Scudder
Latin America
Fund
Semiannual Report
April 30, 1999
No-Load Funds
For investors seeking long-term capital appreciation through investment
primarily in the securities of Latin American issuers.
A no-load fund with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Scudder Latin America Fund
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Date of Inception: 12/8/92 Total Net Assets as 4/30/99: $572.million Ticker Symbol: SLAFX
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</TABLE>
o Stocks in Latin America staged a powerful rally following the devaluation of
the Brazilian currency in January. For the six-month period ended April 30, the
Fund posted a total return of 22.59%.
o Management continues to concentrate on established companies with reliable
cash flows, strong balance sheets, and skilled management teams. Over time, such
firms tend to be better equipped to cope with volatility in the region's
economies.
o Poor stock market performance in the first half of the period provided
opportunities to purchase shares of good companies at favorable prices.
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 23 Stockholder Meeting Results
10 Glossary of Investment Terms 24 Officers and Directors
11 Investment Portfolio 25 Investment Products and Services
14 Financial Statements 26 Scudder Solutions
2 - Scudder Latin America Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
Stock markets in Latin America experienced significant volatility during
the six-month reporting period. After staging a sharp rally along with other
emerging markets stocks in the months immediately following last year's global
financial crisis, the Latin markets tumbled in January when a currency
devaluation in Brazil began to appear inevitable. Once this threat became fact,
however, investors realized that the worst part of the region's financial crisis
was likely behind them. Buoyed by improved market sentiment, stocks powered
higher for the remainder of the period. In this phase, Mexico's Bolsa Index
surpassed its pre-crisis peak, while Brazil and Argentina approached their
previous highs.
Amidst the tumult, the management team of Scudder Latin America Fund
maintained their approach of investing for the long term in companies with the
strongest fundamentals and the most capable management teams. The value of this
strategy is reflected in the Fund's ranking within its peer group. According to
Lipper Analytical Services, the Fund was the top performing Latin American fund
for the five-year period ended April 30, 1999. It was also ranked in the top 18%
of comparable funds by Lipper for the trailing one-year period, and in the 26th
percentile for the three-year period.^1 For more information on recent market
conditions and the management team's investment strategy, please see the
Portfolio Management Discussion beginning on page 6.
For those of you who are interested in new Scudder products, we are pleased
to introduce Scudder Select 500 Fund and Scudder Select 1000 Growth Fund. Both
funds are managed with the goal of providing long-term outperformance compared
to their benchmark indices, the S&P 500 Index and the Russell 1000 Growth Index,
respectively. For more information on either Select fund, please call us at the
number below.
Thank you for your continued investment in Scudder Latin America Fund. If
you have any questions about your investment, please call Scudder Investor
Information at 1-800-225-2470, or visit our Web site at www.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Latin America Fund
^1 Source: Lipper Analytical Services, Inc., is an independent analyst of
investment performance. Performance includes reinvestment of dividends and
capital gains. Past performance is no guarantee of future results. Scudder
Latin America Fund's Lipper ranking was 8th out of 45 Latin America funds for
the one-year period ended April 30, 1999, 9th out of 34 funds for the
three-year period, and 1st out of 14 for the five-year period.
3 - Scudder Latin America Fund
<PAGE>
Performance Update as of April 30, 1999
Total Return
--------------------------------------------
Fund Index Comparisons
--------------------------------------------
Total Return
--------------------------------------------
Period Ended Growth of Average
4/30/1999 $10,000 Cumulative Annual
--------------------------------------------
Scudder Latin America Fund
--------------------------------------------
1 Year $ 8,700 -13.00% -13.00%
5 Year $12,636 26.36% 4.79%
Life of $21,855 118.55% 13.01%
Fund*
--------------------------------------------
IFC Latin America Investable Total Return
Index
--------------------------------------------
1 Year $ 8,530 -14.70% -14.70%
5 Year $10,147 1.47% 0.29%
Life of Fund* $15,263 52.63% 6.91%
--------------------------------------------
* The Fund commenced operations on
December 8, 1992.
Index comparisons begin December 31, 1992.
--------------------------------------------
Growth of a $10,000 Investment
--------------------------------------------
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
- -------------------------------------------------------------------
IFC Latin America
Investable Total Return Scudder Latin America
Index Fund
- -------------------------------------------------------------------
12/92* 10000 10000
'93 10047 10560
'94 15042 16604
'95 11760 13558
'96 13412 16623
'97 16928 21907
'98 17894 24115
'99 15263 20980
- -------------------------------------------------------------------
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
- --------------------------------------------
Yearly periods ended April 30
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
<TABLE>
<CAPTION>
1993* 1994 1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value $ 13.20 $ 20.65 $ 16.21 $ 19.70 $ 25.65 $ 26.80 $ 22.06
- ------------------------------------------------------------------------------------------------------------------
Income Dividends $ -- $ .06 $ -- $ .15 $ .26 $ .25 $ .37
- ------------------------------------------------------------------------------------------------------------------
Capital Gains Distributions $ -- $ .06 $ .73 $ -- $ -- $ 1.14 $ .64
- ------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 10.00** 57.23 -18.34 22.60 31.79 10.08 -13.00
- ------------------------------------------------------------------------------------------------------------------
Index Total Return (%) .47 49.71 -21.85 14.04 26.20 5.71 -14.70
- ------------------------------------------------------------------------------------------------------------------
</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 five year and life of Fund total returns would have been lower.
**Total return does not reflect the effect to the shareholder of the applicable
redemption fees. Portfolio Summary as of April 30, 1999
4 - Scudder Latin America Fund
<PAGE>
Portfolio Summary as of April 30, 1999
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Geographical
(Excludes 4% Cash Equivalents)
- -----------------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the table below.
Mexico 43%
Brazil 36%
Argentina 13%
Chile 3%
Colombia 2%
Other 3%
--------------------------------------
100%
--------------------------------------
Management trimmed holdings in Mexican companies
that it felt had become fully valued, and increased
its position in Brazil.
- -----------------------------------------------------
Sectors
(Excludes 4% Cash Equivalents)
- -----------------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the table below.
Consumer Staples 29%
Communications 24%
Energy 15%
Financial 11%
Utilities 11%
Manufacturing 6%
Consumer Discretionary 4%
--------------------------------------
100%
--------------------------------------
Sector weightings continue to reflect a focus on
non-cyclical industries.
- -----------------------------------------------------
Ten Largest Equity Holdings
(58% of Portfolio)
- -----------------------------------------------------
1. Telefonos de Mexico S.A. de C.V.
Telecommunication services in Mexico
2. Petroleo Brasileiro S.A.
Petroleum company in Brazil
3. YPF S.A.
Petroleum company in Argentina
4. Companhia Energetica de Minas
Gerais
Electric utility in Brazil
5. Kimberly Clark de Mexico S.A. de
C.V.
Producer of consumer paper
products in Mexico
6. Banco Itau S.A.
Bank in Brazil
7. Centrais Eletricas Brasileiras S.A.
Holding company for electric utility
in Brazil
8. Panamerican Beverages, Inc.
Soft drink bottler in Mexico
9. CIFRA S.A. de C.V.
Discount retailer in Mexico
10. Grupo Continental S.A.
Producer and distributor of soft
drinks, sugar and
mineral water in Mexico
Top holdings demonstrate the Fund's emphasis on
companies with strong cash flows, low debt levels,
and minimal dependence on external financing.
For more complete details about the Fund's investment portfolio, see page 11. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
5 -Scudder Latin America Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Scudder Latin America Fund posted a total return of 22.59% for the six
months ended April 30, 1999, compared with a return of 30.45% for its unmanaged
benchmark, the International Finance Corporation's Latin America Investible
Total Return Index. Details of the performance of the IFC Index country
components are provided in the adjacent table.
Volatility, Recovery in Brazil The Fund's point-to-point investment performance
for the six months does not adequately reflect the tremendous uncertainty and
volatility impacting Latin American financial markets during the period. As has
been the case since mid-1997, Brazil was the origin of most of the shockwaves
that troubled the region. In early December, the Brazilian congress rejected a
key part of President Cardoso's reform program, leading many investors to
conclude that Brazil's political system would be unable to deal effectively with
the country's mounting fiscal and current account deficits. Investor concerns
were exacerbated in early January when Itamar Franco, the newly elected governor
of the economically powerful state of Minas Gerais, declared a moratorium on his
state's debts with the federal government. Since Franco is a former president,
his actions were widely viewed as further evidence of Brazil's difficulties in
overcoming regional and special interests in dealing with critical national
problems. The financial markets lost confidence in Brazil as a result, and
foreign leaders became unwilling to roll over maturing loans or to extend new
credits to Brazilian borrowers. The country's foreign exchange reserves fell
sharply, forcing the government to float its currency in mid-January. Following
this action, the Fund's net asset value reached $13.85, its low point for the
six-month period.
- ------------------------------------------------
Investment Returns in Latin American
Stock Markets
Six months ended April 30, 1999
Returns are in U.S. Dollars
- ------------------------------------------------
A graph in the form of a bar chart appears here, illustrating exact data points
in the table below.
Argentina 27.30%
Brazil 16.06%
Chile 33.57%
Colombia 48.38%
Mexico 44.60%
Peru 21.88%
Venezuela 39.11%
IFC Latin 30.45%
America
Investable Index
- ------------------------------------------------
Source: IFC Emerging Markets Database
Past performance is no guarantee of future results.
Against the background of a collapsing currency, capital flight, and mounting
fears of a return of hyperinflation, Congress quickly passed the substance of
President Cardoso's reform program. New management was installed at the central
bank, and a revised austerity program found credibility with the international
community. With the International Monetary Fund's announcement of continued
support for the adjustment program, maintenance of the $41 billion assistance
6 - Scudder Latin America Fund
<PAGE>
package, and the re-opening of the international capital markets to Brazilian
borrowers, financial markets returned to relative calm. By the mid-point of the
Fund's fiscal year, it had become clear that earlier predictions of economic
calamity for Brazil would prove incorrect. Inflation is declining, credit flows
are inching their way back to normal, and the country is expected to meet all of
its principal targets with the IMF. In short, the economy is not experiencing
the free fall that many had predicted.
Most of Brazil's problems in the months leading up to the devaluation were
public sector in origin. The private banking system was in sound condition,
corporate balance sheets were comparatively unleveraged, inflation was close to
zero, and demand was soft due to the slowing economy. What was out of kilter was
the government's ability to deal with its fiscal imbalance and current account
deficit. In our view, the passage of the Cardoso reform program by congress and
the float of the currency effectively addressed these problems. Investor
optimism has been rekindled as a result, sparking a 59% rebound in the Fund's
net asset value from its January low to April 30.
Argentina, Mexico, and Chile
Weather the Storm
Latin American markets came under varying degrees of pressure due to the fear of
a spreading Brazilian "contagion." The Argentine peso was clearly the currency
most vulnerable to a speculative assault, but the risk of a devaluation was
contained by President Menem's announcement that he would seek a complete
dollarization of the economy before devaluing the peso. This position found
support across the country's political spectrum. Given the close economic ties
between Argentina and Brazil, however, it is unlikely that Argentina will be
able to avoid a recession this year.
- -------------------------------------------------------
Economic Growth Forecasts (GDP)
- -------------------------------------------------------
- -------------------------------------------------------
Country 1998 1999*
- -------------------------------------------------------
Argentina 4.2% -1.8%
Brazil 0.1% -0.9%
Chile 3.4% 1.6%
Colombia 0.6% 0.9%
Mexico 4.8% 2.9%
Peru 0.7% 2.9%
Venezuela -0.7% -2.5%
- -------------------------------------------------------
* Estimated. Estimates may prove inaccurate, and, even if accurate, may not
correlate with market activity.
Source: Scudder Latin America Group.
Since Mexico adopted a floating exchange rate regime following its 1994
devaluation, the Brazilian devaluation had a negligible effect on the peso and
only a brief impact on the stock market. The Mexican economy is influenced more
by the U.S. than Brazil due to trading patterns and capital flows. As our above
forecasts for the economic growth rates of the major Latin American countries
7 - Scudder Latin America Fund
<PAGE>
show, Mexico is likely to have one of the best growth rates in the region this
year. This is due primarily to the continued expansion in the U.S. economy and
to the recovery of Mexican consumer spending.
Brazil's difficulty in handling its exchange rate and fiscal reform, as opposed
to Mexico's quick and effective response to the pressure that the decline in
petroleum prices would place on its federal budget, had an influence on
investors' perceptions of country risk for these two dominant Latin American
economies. Mexico's higher standing among investors had a favorable impact on
the country's stock market valuations, and a comparatively negative effect on
Brazilian equities.
Chile should experience a sharp decline in its growth rate for reasons that are
specific to that country. Copper is a major export, and prices and demand for
the metal remain depressed. In addition, Chile is currently experiencing one of
the worst droughts in modern history. Because the country is dependent on
hydro-generated electric power, both businesses and consumers have been subject
to power cutoffs during daylight hours. While this is likely to be a one-time
event, it is clearly having a negative impact on production, employment, and
consumer spending. When consumer stocks were under pressure earlier this year
due to the country's economic outlook, the Fund was able to make its initial
investment in the leading beverage company, Cia. Cervecerias Unidas S.A. The
company has roughly a 90% share of the Chilean beer market and important
holdings in wine, soft drink, and bottled water production in Chile and
Argentina.
- -------------------------------------------------------
Country Weightings
(April 30, 1999
- -------------------------------------------------------
- -------------------------------------------------------
Country Scudder Latin IFC Index
America Fund* Weighting
- -------------------------------------------------------
Argentina 13.4% 13.9%
Brazil 35.6% 28.0%
Chile 2.5% 15.2%
Colombia 1.9% 2.1%
Mexico 43.4% 36.5%
Panama 1.5% 0.0%
Peru 1.5% 2.4%
Venezuela 0.4% 1.9%
- -------------------------------------------------------
* Excludes Fund's assets in cash equivalents. Totals may not add due to
rounding.
Fund Strategy
The portfolio management team was active in adding to the Fund's holdings in
Brazil following the devaluation of the Real in January. The immediate
consequence of the devaluation was an across-the-board reduction in the dollar
market value of such strategically vital assets as petroleum reserves, the
electric generation and distribution grid, and the telecommunications network.
The dollar earning power of such assets was also reduced by both the recession
and the devaluation. We believe the reduction in profits is temporary, and that
the assets will eventually earn a return in dollars that is representative of
the global standard for the asset category. The timing of our investment
8 - Scudder Latin America Fund
<PAGE>
maneuver in Brazil poses some problems, however, since the underpricing of
assets through a devaluation occurs well in advance of the assets' recovery in
profitability and dollar value. We have been willing to accept a timing risk in
pursuing this strategy in Brazil because of the good investment results this
approach brought to the Fund several years ago in Mexico. A portion of the money
used to purchase Brazilian stocks came from the sale of Mexican stocks whose
valuations had exceeded our targets.
The Fund's portfolio tends to be very heavily concentrated in a small number of
companies. The top ten holdings typically account for 45% to 50% of assets, and
this number stood at 58% as of April 30. YPF, the Argentine oil and gas
producer, was the Fund's third largest investment and accounted for just under
6% of net assets at the close of the period. The Spanish oil company, Repsol
S.A., has offered to acquire YPF for cash at a price of $44.78, a 35% premium to
the company's market value on the day of the announcement. At this point, we do
not anticipate deploying cash raised from the sale of YPF into other top ten
holdings.
Shareholders may notice the appearance of a new name among the Fund's top ten
holdings. Grupo Continental S.A. ("Contal") is one of the major Coca-Cola
bottlers in the world, and is the second largest sugar refiner in Mexico. It is
also one of the most profitable bottlers in Latin America, with operating
margins of 19.8% in 1998 and virtually no debt on its balance sheet. Stock
market liquidity for its shares has been thin over the years, since the
Coca-Cola Company owns 20% of its shares and the controlling family holds 60%.
Many of the Fund's purchases have occurred during periods of economic distress
in Mexico, when the stock has become available in the market. The Fund's
experience with Contal underscores the importance of a long-term orientation to
investing profitably in Latin America. It also illustrates the necessity of
constructing the portfolio around the ownership of companies with superior
management, excellent returns on capital, balance sheet integrity, and
established market franchises. It is not luck that has allowed the Fund to
overcome setbacks such as the Mexican and Brazilian devaluations, but rather the
superior management skills of the companies in its portfolio.
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
CURRENCY DEVALUATION A significant decline of a currency's value
relative to other currencies, such as the U.S.
dollar, typically resulting from the cessation of
a country's central bank intervention in the
currency markets. For U.S. investors who are
investing overseas, a devaluation of a foreign
currency can reduce 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.
CURRENT ACCOUNT DEFICIT The difference between the value of goods and
services a country imports and the value of goods
and services it exports. A deficit exists when the
value of imports is greater than the value of
exports. Such a condition is often considered to be
a negative factor for the strength of the currency,
since a deficit implies weaker demand for the
currency of the country in question relative to its
trading partners.
FISCAL DEFICIT The difference between a country's income and its
expenditures. Governments generally issue debt to
finance this shortfall. A low rate of savings in a
debtor nation means that investment from foreign
sources will be required.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into cash
within a reasonably short period of time. A stock
that is liquid has enough shares outstanding and a
substantial enough market capitalization to allow
large purchases and sales to occur without causing a
significant move in its market price as a result.
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, 1999
<TABLE>
<CAPTION>
Principal Market
Amount (U.S.$) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 4.4%
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/1999 at 4.87%, to be
repurchased at $25,064,168 on 5/3/1999, collateralized by a $25,111,000 U.S. Treasury Note, -------------
3.375%, 1/15/2007 (Cost $25,054,000) ........................................................... 25,054,000 25,054,000
--------------
Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stocks 95.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Argentina 12.8%
BI S.A. "A" (Venture capital company) (b) ........................................................ 3,000,000 3,507,000
Nobleza Piccardo S.A. (Tobacco company) .......................................................... 977,177 3,226,007
Quilmes Industrial S.A. (Leading beer distributor) ............................................... 922,443 8,301,987
Telecom Argentina S.A. "B" (ADR) (Telecommunication services) .................................... 360,000 12,420,000
Telefonica de Argentina S.A. "B" (ADR) (Telecommunication services) .............................. 340,000 12,707,500
YPF S.A. "D" (ADR) (Petroleum company) ........................................................... 800,000 33,600,000
-------------
73,762,494
-------------
Brazil 34.0%
Banco Itau S.A. (pfd.) (Bank) .................................................................... 53,004,600 28,081,907
Centrais Eletricas Brasileiras S.A. "B" (pfd.) (Holding company for electric utility) ............ 1,200,000,000 25,285,972
Companhia Cervejaria Brahma (pfd.) (Beer producer and distributor) ............................... 40,288,569 19,064,910
Companhia Energetica de Minas Gerais (pfd.) (Electric utility) ................................... 1,300,086,798 30,917,176
Companhia Paranaense de Energia (voting) (ADR) (Electric utility) ................................ 277,200 2,269,575
Companhia Siderurgica Nacional "B" (ADR) (Manufacturer and distributor of steel and tin
mill products) ................................................................................. 45,000 984,375
Lojas Americanas S.A. (voting) (Discount department store chain) (b) ............................. 429,708,380 1,836,803
Perdigao S.A. (pfd.) (Producer of meat products) ................................................. 1,000,000,000 1,240,216
Petrobras Distribuidora S.A. (pfd.) (Distributor of petroleum derivatives, natural gas and alcohol) 40,000,000 450,331
Petroleo Brasileiro S.A. (pfd.) (Petroleum company) .............................................. 300,000,000 48,585,190
Sadia S.A. (pfd.) (Cattle breeder) ............................................................... 1,945,770 1,077,729
Souza Cruz S.A. (Holding company for cigarettes and tobacco products) ............................ 210,000 1,403,371
Tele Norte Leste Participacoes S.A. (pfd.) (ADR) (Provider of local telecommunication services) .. 570,000 9,654,375
Telecomunicacoes de Sao Paulo S.A. (pfd.) (Telecommunication services) ........................... 170,000,000 21,186,033
Telecomunicacoes do Parana S.A. (pfd.) (Telecommunication services) .............................. 25,009,986 3,571,565
-------------
195,609,528
-------------
Chile 2.4%
Companhia Cervecerias Unidas S.A.(ADR) (Bottler and distributor of beer, soft drinks, and
mineral water) ................................................................................. 180,000 4,421,250
Compania de Telefonos de Chile, S.A. "A" (ADR)(New) (Telecommunication services) ................. 280,541 7,416,803
</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>
Santa Isabel S.A. (ADR) (Supermarket chain) ...................................................... 180,200 1,802,000
-------------
13,640,053
-------------
Colombia 1.8%
Bavaria S.A. (Beer producer and distributor) ..................................................... 1,032,736 5,670,161
Colombiana de Tabaco S.A. (Tobacco producer) ..................................................... 887,271 1,759,197
Compania Nacional de Chocolates S.A. (Chocolate and coffee producer) ............................. 402,422 1,715,078
Industrias Alimenticias Noel S.A. (Food products company) ........................................ 447,039 1,173,235
--------------
10,317,671
--------------
CIFRA S.A. de C.V. "C"* (Discount retailer) ...................................................... 12,458,000 23,325,043
Fomento Economico Mexicano S.A. de C.V. (ADR) (Producer of beer, soft drinks and
mineral water) ................................................................................. 460,000 16,732,500
Grupo Continental, S.A. (Producer and distributor of soft drinks, sugar and mineral water) ....... 6,711,750 23,244,156
Grupo Embotelladora Unidas S.A. de C.V. "B"* (Soft drink producer and marketer) .................. 1,919,134 3,427,025
Grupo Financiero Inbursa S.A. de C.V. "B" (Brokerage, insurance, banking and leasing services) ... 6,200,000 20,062,770
Grupo Industrial Bimbo S.A. de C.V. "A" (Producer of bread and other baked goods) ................ 3,238,000 6,973,615
Grupo Industrial Maseca S.A. de C.V. (ADR) (Food producer) ....................................... 1,142,200 12,064,488
Grupo Industrial Saltillo S.A. de C.V. "B" (Manufacturer of steel products and auto parts) ....... 374,000 1,376,190
Grupo Modelo S.A. "C" (Leading brewery) .......................................................... 2,234,000 5,887,219
Kimberly Clark de Mexico S.A. de C.V. "A" (Producer of consumer paper products) .................. 7,902,000 30,787,013
Panamerican Beverages Inc. "A" (Soft drink bottler) .............................................. 1,070,600 23,753,938
Pepsi-Gemex S.A. "B" (Soft drink bottler) (b) .................................................... 6,544,500 3,810,542
Pepsi-Gemex S.A. (ADR) ........................................................................... 238,000 2,499,000
Telefonos de Mexico S.A. de C.V. "L" (ADR) (Telecommunication services) .......................... 855,000 64,766,250
-------------
238,709,749
-------------
Panama 1.4%
Banco Latinoamericano de Exportaciones S.A. "E" (ADR) (Bank) ..................................... 255,700 8,150,438
-------------
Peru 1.4%
Embotellador Latinoamericana S.A. "T"* (Soft drink bottler and distributor) ...................... 5,600,060 1,090,795
Industrias Pacocha S.A. "T"* (Household products and food producer) .............................. 4,633,237 819,170
Union de Cerveceria Backus & Johnston S.A. "T" (Beer producer) ................................... 14,383,186 6,163,514
-------------
8,073,479
-------------
Venezuela 0.3%
Mavesa S.A. (ADR) (Food processor) ............................................................... 646,275 1,938,825
- -----------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $493,177,243) 550,202,237
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $518,231,243) (a) 575,256,237
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Latin America Fund
<PAGE>
- --------------------------------------------------------------------------------
* Non-income producing security.
(a) The cost for federal income tax purposes was $520,815,530. At April 30,
1999, net unrealized appreciation for all securities based on tax cost was
$54,440,707. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $99,232,730 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$44,792,023.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $9,154,345 (1.60% 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, 1999 aggregated $19,114,009. 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, 1999
<TABLE>
<CAPTION>
Assets
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $518,231,243) ............ $ 575,256,237
Cash ............................................................. 637
Foreign currency holdings, at market (identified cost $59,467) ... 58,605
Receivable for investments sold .................................. 34,536
Receivable for Fund shares sold .................................. 1,068,496
Dividends and interest receivable ................................ 3,868,272
Other assets ..................................................... 6,207
-------------
Total assets ..................................................... 580,292,990
Liabilities
- ---------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................ 5,865,742
Payable for Fund shares redeemed ................................. 809,536
Accrued management fee ........................................... 549,081
Other payables and accrued expenses .............................. 596,438
-------------
Total liabilities ................................................ 7,820,797
----------------------------------------------------------------------------------
Net assets, at market value $ 572,472,193
----------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income 3,773,906 Unrealized
appreciation (depreciation) on:
Investments ................................................... 57,024,994
Foreign currency related transactions ......................... (219,629)
Accumulated net realized gain (loss) ............................. (23,458,114)
Paid-in capital .................................................. 535,351,036
----------------------------------------------------------------------------------
Net assets, at market value $ 572,472,193
----------------------------------------------------------------------------------
Net Asset Value
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($572,472,193 /25,953,426 shares of capital stock -------------
outstanding, $.01 par value, 100,000,000 shares authorized) .... $ 22.06
-------------
The accompanying notes are an integral part of the financial statements.
</TABLE>
14 - Scudder Latin America Fund
<PAGE>
Statement of Operations
six months ended April 30, 1999
<TABLE>
<CAPTION>
Investment Income
- ---------------------------------------------------------------------------------------------------------
Income:
<S> <C>
Dividends (net of foreign taxes withheld of $875,447) ................ $ 10,861,593
Interest ............................................................. 556,095
-------------
11,417,688
-------------
Expenses:
Management fee ....................................................... 2,869,922
Services to shareholders ............................................. 1,080,970
Custodian and accounting fees ........................................ 469,388
Directors' fees and expenses ......................................... 31,351
Reports to shareholders .............................................. 79,567
Auditing ............................................................. 41,074
Legal ................................................................ 10,771
Registration fees .................................................... 51,441
Other ................................................................ 47,524
-------------
4,682,008
--------------------------------------------------------------------------------------
Net investment income 6,735,680
--------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ---------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .......................................................... (17,026,107)
Foreign currency related transactions (including CPMF tax of $113,079) (3,409,047)
-------------
(20,435,154)
-------------
Net unrealized appreciation (depreciation) during the period on:
Investments .......................................................... 113,956,544
Foreign currency related transactions ................................ (180,657)
--------------
113,775,887
--------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 93,340,733
--------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 100,076,413
--------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Latin America Fund
<PAGE>
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, October 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C>
Net investment income ............................... $ 6,735,680 $ 10,839,107
Net realized gain (loss) from investment transactions (20,435,154) 14,336,304
Net unrealized appreciation (depreciation) on
investment transactions during the period............ 113,775,887 (162,701,347)
------------- -------------
Net increase (decrease) in net assets resulting from
operations............................................. 100,076,413 (137,525,936)
------------- -------------
Distributions to shareholders from:
Net investment income ............................... (9,207,053) (8,553,580)
------------- -------------
Net realized gains .................................. (15,934,115) (39,004,290)
------------- -------------
Fund share transactions:
Proceeds from shares sold ........................... 147,795,586 312,261,907
Net asset value of shares issued to shareholders in
reinvestment of distributions...................... 23,977,559 45,271,596
Cost of shares redeemed ............................. (177,855,191) (551,385,752)
------------- -------------
Net increase (decrease) in net assets from Fund share
transactions......................................... (6,082,046) (193,852,249)
------------- -------------
Increase (decrease) in net assets ................... 68,853,199 (378,936,055)
Net assets at beginning of period ................... 503,618,994 882,555,049
Net assets at end of period (including undistributed
net investment income of $3,773,906 and $6,245,279, ------------- -------------
respectively) .................................... $ 572,472,193 $ 503,618,994
------------- -------------
Other Information
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ........... 26,476,730 35,131,733
------------- -------------
Shares sold ......................................... 7,875,104 13,655,806
Shares issued to shareholders in reinvestment of
distributions........................................ 1,363,911 1,743,227
Shares redeemed ..................................... (9,762,319) (24,054,036)
------------- -------------
Net increase (decrease) in Fund shares .............. (523,304) (8,655,003)
------------- -------------
Shares outstanding at end of period ................. 25,953,426 26,476,730
------------- -------------
</TABLE>
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>
Six Months
Ended
April 30, Years Ended October 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------
Net asset value, beginning of period ............................ $19.02 $ 25.12 $ 20.63 $ 16.22 $ 24.44 $ 18.41
-----------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .................................... .26 .34 .26 .25 .09 (.03)
Net realized and unrealized gain (loss) on investment transactions 3.79 (5.05) 4.49 4.30 (7.62) 6.10
-----------------------------------------------------------
Total from investment operations ................................ 4.05 (4.71) 4.75 4.55 (7.53) 6.07
-----------------------------------------------------------
Less distributions:
From net investment income ...................................... (.37) (.25) (.26) (.15) -- (.06)
From net realized gains on investment transactions .............. (.64) (1.14) -- -- (.73) (.06)
-----------------------------------------------------------
Total distributions ............................................. (1.01) (1.39) (.26) (.15) (.73) (.12)
-----------------------------------------------------------
Redemption fees (b) ............................................. -- -- -- .01 .04 .08
-----------------------------------------------------------
Net asset value, end of period .................................. $22.06 $ 19.02 $ 25.12 $ 20.63 $ 16.22 $ 24.44
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ................................................ 22.59** (20.23) 23.25 28.31(c) 30.96(c)(d) 33.43(c)(d)
Ratios and Supplemental Data
Net assets, end of period ($ millions) .......................... 572 504 883 622 519 809
Ratio of operating expenses, net, to average daily net assets (%) 2.04* 1.87 1.89 1.96 2.08 2.01
Ratio of operating expenses, before expense reductions, ......... 2.04* 1.87 1.89 1.96 2.11 2.05
to average daily net assets (%)
Ratio of net investment income (loss) to average daily net ...... 2.93* 1.45 .98 1.32 .52 (.20)
assets (%)
Portfolio turnover rate (%) ..................................... 49.9* 43.6 41.8 22.4 39.5 22.4
(a) Based on monthly average of shares outstanding during the period.
(b) 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.
(c) Total return does not reflect the effect to the shareholder of the 2%
redemption fee on shares held less than one year.
(d) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
</TABLE>
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 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 purchased with original maturities over sixty days are
valued by pricing agents approved by the officers of the Fund, whose 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 is equal to at least 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 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.
18 - Scudder Latin America Fund
<PAGE>
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell 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.
Taxes. The Fund's policy is to comply with the requirements of the Internal
Revenue Code of 1986, as amended, which are applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders. The
Fund paid no federal income taxes and no federal income tax provision was
required.
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. Additionally,
there is a .14% value added tax on foreign exchange transactions in Colombia.
These taxes have 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. An additional distribution may be made to the extent necessary to
avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. The differences
relate primarily to investments in foreign 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.
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.
19 - Scudder Latin America Fund
<PAGE>
B. Purchases and Sales of Securities
During the six months ended April 30, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $112,311,011 and
$126,550,435, respectively.
C. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), 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 management fee
payable under the Agreement is equal to an annual 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. For the
six months ended April 30, 1999, the fee pursuant to this Agreement aggregated
$2,869,922, which was equivalent to an annual effective rate of 1.25% of the
Fund's average daily net assets.
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, 1999, the amount charged to the Fund by SSC
aggregated $827,006, of which $134,513 is unpaid at April 30, 1999.
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, 1999, the Special Servicing Agreement expense charged to the Fund amounted
to $181.
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,
1999, the amount charged to the Fund by STC aggregated $20,169, of which $3,458
is unpaid at April 30, 1999.
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, 1999, the amount charged to the Fund by SFAC aggregated
$130,841, of which $43,548 is unpaid at April 30, 1999.
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, 1999, Directors' fees and expenses aggregated
$31,351.
20 - Scudder Latin America Fund
<PAGE>
D. Investing in Emerging Markets
Investing in emerging markets mayinvolve 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. Line of Credit
The Fund and several affliated Funds (the "Participants") share in a $850
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 pro rata 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.
21 - Scudder Latin America Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder International Fund, Inc. and to the
Shareholders of Scudder Latin America Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder Latin America Fund (the
"Fund") at April 30, 1999, the results of its operations, the changes in its net
assets, and the financial highlights for the periods indicated therein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
June 14, 1999
22 - Scudder Latin America Fund
<PAGE>
Stockholder Meeting Results
A Special Meeting of Stockholders (the "Meeting") of Scudder Latin America Fund
(the "Fund") was held on December 15, 1998, at the office of Scudder Kemper
Investments, Inc., Two International Place, Boston, Massachusetts 02110. At the
Meeting the following matters were voted upon by the shareholders (the resulting
votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
12,929,901 534,763 520,217 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
11,428,092 790,914 762,563 1,003,312
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
23 - Scudder Latin America Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board and
Director
Nicholas Bratt*
President
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
Keith R. Fox
Director; Private Equity
Investor
William H. Luers
Director; Chairman and
President, U.N. Association of
the U.S.A.
Kathryn L. Quirk*
Director, Vice President
and Assistant Secretary
Joan E. Spero
Director; President, Doris Duke
Charitable Foundation
Thomas J. Devine
Honorary Director; Consultant
William H. Gleysteen, Jr.
Honorary Director; Consultant;
Guest Scholar, Brookings
Institute
Wilson Nolen
Honorary Director; Consultant
Robert G. Stone, Jr.
Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
Elizabeth J. Allan*
Vice President
Irene T. Cheng*
Vice President
Joyce E. Cornell*
Vice President
Susan E. Dahl*
Vice President
Philip S. Fortuna*
Vice President
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Theresa Gusman*
Vice President
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
Sheridan P. Reilly*
Vice President
Shahram Tajbakhsh*
Vice President
John R. Hebble*
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 --
Prime Reserve Shares*
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 GNMA Fund
Scudder Income Fund
Scudder Corporate Bond 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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 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 Select 1000 Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth 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
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
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.
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 or classes thereof 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. ++Only the International
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. +++
+++ +++A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold 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
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<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 -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: 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:
- ------------------------------------------------------------------------------------------------------------------------------
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
800 no-load funds from well-known companies--with no
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder
Brokerage account already reserved for them, with
no minimum investment. For information about
Scudder Brokerage Services, call 1-800-700-0820.
Fund Folio funds held less than six months will be charged a transaction fee. 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.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
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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 $280 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services 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 Financial Services Group. The Zurich Financial Services 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
