SCUDDER
INVESTMENTS (SM)
[LOGO]
--------------------------------------------------------------------------------
EQUITY/GLOBAL
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Scudder Pacific
Opportunities Fund
Fund #073
Semiannual Report
April 30, 2000
The fund seeks to provide long-term growth of capital.
A no-load fund with no commissions to buy, sell, or exchange shares.
<PAGE>
Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
10 Portfolio Management Discussion
14 Glossary of Investment Terms
15 Investment Portfolio
19 Financial Statements
22 Financial Highlights
23 Notes to Financial Statements
28 Report of Independent Accountants
29 Officers and Directors
30 Investment Products and Services
32 Scudder Solutions
2
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Scudder Pacific Opportunities Fund
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ticker symbol SCOPX fund number 073
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Date of Inception: o The Asian markets closely tracked the performance of
12/8/92 U.S. equities during the last six months. After rising
behind the strong performance of the technology and
telecommunications sectors throughout the latter part
of 1999 and the first two months of 2000, Asian stocks
Total Net Assets as generally followed the Nasdaq, which was lower over
of 4/30/00: the final seven weeks of the period.
$164 million
o Despite the recent volatility, the fund's management
team remains optimistic on the outlook for Asian
equities. Believing that stronger global growth, the
region's changing corporate culture, and the
increasing focus on restructuring bode well for
corporate earnings growth in 2000 and beyond,
management has been actively buying on market
downturns.
3
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Letter from the Fund's President
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Dear Shareholders,
During the past six months, the level of volatility in the global equity markets
has increased considerably. Sparked by the large fluctuations of the Nasdaq
average in the United States, daily moves of 2-3% in the international indices
have become increasingly commonplace. While such volatility can be unsettling --
particularly for those who are invested in the Asian markets, where daily moves
can be even more substantial -- we urge investors to remain focused on the
important long-term trends that are emerging in the Pacific Rim. The region's
economy is picking up steam, consumer spending is increasing, and many companies
are restructuring to improve their bottom lines. In many countries, we are
witnessing a more dynamic, entrepreneurial culture that is fueling economic
growth and increasing the wealth of the average citizen. In our view, these
factors provide a solid underpinning for strong corporate profit growth in the
years ahead. We remain optimistic that investors will be rewarded by the fruits
of these changes, provided that they can remain focused on the region's positive
long-term trends at the times when stock prices are falling.
We believe that this positive fundamental backdrop in Asia provides a fertile
stockpicking environment for the management team of Scudder Pacific
Opportunities Fund. Utilizing an approach that employs intensive, on-the-ground,
fundamental research, the management team strives to separate companies that
4
<PAGE>
are "cheap for a reason" from those whose attractive valuations do not reflect
their strong business models and talented management teams. For more information
on how the fund's management team seeks to take advantage of the changes
unfolding in the Asian economies, please turn to the Portfolio Management
Discussion that begins on page 10.
Thank you for your continued investment in Scudder Pacific Opportunities Fund.
For current information on the fund or your account, visit our Web site at
www.scudder.com. There you will find a wealth of information, including fund
performance, the most recent news on Scudder products and services, and the
opportunity to perform account transactions. You can also speak with the one of
our representatives by calling 1-800-SCUDDER (1-800-728-3337).
Sincerely,
/s/Nicholas Bratt
Nicholas Bratt
President,
Scudder Pacific Opportunities Fund
5
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Performance Update
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April 30, 2000
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Growth of a $10,000 Investment
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THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
Scudder Pacific MSCI 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
'00 12165 15874
Yearly periods ended April 30
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Fund Index Comparison
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Total Return
Growth of Average
Period ended 4/30/2000 $10,000 Cumulative Annual
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Scudder Pacific Opportunities Fund
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1 year $ 13,552 35.52% 35.52%
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5 year $ 9,496 -5.04% -1.03%
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Life of Fund** $ 12,134 21.34% 2.65%
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MSCI All Country Asia Free Index (excluding Japan)*
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1 year $ 11,670 16.70% 16.70%
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5 year $ 9,808 -1.92% -.39%
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Life of Fund** $ 15,874 58.74% 6.50%
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* 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.
** The Fund commenced operations on December 8, 1992. Index comparisons begin
December 31, 1992.
6
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Returns and Per Share Information
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THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE ILLUSTRATING THE SCUDDER PACIFIC
OPPORTUNITIES FUND TOTAL RETURN (%) AND MSCI ALL COUNTRY ASIA FREE INDEX
(EXCLUDING JAPAN)* TOTAL RETURN (%)
BAR CHART DATA:
Yearly periods ended April 30
1993** 1994 1995 1996 1997 1998 1999 2000
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Fund Total
Return (%) 9.92 22.49 -5.09 13.11 -4.46 -33.51 -2.48 35.52
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Index Total
Return (%) 19.10 41.11 -3.69 23.42 -7.40 -37.89 18.42 16.70
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Net Asset Value ($) 13.19 16.08 15.17 17.05 16.27 10.51 10.21 13.85
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Income
Dividends ($) -- .08 .10 .10 .01 .30 .03 --
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Capital Gains
Distributions ($) -- .01 -- -- -- -- -- --
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* 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.
** The Fund commenced operations on December 8, 1992. Index comparisons begin
December 31, 1992.
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.
7
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Portfolio Summary
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April 30, 2000
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Geographical
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(Excludes 2% Cash Equivalents) The fund's weightings in
its top four country
holdings have increased
during the last six
months.
A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE BELOW.
Hong Kong 26%
Taiwan 23%
Korea 23%
India 12%
Singapore 6%
Malaysia 3%
Australia 1%
China 1%
Thailand 1%
Other 4%
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100%
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Sectors
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(Excludes 2% Cash Equivalents) Although technology and
telecommunications
stocks slumped during
March and April, the
fund's positions in
these areas boosted
performance over the
full period.
A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE BELOW.
Technology 41%
Communications 21%
Financial 14%
Manufacturing 9%
Consumer Staples 4%
Construction 3%
Consumer Discretionary 3%
Service Industries 3%
Health 2%
------------------------------------
100%
------------------------------------
8
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Ten Largest Equity Holdings
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(42.5% of Portfolio) The fund's top holdings
demonstrate a focus on
well-managed,
fast-growing companies
with dominant market
positions and clear
competitive advantages.
1. Samsung Electronics Co., Ltd.
Electronics manufacturer in Korea
2. China Telecommunications Ltd.
Provider of telecommunication services in Hong Kong
3. SK Telecom Co., Ltd.
Provider of mobile telecommunications and paging services
in Indonesia
4. Hutchison Whampoa, Ltd.
Diversified investment holding company in Hong Kong
5. Satyam Computer Services Ltd.
Provider of software services in India
6. Infosys Technologies Ltd.
Financial and industrial software developer in India
7. Hon Hai Precision Industry Co., Ltd.
Manufacturer of electronic connectors and cable assemblies
and memory chips in Taiwan
8. DBS Group Holdings Ltd.
Provider of banking and other financing services in
Singapore
9. Asustek Computer Inc.
Manufacturer of computer motherboards, audio, video and
network cards in Taiwan
10. Chartered Semiconductor
Manufacturer of semiconductors in Singapore
For more complete details about the Fund's investment portfolio, see page 15. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
9
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Portfolio Management Discussion
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April 30, 2000
We asked Tien-Yu Sieh, lead portfolio manager of Scudder Pacific Opportunities
Fund, to discuss the recent market environment and the fund's current investment
strategy over the six-month period ended April 30, 2000.
Q: The Asian markets have been exceptionally volatile over the past six months.
What has been the driving force behind the performance of the region's markets?
A: The most important factor has been the enormous volatility in the U.S. stock
market, particularly the Nasdaq average. While the fluctuations of U.S. equities
have influenced all of the global markets, the impact has been particularly
acute in Asia, where technology and telecommunications stocks make up a large
portion of the indices in Taiwan, Korea, and China. As stocks in these sectors
rocketed to new highs in the U.S., their Asian counterparts followed suit,
posting large gains from November through February. At the same time, most
stocks in the so-called "Old Economy" sectors -- such as financials and
manufacturing stocks -- were flat to down. The correlation with the U.S. market
continued over the final seven weeks of the period, when stocks in Asia dropped
sharply as the Nasdaq was plunging from a high of just over 5,000 on March 10 to
3680 on April 28. While the resulting decline in Asian equities proved to be a
negative for fund performance during this time, we view volatility in the U.S.
markets as "noise" that only serves to obscure what we see as the positive story
that is unfolding in Asia.
Q: How did the fund perform in this environment?
A: For the six months ended April 30, 2000, Scudder Pacific Opportunities Fund
rose 17.97%, versus a total return of 7.23% for its unmanaged benchmark, the
MSCI All Country Asia Free, Ex-Japan Index. The fund also stacked up well
against its peers. According to Lipper Analytical Services, Pacific
Opportunities finished in the
10
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top third of funds in the Pacific Ex-Japan category over the twelve months ended
April 30.^1
Q: What factors helped fund performance during the period?
A: Although techs and telecoms slumped in March and April, the fund was helped
by its position in these sectors over the full period. Within the tech group, we
focus on companies with strong business franchises and management teams that
possess real world experience. Our position is concentrated in technology
enablers, wireless communications providers, companies that make the "nuts and
bolts" of the communications infrastructure, and contract manufacturers in
Korea, Taiwan, and Singapore. While Asia's tech sector is very volatile, we
believe that it is worth taking on the additional risk to participate in what we
believe is its substantial long-term upside. We are also overweighted in
consumer stocks, which stand to benefit from the region's economic recovery and
expanding levels of domestic consumption. Included in this group are retailers,
cellular phone operators in the largest markets, and banks that cater to a
high-end clientele. Going forward, we intend to maintain an overweight position
in companies with exposure to the domestic economy, as well as leading exporters
of industrial products and services.
Another key theme that distinguishes the portfolio is our investments in
companies that have seized the initiative to improve their competitive
positions. We expect that as the region's recovery continues to gain momentum,
there will be an increasing differentiation between companies with strong
fundamentals, and those whose stocks prices have merely been lifted by the
improving economic backdrop. For that reason, we are confident that a bottom-up
^1 Source: Lipper Analytical Services, Inc. is an independent analyst of
investment performance. Performance includes reinvestment of dividends and
capital gains. For the period ended April 30, 2000, Scudder Pacific
Opportunities Fund's Lipper ranking was 25 out of 79 funds for the one-year
period, 35 out of 71 funds for the three-year period, and 26 out of 35 for
the five-year period. Past performance is no guarantee of future results.
11
<PAGE>
approach that focuses on fundamentals and on-the-ground research will be well
suited to the stockpicker's market that we see emerging over the remainder of
the year.
Q: What factors influenced the fund on the down side?
A: Our overweighted positions in Taiwan and Korea detracted from performance,
since both markets were impacted negatively by country-specific factors. In
Taiwan, for instance, the recent presidential election and its resulting
implications for the country's relations with China have put downward pressure
on the market. And in Korea, investors remain concerned about the health of the
banking system. Nevertheless, we remain optimistic on the prospects for the
stocks we hold in these two countries. Korea is particularly attractive in terms
of both its valuations and its earnings growth. Even more important, the country
is undergoing significant changes in its corporate culture. While in the past
the large chaebols (conglomerates) dominated the country's business environment
-- absorbing capital, manpower, and natural resources -- today, due in part to
the growth of the Internet, we are seeing the evolution of a more dynamic,
entrepreneurial environment. College graduates no longer look for lifetime
employment at the chaebols; instead, they want to join start-ups or found their
own companies. Over time, we believe that this type of positive fundamental
change is more important than the day-to-day fluctuations of stock prices.
Q: How have you sought to take advantage of the volatility in the Asian markets?
A: We have been buyers during the recent correction. We have added to our top
holdings -- particularly Samsung Electronics, SK Telecom, and China Telecom --
and we have marginally increased our holdings in the financial sector by buying
shares of HSBC and JCG in Hong Kong. We see downdrafts in the region's markets
as a buying opportunity for the simple reason that, in our view, the improving
fundamentals and positive earnings momentum
12
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of many top companies are not being fully reflected in their stock prices. In
general, the valuations of Asian companies are dramatically more attractive than
those in the U.S., yet Asian share prices tend to fall just as far as American
ones during corrections. If, for example, the S&P 500 Index is valued at 30
times earnings, and Korea's market is valued at less than 10 times, why should a
2% drop in the U.S. translate into a 2% drop in Korea? It should not
necessarily, but it has in recent months because local sentiment -- especially
among retail investors -- has been a more important driver of market performance
than fundamentals. As bottom-up investors, we welcome this anomaly as an
opportunity to add to positions in quality companies whose prices are being
impacted by external factors.
Q: What is your outlook for Asian equities?
A: Although volatility in the U.S. should continue to drive the near-term
performance of Asia's markets, our long-term outlook for the region remains
favorable. Growth continues to improve, exports are up, inflation is benign, and
the rapid growth of the consumer culture is leading to a stronger, more diverse
economy. On the individual company level, management practices are becoming
increasingly efficient and restructuring is becoming a more accepted means of
boosting profits. These factors, in turn, should increase the flow of foreign
assets into the region, which over time will help provide financing for
companies that are investing for the future. As a result, we continue to believe
that corporate earnings growth will exceed expectations over the balance of
2000. We therefore urge investors to maintain a long-term outlook even when the
markets are falling. While we expect that the shifting U.S. interest rate
outlook will continue to roil the global markets in the near term, we expect
that Asia will remain a source of attractive investment opportunities for many
years to come.
13
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Glossary of Investment Terms
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<TABLE>
<S> <C>
Bottom-Up Investing An investment style that focuses on the use of research to
Style assess the performance of individual companies before
considering the impact of economic trends. This approach,
which is the opposite of "top-down" investing, assumes that
the most significant determinant of performance is
individual stock selection, rather than industry or country
allocation.
Fundamental Analysis of companies based on the projected impact of
Research management, products, sales, and earnings on their balance
sheets and income statements. Distinct from technical
analysis, which evaluates the attractiveness of a stock
based on historical price and trading volume movements,
rather than the financial results of the underlying company.
Price/Earnings Price of a stock divided by its earnings per share. A widely
(P/E) (also used gauge of a stock's valuation that indicates what
"earnings investors are paying for a company's earnings on a per share
multiple") basis. A higher earnings multiple indicates higher investor
expectations or a higher growth rate, as well as the
potential for greater price fluctuations.
Restructuring The general term for major corporate changes aimed at
greater efficiency and adaptation to changing markets.
Cost-cutting initiatives, debt retirement, management
realignments, and the sale of non-core businesses are all
developments frequently associated with corporate
restructuring.
Weighting Refers to the allocation of assets -- usually in terms of
(over/under) sectors, industries, or countries -- within a portfolio
relative to the portfolio's benchmark index or investment
universe.
</TABLE>
(Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
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<TABLE>
<CAPTION>
Investment Portfolio as of April 30, 2000
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Principal
Amount ($) Value ($)
-----------------------------------------------------------------------------------------------------------
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Repurchase Agreements 1.5%
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<S> <C> <C>
Donaldson, Lufkin & Jenrette, 5.68%, to be repurchased at
$2,378,125 on 5/1/2000** (Cost $2,377,000) ................................. 2,377,000 2,377,000
Shares
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Common Stocks 98.5%
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Australia 1.2%
Davnet Limited* (Telecommunication services) .................................. 1,352,000 1,933,448
China 0.9%
Nanjing Panda Electronics Co., Ltd."H"* (Developer,
manufacturer and marketer of electronics and
telecommunications products) ............................................... 3,302,000 1,367,161
Hong Kong 25.6%
ASM Pacific Technology Ltd. (Manufacturer of machinery
for the production of semiconductors) ...................................... 688,000 2,437,868
China Telecom Ltd. (Telecommunication
services) .................................................................. 1,634,000 11,695,254
Esprit Holdings Ltd. (Designer and manufacturer of
high quality fashion products) ............................................. 2,438,341 2,598,276
Giordano International Ltd. (Retailer of casual apparel) ...................... 1,592,000 2,605,949
Hutchison Whampoa, Ltd. (Diversified investment
holding company) ........................................................... 404,000 5,861,011
JCG Holdings Ltd. (Bank) ...................................................... 3,164,000 1,645,145
Legend Holdings Ltd. (Manufacturer of computer
related products) .......................................................... 2,142,000 2,488,747
Li & Fung Ltd. (Exporter of consumer products) ................................ 594,000 2,318,317
New World Development Co., Ltd. (Property investment
and development) ........................................................... 7,929 10,739
Next Media Ltd.* (Publisher) .................................................. 2,450,000 487,540
Pacific Century CyberWorks Ltd.* (Provider of Internet
services) .................................................................. 928,000 1,727,542
QPL International Holdings Ltd.* (Manufacturer of
leadframes and integrated circuits) ........................................ 1,857,000 2,622,511
Quality Healthcare Asia Ltd.* (Provider of medical
coverage services) ......................................................... 2,974,000 1,221,810
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
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<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Shares Value ($)
------------------------------------------------------------------------------------
<S> <C> <C>
Sunevision Holdings Ltd. (Provider of Internet
infrastructure and services) ......................... 1,311,000 1,708,368
TCL International Holdings Ltd. (Manufacturer of
electronic products) ................................. 2,941,000 1,774,621
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41,203,698
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India 11.5%
Cipla Ltd. (Manufacturer of fine chemicals and
pharmaceuticals) ..................................... 28,600 584,744
Corporation Bank (Commercial bank) ...................... 100 155
Global Tele-Systems Limited (Manufacturer of
telecommunication products and services) ............. 75,150 2,048,763
HDFC Bank Ltd. (Corporate banking and financial services) 100 565
Hindustan Lever Ltd. (Manufacturer of branded and
packaged consumer products) .......................... 37,900 2,079,421
Infosys Technologies Ltd. (Financial and industrial
software developer) .................................. 28,000 5,195,876
Mahanagar Telephone Nigam Ltd. (Telecommunication
services) ............................................ 100 516
NIIT Ltd. (Designer and distributor of computer software) 36,300 1,696,495
Ranbaxy Laboratories, Ltd. (Manufacturer and distributor
of pharmaceutical products) .......................... 71,400 1,009,087
Satyam Computer Services Ltd. (Provider of software
services) ............................................ 81,924 5,855,736
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18,471,358
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Indonesia 0.3%
PT Indonesia Satellite Corp. (ADR) (Provider of
telecommunications services) ......................... 37,700 501,881
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Korea 22.9%
Dacom Corp. (Provider of domestic long-distance and
Internet services) ................................... 16,710 2,424,249
Dreamline Co., Ltd.* (Provider of Internet services) .... 16,370 519,238
Dreamline Co., Ltd.* "Rights" (b) ....................... 6,482 39,134
Honam Petrochemical Corp. (Chemical manufacturer) ....... 44,270 462,746
H&CB (Provider of banking services) ..................... 110,924 1,899,127
Korea Telecom Corp. (ADR) (Provider of
telecommunications services) ......................... 78,300 2,701,350
SK Telecom Co., Ltd. (Provider of mobile
telecommunications and paging services) .............. 40,000 10,633,025
Samsung Electro-Mechanics Co. (Manufacturer of
precision and electronic parts) ...................... 44,370 3,018,639
Samsung Electronics Co. (Manufacturer of electronics) ... 47,145 12,744,762
Shinhan Bank (Commercial bank) .......................... 187,000 1,794,593
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
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Shares Value ($)
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<S> <C> <C>
Shinhan Bank (GDR) (Commercial bank) .................... 36,000 682,200
----------
36,919,063
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Malaysia 3.0%
Malaysian Pacific Industries Berhad (Manufacturer of
integrated circuits and semiconductors) .............. 27,000 301,970
SCB Developments Berhad (Builder of residential
buildings) ........................................... 1,632,000 2,619,755
Unisem (M) Berhad (Manufacturer of semiconductors) ...... 213,000 1,891,751
----------
4,813,476
----------
Singapore 6.0%
Chartered Semiconductor (ADR) (Manufacturer
of semiconductors) ................................... 44,901 3,923,225
DBS Group Holdings Ltd. (Provider of banking and
other financial services) ............................ 299,899 4,129,146
JIT Holdings Ltd. (Manufacturer and distributor of
electronic products) ................................. 339,000 798,442
Natsteel Electronics Ltd. (Manufacturer of
telecommunication and network products) .............. 151,000 867,003
----------
9,717,816
----------
Taiwan 22.1%
ASE Test Ltd. (Provider of testing services to
semiconductor manufacturers) ......................... 63,300 1,875,263
Asustek Computer Inc.* (Manufacturer of computer
motherboards, audio, video, and network e-cards) ..... 372,439 4,126,714
Chinatrust Commercial Bank* (Commercial bank) ........... 1,564,840 1,294,017
Compeq Manufacturing Co., Ltd.* (Manufacturer of
multi-layer and double-sided printed circuit boards) . 402,000 2,220,559
Far Eastern Textile Ltd. (Manufacturer of natural and
synthetic textile products) .......................... 1,745,289 2,681,111
Formosa Plastics Corp. (Manufacturer of plastics
materials) ........................................... 892,450 1,852,282
GigaMedia Ltd. (Provider of broadband Internet
access services and content) ......................... 62,400 1,497,600
Hon Hai Precision Industry Co., Ltd.* (Manufacturer of
electronic connectors and cable assemblies and
memory chips) ........................................ 441,600 4,257,951
Pacific Electric Wire & Cable Co., Ltd.* (Manufacturer of
electrical wires and cables) ......................... 2,735,000 2,699,689
Synnex Technology International Corp. (Distributor
of personal computers and peripherals) ............... 223,000 1,508,776
Taiwan Cement Corp. (Manufacturer of cement) ............ 2,896,000 2,328,537
Taiwan Semiconductor Manufacturing Co., Ltd.*
(Manufacturer
of integrated circuits) .............................. 529,710 3,410,782
United MicroElectronics Corp.* (Manufacturer of
integrated circuits) ................................. 976,000 3,301,716
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Shares Value ($)
-----------------------------------------------------------------------------------------
<S> <C> <C>
Via Technologies Inc. (Designer, manufacturer and
marketer
of integrated PC chipsets) ............................ 95,000 1,583,592
WYSE Technology Taiwan Ltd. (Manufacturer of computer
terminals) ............................................ 466,000 1,005,262
----------
35,643,851
----------
Thailand 0.9%
TelecomAsia Corporation Public Company, Ltd.* (Foreign
registered) (Telecommunication services) .............. 1,040,000 1,393,772
United Kingdom 3.3%
HSBC Holdings plc (International banking and financial
services company) ..................................... 212,400 2,379,209
Standard Chartered plc (Global bank) ..................... 223,516 3,008,370
----------
5,387,579
----------
United States 0.8%
AsiaInfo Holdings, Inc. (Provider of Internet-related
software products) .................................... 28,400 1,235,401
----------
-----------------------------------------------------------------------------------------
Total Common Stocks (Cost $128,493,934) 158,588,504
-----------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $130,870,934) (a) 160,965,504
-----------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security
** Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities.
(a) The cost for federal income tax purposes was $134,269,716. At April 30,
2000, net unrealized appreciation for all securities based on tax cost was
$26,695,788. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of value over tax cost of
$39,464,184 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over value of $12,768,396.
(b) Security valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $39,134 (0.02% of net assets). The
value has been estimated by the Board of Directors in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, the estimated value may differ significantly from
the value that would have been used had a ready market for the security
existed, and the difference could be material. There was no cost for this
security at April 30, 2000. This security may also have certain
restrictions as to resale.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities as of April 30, 2000
------------------------------------------------------------------------------------------------
Assets
------------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value (cost $130,870,934) ...................... $ 160,965,504
Cash ......................................................................... 574
Foreign currency, at value (cost $7,792,096) ................................. 7,778,273
Receivable for investments sold .............................................. 4,943,024
Dividends receivable ......................................................... 185,936
Interest receivable .......................................................... 1,125
Receivable for Fund shares sold .............................................. 592,910
Foreign taxes recoverable .................................................... 134,330
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Total assets ................................................................. 174,601,676
Liabilities
------------------------------------------------------------------------------------------------
Payable for investments purchased ............................................ 8,608,354
Payable for Fund shares redeemed ............................................. 61,440
Deferred foreign taxes ....................................................... 1,184,022
Accrued management fee ....................................................... 167,540
Accrued reorganization costs ................................................. 84,205
Accrued Directors' fees and expenses ......................................... 45,893
Other accrued expenses and payables .......................................... 279,053
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Total liabilities ............................................................ 10,430,507
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Net assets, at value $ 164,171,169
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Net Assets
------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income (loss) ................................... (1,480,351)
Net unrealized appreciation (depreciation) on:
Investments (net of deferred foreign taxes of $1,184,022) .................. 28,910,548
Foreign currency related transactions ...................................... (13,907)
Accumulated net realized gain (loss) ......................................... (24,811,711)
Paid-in capital .............................................................. 161,566,590
------------------------------------------------------------------------------------------------
Net assets, at value $ 164,171,169
------------------------------------------------------------------------------------------------
Net Asset Value
------------------------------------------------------------------------------------------------
NetAsset Value, offering and redemption price per share ($164,171,169 /
11,857,396 shares of capital stock outstanding, $.01 par value, 100,000,000 ---------------
shares authorized) ........................................................ $ 13.85
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Statement of Operations for the six months ended April 30, 2000
--------------------------------------------------------------------------------------
Investment Income
--------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $55,142) .............. $ 483,528
Interest .......................................................... 87,747
-------------
Total income ...................................................... 571,275
-------------
Expenses:
Management fee .................................................... 1,007,154
Services to shareholders .......................................... 373,815
Custodian and accounting fees ..................................... 279,789
Auditing .......................................................... 46,973
Legal ............................................................. 2,865
Directors' fees and expenses ...................................... 95,240
Reports to shareholders ........................................... 32,429
Registration fees ................................................. 12,210
Reorganization .................................................... 88,493
Other ............................................................. 17,123
-------------
Total expenses, before expense reductions ......................... 1,956,091
Expense reductions ................................................ (32,505)
-------------
Total expenses, after expense reductions .......................... 1,923,586
Net investment income (loss) ...................................... (1,352,311)
Realized and unrealized gain (loss) on investment transactions
--------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments (net of foreign taxes of $849,790) ................... 37,536,063
Foreign currency related transactions ............................. (75,042)
-------------
37,461,021
-------------
Net unrealized appreciation (depreciation) during the period on:
Investments (including deferred foreign taxes of $38,446) ......... (9,803,720)
Foreign currency related transactions ............................. (21,315)
-------------
(9,825,035)
--------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 27,635,986
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 26,283,675
--------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
-------------------------------------------------------------------------------------------------------
Year Ended
Increase (Decrease) in Net Assets Six Months Ended October 31,
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ...................................... $ (1,352,311) $ (721,575)
Net realized gain (loss) on investment transactions ............... 37,461,021 916,485
Net unrealized appreciation (depreciation) on
investment transactions during the period ...................... (9,825,035) 45,992,276
------------- -------------
Net increase (decrease) in net assets resulting
from operations ................................................ 26,283,675 46,187,186
------------- -------------
Distributions to shareholders from:
Net investment income ............................................. -- (314,081)
------------- -------------
Fund share transactions:
Proceeds from shares sold ......................................... 62,830,047 461,378,994
Reinvestment of distributions ..................................... -- 287,106
Cost of shares redeemed ........................................... (68,444,610) (477,752,884)
Redemption fees ................................................... 378,191 571,030
------------- -------------
Net increase (decrease) in net assets from Fund
share transactions ............................................. (5,236,372) (15,515,754)
------------- -------------
Increase (decrease) in net assets ................................. 21,047,303 30,357,351
Net assets at beginning of period ................................. 143,123,866 112,766,515
Net assets at end of period(including undistributed net
investment income (loss) of ($1,480,351) and accumulated
distributions in excess of net investment income of $128,040, ------------- -------------
respectively) ..................................................... $ 164,171,169 $ 143,123,866
------------- -------------
Other Information
-------------------------------------------------------------------------------------------------------
Shares outstanding at beginning of period ......................... 12,172,640 13,463,341
------------- -------------
Shares sold ....................................................... 4,136,161 49,215,178
Shares issued to shareholders in reinvestment of
distributions .................................................. -- 32,540
Shares redeemed ................................................... (4,451,405) (50,538,419)
------------- -------------
Net increase (decrease) in Fund shares ............................ (315,244) (1,290,701)
Shares outstanding at end of period ............................... 11,857,396 12,172,640
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<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>
------------------------------------------------------------------------------------
Years ended October 31, 2000(a)(b) 1999(b) 1998(b) 1997(b) 1996(b) 1995
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $11.76 $ 8.38 $11.38 $15.93 $15.59 $17.57
------------------------------------------------------------------------------------
Income (loss) from investment operations:
------------------------------------------------------------------------------------
Net investment income (loss) (.11) (.06) .05 (.04) .02 .10
------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investment
transactions 2.17 3.41 (2.75) (4.50) .42 (1.98)
------------------------------------------------------
------------------------------------------------------------------------------------
Total from investment
operations 2.06 3.35 (2.70) (4.54) .44 (1.88)
------------------------------------------------------------------------------------
Less distributions from:
Net investment income -- (.02) (.30) (.01) (.10) (.10)
------------------------------------------------------
------------------------------------------------------------------------------------
Total distributions -- (.02) (.30) (.01) (.10) (.10)
------------------------------------------------------------------------------------
Redemption fees .03 .05 -- -- -- --
------------------------------------------------------------------------------------
Net asset value, end
of period $13.85 $11.76 $ 8.38 $11.38 $15.93 $15.59
------------------------------------------------------
------------------------------------------------------------------------------------
Total Return (%) 17.97** 40.49 (24.16) (28.52) 2.76 (10.73)
------------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
------------------------------------------------------------------------------------
Net assets, end of period
($ millions) 164 143 113 147 329 384
------------------------------------------------------------------------------------
Ratio of expenses before
expense reductions (%) 2.06(c)* 2.35 2.46 1.94 1.75 1.74
------------------------------------------------------------------------------------
Ratio of expenses after
expense reductions (%) 2.04(c)* 2.35 2.46 1.94 1.75 1.74
------------------------------------------------------------------------------------
Ratio of net investment
income (loss) (%) (.74)(d)**(.56) .50 (.22) .12 .65
------------------------------------------------------------------------------------
Portfolio turnover rate (%) 175* 122 141 97 95 64
------------------------------------------------------------------------------------
</TABLE>
(a) For the six months ended April 30, 2000.
(b) Based on monthly average shares outstanding during the period.
(c) The ratios of operating expenses excluding costs incurred in connection
with the reorganization before and after expense reductions were 1.97% and
1.97%, respectively.
(d) The ratio for the six months ended April 30, 2000 has not been annualized
since the Fund believes it would not be appropriate because the Fund's
dividend income is not earned ratably throughout the fiscal year.
* Annualized
** Not annualized
22
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
A. Significant Accounting Policies
Scudder Pacific Opportunities (the "Fund") a non-diversified series of Scudder
International Fund, Inc. (the "Corporation") which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a Maryland Corporation.
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. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. 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 ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. 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, or if no sale occurred, at the calculated mean between the most recent
bid and asked quotations on such market. If there are no such bid and asked
quotations, the most recent bid quotation 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.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
23
<PAGE>
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, 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
principal amount of the repurchase price plus accrued interest.
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 against changes in the 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. Sales and
purchases of 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 a forward contract to buy
and a 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, as amended, which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders.
24
<PAGE>
Accordingly, the Fund paid no federal income taxes and no federal income tax
provision was required.
At October 31, 1999, the Fund had a net tax basis capital loss carryforward of
approximately $59,002,000, which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2002 ($12,714,000), October 31, 2004 ($4,484,000) and October 31, 2006
($41,736,000), and October 31, 2007 ($68,000), 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.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. 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 at least
annually.
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 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 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.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to the ex-dividend date as
soon as the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis.
Redemption Fees. In general, shares of the Fund may be redeemed at net asset
value. However, upon the redemption or exchange of shares held by shareholders
for less than one year, a fee of 2% of the current net asset value of the shares
will be assessed and retained by the Fund for the benefit of the remaining
shareholders. The redemption fee is accounted for as an addition to
25
<PAGE>
paid-in capital. This redemption fee is only applicable to shares purchased on
or after May 22, 1999.
B. Purchases and Sales of Securities
During the six months ended April 30, 2000, purchases and sales of investment
securities (excluding short-term investments) aggregated $153,133,129 and
$158,654,381, respectively.
C. Related Parties
Under the Investment 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, 2000, the fee pursuant to this Agreement amounted
to $1,007,154.
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, 2000, the amount charged to the Fund by SSC
aggregated $293,007, of which $95,789 is unpaid at April 30, 2000.
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, 2000,
the amount charged to the Fund by STC aggregated $29,104, of which $4,527 is
unpaid at April 30, 2000.
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, 2000, the amount charged to the Fund by SFAC aggregated $71,409,
of which $11,563 is unpaid at April 30, 2000.
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, 2000, Directors' fees and expenses aggregated $30,231. In
addition, a one-time fee of $65,009 was accrued for
26
<PAGE>
payment to those Directors not affiliated with the Adviser who are not standing
for re-election under the reorganization discussed in Note F. Inasmuch as the
Adviser will also benefit from administrative efficiencies of a consolidated
Board, the Adviser has agreed to bear $32,505 of such costs.
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. Line of Credit
The Fund and several affiliated Funds (the "Participants") share in a $1 billion
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 based upon net assets, 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 33 percent of its net
assets under the agreement.
F. Reorganization
In early 2000, Scudder Kemper initiated a restructuring program for most of its
Scudder no-load open-end funds in response to changing industry conditions and
investor needs. The program proposes to streamline the management and operations
of most of the no-load open-end funds Scudder Kemper advises principally through
the liquidation of several small funds, mergers of certain funds with similar
investment objectives, the creation of one Board of Directors/Trustees and the
adoption of an administrative fee covering the provision of most of the services
currently paid for by the affected funds. Costs incurred in connection with this
restructuring initiative are being borne jointly by Scudder Kemper and certain
of the affected funds. These costs, including printing, shareholder meeting
expenses and professional fees, are presented as reorganization expenses in the
Statement of Operations of the Fund.
27
<PAGE>
Report of Independent Accountants
--------------------------------------------------------------------------------
To the Board of Directors of Scudder International Fund, Inc. and 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, 2000, the results of its operations, the changes in
its net assets, and the financial highlights for each of the periods indicated
therein, in conformity with accounting principles generally accepted in the
United States. 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 auditing standards generally accepted in the
United States, 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, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
June 16, 2000
28
<PAGE>
Officers and Directors
--------------------------------------------------------------------------------
Nicholas Bratt*
o President
Sheryle J. Bolton
o Director; Chief Executive Officer,
Scientific Learning Corporation
William T. Burgin
o Director; General Partner,
Bessemer Venture Partners
Keith R. Fox
o Director; General Partner,
The Exeter Group of Funds
William H. Luers
o Director; Chairman and President,
U.N. Association of America
Kathryn L. Quirk*
o Director, Vice President and
Assistant Secretary
Joan E. Spero
o Director; President, Doris Duke
Charitable Foundation
Paul Bancroft III
o Honorary Director; Consultant
Thomas J. Devine
o Honorary Director; Consultant
William H. Gleysteen, Jr.
o Honorary Director; Consultant;
Guest Scholar, Brookings
Institution
Wilson Nolen
o Honorary Director; Consultant
Robert G. Stone, Jr.
o Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
Irene T. Cheng*
o Vice President
Joyce E. Cornell*
o Vice President
Carol L. Franklin*
o Vice President
Edmund B. Games, Jr.*
o Vice President
Joan R. Gregory*
o Vice President
Ann M. McCreary*
o Vice President
Sheridan P. Reilly*
o Vice President
Tien-Yu Sieh*
o Vice President
Shahram Tajbakhsh*
o Vice President
John Millette*
o Vice President and Secretary
John R. Hebble*
o Treasurer
Caroline Pearson*
o Assistant Secretary
*Scudder Kemper Investments, Inc.
29
<PAGE>
Investment Products and Services
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
The Scudder Family of Funds+++
--------------------------------------------------------------------------------
<S> <C>
Money Market U.S. Growth
Scudder U.S. Treasury Money Fund Value
Scudder Cash Investment Trust Scudder Large Company Value Fund
Scudder Money Market Series -- Scudder Value Fund***
Prime Reserve Shares* Scudder Small Company Value Fund
Premium Shares* Scudder Micro Cap Fund
Managed Shares*
Growth
Tax Free Money Market+ Scudder Classic Growth Fund***
Scudder Tax Free Money Fund Scudder Large Company Growth Fund***
Scudder California Tax Free Money Fund** Scudder Select 1000 Growth Fund
Scudder New York Tax Free Money Fund** Scudder Development Fund
Scudder 21st Century Growth Fund
Tax Free+
Scudder Limited Term Tax Free Fund Global Equity
Scudder Medium Term Tax Free Fund Worldwide
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder High Yield Tax Free Fund Scudder International Value Fund
Scudder California Tax Free Fund** Scudder International Growth and
Scudder Massachusetts Limited Term Income Fund
Tax Free Fund** Scudder International Fund++
Scudder Massachusetts Tax Free Fund** Scudder International Growth Fund
Scudder New York Tax Free Fund** Scudder Global Discovery Fund***
Scudder Ohio Tax Free Fund** Scudder Emerging Markets Growth Fund
Scudder Gold Fund
U.S. Income
Scudder Short Term Bond Fund Regional
Scudder GNMA Fund Scudder Greater Europe Growth Fund
Scudder Income Fund Scudder Pacific Opportunities Fund
Scudder Corporate Bond Fund Scudder Latin America Fund
Scudder High Yield Bond Fund The Japan Fund, Inc.
Global Income Industry Sector Funds
Scudder Global Bond Fund Choice Series
Scudder International Bond Fund Scudder Financial Services Fund
Scudder Emerging Markets Income Fund Scudder Health Care Fund
Scudder Technology Fund
Asset Allocation
Scudder Pathway Conservative Portfolio Preferred Series
Scudder Pathway Balanced Portfolio Scudder Tax Managed Growth Fund
Scudder Pathway Growth Portfolio Scudder Tax Managed Small Company Fund
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
</TABLE>
30
<PAGE>
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
--------------------------------------------------------------------------------
Retirement Programs and Education Accounts
--------------------------------------------------------------------------------
Retirement Programs Education Accounts
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA IRA for Minors
Inherited IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Closed-End Funds#
-----------------------------------------------------------------------------------------
<S> <C>
The Argentina Fund, Inc. Montgomery Street Income Securities, Inc.
The Brazil Fund, Inc. Scudder Global High Income Fund, Inc.
The Korea Fund, Inc. Scudder New Asia Fund, Inc.
</TABLE>
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
Kemper Investment'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 Kemper Investment'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.
31
<PAGE>
Scudder Solutions
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Convenient Automatic Investment Plan
ways to invest,
quickly and A convenient investment program in which money is
reliably electronically debited from your bank account monthly to
regularly purchase fund shares and "dollar cost average" --
buy more shares when the fund's price is lower and fewer
when it's higher, which can reduce your average purchase
price over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to purchase
shares -- use distributions from one Scudder fund to
purchase shares in another, automatically (accounts with
identical registrations or the same social security or tax
identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically,
avoiding potential mailing delays; money for each of your
transactions is electronically debited from a previously
designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government checks
-- invested in up to four Scudder funds at one time.
* 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- Scudder Automated Information Line: SAIL(TM) --
clock electronic 1-800-343-2890
account
service and Personalized account information, the ability to exchange
information, or redeem shares, and information on other Scudder funds
including some and services via touchtone telephone.
transactions
Scudder's Web Site -- www.scudder.com
Personal Investment Organizer: Offering account information
and transactions, interactive worksheets, prospectuses and
applications for all Scudder funds, plus your current asset
allocation, whenever your need them. Scudder's site also
provides news about Scudder funds, retirement planning
information, and more.
32
<PAGE>
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Retirees and Automatic Withdrawal Plan
those who depend
on investment You designate the bank account, determine the schedule (as
proceeds for frequently as once a month) and amount of the redemptions,
living expenses and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into the
automated bank account you designate within three business days after
withdrawal each distribution is paid.
programs
QuickSell
Provides speedy access to your money by electronically
crediting your redemption proceeds to the bank account you
previously designated.
For more Call a Scudder representative at
information about 1-800-SCUDDER
these services
Or visit our Web site at
www.scudder.com
Please address The Scudder Funds
all written PO Box 2291
correspondence Boston, Massachusetts
to 02107-2291
33
<PAGE>
Notes
--------------------------------------------------------------------------------
<PAGE>
Notes
--------------------------------------------------------------------------------
<PAGE>
Notes
--------------------------------------------------------------------------------
<PAGE>
Notes
--------------------------------------------------------------------------------
<PAGE>
Notes
--------------------------------------------------------------------------------
<PAGE>
Notes
--------------------------------------------------------------------------------
<PAGE>
About the Fund's Adviser
SCUDDER
INVESTMENTS (SM)
[LOGO]
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $290 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 over 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.
