of the assets of the Fund, the
Adviser directs the investments of the Fund in accordance with its investment
objective, 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
Agreement. The Agreement also 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. In
addition, the Adviser has agreed not to impose all or a portion of its
management fee until June 30, 1997 in order to maintain the annualized expenses
of the Fund at not more than 2.00% of average daily net assets. For the period
May 8, 1996 (commencement of operations) to October 31, 1996, the Adviser did
not impose any of its management fee amounting to $215,973.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. Included
in services to shareholders is $65,697 charged to the Fund by SSC for the period
May 8, 1996 (commencement of operations) to October 31, 1996 and the amount not
imposed amounted to $58,166, of which $7,531 is unpaid at October 31, 1996.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the period May 8, 1996
(commencement of operations) to October 31, 1996, the amount charged to the Fund
by STC aggregated $1,553 and the amount not imposed amounted to $1,375.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the period May 8,
1996 (commencement of operations) to October 31, 1996, the amount charged to the
Fund by SFAC aggregated $38,540 and the amount not imposed amounted to $34,122,
of which $4,418 is unpaid at October 31, 1996.
The Fund pays each Director not affiliated with the Adviser $4,000 annually plus
specified amounts for attended board and committee meetings. For the period May
8, 1996 (commencement of operations) to October 31, 1996, Directors' fees
aggregated $36,072.
21 - Scudder Emerging Markets Growth Fund
<PAGE>
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, high rates of inflation, repatriation restrictions on
income and capital, and future adverse political and economic developments.
Moreover, securities issued in these markets may be less liquid, subject to
government ownership controls, delayed settlements, and their prices more
volatile than those of comparable securities in the United States.
22 - Scudder Emerging Markets Growth Fund
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF INTERNATIONAL FUND, INC. AND THE SHAREHOLDERS
OF SCUDDER EMERGING MARKETS GROWTH FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
Emerging Markets Growth Fund, including the investment portfolio, as of October
31, 1996, and the related statement of operations, the statement of changes in
net assets, and the financial highlights for the period May 8, 1996
(commencement of operations) to October 31, 1996. 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 audit.
We conducted our audit 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, 1996 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 audit provides 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 Emerging Markets Growth Fund as of October 31, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
period May 8, 1996 (commencement of operations) to October 31, 1996, in
conformity with generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 5, 1996
- --------------------------------------------------------------------------------
23 - Scudder Emerging Markets Growth Fund
<PAGE>
This Page
intentionally
left blank.
24 - Scudder Emerging Markets Growth Fund
<PAGE>
Officers and Directors
Daniel Pierce*
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; Consultant
Dudley H. Ladd*
Director
William H. Luers
Director; President, The
Metropolitan
Museum of Art
Dr. Wilson Nolen
Director; Consultant
Juris Padegs*
Director
Dr. Gordon Shillinglaw
Director; Professor Emeritus of
Accounting, Columbia
University Graduate School of
Business
Robert W. Lear
Honorary Director;
Executive-in-Residence, Visiting
Professor, Columbia University
Graduate School of Business
Robert G. Stone, Jr.
Honorary Director; Chairman
of the Board and Director, Kirby
Corporation
Elizabeth J. Allan*
Vice President
Joyce E. Cornell*
Vice President
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
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.
25 - Scudder Emerging Markets Growth Fund
<PAGE>
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 Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Growth
Scudder Capital Growth Fund
Scudder Classic Growth Fund
Scudder Development Fund
Scudder Emerging Markets Growth Fund
Scudder Global Discovery Fund
Scudder Global Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Latin America Fund
Scudder Micro Cap Fund
Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder 21st Century 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.
26 - Scudder Emerging Markets Growth Fund
<PAGE>
How to Contact Scudder
Account Service and Information
- --------------------------------------------------------------------------------
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
Visit the Scudder World Wide Web Site at:
- --------------------------------------------------------------------------------
http://funds.scudder.com
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 San Francisco
Chicago
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.
27 - Scudder Emerging Markets Growth Fund
<PAGE>
Celebrating Over 75 Years of Serving Investors
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 over 40 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.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER (logo)
