Scudder
Emerging Markets
Growth Fund
Annual Report
October 31, 1997
Pure No-Load(TM) Funds
A fund seeking 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>
In Brief
o Scudder Emerging Markets Growth Fund provided strong performance during a
volatile period in the emerging markets. The Fund's 13.51% return exceeded the
negative 9.97% return of the unmanaged IFC Investable Emerging Market Index by a
significant margin for the same twelve-month period.
o Positive performance of Egyptian, Polish, and Hungarian positions, as well as
an underweighting in troubled Asia, yielded strong results.
o Prospects are encouraging, but the performance of individual markets may
diverge greatly in the months ahead. Eastern Europe and the Middle East should
continue to shine, while many Asian markets may slump further.
Table of Contents
3 Letter from the Fund's Chairman 23 Notes to Financial Statements
4 Performance Update 27 Report of Independent Accountants
5 Portfolio Summary 28 Tax Information
6 Portfolio Management Discussion 29 Shareholder Meeting Results
10 Glossary of Investment Terms 32 Officers and Directors
11 Investment Portfolio 33 Investment Products and Services
19 Financial Statements 34 Scudder Solutions
22 Financial Highlights
2 - Scudder Emerging Markets Growth Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to present the annual report for Scudder Emerging Markets
Growth Fund for the twelve-month period ended October 31, 1997.
Nineteen ninety-seven appeared to be a banner year for the emerging markets
until the Thai baht was devalued on July 2, roiling Southeast Asia. What was
initially perceived as a mild contagion spread quickly to markets around the
globe, including the United States. While the effects on the region's economy
are still being sorted out, the Fund's minimal exposure to the Pacific Basin
permitted it to outperform significantly its benchmarks and peers (see page 6).
Recent events highlight the importance of a sound investment approach that
is based on careful diversification. To that end, an investor's portfolio should
include exposure to small-cap, foreign, emerging market, and fixed income
securities, in addition to large-cap U.S. stocks. Scudder Emerging Markets
Growth Fund can serve as an important holding in this type of diversified
portfolio, which, when combined with a habit of investing regularly and a
long-term perspective, may help many investors meet their investing goals.
For those of you who are interested in new Scudder products, we have
introduced Scudder International Growth and Income Fund, which pursues a
yield-oriented approach to investing in international equities. The Fund seeks
to provide long-term growth of capital plus current income. Investors who desire
international exposure but wish to take a more conservative approach may
appreciate the Fund's emphasis on dividend-paying stocks of established
companies listed on foreign exchanges. For further information on this new fund,
please turn to page 35.
Thank you for your investment in Scudder Emerging Markets Growth Fund. If
you have any questions about your Fund, please call Scudder Investor Relations
at 1-800-225-2470, or visit our Web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Emerging Markets Growth Fund
3 - Scudder Emerging Markets Growth Fund
<PAGE>
PERFORMANCE UPDATE as of October 31, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/97 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER EMERGING MARKETS GROWTH FUND
TICKER SYMBOL: SEMGX
- --------------------------------------------
1 Year $ 11,351 13.51% 13.51%
Life of Fund* $ 12,156 21.56% 14.08%
- --------------------------------------------
IFC EMERGING MARKETS INVESTABLE INDEX
- --------------------------------------------
1 Year $ 9,003 -9.97% -9.97%
Life of Fund* $ 8,711 -12.89% -9.26%
- --------------------------------------------
*The Fund commenced operations on May 8, 1996.
Index comparisons begin May 31, 1996.
- ----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- ----------------------------------------------------------------
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 EMERGING MARKETS GROWTH FUND
Year Amount
- ----------------------
5/96* $10,000
7/96 $10,000
10/96 $10,559
1/97 $12,521
4/97 $12,727
7/97 $13,632
10/97 $11,986
IFC EMERGING MARKETS INVESTABLE INDEX
Year Amount
- ----------------------
5/96* $10,000
7/96 $ 9,454
10/96 $ 9,676
1/97 $10,559
4/97 $10,621
7/97 $11,567
10/97 $ 8,711
IFC Emerging Markets Investable Index is an unmanaged capitalization weighted
measure of stock markets in the emerging markets countries worldwide. Index
returns assume reinvestment of dividends 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.
PERIODS ENDED OCTOBER 31
1996* 1997
------- -------
NET ASSET VALUE........... $12.85 $14.56
INCOME DIVIDENDS.......... $ -- $ .03
FUND TOTAL RETURN (%)**... 7.08 13.51
INDEX TOTAL RETURN (%).... -3.24 -9.97
Performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results. Total return and
principal value will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than when purchased. If the Adviser had not maintained the
Fund's expenses, the total return for the life of Fund period would have been
lower.
**Fund total return does not reflect the effect of applicable redemption fees.
4 - Scudder Emerging Markets Growth Fund
<PAGE>
PORTFOLIO SUMMARY as of October 31, 1997
- ---------------------------------------------------------------------------
GEOGRAPHICAL
(Excludes 12% Cash Equivalents)
- ---------------------------------------------------------------------------
Latin America 33%
Europe 29%
Africa 23%
U.S. & Canada 5%
Pacific Basin 3%
Other 7%
- --------------------------------------
100%
- --------------------------------------
An underweighting in Asia helped
the Fund avoid the significant downturn
in the region during the period.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS
(Excludes 12% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 22%
Consumer Staples 13%
Communications 10%
Metals & Minerals 10%
Construction 9%
Energy 9%
Manufacturing 7%
Consumer Discretionary 5%
Health 5%
Other 10%
- --------------------------------------
100%
- --------------------------------------
The Fund remained broadly
diversified across several
industry sectors.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
(14% of Portfolio)
- --------------------------------------------------------------------------
1. TELECOMUNICACOES BRASILEIRAS S.A.
Telecommunication services in Brazil
2. ZAGREBACKA BANKA D.D.
Commercial banking in Croatia
3. CEMENTOS LIMA S.A.
Cement producer in Peru
4. OTP BANK RT
Commercial bank in Hungary
5. PLIVA D.D.
Pharmaceutical company in Croatia
6. SUEZ CEMENT CO.
Cement producer in Egypt
7. MINAS BUENAVENTURA S.A.
Mining company in Peru
8. OMNIUM NORD AFRICAINE
Conglomerate in Morocco
9. GRABOPLAST RT
Producer of home improvement materials,
artificial leather, and book bindings
in Hungary
10. AL AHRAM BEVERAGE CO.
Beverage company in Eqypt
Holdings in Egypt, Poland, and Hungary
were important contributors to the
Fund's outperformance during the period.
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 - Scudder Emerging Markets Growth Fund
<PAGE>
Portfolio Management Discussion
We asked Joyce E. Cornell, lead portfolio manager of Scudder Emerging Markets
Growth Fund, to discuss the market environment and the Fund's current investment
strategy.
Q: How did the Fund perform for the twelve-month period ended October 31, 1997?
A: The Fund returned 13.51%, which significantly outpaced the negative 9.97%
return of the unmanaged IFC Investable Emerging Market Index. Among its peers,
the Fund ranked in the top 16% (19th) of 117 emerging market funds according to
Lipper Analytical Services for the same twelve-month period.
Q: To what do you attribute the Fund's outperformance?
A: Strong appreciation was delivered by holdings in Egypt, Poland and Hungary,
which comprised 27% of portfolio assets. These markets rose, and we were
substantially overweight in each. Also contributing to the relative
outperformance was our near absence from Malaysia, Indonesia, and Thailand,
which declined sharply during the last three months of the period.
On the negative side, our holdings in the Philippines hurt the Fund's
performance. The market lost 45.38% in the last three months, and our position,
which was less than 5% of porfolio assets, lost half of its value. We believe
the Philippines is in fundamentally better shape than its neighbors, but that
didn't matter, as panic swept the region.
Q: You just returned from a trip to Bulgaria, Romania, and Russia. What did you
find?
A: The big surprise was the attractiveness of Bulgaria. The new government that
came in this year appears to be doing all the right things. Hyperinflation has
been tamed with a currency board. Predictably, the economy is going through a
painful adjustment with GDP (gross domestic product) contracting 10% in the
first six months and unemployment rising. However, the light at the end of the
tunnel is visible: prices are being freed, removing the burden of government
subsidies; government reserves are building to a comfortable level; and a well
conceived stock market opened for business in October. The Bulgarians are
remarkable for their willingness to privatize whole companies, even permitting
foreign majority ownership. This is in contrast to so many other socialist
states who sell only pieces of government-run enterprises. Unlike Bulgaria,
these countries are reluctant to permit wholesale transformation to private
ownership and fail to confront the fact that virtual national bankruptcy means
only foreigners have sufficient capital to bring economic health quickly.
Bulgaria is truly capital-starved and rapidly developing a market-friendly
environment. We believe that combination sets the stage for a high return on
capital, and will be an interesting area for potential investments in the
future.
Q: What is your read on Russia?
A: Russia is much more problematic. Our conclusion is that the country will
eventually "make it" but now there is a huge disconnect between the stock market
and the country's derelict industrial base and liquidity-starved economy. Until
the government gets its fiscal house in order, the crowding out of the private
sector will continue to blight growth prospects. Many companies are largely paid
in IOU's or barter or simply never paid at all. Reported earnings are
6 - Scudder Emerging Markets Growth Fund
<PAGE>
meaningless in many cases because they are based on revenue that will largely
never be collectable. There are huge deficits in the legal and tax
infrastructures that make this a "wild west" for investing. When the market
begins to reflect a fundamental connection with the risks and earning potential
of listed companies, we will start to invest in Russia. There are some glimpses
of hope in the purely private sector, a small sector still, but one with promise
if Russia's reform effort stays on track.
Q: With strong performance in Poland, Hungary, Egypt, and Mexico over the
period, do these markets have further upside?
A: Our enthusiasm for Poland, Hungary, and Egypt remains. The markets are still
inexpensive considering their growth potential and we expect more good
performance from these areas in 1998. We also believe Mexico's recovery is
strengthening and will continue to be reflected in their stock market. We are
overweight in all four markets.
Q: Asia hit a huge pothole during the period. What's the prognosis?
A: The major news in the emerging markets has been the turmoil in Southeast
Asia. As the headlines indicate, we think this news is important. It is a
linchpin in the strategic thinking embedded in the Fund's portfolio. We have
been concerned with the structural problems of this region for some time and
have underweighted the Fund's holdings in Asia. Recent developments only serve
to reinforce this conclusion. However, we recognize that the situation is in
flux. The region has enormous resources and potential, but future government
policies are uncertain and the role of investor confidence is unforecastable. In
the months ahead, we will be alert to developments in the region, as they may
open up future opportunities for the Fund.
------------------------------------------------------------------------------
What We See Unfolding in Asia
-----------------------------
o Vise-like liquidity crunch to seize much of Asia
o Banking systems in jeopardy
o Real GDP growth of Asia may turn negative
o Money printing will be the likely route out
o Markets haven't bottomed yet; earnings will drop and P/E's will rise
o Hong Kong currency peg to US$ a possible casualty
o Some fallout on global liquidity likely, but Africa, Middle East,
and Central Europe look relatively immune
------------------------------------------------------------------------------
Q: What caused the crisis in Southeast Asia?
A: The sins of poor policy -- thwarting of market forces, economic patronage,
feeble bank regulation, massive investment in uneconomic projects -- are the
primary culprits, and are exacting a huge price on Asian growth and stability.
Compounding the damage of past sins is the lack of sensible, swift corrective
policy action. Even more deleterious are the attempts to manipulate markets.
Malaysia's opportunity to avert a full-fledged economic collapse has been
7 - Scudder Emerging Markets Growth Fund
<PAGE>
destroyed by poor policy reactions, which now create the potential for a debacle
approaching Thailand's proportions.
Banking systems in Thailand, Malaysia, and Indonesia are in critical condition.
Korea may follow as its system, already on the brink, is likely to be further
weakened by the fading of Korea's considerable export sales to ASEAN
(Association of Southeast Asian Nations) member countries. Failure or severe
impairment of banking systems reinforce the odds of economic retrenchment.
Without borrowing possibilities to fund investment and working capital,
economies shrink. The Philippine system has been severely wounded by fear, but
should probably pull through due to much lower lending levels in the economy and
superior bank supervision.
Q: Has liquidity, which is important in the emerging markets, been reduced?
A: The disappearance of liquidity is now becoming apparent in the worst-hit
economies. Non-performing loans are increasing. Barter payment is growing.
Massive discounts are being offered to move inventory. The magnitude of the
bail-out necessary for these systems dwarfs the Mexican effort. Even if bail-out
money were available, no aware lender is likely to offer it while these
countries are in denial, protecting favored projects, not allowing bankruptcies
and spending what resources they have left on propping up a failed system, e.g.
Thailand and Malaysia. Thailand has seriously impaired its credibility with
world lenders by hiding the fact, until the bail-out agreement was signed, that
it had squandered nearly all of its reserves on forward currency contracts.
Q: Is there a way out for these countries?
A: We see two ways out, one proven, the other still on trial. The first is
reflation via money printing, the other is to follow the Japanese gradualist
approach, which so far has not succeeded. We fear some other Asian countries may
try the Japanese route, as it appears to offer less immediate pain. However,
without deep pockets as the Japanese have, we think it has little chance of
success.
Money printing has already started in Thailand, and we hope other countries join
in. Boat-loads of money will be needed and more currency devaluation will
follow. However, there would be money around to grease the wheels of the
economies; borrowers can pay back their loans in cheap currency; and the banking
system can start to recycle money again. As a permanent solution this will only
work if reforms are put in place to regulate banks properly and many structural
changes are made in the economies so that capital is allocated efficiently in
the future. These reforms must include ending monopolies, removing
protectionism, ending distorting subsidies and improving government
accountability to reduce economic cronyism.
These prescriptions are probably too much for many governments to accept, so we
expect most of these countries to reflate, but few will solidify the recovery
with a full complement of reforms. No doubt there will be social protest at the
coming pain, which will compound the difficulties. To the extent that countries
do reform their systems to provide transparent, well regulated, open market
environments, confidence and foreign capital will return.
8 - Scudder Emerging Markets Growth Fund
<PAGE>
Q: How have you managed the portfolio with regard to Asia?
A: We were underweight in Asia for the twelve months and had pretty much exited
the region by the end of the period. The weighting is now 3% versus a 43% weight
in the IFC Emerging Markets Investable Index. Why have anything there? There can
be special situations anywhere, and we are holding on to a few companies with
strong exports in hard currencies and some Philippine companies we think will be
among the first to rebound.
Q: What are the promising emerging markets?
A: A number of markets in the Middle East and Africa (excluding South Africa)
have been unaffected by the recent turmoil in Asia. In fact, several of these
even rose a bit. We believe many of these markets have good appreciation
potential because risk has already been properly priced into the markets and
their economic fundamentals are good. The realization of substantial risk is
still being priced into Asian markets, Brazil and Russia, to mention the
notable.
The winners will be those markets where risk is appropriately factored into
stock prices and whose companies can produce consistent earnings growth. We
think Mexico, Peru, Hungary, Poland, Egypt, Oman, Tunisia, Jordan, Kenya and
smaller Eastern European and African markets fit this bill. There are some
special situations in India, Brazil, and South Africa that we like as well.
On balance, we are bullish on the opportunities for capital appreciation in the
markets in which the Fund is positioned. The key is to be invested in markets
with strong earnings growth where risk is already appropriately priced.
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, Lead Portfolio Manager, has responsibility for the Fund's
day-to-day management and investment strategies. Ms. Cornell has been a
portfolio manager at Scudder since 1993, and joined the firm in 1991 after
eight years of investment experience as a research analyst. Elizabeth Allan,
Portfolio Manager, helps set the Fund's general investment strategies. Ms.
Allan joined Scudder in 1987, and has numerous years of Pacific Basin research
and investing experience. Tara C. Kenney, Portfolio Manager, assists with the
Fund's research and investment strategy by focusing on the Latin American
securities in the portfolio. Ms. Kenney joined Scudder in 1995 and has over
ten years of financial industry experience.
9 - Scudder Emerging Markets Growth Fund
<PAGE>
Glossary of Investment Terms
CURRENCY DEVALUATION A significant decline of a currency's value
relative to other currencies, such as the U.S.
dollar. This may be prompted by trading or central
bank intervention (or the lack of intervention) in
the currency markets. For U.S. investors who are
investing overseas, a devaluation of a foreign
currency can have the effect of reducing the total
return of their investment.
FUNDAMENTAL RESEARCH Analysis of companies based on the projected
impact of management, products, sales, and
earnings on balance sheets and income statements.
Distinct from technical analysis, which evaluates
the attractiveness of a stock based on historical
price and trading volume movements, rather than
the financial results of the underlying company.
LIQUIDITY A stock that is liquid has enough shares
outstanding and a substantial enough market
capitalization to allow large purchases and sales
to occur without causing a significant change in
its market price.
OVER/UNDER WEIGHTING Refers to the allocation of assets -- usually by
sector, industry, or country -- within a portfolio
relative to a benchmark index (i.e. the IFC
Investable Emerging Market Index), or an
investment universe.
PRICE-EARNINGS RATIO (P-E) A widely used gauge of a stock's valuation that
(ALSO "EARNINGS MULTIPLE") indicates what investors are paying for a
company's earnings on a per share basis. Typically
based on a company's projected earnings for the
next 12 months, a higher "earnings multiple"
indicates a higher expected growth rate and the
potential for greater price fluctuations.
TRANSPARENCY The degree to which investors can evaluate if a
company is managed in the interests of
shareholders. Transparency is often not as good in
developing markets where disclosure requirements
may be less stringent, and protectionism,
subsidies, and cronyism may distort the business
environment.
(Sources: Scudder; Barron's Dictionary of Finance and Investment Terms)
10 - Scudder Emerging Markets Growth Fund
<PAGE>
Investment Portfolio as of October 31, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 4.2%
- --------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 10/31/97 at 5.7%, to be
repurchased at $8,849,201 on 11/3/97, collateralized by a $8,863,000 U.S. Treasury Note, ------------
5.125%, 2/28/98 (Cost $8,845,000) .............................................................. 8,845,000 8,845,000
------------
Short Term Notes 7.8%
- --------------------------------------------------------------------------------------------------------------------------------
------------
Federal Home Loan Bank Discount Note, 11/3/97 (Cost $16,494,958) ................................. 16,500,000 16,494,958
------------
Convertible Bonds 0.3%
- -------------------------------------------------------------------------------------------------------------------------------
Mexico -----------
Alfa S.A. de C.V., 8%, 9/15/00 (Manufactures various durable goods) (Cost $828,938) .............. 460,000 710,700
-----------
Shares
- -------------------------------------------------------------------------------------------------------------------------------
Common Stocks 87.7%
- -------------------------------------------------------------------------------------------------------------------------------
Argentina 2.2%
Cresud S.A. Comercial* (Agricultural company dealing in cattle and grains) ....................... 569,000 1,041,900
Inversiones y Representaciones S.A. (Real estate developer) ...................................... 223,100 750,070
Perez Companc S.A. "B" (Industrial conglomerate) ................................................. 159,651 1,000,020
S.A. San Miguel AGICI "B"* (Cultivation and process of lemons and lemon products) ................ 9,100 173,005
YPF S.A. "D" (ADR) (Petroleum company) ........................................................... 51,300 1,641,600
-----------
4,606,595
-----------
Australia 0.8%
Orogen Minerals Ltd. (Investment company with controlling interest in Papua New Guinea
gold and oil companies) ........................................................................ 326,300 711,359
Orogen Minerals Ltd. (GDR) ....................................................................... 44,400 965,700
-----------
1,677,059
-----------
Botswana 0.7%
Sechaba Investment Trust Co. (Brewery) ........................................................... 1,229,000 1,427,192
Brazil 8.0% -----------
Aracruz Celulose S.A. "B" (pfd.) (Producer of eucalyptus pulp) ................................... 59,000 90,444
Aracruz Celulose S.A. (ADR) ...................................................................... 42,450 636,750
Cia de Eletricidade do Estado de Bahia* (Electric power utility) ................................. 2,319,500 126,237
Companhia Energetica de Minas Gerais (pfd.) (Electric power utility) ............................. 12,280,000 490,108
Companhia Riograndense Telecomunicacoes S.A.* (Telecommunication services) ....................... 2,279,000 1,757,132
Companhia Riograndense Telecomunicacoes S.A. Receipts* (b) ....................................... 63,578 49,019
Companhia Vale do Rio Doce (pfd.) (Diverse mining and industrial complex) ........................ 55,100 1,074,561
Industrias Klabin de Papel e Celulose S.A. (pfd.) (Producer of paper and paper products,
newsprint, and cardboard boxes) ................................................................ 1,161,000 895,143
</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>
Petroleo Brasileiro S.A. (pfd.) (Petroleum company) ..................................... 11,790,000 2,192,344
Saraiva S.A. (pfd.)* (Book publisher) ................................................... 245,900 1,605,950
Telecomunicacoes Brasileiras S.A. (Telecommunication services) .......................... 43,750,000 3,888,668
Telecomunicacoes de Minas Gerais (voting) (Telecommunication services) .................. 15,530 2,141
Telecomunicacoes de Minas Gerais S.A. "B"* .............................................. 192 17
Telecomunicacoes do Parana S.A. (pfd.) (Telecommunication services) ..................... 3,399,668 1,773,119
Telecomunicacoes do Rio Janeiro S.A. (pfd.) (Telecommunication services) ................ 15,238,000 1,451,304
Telecomunicacoes do Rio Janeiro S.A. Rights* (b) ........................................ 590,837 8,039
Usinas Siderurgicas de Minas Gerais S.A. (pfd.) (Non-coated flat products and
electrolytic galvanized products) ..................................................... 137,000 994,149
-------------
17,035,125
-------------
Canada 1.2%
Corriente Resources, Inc.* (Mining and processing of gold, bismuth, tin and
tungsten in South America) ............................................................ 405,900 403,207
Etruscan Enterprises Ltd.* (Exploration and development of gold prospect in Nigeria) .... 119,000 439,068
Gitennes Exploration Inc. Warrants (expire 10/2/98)* (Gold mining in Peru) (b) .......... 54,000 186,214
Interoil Corp.* (Oil exploration in Papua New Guinea) ................................... 78,300 822,150
Kazakhstan Minerals Corp.* (Mineral exploration in Kazakhstan) .......................... 76,700 49,855
Ouraminas Minerals Inc.* (Gold exploration in Brazil) ................................... 290,000 84,365
Seven Seas Petroleum, Inc.* (Oil and gas exploration) ................................... 13,000 227,500
Solitario Resources Corp.* (Precious and base metals exploration company primarily
in Argentina and Peru) ................................................................ 153,600 422,322
-------------
2,634,681
-------------
Chile 3.0%
Chilgener S.A. (ADR) (Electricity generator and supplier) ............................... 17,457 475,703
Enersis S.A. (ADR) (Generator and distributor of electricity in Chile and Argentina) .... 65,300 2,154,900
Laboratorio Chile S.A. (ADR) (Manufacturer and distributor of off-patent
pharmaceutical products) .............................................................. 26,650 669,581
Sociedad Quimica y Minera de Chile S.A. (ADR) (Producer of fertilizer, iodine and
industrial chemicals) ................................................................. 29,200 1,514,750
Vina Concha y Toro S.A. (ADR) (Wine producer) ........................................... 60,000 1,635,000
-------------
6,449,934
-------------
Croatia 2.8%
Pliva D.D. (GDR) (Pharmaceutical company) ............................................... 83,470 1,293,785
Pliva D.D. (GDR) ........................................................................ 106,650 1,653,075
</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>
Zagrebacka Banka (GDR) (Commercial bank) ..................................................... 97,400 3,104,625
------------
6,051,485
------------
Egypt 11.3%
Al Ahram Beverage Co. (GDR)* (Beverage company) ............................................... 87,200 2,398,000
Al Ahram Beverage Co.* ........................................................................ 8,400 231,000
Arab International Construction Co.* (Construction company) ................................... 1,100 28,773
Commercial International Bank (Commercial bank) ............................................... 50,570 1,168,944
Commercial International Bank (GDR) ........................................................... 40,500 880,875
Eastern Tobacco Company (Maker of tobacco products) ........................................... 80,120 2,007,415
Egyptian Financial & Industrial Co. (Fertilizer producer) ..................................... 37,150 2,445,731
Egyptian International Pharmaceutical Co. (Pharmaceutical company) ............................ 27,400 1,981,014
Helwan Portland Cement Co. (Cement producer) .................................................. 35,100 740,169
International Foods Co.* (Food producer) ...................................................... 34,000 829,390
Madinet Nasser City Housing Co. (Real estate development company) ............................. 30,170 2,083,659
Misr International Bank (Bank) ................................................................ 10,886 1,823,665
North Cairo Mills, Ltd. (Flour producer) ...................................................... 26,600 1,157,032
Olympic Group Financial* (Egyptian household appliance manufacturer) .......................... 223,000 1,063,060
Suez Cement Co. (Cement producer) ............................................................. 99,677 2,182,494
Suez Cement Co. (GDR) ......................................................................... 32,600 676,450
Torrah Portland Cement Co. (Cement producer) .................................................. 90,305 2,468,292
------------
24,165,963
------------
France 1.2%
Bouygues Offshore S.A. (Offshore and onshore oil and gas production construction and
maintenance services) ....................................................................... 53,000 2,512,981
------------
Ghana 0.3%
Social Security Bank Ltd.* (Full service commercial bank) ..................................... 804,000 606,148
------------
Hong Kong 0.0%
Moulin International Holding Ltd. Warrants (expire 10/16/99)* (Manufacturer of optical
products) ................................................................................... 249,208 5,447
------------
Hungary 5.8%
Graboplast Rt (Producer of home improvement materials, artificial leather and book bindings) .. 41,529 2,239,795
Graboplast Rt (GDR)* .......................................................................... 45,800 395,025
Matav Rt* (Telecommunication services) ........................................................ 2,700 1,199,630
Mezogep Rt* (Automobile parts manufacturer) ................................................... 6,000 166,269
OTP Bank Rt (Savings and commercial bank) ..................................................... 84,100 2,678,275
OTP Bank Rt (GDR)* ............................................................................ 10,900 339,263
</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>
Pannonplast Rt (Manufacturer of plastic products from PVC, polypropylene, polyethylene
and other raw materials) .................................................................... 32,757 1,800,175
Pick Szeged Rt (Sausage maker) ................................................................ 18,000 1,479,313
Richter Gedeon Rt (Pharmaceutical company) .................................................... 21,100 1,940,006
------------
12,237,751
------------
India 1.5%
Ashok Leyland Ltd. (GDR) (Manufacturer of medium and heavy duty commercial vehicles) .......... 44,000 185,900
Bharat Petroleum Corp., Ltd (Oil exploration and refining, manufacturer of petroleum
products) ..................................................................................... 33,500 401,600
HDFC Bank Ltd. (Corporate banking and financial services) .....................................1,016,500 2,270,876
Hindustan Petroleum Corp., Ltd (Oil refining, manufacturer of petroleum products) ............. 7,200 94,530
ICICI Banking Corp.* (Bank) ................................................................... 140,000 187,657
------------
3,140,563
------------
Indonesia 0.7%
HM Sampoerna (Foreign registered) (Tobacco company) ........................................... 254,000 442,122
Indah Kiat Pulp & Paper (Foreign registered) (Producer of pulp and paper) .....................1,713,180 653,432
London Sumatra Indonesia (Producer of palm oil, cocoa, coffee and tea) ........................ 350,300 376,536
Panin Bank Warrants (expire 06/26/00)* (Bank) (b) ............................................. 145,714 3,638
------------
1,475,728
------------
Israel 0.2%
Makhteshim Chemical Works* (Chemical producer) ................................................ 74,100 458,593
------------
Jordan 0.7%
Arab Potash Co. (Salt and chemical producer) .................................................. 47,400 410,289
Dar Al Dawa Development & Investment Co.* (Pharmaceutical company) ............................ 37,900 302,453
The Housing Bank (Residential construction finance) ........................................... 113,850 810,811
------------
1,523,553
------------
Kenya 1.1%
East African Portland Cement Co. (Cement producer) (b) ........................................ 290,000 158,544
Firestone East Africa Ltd. (Tire manufacturer) ................................................ 930,000 312,324
Sasini Tea & Coffee Ltd. (Tea and coffee grower and processor) (b) ............................ 925,000 1,358,169
Uchimi Supermarket Ltd. (Supermarket operator) ................................................ 930,000 537,488
------------
2,366,525
------------
Lebanon 1.2%
Banque Libanaise pour le Commerce SAL (GDR)* (Commercial bank) ................................ 115,000 2,541,500
------------
Malaysia 0.1%
PPB Oil Palms Berhad* (Refiner and marketer of palm oils and related products) ................ 191,000 189,081
------------
Mexico 8.8%
Consorcio ARA, S.A. de C.V.* (Low-income housing developer) ................................... 253,000 930,436
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Empresa ICA Sociedad Controladora S.A. (Construction company) ........................... 404,600 903,405
Fomento Economico Mexicano, S.A. de C.V. "B" (Producer of beer and soft drinks) ......... 370,000 2,606,567
Gruma S.A. de C.V.* (Producer and distributor of corn flour) ............................ 174,400 683,023
Grupo Elektra, S.A. de C.V. "B" (Consumer electronics and appliances retail stores) ..... 738,700 1,005,514
Grupo Financiero Banamex-Accival, S.A. de C.V. "B"* (Bank) .............................. 839,200 1,663,370
Grupo Financiero Inbursa, S.A. de C.V. "B" (Brokerage, insurance, banking and
leasing services) ..................................................................... 87,300 307,504
Grupo Industrial Alfa S.A. "A" (Conglomerate: steel, petrochemicals, packaged food) ..... 241,500 1,764,752
Grupo Industrial Maseca S.A. de C.V. "B" (Food producer) ................................ 391,000 378,161
Grupo Mexico S.A. "L" (Mineral mining, including silver, copper, zinc, gold and coal) ... 242,000 716,609
Grupo Radio Centro S.A. de C.V. (Owner and operator of radio stations) .................. 555,900 862,890
Grupo Radio Centro S.A. de C.V. ......................................................... 83,200 1,060,800
Industrias Penoles S.A. (Exploration and marketing of minerals and non-ferrous metals
such as lead, zinc and silver) ........................................................ 503,700 1,999,764
Organizacion Soriana S.A. "A" de CV (Retailer) .......................................... 221,100 736,560
TV Azteca, S.A. de C.V. (ADR)* (Owner and operator of national television networks) ..... 104,900 2,006,213
Telefonos de Mexico S.A. de C.V. "L" (ADR) (Telecommunication services) ................. 24,400 1,055,300
------------
18,680,868
------------
Morocco 2.0%
Maghrebail (Real estate leasing, maintenance and insurance) ............................. 1,599 85,605
Omnium Nord Africaine (Conglomerate) .................................................... 29,900 2,717,463
Societe Nationale d'Investissements (Conglomerate, various joint ventures) .............. 6,000 530,075
WAFABANK (Commercial bank) .............................................................. 10,707 999,161
------------
4,332,304
------------
Oman 2.9%
Bank Muscat Al Ahla Al Omani (Commercial bank) .......................................... 68,500 1,823,891
National Bank of Oman Ltd. (Commercial bank) ............................................ 84,200 2,298,789
Oman Alliance Bank* (Commercial bank) ................................................... 90,000 551,746
Oryx Fund, Ltd.* (Mutual fund domiciled in Guernsey, investing in the Middle East) ...... 79,500 1,530,375
------------
6,204,801
------------
Peru 6.8%
CPT Telefonica del Peru S.A. (ADR) (Telecommunication services) ......................... 14,100 278,475
Cementos Lima S.A. "T" (Cement producer) ................................................ 148,477 3,090,991
Compania Peruana de Telefonos S.A. "B" (Public and cellular telephone services) ......... 698,000 1,391,371
Edegel S.A. "B" (Electric power utility) ................................................ 3,307,637 1,401,541
Enrique Ferreyros y Cia. (Machinery manufacturer) ....................................... 2,119,312 2,186,468
Luz del Sur S.A. "B" (Electric power distributor) ....................................... 917,500 1,122,366
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Minas Buenaventura S.A. "A" (Mining company) ............................................ 312,500 2,717,391
Minas Buenaventura S.A. (ADR) ........................................................... 7,300 130,944
Minera Milpo "T" (Mining company) ....................................................... 135,885 945,287
Peru Pacifico* (Food producer) .......................................................... 1,094,913 1,133,642
Volcan Compania Minera S.A. "T" (Mining company) ........................................ 15,900 93,736
------------
14,492,212
------------
Philippines 1.1%
Aboitiz Equity Ventures Inc. (Conglomerate: electricity, infrastructure, shipbuilding) .. 14,818,000 484,877
C & P Homes, Inc. (Home construction company) ........................................... 1,538,700 115,023
International Container Terminal Services, Inc.* (Containerized cargo handling firm) .... 5,487,750 1,083,618
Ionics Circuit Inc. (Manufacturer of electronic components) ............................. 348,750 204,134
Metropolitan Bank and Trust Company (Commercial bank and trust company) ................. 43,804 302,736
Mondragon International Philippines, Inc. (Wholesale and direct selling of clothing,
housewares and homecare products) ..................................................... 3,003,600 162,677
------------
2,353,065
------------
Poland 10.0%
Amica* (Manufacturer of home appliances) ................................................ 106,522 2,002,063
Bank Przemyslowo Handlowy (Bank) ........................................................ 24,698 1,296,911
Bydgoska Fabryka Kabli S.A.* (Manufacturer of cables, wires and insulating materials) ... 226,750 1,854,340
Cersanit SA* (Manufacturer of ceramic sanitary products) (b) ............................ 17,500 954,089
Computerland Poland S.A.* (Provider of computer services and systems) ................... 76,300 1,357,418
Debica S.A. "A" (Tire manufacturer) ..................................................... 62,500 1,649,928
ITI Group S.A.* (Telecommunication services) (b) ........................................ 8,315 1,954,025
Jelfa* (Pharmaceutical company) ......................................................... 10,200 210,732
Kutnowskie Zaklady Farmaceutyczne Polfa S.A.* (Producer of pharmaceuticals, veterinary
medicines, food components) ........................................................... 49,700 1,454,634
Mostostal Zabrze Holding S.A. (Construction company) .................................... 271,100 1,493,578
Poland Privatization Voucher* (Exchangeable into shares of National Investment Funds) ... 18,100 690,760
Powszechny Bank Kredytowy S.A.* (Commercial bank) ....................................... 10,000 215,208
RP Telecom* (Telecommunication services) (b) ............................................ 96,742 1,934,840
RP Telecom "O"* (b) ..................................................................... 8,729 174,580
RP Telecom "P"* (b) ..................................................................... 7,330 146,600
Wielkopolski Bank Kredytowy S.A. (Commercial bank) ...................................... 453,800 2,408,981
Zaklady Metali Lekkich Kety* (Manufacturer of aluminum casting alloys and products) ..... 98,300 1,359,558
------------
21,158,245
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Portugal 2.9%
Cimentos de Portugal S.A. (Manufacturer of cement, ready mix concrete and aggregates) ..... 34,100 862,923
Electricidade de Portugal (Generates, transmits and distributes electricity in Portugal) .. 109,000 1,915,326
Portugal Telecom SA (Telecommunication services) .......................................... 52,300 2,145,832
Semapa S.A. (Cement producer) ............................................................. 51,700 1,193,642
------------
6,117,723
------------
Romania 0.5%
Societe Generale Romania Fund* (Investment company) ....................................... 9,400 963,500
------------
Slovenia 0.2%
BTC (GDR)* (Property management) .......................................................... 57,000 484,500
------------
South Africa 1.5%
Energy Africa Ltd.* (Oil and gas exploration and production) .............................. 203,133 1,065,125
Sasol Ltd. (Coal mining and processing, crude oil exploration and refining,
petrochemical production) ............................................................... 184,200 2,218,586
------------
3,283,711
------------
Switzerland 0.3%
Holderbank Financiere Glaris AG (Bearer) (Cement producer) ................................ 715 575,246
------------
Taiwan 0.1%
Kee Tai Properties Co., Ltd. (Sale and leasing of residential and commercial buildings) ... 105,300 154,463
------------
United Kingdom 1.4%
African Lakes Corp. PLC* (Motor trading, agriculture, mining, engineering, computer
supplies and general trading) ........................................................... 869,928 751,631
James Finlay PLC (Tea producer) ........................................................... 899,000 1,809,903
Reunion Mining PLC* (Mineral exploration and copper production) ........................... 203,000 326,950
------------
2,888,484
------------
United States 3.6%
Aramex International Ltd.* (Express delivery and freight forwarding in the Mideast
and India) ................................................................................ 35,700 548,888
Benton Oil & Gas Co.* (Oil and gas exploration, development and production) ............... 111,600 2,245,950
Diamond Offshore Drilling, Inc. (Offshore oil and gas well drilling) ...................... 30,700 1,911,075
Santa Fe International Corp. (International offshsore and land contract driller) .......... 24,500 1,205,094
Triton Energy Ltd.* (Independent oil and gas exploration and production company) .......... 44,400 1,737,150
------------
7,648,157
------------
Zimbabwe 2.8%
Delta Corp., Ltd. (Brewery) ............................................................... 688,820 973,406
Meikles Africa Ltd. (GDR) (Hotel operator) ................................................ 965,400 1,954,935
National Merchant Bank of Zimbabwe Ltd (Commercial bank) .................................. 342,500 811,725
Tanganda Tea Co., Ltd. (Tea producer and distributor) ..................................... 1,205,000 657,488
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Emerging Markets Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wankie Colliery Co., Ltd. (Coal mining at Hwange) ......................................... 1,965,000 1,079,882
Zimbabwe Sun (Operator of hotels and other tourist facilities) ............................ 1,212,392 454,498
------------
5,931,934
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $181,470,799) 186,375,117
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $207,639,695) (a) 212,425,775
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $208,926,650. At October 31,
1997, net unrealized appreciation for all securities based on tax cost was
$3,499,125. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $24,266,168 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$20,767,043.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $6,927,757 (3.15% of net assets).
Their values have been estimated by the Valuation Committee 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. The cost of
these securities at October 31, 1997 aggregated $6,534,693. These
securities may also have certain restrictions as to resale.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
18 - Scudder Emerging Markets Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of October 31, 1997
<TABLE>
<S> <C>
Assets
- ------------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $207,639,695) ................. $ 212,425,775
Cash .................................................................. 1,010
Foreign currency, at value (identified cost $554,092) ................. 542,923
Receivable for investments sold ....................................... 9,234,102
Dividends and interest receivable ..................................... 138,269
Receivable for Fund shares sold ....................................... 123,220
Foreign taxes recoverable ............................................. 9,875
Deferred organization expenses ........................................ 21,449
Other assets .......................................................... 1,269
----------------
Total assets .......................................................... 222,497,892
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ..................................... 1,547,429
Payable for Fund shares redeemed ...................................... 536,667
Accrued management fee ................................................ 245,754
Other payables and accrued expenses ................................... 543,561
----------------
Total liabilities ..................................................... 2,873,411
---------------------------------------------------------------------------------------------
Net assets, at market value $ 219,624,481
---------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distribution in excess of net investment income ........... (474,763)
Unrealized appreciation (depreciation) on:
Investment securities .............................................. 4,786,080
Foreign currency related transactions .............................. (20,343)
Accumulated net realized loss ......................................... (699,642)
Paid-in capital ....................................................... 216,033,149
---------------------------------------------------------------------------------------------
Net assets, at market value $ 219,624,481
---------------------------------------------------------------------------------------------
Net Asset Value
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($219,624,481 /
15,080,532 shares of capital stock outstanding, $.01 par value, ----------------
100,000,000 shares authorized) ..................................... $14.56
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 - Scudder Emerging Markets Growth Fund
<PAGE>
Statement of Operations
year ended October 31, 1997
<TABLE>
<S> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $198,340) .................. $ 3,104,094
Interest ............................................................... 820,761
-----------------
3,924,855
-----------------
Expenses:
Management fee ......................................................... 2,342,072
Custodian and accounting fees .......................................... 989,541
Services to shareholders ............................................... 743,989
Directors' fees and expenses ........................................... 64,633
Registration fees ...................................................... 58,279
Auditing ............................................................... 56,130
Reports to shareholders ................................................ 58,625
Legal .................................................................. 14,602
Amortization of organization expense ................................... 6,106
Other .................................................................. 12,101
-----------------
Total expenses before reductions ....................................... 4,346,078
Expense reductions ..................................................... (617,962)
-----------------
Expenses, net .......................................................... 3,728,116
---------------------------------------------------------------------------------------------
Net investment income 196,739
---------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized loss from:
Investments ............................................................ (95,234)
Foreign currency related transactions (net of CPMF tax $65,329) ........ (456,541)
-----------------
(551,775)
-----------------
Net unrealized appreciation (depreciation) during the period on:
Investments (net of India tax $67,289) ................................. 3,174,568
Foreign currency related transactions .................................. (18,865)
-----------------
3,155,703
---------------------------------------------------------------------------------------------
Net gain on investment transactions 2,603,928
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 2,800,667
---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 - Scudder Emerging Markets Growth Fund
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
May 8, 1996
(commencement
Year of
Ended operations) to
October 31, October 31,
Increase (Decrease) in Net Assets 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ............................. $ 196,739 $ (55,079)
Net realized loss ........................................ (551,775) (615,373)
Net unrealized appreciation on investment transactions
during the period ..................................... 3,155,703 1,610,034
---------------- -----------------
Net increase in net assets resulting from operations ..... 2,800,667 939,582
---------------- -----------------
Distributions to shareholders from net investment income . (178,523) --
---------------- -----------------
Fund share transactions:
Proceeds from shares sold ................................ 195,752,276 76,964,590
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................ 144,724 --
Cost of shares redeemed .................................. (55,248,506) (2,135,475)
Redemption fees .......................................... 560,150 23,796
---------------- -----------------
Net increase in net assets from Fund share transactions .. 141,208,644 74,852,911
---------------- -----------------
Increase in net assets ................................... 143,830,788 75,792,493
Net assets at beginning of period ........................ 75,793,693 1,200
Net assets at end of period (including accumulated
distributions in excess of net investment income $474,763 ---------------- -----------------
and net investment loss of $124,716, respectively) ....... $219,624,481 $75,793,693
---------------- -----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period 5,896,839 100
---------------- -----------------
Shares sold 12,807,944 6,064,272
Shares issued to shareholders in reinvestment of 10,595 --
distributions
Shares redeemed (3,634,846) (167,533)
---------------- -----------------
Net increase in Fund shares 9,183,693 5,896,739
---------------- -----------------
Shares outstanding at end of period 15,080,532 5,896,839
---------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21 - Scudder Emerging Markets Growth Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
May 8, 1996
Year (commencement) of
Ended operations) to
October 31, October 31,
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
---------------------------------------------
Net asset value, beginning of period .......................................... $12.85 $12.00
---------------------------------------------
Income from investment operations: ............................................ .02 (.02)
Net investment income (loss)
Net realized and unrealized gain on investments ............................... 1.67 .86
---------------------------------------------
Total from investment operations .............................................. 1.69 .84
---------------------------------------------
Less distributions from net investment income ................................. (.03) --
Redemption fees ............................................................... .05 .01
---------------------------------------------
Net asset value, end of period ................................................ $14.56 $12.85
---------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (c) (d) ...................................................... 13.51 7.08**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ........................................ 220 76
Ratio of operating expenses, net to average daily net assets (%) .............. 2.00 2.00*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ................................................................. 2.33 3.79*
Ratio of net investment income (loss) to average daily net assets (%) ......... .11 (.32)*
Portfolio turnover rate (%) ................................................... 61.5 19.5*
Average commission rate paid (b) .............................................. $.0013 $.0006
</TABLE>
(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 to the shareholder of the 2%
redemption fee on shares held less than one year.
* Annualized
** Not annualized
22 - Scudder Emerging Markets Growth Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Emerging Markets Growth 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 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 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 other than money market securities 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. Money market
instruments purchased with an original maturity of sixty days or less are valued
at amortized cost. All other securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
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, is equal to at least 100.5% of the repurchase 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.
23 - Scudder Emerging Markets Growth Fund
<PAGE>
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.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
Taxation. The Fund's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. The Fund paid
no federal income taxes and no federal income tax provision was required.
At October 31, 1997, the Fund had a net tax basis capital loss carryforward of
approximately $370,000, 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.
Effective January 23, 1997, the Fund is also subject to a .20% Contribuicao
Provisoria sobre Movimentacoes Financeiras (CPMF) tax which is applied to
foreign exchange transactions representing capital inflows or outflows to the
Brazilian market. This tax has been reported as part of the net realized gain
(loss) on foreign currency related transactions.
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 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.
24 - Scudder Emerging Markets Growth Fund
<PAGE>
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.
B. Purchases and Sales of Securities
For the year ended October 31, 1997, purchases and sales of investment
securities (excluding short-term investments) aggregated $213,455,841 and
$102,511,952, 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 Adviser has agreed not to impose all or a portion of its
management fee until February 28, 1998, in order to maintain the annualized
expenses of the Fund at not more than 2.00% of average daily net assets. For the
year ended October 31, 1997, the Adviser did not impose a portion of its
management fee amounting to $617,962, and the amount imposed amounted to
$1,724,110.
On June 26, 1997, the Adviser entered into an agreement with The Zurich
Insurance Company ("Zurich"), an international insurance and financial services
organization, pursuant to which Zurich will acquire a majority interest in the
Adviser, and the Adviser will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc. and change
its name to Scudder Kemper Investments, Inc. Subject to the receipt of the
required regulatory and shareholder approvals, the transaction is expected to
close by the end of the fourth quarter of 1997.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended October 31, 1997 the amount charged by SSC aggregated $480,002, of
which $42,661 is unpaid at October 31, 1997.
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be invested in the Underlying Funds. For the year ended October 31,
1997, the Special Servicing Agreement expense charged to the Fund amounted to
$136,201.
25 - Scudder Emerging Markets Growth Fund
<PAGE>
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 year ended October 31,
1997, the amount charged to the Fund by STC aggregated $41,624, of which $5,496
is unpaid at October 31, 1997.
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 year ended
October 31, 1997, the amount charged to the Fund by SFAC aggregated $178,487, of
which $34,622 is unpaid at October 31, 1997.
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, 1997, Directors' fees and expenses aggregated $64,633.
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.
26 - 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, 1997, and the related statement of operations for the year then ended, the
statements of changes in net assets for the year then ended and for the period
May 8, 1996 (commencement of operations) to October 31, 1996, and the financial
highlights for the year ended October 31, 1997 and 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 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, 1997 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 Emerging Markets Growth Fund as of October 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for the year
then ended and for the period May 8, 1996 (commencement of operations) to
October 31, 1996 and the financial highlights for the year ended October 31,
1997 and 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 17, 1997
27 - Scudder Emerging Markets Growth Fund
<PAGE>
Tax Information
The Fund paid foreign taxes of $198,340 and the Fund recognized $515,442 of
foreign source income during the fiscal year ended October 31, 1997. Pursuant to
section 853 of the Internal Revenue Code, the Fund designates $.01315 per share
of foreign taxes and $.03418 of income from foreign sources as having been paid
in the fiscal year ended October 31, 1997, respectively.
28 - Scudder Emerging Markets Growth Fund
<PAGE>
Stockholder Meeting Results
A Special Meeting of Stockholders (the "Meeting") of Scudder Emerging Markets
Growth Fund (the "Fund") was held on October 27, 1997, at the offices of
Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street),
New York, New York 10154. At the Meeting, as adjourned and reconvened, the
following matters were voted upon by the stockholders (the resulting votes for
each matter are presented below.) With regard to certain proposals, it was
recommended that the Meeting be reconvened in order to provide stockholders with
an additional opportunity to return their proxies. The date of the reconvened
meeting at which the matters were decided is noted after the proposed matter.
1. To elect Directors.
Number of Votes:
----------------
Director For Withheld
-------- --- --------
Paul Bancroft III 8,485,231 224,914
Sheryle J. Bolton 8,482,415 227,730
William T. Burgin 8,485,269 224,876
Thomas J. Devine 8,480,316 229,829
Keith R. Fox 8,488,091 222,054
William H. Gleysteen, Jr. 8,477,231 232,914
William H. Luers 8,481,631 228,514
Wilson Nolen 8,483,572 226,573
Daniel Pierce 8,484,766 225,379
Kathryn L. Quirk 8,482,038 228,107
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
8,384,334 207,247 118,564 98,188
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise. (Approved on December 2, 1997.)
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
8,268,279 426,626 228,693 0
29 - Scudder Emerging Markets Growth Fund
<PAGE>
4. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Fundamental Policies For Against Abstain Broker Non-Votes*
-------------------- --- ------- ------- -----------------
<S> <C> <C> <C> <C>
4.1 Diversification 8,034,053 312,203 265,701 98,188
4.2 Borrowing 7,959,915 384,810 267,232 98,188
4.3 Senior securities 7,984,239 358,780 268,938 98,188
4.4 Purchase of physical 7,983,542 362,159 266,256 98,188
commodities
4.5 Concentration 7,988,834 357,407 265,716 98,188
4.6 Underwriting of securities 7,984,571 361,251 266,135 98,188
4.7 Investment in real estate 7,989,300 356,891 265,766 98,188
4.8 Lending 7,975,819 328,856 307,282 98,188
</TABLE>
5. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
8,453,635 98,033 158,477
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
30 - Scudder Emerging Markets Growth Fund
<PAGE>
This Page
intentionally
left blank.
31 - Scudder Emerging Markets Growth Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board and
Director
Paul Bancroft III
Director; Venture Capitalist and
Consultant
Sheryle J. Bolton
Director; Chief Executive
Officer, Scientific Learning
Corporation
William T. Burgin
Director; General Partner,
Bessemer Venture Partners
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; President, Exeter
Capital Management
Corporation
William H. Gleysteen, Jr.
Director; Consultant; Guest
Scholar, Brookings Institute
William H. Luers
Director; President, The
Metropolitan Museum of Art
Wilson Nolen
Director; Consultant
Kathryn L. Quirk*
Director, Vice President and
Assistant Secretary
Robert W. Lear
Honorary Director;
Executive-in-Residence, Visiting
Professor, Columbia University
Graduate School ofBusiness
Robert G. Stone, Jr.
Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
Elizabeth J. Allan*
Vice President
Joyce E. Cornell*
Vice President
Richard W. Desmond*
Assistant Secretary
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
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
*Scudder, Stevens & Clark, Inc.
32 - Scudder Emerging Markets Growth Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil 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 Spain and Portugal Fund, Inc.
Scudder World Income Opportunities
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. +++Funds within categories are listed
in order from expected least risk to most risk. Certain Scudder funds may not be
available for purchase or exchange. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *A class of shares of
the Fund. **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.
33 - Scudder Emerging Markets Growth Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from that account.
fewer when it's higher, which can reduce your average
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you designate.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
34 - Scudder Emerging Markets Growth Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
- ------------------------------------------------------------------------------------------------------------------------------
New From Scudder: Scudder International Growth and Income Fund
Scudder International Growth and Income Fund takes a yield-oriented approach to investing in international equities. The
Fund seeks to provide long-term growth of capital plus current income. Investors who desire international exposure but
who wish to take a more conservative approach may appreciate the Fund's emphasis on the dividend paying stocks of
well-established companies outside the United States.
- ------------------------------------------------------------------------------------------------------------------------------
The share price of Scudder International Growth and Income Fund will fluctuate. International investing involves special
risks including currency fluctuation and political instability. Contact Scudder Investor Services, Inc., Distributor,
for a prospectus which contains more complete information, including management fees and other expenses. Please read it
carefully before you invest or send money.
</TABLE>
35 - 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
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