Scudder
Pacific
Opportunities
Fund
Semiannual Report
April 30, 1999
No-Load Funds
Seeks long-term growth of capital through investment primarily in the equity
securities of Pacific Basin companies, excluding Japan.
A no-load fund with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
- --------------------------------------------------------------------------------
Date of Inception: 12/8/92 Total Net Assets as of Ticker Symbol: SCOPX
4/30/99: $138.1 million
- --------------------------------------------------------------------------------
o Pacific Basin stock markets rose in the past six months as a wide range of
positive developments on both the macroeconomic and corporate levels contributed
to improved investor sentiment.
o We continue to employ a research-driven approach to uncover high quality
companies with dominant market positions and clear competitive advantages.
o Management has increased the Fund's weighting in selected producers of basic
materials, in order to take advantage of a potential economic recovery in the
region.
o The Fund continues to emphasize technology companies that stand to benefit
from increased outsourcing in the PC and telecommunications industries.
Table of Contents
3 Letter from the Fund's President 17 Notes to Financial Statements
4 Performance Update 22 Report of Independent Accountants
5 Portfolio Summary 23 Shareholder Meeting Results
6 Portfolio Management Discussion 24 Officers and Directors
9 Investment Portfolio 25 Investment Products and Services
13 Financial Statements 26 Scudder Solutions
16 Financial Highlights
2 - Scudder Pacific Opportunities Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
Stock markets in the Pacific Basin have undergone nerve-wracking
fluctuations in the past two years. A collapse in mid-1997 was followed by a
rebound early in 1998, but the gains evaporated when the global financial crisis
sent stocks into a free fall during the summer. Although fears of a global
financial meltdown were rampant at the depths of the crisis, the Asian markets
have managed to rebound strongly in the past six months. Investors have again
begun to focus on the many reasonably-valued growth opportunities available in
the region as evidence of an economic recovery has become more prevalent.
Although it is natural to concentrate on the dramatic swings in the
region's markets, long-term investors should consider the many positive reforms
that have taken place in the past two years. The crisis, while painful, has
sparked important changes such as industry consolidation and corporate
restructuring. We believe that these developments will ultimately lead to
stronger corporate earnings and, by extension, higher stock prices. While the
Asian markets are likely to experience additional setbacks as the region's
economies undergo further transformation, we feel that the long-term
implications of change will be extremely positive for patient investors. For
more information on how Fund management is seeking to capitalize on the
evolution of the business environment in the Pacific Basin, please turn to the
Portfolio Management Discussion 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 pursuing 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 Pacific Opportunities
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
President,
Scudder Pacific Opportunities Fund
3 - Scudder Pacific Opportunities Fund
<PAGE>
Performance Update as of April 30, 1999
- --------------------------
Fund Index Comparisons
- --------------------------
Total Return
-------------------------------------------------
Period
Ended Growth of Average
4/30/1999 $10,000 Cumulative Annual
-------------------------------------------------
Scudder Pacific Opportunities Fund
-------------------------------------------------
1 Year $ 9,752 -2.48% -2.48%
5 Year $ 6,650 -33.50% -7.83%
Life of Fund* $ 8,954 -10.46% -1.71%
-------------------------------------------------
MSCI All Country Asia Free Index
(excluding Japan)
-------------------------------------------------
1 Year $ 11,842 18.42% 18.42%
5 Year $ 8,094 -19.06% -4.14%
Life of Fund* $ 13,603 36.03% 4.98%
-------------------------------------------------
* The Fund commenced operations on December 8, 1992. Index comparisons
begin December 31, 1992.
- ------------------------------
Growth of a $10,000 Investment
- ------------------------------
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Scudder Pacific MSCI All Country Asia Free
Opportunities Fund Index (excluding Japan)
12/92* 10000 10000
'93 11019 11910
'94 13498 16806
'95 12811 16185
'96 14490 19974
'97 13844 18496
'98 9205 11487
'99 8976 13603
Yearly periods ended April 30
The Morgan Stanley Capital International (MSCI) All Country Asia Free Index is
an unmanaged capitalization-weighted measure of stock markets in the Pacific
Region, excluding Japan. Index returns assume dividends are reinvested and,
unlike Fund returns, do not reflect any 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 $13.19 $16.08 $15.17 $17.05 $16.27 $10.51 $10.21
- -------------------------------------------------------------------------------------------------
Income Dividends $ -- $ .08 $ .10 $ .10 $ .01 $ .30 $ .03
- -------------------------------------------------------------------------------------------------
Capital Gains Distributions $ -- $ .01 $ -- $ -- $ -- $ -- $ --
- -------------------------------------------------------------------------------------------------
Fund Total Return (%) 9.92 22.49 -5.09 13.11 -4.46 -33.51 -2.48
- -------------------------------------------------------------------------------------------------
Index Total Return (%) 19.10 41.11 -3.69 23.42 -7.40 -37.89 18.42
- -------------------------------------------------------------------------------------------------
</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 life of Fund total return for the Fund would have been lower.
4 - Scudder Pacific Opportunities Fund
<PAGE>
Portfolio Summary as of April 30, 1999
- -------------------------------
Geographical
(Excludes 1% Cash Equivalent)
- --------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Hong Kong 28%
Taiwan 17%
Korea 14%
Singapore 9%
Indonesia 8%
India 7%
China 5%
Australia 4%
Philippines 3%
Other 5%
--------------------------------------
100%
--------------------------------------
The Fund has uncovered attractively valued stocks in Taiwan, Korea, and
Indonesia.
- ------------------------------
Sectors
(Excludes 1% Cash Equivalents)
- ------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Financial 23%
Technology 16%
Manufacturing 15%
Consumer Staples 9%
Service Industries 7%
Durables 6%
Communications 6%
Energy 5%
Metals & Minerals 3%
Other 10%
--------------------------------------
100%
--------------------------------------
Sector weightings are the result of individual stock selection rather than
top-down asset allocation.
- ----------------------------
Ten Largest Equity Holdings
(27% of Portfolio)
- ----------------------------
1. Hutchison Whampoa Ltd.
Diversified investment holding
company in Hong Kong
2. Li & Fung Ltd.
Exporter of consumer products in Hong Kong
3. Taiwan Semiconductor
Manufacturing Co.
Manufacturer of integrated
circuits in Taiwan
4. Hong Kong Telecommunications, Ltd.
Telecommunication services in
Hong Kong
5. Cheung Kong Holdings Ltd.
Real estate company in Hong Kong
6. Citic Pacific Ltd.
Diversified holding company in
Hong Kong
7. HSBC Holdings plc
International banking and
financial services provider in
Hong Kong
8. Sun Hung Kai Properties Ltd.
Real estate developer and finance
company in Hong Kong
9. Pohang Iron & Steel Co., Ltd.
Steel producer in Korea
10. Hero Honda Motors Ltd.
Manufacturer of motorized two
wheelers in India
Top holdings reflect a focus on well-managed companies positioned to take
advantage of the shifting economic backdrop in Asia.
For more complete details about the Fund's investment portfolio, see page 9.
A quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Pacific Opportunities Fund
<PAGE>
Portfolio Management Discussion
In the following interview, Theresa Gusman, Lead Portfolio Manager of Scudder
Pacific Opportunities Fund, discusses the Fund's strategy and the market
environment for the six-month period ended April 30, 1999.
Q: Pacific Basin equities have rallied substantially in the past six months. In
your view, what factors caused stock prices to move higher?
A: When the reporting period began last October, Pacific Basin equities were
still suffering from the aftereffects of the global market correction. Believing
that many individual companies offered significant long-term value at that
point, we told shareholders that we anticipated a turnaround in the Asian
markets. While that view has indeed proven correct, the speed at which
investment capital returned to the region was somewhat surprising. Spurred by
lower interest rates, investors reversed course and poured assets back into the
developing countries over the past six months, driving up stock prices in
markets that are relatively small and illiquid in global terms. Despite the
significant role played by liquidity factors in the rebound of the Asian
markets, we believe that the upturn has several fundamental underpinnings.
Q: What developments have led you to take this optimistic view?
A: We continue to see increasing evidence of a cyclical recovery in Asia. Almost
two years after the devaluation of the Thai Baht touched off the region's
crisis, it appears that economic reforms have begun to take effect. Intra-Asian
trade data has improved, with shipments from Japan and Korea actually increasing
in recent months. Regional currencies have been relatively stable amid
decelerating inflation and falling interest rates. Foreign direct investment has
been strong, with Indonesia, Japan, and South Korea among the recent investment
destinations of multinational companies. Recoveries in retail spending and
automobile sales have provided additional evidence that consumption has bottomed
in non-Japan Asia. These developments have combined to provide a positive
fundamental backdrop for the region's stock markets.
Q: Are you seeing positive changes on the corporate level, as well?
A: Yes. Corporate restructuring efforts, including asset sales, capacity
rationalization programs, headcount reductions, and management shakeups continue
to gain momentum as the support systems of the old Asian economy begin to
crumble. Over time, we feel that the ongoing improvement in the cost structures
of Asian companies will significantly increase their earnings power, as it has
for U.S. and European companies in the past ten years. The combination of a
cyclical upturn and falling interest expense should also contribute to
dramatically improved profits in the next 18-24 months. As a result, we believe
that even though some stocks in Asia appear expensive by global standards,
valuations remain attractive in light of the potential rebound in corporate
earnings. We are currently finding opportunities in selected companies in
Indonesia, South Korea, and Taiwan.
6 - Scudder Pacific Opportunities Fund
<PAGE>
Q: How has the Fund performed in this environment?
A: The Fund returned 22.30% in the period, trailing the 41.00% total return of
its unmanaged benchmark, the MSCI Asia All-Country (ex-Japan) Index. Our
holdings in Hong Kong and Taiwan lagged their respective markets after several
quarters of outperformance. In Hong Kong, companies dependent on Chinese
infrastructure development suffered despite their excellent operating results,
strong balance sheets, and reasonable valuations. Believing that the stocks
possessed little prospect for additional gains, we sold into recent strength.
Our holdings in leading PC-related technology stocks in Taiwan also
underperformed. Compal, one of the country's leading manufacturers of notebook
PCs, posted strong first quarter results, with both unit volumes and operating
margins exceeding consensus forecasts. We remain confident in the long-range
prospects of this holding.
Q: What is your fundamental investment strategy?
A: In all market conditions, our ongoing objective is to use intensive
fundamental research to locate attractive, undervalued companies with excellent
management, dominant market positions, clear competitive advantages, and strong
balance sheets. In the rapidly changing environment of the last two years, we
have sought to identify companies positioned to benefit from the shifting
structural, political, social, and economic backdrop in Asia. With this goal in
mind, we are always on the lookout for firms that are poised to increase their
earnings through restructuring and cost-cutting initiatives.
Q: Given your positive outlook for a cyclical recovery, how have you positioned
the portfolio to capitalize on this trend?
A: Our bottom-up strategy led us to add to the Fund's large position in
producers of basic materials. Specifically, we increased exposure to steel,
chemical, DRAM, and petroleum companies, and maintained our significant holdings
in the Indonesian pulp and paper sector. In our view, the supply of basic
materials will fall short of expectations as expansion plans are shelved and
existing production capacity is scrapped more quickly than anticipated. In
addition, we believe that demand will exceed expectations as Asian economies
recover and rock-bottom inventory levels are rebuilt. This should lead to an
increase in prices from current levels, which are barely above the variable cost
of production for many global commodities. Corporate profits, which have dropped
as disinflation has taken a toll on producers, would likely rebound if the
prices of basic materials did indeed begin to rise. We have chosen companies
that are trading at "bottom-of-the-cycle" valuation levels, which typically
represents an attractive entry point.
Our holdings in Indonesia, where we have invested in companies in the pulp and
paper, chemicals, and consumer goods sectors, effectively illustrate our
strategy. Recent pulp industry pricing and inventory data, in combination with
mounting evidence that regional demand has picked up, leads us to believe that
the pulp and paper cycle has turned to the upside. If this is indeed the case,
the share price of Asia Pulp and Paper is likely to rise in kind. On the
consumer side, downtrodden Indonesian companies
7 - Scudder Pacific Opportunities Fund
<PAGE>
such as Astra International (automobiles), Gudang Garam (tobacco), and Indosat
(international communications) should recover as interest rates continue to fall
and confidence returns following the elections.
Q: What opportunities have you found in the technology sector?
A: We continued to look for companies that act as "facilitators of deflation,"
which is our term for companies that allow their European, Japanese, and U.S.
customers to achieve lower costs by outsourcing the production of PCs and
telecommunications equipment. As competition forces multinational technology
companies to search for new ways to grow their profit margins, these types of
companies should fill an important niche in the global economy.
We have also established a small position in an interesting company called
Pacific Internet, which is the leading Internet service provider in Asia outside
of Japan. In addition to holding the dominant market position in Singapore, the
company is a leading player in Hong Kong, Thailand, and Malaysia, and is
establishing operations elsewhere in the region. An excellent growth story,
Pacific Internet has already turned a profit and is poised for further market
penetration going forward.
Q: What do you feel are the key risks to the markets in the months ahead?
A: We feel that the list of possible risks remains essentially unchanged from
six months ago. In our view, the primary threat to the markets continues to be
the potential for backtracking by government and corporate officials on
announced reform and restructuring programs. Secondary risks include an extended
bout of yen weakness, rising U.S. interest rates, and a significant slowdown in
global growth. While it is likely that growth will return to the region in the
years ahead, it is prudent to keep a watchful eye on external factors while the
recovery is still in its early stages.
Notwithstanding the Fund's lackluster performance in the past six months, we
remain convinced that superior individual stock selection will be the key to
long-term performance for investors in the Pacific region. We will continue to
use original, forward-looking research to identify the companies likely to
emerge as the winners of the new business environment in Asia. The potential
gains from restructuring and reform that lie ahead should provide a significant
opportunity for Scudder -- with its strong research capability -- to identify
stocks that will outperform in the months and years ahead.
8 - Scudder Pacific Opportunities Fund
<PAGE>
Investment Portfolio as of April 30, 1999
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 0.5%
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/1999 at 4.87%, to be
repurchased at $671,272 on 5/3/1999, collateralized by a $673,000 U.S. Treasury Note,
3.375%, 1/15/2007 (Cost $671,000) ................................................................... 671,000 671,000
Convertible Bonds 1.7%
- ---------------------------------------------------------------------------------------------------------------------------------
Singapore 0.9%
Finlayson Global Corp., Zero Coupon, 2/19/2004 ........................................................ 950,000 1,156,625
----------
United Kingdom 0.8%
APP Global Finance Ltd., 2%, 7/25/2000 ................................................................ 1,195,000 1,093,425
- ---------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $2,075,777) ............................................................. 2,250,050
- ---------------------------------------------------------------------------------------------------------------------------------
Shares
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stocks 97.8%
- ---------------------------------------------------------------------------------------------------------------------------------
Australia 3.7%
Broken Hill Proprietary Co. Ltd. (Petroleum and mineral exploration and steel production) ............. 120,600 1,363,423
Cable & Wireless Optus Ltd.* (Telecommunication services) ............................................. 591,700 1,331,295
Woodside Petroleum Ltd. (Oil and gas producer) ........................................................ 324,500 2,211,800
----------
4,906,518
----------
China 4.7%
Beijing Datang Power Generation Co., Ltd. "H" (Owner and operator of coal-fired electric
power plants) ....................................................................................... 4,846,000 1,453,659
Guangdong Kelon Electric Holdings, Ltd. "H" (Refrigerator manufacturer) ............................... 1,447,000 1,344,180
Harbin Power Equipment Co., Ltd. "H" (Manufacturer of electric power generation equipment) ............ 17,394,000 1,166,968
Shanghai Petrochemical Co., Ltd. "H" (Manufacturer of petrochemical and petroleum products) ........... 11,531,000 2,157,204
----------
6,122,011
----------
Hong Kong 27.9%
Cheung Kong Holdings Ltd. (Real estate company) ....................................................... 320,000 2,910,686
Citic Pacific Ltd. (Diversified holding company) ...................................................... 1,050,000 2,844,886
Dah Sing Financial Group (General banking and property investment holding company) .................... 446,800 1,409,446
Esprit Holdings Ltd. (Designer and manufacturer of high quality fashion products) ..................... 2,406,000 1,443,460
Giordano International Ltd. (Retailer of casual apparel) .............................................. 3,008,000 1,397,129
HSBC Holdings plc (International banking and financial services provider) ............................. 76,400 2,838,848
Hong Kong Telecommunications, Ltd. (Telecommunication services) ....................................... 1,284,100 3,454,309
Hutchison Whampoa, Ltd. (Diversified investment holding company) ...................................... 740,900 6,643,557
Li & Fung Ltd. (Exporter of consumer products) ........................................................ 1,873,000 4,591,427
New World Development Co., Ltd. (Property investment and development) ................................. 817,498 2,025,089
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Pacific Opportunities Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
New World Infrastructure Ltd.* (Investment in and operation of infrastructure projects) ... 977,000 1,789,943
SmarTone Telecommunications Holdings Ltd. (Cellular communication services) ............... 370,500 1,283,479
Sun Hung Kai Properties Ltd. (Real estate developer and finance company) .................. 316,000 2,762,184
Wing Hang Bank Ltd. (Bank) ................................................................ 435,000 1,330,129
----------
36,724,572
----------
India 6.8%
Corporation Bank (Commercial bank) (b) .................................................... 100 137
HDFC Bank Ltd. (Corporate banking and financial services) (b) ............................. 100 146
Hero Honda Motors Ltd. (Manufacturer of motorized two wheelers) (b) ....................... 129,100 2,636,910
Hindustan Lever Ltd. (Manufacturer of branded and packaged consumer products) (b) ......... 43,600 2,090,844
Infosys Technologies Ltd. (Financial and industrial software developer) (b) ............... 34,600 2,122,778
Mahanagar Telephone Nigam Ltd. (Telecommunication services in Delhi and Bombay) (b) ....... 100 363
Punjab Tractors Ltd. (Manufacturer of agricultural equipment) (b) ......................... 44,000 1,380,206
TVS Suzuki Ltd. (Manufacturer of motorcycles and mopeds) (b) .............................. 68,700 714,856
----------
8,946,240
----------
Indonesia 7.5%
Asia Pulp & Paper Co., Ltd. (ADR)* (Producer of pulp and paper) ........................... 201,600 2,116,800
Indonesia Satellite Corp. (ADR) (International telecommunication services) ................ 73,900 1,394,863
PT Astra International, Inc.* (Distributor of automobiles and related parts) .............. 9,016,000 1,591,552
PT Gudang Garam Tbk (Manufacturer and distributor of cigarettes) .......................... 849,000 1,540,768
PT Indofood Sukses Makmur Tbk* (Manufacturer of food products) ............................ 2,103,000 1,667,290
PT Indorama Synthetics Tbk* (Producer of polyester yarn, fiber and fabric) ................ 8,798,800 1,553,210
----------
9,864,483
----------
Korea 14.2%
Cheil Jedang Corp. (Sugar refiner and major integrated food processor) .................... 27,540 1,459,840
Honam Petrochemical Corp. (Manufacturer of polypropylene, polyethylene and ethylene glycol) 111,950 2,072,276
Medison Co., Ltd. (Producer of medical equipment) ......................................... 100,990 1,130,136
Pacific Corp. (Manufacturer of life commodities and bio-chemical products) ................ 68,060 1,517,535
Pohang Iron & Steel Co., Ltd. (Steel producer) (b) ........................................ 30,740 2,639,993
Samsung Corp. (Trading company) ........................................................... 170,090 2,389,990
Samsung Electronics Co., Ltd. (Electronics manufacturer) .................................. 34,086 2,621,338
Samsung Securities Co. Ltd. (Securities company) .......................................... 47,376 1,833,653
Shinhan Bank (GDR)* (Bank) ................................................................ 70,600 1,685,575
Ssangyong Oil Refining Co., Ltd. (Producer of refined oil, lube oil and lubricants) ....... 67,480 1,362,659
----------
18,712,995
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Pacific Opportunities Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Malaysia 1.1%
Rothmans of Pall Mall Berhad (Manufacturer, importer and retailer of tobacco products) ........ 202,600 1,466,165
United Plantations Berhad (Cultivation and processing of palm oil, copra and cocoa) ........... 20,000 21,579
----------
1,487,744
----------
Papua New Guinea 1.5%
Oil Search Ltd. (Oil and gas exploration and production) ...................................... 1,071,900 1,397,379
Orogen Minerals Ltd. (Investment company with controlling interest in Papua New Guinea
gold and oil companies) ..................................................................... 521,800 635,354
----------
2,032,733
----------
Philippines 3.2%
Bank of the Philippine Islands (Commercial bank) .............................................. 433,000 1,366,469
International Container Terminal Services, Inc. (Containerized cargo handling firm) ........... 14,852,100 1,484,234
Metropolitan Bank and Trust Co. (Commercial bank) ............................................. 141,090 1,409,972
----------
4,260,675
----------
Singapore 8.2%
Allgreen Properties Ltd.* (Real estate development) (b) ....................................... 756,000 459,046
City Developments Ltd. (Developer of residential, industrial, retail and investment properties) 218,000 1,452,220
JIT Holdings Ltd. (Manufacturer and distributor of electronic products) ....................... 179,000 195,219
Keppel Land Ltd. (Property investment and development) ........................................ 931,000 1,553,222
Natsteel Electronics Ltd. (Manufacturer of telecommunication and network products) ............ 547,000 1,838,059
Overseas Chinese Banking Corp., Ltd. (Foreign registered) (Commercial bank) ................... 162,000 1,518,481
Overseas Union Bank Ltd. (Foreign registered) (Provider of banking and financial services) .... 293,000 1,502,741
Pacific Internet Ltd.* (Provider of internet access services to the Asia Pacific market) ...... 11,800 936,625
United Overseas Bank, Ltd. (Foreign registered) (Commercial bank) ............................. 182,000 1,405,530
----------
10,861,143
----------
Taiwan 16.9%
ASE Test Ltd.* (Provider of testing services to semiconductor manufacturers) .................. 73,000 1,533,000
Acer Peripherals, Inc. (Developer and distributor of computer peripherals) .................... 801,291 1,408,998
Asustek Computer Inc. (Manufacturer of computer mainboards, audio, video and network cards) ... 197,141 2,061,842
China Motor Co., Ltd. (Manufacturer of trucks and automobiles) ................................ 870,000 1,423,395
Compal Electronics Inc. (Manufacturer and marketer of notebook computers and color monitors) .. 426,706 1,474,550
Far East Textile Ltd. (Manufacturer of natural and synthetic textile products) ................ 1,648,560 2,213,204
Formosa Plastics Corp. (Manufacturer of plastics materials) ................................... 1,135,000 2,013,150
Hon Hai Precision Industry Co., Ltd. (Manufacturer of electronic connectors, cable assemblies
and memory chips) ........................................................................... 400,000 2,177,370
Siliconware Corp. (Testing and packaging of integrated circuits) .............................. 1,959,200 1,336,091
Siliconware Precision Industries Co. (Manufacturer and marketer of integrated circuit plates) . 725,000 1,297,018
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Pacific Opportunities Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Synnex Technology International Corp. (GDR)* (Distributor of personal computers
and peripherals) ....................................................................... 643 2,930
Taiwan Semiconductor Manufacturing Co. (Manufacturer of integrated circuits) ............. 1,177,000 3,977,324
Yang Ming Marine Transport Corp. (Marine transportation) ................................. 1,871,000 1,327,437
----------
22,246,309
----------
Thailand 2.1%
BEC World Public Co., Ltd. (Foreign registered) (Holding company involved in entertainment
and television broadcasting) (b) ....................................................... 251,700 1,330,812
Siam Cement Co., Ltd.(Foreign registered)* (Manufacturer of construction materials) (b) .. 49,600 1,466,458
----------
2,797,270
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $98,412,811) 128,962,693
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $101,159,588) (a) 131,883,743
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security
(a) The cost for federal income tax purposes was $103,762,257. At April 30,
1999, net unrealized depreciation for all securities based on tax cost was
$28,121,486. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $32,559,195 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$4,437,709.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $14,842,549 (10.75% of net assets).
Their values have been estimated by the Board of Directors in the absence
of readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of
these securities at April 30, 1999 aggregated $10,347,259. These
securities may also have certain restrictions as to resale.
Transactions in written options during the six months ended April 30, 1999
were:
<TABLE>
<CAPTION>
Number of Contracts Premiums ($)
---------------------------------------
<S> <C> <C>
Outstanding at
October 31, 1998 ......................... -- --
Contracts written ........................ (269) (74,524)
Contracts closed ......................... 269 74,524
---------------------------------------
-- --
------- --------
April 30, 1999............................ ------- --------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Pacific Opportunities Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1999
<TABLE>
<CAPTION>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $101,159,588) ........... $ 131,883,743
Cash ............................................................ 297
Foreign currency holdings, at market (identified cost $1,990,261) 1,991,257
Receivables for investments sold ................................ 8,921,365
Receivables for Fund shares sold ................................ 572,742
Dividends and interest receivable ............................... 362,417
Unrealized appreciation on forward currency exchange contracts .. 116,465
Other assets .................................................... 1,919
-------------
Total assets .................................................... 143,850,205
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ............................... 2,552,477
Payable for Fund shares redeemed ................................ 1,846,106
Deferred foreign taxes .......................................... 925,167
Accrued management fee .......................................... 113,548
Other payables and accrued expenses ............................. 288,779
-------------
Total liabilities ............................................... 5,726,077
- ---------------------------------------------------------------------------------------------------
Net assets, at market value $ 138,124,128
- ---------------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated net investment loss.................................. (492,117)
Unrealized appreciation (depreciation) on:
Investments .................................................. 30,724,155
Foreign currency related transactions ........................ 50,234
Accumulated net realized gain (loss) ............................ (75,370,640)
Paid-in capital ................................................. 183,212,496
- ---------------------------------------------------------------------------------------------------
Net assets, at market value $ 138,124,128
- ---------------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($138,124,128 /13,522,889 shares of capital stock ---------
outstanding, $.01 par value, 100,000,000 shares authorized)... $10.21
---------
The accompanying notes are an integral part of the financial statements.
</TABLE>
13 - Scudder Pacific Opportunities Fund
<PAGE>
Statement of Operations
six months ended April 30, 1999
<TABLE>
<CAPTION>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $61,841) $ 575,036
Interest ................................................... 378,419
-----------
953,455
-----------
Expenses:
Management fee ............................................. 594,965
Services to shareholders ................................... 412,872
Custodian and accounting fees .............................. 247,833
Directors' fees and expenses ............................... 23,088
Reports to shareholders .................................... 35,878
Auditing ................................................... 38,140
Registration fees .......................................... 24,116
Legal ...................................................... 8,519
Other ...................................................... 19,865
-----------
1,405,276
--------------------------------------------------------------------------
Net investment income (loss) (451,821)
---------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ................................................ (9,726,019)
Futures .................................................... (389,378)
Options .................................................... (297,666)
Foreign currency related transactions ...................... (879,241)
-----------
(11,292,304)
-----------
Net unrealized appreciation (depreciation) during the period on:
Investments (net of deferred foreign taxes of $925,167) .... 37,417,391
Foreign currency related transactions ...................... 627,598
-----------
38,044,989
--------------------------------------------------------------------------
Net gain (loss) on investment transactions 26,752,685
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $26,300,864
--------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Pacific Opportunities Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets Six Months
Ended Year Ended
April 30, October 31,
1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ...................................... $ (451,821) $ 607,308
Net realized gain (loss) from investment transactions ............. (11,292,304) (44,875,920)
Net unrealized appreciation (depreciation) on investment
transactions during the period ................................. 38,044,989 15,501,227
------------- -------------
Net increase (decrease) in net assets resulting from operations ... 26,300,864 (28,767,385)
------------- -------------
Distributions to shareholders from net investment income .......... (313,685) (3,652,405)
------------- -------------
Fund share transactions:
Proceeds from shares sold ......................................... 319,673,020 488,924,261
Net asset value of shares issued to shareholders in reinvestment of
distributions .................................................. 286,711 3,371,465
Cost of shares redeemed ........................................... (320,589,297) (494,386,113)
------------- -------------
Net increase (decrease) in net assets from Fund share transactions (629,566) (2,090,387)
------------- -------------
Increase (decrease) in net assets ................................. 25,357,613 (34,510,177)
Net assets at beginning of period ................................. 112,766,515 147,276,692
Net assets at end of period (including accumulated net investment
loss of $492,117 and undistributed net investment income of ------------- -------------
$273,389, respectively) ........................................ $ 138,124,128 $ 112,766,515
------------- -------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ......................... 13,463,341 12,936,930
----------- -----------
Shares sold ....................................................... 36,484,052 53,297,255
Shares issued to shareholders in reinvestment of distributions..... 32,507 336,809
Shares redeemed ................................................... (36,457,011) (53,107,653)
----------- ----------
Net increase (decrease) in Fund shares ............................ 59,548 526,411
----------- ----------
Shares outstanding at end of period ............................... 13,522,889 13,463,341
----------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Pacific Opportunities 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 ................ $ 8.38 $ 11.38 $ 15.93 $ 15.59 $ 17.57 $ 16.21
Income from investment operations: ----------------------------------------------------------
Net investment income (loss) ........................ (.04) 0.05 (.04) .02 .10 .04
Net realized and unrealized gain (loss) on investment
transactions...................................... 1.90 (2.75) (4.50) .42 (1.98) 1.41
----------------------------------------------------------
Total from investment operations .................... 1.86 (2.70) (4.54) .44 (1.88) 1.45
----------------------------------------------------------
Less distributions from:
Net investment income ............................... (.03) (.30) (.01) (.10) (.10) (.08)
Net realized gains on investment transactions ....... -- -- -- -- -- (.01)
----------------------------------------------------------
Total distributions ................................. (.03) (.30) (.01) (.10) (.10) (.09)
----------------------------------------------------------
----------------------------------------------------------
Net asset value, end of period....................... $10.21 $ 8.38 $ 11.38 $ 15.93 $ 15.59 $ 17.57
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ......................................... 22.30** (24.16) (28.52) 2.76 (10.73) 8.97
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................... 138 113 147 329 384 499
Ratio of operating expenses to average daily net .........
assets (%).............................................. 2.60* 2.46 1.94 1.75 1.74 1.81
Ratio of net investment income (loss) to average daily net
assets (%).............................................. (.84)* .50 (.22) .12 .65 .28
Portfolio turnover rate (%) .............................. 168.2* 140.9 97.2 95.4 64.0 38.5
(a) Based on monthly average shares outstanding during the period.
* Annualized
** Not annualized
</TABLE>
16 - Scudder Pacific Opportunities Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Pacific Opportunities 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 the 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 purchased with original maturities greater than
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.
Options. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the
period, the Fund purchased call options and wrote put options on indices as a
hedge against potential adverse price movements in the value of portfolio
assets.
If the Fund writes an option and the option expires unexercised, the
Fund will realize income, in the form of a capital gain, to the extent of the
amount received for the option (the "premium"). If the Fund elects to close out
the option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium paid. If the Fund elects to close out the option it
would recognize a gain or loss equal to the difference between the cost of
acquiring the option and the amount realized upon the sale of the option.
17 - Scudder Pacific Opportunities Fund
<PAGE>
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked price are available. Over-the-counter written or purchased options are
valued using dealer supplied quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise
price.Over-the- counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased and sold futures on indices as a hedge against potential adverse
price movements in the value of portfolio assets.
Upon entering into a futures contract, the Fund is required to deposit
with a financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
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 rates of exchange prevailing on the respective dates
of such transactions.
18 - Scudder Pacific Opportunities Fund
<PAGE>
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
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 and as a
hedge against changes in exchange rates relating to foreign currency denominated
assets.
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.
At October 31, 1998, the Fund had a net tax basis capital loss carryforward of
approximately $60,000,000, which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2002 ($13,000,000), October 31, 2004 ($5,000,000) and October 31, 2006
($42,000,000), the respective expiration dates, whichever occurs first.
Net realized and unrealized gains of the Fund derived in India are subject to
certain non-U.S. taxes. Additionally, principal amounts of cash and securities
invested in Malaysia are also subject to certain non-U.S. taxes.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax.
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 forward contracts, passive
foreign investment companies and investments in 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
19 - Scudder Pacific Opportunities Fund
<PAGE>
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. All original issue discounts are accreted for both tax and
financial reporting purposes. Interest income is recorded on the accrual basis.
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 $91,127,892 and
$86,955,271, respectively.
The aggregate face value of futures contracts opened and closed during the six
months ended April 30, 1999 was $92,057,194.
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 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 Agreement. The management fee
payable under the Agreement is equal to an annual rate of 1.10% of the Fund's
average daily net assets, computed and accrued daily and payable monthly. For
the six months ended April 30, 1999, the fee pursuant to this Agreement amounted
to $594,965, of which $113,548 is unpaid at April 30, 1999.
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 $305,737, of which $49,417 is unpaid at April 30, 1999.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans for the Fund. For the six months ended April 30, 1999,
the amount charged to the Fund by STC aggregated $23,343, of which $3,914 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 $55,746,
of which $19,627 is unpaid at April 30, 1999.
The Fund pays each Director 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 $23,088.
20 - Scudder Pacific Opportunities Fund
<PAGE>
D.Investing in Emerging Markets
Investing in emerging markets may involve special risks and considerations not
typically associated with investing in the United States. These risks include
revaluation of currencies, high rates of inflation, repatriation restrictions on
income and capital, and future adverse political and economic developments.
Moreover, securities issued in these markets may be less liquid, subject to
government ownership controls, delayed settlements, and their prices more
volatile than those of comparable securities in the United States.
E. Commitments
As of April 30, 1999, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized appreciation of
$116,465.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
--------------------------- ------------------------- ----------------------- --------------------
<S> <C> <C> <C> <C> <C>
USD 1,581,645 THB 60,244,850 6/2/1999 44,368
THB 60,244,850 USD 1,602,683 6/2/1999 (23,330)
USD 1,694,417 KRW 2,324,740,000 8/4/1999 257,435
KRW 2,324,740,000 USD 1,745,300 8/4/1999 (206,551)
USD 1,586,853 KRW 2,324,740,000 8/13/1999 364,671
KRW 2,324,740,000 USD 1,631,396 8/13/1999 (320,128)
---------
116,465
---------
---------
</TABLE>
F. Line of Credit
The Fund and several affiliated 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.
G. Other
Effective May 22, 1999, a redemption fee of 2% will be imposed for the
redemption or exchange of shares held less than one year. This redemption fee is
only applicable to shares purchased on or after May 22, 1999.
21 - Scudder Pacific Opportunities Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder International Fund, Inc. and to the
Shareholders of Scudder Pacific Opportunities 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 Pacific Opportunities 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 11, 1999
22 - Scudder Pacific Opportunities Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Pacific
Opportunities 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*
--- ------- ------- -----------------
6,274,689 481,861 211,134 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
5,362,416 540,469 287,317 777,482
- --------------------------------------------------------------------------------
* 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 Pacific Opportunities 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 Pacific Opportunities 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
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Education IRA
UGMA/UTMA
Closed-End Funds#
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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 Pacific Opportunities Fund
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Scudder Solutions
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Convenient ways to invest, quickly and reliably:
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<S> <C> <C>
Automatic Investment Plan 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 Pacific Opportunities Fund
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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
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
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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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28 - Scudder Pacific Opportunities Fund
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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
