<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>sr-laf.txt
<DESCRIPTION>SEMIANNUAL REPORT
<TEXT>
SCUDDER
INVESTMENTS
--------------------------------------------------------------------------------
EQUITY/GLOBAL
--------------------------------------------------------------------------------
Scudder
Latin America Fund
Semiannual Report
April 30, 2001
The fund seeks long-term capital appreciation.
<PAGE>
Contents
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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
<PAGE>
Scudder Latin America Fund
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Class AARP ticker symbol SLAMX fund number 174
Class S ticker symbol SLAFX fund number 074
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<TABLE>
<S> <C>
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
</TABLE>
^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
<PAGE>
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
<PAGE>
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
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AARP Investment Program Scudder Class S
Web site: aarp.scudder.com myScudder.com
Toll-free: 1-800-253-2277 1-800-SCUDDER
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5
<PAGE>
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
<PAGE>
--------------------------------------------------------------------------------
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
<TABLE>
<CAPTION>
1993** 1994 1995 1996 1997 1998 1999 2000 2001
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
------------------------------------------------------------------------------------
</TABLE>
* 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
<PAGE>
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
<PAGE>
--------------------------------------------------------------------------------
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
Glossary of Investment Terms
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<TABLE>
<S> <C>
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.
</TABLE>
(Source: Zurich Scudder Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
16
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio as of April 30, 2001 (Unaudited)
-------------------------------------------------------------------------------------
Principal
Amount ($) Value ($)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Repurchase Agreements 3.1%
-------------------------------------------------------------------------------------
<S> <C> <C>
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
<PAGE>
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
<PAGE>
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
-------------------------------------------------------------------------------------
</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 $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
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Statement of Assets and Liabilities as of April 30, 2001 (Unaudited)
----------------------------------------------------------------------------------------------
Assets
----------------------------------------------------------------------------------------------
<S> <C>
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
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
--------------------------------------------------------------------------------
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
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Statements of Changes in Net Assets
-------------------------------------------------------------------------------------
Six Months
Ended Year Ended
April 30, 2001 October 31,
Increase (Decrease) in Net Assets (Unaudited) 2000
-------------------------------------------------------------------------------------
Operations:
<S> <C> <C>
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
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<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.
Class AARP
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
2001(c) 2000(a)
------------------------------------------------------------------------------------
<S> <C> <C>
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
------------------------------------------------------------------------------------
</TABLE>
(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
<PAGE>
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
Class S
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Years Ended October 31, 2001(a) 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
------------------------------------------------------------------------------------
</TABLE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 2001 October 31, 2000
------------------------------------------------------------------
Shares Dollars Shares Dollars
Shares sold
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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)
-------------- --------------
</TABLE>
* For the period from October 2, 2000 (commencement of sales of Class AARP
shares) to October 31, 2000.
30
<PAGE>
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
<PAGE>
Investment Products and Services
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Scudder Funds
--------------------------------------------------------------------------------
<TABLE>
<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
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
<PAGE>
--------------------------------------------------------------------------------
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.
</TABLE>
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
<PAGE>
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
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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
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Notes
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Notes
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Notes
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Notes
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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
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