This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
86-6-85
MIS18A
Scudder
International
Bond Fund
Annual Report
June 30, 1995
o For investors seeking an easy and low-cost way to broaden their
income-oriented investments beyond U.S. borders. Invests primarily in
high-grade bonds denominated in foreign currencies.
o A pure no-load(TM)fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
CONTENTS
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
27 Report of Independent Accountants
29 Officers and Directors
30 Investment Products and Services
31 How to Contact Scudder
IN BRIEF
* Scudder International Bond Fund provided a 3.92% total return for the
fiscal year ended June 30, 1995, reflecting recent strong portfolio
performance.
* Although severe currency volatility in late 1994 and early 1995 created a
negative environment for emerging-market bonds, developed bond markets
generally performed well. This is reflected in the unmanaged Salomon
Brothers Non-U.S. Dollar World Government Bond Index's return of 22.71% for
the period, of which roughly half can be attributed to currency gains.
BAR CHART OMITTED
TITLE: Government Bond Returns Show Disparity Between
Developed and Developing Markets
June 1994 - June 1995
CHART DATA:
Japan 32.97%
Germany 24.01%
France 20.94%
United Kingdom 13.46%
Italy 2.96%
Argentina -0.49%
Mexico 3.22%
FOOTNOTE TO CHART:
The chart above shows the dollar-based total returns of government
bonds issued in various foreign bond markets.
Source: J.P. Morgan
* In an environment characterized by significant currency fluctuation and
considerable uncertainty, the Fund's hedging strategies, which were
designed to protect the Fund, ultimately hindered performance.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
- --------------------------------------------------------------------------------
Dear Shareholders,
After rising throughout 1994, interest rates around the world eased this
year, setting the stage for a dramatic rally in global bond markets. The
economies of Europe, the United States, and Japan all appear to be slowing,
creating a favorable environment for bond investors. Meanwhile, the extreme
currency volatility that plagued the emerging markets late last year and early
this year also appears to have eased.
The change in interest rates over the past eight months and the resultant
global rise in bond prices show how dramatically the markets can move in short
time periods. While our outlook is for lower rates over the next several months
- -- and therefore positive bond market conditions -- we expect that pockets of
price or currency volatility will continue to occur.
The Fund's defensive investment strategy in late 1994 and early 1995 was
initiated following a period of persistent dollar weakness and considerable
uncertainty. This defensive approach proved to be premature and ultimately
restrained the Fund's performance. The positive investment environment so far
this year has enabled your portfolio managers to approach the bond markets more
offensively, and with greater exposure to foreign currencies. So far, the
results have been encouraging -- as is the Fund's longer-term record. Scudder
International Bond Fund's 10.80% average annualized total return for the five
years ended June 30, 1995, ranked third out of 25 general world income funds
according to Lipper Analytical Services, Inc.
If you have any questions about the Fund or your investments, please
contact a Scudder Investor Relations representative at 1-800-225-2470. Page 31
provides more information on how to contact Scudder. Thank you for your
continued interest in Scudder International Bond Fund.
Sincerely,
/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder International Bond Fund
3
<PAGE>
Scudder International Bond Fund
Performance Update as of June 30, 1995
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder International Bond Fund
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
6/30/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,392 3.92% 3.92%
5 Year $16,700 67.00% 10.80%
Life of
Fund* $20,061 100.61% 10.48%
Salomon Brothers Non-U.S. Dollar
World Government Bond Index
- --------------------------------------
Total Return
Period Growth -------------
Ended of Average
6/30/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $12,271 22.71% 22.71%
5 Year $20,608 106.08% 15.55%
Life of
Fund* $21,729 117.29% 11.88%
*The Fund commenced operations on July 6, 1988.
Index comparisons begin July 31, 1988.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Yearly periods ended June 30
Scudder International Bond Fund
Year Amount
- ----------------------
7/31/88 10000
89 10216
90 12013
91 13800
92 17699
93 19866
94 19304
95 20062
Salomon Brothers Non-U.S.
Dollar World Government
Bond Index
Year Amount
- ----------------------
7/31/88 10000
89 9831
90 10544
91 11581
92 14741
93 16176
94 17707
95 21729
The unmanaged Salomon Brothers Non-U.S. Dollar World Government Bond
Index consists of worldwide fixed-rate government bonds with remaining
maturities greater than one year. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees or expenses.
- -------------------------------------------------------------------
Returns and Per Share Information
- -------------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended June 30
- ----------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1989* 1990 1991 1992 1993 1994 1995
------------------------------------------------------
Net Asset Value... $11.27 $12.08 $12.35 $13.68 $13.57 $11.97 $11.43
Income Dividends.. $ 1.00 $ 1.09 $ 1.21 $ 1.09 $ 1.04 $ .91 $ .98
Capital Gains
Distributions..... $ -- $ -- $ .29 $ .81 $ .62 $ .39 $ --
Fund Total
Return (%)........ 2.16 17.59 14.88 28.25 12.24 -2.83 3.92
Index Total
Return (%)........ -1.69 7.25 9.84 27.29 9.74 9.46 22.71
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not temporarily capped expenses, the average
annual total return for the Fund for the one and five year periods
and life of Fund would have been lower.
4
<PAGE>
Portfolio Summary as of June 30, 1995
- ---------------------------------------------------------------------------
Market Exposure
- ---------------------------------------------------------------------------
Geographical
- ---------------------
Germany 12.7%
Supranational
Agencies 12.4%
France 9.9%
U.K. 9.5%
Italy 7.3%
Denmark 7.2%
Canada 6.3%
Australia 4.3%
New Zealand 4.2%
United States 4.2%
Sweden 4.0%
Netherlands 3.3%
Spain 3.0%
Poland 2.9%
Norway 2.5%
Finland 2.3%
Portugal 2.2%
Japan 1.8%
-----
100%
=====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Interest Rate
- ---------------------
Japan 14.2%
Germany 12.7%
France 10.8%
U.K. 9.5%
Italy 7.3%
Denmark 7.2%
United States 7.1%
Canada 6.3%
ECU 6.1%
Australia 4.3%
New Zealand 4.2%
Sweden 4.0%
Netherlands 3.3%
Spain 3.0%
-----
100%
=====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Currency Exposure (a)
- ---------------------
Australia 0.2%
Belgium -1.0%
Canada 4.5%
Denmark 2.0% The Fund's exposure to foreign
ECU 1.6% currencies was greatly enhanced
France 3.1% in the spring of 1995, with
Germany 7.7% particular emphasis on the Japanese
Italy 7.3% yen.
Japan 18.9%
Netherlands -0.9%
New Zealand 3.1%
Spain 0.4%
Sweden 1.7%
U.K. 6.2%
U.S. 45.2%
-----
100%
=====
(a) Currency exposure after taking into
account the effects of foreign currency
options, futures, and forward contracts.
For more complete details about the Fund's Investment Portfolio,
see page 10.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Dear Shareholders,
After a difficult 1994, bond markets around the world rallied sharply in
1995, with some posting double-digit gains in U.S. dollar terms. Economic growth
in the United States and Europe has shown signs of slowing, which has eased
investors' fears of burgeoning inflation. (Bond investors generally do not like
inflation because it deteriorates the purchasing power of their investment
income.) Meanwhile, Japan's anemic economic recovery appears to have been
scuttled by the adverse effects of a strong yen.
The Fund's 3.92% return, while positive, lagged the unmanaged Solomon
Brothers Non-U.S. Dollar World Government Bond Index by a wide margin during the
year primarily as the result of two factors: a defensive currency hedging
strategy that reduced the positive effects of rising foreign currencies against
the dollar, and the portfolio's 12% exposure to Latin American bonds, which
suffered due to financial difficulties in Mexico.
Scudder International Bond Fund seeks to provide regular income by
investing primarily in high-quality government bonds from around the world.
Government bonds are by definition the highest-quality investments available in
any country. However, quality varies from country to country and must be
evaluated as would the creditworthiness of an issuing corporation. Variables
include the stage of the country's economic cycle, the impact of central bank
activities, the level of real (inflation-adjusted) interest rates, and the
amount of government debt. Based on that information, the Fund develops a dual
investment strategy that views bond markets as separate from currency markets.
Bond Market Strategy
Throughout the year, we sought above-average interest-rate exposure while
emphasizing what we believed to be "value" markets. First, we looked for
investments in economies that appeared to be peaking and thus poised for
downturn. Slowing economic growth historically has been well received by bond
markets around the world as it is typically accompanied by declining interest
rates and lower inflation. During the period, we increased the Fund's interest
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
rate exposure in Germany, France, the United Kingdom, and Japan to a combined
weighting of 47% as of June 30. These markets offer significant appreciation
potential, in our estimation, as the growth rates of their economies wind down
from the pace of the past few years, and as Japan continues its deflationary
trend. Second, we sought investments in markets characterized by high relative
yields and attractively low prices, so-called "value" markets. Denmark and
Australia, for example, offered attractive investment opportunities during the
year as those countries waged successful battles against inflation and lofty
national debt burdens.
In recent years, emerging markets also have offered high current income and
significant appreciation potential as those countries work their way out of a
dependence on foreign capital and into self-perpetuating economic growth. While
emerging-market bonds have never constituted core investments for the Fund, the
impact of even a small exposure can sometimes be dramatic, as was the case this
year. The Fund's roughly 12% stake in Brazilian, Argentine, and Mexican
securities as of December 1994 reflected our belief that these Latin American
markets are indeed emerging. In each case, they have endured years of economic
and political reform, and now enjoy among the largest and most liquid markets of
the developing countries. While our belief in their fundamental progress has not
changed, we were surprised by the severe investor reaction to the Mexican peso
devaluation. Latin American bonds were sold indiscriminately for several months
by investors around the world, and the resulting declines took their toll on the
portfolio. As those markets rebounded this spring, we took the opportunity to
sell our Latin American holdings entirely. The Fund's emerging-market exposure
has shifted to Poland, where a recent investment-grade rating by Moody's
reflects the country's strong economic performance, relative political
stability, and improving trade balance with other nations.
Currency Strategy
In the early- to mid-'80s, the dollar was significantly overvalued relative
to major trading partners, prompting many years of American cost-cutting to meet
the challenge of foreign -- particularly Japanese -- competition. An expensive
currency tends to tilt an economy towards consumers, who buy foreign goods more
cheaply; a cheap one towards producers, whose products become more competitive
7
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
overseas. And for a long while, Americans consumed while other countries
produced. Relative currency valuations have since changed, and the plunging
dollar has made America one of the cheapest places to produce goods and
services. By contrast, the yen has soared with the result that the amount of
goods that 100 yen can buy outside Japan is considerably higher than the amount
it can buy inside Japan. The yen's rise has been surprisingly persistent, and we
have been anticipating for a long while that yen would flow out of Japan to
where its value was worth more. Such a global shift would help the currency to
decline. The Fund's defensive currency strategy was much a product of these
forces; we believed the dollar was poised to rise and sought to protect the
value of portfolio holdings from the negative effects of falling foreign
currencies.
For most of the period, the Fund's hedging strategy was premature. The
dollar continued to fall, and the Fund did not benefit from the rise of several
foreign currencies -- the chief reason for its underperformance relative to the
Salomon Index. In the spring of this year, we increased our exposure to the yen
and other currencies to roughly 45% of the portfolio, acknowledging that, while
the dollar was still undervalued, the momentum clearly was with the strong yen
and the deutschemark. In recent weeks, the dollar has shown some resiliency as
Japan has taken a somewhat tougher stance in reducing its strong yen.
Nevertheless, we intend to keep the Fund's currency strategy flexible in the
coming months, maintaining exposure to foreign currencies, while mindful of the
dollar's appreciation potential.
Outlook
The prospects appear good for continued positive global bond market
performance in the coming months. The United States and European economies
appear to be nearing the end of their respective expansionary cycles, and Japan
is in a confirmed deflationary spiral. Bond investors should continue to enjoy
the benefits of slowing economic growth worldwide, with its moderating effect on
interest rates and inflation. As always, the potential exists for bumps along
the way. In particular, a slowing world economy will put pressure on some
8
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
governments to support their already heavy debt loads. This will be especially
true of the emerging markets. However, with the Fund positioned to benefit
largely from such developed markets as Germany, France, and Japan -- and with
increased flexibility to take advantage of appreciating currencies -- we believe
Scudder International Bond Fund will continue to provide shareholders with
competitive income and total returns.
Sincerely,
Your Portfolio Management Team
/s/Adam M. Greshin /s/Margaret D. Hadzima
Adam M. Greshin Margaret D. Hadzima
/s/Margaret R. Craddock
Margaret R. Craddock
Scudder International
Bond Fund:
A Team Approach to Investing
Scudder International Bond Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. We believe our
team approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.
Lead Portfolio Manager Adam M. Greshin assumed responsibility for the
Fund's day-to-day management and investment strategies in March 1995. Mr.
Greshin, who specializes in global and international bond investments, was
involved in the original design of Scudder International Bond Fund and has been
a portfolio manager of the Fund since its inception in 1988. Portfolio Manager
Margaret D. Hadzima is Chairman of Scudder's Global Bond Strategy Committee and
Director of Global Bond Research. Ms. Hadzima, who joined Scudder in 1973 and
the team in 1995, plays an active role in setting the Fund's overall bond
strategy. Margaret R. Craddock, Portfolio Manager, has seven years of experience
in global fixed-income research and investing. Ms. Craddock, who joined Scudder
in 1991 and the team in 1995, is involved in both managing the Fund and setting
investment strategies.
9
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL BOND FUND
INVESTMENT PORTFOLIO as of June 30, 1995
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------
92.4% FOREIGN DENOMINATED DEBT OBLIGATIONS
-------------------------------------------------------------------------------------------
AUSTRALIAN DOLLARS 4.3% AUD 12,000,000 Commonwealth of Australia, 6.75%, 11/15/06.............. 7,022,235
2,890,000 Commonwealth of Australia, 10%, 10/15/07................ 2,154,736
2,530,000 Commonwealth of Australia, 10.5%, 9/15/95............... 1,807,896
13,500,000 New South Wales Treasury Bond, 6.5%, 5/1/06............. 7,675,710
11,960,000 New South Wales Treasury Corp., 12.5%, 4/1/97........... 9,117,506
17,250,000 Treasury Corp. of Victoria, 8.25%, 10/15/03............. 11,485,606
-----------
39,263,689
-----------
BRITISH POUNDS 9.5% GBP 37,295,000 United Kingdom Treasury Bond, 8%, 12/7/15............... 56,960,612
6,955,000 United Kingdom Treasury Bond, 8%, 9/25/09............... 10,618,899
11,850,000 United Kingdom Treasury Bond, 8.5%, 12/7/05............. 18,942,616
-----------
86,522,127
-----------
CANADIAN DOLLARS 6.3% CAD 15,510,000 Government of Canada, 6.5%, 6/1/04...................... 10,270,707
26,100,000 Government of Canada, 7.5%, 9/1/00...................... 18,982,564
27,590,000 Government of Canada, 8.5%, 3/1/00...................... 20,869,740
10,000,000 Mobil Oil Canada, Ltd., 8.125%, 1/20/98................. 7,380,007
-----------
57,503,018
-----------
DANISH KRONER 7.1% DKK 100,000,000 Kingdom of Denmark, 7%, 12/15/04........................ 16,681,253
55,000,000 Kingdom of Denmark, 8%, 5/15/03......................... 9,897,667
200,500,000 Kingdom of Denmark, 9%, 11/15/00........................ 38,501,775
-----------
65,080,695
-----------
DEUTSCHEMARKS 12.7% DEM 33,700,000 Federal Republic of Germany, 6.25%, 1/4/24.............. 20,565,354
121,250,000 Federal Republic of Germany, 8.375%, 5/21/01............ 94,751,482
-----------
115,316,836
-----------
DUTCH GUILDERS 3.3% NLG 32,000,000 Government of the Netherlands, 6.5%, 4/15/03............ 20,220,246
14,000,000 Government of the Netherlands, 7.75%, 1/15/00........... 9,571,735
-----------
29,791,981
-----------
EUROPEAN CURRENCY
UNITS 6.0% ECU 8,300,000 Electricite de France, 10.50%, 6/20/01.................. 12,398,198
15,000,000 Republic of Finland, 8.75%, 10/17/01.................... 20,627,844
16,200,000 Kingdom of Norway, 9%, 7/1/96........................... 22,047,401
-----------
55,073,443
-----------
FRENCH FRANCS 10.7% FRF 1,755,000,000 Government of France, Principal Strips, 10/25/19........ 48,120,477
110,000,000 Government of France OAT, 5.5%, 4/25/04................. 19,715,524
45,000,000 Government of France OAT, 8.5%, 3/28/00................. 9,765,483
95,800,000 Republic of Portugal, 7.7%, 6/7/05...................... 19,543,675
-----------
97,145,159
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ITALIAN LIRE 7.3% ITL 49,200,000,000 Republic of Italy, 10.5%, 4/15/98..................... 29,038,588
61,200,000,000 Union Bank of Switzerland, Certificate of
Deposit, 10.46%, 7/17/95............................ 37,450,669
-----------
66,489,257
-----------
JAPANESE YEN 14.1% JPY 3,969,700,000 International Bank for Reconstruction &
Development, 4.75%, 12/20/04........................ 54,158,904
4,251,400,000 International Bank for Reconstruction &
Development, 5.25%, 3/20/02......................... 58,378,632
1,125,000,000 Japan Development Bank, 6.5%, 9/20/01................. 16,271,622
-----------
128,809,158
-----------
NEW ZEALAND
DOLLARS 4.2% NZD 27,200,000 Government of New Zealand, 8%, 11/15/06............... 18,709,397
28,590,000 Government of New Zealand, 8%, 4/15/04................ 19,526,643
-----------
38,236,040
-----------
SPANISH PESETAS 3.0% ESP 2,530,000,000 Kingdom of Spain, 7.4%, 7/30/99....................... 18,140,026
1,115,000,000 Kingdom of Spain, 10.25%, 11/30/98.................... 8,893,037
-----------
27,033,063
-----------
SWEDISH KRONOR 3.9% SEK 194,000,000 Kingdom of Sweden, 10.25%, 5/5/00..................... 26,203,376
70,000,000 Kingdom of Sweden, 11%, 1/21/99....................... 9,712,607
-----------
35,915,983
-----------
TOTAL FOREIGN DENOMINATED DEBT
(Cost $827,574,694)................................. 842,180,449
-----------
-------------------------------------------------------------------------------------------
7.0% U.S. DOLLAR DENOMINATED DEBT OBLIGATIONS
-------------------------------------------------------------------------------------------
U. S. DOLLARS USD 4,600,000 American Express Credit Corp., Commercial
Paper, 5.853%, 7/3/95............................... 4,600,000
4,600,000 Associates Corp. of North America,
Commercial Paper, 6.123%, 7/3/95.................... 4,600,000
4,534,000 Chevron Oil Finance Co., Commercial Paper,
5.903%, 7/3/95...................................... 4,534,000
4,500,000 CIT Group Holdings Inc., Commercial Paper,
5.753%, 7/3/95...................................... 4,500,000
4,600,000 General Electric Capital Corp., Commercial
Paper, 5.803%, 7/3/95............................... 4,600,000
4,600,000 Household Finance Corp., Commercial Paper,
6.123%, 7/3/95...................................... 4,600,000
4,500,000 Prudential Funding Corp., Commercial
Paper, 6.053%, 7/3/95............................... 4,500,000
19,500,000 Republic of Poland, Past Due Interest Bond,
Step-up-Coupon, 3.25%, 10/27/14..................... 11,602,500
19,000,000 Republic of Poland, Collateralized Discount
Bond, LIBOR plus .8125%, 7.125%, 10/27/24........... 14,582,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL BOND FUND
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
2,000,000 U.S. Treasury Bill, 8/3/95......................... 1,990,102
700,000 U.S. Treasury Bill, 10/5/95........................ 689,758
2,500,000 U.S. Treasury Bill, 10/19/95....................... 2,457,836
700,000 U.S. Treasury Bill, 12/21/95....................... 681,629
-----------
TOTAL U.S. DOLLAR DENOMINATED DEBT
(Cost $59,007,916)............................... 63,938,325
-----------
TOTAL INVESTMENTS (Cost $886,582,610).............. 906,118,774
-----------
-------------------------------------------------------------------------------------------
0.6% PURCHASED OPTIONS
-------------------------------------------------------------------------------------------
DEM 52,480,200 Put on Deutschemarks, strike price DEM 1.41,
expiration date 7/27/95.......................... 221,939
DEM 74,312,500 Put on Deutschemarks, strike price DEM 1.45,
expiration date 8/11/95.......................... 145,578
DEM 90,335,000 Put on Deutschemarks, strike price DEM 1.465,
expiration date 8/3/95........................... 76,785
DEM 79,233,000 Put on Deutschemarks, strike price DEM 1.47,
expiration date 10/17/95......................... 382,616
DEM 57,041,880 Put on Deutschemarks, strike price DEM 1.47,
expiration date 11/13/95......................... 339,513
FRF 267,525,000 Put on French Francs, strike price FRF 5.22,
expiration date 1/12/96.......................... 444,627
FRF 241,600,000 Put on French Francs, strike price FRF 5.214,
expiration date 8/28/95.......................... 51,219
JPY 6,140,705,422 Call on Japanese Yen, strike price JPY 86.57,
expiration date 7/11/95.......................... 1,657,990
JPY 1,771,294,578 Put on Japanese Yen, strike price JPY 88,
expiration date 12/8/95.......................... 228,497
JPY 8,878,000,000 Put on Japanese Yen, strike price JPY 88.52,
expiration date 10/11/95......................... 639,216
Number of
Contracts
---------
310 Call on Italian 10 year Bond, strike price 97,
expiration date 8/22/95.......................... 842,273
390 Put on Eurodollar Futures, strike price 93.5,
expiration date 9/18/95.......................... 19,500
-----------
TOTAL PURCHASED OPTIONS (Cost $11,330,729)......... 5,049,753
-----------
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $897,913,339) (a).......................... 911,168,527
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $898,862,530. At June 30, 1995,
net unrealized appreciation for all securities based on tax cost was
$12,305,997. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of
$24,047,088 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $11,741,091.
<TABLE>
--------------------------------------------------------------------------------
WRITTEN OPTIONS
--------------------------------------------------------------------------------
At June 30, 1995, outstanding written options were as follows (Note A):
<CAPTION>
Principal
Amount Expiration Market
Call Options (000's) Date Strike Price Value ($)
-------------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
SEK........... 13,252 7/6/95 SEK 7.4875 49,283
GBP........... 11,773 7/12/95 GBP 1.5808 214,260
SEK........... 260,269 8/17/95 SEK 7.3145 679,302
FRF........... 241,600 8/28/95 FRF 4.79 648,213
DEM........... 51,803 9/14/95 DEM 1.335 426,808
JPY........... 2,219,500 10/11/95 JPY 74.5 59,927
---------
Total outstanding written options (Premiums received $2,060,243).... 2,077,793
=========
</TABLE>
<TABLE>
CURRENCY ABBREVIATIONS
--------------------------------------------------------------------------
<S> <C> <C> <C>
AUD Australian Dollar ITL Italian Lira
BEF Belgian Franc JPY Japanese Yen
GBP British Pound NLG Netherlands Guilder
CAD Canadian Dollar NZD New Zealand Dollar
DKK Danish Krone ESP Spanish Peseta
DEM Deutschemark SEK Swedish Krone
ECU European Currency Unit USD United States Dollar
FRF French Franc
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL BOND FUND
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------------------------------
JUNE 30, 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $886,582,610) (Note A)....... $ 906,118,774
Purchased options, at market (identified cost $11,330,729) (Note A).. 5,049,753
Cash................................................................. 365
Foreign currency at market (identified cost $347,723) (Note A)...... 357,620
Net receivable on closed forward foreign currency exchange
contracts (Note A)................................................ 794,890
Receivables:
Investments sold.................................................. 90,646,265
Interest.......................................................... 17,204,113
Fund shares sold.................................................. 253,277
Foreign taxes recoverable......................................... 20,959
Unrealized appreciation on forward currency exchange
contracts (Notes A & D)........................................... 4,804,008
Other ............................................................... 14,416
--------------
Total assets................................................... 1,025,264,440
LIABILITIES
Payables:
Investments purchased............................................. $95,206,767
Dividends......................................................... 5,170,688
Fund shares redeemed.............................................. 1,503,433
Accrued management fee (Note C)................................... 661,570
Other accrued expenses (Note C)................................... 770,102
Written options at market (premiums received $2,060,243)
(Note A)........................................................ 2,077,793
Unrealized depreciation on forward currency exchange
contracts (Notes A & D)......................................... 10,366,475
-----------
Total liabilities............................................... 115,756,828
--------------
Net assets, at market value.......................................... $ 909,507,612
==============
NET ASSETS
Net assets consist of:
Net unrealized appreciation (depreciation) on:
Investments................................................... $ 19,536,164
Options....................................................... (6,298,526)
Foreign currency related transactions......................... (5,286,922)
Accumulated net realized loss................................... (113,014,882)
Capital stock................................................... 795,748
Additional paid-in capital...................................... 1,013,776,030
--------------
Net assets, at market value.......................................... $ 909,507,612
==============
NET ASSET VALUE, offering and redemption price per share
($909,507,612 / 79,574,801 shares of capital stock
outstanding, $.01 par value, 200,000,000 shares of capital
stock authorized)............................................... $11.43
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30, 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest (net of withholding taxes of $1,283,216)..................... $ 106,730,051
Expenses:
Management fee (Note C)............................................... $ 9,197,192
Services to shareholders (Note C)..................................... 1,867,039
Directors' fees (Note C).............................................. 44,525
Custodian fees........................................................ 2,288,866
Auditing.............................................................. 99,895
Reports to shareholders............................................... 360,343
Legal................................................................. 38,007
State registration.................................................... 31,474
Interest (Note E)..................................................... 165,100
Other................................................................. 71,129 14,163,570
-------------- --------------
Net investment income................................................. 92,566,481
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized loss from:
Investments........................................................ (65,846,411)
Options............................................................ (4,373,098)
Futures contracts.................................................. (2,794,580)
Foreign currency related transactions.............................. (116,109,092) (189,123,181)
--------------
Net unrealized appreciation (depreciation) during the period on:
Investments........................................................ 122,447,177
Options............................................................ (4,214,992)
Futures contracts.................................................. (1,416,313)
Foreign currency related transactions.............................. 13,898,919 130,714,791
-------------- --------------
Net loss on investment transactions................................... (58,408,390)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $ 34,158,091
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL BOND FUND
- ------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income................................................ $ 92,566,481 $ 88,178,209
Net realized loss from investment transactions....................... (189,123,181) (5,029,105)
Net unrealized appreciation (depreciation) on investment
transactions during the period.................................... 130,714,791 (130,965,996)
------------- --------------
Net increase (decrease) in net assets resulting from operations...... 34,158,091 (47,816,892)
------------- --------------
Distributions to shareholders:
From net investment income ($.91 per share for June 30, 1994)..... - (88,034,933)
------------- --------------
In excess of net realized gains from investment transactions
($.39 per share)............................................... - (37,671,614)
------------- --------------
Tax return of capital ($.98 per share for June 30, 1995).......... (92,566,481) -
------------- --------------
Fund share transactions:
Proceeds from shares sold............................................ 318,060,128 974,377,033
Net asset value of shares issued to shareholders in reinvestment of
distributions..................................................... 72,680,706 66,270,009
Cost of shares redeemed.............................................. (653,886,791) (652,677,186)
------------- --------------
Net increase (decrease) in net assets from Fund share transactions... (263,145,957) 387,969,856
------------- --------------
INCREASE (DECREASE) IN NET ASSETS.................................... (321,554,347) 214,446,417
Net assets at beginning of period.................................... 1,231,061,959 1,016,615,542
------------- --------------
NET ASSETS AT END OF PERIOD (including accumulated distributions in
excess of net investment income of $9,538,822 for June 30, 1994).. $ 909,507,612 $1,231,061,959
============= ==============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period............................ 102,881,085 74,937,656
------------- --------------
Shares sold.......................................................... 27,314,845 72,265,334
Shares issued to shareholders in reinvestment of distributions....... 6,274,380 4,976,780
Shares redeemed...................................................... (56,895,509) (49,298,685)
------------- --------------
Net increase (decrease) in Fund shares............................... (23,306,284) 27,943,429
------------- --------------
Shares outstanding at end of period.................................. 79,574,801 102,881,085
============= ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD AND OTHER PERFORMANCE INFORMATION
DERIVED FROM THE FINANCIAL STATEMENTS.
<CAPTION>
For the Period
July 6, 1988
(commencement
Years Ended June 30, of operations)
--------------------------------------------------- to June 30,
1995 1994(b) 1993 1992 1991 1990 1989
--------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $11.97 $13.57 $13.68 $12.35 $12.08 $11.27 $12.00
------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (a)......................... .98 .92 1.03 1.08 1.21 1.10 1.00
Net realized and unrealized gain (loss)
on investment transactions (c).................. (.54) (1.22) .52 2.15 .56 .80 (.73)
------ ------ ------ ------ ------ ------ ------
Total from investment operations.................... .44 (.30) 1.55 3.23 1.77 1.90 .27
------ ------ ------ ------ ------ ------ ------
Less distributions:
From net investment income........................ - (.91) (1.04) (1.09) (1.21) (1.09) (1.00)
From net realized gains on investment
transactions.................................... - - (.62) (.81) (.29) - -
In excess of net realized gains on investment
transactions.................................... - (.39) - - - - -
Tax return of capital............................. (.98) - - - - - -
------ ------ ------ ------ ------ ------ ------
Total distributions................................. (.98) (1.30) (1.66) (1.90) (1.50) (1.09) (1.00)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period...................... $11.43 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%).................................... 3.92 (2.83) 12.24 28.25 14.88 17.59 2.16**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions).............. 910 1,231 1,017 542 144 73 13
Ratio of operating expenses, net to average net
assets (%) (a).................................... 1.30 1.27 1.25 1.25 1.25 1.25 1.00*
Ratio of net investment income to average net
assets (%)........................................ 8.52 6.86 7.69 8.31 9.48 9.57 8.58*
Portfolio turnover rate (%)......................... 318.5 232.9 249.7 147.9 260.1 215.6 103.8*
<FN>
(a) Reflects a per share amount of expenses,
exclusive of management fees, reimbursed by
the Adviser of................................ $ - $ - $ - $ - $ - $ - $ .39
Reflects a per share amount of management fee
not imposed by the Adviser of................. $ - $ - $ .02 $ .04 $ .06 $ .10 $ .10
Operating expense ratio including
expenses reimbursed, management fee and other
expenses not imposed (%)...................... - 1.29 1.37 1.57 1.75 2.51 5.59*
(b) Per share amounts have been calculated using weighted average shares outstanding.
(c) Includes exchange gain (loss) of $.01, $.01 and ($.02) for the periods ended June 30, 1991, 1990 and 1989, previously
included in net investment income.
* Annualized
** Not annualized
</FN>
</TABLE>
17
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder International Bond Fund (the "Fund") is a non-diversified series of
Scudder Global Fund, Inc., a Maryland corporation registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The policies described below are followed consistently by
the Fund in the preparation of its financial statements in conformity with
generally accepted accounting principles.
SECURITY VALUATION. Portfolio debt securities with remaining maturities greater
than sixty days are valued by pricing agents approved by the Officers of the
Fund, which prices reflect broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. All other debt securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
OPTIONS. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or
sell to (put option), the writer a designated instrument at a specified price
within a specified period of time. Certain options, including options on
indices, will require cash settlement by the Fund if the option is exercised.
During the period, the Fund purchased put options and wrote call options on
currencies primarily as a hedge against potential adverse price movements in
the value of portfolio assets. In addition, during the period, the Fund
purchased call options and wrote put options on currencies to lock in the
exchange rate component of the purchase price of securities expected to be
purchased in the near future and to enhance potential gain.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium paid. If the Fund elects to close out the option it
would recognize a
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
gain or loss equal to the difference between the cost of acquiring the option
and the amount realized upon the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call
or purchased put option is adjusted for the amount of option premium. If a
written put or purchased call option is exercised the Fund's cost basis of
the acquired security or currency would be the exercise price adjusted for
the amount of the option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked price are available. Over-the-counter written or purchased options
are valued using dealer supplied quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an
increase in the market value of the underlying security or currency above the
exercise price. When the Fund writes a put option it accepts the risk of a
decline in the market value of the underlying security or currency below the
exercise price. Over-the-Counter options have the risk of the potential
inability of counterparties to meet the terms of their contracts. The Fund's
maximum exposure to purchased options is limited to the premium initially paid.
In addition, certain risks may arise upon entering into option contracts
including the risk that an illiquid secondary market will limit the Fund's
ability to close out an option contract prior to the expiration date and, that
a change in the value of the option contract may not correlate exactly with
changes in the value of the securities or currencies hedged.
FUTURES CONTRACTS. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased interest rate futures to manage the duration of the portfolio.
In addition, the Fund sold interest rate futures to hedge against declines in
the value of portfolio securities.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the
19
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
underlying security, and are recorded for financial reporting purposes as
unrealized gains or losses by the Fund. When entering into a closing
transaction, the Fund will realize a gain or loss equal to the difference
between the value of the futures contract to sell and the futures contract to
buy. Futures contracts are valued at the most recent settlement price.
Certain risks may arise upon entering into futures contracts including the
risk that an illiquid secondary market will limit the Fund's ability to close
out a futures contract prior to the settlement date and that a change in the
value of a futures contract may not correlate exactly with changes in the value
of the securities or currencies hedged. When utilizing futures contracts to
hedge the Fund gives up the opportunity to profit from favorable price
movements in the hedged positions during the term of the contract.
INDEXED SECURITIES. Indexed securities held by the Fund are investments whose
value is indexed to another financial instrument, index, currency, or commodity
(the "reference instrument"). For principal indexed securities, the principal
amount payable at maturity may be more or less than the amounts shown depending
on fluctuations in the value of the reference instrument. For coupon indexed
securities, the principal amount payable at maturity is fixed. However, the
coupon is indexed to the reference instrument. The price sensitivity of these
securities may be greater than that of non-indexed securities with similar
maturities.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at
the daily rates of exchange, and
(ii) purchases and sales of investment securities, interest income and
certain expenses at the rates of exchange prevailing on the
respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes
in market prices of the investments. Such fluctuations are included with the
net realized and unrealized gains and losses from investments.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the accrual and payment dates on
interest and foreign withholding taxes.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract (forward contract) is a commitment to purchase or sell a
foreign currency at the settlement date at a negotiated rate. During the
period, the Fund utilized forward contracts as a hedge in connection with
portfolio purchases and sales of securities denominated in foreign currencies
and as a hedge against changes in exchange rates relating to foreign currency
denominated assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code 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. At June 30, 1995, the Fund had a net tax basis capital
loss carryforward of approximately $77,681,000, which may be applied against
any realized net taxable capital gains of each succeeding year until fully
utilized or until June 30, 2003, whichever occurs first. In addition, from
November 1, 1994 through June 30, 1995, the Fund incurred $26,583,252 of net
realized capital losses and $23,044,146 of net realized currency losses. As
permitted by tax regulations, the Fund intends to elect to defer $26,583,252 of
net realized capital losses
21
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
and $5,541,013 of net realized currency losses and treat them as arising in
the fiscal year ended June 30, 1996.
DISTRIBUTION OF INCOME AND GAINS. Distribution of net investment income is
declared as a dividend to shareholders of record as of the close of business
each day and is distributed to shareholders monthly. During any particular year
net realized gains and certain unrealized gains (which for federal income tax
reporting purposes may be considered realized) from investment transactions,
in excess of available capital loss carryforwards, would be taxable to the Fund
if not distributed and, therefore, will be distributed to shareholders. An
additional distribution may be made to the extent necessary to avoid the payment
of a four percent federal excise tax. Distributions of net realized gains to
shareholders are recorded on the ex-dividend date.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
These differences relate primarily to investments in options, futures, forward
contracts, foreign denominated investments and certain securities sold at a
loss. As a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
OTHER. Investment security transactions are accounted for on a trade date
basis. Interest income is recorded on the accrual basis. All discounts are
accreted for both tax and financial reporting purposes.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
For the year ended June 30, 1995, purchases and sales of investment securities
(excluding short-term investments) aggregated $3,221,514,133, and
$3,547,083,396, respectively.
The aggregate face value of futures contracts opened and closed during the
year ended June 30, 1995 was $4,105,475,081 and $4,147,378,894, respectively.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Transactions in written options for the year ended June 30, 1995 are summarized
as follows:
<TABLE>
<CAPTION>
OPTIONS CONTRACTS OPTIONS ON CURRENCIES (000 OMITTED)
----------------------------- ----------------------------------------------------------
NUMBER OF PREMIUMS PREMIUMS
CONTRACTS RECEIVED ($) AUD CAD DEM RECEIVED ($)
---------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period............. - - - - - $ -
Written......................... 39,004,795 5,768,888 199,274 60,300 359,479 3,674,140
Closed.......................... (4,795) (5,031,888) (146,268) (60,300) - (1,280,390)
Exercised....................... (39,000,000) (737,000) - - (157,058) (889,932)
Expired......................... - - (53,006) - (150,618) (1,088,615)
------------ ------------- ------------ ------------- ------------ -------------
End of Period................... - - - - 51,803 $ 415,203
============ ============= ============ ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
OPTIONS ON CURRENCIES (000 OMITTED) (CONTINUED)
-----------------------------------------------------------------------------------------
PREMIUMS
ESP FRF GBP JPY NLG RECEIVED ($)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period............. - - - - - $ -
Written......................... 12,744,640 241,600 170,651 37,315,509 199,059 14,036,717
Closed.......................... (12,744,640) - (131,784) (35,096,009) (80,239) (11,506,750)
Exercised....................... - - (27,094) - (118,820) (1,652,246)
Expired......................... - - - - - -
------------ ------------- ------------ ------------- ------------ -------------
End of Period................... - 241,600 11,773 2,219,500 - $ 877,721
============ ============= ============ ============= ============ =============
</TABLE>
<TABLE>
OPTIONS ON CURRENCIES
(000 OMITTED) (CONTINUED)
-----------------------------------------------------------
PREMIUMS
NZD SEK SEK/DEM RECEIVED ($)
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Beginning of Period............. 25,305 - - $ 156,891
Written......................... - 1,245,863 118,500 3,238,441
Closed.......................... - (428,753) - (1,371,246)
Exercised....................... (25,305) (374,666) (118,500) (1,034,883)
Expired......................... - (168,923) - (221,884)
------------ ------------- ------------ -------------
End of Period................... - 273,521 - $ 767,319
============ ============= ============ =============
</TABLE>
23
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
C. RELATED PARTIES
- --------------------------------------------------------------------------------
On September 7, 1994, the Fund's Board of Directors approved a new Investment
Management Agreement (the "Management Agreement") with Scudder, Stevens &
Clark, Inc. (the "Adviser"). As manager of the assets of the Fund, the Adviser
directs the investments of the Fund in accordance with its investment
objective, policies, and restrictions. The Adviser determines the securities,
instruments, and other contracts relating to investments to be purchased, sold
or entered into by the Fund. In addition to portfolio management services, the
Adviser provides certain administrative services in accordance with the
Management Agreement. The management fee payable under the Management
Agreement is equal to an annual rate of 0.85% on the first $1,000,000,000 of
average daily net assets and 0.80% of such net assets in excess of
$1,000,000,000, computed and accrued daily and payable monthly.
Under the Investment Management Agreement which was in effect prior to
September 7, 1994 (the "Agreement"), the Fund agreed to pay the Adviser a fee
equal to an annual rate of 0.85% of the Fund's average daily net assets,
computed and accrued daily and payable monthly. Both the Management Agreement
and the Agreement provide that if the Fund's expenses, exclusive of taxes,
interest, and extraordinary expenses, exceed specified limits, such excess, up
to the amount of the management fee, will be paid by the Adviser. For the year
ended June 30, 1995, the fee pursuant to both the Management Agreement and the
Agreement amounted to $9,197,192, which is equivalent to an annual effective
rate of 0.85% of the Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend paying and shareholder service agent for the Fund.
For the year ended June 30, 1995, the amount charged by SSC aggregated
$1,435,234, of which $106,859 is unpaid at June 30, 1995.
The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the year
ended June 30, 1995, Directors' fees aggregated $44,525.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
D. COMMITMENTS
- --------------------------------------------------------------------------------
As of June 30, 1995, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$5,562,467.
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (U.S.$)
- -------------------- ------------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
AUD 91,861,178 USD 67,696,098 7/12/95 2,490,833
USD 28,277,040 AUD 39,437,923 7/12/95 (255,211)
FRF 483,264,912 USD 99,001,293 7/17/95 (696,459)
USD 61,403,531 FRF 302,912,494 7/17/95 1,127,434
ESP 2,889,616,379 USD 23,780,698 7/31/95 (23,861)
NZD 28,786,618 USD 19,027,954 7/31/95 (156,729)
USD 9,125,530 NZD 13,672,230 7/31/95 (4,021)
USD 8,881,988 GBP 5,603,000 8/7/95 45,673
GBP 16,937,940 USD 27,203,858 8/7/95 to 8/8/95 224,024
USD 16,313,266 CAD 22,563,240 8/8/95 122,661
CAD 45,126,480 USD 32,672,134 8/8/95 (185,359)
ECU 30,186,869 USD 39,790,509 8/8/95 (351,603)
NLG 59,410,000 USD 38,428,202 8/14/95 27,323
USD 24,875,314 DKK 134,280,575 8/22/95 (23,727)
DKK 388,825,162 USD 68,892,993 8/22/95 (2,981,228)
USD 25,392,275 ITL 41,930,264,476 8/23/95 113,848
ITL 41,930,264,476 USD 24,414,541 8/23/95 (1,048,065)
USD 60,019,805 BEF 1,716,866,512 9/5/95 500,794
BEF 1,982,430,451 USD 65,426,748 9/5/95 (4,377,387)
DEM 54,389,899 USD 39,135,871 9/12/95 (262,825)
USD 39,281,554 DEM 54,389,899 9/12/95 151,418
----------
(5,562,467)
==========
</TABLE>
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
E. SHORT-TERM DEBT
- --------------------------------------------------------------------------------
During the year ended June 30, 1995, the Fund periodically borrowed amounts
from a bank at the existing prime rate. The arrangement with the bank allows
the Fund to borrow a maximum amount based on the Fund's net asset value. There
were no borrowings outstanding at the end of the period.
During the year ended June 30, 1995, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $10,477,773 with a weighted average interest rate of 8.49%. Interest
expense for the year ended June 30, 1995 was $165,100 (less than $.01 per
share).
26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE DIRECTORS OF SCUDDER GLOBAL FUND, INC. AND TO THE SHAREHOLDERS OF
SCUDDER INTERNATIONAL BOND FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
International Bond Fund including the investment portfolio, as of June 30,
1995, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the six years in the
period then ended and for the period July 6, 1988 (commencement of operations)
to June 30, 1989. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of June 30, 1995, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder International Bond Fund as of June 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the six years in the period then ended and for the period July 6, 1988
(commencement of operations) to June 30, 1989, in conformity with generally
accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
August 11, 1995
27
<PAGE>
(This page intentionally left blank.)
28
<PAGE>
OFFICERS AND DIRECTORS
- --------------------------------------------------------------------------------
Edmond D. Villani*
Chairman of the Board and Director
Nicholas Bratt*
President and Director
Paul Bancroft III
Director; Venture Capitalist and Consultant
Thomas J. Devine
Director; Consultant
William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.
William H. Luers
Director; President, Metropolitan Museum of Art
Daniel Pierce*
Director and Vice President
Robert G. Stone, Jr.
Director; Chairman of the Board and Director, Kirby Corporation
Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor, Columbia
University Graduate School of Business
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Vice President and Assistant Treasurer
Douglas M. Loudon*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Gerald J. Moran*
Vice President
Edward J. O'Connell*
Vice President and Assistant Treasurer
Juris Padegs*
Vice President and Assistant Secretary
Kathryn L. Quirk*
Vice President and Assistant Secretary
Cornelia M. Small*
Vice President
Coleen Downs Dinneen*
Assistant Secretary
* Scudder, Stevens & Clark, Inc.
29
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<S> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Value Fund
Scudder Growth and Income Fund The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
For complete information on any of the above Scudder funds, including management fees and expenses, call or
write for a free prospectus. Read it carefully before you invest or send money. +A portion of the income from
the tax-free funds may be subject to federal, state, and local taxes. *Not available in all states. +++A
no-load variable annuity contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark,
Inc. are traded on various stock exchanges. ++For information on Scudder Treasurers Trust,(TM) an
institutional cash management service that utilizes certain portfolios of Scudder Fund, Inc. ($100,000
minimum), call 1-800-541-7703.
</TABLE>
30
<PAGE>
HOW TO CONTACT SCUDDER
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For account updates, prices, yields, exchanges, and redemptions
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
-------------------------------------------------------------------------------------------------------------
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
-------------------------------------------------------------------------------------------------------------
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
-------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
-------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided through Scudder Investor
Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a prospectus with more complete
information, including management fees and expenses. Please read it carefully before you invest or send
money.
</TABLE>
31
<PAGE>
Celebrating Over 75 Years of Serving Investors
- --------------------------------------------------------------------------------
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the first independent investment counsel
firm in the United States. Since its birth, Scudder's pioneering spirit and
commitment to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load mutual
fund. Today we offer 36 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
