Scudder
Latin America
Fund
Semiannual Report
April 30, 1998
Pure No-Load(TM) Funds
For investors seeking long-term capital appreciation through investment
primarily in the securities of Latin American issuers.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder Latin America Fund
- --------------------------------------------------------------------------------
Total Net Assets as of
Date of Inception: 12/8/92 4/30/98: $861.2 million Ticker Symbol: SLAFX
- --------------------------------------------------------------------------------
o Scudder Latin America Fund provided a total return of 12.40% for the six-month
period ended April 30, 1998. For the five-year period ended April 30, 1998, the
Fund was ranked number one out of nine Latin American equity funds tracked by
Lipper Analytical Services, with an average annual return of 17.96% versus
10.26% for the Lipper average.^1
o The Fund concentrates its investments in companies where there is a
conservative relationship between internal cash flow and debt.
o Morningstar assigned the Fund an overall rating of four stars for its
risk-adjusted performance among 740 international equity funds as of April 30,
1998.^2
Table of Contents
3 Letter from the Fund's Chairman 17 Financial Highlights
4 Performance Update 18 Notes to Financial Statements
5 Portfolio Summary 22 Report of Independent Accountants
6 Portfolio Management Discussion 24 Officers and Directors
10 Glossary of Investment Terms 25 Investment Products and Services
11 Investment Portfolio 26 Scudder Solutions
14 Financial Statements
^1 Source: Lipper Analytical Services. The Fund was also ranked in the top 40%
of Latin American equity funds for the one-year period, with an average
annual return of 10.08% versus 7.69% for the Lipper average.
^2 Source: Morningstar. Ratings are subject to change monthly and are
calculated from a Fund's three-, five-, and ten-year average annual returns
in excess of 90-day Treasury bill returns with appropriate fee adjustments,
and a risk factor that reflects Fund performance below 90-day T-bill
returns. The Fund received a four star rating for the three- and five-year
periods among 740 international equity funds. In an investment category,
the top 10% of funds receive five stars and the next 22.5% receive four
stars. Past performance is no guarantee of future results.
2 - Scudder Latin America Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to present the semiannual report for Scudder Latin America
Fund, covering the six-month period ended April 30, 1998.
As detailed in the management discussion that begins on page, the Fund
provided a solid return of 12.40% for the six months, despite a period of
generally level performance for Latin America's stock markets, reflecting in
part the "Asian contagion" and investor concern over Latin America's dependence
on external capital. However, we expect earnings for a broad cross-section of
Latin American corporations to increase substantially in 1998, contributing to a
forecast of economic growth for the region. We believe the Fund is positioned to
take advantage of current attractive valuations and to capitalize on the
opportunities for long-term capital appreciation to be found in the region's
equity markets.
At the beginning of 1998, the Fund's investment adviser changed its name to
Scudder Kemper Investments, Inc. from Scudder, Stevens and Clark, Inc.,
reflecting the acquisition of a majority interest in Scudder by Zurich Insurance
Company, and the combining of Scudder's business with that of Zurich Kemper
Investments, Inc. We think this combination is very positive, and will provide
your Fund's management team with expanded resources in managing the Fund.
For those of you who are interested in new products and services, we would
like to take this opportunity to highlight the two most recent additions to our
growth and income category: Scudder Real Estate Investment Fund, which was
launched on April 6th, and Scudder Dividend & Growth Fund, which will begin
operations on July 17th. For further information on these new funds, please call
1-800-225-2470.
Thank you for choosing Scudder Latin America Fund to meet your investment
needs. If you have any questions regarding your Fund, please contact an Investor
Relations representative at the toll-free number above, or visit our Web site at
http://www.funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Latin America Fund
3 - Scudder Latin America Fund
<PAGE>
PERFORMANCE UPDATE as of April 30, 1998
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FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
- ------------------------------------------------
Period Ended Growth of Average
4/30/98 $10,000 Cumulative Annual
- ------------------------------------------------
SCUDDER LATIN AMERICA FUND
- ------------------------------------------------
1 Year $ 11,008 10.08% 10.08%
3 Year $ 17,786 77.86% 21.16%
5 Year $ 22,836 128.36% 17.96%
Life of Fund* $ 25,119 151.19% 18.62%
- ------------------------------------------------
IFC LATIN AMERICA INVESTABLE TOTAL RETURN INDEX
- ------------------------------------------------
1 Year $ 10,571 5.71% 5.71%
3 Year $ 15,216 52.16% 15.00%
5 Year $ 17,810 78.10% 12.23%
Life of Fund* $ 17,894 78.94% 11.53%
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*The Fund commenced operations on December 8, 1992.
Index comparisons begin December 31, 1992.
- ----------------------------------------------------------------
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 LATIN AMERICA FUND
Year Amount
- ----------------------
12/92* $10,000
'93 $11,000
'94 $17,296
'95 $14,123
'96 $17,315
'97 $22,820
'98 $25,119
IFC LATIN AMERICA INVESTABLE
TOTAL RETURN INDEX
Year Amount
- ----------------------
12/92* $10,000
'93 $10,047
'94 $15,042
'95 $11,760
'96 $13,412
'97 $16,928
'98 $17,894
Yearly periods ended April 30
The IFC Latin America Investable Total Return Index is prepared by
International Finance Corporation. It is an unmanaged, market
capitalization-weighted representation of stock performance in seven Latin
American markets, and measures the returns of stocks that are legally and
practically available to investors. Unlike Fund returns, Index returns do not
reflect fees or expenses.
- ----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- ----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended April 30
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1993* 1994 1995 1996 1997 1998
-----------------------------------------------------------------------
NET ASSET VALUE......... $ 13.20 $ 20.65 $ 16.21 $ 19.70 $ 25.65 $ 26.80
INCOME DIVIDENDS........ $ -- $ .06 $ -- $ .15 $ .26 $ .25
CAPITAL GAINS
DISTRIBUTIONS........... $ -- $ .06 $ .73 $ -- $ -- $ 1.14
FUND TOTAL RETURN (%)... 10.00** 57.23 -18.34 22.60 31.79 10.08
INDEX TOTAL RETURN (%).. .47 49.71 -21.85 14.04 26.20 5.71
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results. Investment return and
principal value will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than when purchased. If the Adviser had not maintained the
Fund's expenses, the total returns for the life of Fund period would have been
lower.
**Total return does not reflect the effect to the shareholder of the applicable
redemption fees.
4 - Scudder Latin America Fund
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PORTFOLIO SUMMARY as of April 30, 1998
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GEOGRAPHICAL
(Excludes 6% Cash Equivalents)
- ---------------------------------------------------------------------------
Brazil 44%
Mexico 36%
Argentina 12%
Chile 2%
Peru 2%
Other 4%
- --------------------------------------
100%
- --------------------------------------
The Fund is overweighted in
Brazil at the expense of Chile.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS
(Excludes 6% Cash Equivalents)
- --------------------------------------------------------------------------
Consumer Staples 26%
Communications 24%
Financial 13%
Manufacturing 9%
Utilities 9%
Energy 8%
Consumer Discretionary 5%
Other 6%
- --------------------------------------
100%
- --------------------------------------
Deregulation has provided
investment opportunities in the
utility and energy 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
(52% of Portfolio)
- --------------------------------------------------------------------------
1. TELECOMUNICACOES BRASILEIRAS S.A.
Telecommunication services in Brazil
2. TELEFONOS DE MEXICO S.A. DE C.V.
Telecommunication services in Mexico
3. KIMBERLY CLARK DE MEXICO S.A. DE C.V.
Producer of consumer paper products in Mexico
4. BANCO ITAU S.A.
Bank in Brazil
5. PANAMERICAN BEVERAGES, INC.
Soft drink bottler in Mexico
6. COMPANHIA ENERGETICA DE MINAS GERAIS
Electric power utility in Brazil
7. CIFRA S.A. DE C.V.
Discount retailer in Mexico
8. BANCO BRADESCO S.A.
Bank in Brazil
9. PETROLEO BRASILEIRO S.A.
Petroleum company in Brazil
10. YPF S.A.
Petroleum company in Argentina
Top holdings such as Telebras
and CIFRA S.A. possess strong
balance sheets that reduce their
dependence on external
financing.
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 Latin America Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
The Scudder Latin America Fund provided a total investment return of 12.40% for
the six months ended April 30, 1998. This compared with a total return of 6.53%
for the unmanaged International Finance Corporation's Latin America Investable
Total Return Index for the same period. Details of the performance of the
country components of the IFC Index for the six months are provided in the chart
below.
Asian Contagion Promotes Investor Caution
Latin American stock markets have been in a holding pattern for the past six
months. Earnings for a broad sample of leading Latin American corporations are
estimated to increase by 19% this year, according to Morgan Stanley Dean Witter,
so valuations remain comparatively attractive, especially when one looks at
other stock markets around the world. A number of economists forecast economic
growth for the Latin American region of 3.5% in 1998, following a 5.3% increase
last year. Consumer price inflation for the region continues on a downtrend and
will likely average under 8% for the year. Last year it was almost 9%. Details
of our estimates of economic growth for the major Latin American countries are
shown in the table on page 7.
THE PRINTED DOCUMENT CONTAINS A HORIZONTAL BAR CHART HERE
BAR CHART TITLE:
Investment Returns in Latin American
Stock Markets
BAR CHART PERIOD:
(Six months ended April 30, 1998; Returns in $U.S.)
BAR CHART DATA:
------------------------------------------------
Argentina 12.3%
Brazil 19.9%
Chile -12.2%
Colombia -26.2%
Mexico 10.7%
Peru 0.6%
Venezuela -39.8%
IFC Latin America
Investable Total Return Index 6.5%
------------------------------------------------
Source: IFC Emerging Markets Database.
Past performance is no guarantee of future results.
Stock prices are mainly, but not exclusively, influenced by current and
prospective earnings. The unwillingness of investors to bid up Latin American
securities in the face of favorable earnings expectations and a positive
regional economic growth outlook underscores the extent to which attitudes are
now influenced by a broader range of risk considerations. With respect to Latin
America specifically and emerging markets generally, investors appear to be
concentrating more on the sources of growth than growth rates themselves. As a
result, earnings growth rates and investment valuations are being calculated
with more cautious assumptions and a greater margin of safety than was required
only a few years ago. This is a clear example of how the so-called "Asian
contagion" has impacted investment attitudes toward Latin America.
One concern raised by the Asian debt crisis is how Latin America financed its
economic growth and development. Because of its low rate of domestic savings,
the region historically has depended on external capital to fill the gap between
6 - Scudder Latin America Fund
<PAGE>
======================================================
Economic Growth Forecasts (GDP)
------------------------------------------------------
Country 1996 1997 1998*
------------------------------------------------------
Argentina 4.4% 8.5% 5-6%
Brazil 2.9% 3.0% 1-2%
Chile 7.2% 7.1% 5-6%
Colombia 2.1% 3.1% 3-4%
Mexico 5.1% 7.0% 4-5%
Peru 2.8% 7.3% 3-4%
Venezuela (1.6%) 5.1% 0-1%
======================================================
* Estimated. Estimates may prove inaccurate and, even if accurate, may not
correlate with market activity.
Source: Scudder Kemper Latin America Group.
- ----------
national savings and investment spending. More often than not, external savings
entered the region in the form of short-term loans; and more often than not,
economic shocks arose from a breakdown in the smooth working of the
creditor-debtor relationship. Mexico's devaluation in 1994 and Brazil's
austerity program in 1997 are examples of the political and economic risks that
a country runs as a result of dependence on external debt.
The lackluster performance of some Latin American stock markets this year may
also reflect continuing investor concern for the risks associated with external
account imbalances. The deterioration in Brazil's fiscal accounts and the lack
of convincing progress in dealing with the country's trade and current account
deficits suggest that Brazilian authorities may have to revisit austerity
measures after this fall's presidential election. That unhappy prospect seems to
have cooled investor enthusiasm generated by progress on the privatization front
and generally good first quarter earnings reports. Argentina has increased its
external debt materially in tandem with the investment-led recovery from its
1995 slump. The deterioration in external accounts and a large fiscal deficit
have elicited well publicized criticism of Argentina's economic management by
the International Monetary Fund (IMF). This contrasts poignantly with the IMF's
assurances that all was well in southeast Asia up to the point of economic
collapse.
Focus on Companies with Conservative Debt Levels
If external debt burdens are intrinsic to the risk of location for the investor,
then balance sheet integrity should be a guiding principle of stock selection
for the portfolio manager. The Latin America Fund's largest investment is
Telebras, the government-controlled holding company for Brazil's operating
telephone companies. Telebras has a solid balance sheet, with a net cash
position equivalent to $1.3 billion at the end of 1997. Mexico's leading
retailer, CIFRA S.A. (controlled by Wal-Mart), has no debt whatsoever on its
books. At the end of the year, moreover, it held the equivalent of $805 million
in cash -- almost double its annual cash flow.
Not all of the portfolio's companies possess the high degree of financial
integrity shown by Telebras and CIFRA, but we do insist that they demonstrate a
conservative relationship between internal cash flow and debt. Most of the
7 - Scudder Latin America Fund
<PAGE>
companies in the portfolio could repay all of their net debt with well under
four years' worth of internally generated cash flow. They are not hostage to the
capital markets or the willingness of lenders to roll over their loans with
respect to servicing balance sheet obligations. As a result, the cash generated
by companies in the Fund's portfolio is reinvested in the businesses mainly for
the benefit of shareowners and not creditors.
Another important investor concern is the potential impact of commodity price
deflation on the performance of national economies and corporate earnings. Lower
than anticipated oil prices have, for example, had a major negative impact on
the Venezuelan economy, where petroleum accounts for almost 80% of exports.
While oil accounts for only 10% of Mexico's exports, exports and domestic sales
of oil generate over 30% of the federal government's revenues.
Energy sector investments represented 8.4% of the Fund's equity portfolio on
April 30th. The Brazilian parastatal, Petrobras, was our largest holding in the
industry, accounting for just under 3.7% of equities. While Petrobras is an
importer of oil and refined petroleum products, and therefore favored by lower
global prices for oil, the company has not been highly profitable over the years
due to the heavy hand of government regulation. The deregulation of the
petroleum industry is the stock's principal driving force, not lower oil prices.
YPF S.A., the Argentine oil and gas producer, accounted for 3.5% of equity
assets on April 30th. The negative impact of lower prices for its oil and gas
exports has been contained by the benefits of the company's restructuring and
cost-cutting efforts and by the slow pace at which lower energy prices have been
passed on to domestic consumers.
The Fund's exposure to commodity price deflation risks is company specific
rather than country specific. As the country allocation table below indicates,
Venezuela is a small part of the IFC Latin America Index and an even smaller
part of the Fund's portfolio. The Fund is significantly underweight in Chile,
although we did increase our investment in Cia. de Telecomunicaciones de Chile,
S.A. during recent stock market weakness prompted by the decline in copper
prices. The Fund also has a low exposure to those Mexican exporters that may be
vulnerable to lower prices for such commodities as steel and petrochemicals.
======================================================
Country Weightings
(April 30, 1998)
------------------------------------------------------
Country Scudder Latin IFC Index
America Fund* Weighting
------------------------------------------------------
Argentina 12.2% 12.1%
Brazil 44.3% 32.4%
Chile 2.2% 14.4%
Colombia 1.6% 2.7%
Mexico 36.3% 33.3%
Panama 1.1% 0.0%
Peru 1.9% 3.2%
Venezuela 0.4% 1.9%
======================================================
* Excludes Fund's assets in cash equivalents.
8 - Scudder Latin America Fund
<PAGE>
Continued Volatility Expected for Near Term
Latin America's stock markets have been, and will likely remain, highly
volatile. Not all investors are comfortable with such volatility. In fairness to
Latin America, however, we should point out that volatility is mainly due to
such structural considerations as small capitalizations, concentration of
trading activity in a limited number of stocks, and the undeveloped nature of
institutional equity ownership in many countries. Volatility, at least as we
have experienced it in Latin America, should not be equated with business risk.
Nor should an economic forecast for a country be translated uncritically into a
stock market strategy, due to the dissimilarities between a country's economic
profile and the structure of its stock market. For example, there are no listed
electric utilities on the Mexican stock exchange, while electric utilities
account for roughly one-half of the market capitalization of the Chilean stock
market.
There is a disconnect between economic events, stock prices and business
fundamentals in Latin America that is perhaps wider than many shareholders might
expect. For the majority of the companies in the Fund's portfolio, the price of
their securities has no impact on their profitability and growth prospects.
Those outcomes will be determined by the skill and intelligence with which
management reinvests cash flow to grow the business.
Sincerely,
Your Portfolio Management Team
/s/Edmund B. Games, Jr. /s/Tara C. Kenney
Edmund B. Games, Jr. Tara C. Kenney
/s/Paul H. Rogers
Paul H. Rogers
9 - Scudder Latin America Fund
<PAGE>
Glossary of Investment Terms
ASSET ALLOCATION The distribution of assets among the major
asset classes, such as stocks, bonds, and
money market instruments. The asset
allocation decision is based on an investor's
objective, investment horizon, and risk
tolerance. For example, an investor with a
long-term investment horizon who is
comfortable assuming additional risk in
seeking higher returns may decide to allocate
a higher proportion to stocks than bonds or
money markets.
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.
CURRENCY EXCHANGE RATE The price at which one country's currency can
be exchanged into another currency. When a
country's currency rises relative to other
currencies, this decreases the buying power
of foreign purchasers of that country's goods
and services and tends to hurt the earnings
of companies that export; by contrast, a weak
currency promotes exports. From the
perspective of a U.S. investor in overseas
securities, a weakening U.S. dollar adds to
total returns, as assets denominated in
foreign currencies then translate into more
in dollar terms; a strengthening dollar
relative to foreign currencies reduces
returns to U.S.
investors.
DIVERSIFICATION The spreading of risk by investing in several
asset categories, industry sectors, or
individual securities. An investor with a
broadly diversified portfolio will receive
some protection from the price declines of an
individual asset class.
INTERNATIONAL MONETARY An organization focused on lowering trade
FUND (IMF) barriers and stabilizing currencies. While
helping developing nations pay their debts,
the IMF usually imposes tough guidelines
aimed at lowering inflation, cutting imports,
and raising exports.
WEIGHTING (OVER/UNDER) Refers to the allocation of assets -- usually
in terms of sectors, industries, or countries
-- within a portfolio relative to the
portfolio's benchmark index or investment
universe.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
10 - Scudder Latin America Fund
<PAGE>
Investment Portfolio as of April 30, 1998
<TABLE>
<CAPTION>
Principal Market
Amount (U.S.$) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Short Term Notes 5.5%
- ------------------------------------------------------------------------------------------------------------------------------
-----------
Federal Home Loan Mortgage Corp., 5/1/98 (Cost $46,000,000) ........................... 46,000,000 46,000,000
-----------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 94.5%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 11.5%
BI S.A. "A" (Venture capital company) (b) ............................................. 3,000,000 3,240,000
Bagley y Cia Ltd. S.A. "B" (Producer of cookies and biscuits) ......................... 2,868,651 5,738,134
Nobleza Piccardo S.A. (Tobacco company) (b) ........................................... 1,004,177 5,071,829
Perez Companc S.A. "B" (Industrial conglomerate) ...................................... 1,701,565 10,227,889
Quilmes Industrial S.A. (Leading beer distributor) .................................... 982,443 8,547,254
Quilmes Industrial S.A. (ADR) ......................................................... 730,500 8,081,156
Telecom Argentina S.A. "B" (ADR) (Telecommunication services) ......................... 440,000 15,840,000
Telefonica de Argentina S.A. "B" (ADR) (Telecommunication services) ................... 330,000 12,725,625
YPF S.A. "D" (ADR) (Petroleum company) ................................................ 800,000 27,900,000
-----------
97,371,887
-----------
Brazil 41.9%
Aracruz Celulose S.A. "B" (ADR) (Producer of eucalyptus kraft pulp) ................... 780,400 12,291,300
Banco Bradesco S.A. (pfd.) (Commercial bank) .......................................... 3,756,277,111 34,486,871
Banco Itau S.A. (pfd.) (Bank) ......................................................... 70,009,600 47,136,267
Centrais Eletricas Brasileiras S.A. "B" (pfd.) (Electric utility) ..................... 200,000,000 8,920,561
Companhia Cervejaria Brahma (pfd.) (Leading beer producer and distributor) ............ 40,046,569 26,087,259
Companhia Energetica de Minas Gerais (pfd.) (Electric power utility) .................. 800,875,000 38,865,529
Companhia Paranaense de Energia "B" (pfd.) (Electric utility) ......................... 620,400,000 8,679,579
Companhia Paranaense de Energia (voting) .............................................. 800,600,400 9,240,524
Companhia Paulista de Forca e Luz (Electric power utility) ............................ 13,880,000 1,917,580
Companhia Paulista de Forca e Luz (pfd.) .............................................. 12,120,000 1,421,145
Companhia Paulista de Forca e Luz (pfd.) (New)* ....................................... 28,793 2,832
Companhia Suzano de Papel e Celulose S.A. (pfd.) (Paper products) ..................... 2,689,840 4,092,442
Empresa Brasileira de Compressores S.A. (pfd.) (Manufacturer of electrical equipment) . 3,769,000 1,581,883
Industrias Klabin de Papel e Celulose S.A. (pfd.) (Producer of paper and paper
products) ........................................................................... 17,080,000 10,752,940
Lojas Americanas S.A. (voting) (Discount department store chain)* ..................... 439,708,380 3,844,781
Petroleo Brasileiro S.A. (pfd.) (Petroleum company) ................................... 115,000,000 29,161,020
S/A White Martins (voting) (Chemical company) ......................................... 3,524,655 5,116,012
Telecomunicacoes Brasileiras S.A. (ADR) (Telecommunication services) .................. 660,000 80,396,250
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Latin America Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Telecomunicacoes do Parana S.A. (pfd.) (Telecommunication services) ................... 16,031,986 9,153,925
Usinas Siderurgicas de Minas Gerais S.A. (pfd.) (Steel manufacturer) .................. 3,000,000 19,673,851
-----------
352,822,551
-----------
Chile 2.1%
Compania de Telecomunicaciones de Chile, S.A. (ADR) (New) (Telecommunication
services) ........................................................................... 710,000 17,794,375
-----------
Colombia 1.5%
Bavaria S.A. (Beer producer and distributor) .......................................... 900,461 5,738,332
Colombiana de Tabaco S.A. (Tobacco producer) .......................................... 864,371 1,583,039
Compania Nacional de Chocolates S.A. (Chocolate and coffee producer) (b) .............. 426,643 2,187,833
Industrias Alimenticias Noel S.A. (Food products company) ............................. 745,037 1,405,421
Valores Bavaria S.A. (Diversified holding company) .................................... 771,761 1,922,265
-----------
12,836,890
-----------
Mexico 34.3%
Apasco, S.A. de C.V. (Cement producer) ................................................ 597,000 4,051,034
CIFRA S.A. de C.V. "C" (Discount retailer) ............................................ 17,001,000 28,920,827
CIFRA S.A. de C.V. "V" ................................................................ 3,265,180 5,700,650
Grupo Continental, S.A. (Soft drink producer and distributor) ......................... 6,649,750 25,146,607
Grupo Embotelladora Unidas S.A. de CV "B" (Soft drink producer and marketer)* (b) ..... 1,899,134 3,803,414
Grupo Financiero Inbursa, S.A. de C.V. "B" (Brokerage, insurance, banking and
leasing services)* .................................................................. 4,231,000 12,909,572
Grupo Industrial Bimbo, S.A. de C.V. "A" (Producer of bread and other baked goods) .... 7,506,000 18,834,635
Grupo Industrial Maseca S.A. de C.V. (ADR) (Food producer) ............................ 1,214,600 13,360,600
Grupo Industrial Saltillo, S.A. de C.V. "B" (Manufacturer of steel products and
auto parts) ......................................................................... 300,000 1,279,378
Grupo Modelo S.A. "C" (Leading brewery) ............................................... 1,800,000 17,006,538
Kimberly Clark de Mexico S.A. de C.V. "A" (Consumer paper products producer) .......... 9,708,000 47,633,646
Panamerican Beverages Inc. "A" (Soft drink bottler) ................................... 1,100,600 43,886,425
Pepsi-Gemex S.A. "B" (Soft drink bottler) (b) ......................................... 6,544,500 3,469,429
TV Azteca, S.A. de C.V. (Owner and operator of television networks) ................... 1,324,096 1,544,272
Telefonos de Mexico S.A. de C.V. "L" (ADR) (Telecommunication services) ............... 1,030,000 58,323,750
Tubos de Acero de Mexico S.A. (ADR) (New) (Manufacturer of various types of pipes,
casings and tubing)* ................................................................ 200,000 3,675,000
-----------
289,545,777
-----------
Panama 1.1%
Banco Latinoamericano de Exportaciones S.A. "E" (ADR) (Bank) .......................... 250,700 8,962,525
-----------
Peru 1.8%
Cementos Lima S.A. "T" (Cement producer) .............................................. 534,345 1,166,841
Embotellador Latinoamericana S.A. (Soft drink bottler and distributor)* ............... 6,591,913 3,639,492
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Latin America Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrias Pacocha S.A. "T" (Household products and food producer) .................... 4,584,886 1,346,825
Union de Cerveceria Backus & Johnston S.A. "T" (Soft drink producer) .................. 11,093,137 8,637,374
-----------
14,790,532
-----------
Venezuela 0.3%
Mavesa S.A. (ADR) (Food processor) .................................................... 732,875 2,931,500
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $674,778,635) 797,056,037
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $720,778,635) (a) 843,056,037
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $723,776,417. At April 30,
1998, net unrealized appreciation for all securities based on tax cost was
$119,279,620. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $182,418,457 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$63,138,837.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $17,772,505 (2.06% 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, 1998 aggregated $26,985,413. These
securities may also have certain restrictions as to resale.
The accompanying notes are an integral part of the financial statements.
13 - Scudder Latin America Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1998
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $720,778,635) ............... $ 843,056,037
Foreign currency holdings, at market (identified cost $2,859,760) ... 2,859,875
Receivable for investments sold ..................................... 10,779,979
Receivable for Fund shares sold ..................................... 2,633,821
Dividends and interest receivable ................................... 4,603,271
Other assets ........................................................ 6,759
----------------
Total assets ........................................................ 863,939,742
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed .................................... 822,992
Accrued management fee .............................................. 932,777
Other payables and accrued expenses ................................. 986,768
----------------
Total liabilities ................................................... 2,742,537
--------------------------------------------------------------------------------------------
Net assets, at market value $ 861,197,205
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................. 3,263,708
Unrealized appreciation (depreciation) on:
Investments ...................................................... 122,277,402
Foreign currency related transactions ............................ (54)
Accumulated net realized gain (loss) ................................ 75,012,826
Paid-in capital ..................................................... 660,643,323
--------------------------------------------------------------------------------------------
Net assets, at market value $ 861,197,205
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($861,197,205 / 32,129,395 shares of capital stock outstanding, ----------------
$.01 par value, 100,000,000 shares authorized) ................... $26.80
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Latin America Fund
<PAGE>
Statement of Operations
six months ended April 30, 1998
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $1,191,303) ............. $ 13,404,249
Interest ............................................................ 964,874
----------------
14,369,123
----------------
Expenses:
Management fee ...................................................... 5,529,678
Services to shareholders ............................................ 1,364,334
Custodian and accounting fees ....................................... 984,667
Directors' fees and expenses ........................................ 28,832
Reports to shareholders ............................................. 132,702
Auditing ............................................................ 49,910
Legal ............................................................... 11,637
Registration fees ................................................... 15,526
Amortization of organization expenses ............................... 1,544
Other ............................................................... 37,297
----------------
8,156,127
--------------------------------------------------------------------------------------------
Net investment income 6,212,996
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ......................................................... 78,874,349
Foreign currency related transactions (including CPMF tax of
$266,656) ........................................................ (791,837)
----------------
78,082,512
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ......................................................... 16,485,345
Foreign currency related transactions ............................... 61,178
----------------
16,546,523
--------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 94,629,035
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 100,842,031
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Latin America Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................. $ 6,212,996 $ 8,993,327
Net realized gain (loss) from investment transactions . 78,082,512 108,195,714
Net unrealized appreciation (depreciation) on
investment transactions during the period .......... 16,546,523 26,908,312
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ......................................... 100,842,031 144,097,353
---------------- ----------------
Distributions to shareholders from:
Net investment income ................................. (8,553,580) (7,655,243)
---------------- ----------------
Net realized gains .................................... (39,004,289) --
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ............................. 159,423,918 737,548,712
Net asset value of shares issued to shareholders in
reinvestment of distributions ...................... 45,271,590 7,123,139
Cost of shares redeemed ............................... (279,337,514) (620,473,602)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ....................................... (74,642,006) 124,198,249
---------------- ----------------
Increase (decrease) in net assets ..................... (21,357,844) 260,640,359
Net assets at beginning of period ..................... 882,555,049 621,914,690
Net assets at end of period (including undistributed
net investment income of $3,263,708 and $5,604,292, ---------------- ----------------
respectively) ...................................... $861,197,205 $882,555,049
---------------- ----------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ............. 35,131,733 30,148,974
---------------- ----------------
Shares sold ........................................... 6,105,147 27,610,297
Shares issued to shareholders in reinvestment of
distributions ......................................... 1,743,227 334,106
Shares redeemed ....................................... (10,850,712) (22,961,644)
---------------- ----------------
Net increase (decrease) in Fund shares ................ (3,002,338) 4,982,759
---------------- ----------------
Shares outstanding at end of period ................... 32,129,395 35,131,733
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Latin America Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
December 8, 1992
Six Months (commencement
Ended Years Ended October 31, of operations) to
April 30, October 31,
1998(a) 1997(a) 1996(a) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------
Net asset value, beginning of period ....... $25.12 $20.63 $16.22 $24.44 $18.41 $12.00
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) ............... .18 .26 .25 .09 (.03) .03
Net realized and unrealized gain (loss) on
investment transactions ................. 2.89 4.49 4.30 (7.62) 6.10 6.36
------------------------------------------------------------------------------
Total from investment operations ........... 3.07 4.75 4.55 (7.53) 6.07 6.39
------------------------------------------------------------------------------
Less distributions:
From net investment income ................. (.25) (.26) (.15) -- -- --
In excess of net investment income ......... -- -- -- -- (.06) --
From net realized gains on investment
transactions ............................ (1.14) -- -- (.73) (.06) --
------------------------------------------------------------------------------
Total distributions ........................ (1.39) (.26) (.15) (.73) (.12) --
------------------------------------------------------------------------------
Redemption fees (c) ........................ -- -- .01 .04 .08 .02
------------------------------------------------------------------------------
Net asset value, end of period ............. $26.80 $25.12 $20.63 $16.22 $24.44 $18.41
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ........................... 12.40** 23.25 28.31(d) (30.96)(d) 33.43(d) 53.42(d)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ..... 861 883 622 519 809 261
Ratio of operating expenses, net, to
average daily net
assets (%) .............................. 1.85* 1.89 1.96 2.08 2.01 2.00*
Ratio of operating expenses, before
expense reductions, to average daily
net assets (%) .......................... 1.85* 1.89 1.96 2.11 2.05 2.69*
Ratio of net investment income (loss) to
average daily net assets (%) ............ 1.41* .98 1.32 .52 (.20) .44*
Portfolio turnover rate (%) ................ 28.0* 41.8 22.4 39.5 22.4 4.6*
Average commission rate paid (b) ........... $.0004 $.0002 $.0001 $ -- $ -- $ --
</TABLE>
(a) Based on monthly average of shares outstanding during the period.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years ending on or after October 31, 1996.
(c) Until September 5, 1996, upon the redemption or exchange of shares held by
shareholders for less than one year, a fee of 2% was assessed and retained
by the Fund for the benefit of the remaining shareholders.
(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
17 - Scudder Latin America Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Latin America Fund (the "Fund") is a non-diversified series of Scudder
International Fund, Inc. (the "Corporation"). The Corporation is organized as a
Maryland corporation and is registered under the Investment Company Act of 1940,
as amended, as an open-end, management investment company.
The 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 consistently 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 Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on Nasdaq. If there are no such sales, the value is the most
recent bid quotation. Securities which are not quoted on Nasdaq 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 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 instruments with an original
maturity 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. 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.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at the
daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest income
and certain expenses at the daily rates of exchange prevailing on the
respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
18 - Scudder Latin America Fund
<PAGE>
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-dividend and payment dates on
dividends, interest and foreign withholding taxes.
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.
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. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
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) from foreign currency related transactions.
Distribution of Income and Gains. Distribution of net investment income is made
annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax. Earnings
and profits distributed to shareholders on redemption of Fund shares ("tax
equalization") may be utilized by the Fund, to the extent permissible, as part
of the Fund's dividends paid deduction on its federal tax returns.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in foreign denominated investments,
passive foreign investment companies, and certain securities sold at a loss. As
a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
19 - Scudder Latin America Fund
<PAGE>
Organization Costs. Costs incurred by the Fund in connection with its
organization and initial registration of shares were deferred and 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. Dividend
income from certain portfolio companies may fluctuate significantly from year to
year due to dividend distribution policies of such companies.
B. Purchases and Sales of Securities
For the six months ended April 30, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $118,586,316 and
$236,122,060, respectively.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Directors and by the Fund's Shareholders. The
Management Agreement, which was effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, the Fund has agreed to pay
to the Adviser a fee equal to an annualized rate of 1.25% of the first $1
billion of the Fund's average daily net assets and 1.15% of such assets in
excess of $1 billion, computed and accrued daily and payable monthly. The
Adviser directs the investments of the Fund in accordance with its investment
objectives, policies, and restrictions. The Adviser determines the securities,
instruments, and other contracts relating to investments to be purchased, sold
or entered into by the Fund. In addition to portfolio management services, the
Adviser provides certain administrative services in accordance with the
Management Agreement. For the six months ended April 30, 1998, the fee pursuant
to these agreements aggregated $5,529,678.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended April 30, 1998, the amount charged to the Fund by SSC
aggregated $1,062,788, of which $169,637 is unpaid at April 30, 1998.
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 months ended April 30,
1998, the amount charged to the Fund by STC aggregated $16,990, of which $3,074
is unpaid at April 30, 1998.
20 - Scudder Latin America Fund
<PAGE>
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 months
ended April 30, 1998, the amount charged to the Fund by SFAC aggregated
$185,810, of which $35,881 is unpaid at April 30, 1998.
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 six months ended April
30, 1998, the Special Servicing Agreement expense charged to the Fund amounted
to $2,972.
The Fund pays each of its Directors not affiliated with the Adviser an annual
retainer, plus specified amounts for attended board and committee meetings. For
the six months ended April 30, 1998, Directors' fees and expenses aggregated
$28,832.
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.
E. Lines of Credit
The Fund and several affiliated Funds (the "Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 25 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
21 - Scudder Latin America Fund
<PAGE>
Report of Independent Accountants
Tax Information
To the Board of Directors of Scudder International Fund, Inc. and to the
Shareholders of Scudder Latin America Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Latin America Fund including the investment portfolio, as of April 30, 1998, and
the related statement of operations for the six months then ended, the
statements of changes in net assets for the six months then ended and for the
year ended October 31, 1997, and the financial highlights for the six months
ended April 30, 1998, for each of the four years in the period ended October 31,
1997 and for the period December 8, 1992 (commencement of operations) to October
31, 1993. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1998, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Latin America Fund as of April 30, 1998, 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 year ended October 31, 1997, and the financial highlights
for the six months ended April 30, 1998, for each of the four years in the
period ended October 31, 1997 and for the period December 8, 1992 (commencement
of operations) to October 31, 1993 in conformity with generally accepted
accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
June 10, 1998
22 - Scudder Latin America Fund
<PAGE>
This Page
intentionally
left blank.
23 - Scudder Latin America 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 of Business
Robert G. Stone, Jr.
Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
Nicholas Bratt*
President
Elizabeth J. Allan*
Vice President
Irene T. Cheng*
Vice President
Joyce E. Cornell*
Vice President
Susan E. Dahl*
Vice President
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Theresa Gusman*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
Sheridan P. Reilly*
Vice President
John R. Hebble*
Assistant Treasurer
Richard W. Desmond*
Assistant Secretary
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - Scudder Latin America 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
Scudder Real Estate Investment 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.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal 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. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. +++ +++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 Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
25 - Scudder Latin America Fund
<PAGE>
Scudder Solutions
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<CAPTION>
Convenient ways to invest, quickly and reliably:
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<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
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 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 previously designated.
Distributions Direct
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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26 - Scudder Latin America Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
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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 8,000 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
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Additional Information on How to Contact Scudder:
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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
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27 - Scudder Latin America Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
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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