-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ID/+wq1fZDF4eh5REdbjBwi7C6pZ+fnSDjdL9cgcto+qMHxK/hCbz6iS6RKi42aA iTnTVojszd2NaKbWvuOYtQ== 0000088053-01-500251.txt : 20010618 0000088053-01-500251.hdr.sgml : 20010618 ACCESSION NUMBER: 0000088053-01-500251 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20010615 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCUDDER INTERNATIONAL FUND INC CENTRAL INDEX KEY: 0000088053 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 132827803 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-00642 FILM NUMBER: 1661481 BUSINESS ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 2123266200 FORMER COMPANY: FORMER CONFORMED NAME: SCUDDER INTERNATIONAL INVESTMENTS LTD DATE OF NAME CHANGE: 19761203 N-30D 1 sr-laf.txt SEMIANNUAL REPORT SCUDDER INVESTMENTS - -------------------------------------------------------------------------------- EQUITY/GLOBAL - -------------------------------------------------------------------------------- Scudder Latin America Fund Semiannual Report April 30, 2001 The fund seeks long-term capital appreciation. Contents - -------------------------------------------------------------------------------- 4 Letter from the Fund's President 6 Performance Update 8 Portfolio Summary 10 Portfolio Management Discussion 16 Glossary of Investment Terms 17 Investment Portfolio 20 Financial Statements 23 Financial Highlights 25 Notes to Financial Statements 31 Officers and Directors 32 Investment Products and Services 34 Account Management Resources 2 Scudder Latin America Fund - -------------------------------------------------------------------------------- Class AARP ticker symbol SLAMX fund number 174 Class S ticker symbol SLAFX fund number 074 - -------------------------------------------------------------------------------- Date of Inception: o Stocks in Latin America experienced high volatility 12/8/92 during the six months ended April 30, 2001, due largely to slower economic growth worldwide, large fluctuations in the Total Net Assets as U.S. stock market, and concerns about the stability of the of 4/30/01 -- Argentine economy. Class AARP: o During the period, management slightly trimmed the $0.2 million fund's weighting in Brazil and added to its positions in banks and consumer stocks in Mexico. Class S: $381 million o The Class S shares of the fund stacked up well against the Latin America Funds peer group, according to Lipper, Inc. The fund finished 3rd out of 40 funds during the six-month reporting period, and has outperformed the group average over the one-, three-, and five-year intervals.^1
^1 Class S shares ranked 3, 8, 11, and 10, respectively, for the 6-month, 1-, 3-, and 5-year periods as of April 30, 2001. There were 40, 38, 32, and 25 funds, respectively, in Lipper's Latin America category. Performance includes reinvestment and capital gains and is no guarantee of future results. Source: Lipper, Inc. as of April 30, 2001. 3 Letter from the Fund's President - -------------------------------------------------------------------------------- Dear Shareholders, The past year has been exceptionally difficult for investors in international equities. Although overseas stocks are generally expected to provide investors with a measure of portfolio diversification, concerns about slowing economic growth in the United States spread to all of the global markets. Stocks in Latin America have not been immune to these difficulties, but have generally outperformed their counterparts around the globe. During the past year, for example, the IFC Latin America Index returned -8.74%, compared to -16.02% for the MSCI World Index. In our view, this underscores the importance of the positive trends that continue to support many of the Latin American economies, such as attractive growth rates, low inflation, and a growing shareholder orientation among corporate management teams. Although the long-term trends in Latin America remain positive, the area continues to face meaningful challenges. Most recently, the region has been pressured by concerns that Argentina will be unable to meet its financing requirements. (For more details, see the Portfolio Management Discussion beginning on page 10.) Knowing that the Latin American markets are volatile and remain vulnerable to crises in other developing countries around the world, the fund's management team strives to construct a portfolio of what it believes to be the region's best companies. 4 Over time, owning shares in firms that can deliver steady earnings in any environment should help the fund outperform in both up and down markets. We would like to take this opportunity to recognize the extensive contributions of Edmund B. Games, Jr., who retired as lead portfolio manager of Scudder Latin America Fund on March 30, 2001. Mr. Games had been with Scudder since 1960 and had overseen the daily operation of the fund since its inception in 1992. We thank him for his many years of dedicated service to the firm. Paul H. Rogers and Tara C. Kenney, who have worked as research analysts and co-portfolio managers of the fund since 1995 and 1996, respectively, will assume management duties for the fund. Thank you for your continued investment in Scudder Latin America Fund. If you have any questions regarding the fund or your account, visit us on the Web. You can also speak with one of our representatives by calling us toll-free. Sincerely, /s/Lin C. Coughlin Linda C. Coughlin President Scudder Latin America Fund - --------------------------------------------------------------------- AARP Investment Program Scudder Class S Web site: aarp.scudder.com myScudder.com Toll-free: 1-800-253-2277 1-800-SCUDDER - --------------------------------------------------------------------- 5 Performance Update - -------------------------------------------------------------------------------- April 30, 2001 - -------------------------------------------------------------------------------- Growth of a $10,000 Investment - -------------------------------------------------------------------------------- THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE LINE CHART DATA: Scudder Latin America IFC Latin America Investable Fund -- Class S Total Return Index* 12/92** 10000 10000 '93 10561 10047 '94 17323 15042 '95 14145 11760 '96 17342 13412 '97 22855 16928 '98 25158 17894 '99 21889 15263 '00 23454 17895 '01 22117 16331 Yearly periods ended April 30 - -------------------------------------------------------------------------------- Fund Index Comparison - -------------------------------------------------------------------------------- Total Return Growth of Average Period ended 4/30/2001 $10,000 Cumulative Annual - -------------------------------------------------------------------------------- Scudder Latin America Fund -- Class S - -------------------------------------------------------------------------------- 1 year $ 9,445 -5.55% -5.55% - -------------------------------------------------------------------------------- 5 year $ 12,773 27.73% 5.02% - -------------------------------------------------------------------------------- Life of Class** $ 22,117 121.17% 9.92% - -------------------------------------------------------------------------------- IFC Latin America Investable Total Return Index* - -------------------------------------------------------------------------------- 1 year $ 9,126 -8.74% -8.74% - -------------------------------------------------------------------------------- 5 year $ 12,176 21.76% 4.01% - -------------------------------------------------------------------------------- Life of Class** $ 16,331 63.31% 6.06% - -------------------------------------------------------------------------------- 6 - -------------------------------------------------------------------------------- Returns and Per Share Information - -------------------------------------------------------------------------------- THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE ILLUSTRATING THE SCUDDER LATIN AMERICA FUND -- CLASS S TOTAL RETURN (%) AND IIFC LATIN AMERICA INVESTABLE TOTAL RETURN INDEX* TOTAL RETURN (%) BAR CHART DATA: Yearly periods ended April 30
1993** 1994 1995 1996 1997 1998 1999 2000 2001 - ------------------------------------------------------------------------------------ Class Total Return (%) 10.00*** 57.23 -18.34 22.60 31.79 10.08 -13.00 7.15 -5.55 - ------------------------------------------------------------------------------------ Index Total Return (%) .47 49.71 -21.85 14.04 26.20 5.71 -14.70 17.24 -8.74 - ------------------------------------------------------------------------------------ Net Asset Value ($) 13.20 20.65 16.21 19.70 25.65 26.80 22.06 23.58 20.54 - ------------------------------------------------------------------------------------ Income Dividends ($) -- .06 -- .15 .26 .25 .37 .05 .18 - ------------------------------------------------------------------------------------ Capital Gains Distributions ($) -- .06 .73 -- -- 1.14 .64 -- 1.49 - ------------------------------------------------------------------------------------
* The IFC Latin America Investable Total Return Index is prepared by International Finance Corporation. It is an unmanaged, market-capitalization-weighted representation of stock performance in seven Latin American markets, and measures the returns of stocks that are legally and practically available to investors. Index returns assume reinvestment of dividends 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. *** Total return does not reflect the effect to the shareholder of the applicable redemption fees. On October 2, 2000, existing shares of the Fund were redesignated as Class S shares. In addition, the Fund commenced offering Class AARP shares. The total return information provided is for the Fund's Class S shares. 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 Advisor had not maintained the Fund's expenses, the life-of-class total returns would have been lower. 7 Portfolio Summary - -------------------------------------------------------------------------------- April 30, 2001 - -------------------------------------------------------------------------------- Geographical - -------------------------------------------------------------------------------- (Excludes 3% Cash Equivalents) The fund's geographical weightings changed only slightly during the six-month reporting period. A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE BELOW. Mexico 51% Brazil 39% Argentina 4% Chile 3% Panama 2% Peru 1% - ------------------------------------ 100% - ------------------------------------ - -------------------------------------------------------------------------------- Sectors - -------------------------------------------------------------------------------- (Excludes 3% Cash Equivalents) The fund's sector weightings are a result of management's focus on selecting what it believes to be the best individual companies in Latin America. A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE BELOW. Consumer Staples 26% Communications 23% Financial 16% Energy 12% Construction 7% Manufacturing 5% Consumer Discretionary 5% Media 3% Metals & Minerals 3% - ------------------------------------ 100% - ------------------------------------ 8 - -------------------------------------------------------------------------------- Ten Largest Equity Holdings - -------------------------------------------------------------------------------- (54% of Portfolio) Top holdings reflect management's goal of constructing a portfolio of well-managed companies with steady earnings growth, strong franchises, and low debt levels. 1. Petroleo Brasileiro SA Producer and marketer of petroleum and petroleum products in Brazil 2. Telefonos de Mexico SA de CV Provider of telecommunication services in Mexico 3. Banco Itau SA Provider of commercial banking services in Brazil 4. Fomento Economico Mexicano SA de CV Producer of beer, soft drinks and mineral water in Mexico 5. Companhia de Bebidas das Americas Producer of beer, soft drinks, teas, bottled water, fruit juices and sports drinks in Brazil 6. Tele Norte Leste Participacoes SA Provider of local telecommunication services in Brazil 7. Grupo Continental SA Producer and distributor of soft drinks, sugar and mineral water in Mexico 8. Kimberly Clark de Mexico SA de CV Producer of consumer paper products in Mexico 9. Wal-Mart de Mexico SA de CV Retailer of discount food, clothing and other merchandise in Mexico 10. Panamerican Beverages Inc. Bottler of soft drinks in Mexico For more complete details about the Fund's investment portfolio, see page 17. A quarterly Fund Summary and Portfolio Holdings are available upon request. 9 Portfolio Management Discussion - -------------------------------------------------------------------------------- April 30, 2001 In the following interview, Portfolio Managers Paul H. Rogers and Tara C. Kenney discuss Scudder Latin America Fund's strategy and the market environment during the six-month period ended April 30, 2001. Q: The Latin American markets experienced significant volatility during the last six months. What happened? A: Stocks in Latin America were hurt by many of the same issues that caused weakness across all of the global markets, such as concerns about the slowing U.S. economy, lower corporate profits worldwide, and investors' desire to avoid riskier asset classes. The reporting period began on a down note as stocks in the region fell during November and early December in sympathy with market weakness around the world. The surprise interest rate cut in the United States and an upgrade of Brazil's bond rating by Standard and Poor's subsequently sparked a strong rally across the region during January, but the upturn proved short-lived as a currency crisis in Turkey prompted investors to take a closer look at problems in Latin America. Foremost among these was Argentina's large debt burden and economic woes. Investors' fear that Argentina would be unable to meet its substantial debt payments pressured the market and fueled concerns that the country will eventually be forced to devalue its currency (see glossary), since a stronger currency can sometimes impede economic growth. The concerns about Argentina spread to neighboring Brazil during February and March, causing the value of its currency -- the real -- to decline sharply. This was a distinct negative for U.S. investors, since it reduced the dollar value of holdings that were bought in reales. Making matters worse, the decline in the real prompted Brazil's central bank to raise interest rates to combat the potential inflation pressures that can arise from currency weakness. Stocks in both Argentina and Brazil enjoyed a bounce in the final days of the period, however, as investors reacted 10 favorably to the policy initiatives of Argentina's new finance minister, Domingo Cavallo. For example, he raised the Tax on Financial Transactions, allowing the government to boost revenues without taking steps that would reduce consumption, such as raising income taxes. He has also announced measures to reduce government spending and bring the country's budget deficits under control. Although Cavallo has made missteps, it appears that he has been generally well-received both at home and abroad and, in our view, is beginning to move the country in the right direction. For the full six months, the IFC Argentina Index returned -1.67%, while Brazil's Bovespa Index fell -13.30% in dollar terms. Q: How did the fund perform in this challenging environment? A: Class S shares of Scudder Latin America Fund returned -2.06% during the six months ended April 30, 2001. In comparison, the fund's benchmark, the IFC Latin America Index, returned -3.38%. For the period, performance was helped by the fund's positions in Companhia de Bebidas das Americas (Beverages) and Banco Itau (Finance) in Brazil, and Cemex (Cement), Grupo Continental (Beverages), and Kimberly-Clark (Consumer Products) in Mexico. On the downside, Brasil Telecom, Tele Norte Leste Participacoes (Brazil/Telecommunications), Grupo Televisa (Mexico/Media) and Grupo Financiero Inbursa (Mexico/Finance) detracted from returns. While we understand that you may be distressed by the fund's negative returns during this time, we encourage you to look at its performance in relation its peers. For the period, Scudder Latin America Fund outperformed 92% of the funds in its peer group, according to Lipper, Inc. The fund has also beaten the majority of the funds in its category over the one-, three- and five-year periods. We believe that this performance record underscores the value of our strict, research-driven approach that seeks to find the best companies in Latin America. Of course, past performance is no guarantee of future results. 11 Q: What has been your strategy in managing the fund? A: We continue to use intensive fundamental research (see glossary) to find the highest quality companies in Latin America. We focus on companies with low debt levels, capable management teams, a history of strong earnings, and a demonstrated ability to generate cash and reinvest it in ventures that will add value for their shareholders. Over time, we believe that a focus on positive fundamentals such as these will uncover companies with the ability to perform well even when the region's economy is experiencing difficulties. As a result of our stock selection process, we have trimmed our position in Brazil and added marginally to Mexico, where we are finding companies with attractive fundamentals. The fund remains underweight in Argentina and Chile. In general, we have opted to hold on to our positions and keep trading to a minimum. This approach is consistent with our practice of establishing long-term positions in what we see as the region's top companies. However, we have selectively reduced positions as stocks reached what we saw as full valuations. We have also trimmed positions in some of the fund's top ten holdings to improve diversification and thereby reduce risk. Q: Despite the difficulties in Argentina and Brazil, Mexico has held up relatively well. What factors are affecting the performance of stocks in that country? A: Mexico has weathered the storm quite well. The IFC Mexico Index returned - -2.91% during the six-month period, which compares favorably with the returns of stocks in Brazil and Argentina. The reasons for Mexico's relative strengths are many: growth remains steady, inflation is in check, and its currency -- the peso - -- has been strong. What's more, the slowdown in the U.S. economy has not yet led to a slowdown in Mexico. These trends have translated into strength in the consumer sector. For example, Coca-Cola bottlers in Mexico reported earnings growth of 3-4% in the first quarter, versus growth of approximately 1% for Coke bottlers worldwide. 12 Telefonos de Mexico, the country's largest telephone company, (and one of the fund's largest holdings) also reported outstanding earnings growth. We are also encouraged by the meaningful consolidation activity (see glossary) taking place in Mexico. Some of the strongest, best-run companies are taking business away from second-line firms, forcing them to sell their operations. A good example of a company we hold that is taking advantage of this trend is Walmex, Wal-Mart's Mexican arm. This process of separating the wheat from the chaff should, over time, make the economy stronger by reducing the number of poorly run, less competitive firms. On the political front, President Vincente Fox continues to enjoy broad-based support. This increases the likelihood that his fiscal tax reform bill -- which broadens the items subject to the value-added tax in order to address tax evasion and reduce the country's reliance on oil revenues -- will pass despite resistance from the country's opposition party, the PRI. Our focus on what we see as the best individual stocks in the region has led us to develop an overweight position in Mexico, where we are focused on companies that stand to benefit from the relative strength of the country's economy. For example, we own consumer stocks such as FEMSA (a brewer and Coca-Cola bottler), Walmex, and Kimberly-Clark. Other stocks we have been buying recently include Banamex and Bancomer, which are becoming stronger financially and are -- in our view -- attractively valued in relation to their growth prospects. Q: How would you characterize the investment picture in Brazil? A: While the recent selloff in Brazil was largely a result of the problems in Argentina, the market may remain weak until it becomes clear that inflation is in check and further interest rate increases won't be necessary. We are also concerned that falling commodity prices and a large debt burden on the part of both government and corporations 13 will put additional near-term pressure on the country's economy. Despite these developments, there are still many factors supporting the longer-term outlook for stocks in Brazil. Industrial production is increasing, foreign direct investment (see glossary) remains strong, and lower unemployment is boosting personal spending. On the political front, President Hernando Cardoso's popularity has risen and the Fiscal Responsibility Law has had a positive impact on state and municipal finances by keeping spending in check. The short-term outlook for Brazil remains challenging, as it faces the difficult combination of a slowing global economy, ongoing concerns in Argentina, and a potential inflation threat at home. However, we believe that the country is continuing on the right path on a long-term basis, and that the fund -- which holds what we believe to be Brazil's best companies (for example, Companhia de Bebidas das Americas, Banco Itau, and Companhia Vale do Rio Doce) -- will benefit as current economic concerns subside and the country resumes its path toward lower interest rates and more sustainable growth. Q: What is your long-term outlook for stocks in Latin America? A: Looking ahead to the second half of 2001, we believe that the Latin economies will continue to experience fundamental improvements. The larger economies of Mexico and Brazil are still in fairly good shape as measured by relatively low inflation, shrinking budget deficits, and a positive growth outlook. We believe that Mexico and Brazil should both grow in the 2-3% range this year. Earnings growth appears sustainable for the top companies, and stock market valuations are low compared to other regions of the world. That said, it is reasonable to expect that the high volatility we have witnessed in recent months will continue. The situation in Argentina will likely continue to impact the performance of all of the region's markets until the 14 problem is resolved. Additionally, the upcoming presidential elections in Brazil (in October, 2002) are leading to political wrangling that could obstruct reform and add to market volatility. In this environment, we will continue to look for companies that can be prosperous despite any uncertainties. While current economic and political difficulties may dampen stock market performance in the short term, we believe our focused investment philosophy will help us outperform both our benchmark and our peers over time. 15 Glossary of Investment Terms - -------------------------------------------------------------------------------- Consolidation The reduction in the number of companies in a particular industry, brought about by merger and acquisition activity. Currency A significant decline of a currency's value Devaluation relative to other currencies, such as the U.S. dollar, typically resulting from the cessation of a country's central bank intervention in the currency markets. For U.S. investors who are investing overseas, a devaluation of a foreign currency can reduce the total return of their investment. Currency The price at which one country's currency can be exchanged Exchange Rate into another currency. When a country's currency rises relative to other currencies, this decreases the buying power of foreign purchasers of that country's goods and services and tends to hurt the earnings of companies that export; by contrast, a weak currency promotes exports. From the perspective of a U.S. investor in overseas securities, a weakening U.S. dollar adds to total returns, as assets denominated in foreign currencies then translate into more in dollar terms; a strengthening dollar relative to foreign currencies reduces returns to U.S. investors. Foreign Investment in a country's businesses by foreign citizens, Direct usually involving majority stock ownership of the Investment enterprise. For example, a U.S. corporation that wishes to sell its cars in Europe may form a joint venture with a French auto company to construct a production facility in France. Fundamental Analysis of companies based on the projected Research impact of management, products, sales, and earnings on their balance sheets and income statements. Companies that exhibit strength in these areas are usually said to have "good fundamentals." Weighting The percentage of assets within a portfolio relative to the (over/under) percentage in the portfolio's benchmark index or investment universe. "Weighting" is usually used to describe a fund's relative position in sectors, industries, or countries.
(Source: Zurich Scudder Investments, Inc.; Barron's Dictionary of Finance and Investment Terms) 16
Investment Portfolio as of April 30, 2001 (Unaudited) - ------------------------------------------------------------------------------------- Principal Amount ($) Value ($) - ------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------- Repurchase Agreements 3.1% - ------------------------------------------------------------------------------------- Salomon Smith Barney, 4.62%, to be repurchased at ---------------- $11,872,523 on 5/1/2001** (Cost $11,871,000) .... 11,871,000 11,871,000 ---------------- Shares - ------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------- Common Stocks 96.9% - ------------------------------------------------------------------------------------- Argentina 3.8% BI SA "A" (Provider of financial services) (b) ...... 3,000,000 2,250,000 Perez Companc SA "B" (ADR) (Operator of an investment company) ......................................... 470,045 7,191,683 Telecom Argentina SA "B" (ADR) (Provider of telecommunication services) ...................... 325,000 5,118,750 ---------------- 14,560,433 ---------------- Brazil 37.8% Aracruz Celulose SA "B" (pfd.) (ADR) (Producer of eucalyptus kraft pulp) ........................... 415,000 5,893,000 Banco Bradesco SA (pfd.) (ADR) (Provider of banking services) ................................ 1,030,000 5,825,938 Banco Itau SA (pfd.) (Provider of commercial banking services) ................................ 255,153,400 20,532,917 Brasil Telecom Participacoes SA (pfd.) (ADR) (Provider of local telecommunication services) ................ 195,200 8,382,171 Companhia de Bebidas das Americas (pfd.) (Producer of beer, soft drinks, teas, bottled water, fruit juices and sports drinks) ........................ 74,000,000 18,100,477 Companhia Vale do Rio Doce (pfd.) (ADR) (Operator of diverse mining and industrial complex) ........... 435,000 10,195,313 Embratel Participacoes SA (pfd.) (ADR) (Provider of telecommunication services) ...................... 128,200 1,162,774 Petrobras Distribuidora SA (pfd.) (Distributor of petroleum and natural gas) ....................... 388,200,000 5,965,520 Petroleo Brasileiro SA (pfd.) (Producer and marketer of petroleum and petroleum products) ............. 1,560,000 37,874,062 Tele Norte Leste Participacoes SA (pfd.) (ADR) (Provider of local telecommunication services) ... 1,028,800 17,983,424 Telecomunicacoes do Parana SA (pfd.) (Provider of telecommunication services) ...................... 1,485,194,454 9,338,595 The accompanying notes are an integral part of the financial statements. 17 Shares Value ($) - ------------------------------------------------------------------------------------- Votorantim Celulose e Papel SA (ADR) (Producer and exporter of printing, writing and other specialty papers) ........................................... 221,100 3,073,290 ---------------- 144,327,481 ---------------- Chile 3.4% Compania Cervecerias Unidas SA (ADR) (Bottler and distributor of beer, soft drinks and mineral water) 449,500 10,922,850 Embotelladora Andina SA "B" (ADR) (Distributor of Coca-Cola soft drinks) ............................ 200,000 2,150,000 ---------------- 13,072,850 ---------------- Mexico 49.3% America Movil SA de CV "L" (ADR)* (Provider of wireless communication services) .................. 704,200 12,957,280 Apasco SA de CV (Manufacturer of cement and ready-mixed concrete) ............................. 1,924,000 9,885,343 Cemex SA de CV (ADR) (Producer of concrete and cement) ........................................... 500,000 11,585,000 Coca-Cola FEMSA, SA de CV "L" (ADR) (Bottler and distributor of soft drinks) ....................... 320,800 6,255,600 Fomento Economico Mexicano SA de CV (ADR) (Producer of beer, soft drinks and mineral water).. 495,000 18,909,000 Grupo Continental SA (Producer and distributor of soft drinks, sugar and mineral water) ............. 13,488,500 17,522,649 Grupo Embotelladora Unidas SA de CV "B" (Producer and marketer of soft drinks) ............ 1,839,134 2,983,992 Grupo Financiero BBVA Bancomer SA de CV* (Provider of banking and financial services) ...... 2,487,600 1,996,538 Grupo Financiero Banamex Accival SA de CV (Provider of individual, commercial and retail banking services) ................................. 5,377,500 10,057,001 Grupo Financiero Inbursa SA de CV "O"* (Provider of financial services) .................. 1,467,600 4,841,731 Grupo Industrial Bimbo SA de CV "A" (Producer of bread and other baked goods) ................... 175,700 259,226 Grupo Televisa SA de CV (GDR)* (Operator of entertainment businesses) ......................... 320,000 12,169,600 Kimberly-Clark de Mexico SA de CV "A" (Producer of consumer paper products) ....................... 6,409,800 17,125,155 Panamerican Beverages Inc. "A" (Bottler of soft drinks) ........................................... 768,500 13,917,535 Pepsi-Gemex SA "B"* (Distributor of soft drink products) (b) ..................................... 6,543,500 1,850,866 Telefonos de Mexico SA de CV "L" (ADR) (Provider of telecommunication services) ....................... 839,200 29,036,320 Wal-Mart de Mexico SA de CV "C" (Operator of department stores, supermarkets, wholesale outlets and restaurants) ...................................... 7,554,100 16,750,573 ---------------- 188,103,409 ---------------- The accompanying notes are an integral part of the financial statements. 18 Shares Value ($) - ------------------------------------------------------------------------------------- Panama 2.1% Banco Latinoamericano de Exportaciones SA "E" (ADR) (Provider of banking services) ................... 240,000 7,920,000 ---------------- Peru 0.5% Union de Cerveceria Backus & Johnston SA "T" (Producer of malted, nonalcoholic and carbonated drinks) .......................................... 6,803,019 1,784,523 ---------------- - ------------------------------------------------------------------------------------- Total Common Stocks (Cost $357,571,181) 369,768,696 - ------------------------------------------------------------------------------------- Total Investment Portfolio -- 100.0% (Cost $369,442,181) (a) 381,639,696 - -------------------------------------------------------------------------------------
* 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 $370,621,237. At April 30, 2001, net unrealized appreciation for all securities based on tax cost was $11,018,459. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $60,128,416 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $49,109,957. (b) Securities valued in good faith by the Valuation Committee of the Board of Directors at fair value amounted to $4,100,866 (1.08% of net assets). Their values have been estimated by the Valuation Committee in the absence of readily ascertainable market values. However, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the difference could be material. The cost of these securities at April 30, 2001 aggregated $12,103,484. These securities may also have certain restrictions as to resale. The accompanying notes are an integral part of the financial statements. 19
Financial Statements - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- Statement of Assets and Liabilities as of April 30, 2001 (Unaudited) - ---------------------------------------------------------------------------------------------- Assets - ---------------------------------------------------------------------------------------------- Investments in securities, at value (cost $369,442,181) ...................... $ 381,639,696 Cash ......................................................................... 102 Receivable for investments sold .............................................. 1,695,309 Dividends receivable ......................................................... 1,152,134 Interest receivable .......................................................... 1,523 Receivable for Fund shares sold .............................................. 175,045 ------------- Total assets ................................................................. 384,663,809 Liabilities - ---------------------------------------------------------------------------------------------- Payable for investments purchased ............................................ 2,646,688 Payable for Fund shares redeemed ............................................. 742,022 Accrued management fee ....................................................... 356,646 Other accrued expenses and payables .......................................... 178,644 ------------- Total liabilities ............................................................ 3,924,000 - ---------------------------------------------------------------------------------------------- Net assets, at value $ 380,739,809 - ---------------------------------------------------------------------------------------------- Net Assets - ---------------------------------------------------------------------------------------------- Net assets consist of: Undistributed net investment income .......................................... 1,387,927 Net unrealized appreciation (depreciation) on: Investments ................................................................ 12,197,515 Foreign currency related transactions ...................................... (86,713) Accumulated net realized gain (loss) ......................................... (2,053,215) Paid-in capital .............................................................. 369,294,295 - ---------------------------------------------------------------------------------------------- Net assets, at value $ 380,739,809 - ---------------------------------------------------------------------------------------------- Net Asset Value - ---------------------------------------------------------------------------------------------- Class AARP Net Asset Value, offering and redemption price per share ($155,062 / 7,550 shares of capital stock outstanding, $.01 par value, 100,000,000 shares ------------- authorized) ............................................................... $ 20.54 ------------- Class S Net Asset Value, offering and redemption price per share ($380,584,747 / 18,530,605 shares of capital stock outstanding, $.01 par value, 100,000,000 ------------- shares authorized) ........................................................ $ 20.54 -------------
The accompanying notes are an integral part of the financial statements. 20 - -------------------------------------------------------------------------------- Statement of Operations for the six months ended April 30, 2001 (Unaudited) - -------------------------------------------------------------------------------- Investment Income - -------------------------------------------------------------------------------- Income: Dividends (net of foreign taxes withheld of $200,558) .......... $ 5,483,700 Interest ....................................................... 456,847 ------------ Total Income ................................................... 5,940,547 ------------ Expenses: Management fee ................................................. 2,500,392 Administrative fee ............................................. 1,300,203 Directors' fees and expenses ................................... 2,845 Other .......................................................... 80,970 ------------ Total expenses ................................................. 3,884,410 - -------------------------------------------------------------------------------- Net investment income (loss) 2,056,137 - -------------------------------------------------------------------------------- Realized and unrealized gain (loss) on investment transactions - -------------------------------------------------------------------------------- Net realized gain (loss) from: Investments .................................................... (647,380) Foreign currency related transactions (including CPMF tax of $25,905) ................................................. (145,479) ------------ (792,859) ------------ Net unrealized appreciation (depreciation) during the period on: Investments .................................................... (12,253,221) Foreign currency related transactions .......................... (78,848) ------------ (12,332,069) - -------------------------------------------------------------------------------- Net gain (loss) on investment transactions (13,124,928) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(11,068,791) - -------------------------------------------------------------------------------- The accompanying notes are an integral part of the financial statements. 21
- ------------------------------------------------------------------------------------- Statements of Changes in Net Assets - ------------------------------------------------------------------------------------- Six Months Ended Year Ended April 30, 2001 October 31, Increase (Decrease) in Net Assets (Unaudited) 2000 - ------------------------------------------------------------------------------------- Operations: Net investment income (loss) ...................... $ 2,056,137 $ 4,026,628 Net realized gain (loss) on investment transactions ................................... (792,859) 54,212,373 Net unrealized appreciation (depreciation) on investment transactions during the period ...... (12,332,069) 12,694,936 ------------- ------------- Net increase (decrease) in net assets resulting from operations ................................ (11,068,791) 70,933,937 ------------- ------------- Distributions to shareholders from: Net investment income: Class AARP ...................................... (354) -- ------------- ------------- Class S ......................................... (3,252,624) (1,108,570) ------------- ------------- Net realized gains: Class AARP ...................................... (2,933) -- ------------- ------------- Class S ......................................... (26,901,611) -- ------------- ------------- Fund share transactions: Proceeds from shares sold ......................... 53,682,324 204,140,220 Reinvestment of distributions ..................... 28,776,988 1,045,242 Cost of shares redeemed ........................... (82,657,968) (301,807,848) ------------- ------------- Net increase (decrease) in net assets from Fund share transactions ............................. (198,656) (96,622,386) ------------- ------------- Increase (decrease) in net assets ................. (41,424,969) (26,797,019) Net assets at beginning of period ................. 422,164,778 448,961,797 Net assets at end of period (including undistributed net investment income of ------------- ------------- $1,387,927 and $2,584,768, respectively) ....... $ 380,739,809 $ 422,164,778 ------------- -------------
The accompanying notes are an integral part of the financial statements. 22 Financial Highlights - -------------------------------------------------------------------------------- The following table includes selected data for a share outstanding throughout each period and other performance information derived from the financial statements. Class AARP
- ------------------------------------------------------------------------------------ 2001(c) 2000(a) - ------------------------------------------------------------------------------------ Net asset value, beginning of period $22.75 $23.51 - ------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income (loss) (b) .11 (.03) - ------------------------------------------------------------------------------------ Net realized gains on investment transactions (.65) (.73) - ------------------------------------------------------------------------------------ Total from investment operations (.54) (.76) - ------------------------------------------------------------------------------------ Less distributions from: Net investment income (.18) -- - ------------------------------------------------------------------------------------ Net realized gains on investment transactions (1.49) -- - ------------------------------------------------------------------------------------ Total distributions (1.67) -- - ------------------------------------------------------------------------------------ Net asset value, end of period $20.54 $22.75 - ------------------------------------------------------------------------------------ Total Return (%) (2.11)** (3.23)** - ------------------------------------------------------------------------------------ Ratios to Average Net Assets and Supplemental Data - ------------------------------------------------------------------------------------ Net assets, end of period ($ millions) .16 .02 - ------------------------------------------------------------------------------------ Ratio of expenses (%) 1.92* 1.91* - ------------------------------------------------------------------------------------ Ratio of net investment income (loss) (%) 1.13* (.15)** - ------------------------------------------------------------------------------------ Portfolio turnover rate (%) 24* 42 - ------------------------------------------------------------------------------------
(a) For the period from October 2, 2000 (commencement of sales of Class AARP shares) to October 31, 2000. (b) Based on monthly average shares outstanding during the period. (c) For the six months ended April 30, 2001 (Unaudited). * Annualized ** Not annualized 23 The following table includes selected data for a share outstanding throughout each period and other performance information derived from the financial statements. Class S
- ------------------------------------------------------------------------------------ Years Ended October 31, 2001(a) 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------ Net asset value, beginning of period $22.74 $19.95 $19.02 $25.12 $20.63 $16.22 - ------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income (loss) (b) .11 .20(f) .31 .34 .26 .25 - ------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investment transactions (.64) 2.64 1.63 (5.05) 4.49 4.30 - ------------------------------------------------------------------------------------ Total from investment operations (.53) 2.84 1.94 (4.71) 4.75 4.55 - ------------------------------------------------------------------------------------ Less distributions from: Net investment income (.18) (.05) (.37) (.25) (.26) (.15) - ------------------------------------------------------------------------------------ Net realized gains on investment transactions (1.49) -- (.64) (1.14) -- -- - ------------------------------------------------------------------------------------ Total distributions (1.67) (.05) (1.01) (1.39) (.26) (.15) - ------------------------------------------------------------------------------------ Redemption fees (c) -- -- -- -- -- .01 - ------------------------------------------------------------------------------------ Net asset value, end of period $20.54 $22.74 $19.95 $19.02 $25.12 $20.63 - ------------------------------------------------------------------------------------ Total Return (%) (2.06)** 14.15 10.97 (20.23) 23.25 28.31(d) - ------------------------------------------------------------------------------------ Ratios to Average Net Assets and Supplemental Data - ------------------------------------------------------------------------------------ Net assets, end of period ($ millions) 381 422 449 504 883 622 - ------------------------------------------------------------------------------------ Ratio of expenses before expense reductions (%) 1.92* 1.80(e) 1.96 1.87 1.89 1.96 - ------------------------------------------------------------------------------------ Ratio of expenses after expense reductions (%) 1.92* 1.79(e) 1.96 1.87 1.89 1.96 - ------------------------------------------------------------------------------------ Ratio of net investment income (loss) (%) 1.05* .80 1.61 1.45 .98 1.32 - ------------------------------------------------------------------------------------ Portfolio turnover rate (%) 24* 42 48 44 42 22 - ------------------------------------------------------------------------------------
(a) For the six months ended April 30, 2001 (Unaudited). (b) Based on monthly average shares outstanding during the period. (c) Until September 5, 1996, upon the redemption or exchange of shares held by shareholders for less than one year, a fee of 2% was assessed and retained by the Fund for the benefit of the remaining shareholders. (d) Shareholders redeeming shares held less than one year will have a lower total return due to the effect of the 2% redemption fee. (e) The ratios of operating expenses excluding costs incurred in connection with the reorganization in fiscal 2000 before and after expense reductions were 1.79% and 1.79%, respectively. (f) Net investment income per share includes non-recurring dividend income of $.05 per share. * Annualized ** Not annualized 24 Notes to Financial Statements (Unaudited) - -------------------------------------------------------------------------------- A. Significant Accounting Policies Scudder Latin America Fund (the "Fund") is 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 and is organized as a Maryland Corporation. The fund offers multiple classes of shares. The two classes of shares provide investors with different purchase options. Shares of Class AARP are especially designed for members of AARP. After December 29, 2000, Class S Shares of the Fund are generally not available to new investors. Investment income, realized and unrealized gains and losses, and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of both classes except that each class bears certain expenses unique to that class. Differences in class-level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those 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. 25 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. 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 26 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. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required. The Fund was subject to a 0.30% Contribuicao Provisoria sobre Movimentacao Financiera (CPMF) tax which is applied to foreign exchange transactions representing capital inflows or outflows to the Brazilian market. 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 accounting principles generally accepted in the United States of America. These differences primarily relate to 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. Other. 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. Other expenses in the Statement of Operations include ordinary changes of estimates in expenses. 27 B. Purchases and Sales of Securities During the six months ended April 30, 2001, purchases and sales of investment securities (excluding short-term investments) aggregated $46,549,499 and $65,043,605, respectively. C. Related Parties Management Agreement. Under the Investment Management Agreement (the "Management Agreement") with Zurich Scudder Investments, Inc., formerly Scudder Kemper Investments, Inc., ("ZSI" or the "Advisor"), the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor 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 Advisor provides certain administrative services in accordance with the Management Agreement. The management fee payable under the Management Agreement is equal to an annual rate of 1.25% of the first $1,000,000,000 of the Fund's average daily net assets and 1.15% of such net assets in excess of $1,000,000,000, computed and accrued daily and payable monthly. Accordingly, for the six months ended April 30, 2001, the fee pursuant to the Management Agreement aggregated $2,500,392, which was equivalent to an annualized effective rate of 1.25% of the Fund's average daily net assets. Administrative Fee. Under the Administrative Agreement (the "Administrative Agreement"), ZSI provides or pays others to provide substantially all of the administrative services required by the Fund (other than those provided by ZSI under its Management Agreement with the Fund, as described above) in exchange for the payment by the Fund of an administrative services fee (the "Administrative Fee") of 0.65% of average daily net assets for each class, computed and accrued daily and payable monthly. Various third-party service providers, some of which are affiliated with ZSI, provide certain services to the Fund under the Administrative Agreement. Scudder Fund Accounting Corporation, a subsidiary of ZSI, computes the net asset value for the Fund and maintains the accounting records of the Fund. Scudder Service Corporation, also a subsidiary of ZSI, is the transfer, shareholder service and dividend-paying agent for the shares of the Fund. Scudder Trust Company, an affiliate of ZSI, provides subaccounting and recordkeeping services for shareholders in certain retirement and employee benefit plans. In addition, other service providers, not affliliated with ZSI 28 provide certain services (i.e. custody, legal, audit) to the Fund under the Administrative Agreement. ZSI pays the service providers for the provision of their services to the Fund and pays other Fund expenses, including insurance, registration, printing, postage and other costs. Certain expenses of the Fund will not be borne by ZSI under the Administrative Agreement, such as taxes, brokerage, interest and extraordinary expense, and the fees and expenses of Independent Directors (including the fees and expenses of their independent counsel). For the six months ended April 30, 2001, the Administrative Fee was as follows: Unpaid at Administrative Fee Total Aggregated April 30, 2001 - ------------------------------------------ ---------------- ---------------- Class AARP .............................. $ 315 $ 72 Class S ................................. 1,299,888 177,884 -------------- -------------- $ 1,300,203 $ 177,956 -------------- -------------- Directors' Fees and Expenses. The Fund pays each Director not affiliated with the Advisor an annual retainer, plus specified amounts for attended board and committee meetings. For the six months ended April 30, 2001, Directors' fees and expenses aggregated $2,845. Other Related Parties. AARP through its affiliates, monitors and approves the AARP Investment Program from ZSI. The Advisor has agreed to pay a fee to AARP and/or its affiliates in return for the use of the AARP trademark and services relating to investments by AARP members in Class AARP shares of the Fund. This fee is calculated on a daily basis as a percentage of the combined net assets of the AARP classes of all funds managed by ZSI. The fee rates, which decrease as the aggregate net assets of the AARP classes become larger, are as follows: 0.07% for the first $6,000,000,000 of net assets, 0.06% for the next $10,000,000,000 of such net assets and 0.05% of such net assets thereafter. These amounts are used for the general purposes of AARP and its members. D. Investing in Emerging Markets Investing in emerging markets may involve special risks and considerations not typically associated with investing in the United States of America. 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 29 prices more volatile than those of comparable securities in the United States of America. E. Line of Credit The Fund and several affiliated Funds (the "Participants") share in a $1 billion revolving credit facility with J.P. Morgan Chase & Co. 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 at the Federal Funds Rate plus 0.5%. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. F. Share Transactions The following table summarizes shares of capital stock and dollar activity in the Fund:
Six Months Ended Year Ended April 30, 2001 October 31, 2000 ------------------------------------------------------------------ Shares Dollars Shares Dollars Shares sold - ------------------------------------------------------------------------------------- Class AARP ........ 9,995 $ 215,784 1,438* $ 33,844* Class S ........... 2,456,070 53,466,540 8,340,107 204,106,376 -------------- -------------- $ 53,682,324 $ 204,140,220 -------------- -------------- Shares issued to shareholders in reinvestment of distributions - ------------------------------------------------------------------------------------- Class AARP ........ 165 $ 3,272 -- $ -- Class S ........... 1,451,737 28,773,716 41,379 1,045,242 -------------- -------------- $ 28,776,988 $ 1,045,242 -------------- -------------- Shares redeemed - ------------------------------------------------------------------------------------- Class AARP ........ (3,570) $ (75,651) (478)* $ (10,882)* Class S ........... (3,940,219) (82,582,317) (12,318,111) (301,796,966) -------------- -------------- $ (82,657,968) $(301,807,848) -------------- -------------- Net increase (decrease) - ------------------------------------------------------------------------------------- Class AARP ........ 6,590 $ 143,405 960* $ 22,962* Class S ........... (32,412) (342,061) (3,936,625) (96,645,348) -------------- -------------- $ (198,656) $ (96,622,386) -------------- --------------
* For the period from October 2, 2000 (commencement of sales of Class AARP shares) to October 31, 2000. 30 Officers and Directors - -------------------------------------------------------------------------------- Linda C. Coughlin* o President and Director Henry P. Becton, Jr. o Director; President, WGBH Educational Foundation Dawn-Marie Driscoll o Director; President, Driscoll Associates; Executive Fellow, Center for Business Ethics, Bentley College Edgar R. Fiedler o Director; Senior Fellow and Economic Counsellor, The Conference Board, Inc. Keith R. Fox o Director; General Partner, The Exeter Group of Funds Jean Gleason Stromberg o Director; Consultant Jean C. Tempel o Director; Managing Director, First Light Capital, LLC Steven Zaleznick o Director; President and Chief Executive Officer, AARP Services, Inc. Thomas V. Bruns* o Vice President Irene T. Cheng* o Vice President Joyce E. Cornell* o Vice President Carol L. Franklin* o Vice President William F. Glavin* o Vice President Joan R. Gregory* o Vice President James E. Masur* o Vice President Paul H. Rogers* o Vice President Howard S. Schneider* o Vice President John Millette* o Vice President and Secretary Kathryn L. Quirk* o Vice President and Assistant Secretary John R. Hebble* o Treasurer Brenda Lyons* o Assistant Treasurer Caroline Pearson* o Assistant Secretary *Zurich Scudder Investments, Inc. 31 Investment Products and Services - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Scudder Funds - -------------------------------------------------------------------------------- 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 Managed Shares Growth Scudder Tax Free Money Fund Scudder Classic Growth Fund Scudder Capital Growth Fund Tax Free Scudder Large Company Growth Fund Scudder Medium Term Tax Free Fund Scudder Select 1000 Growth Fund Scudder Managed Municipal Bonds Scudder Development Fund Scudder High Yield Tax Free Fund Scudder Small Company Stock Fund Scudder California Tax Free Fund Scudder 21st Century Growth Fund Scudder Massachusetts Tax Free Fund Scudder New York Tax Free Fund Global Equity Worldwide U.S. Income Scudder Global Fund Scudder Short Term Bond Fund Scudder International Fund Scudder GNMA Fund Scudder Global Discovery Fund Scudder Income Fund Scudder Emerging Markets Growth Fund Scudder High Yield Opportunity Fund Scudder Gold Fund Global Income Regional Scudder Global Bond Fund Scudder Greater Europe Growth Fund Scudder Emerging Markets Income Fund Scudder Pacific Opportunities Fund Scudder Latin America Fund Asset Allocation The Japan Fund, Inc. Scudder Pathway Conservative Portfolio Scudder Pathway Moderate Portfolio Industry Sector Funds Scudder Pathway Growth Portfolio Scudder Health Care Fund Scudder Technology Innovation 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 32 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- Closed-End Funds - -------------------------------------------------------------------------------- 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.
Scudder funds are offered by prospectus only. For more complete information on any fund or variable annuity registered in your state, including information about a fund's objectives, strategies, risks, advisory fees, distribution charges, and other expenses, please order a free prospectus. Read the prospectus before investing in any fund to ensure the fund is appropriate for your goals and risk tolerance. There is no assurance that the objective of any fund will be achieved, and fund returns and net asset values fluctuate. Shares are redeemable at current net asset value, which may be more or less than their original cost. A money market mutual fund investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market mutual fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund. The services and products described should not be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. Scudder Investor Services, Inc. 33 Account Management Resources - -------------------------------------------------------------------------------- For shareholders of Scudder funds including those in the AARP Investment Program 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- Automated Information Lines clock electronic account Scudder Class S Shareholders: service and Call SAIL(TM) -- 1-800-343-2890 information, including some AARP Investment Program Shareholders: transactions Call Easy-Access Line -- 1-800-631-4636 Personalized account information, the ability to exchange or redeem shares, and information on other Scudder funds and services via touchtone telephone. Web Site Scudder Class S Shareholders -- myScudder.com AARP Investment Program Shareholders -- aarp.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 you need them. Scudder's site also provides news about Scudder funds, retirement planning information, and more. 34 - -------------------------------------------------------------------------------- Those who Automatic Withdrawal Plan depend on investment You designate the bank account, determine the proceeds for schedule (as frequently as once a month) and amount living expenses of the redemptions, and Scudder does the rest. can enjoy these convenient, Distributions Direct timely, and reliable Automatically deposits your fund distributions into automated the bank account you designate within three business withdrawal days after 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 Scudder Class S Shareholders: information about these Call a Scudder representative at services 1-800-SCUDDER AARP Investment Program Shareholders: Call an AARP Investment Program representative at 1-800-253-2277 Please address For Scudder Class S Shareholders: all written correspondence Scudder Investments to PO Box 219669 Kansas City, MO 64121-9669 For AARP Investment Program Shareholders: AARP Investment Program from Scudder Investments PO Box 219735 Kansas City, MO 64121-9735 35 Notes - -------------------------------------------------------------------------------- Notes - -------------------------------------------------------------------------------- Notes - -------------------------------------------------------------------------------- Notes - -------------------------------------------------------------------------------- About the Fund's Advisor Zurich Scudder Investments, Inc., a leading global investment management firm, is a member of the Zurich Financial Services Group. Zurich Scudder Investments is one of the largest and most experienced investment management organizations in the world, managing more than USD 370 billion in assets for corporate clients, retirement and pension plans, insurance companies, mutual fund investors, and individuals worldwide. Headquartered in New York, Zurich Scudder 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. Headquartered in Zurich, Switzerland, Zurich Financial Services Group is one of the global leaders in the financial services industry, providing its customers with products and solutions in the area of financial protection and asset accumulation. This information must be preceded or accompanied by a current prospectus. Portfolio changes should not be considered recommendations for action by individual investors. AARP Investment Program from Scudder Investments PO Box 219735 Kansas City, MO 64121-9735 1-800-253-2277 aarp.scudder.com Scudder Investments PO Box 219669 Kansas City, MO 64121-9669 1-800-SCUDDER myScudder.com SCUDDER INVESTMENTS A member of [LOGO] Zurich Scudder Investments -----END PRIVACY-ENHANCED MESSAGE-----