Scudder
Emerging Markets Growth Fund
Semiannual Report
April 30, 1997
Pure No-Load(TM) Funds
A fund designed to seek long-term growth of capital primarily through equity
investment in emerging markets around the globe.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
17 Financial Statements
20 Financial Highlights
21 Notes to Financial Statements
24 Report of Independent Accountants
27 Officers and Directors
29 Investment Products and Services
30 Scudder Solutions
In Brief
o Deepening reforms, increased stability and confidence, and accelerating
economic growth helped to propel many emerging markets higher over the six
months ended April 30, 1997.
o Scudder Emerging Markets Growth Fund returned an outstanding 20.53%, exceeding
the 10.19% return of the unmanaged IFC Emerging Markets Investable Index for the
same six-month period.
o Our emphasis on the emerging markets of Central Europe, Africa and Latin
America contributed to the Fund's very attractive performance.
2-SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
Letter From the Fund's Chairman
Dear Shareholders,
We are pleased to present the semiannual report for Scudder Emerging
Markets Growth Fund for the six-month period ended April 30, 1997.
Your Fund's outstanding performance is gratifying, providing reassurance of
the benefits of international diversification and the dynamic growth
opportunities of the emerging markets. More volatility, however, can be expected
from investments in the emerging markets since, by definition, these markets are
experiencing rapid economic, political, and social change. Your portfolio
management team discusses the environment and their investment strategy in more
detail beginning on page 6.
While it is easy to applaud impressive short-term performance, we know that
our shareholders also expect consistent performance over the years. We will do
our best to meet those expectations because we know that consistent performance
will earn your trust and commitment to investing in Scudder funds over the long
term.
For those of you who are interested in new products and services, we
recently introduced the Scudder Pathway Series. Pathway simplifies investing
through the "fund of funds" approach offering four distinct portfolios:
Conservative, Balanced, Growth, and International. Each portfolio invests in a
select mix of Scudder Funds, providing flexibility, diversification, and
simplicity for regular and retirement plan investors. For more complete
information on Scudder products and services, please turn to page 29.
Thank you for your continued investment in Scudder Emerging Markets Growth
Fund. If you have questions about your account, please call our Investor
Relations representatives at 1-800-225-2470; they will be happy to assist you.
You can also obtain information by visiting our Internet 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 April 30, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/97 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER EMERGING MARKETS GROWTH FUND
- --------------------------------------------
Life of Fund* $ 12,907 29.07% --
- --------------------------------------------
IFC EMERGING MARKETS INVESTABLE INDEX
- --------------------------------------------
Life of Fund* $ 10,572 5.72% --
- --------------------------------------------
*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
6/96 $10,394
7/96 $10,000
8/96 $10,501
9/96 $10,855
10/96 $10,559
11/96 $10,904
12/96 $11,360
1/97 $12,521
2/97 $12,932
3/97 $12,661
4/97 $12,727
IFC EMERGING MARKETS INVESTABLE INDEX
Year Amount
- ----------------------
5/96* $10,000
6/96 $10,146
7/96 $ 9,513
8/96 $ 9,727
9/96 $ 9,813
10/96 $ 9,594
11/96 $ 9,732
12/96 $ 9,646
1/97 $10,295
2/97 $10,763
3/97 $10,572
4/97 $10,572
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.
1997*
-------
NET ASSET VALUE........... $15.46
INCOME DIVIDENDS.......... $ .03
FUND TOTAL RETURN (%)**... 29.07
INDEX TOTAL RETURN (%).... 5.72
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 April 30, 1997
- ---------------------------------------------------------------------------
GEOGRAPHICAL
(Excludes 9% Cash Equivalents)
- ---------------------------------------------------------------------------
Latin America 35%
Europe 25%
Africa 17%
Pacific Basin 14%
U.S. & Canada 5%
Other 4%
- --------------------------------------
100%
- --------------------------------------
Holdings in Egypt and Brazil
were significant contributors to
your Fund's solid performance.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS
(Excludes 9% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 19%
Communications 12%
Metals & Minerals 11%
Consumer Staples 11%
Manufacturing 10%
Construction 7%
Energy 6%
Health 6%
Consumer Discretionary 5%
Other 13%
- --------------------------------------
100%
- --------------------------------------
Your Fund remained diversified
across several industry sectors as
well as maintained broad
representation in each emerging
markets region.
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. PETROLEO BRASILEIRO S.A.
Petroleum company in Brazil
3. CORRIENTE RESOURCES, INC.
Canadian mining company
4. ZAGREBACKA BANKA
Commercial banking in Croatia
5. PLIVA D.D.
Pharmaceutical company in Croatia
6. OMNIUM NORD AFRICAINE
Conglomerate in Morocco
7. COMPANHIA RIOGRANDENSE
TELECOMUNICACOES S.A.
Telecommunication services in Brazil
8. INDUSTRIAS PENOLES S.A.
Exploration and marketing of minerals and
non-ferrous metals in Mexico
9. MEIKLES AFRICA LTD.
Hotel operations in Zimbabwe
10. COMPUTERLAND POLAND S.A.
Provider of computer services and systems
in Poland
Three of our top ten holdings
were in Brazil, one of the best
performing emerging markets
during the six-month period.
For more complete details about the Fund's investment portfolio, see page 9.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5 - SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Scudder Emerging Markets Growth Fund provided an outstanding total return for
the six months ended April 30, 1997. The Fund returned 20.53%, reflecting an
increase in net asset value per share from $12.85 to $15.46 and an income
distribution of 3 cents per share. We are pleased with this performance, which
significantly outpaced the unmanaged IFC Emerging Markets Investable Index
return of 10.19% and the Lipper emerging markets fund average return of 14.60%
for the same six-month period.
Market Review
Egypt and Brazil were the largest contributors to the Fund's outperformance of
its benchmark for the six months. The Egyptian market rose 70% in U.S. dollar
terms with the Fund holding 8% of assets there, although Egypt is not yet
included in the index. The Brazilian market rose 48% and the Fund held 15%.
Hungary, Zimbabwe and Morocco also performed well rising 41%, 28%, and 42%,
respectively. However, these three markets had less significant impact on
performance as they represented a relatively small percentage of Fund assets.
Performance was also helped by avoiding the 29% plunge in Thailand, having
virtually no holdings in Korea, which dropped 14%, and being very light in
Malaysia, which declined 7%.
Market Outlook
We are sanguine about the emerging markets, despite the increase in U.S.
short-term interest rates at the end of March. Many emerging markets are tied to
changes in U.S. interest rates, especially Asian and Latin American countries
with currencies linked to the U.S. dollar. However, we have concentrated on
investments that have a low correlation to the U.S. dollar, which we believe
helped Fund performance during the period.
Our favored markets in the Western hemisphere and European time zone are Central
Europe, Middle East and Africa because we believe they offer good growth at
inexpensive prices. U.S. interest rates would need to rise considerably, which
we do not anticipate, to affect the favorable fundamentals of these markets.
Profound structural reform is the force driving growth in our European time zone
markets. The energy that is being released as state assets are switched to more
efficient private management is driving economic growth of 6-7% in Egypt,
Morocco, Zimbabwe, Kenya, Ghana, Oman and Poland. Lebanon and Croatia are
rebounding from wars. These dynamics are little affected by the U.S. economy,
and global liquidity is not yet a factor in most of these markets.
In Latin America, Brazil, Argentina, Peru and Chile all continue to offer good
prospects for continued gains, notwithstanding strong performance during the
first four months of 1997. Brazilian equities are still inexpensive as the
benefits of structural reform continue to drive growth. Argentina and Peru are
rebounding well from a recession, and Chilean officials are poised to stimulate
6-SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
growth after a long period of slowdown engineered by the central bank.
Asia is the least appealing region to us, from an investment standpoint. Higher
U.S. interest rates affect many Asian currencies because of their links to the
U.S. dollar. The higher rate environment has meant a stronger dollar, which
reduces the competitiveness of their exports. Stronger currencies, combined with
structural problems in many economies, have resulted in diminished investment
prospects. We reduced the Fund's holdings in Asia from 22% of assets at the
beginning of the period to 15% of assets on April 30, 1997.
Since the beginning of 1997 we have visited Brazil, Oman, Zimbabwe, Egypt,
Lebanon and Romania. The first four trips were to check on existing Fund
positions. All visits were reassuring, but Zimbabwe and Egypt were particularly
exciting as the pace of reform in those countries is picking up discernibly.
Before going on the trip we wondered if the strong market gains posted last year
had left any upside. Happily there was plenty of evidence that much growth
remains ahead. Zimbabwe has instituted a sensible tax reform and is continuing
to privatize. Egypt is also privatizing state assets at a good clip. In both
cases there is less government "crowding out" of the private sector and interest
rates are falling.
Visits to Lebanon and Romania were our first. The Beirut area is one massive,
active construction site. Flight capital is returning and the economy is growing
strongly. During the long war Lebanese citizens exported much of their capital.
This capital is now returning. The banking sector, a traditional Lebanese
strength, is flourishing and well regulated. We have made several investments in
banks, which should act as good proxies for the economy.
In November 1996, Romania finally voted out the former communists who had been
running the country since the collapse of the Soviet Union. The new leaders are
instituting free-market reforms and administering the tough medicine to cure
hyperinflation. This will be a painful year for the already long-suffering
Romanians, but if they stay the course the result could be an excellent
investment opportunity. Romania has an internal market of 30 million people,
rich agricultural land, a well-educated work force and a substantial industrial
sector. We give Romania good odds for success. Romanians are strikingly
"western" in outlook and orientation. We were reminded many times that theirs is
a Latin language (it actually sounds like a close cousin to Italian) and that
they are really a Western European country misplaced in Eastern Europe. In our
opinion, that perceived identity and clear longing to be accepted as Western
European will help them through a painful transition year. Romania could be the
next Poland in terms of investment potential.
7-SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
We are optimistic about many of the world's emerging markets. Despite higher
short-term U.S. interest rates, we do not see the global liquidity environment
as hostile. Europe maintains a loose monetary environment and its apparent
pick-up in economic growth is a boon to emerging markets, particularly those in
Central Europe. Importantly, many of the markets in which we are invested have
little connection with U.S. interest rates and their stock markets are not
correlated with the domestic market. Compared to the United States, the
valuation of many emerging markets is reasonable. Consequently, we would not be
surprised if more investors turn to the emerging markets for their higher growth
prospects and the diversification opportunity they offer.
Sincerely,
Your Portfolio Management Team
/s/Joyce E. Cornell /s/Elizabeth J. Allan
Joyce E. Cornell Elizabeth Allan
/s/Tara C. Kenney
Tara C. Kenney
8-SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
Investment Portfolio as of April 30, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 3.9%
- -----------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/97 at 5.375%, to be
repurchased at $7,650,142 on 5/1/97, collateralized by a $7,683,000 U.S. Treasury Note, ----------
5%, 1/31/98 (Cost $7,649,000) ................................................................. 7,649,000 7,649,000
----------
Short-Term Notes 5.1%
- -----------------------------------------------------------------------------------------------------------------------------
----------
Student Loan Marketing Association Discount Note, 5/1/97 (Cost $10,000,000) .................... 10,000,000 10,000,000
----------
Shares
- -----------------------------------------------------------------------------------------------------------------------------
Common Stocks 91%
- -----------------------------------------------------------------------------------------------------------------------------
Argentina 4.7%
Banco Frances del Rio de la Plata (ADR) (Commercial and private bank) .......................... 21,800 219,776
Banco de Galicia y Buenos Aires "B" (Commercial and private bank) .............................. 113,078 683,090
Banco de Galicia y Buenos Aires (ADR) .......................................................... 15,572 378,833
Banco del Sud "B" * (Regional commercial bank) ................................................. 6,900 95,579
Compania Interamericana de Automoviles S.A. (Automobile manufacturer) .......................... 163,150 652,695
Cresud S.A. Comercial* (Agricultural company dealing in cattle and grains) ..................... 619,000 1,145,316
Inversiones y Representaciones S.A. (Real estate developer) .................................... 273,100 961,451
Perez Companc S.A. "B" * (Industrial conglomerate) ............................................. 108,100 876,818
Sevel Argentina S.A. "C" * (Automobile and truck manufacturer) ................................. 140,000 301,044
Siderar SAIC (Manufacturer of hot and cold rolled sheets of steel) ............................. 221,100 866,838
Telecom Argentina S.A. (ADR) (Telecommunication services) ...................................... 37,200 1,860,000
YPF S.A. "D" (Sponsored ADR) (Petroleum company) ............................................... 47,800 1,320,475
-----------
9,361,915
-----------
Botswana 0.2%
Sechaba Investment Trust Co.* (Brewery) (b) .................................................... 517,000 458,437
-----------
Brazil 15.4%
Aracruz Celulose S.A. "B" (pfd.) (Producer of eucalyptus pulp) ................................. 59,000 110,960
Aracruz Celulose S.A. (ADR) .................................................................... 57,450 1,084,364
Centrais Eletricas Brasileiras S.A. "B" (pfd.) (Electric utility) .............................. 2,596,000 1,210,791
Centrais Eletricas de Santa Catarina S.A. "B" (pfd.)* (Electric power distributor) ............. 819,215 1,155,506
Centrais Eletricas de Santa Catarina S.A. (GDR)* ............................................... 4,600 650,900
Companhia Cervejaria Brahma (pfd.) (Leading beer producer and distributor) ..................... 1,966,000 1,337,534
Companhia Energetica de Minas Gerais (pfd.)* (Electric power utility) .......................... 25,319,000 1,154,705
Companhia Riograndense Telecomunicacoes S.A.* (Telecommunication services) ..................... 1,785,000 2,349,060
Companhia Siderurgica Paulista "B" (pfd.)* (Steel producer) .................................... 1,751,000 1,201,965
Companhia Vale do Rio Doce (pfd.) (Diverse mining and industrial complex) ...................... 62,800 1,591,481
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 -- SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrias Klabin de Papel e Celulose S.A. (pfd.) (Producer of papers and paper products,
newsprint, and cardboard boxes) ............................................................... 1,690,000 1,748,084
Lojas Renner S.A. (pfd.) (Specialty retailer of apparel, cosmetics, electronics, household
appliances and furniture) ..................................................................... 13,600,000 818,468
Petroleo Brasileiro S.A. (pfd.) (Petroleum company) ............................................ 14,845,000 3,119,900
Saraiva S.A. (pfd.)* (Book publisher) .......................................................... 96,000 726,692
Telecomunicacoes Brasileiras S.A. (ADR) (Telecommunication services) ........................... 16,700 1,916,325
Telecomunicacoes Brasileiras S.A. .............................................................. 50,121,000 5,396,450
Telecomunicacoes de Minas Gerais (voting) (Telecommunication services) ......................... 15,530 2,206
Telecomunicacoes de Sao Paulo S.A. (pfd.) (Telecommunication services) ......................... 910,000 258,423
Telecomunicacoes do Parana S.A. (pfd.) (Telecommunication services) ............................ 2,081,000 1,428,492
Telecomunicacoes do Rio Janeiro S.A. (pfd.)* (Telecommunication services) ...................... 9,407,000 1,565,696
Usinas Siderurgicas de Minas Gerais S.A. (pfd.) (Non-coated flat products and electrolytic
galvanized products) .......................................................................... 1,370,000,000 1,623,207
-----------
30,451,209
-----------
Canada 2.2%
Corriente Resources, Inc.* (Mining and processing of gold, bismuth, tin and tungsten
in South America) ............................................................................. 313,400 2,747,647
Corriente Resources, Inc. Special Warrants (expire 2/18/98)* (b) ............................... 22,000 206,262
Etruscan Enterprises Ltd.* (Exploration and development of gold prospect in Nigeria) ........... 95,000 421,542
Kazakhstan Minerals Corp.* (Mineral exploration in Kazakhstan) ................................. 76,700 164,905
Ouraminas Minerals Inc.* (Gold exploration in Brazil) .......................................... 290,000 290,571
Seven Seas Petroleum, Inc.* (Oil and gas exploration) .......................................... 13,000 140,400
Solitario Resources Corp.* (Precious and base metals exploration company primarily
in Argentina and Peru) ........................................................................ 114,100 375,638
-----------
4,346,965
-----------
Chile 3.0%
Chilgener S.A. (ADR) (Electricity generator and supplier) ...................................... 7,900 225,150
Enersis S.A. (ADR) (Generator and distributor of electricity in Chile and Argentina) ........... 19,800 623,700
Laboratorio Chile S.A. (ADR) (Manufacturer and distributor of off-patent pharmaceutical
products) ..................................................................................... 23,400 514,800
Madeco, S.A. (ADR) (Manufacturer of copper and aluminum products for various industrial
and consumer uses) ............................................................................ 28,900 791,138
Santa Isabel S.A. (Supermarket chain) .......................................................... 17,000 414,375
Sociedad Quimica y Minera de Chile S.A. (ADR) (Producer of fertilizer, iodine and
industrial chemicals) ......................................................................... 23,100 1,368,675
Vina Concha y Toro S.A. (ADR) (Wine producer) .................................................. 58,300 1,902,038
-----------
5,839,876
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 -- SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Croatia 2.8%
Pliva D.D. (GDR)* (Pharmaceutical company) ..................................................... 157,720 2,586,608
Zagrebacka Banka (GDR)* (Commercial banking) ................................................... 82,700 2,925,513
-----------
5,512,121
-----------
Egypt 8.3%
Al Ahram Beverage Co. (GDR)* (Beverage company) ................................................ 71,400 1,349,455
Commercial International Bank (Commercial bank) ................................................ 23,000 528,465
Commercial International Bank (GDR) ............................................................ 65,500 1,473,750
Eastern Tobacco Company (Maker of tobacco products) ............................................ 68,220 1,728,017
Egypt Financial & Industrial Co.* (Fertilizer producer) ........................................ 24,150 1,573,759
Egyptian International Pharmaceutical Co.* (Pharmaceutical company) ............................ 24,200 1,525,341
Heliopolis Housing* (Property developer) ....................................................... 2,400 314,564
Helwan Portland Cement Co.* (Cement producer) .................................................. 30,700 723,380
Madinet Nasser City Housing Co.* (Real estate development company) ............................. 10,825 1,566,276
Misr International Bank (Bank) ................................................................. 2,385 464,331
North Cairo Mills, Ltd. (Flour producer) ....................................................... 26,600 1,488,505
Paints & Chemical Industries, Ltd. (Producer of paints and chemicals) .......................... 18,910 788,108
Suez Cement Co.* (Cement producer) ............................................................. 23,625 494,047
Suez Cement Co.* (GDR) ......................................................................... 23,200 431,520
Torrah Portland Cement Co. (Cement producer) ................................................... 67,650 1,912,832
-----------
16,362,350
-----------
France 0.4%
Bouygues Offshore S.A.* (Offshore and onshore oil and gas production construction
and maintenance services) ..................................................................... 30,100 768,225
Ghana 0.3%
Ashanti Goldfields Co., Ltd. (GDR) (Leading gold producer) ..................................... 4,889 58,057
Social Security Bank Ltd.* (Full service commercial bank) ...................................... 804,000 518,315
-----------
576,372
-----------
Hong Kong 0.8%
Moulin International Holding Ltd. (Manufacturer of optical products) ........................... 882,000 671,761
Sinocan Holdings Ltd. (Manufacturer of three-piece cans for beverage and food industries) ...... 2,307,000 915,772
-----------
1,587,533
-----------
Hungary 4.8%
Danubius Hotel & Spa Rt* (Hotel operator) ...................................................... 53,800 1,708,544
EGIS Rt (Pharmaceutical company) ............................................................... 22,600 1,435,431
Graboplast Rt (Producer of home improvement materials, artificial leather and book bindings) ... 39,129 1,793,247
Mezogep Rt* (Automobile parts manufacturer) .................................................... 6,000 74,739
</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>
Pannonplast Rt (Manufacturer of plastic products from PVC, polypropylene, polyethylene
and other raw materials) ...................................................................... 32,400 1,614,367
Pick Szeged Rt (Sausage maker) ................................................................. 17,800 1,072,084
Richter Gedeon Rt (Pharmaceutical company) ..................................................... 22,900 1,730,366
-----------
9,428,778
-----------
India 0.2%
Ashok Leyland Ltd. (GDR) (Manufacturer of medium and heavy duty commercial vehicles) ........... 44,000 324,500
-----------
Indonesia 2.7%
Darya Varia Laboratoria (Foreign registered) (Producer of medicines and pharmaceuticals) ....... 133,000 161,461
HM Sampoerna (Foreign registered) (Tobacco company) ............................................ 271,000 1,090,134
Indah Kiat Pulp & Paper (Foreign registered) (Producer of pulp and paper) ...................... 1,713,180 1,392,399
London Sumatra Indonesia (Producer of palm oil, cocoa, coffee and tea) ......................... 725,000 1,872,171
Panin Bank (Foreign registered) (Bank) (b) ..................................................... 340,000 482,716
Putra Surya Multidana* (Manufacturer of motorcycles and automobile parts) ...................... 231,500 261,986
-----------
5,260,867
-----------
Israel 0.2%
Makhteshim Chemical Works (Chemical producer) .................................................. 57,600 358,696
-----------
Jordan 0.3%
Arab Potash Co.* (Salt and chemical producer) .................................................. 26,500 213,047
Jordan Cement Factories* (Cement producer) ..................................................... 62,375 327,271
-----------
540,318
-----------
Kenya 0.9%
Firestone East Africa Ltd. (Tire manufacturer) ................................................. 930,000 458,421
Sasini Tea & Coffee Ltd. (Tea and coffee grower and processor) ................................. 472,722 655,899
Uchimi Supermarket Ltd. (Supermarket operator) ................................................. 930,000 666,408
-----------
1,780,728
-----------
Korea 1.0%
Chosun Brewery Co., Ltd. (Brewery) ............................................................. 31,320 825,135
Korea Electric Power Co. (Electric utility) .................................................... 8,100 241,547
Samsung Electronics Co., Ltd. (Major electronics manufacturer) ................................. 13,600 923,946
-----------
1,990,628
-----------
Lebanon 1.4%
Banque Audi SAL (GDR)* (Bank) .................................................................. 36,600 823,500
Banque Libanaise pour le Commerce SAL (GDR)* (Commercial bank) ................................. 106,000 1,886,795
Solidere (GDR)* (Central Beirut reconstruction and development) ................................ 6,600 107,250
-----------
2,817,545
-----------
</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>
Malaysia 0.3%
Arab Malaysian Finance Bhd. (Foreign registered) (Licensed finance company) .................... 62,000 135,830
Arab Malaysian Finance Bhd. Rights* ............................................................ 124,000 247
IOI Corporation Bhd. (Processor of oil palm, rubber and cocoa) ................................. 361,000 448,644
-----------
584,721
-----------
Mexico 1.7%
Industrias Penoles S.A. (Exploration and marketing of minerals and non-ferrous metals such as
lead, zinc and silver) ........................................................................ 480,300 2,248,431
Telefonos de Mexico S.A. de C.V. "L" (ADR) (Telecommunication services) ........................ 24,400 1,006,500
-----------
3,254,931
-----------
Morocco 1.6%
Banque Marocaine du Commerce Exterieur S.A.* (Commercial bank) ................................. 10,100 686,436
Omnium Nord Africaine (Conglomerate) ........................................................... 27,400 2,383,172
Societe Nationale d'Investissements* (Conglomerate, various joint ventures) .................... 1,300 109,247
-----------
3,178,855
-----------
Oman 1.6%
Bank Muscat Al Ahla Al Omani* (Commercial bank) ................................................ 80,500 1,066,350
National Bank of Oman Ltd.* (Commercial bank) .................................................. 63,000 1,079,986
Oryx Fund, Ltd. (Mutual fund domiciled in Guernsey, investing in the Middle East) .............. 79,500 1,103,058
-----------
3,249,394
-----------
Papua New Guinea 1.4%
Orogen Minerals Ltd. (Investment company with controlling interest in Papua New Guinea gold
and oil companies) ............................................................................ 289,000 666,042
Orogen Minerals Ltd. (GDR) ..................................................................... 44,400 1,032,300
Southern Pacific Interoil Co. Warrants (expire 5/31/97)* (Oil producer) (b) .................... 70,300 1,001,775
-----------
2,700,117
-----------
Peru 7.3%
CPT Telefonica del Peru S.A. (ADR) (Telecommunication services) ................................ 14,100 338,400
Cementos Lima S.A. "T" (Cement producer) ....................................................... 115,200 2,096,510
Cementos Norte Pasasmayo S.A. (Cement producer) ................................................ 50,230 76,335
Compania Peruana de Telefonos S.A. "B" (Public and cellular telephone services) ................ 574,500 1,383,974
Credicorp Ltd. (Holding company providing a full range of financial services) .................. 79,560 1,670,760
Edegel S.A. "B" (Electric power utility) ....................................................... 3,947,637 1,925,677
Enrique Ferreyros y Cia. (Machinery manufacturer) .............................................. 1,251,751 1,221,220
Luz del Sur S.A. "B" (Electric power distributor) .............................................. 491,000 584,041
Minas Buenaventura S.A. "A" (Mining company) ................................................... 211,400 1,987,081
Minas Buenaventura S.A.* (ADR) ................................................................. 2,300 50,025
</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>
Minera Milpo "T" * (Mining company) ............................................................ 108,500 924,184
Minsur S.A. "T" * (Tin mining company) ......................................................... 151,501 623,627
Peru Pacifico* (Food producer) ................................................................. 1,035,913 1,477,099
-----------
14,358,933
-----------
Philippines 5.5%
Aboitiz Equity Ventures Inc.* (Conglomerate: electricity, infrastructure, shipbuilding) ........ 14,818,000 1,292,431
Ayala Corp. "B" (Industrial conglomerate) ...................................................... 629,000 441,278
C & P Homes, Inc. (Home construction company) .................................................. 3,843,000 1,457,338
DMCI Holdings, Inc.* (Construction and property development company) ........................... 2,496,500 1,278,072
Equitable Banking Corp.* (Universal bank) ...................................................... 203,000 792,909
HI Cement Corp.* (Manufactures two kinds of cement: portland cement and pozzolan cement) ....... 900,000 300,341
International Container Terminal Services, Inc.* (Containerized cargo handling firm) ........... 2,908,500 1,709,585
Ionics Circuit Inc.* (Manufacturer of electronic components) ................................... 279,000 169,283
Manila Electric Co. "B" (Electric utility) ..................................................... 87,600 544,801
Metropolitan Bank and Trust Company (Commercial bank and trust company) ........................ 55,544 1,137,420
Mondragon International Philippines, Inc.* (Wholesale and direct selling of clothing, housewares
and homecare products) ........................................................................ 2,503,000 901,725
Philippine Savings Bank* (Bank) ................................................................ 270,200 389,367
SM Prime Holdings Corp. (Leader in commercial center operations) ............................... 1,630,000 426,507
-----------
10,841,057
-----------
Poland 10.2%
Amica* (Manufacturer of household appliances) (b) .............................................. 60,000 521,657
Bank Przemyslowo Handlowy (Bank) ............................................................... 24,498 1,235,356
Bank Rozwoju Eksportu S.A. (Export bank) ....................................................... 56,900 1,367,183
Bank Slaski S.A. (Bank) ........................................................................ 15,500 1,283,908
Budimex S.A.* (Construction of apartment houses and sewage treatment facilities) ............... 29,500 321,767
Bydgoska Fabryka Kabli S.A. (Manufacturer of cables, wires and insulating materials) ........... 174,500 1,324,059
Computerland Poland S.A.* (Provider of computer services and systems) .......................... 76,700 2,230,920
Debica S.A. "A" * (Tire manufacturer) .......................................................... 39,200 979,071
Elektrim Spolka Akcyjna S.A. (Manufacturer of power equipment, electrical machinery
and apparatus) ................................................................................ 67,800 606,620
ITI Group S.A.* (Telecommunication services) (b) ............................................... 6,715 1,309,425
Krosno S.A. (Manufacturer of wide range of glassware) .......................................... 45,000 697,123
Kutnowskie Zaklady Farmaceutyczne Polfa S.A.* (Producer of pharmaceuticals, veterinary
medicines, food components) ................................................................... 46,900 1,823,807
Mostostal Zabrze Holding S.A. (Construction company) ........................................... 271,100 1,979,896
Poland Privatization Vouchers * (Exchangeable into shares of National Investment Funds) ........ 13,800 595,542
</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>
Polifarb Debica S.A.* (Chemical producer) (b) .................................................. 389 7,994
Wielkopolski Bank Kredytowy S.A. (Commercial bank) ............................................. 371,200 2,112,425
Zaklady Metali Lekkich Kety* (Manufacturer of aluminum casting alloys and products) ............ 82,000 1,788,808
-----------
20,185,561
-----------
Portugal 2.0%
Cimentos de Portugal S.A. (Manufacturer of cement, ready mix concrete and aggregates) .......... 34,100 733,249
Portugal Telecom S.A. (Telecommunication services) ............................................. 37,000 1,362,531
Semapa S.A.* (Cement producer) ................................................................. 51,700 1,105,755
Telecel-Comunicacoes Pessoais, S.A.* (Cellular communication services) ......................... 8,901 766,101
-----------
3,967,636
-----------
Romania 0.1%
Societe Generale Romania Fund* (Investment company) (b) ........................................ 2,500 250,000
-----------
Slovenia 0.7%
SKB Banka D.D. (GDR)* (Commercial bank) ........................................................ 37,920 1,336,680
-----------
South Africa 1.0%
Sasol Ltd. (Coal mining and processing, crude oil exploration and refining,
petrochemical production) ..................................................................... 160,000 2,051,051
-----------
Switzerland 0.6%
Holderbank Financiere Glaris AG (Bearer) (Cement producer) ..................................... 715 556,569
Phoenix Mecano AG (Bearer) (Manufacturer of housings and components for computers) ............. 1,350 618,426
-----------
1,174,995
-----------
Taiwan 0.8%
Acer Inc. (Manufacturer of desktop and portable personal computers) ............................ 344,000 876,790
Far Eastern Department Stores, Ltd. (Department store chain) ................................... 389,455 698,372
-----------
1,575,162
-----------
Thailand 0.7%
PTT Exploration and Production Co., Ltd. (Foreign registered) (Petroleum exploration and
production) ................................................................................... 110,900 1,417,958
United Kingdom 0.8%
James Finlay PLC (Tea producer) ................................................................ 646,000 1,151,243
Reunion Mining PLC* (Mineral exploration and copper production) ................................ 203,000 417,673
-----------
1,568,916
-----------
United States 2.3%
Aramex International Ltd.* (Express delivery and freight forwarding in the Mideast and India) .. 35,700 334,688
Benton Oil & Gas Co.* (Oil and gas exploration, development and production) .................... 94,000 1,374,742
Freeport McMoRan Copper & Gold, Inc. "A" (U.S. company mining in Indonesia) .................... 11,000 308,000
Triton Energy Ltd.* (Independent oil and gas exploration and production company) ............... 44,400 1,631,700
</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>
Zoran Corp.* (Manufacturer of integrated circuits and software) ................................ 61,000 793,000
-----------
4,442,130
Zimbabwe 2.8%
Delta Corp. (Brewery) .......................................................................... 551,096 876,146
Meikles Africa Ltd.* (GDR) (Hotel operator) .................................................... 965,400 2,244,555
National Merchant Bank of Zimbabwe Ltd* (Commercial bank) ...................................... 342,500 967,563
Tanganda Tea Co., Ltd. (Tea producer and distributor) .......................................... 181,500 104,200
Wankie Colliery Co., Ltd. (Coal mining at Hwange) .............................................. 1,965,000 937,202
Zimbabwe Sun (Operator of hotels and other tourist facilities) ................................. 1,180,847 417,187
-----------
5,546,853
- -----------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $158,858,556) 179,452,013
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $176,507,556) (a) 197,101,013
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $176,813,204. At April 30,
1997, net unrealized appreciation for all securities based on tax cost was
$20,287,809. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of
$28,560,306 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $8,272,497.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $4,238,266 (2.1% 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 April 30, 1997 aggregated $4,132,652. 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.
16 -- SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1997
Assets
- --------------------------------------------------------------------------------
Investments, at market (identified cost
$176,507,556) .................................... $ 197,101,013
Cash ............................................... 1,346
Foreign currency, at value (cost $3,041,301) ....... 3,039,000
Receivable for investments sold .................... 1,356,950
Dividends and interest receivable .................. 570,979
Receivable for Fund shares sold .................... 537,579
Deferred organization expenses ..................... 24,528
Due from Adviser ................................... 330,918
Other assets ....................................... 1,586
-------------
Total assets ....................................... 202,963,899
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased .................. 4,878,936
Payable for Fund shares redeemed ................... 71,714
Accrued management fee ............................. 394,392
Other payables and accrued expenses ................ 266,949
-------------
Total liabilities .................................. 5,611,991
---------------------------------------------------------------------
Net assets, at market value $ 197,351,908
---------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
Net assets consist of:
Accumulated net investment loss .................... (2,617)
Unrealized appreciation (depreciation) on:
Investment securities .............................. 20,593,457
Foreign currency related transactions .............. 2,506
Accumulated net realized loss ...................... (823,954)
Paid-in capital .................................... 177,582,516
---------------------------------------------------------------------
Net assets, at market value $ 197,351,908
---------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per
share ($197,351,908 / 12,765,188 shares of capital
stock outstanding, $.01 par value, 100,000,000 -------------
shares authorized) ............................... $15.46
-------------
The accompanying notes are an integral part of the financial statements.
17 -- SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
Statement of Operations
for the six months ended
April 30, 1997
Investment Income
- --------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of
$60,147) ........................................ $ 1,339,624
Interest .......................................... 300,326
--------------
1,639,950
--------------
Expenses:
Management fee .................................... 849,342
Custodian and accounting fees ..................... 424,017
Services to shareholders .......................... 269,394
Directors' fees and expenses ...................... 26,014
Registration fees ................................. 65,715
Auditing .......................................... 4,375
Reports to shareholders ........................... 20,770
Legal ............................................. 5,902
Amortization of organization expense .............. 3,028
Other ............................................. 1,689
--------------
Total expenses before reductions .................. 1,670,246
Expense reductions ................................ (330,918)
--------------
Expenses, net ..................................... 1,339,328
---------------------------------------------------------------------
Net investment income 300,622
---------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- --------------------------------------------------------------------------------
Net realized loss from:
Investments ....................................... (177,575)
Foreign currency related transactions ............. (127,479)
--------------
(305,054)
--------------
Net unrealized appreciation (depreciation)
during the period on:
Investments ....................................... 18,981,945
Foreign currency related transactions ............. 3,984
--------------
18,985,929
---------------------------------------------------------------------
Net gain on investment transactions 18,680,875
---------------------------------------------------------------------
---------------------------------------------------------------------
Net increase in net assets resulting from
operations $ 18,981,497
---------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
18 -- SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
May 8, 1996
(commencement of
Six Months operations)
Ended to
April 30, October 31,
Increase (Decrease) in Net Assets 1997 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ................................ $ 300,622 $ (55,079)
Net realized loss ........................................... (305,054) (615,373)
Net unrealized appreciation on investment transactions
during the period ......................................... 18,985,929 1,610,034
-----------------------------------
Net increase in net assets resulting from operations ........ 18,981,497 939,582
-----------------------------------
Distributions to shareholders from net investment income .... (178,523) --
-----------------------------------
Fund share transactions:
Proceeds from shares sold ................................... 118,813,531 76,964,590
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................. 144,724 --
Cost of shares redeemed ..................................... (16,326,218) (2,135,475)
Redemption fees ............................................. 123,204 23,796
-----------------------------------
Net increase in net assets from Fund share transactions ..... 102,755,241 74,852,911
-----------------------------------
Increase in net assets ...................................... 121,558,215 75,792,493
Net assets at beginning of period ........................... 75,793,693 1,200
Net assets at end of period (including accumulated net ------------------------------------
investment loss of $2,617 and $124,716, respectively) ..... $197,351,908 $75,793,693
------------------------------------
Other information
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ................... 5,896,839 100
-----------------------------------
Shares sold ................................................. 7,930,301 6,064,272
Shares issued to shareholders in reinvestment of
distributions ............................................. 10,595 --
Shares redeemed ............................................. (1,072,547) (167,533)
-----------------------------------
Net increase in Fund shares ................................. 6,868,349 5,896,739
------------------------------------
Shares outstanding at end of period ......................... 12,765,188 5,896,839
------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 -- 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
Six Months (commencement)
Ended of operations) to
April 30, October 31,
1997 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period ................................................. $12.85 $12.00
-------------------------------
Income from investment operations:
Net investment income (loss) ......................................................... (.03) (.02)
Net realized and unrealized gain on investments ...................................... 2.60 0.86
-------------------------------
Total from investment operations ..................................................... 2.63 0.84
-------------------------------
Less distributions from net investment income ........................................ (.03) --
Redemption fees ...................................................................... 0.01 0.01
-------------------------------
Net asset value, end of period ....................................................... $15.46 $12.85
- -----------------------------------------------------------------------------------------------------------------------
Total Return (%) (c) (d) ............................................................. 20.53* 7.08**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............................................... 197 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 (%) 2.49* 3.79*
Ratio of net investment income (loss) to average daily net assets (%) ................ .45* (.32)*
Portfolio turnover rate (%) .......................................................... 23.5* 19.5*
Average commission rate paid (b) ..................................................... $.0008 $.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 of the 2% redemption fee on shares
held less than one year.
* Annualized
** Not annualized
20 -- SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Emerging Markets Growth Fund ("the Fund") is a diversified series of
Scudder International Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed by the Fund in the preparation of its
financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq System, for which
there have been sales, are valued at the most recent sale price reported on such
system. If there are no such sales, the value is the high or "inside" bid
quotation. Securities which are not quoted on the Nasdaq System but are traded
in another over-the-counter market are valued at the most recent sale price on
such market. If no sale occurred, the security is then valued at the calculated
mean between the most recent bid and asked quotations. If there are no such bid
and asked quotations, the most recent bid quotation shall be used.
Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost. All other securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
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.
21 -- 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.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. The Fund paid
no federal income taxes and no federal income tax provision was required.
At October 31, 1996, the Fund had a net tax basis capital loss carryforward of
approximately $481,000, which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2004, the expiration date, whichever occurs first.
Redemption Fees. In general, shares of the Fund may be redeemed at net asset
value. However, upon the redemption or exchange of shares held by shareholders
for less than one year, a fee of 2% of the current net asset value of the shares
will be assessed and retained by the Fund for the benefit of the remaining
shareholders. The redemption fee is included as an addition to paid-in capital.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax. Earnings
and profits distributed to shareholders on redemption of Fund shares ("tax
equalization") may be utilized by the Fund, to the extent permissible, as part
of the Fund's dividends paid deduction on its federal income tax return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. The differences
primarily relate to investments in forward contracts, passive foreign investment
companies, foreign denominated investments, and certain securities sold at a
loss. As a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
22 -- SCUDDER EMERGING MARKETS GROWTH FUND
<PAGE>
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 six months ended April 30, 1997, purchases and sales of investment
securities (excluding short-term investments) aggregated $102,528,293 and
$14,943,245, 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
six month period ended April 30, 1997, the Adviser did not impose a portion of
its management fee amounting to $330,918, and the amount imposed amounted to
$518,424.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six month period ended April 30, 1997 the amount charged by SSC aggregated
$208,153, of which $44,358 is unpaid at April 30, 1997.
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 six month period ended
April 30, 1997, the amount charged to the Fund by STC aggregated $14,105, of
which $2,895 is unpaid at April 30, 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 six month
period ended April 30, 1997, the amount charged to the Fund by SFAC aggregated
$78,443, of which $16,956 is unpaid at April 30, 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 six month
period ended April 30, 1997, Directors' fees and expenses aggregated $26,014.
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.
23 -- 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 April
30, 1997, and the related statement of operations for the six months then ended,
the statement of changes in net assets for the six months then ended and for the
period May 8, 1996 (commencement of operations) to October 31, 1996, and the
financial highlights for the six months ended April 30, 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of April 30, 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Emerging Markets Growth Fund as of April 30, 1997, the results of its
operations for the six months then ended, the changes in its net assets for the
six months then ended and for the period May 8, 1996 (commencement of
operations) to October 31, 1996 and the financial highlights for the six months
ended April 30, 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.
June 12, 1997
24 -- SCUDDER EMERGING MARKETS GROWTH FUND
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25-SCUDDER EMERGING MARKETS GROWTH FUND
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26-SCUDDER EMERGING MARKETS GROWTH FUND
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Officers and Directors
Daniel Pierce*
Chairman of the Board and Director
Nicholas Bratt*
President and Director
Paul Bancroft III
Director; Venture Capitalist and Consultant
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; President, Exeter Capital Management Corporation
William H. Gleysteen, Jr.
Director; Consultant;
Guest Scholar, Brookings Institute
Dudley H. Ladd*
Director
William H. Luers
Director; President, The Metropolitan
Museum of Art
Wilson Nolen
Director; Consultant
Kathryn L. Quirk*
Director, Vice President and Assistant Secretary
Dr. Gordon Shillinglaw
Director; Professor Emeritus of
Accounting, Columbia
University Graduate School of Business
Robert W. Lear
Honorary Director; Executive-in-Residence,
Visiting Professor, Columbia University
Graduate School of Business
Robert G. Stone, Jr.
Honorary Director; Chairman Emeritus and Director, Kirby Corporation
Elizabeth J. Allan*
Vice President
Joyce E. Cornell*
Vice President
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
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
Richard W. Desmond*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
27-SCUDDER EMERGING MARKETS GROWTH FUND
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28-SCUDDER EMERGING MARKETS GROWTH FUND
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Investment Products and Services
The Scudder Family of Funds+++
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Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
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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
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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
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
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan *+++ +++
(a variable annuity)
Closed-End Funds#
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The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
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. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *Not available in all
states. +++ +++A no-load variable annuity contract provided by Charter National
Life Insurance Company and its affiliate, offered by Scudder's insurance
agencies, 1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark,
Inc., are traded on various stock exchanges.
29-SCUDDER EMERGING MARKETS GROWTH FUND
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Scudder Solutions
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Convenient ways to invest, quickly and reliably:
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<S> <C> <C>
Automatic Investment Plan AutoBuy
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:
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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:
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Automatic Withdrawal Plan AutoSell
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
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30-SCUDDER EMERGING MARKETS GROWTH FUND
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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 Developed for investors who prefer the benefits of no-load
shareholders can take advantage of a Scudder Scudder funds but want ongoing professional assistance in
Brokerage account already reserved for them, with managing a portfolio. Personal Counsel(SM) is a highly
no minimum investment. For information about customized, fee-based asset management service for
Scudder Brokerage Services, call 1-800-700-0820. 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 Funds 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 Funds Centers. Check for a Funds 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
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New From Scudder: Pathway Series
In a complex financial world, Scudder Pathway Series is a refreshingly simple concept. With one
investment, Pathway gives you instant access to broad diversification in U.S. markets and
across the globe. Select from four Portfolios -- Conservative, Balanced, Growth, or
International -- each with a distinct investment objective that can match your goals. Each
Portfolio, rather than investing in individual securities, invests in carefully selected
Scudder mutual funds.
- ------------------------------------------------------------------------------------------------------------------------------
The share price of each Pathway Series portfolio will fluctuate and the risk associated with
each portfolio is determined by the securities held in each underlying Scudder fund. 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.
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31-SCUDDER EMERGING MARKETS GROWTH FUND
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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.
