SCUDDER GLOBAL FUND INC, 497, 1995-11-06

SCUDDER GLOBAL FUND INC
497, 1995-11-06

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This prospectus sets forth concisely the information about Scudder Global Fund,
a series of Scudder Global Fund, Inc., an open-end management investment
company, that a prospective investor should know before investing. Please retain
it for future reference.

If you require more detailed information, a Statement of Additional Information
dated November 1, 1995, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statement, which is
incorporated by reference into this prospectus, has been filed with the
Securities and Exchange Commission.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Contents--see page 4.

Scudder Global Fund

Prospectus
November 1, 1995

A pure no-load(tm) (no sales charges) mutual fund series which seeks long-term
growth of capital from worldwide investing.
<PAGE>
Expense information

How to compare a Scudder pure no-load(TM) fund

This information is designed to help you understand the various costs and
expenses of investing in Scudder Global Fund (the "Fund"). By reviewing this
table and those in other mutual funds' prospectuses, you can compare the Fund's
fees and expenses with those of other funds. With Scudder's pure no-load(TM)
funds, you pay no commissions to purchase or redeem shares, or to exchange from
one fund to another. As a result, all of your investment goes to work for you.

1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.

Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE

2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended June 30, 1995.

Investment management fee 0.97%
12b-1 fees NONE
Other expenses 0.41%
-----
Total Fund operating expenses 1.38%
=====

Example

Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its net
investment income to shareholders. (As noted above, the Fund has no redemption
fees of any kind.)

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$14 $44 $76 $166

See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than those
shown.

* You may redeem by writing or calling the Fund. If you wish to receive your
redemption proceeds via wire, there is a $5 wire service fee. For
additional information, please refer to "Transaction information--Redeeming
shares."

2
<PAGE>
Financial Highlights

The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the audited financial
statements. If you would like more detailed information concerning the Fund's
performance, a complete portfolio listing and audited financial statements are
available in the Fund's Annual Report dated June 30, 1995 and may be obtained
without charge by writing or calling Scudder Investor Services, Inc.
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 23, 1986
(COMMENCEMENT
YEARS ENDED JUNE 30, OF OPERATIONS)
------------------------------------------------------------------------- TO JUNE 30,
1995 1994(d) 1993 1992 1991 1990 1989 1988 1987
------------------------------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period............. $23.93 $21.63 $19.56 $18.06 $20.36 $17.64 $14.47 $15.42 $12.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income........... .25 .23 .15 .19 .40 .19 .19 .18 .05
Net realized and unrealized
gain (loss) on investment
transactions.................. 1.91 2.57 2.42 2.28 (1.50) 3.28 3.20 (.82) 3.37
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 2.16 2.80 2.57 2.47 (1.10) 3.47 3.39 (.64) 3.42
------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions from:
Net investment income........... (.11) (.24) (.16) (.31) (.37) (.20) (.14) (.06) -
Net realized gains on
investment transactions....... (.34) (.26) (.34) (.66) (.83) (.55) (.08) (.25) -
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.............. (.45) (.50) (.50) (.97) (1.20) (.75) (.22) (.31) -
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period... $25.64 $23.93 $21.63 $19.56 $18.06 $20.36 $17.64 $14.47 $15.42
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%)................. 9.11 12.99 13.45 14.09 (5.20) 20.00 23.90 (4.45) 28.50**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
($ millions)................... 1,168 1,096 577 371 268 257 91 81 102
Ratio of operating expenses,
to average daily net
assets (%)..................... 1.38 1.45 1.48 1.59 1.70 1.81 1.98 1.71(b) 1.84*(a)
Ratio of net investment income to
average daily net assets (%)... 1.03 .97 .90 1.09 2.21 1.77 1.22 1.23 .63*
Portfolio turnover rate (%)...... 44.4 59.7 64.9 44.6 85.0(c) 38.3 30.7 53.8 32.2*
<FN>
(a) The Adviser did not impose all of its management fee during the period July 23, 1986 (commencement of operations) to
December 31, 1986, amounting to $.01 per share.

(b) The Adviser absorbed a portion of the Fund's expenses exclusive of management fees, amounting to $.03 per share.

(c) The portfolio turnover rate on equity securities and debt securities was 62.7% and 174.4%, respectively, based on average
monthly equity holdings and average monthly debt holdings.

(d) Per share amounts have been calculated using weighted average shares outstanding.

* Annualized

** Not annualized

</FN>
</TABLE>

3
<PAGE>

A message from Scudder's chairman

Scudder, Stevens & Clark, Inc., investment adviser to the Scudder Family of
Funds, was founded in 1919. We offered America's first no-load mutual fund in
1928. Today, we manage in excess of $90 billion for many private accounts and
over 50 mutual fund portfolios. We manage the mutual funds in a special program
for the American Association of Retired Persons, as well as the fund options
available through Scudder Horizon Plan, a tax-advantaged variable annuity. We
also advise The Japan Fund and nine closed-end funds that invest in countries
around the world.

The Scudder Family of Funds is designed to make investing easy and less costly.
It includes money market, tax free, income and growth funds as well as IRAs,
401(k)s, Keoghs and other retirement plans.

Services available to all shareholders include toll-free access to the
professional service representatives of Scudder Investor Relations, easy
exchange among funds, shareholder reports, informative newsletters and the
walk-in convenience of Scudder Funds Centers.

All Scudder mutual funds are pure no-load(TM). This means you pay no commissions
to purchase or redeem your shares or to exchange from one fund to another. There
are no "12b-1" fees either, which many other funds now charge to support their
marketing efforts. All of your investment goes to work for you. We look forward
to welcoming you as a shareholder.

/s/Daniel Pierce

Scudder Global Fund

Investment objective

* long-term growth of capital from global investment markets

Investment characteristics

* worldwide investing with international investment risk

* efficient vehicle for investors to participate in investments denominated
in U.S. and foreign currencies

Contents

Investment objective and policies 5
Investment results 6
Risks of global investing 6
Why invest in the Fund? 7
International investment experience 8
Additional information about policies
and investments 8
Distribution and performance information 11
Fund organization 11
Purchases 12
Exchanges and redemptions 13
Transaction information 14
Shareholder benefits 17
Directors and Officers 20
Investment products and services 21
How to contact Scudder 22

4
<PAGE>

Investment objective and policies

Scudder Global Fund (the "Fund"), a series of Scudder Global Fund, Inc., seeks
long-term growth of capital through a diversified portfolio of marketable
securities, primarily equity securities, including common stocks, preferred
stocks and debt securities convertible into common stocks. The Fund invests on a
worldwide basis in equity securities of companies which are incorporated in the
U.S. or in foreign countries. It also may invest in the debt securities of U.S.
and foreign issuers. Income is an incidental consideration.

Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. Shareholders
will receive written notice of any changes in the Fund's objective. If there is
a change in investment objective, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current financial
position and needs. There can be no assurance that the Fund's objective will be
met.

Investments

The Fund invests in companies that the Fund's investment adviser, Scudder,
Stevens & Clark, Inc. (the "Adviser"), believes will benefit from global
economic trends, promising technologies or products and specific country
opportunities resulting from changing geopolitical, currency or economic
relationships. It is expected that investments will be spread broadly around the
world. The Fund will be invested usually in securities of issuers located in at
least three countries, one of which may be the U.S. The Fund may be invested
100% in non-U.S. issues, and for temporary defensive purposes may be invested
100% in U.S. issues, although under normal circumstances it is expected that
both foreign and U.S. investments will be represented in the Fund's portfolio.
It is expected that investments will include companies of varying size as
measured by assets, sales or capitalization.

The Fund generally invests in equity securities of established companies listed
on U.S. or foreign securities exchanges, but also may invest in securities
traded over-the-counter. It also may invest in debt securities convertible into
common stock, and convertible and non-convertible preferred stock, and
fixed-income securities of governments, government agencies, supranational
agencies and companies when the Adviser believes the potential for appreciation
will equal or exceed that available from investments in equity securities. These
debt and fixed-income securities will be predominantly investment-grade
securities, that is, those rated Aaa, Aa, A or Baa by Moody's Investors Service,
Inc. ("Moody's") or AAA, AA, A or BBB by Standard & Poor's ("S&P") or those of
equivalent quality as determined by the Adviser. The Fund may not invest more
than 5% of its total assets in debt securities rated Baa or below by Moody's, or
BBB or below by S&P or deemed by the Adviser to be of comparable quality (see
"Additional information about policies and investments --Risk factors").

The Fund may invest in zero coupon securities which pay no cash income and are
issued at substantial discounts from their value at maturity. When held to
maturity, their entire income, which consists of accretion of discount, comes
from the difference between the issue price and their value at maturity.
Fixed-income securities also may be held for temporary defensive purposes when
the Adviser believes market conditions so warrant and for temporary investment.
Similarly, the Fund may invest in cash equivalents (including foreign money
market instruments, such as bankers' acceptances, certificates of deposit,
commercial paper, short-term government and corporate obligations and repurchase

5
<PAGE>

Investment objective and policies (cont'd)

agreements) for temporary defensive purposes and for liquidity. The Fund may
invest in closed-end investment companies holding foreign securities. In
addition, the Fund may engage in strategic transactions.

Risks of global investing

Global investing involves economic and political considerations not typically
found in U.S. markets. These considerations include changes in exchange rates
and exchange rate controls (which may include suspension of the ability to
transfer

Investment results

Scudder Global Fund is designed for long-term investors who can accept
international investment risk. The dollar value of the Fund's portfolio
securities fluctuates with changes in market and economic conditions abroad and
with changes in relative currency values. Changes in the Fund's share price may
not be related to changes in the U.S. stock and bond markets. As with any
long-term investment, the value of shares when sold may be higher or lower than
when purchased. For additional information concerning risks of international
investment, see "Risks of global investing."

<TABLE>
<CAPTION>
Annual capital changes**
- -------------------------
Years Ended Net Asset Capital Gains
June 30, Value/Share Dividends Distributions Capital Change
-------- ----------- --------- ------------- --------------
<S> <C> <C> <C> <C>
1987* $15.42
1988 14.47 $.06 $ .25 - 4.88%
1989 17.64 .14 .08 + 22.69
1990 20.36 .20 .55 + 19.33
1991 18.06 .37 .83 - 8.47
1992 19.56 .31 .66 + 12.24
1993 21.63 .16 .34 + 12.53
1994 23.93 .24 .26 + 11.88
1995 25.64 .11 .34 + 8.63

Growth of a $10,000 investment Total Return
------------------------------ ------------

Years Ended Value of Initial
June 30, 1995 $10,000 Investment Average Annual Cumulative
------------- ------------------ -------------- ----------
One Year $10,911 + 9.11% + 9.11%
Five Years 15,129 + 8.63 + 51.29
Life of the Fund 27,638 + 12.04 + 176.38

</TABLE>
Performance figures are historical and all total return calculations assume
reinvestment of capital gains and income distributions. Investor returns and
principal value fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. *For the period July 23, 1986
(commencement of operations) to June 30, 1987. **For a definition of "capital
change," see "Distribution and performance information."

These results are not intended to indicate future investment performance.

6
<PAGE>
currency from a given country), costs incurred in conversions between
currencies, non-negotiable brokerage commissions, less publicly available
information, different accounting standards, lower trading volume and greater
market volatility, the difficulty of enforcing obligations in other countries,
less securities regulation, different tax provisions (including withholding on
dividends and interest paid to the Fund), war, expropriation, political and
social instability, and diplomatic developments.

Further, the settlement period of securities transactions in foreign markets may
be longer than in domestic markets. These considerations generally are more of a
concern in developing countries. For example, the possibility of revolution and
the dependence on foreign economic assistance may be greater in these countries
than in developed countries. The management of the Fund seeks to mitigate the
risks associated with these considerations through diversification and active
professional management.

The Fund is designed for long-term investors who can accept international
investment risk. Since the Fund normally will be invested in both U.S. and
foreign securities markets, changes in the Fund's share price may have a low
correlation with movements in the U.S. markets. The Fund's share price will
reflect the movements of both the different stock and bond markets in which it
is invested and the currencies in which the investments are denominated; the
strength or weakness of the U.S. dollar against foreign currencies may account
for part of the Fund's investment performance. As with any long-term investment,
the value of shares when sold may be higher or lower than when purchased.
Because of the Fund's global investment policies and the investment
considerations discussed above, investment in shares of the Fund should not be
considered a complete investment program.

Why invest in the Fund?

The management of the Fund believes that there is substantial opportunity for
long-term capital growth from a professionally managed portfolio of securities
selected from the U.S. and foreign equity markets. This global investment
framework seeks to take advantage of the investment opportunities created by the
global economy. The world has become highly integrated in economic, industrial
and financial terms. Companies increasingly operate globally as they purchase
raw materials, produce and sell their products and raise capital. As a result,
international trends such as movements in currency and trading relationships are
becoming more important to many industries than purely domestic influences. To
understand a company's business, it is frequently more important to understand
how it is linked to the world economy than whether or not it is, for example, a
U.S., French or Swiss company. Just as a company takes a global perspective in
deciding where to operate, so too may an investor benefit from looking globally
in deciding which industries are growing, which producers are efficient and
which companies' shares are undervalued. The Fund affords the investor access to
opportunities wherever they arise, without being constrained by the location of
a company's headquarters or the trading market for its shares.

The Fund is designed for investors seeking worldwide equity opportunities in
developed, newly industrialized and developing countries (some of these
developing countries are located in Latin America and Africa). Like consumers
who seek to buy a good product wherever it is made, the Fund seeks to find
investment opportunities regardless of location. Because the Fund's portfolio
invests globally, it provides the potential to augment returns available from
the U.S. stock market. In addition, since U.S. and foreign markets do not always

7
<PAGE>
move in step with each other, a global portfolio will be more diversified than
one invested solely in U.S. securities.

Investing directly in foreign securities is usually impractical for most
investors because it presents complications and extra costs. Investors often
find it difficult to arrange purchases and sales, to obtain current information,
to hold securities in safekeeping and to convert the value of their investments
from foreign currencies into dollars. The Fund manages these problems for the
investor. With a single investment, the investor has a diversified worldwide
investment portfolio which is managed actively by experienced professionals. The
Adviser has had many years of experience investing in foreign markets and
dealing with trading, custody and currency transactions around the world. The
Adviser has the benefit of information it receives from worldwide sources and
believes the Fund affords investors an efficient and cost-effective method of
investing worldwide.

In addition, the Fund offers all the benefits of the Scudder Family of Funds.
Scudder, Stevens & Clark, Inc. manages a diverse family of pure no-load(TM)
funds and provides a wide range of services to help investors meet their
investment needs. Please refer to "Investment products and services" for
additional information.

International investment experience

The Adviser has been a leader in international investment management for over 40
years. Its investment company clients include Scudder International Fund, which
invests primarily in foreign securities and was initially incorporated in Canada
in 1953 as the first foreign investment company registered with the United
States Securities and Exchange Commission, Scudder International Bond Fund,
which invests internationally, Scudder Short Term Global Income Fund and Scudder
Global Small Company Fund which invest worldwide, Scudder Greater Europe Growth
Fund which invests primarily in the equity securities of European companies, The
Japan Fund, Inc., which invests primarily in securities of Japanese companies,
Scudder Latin America Fund, which invests in Latin American issuers, Scudder
Pacific Opportunities Fund, which invests in issuers located in the Pacific
Basin, with the exception of Japan and Scudder Emerging Markets Income Fund,
which invests in debt securities issued in emerging markets. The Adviser also
manages the assets of eight closed-end investment companies investing in foreign
securities: The Argentina Fund, Inc., The Brazil Fund, Inc., The First Iberian
Fund, Inc., The Korea Fund, Inc., The Latin America Dollar Income Fund, Inc.,
Scudder New Asia Fund, Inc., Scudder New Europe Fund, Inc. and Scudder World
Income Opportunities Fund, Inc. Assets of international investment company
clients of the Adviser exceeded $8 billion as of September 30, 1995.

Additional information about policies and investments

Investment restrictions

The Fund has adopted certain fundamental policies which may not be changed
without a vote of shareholders and which are designed to maintain the
portfolio's diversity and reduce investment risk.

The Fund may not borrow money except as a temporary measure for extraordinary or
emergency purposes and may not make loans except through the lending of
portfolio securities, the purchase of debt securities or through repurchase
agreements.

In addition, as a matter of nonfundamental policy, the Fund may not invest more
than 10% of its total assets, in the aggregate, in securities which are not
readily marketable, restricted securities and repurchase agreements maturing in
more than seven days.

8
<PAGE>

A complete description of these and other policies and restrictions is contained
under "Investment Restrictions" in the Fund's Statement of Additional
Information.

Repurchase agreements

Strategic Transactions and derivatives

The Fund may, but is not required to, utilize various other investment
strategies as described below to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements), to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio or to enhance potential gain. These
strategies may be executed through the use of derivative contracts. Such
strategies are generally accepted as a part of modern portfolio management and
are regularly utilized by many mutual funds and other institutional investors.
Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur.

In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other financial instruments, purchase and
sell financial futures contracts and options thereon, enter into various
interest rate transactions such as swaps, caps, floors or collars, and enter
into various currency transactions such as currency forward contracts, currency
futures contracts, currency swaps or options on currencies or currency futures
(collectively, all the above are called "Strategic Transactions").

Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for the Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance
potential gain although no more than 5% of the Fund's assets will be committed
to Strategic Transactions entered into for non-hedging purposes. Any or all of
these investment techniques may be used at any time and in any combination, and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Fund to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Fund will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. Strategic Transactions involving
financial futures and options thereon will be purchased, sold or entered into
only for bona fide hedging, risk management or portfolio management purposes and
not for speculative purposes. Please refer to "Risk factors--Strategic
Transactions and derivatives" for more information.

Risk factors

The Fund's risks are determined by the nature of the securities held and the
portfolio management strategies used by the Adviser. The following are
descriptions of certain risks related to the investments and techniques that the
Fund may use from time to time.

Repurchase agreements. If the seller under a repurchase agreement becomes
insolvent, the Fund's right to dispose of the securities may be restricted, or

9
<PAGE>
Additional information about policies and investments (cont'd)

the value of the securities may decline before the Fund is able to dispose of
them. In the event of the commencement of bankruptcy or insolvency proceedings
with respect to sellers of the securities before repurchase under a repurchase
agreement, the Fund may encounter delay and incur costs including a decline in
the value of the securities, before being able to sell the securities.

Debt securities. The Fund will invest no more than 5% of its total assets in
debt securities rated BBB or Baa or below or in unrated securities. Securities
rated below BBB/Baa are commonly referred to as "junk bonds." The lower the
quality of such debt securities, the greater their risks render them like equity
securities. The Fund may invest in securities which are rated as low as C by
Moody's or D by S&P at the time of purchase. Such securities may be in default
with respect to payment of principal or interest.

Zero coupon securities. Zero coupon securities are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities which make current cash distributions of interest.

Illiquid investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of illiquid
investments may involve time-consuming negotiation and legal expenses, and it
may be difficult or impossible for the Fund to sell them promptly at an
acceptable price.

Strategic Transactions and derivatives. Strategic Transactions, including
derivative contracts, have risks associated with them including possible default
by the other party to the transaction, illiquidity and, to the extent the
Adviser's view as to certain market movements is incorrect, the risk that the
use of such Strategic Transactions could result in losses greater than if they
had not been used. Use of put and call options may result in losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or for
prices higher than (in the case of put options) or lower than (in the case of
call options) current market values, limit the amount of appreciation the Fund
can realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of currency transactions can result in the Fund
incurring losses as a result of a number of factors including the imposition of
exchange controls, suspension of settlements or the inability to deliver or
receive a specified currency. The use of options and futures transactions
entails certain other risks. In particular, the variable degree of correlation
between price movements of futures contracts and price movements in the related
portfolio position of the Fund creates the possibility that losses on the
hedging instrument may be greater than gains in the value of the Fund's
position. In addition, futures and options markets may not be liquid in all
circumstances and certain over-the-counter options may have no markets. As a
result, in certain markets, the Fund might not be able to close out a
transaction without incurring substantial losses, if at all. Although the use of
futures contracts and options transactions for hedging should tend to minimize
the risk of loss due to a decline in the value of the hedged position, at the
same time they tend to limit any potential gain which might result from an
increase in value of such position. Finally, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium. Losses resulting from the use of Strategic
Transactions would reduce net asset value, and possibly income, and such losses
can be greater than if the Strategic Transactions had not been utilized. The
Strategic Transactions that the Fund may use and some of their risks are
described more fully in the Fund's Statement of Additional Information.

10
<PAGE>

Distribution and performance information

Dividends and capital gains distributions

The Fund intends to distribute any dividends from net investment income and any
net realized capital gains after utilization of capital loss carryforwards, if
any, in November or December to prevent application of federal excise tax. An
additional distribution may be made within three months of the Fund's fiscal
year end, if necessary. Any dividends or capital gains distributions declared in
October, November or December with a record date in such a month and paid during
the following January will be treated by shareholders for federal income tax
purposes as if received on December 31 of the calendar year declared. According
to preference, shareholders may receive distributions in cash or have them
reinvested in additional shares of the Fund. If an investment is in the form of
a retirement plan, all dividends and capital gains distributions must be
reinvested into the shareholder's account.

Generally, dividends from net investment income are taxable to shareholders as
ordinary income. Long-term capital gains distributions, if any, are taxable as
long-term capital gains regardless of the length of time shareholders have owned
their shares. Short-term capital gains and any other taxable income
distributions are taxable as ordinary income. A portion of dividends from net
investment income may qualify for the dividends-received deduction for
corporations.

Shareholders may be able to claim a credit or deduction on their income tax
returns for their pro rata portions of qualified taxes paid by the Fund to
foreign countries.

The Fund sends detailed tax information about the amount and type of its
distributions to its shareholders by January 31 of the following year.

Performance information

From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance figures
are historical, show the performance of a hypothetical investment and are not
intended to indicate future performance. "Total return" is the change in value
of an investment in the Fund for a specified period. The "average annual total
return" of the Fund is the average annual compound rate of return of an
investment in the Fund assuming that the investment has been held for periods of
one year, five years and the life of the Fund. "Cumulative total return"
represents the cumulative change in value of an investment in the Fund for
various periods. All types of total return calculations assume that dividends
and capital gains distributions during the period were reinvested. "Capital
change" measures return from capital, including reinvestment of any capital
gains distributions but does not include the reinvestment of dividends.
Performance will vary based upon, among other things, changes in market
conditions and the level of the Fund's expenses.

Fund organization

The Fund is a diversified series of Scudder Global Fund, Inc. (the
"Corporation"), an open-end, management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"). The Corporation was organized
as a Maryland corporation in May 1986.

(Continued on page 14)

11
<PAGE>

<TABLE>
<CAPTION>
Purchases
<S> <C>
Opening Minimum initial investment: $1,000; IRAs $500
an account Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums. See appropriate
plan literature.

Make checks o By Mail Send your completed and signed application and check
payable to "The
Scudder Funds."
by regular mail to: or by express, registered,
or certified mail to:

The Scudder Funds Scudder Shareholder Services
P.O. Box 2291 Center
Boston, MA 42 Longwater Drive
02107-2291 Norwell, MA
02061-1612

o By Wire Please see Transaction information--Purchasing shares--
By wire following these tables for details, including the ABA wire
transfer number. Then call 1-800-225-5163 for instructions.

o In Person Visit one of our Funds Centers to complete your application with the help
of a Scudder representative. Funds Center locations are listed under
Shareholder benefits.
-----------------------------------------------------------------------------------------------------------------------
Purchasing Minimum additional investment: $100; IRAs $50
additional Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums. See appropriate
shares plan literature.

Make checks o By Mail Send a check with a Scudder investment slip, or with a letter of
payable to "The instruction including your account number and the complete Fund name, to
Scudder Funds." the appropriate address listed above.

o By Wire Please see Transaction information--Purchasing shares-- By wire
following these tables for details, including the ABA wire transfer
number.

o In Person Visit one of our Funds Centers to make an additional investment in your
Scudder fund account. Funds Center locations are listed under Shareholder
benefits.

o By Telephone You may purchase additional shares in an amount of $10,000 or more.
Please call 1-800-225-5163 for more details.

o By Automatic You may arrange to make investments on a regular basis through automatic
Investment Plan deductions from your bank checking account. Please call 1-800-225-5163
($50 minimum) for more information and an enrollment form.

12
<PAGE>

Exchanges and redemptions

Exchanging shares Minimum investments: $1,000 to establish a new account; $100 to exchange among existing accounts

o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).

o By Mail Print or type your instructions and include:
or Fax - the name of the Fund and the account number you are exchanging from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to exchange;
- the name of the Fund you are exchanging into; and
- your signature(s) as it appears on your account and a daytime telephone
number.

Send your instructions
by regular mail to: or by express, registered, or by fax to:
or certified mail to:

The Scudder Funds Scudder Shareholder Services 1-800-821-6234
P.O. Box 2291 Center
Boston, MA 02107-2291 42 Longwater Drive
Norwell, MA
02061-1612
-----------------------------------------------------------------------------------------------------------------------
Redeeming shares o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day). You may have redemption
proceeds sent to your predesignated bank account, or redemption proceeds of up
to $50,000 sent to your address of record.

o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:
- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem; and
- your signature(s) as it appears on your account and a daytime telephone
number.

A signature guarantee is required for redemptions over $50,000. See Transaction
information--Redeeming shares following these tables.

o By Automatic You may arrange to receive automatic cash payments periodically. Call
Withdrawal 1-800-225-5163 for more information and an enrollment form.
Plan
</TABLE>

13
<PAGE>
Fund organization (cont'd)

(Continued from page 11)

investment policies or approving an investment management contract. Shareholders
will be assisted in communicating with other shareholders in connection with
removing a Director as if Section 16(c) of the 1940 Act were applicable.

Investment adviser

The Fund retains the investment management firm of Scudder, Stevens & Clark,
Inc., a Delaware corporation, to manage the Fund's daily investment and business
affairs subject to the policies established by the Board of Directors. The
Directors have overall responsibility for the management of the Fund under
Maryland law.

For the fiscal year ended June 30, 1995, the Adviser received an investment
management fee of 0.97% of the Fund's average daily net assets.

The Adviser receives an investment management fee for these services equal, on
an annual basis, to 1.0% of the first $500 million of average daily net assets,
0.95% of such assets in excess of $500 million and 0.90% of such assets in
excess of $1 billion.

Prior to September 6, 1995, the Adviser received on an annual basis, an
investment management fee for its services equal to 1.0% of the first $500
million of average daily net assets and 0.95% of such assets in excess of $500
million.

The fee is graduated so that increases in the Fund's net assets may result in a
lower fee rate and decreases in the Fund's net assets may result in a higher fee
rate.

The fee is payable monthly, provided the Fund will make such interim payments as
may be requested by the Adviser not to exceed 75% of the amount of the fee then
accrued on the books of the Fund and unpaid. This fee is higher than that
charged many funds which invest primarily in U.S. securities, but not
necessarily higher than the fees charged to funds with investment objectives
similar to those of the Fund.

All the Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment services.

Scudder, Stevens & Clark, Inc., is located at 345 Park Avenue, New York, New
York.

Transfer agent

Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
wholly-owned subsidiary of the Adviser, is the transfer, shareholder servicing
and dividend-paying agent for the Fund.

Underwriter

Scudder Investor Services, Inc., a wholly-owned subsidiary of the Adviser, is
the Fund's principal underwriter. Scudder Investor Services, Inc. confirms, as
agent, all purchases of shares of the Fund. Scudder Investor Relations is a
telephone information service provided by Scudder Investor Services, Inc.

Custodian

State Street Bank and Trust Company is the Fund's custodian.

Fund accounting agent

Scudder Fund Accounting Corporation, a wholly-owned subsidiary of the Adviser,
is responsible for determining the daily net asset value per share and
maintaining the general accounting records of the Fund.

Transaction information

Purchasing shares

Purchases are executed at the next calculated net asset value per share after
the Fund's transfer agent in Boston receives the purchase request in good order.
Purchases are made in full and fractional shares. (See "Share price.")

14
<PAGE>

By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
the Fund may hold redemption proceeds until the purchase check has cleared. If
you purchase shares by federal funds wire, you may avoid this delay. Redemption
or exchange requests by telephone prior to the expiration of the seven-day
period will not be accepted.

By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent in Boston. Accounts cannot
be opened without a completed, signed application and a Scudder fund account
number. Contact your bank to arrange a wire transfer to:

The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552

Your wire instructions must also include:

- -- the name of the fund in which the money is to be invested,

- -- the account number of the fund, and

- -- the name(s) of the account holder(s).

The account will be established once the application and money order are
received in good order.

You may also make additional investments of $100 or more to your existing
account by wire.

By exchange. Your new account will have the same registration and address as
your existing account.

The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call 1-800-225-5163 for more
information, including information about the transfer of special account
features.

You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.

By telephone order. Existing shareholders may purchase shares at a certain day's
price by calling 1-800-225-5163 before the close of regular trading on the New
York Stock Exchange (the "Exchange"), normally 4 p.m. eastern time, on that day.
Orders must be for $10,000 or more and cannot be for an amount greater than four
times the value of your account at the time the order is placed. A confirmation
with complete purchase information is sent shortly after your order is received.
You must include with your payment the order number given at the time the order
is placed. If payment by check or wire is not received within three business
days, the order is subject to cancellation and the shareholder will be
responsible for any loss to the Fund resulting from this cancellation. Telephone
orders are not available for shares held in Scudder IRA accounts and most other
Scudder retirement plan accounts.

Redeeming shares

The Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.

By telephone. This is the quickest and easiest way to sell Fund shares. If you
elected telephone redemption to your bank on your application, you can call to
request that federal funds be sent to your authorized bank account. If you did
not elect telephone redemption to your bank on your application, call
1-800-225-5163 for more information.

Redemption proceeds will be wired to your bank unless otherwise requested. If
your bank cannot receive federal reserve wires, redemption proceeds will be
mailed to your bank. There will be a $5 charge for all wire redemptions.

15
<PAGE>

Transaction information (cont'd)

You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.

If you open an account by wire, you cannot redeem shares by telephone until the
Fund's transfer agent has received your completed and signed application.
Telephone redemption is not available for shares held in Scudder IRA accounts
and most other Scudder retirement plan accounts.

In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.

Signature guarantees. For your protection and to prevent fraudulent redemptions,
on written redemption requests in excess of $50,000 we require an original
signature and an original signature guarantee for each person in whose name the
account is registered. (The Fund reserves the right, however, to require a
signature guarantee for all redemptions.) You can obtain a signature guarantee
from most banks, credit unions or savings associations, or from broker/dealers,
municipal securities broker/dealers, government securities broker/dealers,
national securities exchanges, registered securities associations or clearing
agencies deemed eligible by the Securities and Exchange Commission. Signature
guarantees by notaries public are not acceptable. Redemption requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
For more information, please call 1-800-225-5163.

Telephone transactions

Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $50,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. The Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If the Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Fund will not be liable for acting upon instructions
communicated by telephone that it reasonably believes to be genuine.

Share price

Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines net asset value per share as of
the close of regular trading on the Exchange, normally 4 p.m. eastern time, on
each day the Exchange is open for trading. Net asset value per share is
calculated by dividing the value of total Fund assets, less all liabilities, by
the total number of shares outstanding.

Processing time

All purchase and redemption requests received in good order by the Fund's
transfer agent in Boston by the close of regular trading on the Exchange are
executed at the net asset value per share calculated at the close of regular
trading that day.

Purchase and redemption requests received after the close of regular trading on
the Exchange will be executed the following business day.

If you wish to make a purchase of $500,000 or more, you should notify Scudder
Investor Relations by calling 1-800-225-5163.

The Fund will normally send your redemption proceeds within one business day
following the redemption request, but may take up to seven business days (or
longer in the case of shares recently purchased by check).

Short-term trading

16
<PAGE>

purchases and sales made in response to short-term fluctuations in the Fund's
share price appears evident.

Tax information

A redemption of shares, including an exchange into another Scudder fund, is a
sale of shares and may result in a gain or loss for income tax purposes.

Tax identification number

Be sure to complete the Tax Identification Number section of the Fund's
application when you open an account. Federal tax law requires the Fund to
withhold 31% of taxable dividends, capital gains distributions and redemption
and exchange proceeds from accounts (other than those of certain exempt payees)
without a certified Social Security or tax identification number and certain
other certified information or upon notification from the IRS or a broker that
withholding is required. The Fund reserves the right to reject new account
applications without a certified Social Security or tax identification number.
The Fund also reserves the right, following 30 days' notice, to redeem all
shares in accounts without a certified Social Security or tax identification
number. A shareholder may avoid involuntary redemption by providing the Fund
with a tax identification number during the 30-day notice period.

Minimum balances

Shareholders should maintain a share balance worth at least $1,000, which amount
may be changed by the Board of Directors. Scudder retirement plans have similar
or lower minimum share balance requirements. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
sub-minimum accounts, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account.
Reductions in value that result solely from market activity will not trigger an
involuntary redemption. The Fund will mail the proceeds of the redeemed account
to the shareholder. The shareholder may restore the share balance to $1,000 or
more during the 60-day notice period and must maintain it at no lower than that
minimum to avoid involuntary redemption.

Third party transactions

If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
member may, at its discretion, charge a fee for that service.

Redemption-in-kind

The Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order by making
payment in whole or in part in readily marketable securities chosen by the Fund
and valued as they are for purposes of computing the Fund's net asset value (a
redemption-in-kind). If payment is made in securities, a shareholder may incur
transaction expenses in converting these securities to cash. The Corporation has
elected, however, to be governed by Rule 18f-1 under the 1940 Act, as a result
of which the Fund is obligated to redeem shares, with respect to any one
shareholder during any 90-day period, solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of the
period.

Shareholder benefits

Experienced professional management

Scudder, Stevens & Clark, Inc., one of the nation's most experienced investment
management firms, actively manages your Scudder fund investment. Professional
management is an important advantage for investors who do not have the time or
expertise to invest directly in individual securities.

17
<PAGE>

Shareholder benefits (cont'd)

A team approach to investing

Scudder Global 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. Scudder believes its team
approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.

Lead Portfolio Manager William E. Holzer has had day-to-day responsibility for
Scudder Global Fund's worldwide strategy and investment themes since its
inception in 1986. Mr. Holzer, who has over 20 years' experience in global
investing, joined Scudder in 1980. Nicholas Bratt, Portfolio Manager, directs
Scudder's overall global equity investment strategies. Mr. Bratt joined Scudder
in 1976 and the team in 1993. Alice Ho, Portfolio Manager, joined the team in
1994 and is also responsible for implementing the Fund's strategy. Ms. Ho, who
joined Scudder in 1986 as a member of the institutional and private investment
counsel areas, has worked as a portfolio manager since 1989.

SAIL(TM)--Scudder Automated Information Line

For personalized account information including fund prices, yields and account
balances, to perform transactions in existing Scudder fund accounts, or to
obtain information on any Scudder fund, shareholders can call Scudder's
Automated Information Line (SAIL) at 1-800-343-2890, 24 hours a day. During
periods of extreme economic or market changes, or other conditions, it may be
difficult for you to effect telephone transactions in your account. In such an
event you should write to the Fund; please see "How to contact Scudder" for the
address.

Investment flexibility

Scudder offers toll-free telephone exchange between funds at current net asset
value. You can move your investments among money market, income, growth,
tax-free and growth and income funds with a simple toll-free call or, if you
prefer, by sending your instructions through the mail or by fax. Telephone and
fax redemptions and exchanges are subject to termination and their terms are
subject to change at any time by the Fund or the transfer agent. In some cases,
the transfer agent or Scudder Investor Services, Inc. may impose additional
conditions on telephone transactions.

Dividend reinvestment plan

You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.

Shareholder statements

You receive a detailed account statement every time you purchase or redeem
shares. All of your statements should be retained to help you keep track of
account activity and the cost of shares for tax purposes.

Shareholder reports

In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.

To reduce the volume of mail you receive, only one copy of most Fund reports,
such as the Fund's Annual Report, may be mailed to your household (same surname,
same address). Please call 1-800-225-5163 if you wish to receive additional
shareholder reports.

Newsletters

Four times a year, Scudder sends you At the Helm, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.

18
<PAGE>

Scudder Funds Centers

As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Funds Centers in Boca Raton, Boston, Chicago,
Cincinnati, Los Angeles, New York, Portland (OR), San Diego, San Francisco and
Scottsdale.

T.D.D. service for the hearing impaired

Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D. (Telephone
Device for the Deaf) service. If you have access to a T.D.D., call
1-800-543-7916 for investment information or specific account questions and
transactions.

Scudder tax-advantaged retirement plans

Scudder offers a variety of tax-advantaged retirement plans for individuals,
businesses and non-profit organizations. These flexible plans are designed for
use with the Scudder Family of Funds (except Scudder tax-free funds, which are
inappropriate for such plans). Scudder Funds offer a broad range of investment
objectives and can be used to seek almost any investment goal. Using Scudder's
retirement plans can help shareholders save on current taxes while building
their retirement savings.

* Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of $2,000 per person for anyone with earned income. Many
people can deduct all or part of their contributions from their taxable
income, and all investment earnings accrue on a tax deferred basis. The
Scudder No-Fee IRA charges no annual custodial fee.

* 401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee
communications and trustee services, as well as investment options.

* Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make annual,
tax-deductible contributions of up to $30,000 for each person covered by
the plans. Plans may be adopted individually or paired to maximize
contributions. These are sometimes known as Keogh plans.

* 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.

* SEP-IRAs. Easily administered retirement plans for small businesses and
self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation.

* Scudder Horizon Plan. A no-load variable annuity that lets you build assets
by deferring taxes on your investment earnings. You can start with $2,500
or more.

Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA, Profit Sharing
or Pension Plan accounts, call 1-800-225-5163.

The variable annuity contract is provided by Charter National Life Insurance
Company (in New York State, Intramerica Life Insurance Company [S 1802]). The
contract is offered by Scudder Insurance Agency, Inc. (in New York State, Nevada
and Montana, Scudder Insurance Agency of New York, Inc.). CNL, Inc. is the
Principal Underwriter. Scudder Horizon Plan is not available in all states.

19
<PAGE>
Directors and Officers

Edmond D. Villani*
Chairman of the Board and Director

William E. Holzer*
President

Paul Bancroft III
Director; Venture Capitalist and Consultant

Nicholas Bratt*
Director

Thomas J. Devine
Director; Consultant

William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.

William H. Luers
Director; President, The 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

Douglas M. Loudon*
Vice President

Gerald J. Moran*
Vice President

Cornelia M. Small*
Vice President

Thomas F. McDonough*
Vice President and Secretary

Pamela A. McGrath*
Vice President and Treasurer

David S. Lee*
Vice President and Assistant Treasurer

Edward J. O'Connell*
Vice President and Assistant Treasurer

Juris Padegs*
Vice President and Assistant Secretary

Kathryn L. Quirk*
Vice President and Assistant Secretary

Coleen Downs Dinneen*
Assistant Secretary

*Scudder, Stevens & Clark, Inc.

20
<PAGE>
<PAGE>

<TABLE>
<CAPTION>
Investment products and services
<S> <C>

The Scudder Family of Funds Income
Money market Scudder Emerging Markets Income Fund
Scudder Cash Investment Trust Scudder GNMA Fund
Scudder U.S. Treasury Money Fund Scudder Income Fund
Tax free money market+ Scudder International Bond Fund
Scudder Tax Free Money Fund Scudder Short Term Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Global Income Fund
Scudder New York Tax Free Money Fund* Scudder Zero Coupon 2000 Fund
Tax free+ Growth
Scudder California Tax Free Fund* Scudder Capital Growth Fund
Scudder High Yield Tax Free Fund Scudder Development Fund
Scudder Limited Term Tax Free Fund Scudder Global Fund
Scudder Managed Municipal Bonds Scudder Global Small Company Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Gold Fund
Scudder Massachusetts Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Medium Term Tax Free Fund Scudder International Fund
Scudder New York Tax Free Fund* Scudder Latin America Fund
Scudder Ohio Tax Free Fund* Scudder Pacific Opportunities Fund
Scudder Pennsylvania Tax Free Fund* Scudder Quality Growth Fund
Growth and Income Scudder Small Company Value 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
401(k) Plans Money Purchase Pension Plans
------------------------------------------------------------------------------------------------------------------------
Closed-end Funds#
The Argentina Fund, Inc. Scudder New Europe Fund, Inc.
The Brazil Fund, Inc. Scudder World Income Opportunities Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc. Institutional Cash Management
The Latin America Dollar Income Fund, Inc. Scudder Institutional Fund, Inc.
Montgomery Street Income Securities, Inc. Scudder Fund, Inc.
Scudder New Asia 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.

21
<PAGE>

How to contact Scudder

Account Service and Information: Please address all correspondence to:

For existing account service Scudder Investor Relations The Scudder Funds
and transactions 1-800-225-5163 P.O. Box 2291
Boston, Massachusetts
02107-2291

For personalized information Scudder Automated
about your Scudder accounts; Information Line (SAIL)
exchanges and redemptions; or 1-800-343-2890
information on any Scudder
fund

Investment Information: Or Stop by a Scudder Funds Center:

To receive information about Scudder Investor Relations Many shareholders enjoy the personal, one-on-one
the Scudder funds, for 1-800-225-2470 service of the Scudder Funds Centers. Check for a
additional applications and Funds Center near you--they can be found in the
prospectuses, or for following cities:
investment questions

For establishing 401(k) and Scudder Defined Boca Raton New York
403(b) plans Contribution Services Boston Portland, OR
1-800-323-6105 Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale

For information on Scudder Treasurers Trust(TM), an For information on Scudder Institutional Funds*, funds
institutional cash management service for corporations, designed to meet the broad investment management and
non-profit organizations and trusts which utilizes service needs of banks and other institutions, call:
certain portfolios of Scudder Fund, Inc.* ($100,000 1-800-854-8525.
minimum), call: 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.

22
</TABLE>
<PAGE>

Scudder
International
Bond Fund

Prospectus

November 1, 1995

A pure no-load(TM) (no sales charges) mutual fund series which seeks income
primarily by investing in high-grade bonds denominated in foreign currencies. As
a secondary objective, the Fund seeks protection and possible enhancement of
principal value by actively managing currency, bond market and maturity exposure
and by security selection.

This prospectus sets forth concisely the information about Scudder International
Bond Fund, a series of Scudder Global Fund, Inc., an open-end management
investment company, that a prospective investor should know before investing.
Please retain it for future reference.

If you require more detailed information, a Statement of Additional Information
dated November 1, 1995, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statement, which is
incorporated by reference into this prospectus, has been
filed with the Securities and Exchange Commission.

Contents--see page 4.
<PAGE>

Expense information

How to compare a Scudder pure no-load(TM) fund This information is designed to
help you understand the various costs and expenses of investing in Scudder
International Bond Fund (the "Fund"). By reviewing this table and those in
other mutual funds' prospectuses, you can compare the Fund's fees and expenses
with those of other funds. With Scudder's pure no-load(TM) funds, you pay no
commissions to purchase or redeem shares, or to exchange from one fund to
another. As a result, all of your investment goes to work for you.

1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.

Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE

Investment management fee 0.84%**
12b-1 fees NONE
Other expenses 0.45%
-----
Total Fund operating expenses 1.29%**
=====

Example
Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its
net investment income to shareholders. (As noted above, the Fund has no
redemption fees of any kind.)

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$13 $41 $71 $156

** These fees have been restated to reflect the fees which would have been
payable for the fiscal year ended June 30, 1995 under the Investment
Management Agreement dated September 8, 1994.

2
<PAGE>

Financial highlights

The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the audited
financial statements.

If you would like more detailed information concerning the Fund's performance,
a complete portfolio listing and audited financial statements are available
in the Fund's Annual Report dated June 30, 1995 and may be obtained without
charge by writing or calling Scudder Investor Services, Inc.

<TABLE>
<CAPTION>
For the Period
July 6, 1988
(commencement
of operations)
to June 30,
-------------------------------------------------------
1995 1994 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*
(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

</TABLE>

3
<PAGE>

A message from Scudder's chairman

/s/Daniel Pierce

Scudder International Bond Fund

Investment objectives

o income primarily by investing in high-grade bonds denominated in foreign
currencies

o protection and possible enhancement of principal value by actively managing
currency, bond market and maturity exposure and by security selection

Investment characteristics

o easy access to worldwide interest rate and currency cycles through a
portfolio of debt securities denominated in foreign currencies

o convenient vehicle for investors seeking income from non-U.S.
dollar-denominated bonds

Contents

Investment objectives and policies 5
International bond investing 5
Why invest in the Fund? 6
International investment experience 6
Special risk considerations 6
Investments 7
Additional information about policies
and investments 8
Purchases 12
Exchanges and redemptions 13
Distribution and performance information 14
Fund organization 15
Transaction information 16
Shareholder benefits 19
Directors and Officers 22
Investment products and services 23
How to contact Scudder Back cover

4
<PAGE>

Investment objectives and policies

Scudder International Bond Fund (the "Fund"), a non-diversified series of
Scudder Global Fund, Inc., is a pure no-load(TM), open-end management investment
company which offers investors a convenient way to invest in a managed portfolio
of debt securities denominated in foreign currencies. (In this prospectus, such
securities are called "international" securities.) The Fund's objective is to
provide income primarily by investing in a managed portfolio of high-grade
international bonds. As a secondary objective, the Fund seeks protection and
possible enhancement of principal value by actively managing currency, bond
market and maturity exposure and by security selection.

Except as otherwise indicated, the Fund's investment objectives and policies are
not fundamental and may be changed without a vote of shareholders. Shareholders
will receive written notice of any changes in the Fund's objectives. If there is
a change in investment objectives, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current financial
position and needs. There can be no assurance that the Fund's objectives will be
met.

International bond investing

Opening of foreign markets

In recent years, opportunities for investment in international bond markets have
become more significant. Foreign currency denominated bond markets have grown
faster than the U.S. dollar-denominated bond market in terms of U.S. dollar
market value and now represent more than half of the value of the world's
developed bond markets. Participants in the markets have grown in number thereby
providing better liquidity. Finally, a number of international bond markets have
reduced barriers to entry to foreign investors by deregulation and by reducing
their withholding taxes.

Globalization of capital flows

Simultaneous with the opening of foreign markets, barriers to international
capital flows have been reduced or eliminated, freeing investment funds to seek
the highest expected returns. Thus, market conditions in one economy influence
market conditions elsewhere, through the channel of global capital flows. The
Fund provides a convenient vehicle to participate in international bond markets,
some of which may outperform U.S. dollar-denominated bond markets in U.S. dollar
terms during certain periods of time.

International participation

Although the Fund is non-diversified under the Investment Company Act of 1940
(the "1940 Act"), investing in the Fund can provide international diversity to
an investor's existing portfolio of U.S. dollar-denominated bonds ("U.S.
bonds"), thereby reducing volatility or risk over time. Historically, returns of
international bond markets have often diverged from returns generated by U.S.
bond markets. These divergences stem not only from fluctuating exchange rates,
but also from foreign interest rates not always moving in the same direction or
having the same magnitude as interest rates in the U.S. Investment in the Fund
may provide the international bond portion of an investor's diversification
program.

Investment opportunity

International bonds may provide, at times, higher investment returns than U.S.
bonds. For example, international bonds may provide higher current income than
U.S. bonds and/or the local price of international bonds can appreciate more
than U.S. bonds. Fluctuations in foreign currencies relative to the U.S. dollar
can potentially benefit investment returns. Of course, in each case, at any time
the opposite may also be true.

5
<PAGE>

Why invest in the Fund?

The Fund provides an easy, efficient and relatively low cost way of investing in
international bonds. Direct investment in international securities is usually
impractical for most individual and smaller institutional investors. Investors
often find it difficult to purchase and sell international bonds, to obtain
current information about foreign entities, to hold securities in safekeeping
and to convert the value of their investment from foreign currencies into U.S.
dollars. The Fund manages these concerns for the investor. With a single
investment in the Fund, a shareholder can benefit from the income and potential
capital protection and appreciation associated with a professionally managed
portfolio of high-grade international bonds. The Fund's investment adviser,
Scudder, Stevens & Clark, Inc. (the "Adviser"), has had extensive experience
investing in international markets and dealing with trading, custody and
currency transactions around the world.

International investment
experience

The Adviser has been a leader in international investment management for over 40
years. Its investment company clients include Scudder International Fund, which
invests primarily in foreign securities and was initially incorporated in Canada
in 1953 as the first foreign investment company registered with the United
States Securities and Exchange Commission, Scudder Global Fund, Scudder Global
Small Company Fund and Scudder Short Term Global Income Fund, which invest
worldwide, Scudder Greater Europe Growth Fund, which invests primarily in the
equity securities of European companies, The Japan Fund, Inc., which invests
primarily in securities of Japanese companies, Scudder Latin America Fund, which
invests in Latin American issuers, Scudder Pacific Opportunities Fund, which
invests in issuers located in the Pacific Basin, with the exception of Japan and
Scudder Emerging Markets Income Fund, which invests in debt securities issued in
emerging markets. The Adviser also manages the assets of eight closed-end
investment companies investing in foreign securities: The Argentina Fund, Inc.,
The Brazil Fund, Inc., The First Iberian Fund, Inc., The Korea Fund, Inc., The
Latin America Dollar Income Fund, Inc., Scudder New Asia Fund, Inc., Scudder New
Europe Fund, Inc., and Scudder World Income Opportunities Fund, Inc. Assets of
international investment company clients of the Adviser exceeded $8 billion as
of September 30, 1995.

Special risk considerations

The Fund is intended for long-term investors who can accept the risks associated
with investing in international bonds. Total return from investment in the Fund
will consist of income after expenses, bond price gains (or losses) in terms of
the local currency and currency gains (or losses). For tax purposes, realized
gains and losses on currency are regarded as ordinary income and loss and could,
under certain circumstances, have an impact on distributions. The value of the
Fund's portfolio will fluctuate in response to various economic factors, the
most important of which are fluctuations in foreign currency exchange rates and
interest rates.

Since the Fund's investments are primarily denominated in foreign currencies,
exchange rates are likely to have a significant impact on total Fund
performance. For example, a fall in the U.S. dollar's value relative to the
Japanese yen will increase the U.S. dollar value of a Japanese bond held in the
portfolio, even though the price of that bond in yen terms remains unchanged.
Conversely, if the U.S. dollar rises in value relative to the yen, the U.S.

6
<PAGE>

dollar value of a Japanese bond will fall. Investors should be aware that
exchange rate movements can be significant and endure for long periods of time.

The Adviser attempts to control exchange rate and interest rate risks through
active portfolio management. The Adviser's techniques include management of
currency, bond market and maturity exposure and security selection which will
vary based on available yields and the Adviser's outlook for the interest rate
cycle in various countries and changes in foreign currency exchange rates. In
any of the markets in which the Fund invests, longer maturity bonds tend to
fluctuate more in price as interest rates change than shorter-term
instruments--again providing both opportunity and risk.

Because of the Fund's long-term investment objectives, investors should not rely
on an investment in the Fund for their short-term financial needs and should not
view the Fund as a vehicle for playing short-term swings in the international
bond and foreign exchange markets. Shares of the Fund alone should not be
regarded as a complete investment program. Also, investors should be aware that
investing in international bonds may involve a higher degree of risk than
investing in U.S. bonds.

Investments in foreign securities involve special considerations due to more
limited information, higher brokerage costs, different accounting standards,
thinner trading markets and the likely impact of foreign taxes on the yield from
debt securities. They may also entail certain risks, such as the possibility of
one or more of the following: imposition of dividend or interest withholding or
confiscatory taxes, currency blockages or transfer restrictions, expropriation,
nationalization or other adverse political or economic developments, less
government supervision and regulation of securities exchanges, brokers and
listed companies, and the difficulty of enforcing obligations in other
countries. Purchases of foreign securities are usually made in foreign
currencies and, as a result, the Fund may incur currency conversion costs and
may be affected favorably or unfavorably by changes in the value of foreign
currencies against the U.S. dollar. Further, it may be more difficult for the
Fund's agents to keep currently informed about corporate actions which may
affect the prices of portfolio securities. Communications between the U.S. and
foreign countries may be less reliable than within the U.S., thus increasing the
risk of delayed settlements of portfolio transactions or loss of certificates
for portfolio securities. The Fund's ability and decisions to purchase and sell
portfolio securities may be affected by laws or regulations relating to the
convertibility and repatriation of assets. Please see "Additional information
about policies and investments-- Risk factors."

Investments

To achieve its objectives, the Fund will primarily invest in a managed portfolio
of high-grade international bonds that are denominated in foreign currencies,
including bonds denominated in the European Currency Unit (ECU). Portfolio
investments will be selected on the basis of, among other things, yields, credit
quality, and the fundamental outlooks for currency and interest rate trends in
different parts of the globe, taking into account the ability to hedge a degree
of currency or local bond price risk. The Fund will normally invest at least 65%
of its total assets in bonds denominated in foreign currencies.

The high-grade debt securities in which the Fund primarily invests will be rated
in one of the three highest rating categories of one of the major U.S. rating
services or, if not rated, considered to be of equivalent quality in local
currency terms by the Adviser. These securities are rated AAA, AA or A by

7
<PAGE>

Standard & Poor's ("S&P") or Aaa, Aa, or A by Moody's Investors Service, Inc.
("Moody's").

The Fund may also purchase debt securities rated BBB, BB or B by S&P or Baa, Ba
or B by Moody's and unrated securities considered to be of equivalent quality by
the Adviser. The Fund will do so to avail itself of the higher yields available
with these securities, but only to the extent that up to 15% of the Fund's total
assets may be invested in securities rated below BBB by S&P or below Baa by
Moody's. Securities rated below investment-grade (i.e., below BBB by S&P or
below Baa by Moody's) entail greater risks than investment-grade debt securities
(see "Risk factors").

During the year ended June 30, 1995, the average monthly dollar-weighted market
value of the bonds in the Fund's portfolio were as follows: 54.4% rated Aaa,
32.2% Aa, 7.8% A, 2.9% Baa. The Bonds are rated by Moody's or S&P, or of
equivalent quality as determined by the Adviser.

The Fund's investments may include:

o Debt securities issued or guaranteed by a foreign national government, its
agencies, instrumentalities or political subdivisions

o Debt securities issued or guaranteed by supranational organizations (e.g.,
European Investment Bank, Inter-American Development Bank or the World
Bank)

o Corporate debt securities

o Bank or bank holding company debt securities

o Other debt securities, including those convertible into common stock

The Fund may purchase securities which are not publicly offered. If such
securities are purchased, they may be subject to restrictions applicable to
restricted securities. Please see "Additional information about policies and
investments-- Investment restrictions."

The Fund intends to select its investments from a number of country and market
sectors. It may substantially invest in the issuers of one or more countries and
intends to have investments in securities of issuers from a minimum of three
different countries; however, the Fund may invest substantially all of its
assets in securities of issuers located in one country. Under normal
circumstances, the Fund will invest no more than 35% of the value of its total
assets in U.S. debt securities.

For temporary defensive or emergency purposes, however, the Fund may invest
without limit in U.S. debt securities, including short-term money market
securities. It is impossible to predict for how long such alternative strategies
will be utilized. In addition, the Fund may engage in strategic transactions.

Additional information about policies and investments

Investment restrictions

The Fund has adopted certain fundamental policies which may not be changed
without a vote of shareholders and which are designed to reduce the fund's
investment risk.

The Fund may not borrow money except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase agreements,
and may not make loans except through the lending of portfolio securities, the
purchase of debt securities or through repurchase agreements.

8
<PAGE>

more than seven days. A complete description of these and other policies and
restrictions is contained under "Investment Restrictions" in the Fund's
Statement of Additional Information.

Short-term investments

To protect against adverse movements of interest rates and for liquidity, the
Fund may also purchase short-term obligations denominated in U.S. and foreign
currencies such as, but not limited to, bank deposits, bankers' acceptances,
certificates of deposit, commercial paper, short-term government, government
agency, supranational agency and corporate obligations, and repurchase
agreements.

Indexed securities

The Fund may invest in indexed securities, the value of which is linked to
currencies, interest rates, commodities, indices or other financial indicators
("reference instruments"). The interest rate or (unlike most fixed-income
securities) the principal amount payable at maturity of an indexed security may
be increased or decreased, depending on changes in the value of the reference
instrument. Indexed securities may be positively or negatively indexed, so that
appreciation of the reference instrument may produce an increase or a decrease
in the interest rate or value at maturity of the security. In addition, the
change in the interest rate or value at maturity of the security may be some
multiple of the change in the value of the reference instrument. Thus, in
addition to the credit risk of the security's issuer, the Fund will bear the
market risk of the reference instrument.

Repurchase agreements

As a means of earning income for periods as short as overnight, the Fund may
enter into repurchase agreements with selected banks and broker/dealers. Under a
repurchase agreement, the Fund acquires securities, subject to the seller's
agreement to repurchase them at a specified time and price. The Fund may also
enter into repurchase commitments for investment purposes for periods of 30 days
or more. Such commitments involve investment risk similar to that of debt
securities in which the Fund invests.

Dollar roll transactions

The Fund may enter into dollar roll transactions with selected banks and
broker/dealers. Dollar roll transactions are treated as reverse repurchase
agreements for purposes of the Fund's borrowing restrictions and consist of the
sale by the Fund of mortgage-backed securities together with a commitment to
purchase similar, but not identical, securities at a future date, at the same
price. In addition, the Fund receives compensation as consideration for entering
into the commitment to repurchase. The compensation is paid in the form of a
fee. Dollar rolls may be renewed after cash settlement and initially may involve
only a firm commitment agreement by the Fund to buy securities.

When-issued securities

The Fund may purchase securities on a when-issued or forward delivery basis, for
payment and delivery at a later date. The price and yield are generally fixed on
the date of commitment to purchase. During the period between purchase and
settlement, no interest accrues to the Fund. At the time of settlement, the
market value of the security may be more or less than the purchase price.

Strategic Transactions and derivatives

The Fund may, but is not required to, utilize various other investment
strategies as described below to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements), to manage the effective maturity or duration of the Fund's
portfolio or to enhance potential gain. These strategies may be executed through
the use of derivative contracts. Such strategies are generally accepted as a
part of modern portfolio management and are regularly

9
<PAGE>

utilized by many mutual funds and other institutional investors. Techniques and
instruments may change over time as new instruments and strategies are developed
or regulatory changes occur.

Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for the Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of the Fund's portfolio,
or to establish a position in the derivatives markets as a temporary substitute
for purchasing or selling particular securities. Some Strategic Transactions may
also be used to enhance potential gain although no more than 5% of the Fund's
assets will be committed to Strategic Transactions entered into for non-hedging
purposes. Any or all of these investment techniques may be used at any time and
in any combination, and there is no particular strategy that dictates the use of
one technique rather than another, as use of any Strategic Transaction is a
function of numerous variables including market conditions. The ability of the
Fund to utilize these Strategic Transactions successfully will depend on the
Adviser's ability to predict pertinent market movements, which cannot be
assured. The Fund will comply with applicable regulatory requirements when
implementing these strategies, techniques and instruments. Strategic
Transactions involving financial futures and options thereon will be purchased,
sold or entered into only for bona fide hedging, risk management or portfolio
management purposes and not for speculative purposes. Please refer to "Risk
factors--Strategic Transactions and derivatives" for more information.

Risk factors

Bonds. The Fund will invest no more than 15% of its total assets in debt
securities rated below BBB or Baa, but no lower than B by S&P or Moody's.
Securities rated below investment- grade are commonly referred to as "junk
bonds" and involve greater price volatility and higher degrees of speculation
with respect to the payment of principal and interest than higher quality
fixed-income securities. The market prices of such lower-rated debt securities
may decline significantly in periods of general economic difficulty. In
addition, the trading market for these securities is generally less liquid than
for higher rated securities and the Fund may have difficulty disposing of these
securities at the time it wishes to do so. The lack of a liquid secondary market
for certain securities may also make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing its portfolio and calculating
its net asset value.

10
<PAGE>

Non-diversified investment company. As a non-diversified investment company, the
Fund may invest a greater proportion of its assets in the securities of a
smaller number of issuers and therefore may be subject to greater market and
credit risk than a more broadly diversified portfolio.

Repurchase agreements. If the seller under a repurchase agreement becomes
insolvent, the Fund's right to dispose of the securities may be restricted, or
the value of the securities may decline before the Fund is able to dispose of
them. In the event of the commencement of bankruptcy or insolvency proceedings
with respect to sellers of the securities before repurchase under a repurchase
agreement, the Fund may encounter delay and incur costs including a decline in
the value of the securities, before being able to sell the securities.

Dollar roll transactions. If the broker/dealer to whom the Fund sells the
securities underlying a dollar roll transaction becomes insolvent, the Fund's
right to purchase or repurchase the securities may be restricted; the value of
the securities may change adversely over the term of the dollar roll; the
securities that the Fund is required to repurchase may be worth less than the
securities that the Fund originally held, and the return earned by the Fund with
the proceeds of a dollar roll may not exceed transaction costs.

(Continued on page 14)

11
<PAGE>

Purchases
<TABLE>
<CAPTION>

Opening Minimum initial investment: $1,000; IRAs $500
an account Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums. See appropriate
plan literature.

Make checks o By Mail Send your completed and signed application and check
payable to "The
Scudder Funds."
by regular mail to: or by express, registered,
or certified mail to:

The Scudder Funds Scudder Shareholder Services
P.O. Box 2291 Center
Boston, MA 42 Longwater Drive
02107-2291 Norwell, MA
02061-1612

o By Wire Please see Transaction information--Purchasing shares--
By wire following these tables for details, including the ABA
wire transfer number. Then call 1-800-225-5163 for instructions.

o In Person Visit one of our Funds Centers to complete your application with the help
of a Scudder representative. Funds Center locations are listed under
Shareholder benefits.
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Purchasing Minimum additional investment: $100; IRAs $50
additional shares Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums. See appropriate
plan literature.

o By Wire Please see Transaction information--Purchasing shares--
By wire following these tables for
details, including the ABA wire
transfer number.

o In Person Visit one of our Funds Centers to make an additional
investment in your Scudder fund account. Funds Center
locations are listed under Shareholder benefits.

o By Automatic You may arrange to make investments on a regular basis
Investment Plan through automatic deductions from your bank checking
($50 minimum) account. Please call 1-800-225-5163 for more information and
an enrollment form.

</TABLE>

12
<PAGE>
<TABLE>
<CAPTION>

Exchanges and redemptions
<S> <C> <C> <C> <C>

Exchanging Minimum investments: $1,000 to establish a new account; $100 to exchange among
shares existing accounts

Send your instructions
by regular mail to: or by express, registered, or by fax to:
or certified mail to:

The Scudder Funds Scudder Shareholder Services 1-800-821-6234
P.O. Box 2291 Center
Boston, MA 02107-2291 42 Longwater Drive
Norwell, MA
02061-1612

-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Redeeming o By Telephone To speak with a service representative, call 1-800-225-5163 from
shares 8 a.m. to 8 p.m. eastern time or to access SAIL(TM),
Scudder's Automated Information Line, call 1-800-343-2890
(24 hours a day). You may have redemption proceeds sent to your
predesignated bank account, or redemption proceeds of up to
$50,000 sent to your address of record.

A signature guarantee is required for redemptions over $50,000. See
Transaction information--Redeeming shares following these tables.

o By Automatic You may arrange to receive automatic cash payments periodically.
Withdrawal Call 1-800-225-5163 for more information and an enrollment form.
Plan

</TABLE>

13
<PAGE>

Additional information about policies and investments
(cont'd)

(Continued from page 11)

for futures contracts would create a greater ongoing potential financial risk
than would purchases of options, where the exposure is limited to the cost of
the initial premium. Losses resulting from the use of Strategic Transactions
would reduce net asset value, and possibly income, and such losses can be
greater than if the Strategic Transactions had not been utilized. The Strategic
Transactions that the Fund may use and some of their risks are described more
fully in the Fund's Statement of Additional Information.

Distribution and performance information

Dividends and capital gains distributions

The Fund's dividends from net investment income are declared daily and
distributed monthly. The Fund intends to distribute net realized capital gains
after utilization of capital loss carryforwards, if any, in November or
December, to prevent application of federal excise tax. An additional
distribution may be made within three months of the Fund's fiscal year end, if
necessary.

Any dividends or capital gains distributions declared in October, November or
December with a record date in such a month and paid during the following
January will be treated by shareholders for federal income tax purposes as if
received on December 31 of the calendar year declared. According to preference,
shareholders may receive distributions in cash or have them reinvested in
additional shares of the Fund. If an investment is in the form of a retirement
plan, all dividends and capital gains distributions must be reinvested into the
shareholder's account.

Generally, dividends from net investment income are taxable to shareholders as
ordinary income. Certain realized gains or losses on the sale or retirement of
international bonds held by the Fund, to the extent attributable to fluctuations
in currency exchange rates, as well as certain other gains or losses
attributable to exchange rate fluctuations, must be treated as ordinary income
or loss. Such income or loss may increase or decrease (or possibly eliminate)
the Fund's income available for distribution to shareholders. If, under the
rules governing the tax treatment of foreign currency gains and losses, the
Fund's income available for distribution is decreased or eliminated, all or a
portion of the dividends declared by the Fund may be treated for federal income
tax purposes as a return of capital or, in some circumstances, as capital gain.
Generally, a shareholder's tax basis in their Fund shares will be reduced to the
extent that an amount distributed to the shareholder is treated as a return of
capital. The Fund may reduce its daily dividend to lessen the effect of these
rules. If the Fund's income is increased under the foreign currency taxation
rules, the Fund intends to declare additional distributions of such income in
December and, if necessary, within three months after the Fund's fiscal year end
of June 30.

Long-term capital gains distributions, if any, are taxable as long-term capital
gains regardless of the length of time shareholders have owned their shares.
Short-term capital gains and any other taxable income distributions are taxable
as ordinary income.

The Fund sends detailed tax information about the amount and type of its
distributions to its shareholders by January 31 of the following year.

Performance information

From time to time quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance figures
are historical, show the performance of a hypothetical investment and are not
intended to indicate future performance. The "SEC yield" of the Fund is an
annualized expression of the net income generated by the Fund over a specified
30-day (one month) period, as a percentage of the Fund's share price on the last

14
<PAGE>

day of that period. This yield is calculated according to methods required by
the Securities and Exchange Commission (the "SEC"), and therefore may not equate
to the level of income paid to shareholders. Yield is expressed as an annualized
percentage. "Total return" is the change in value of an investment in the Fund
for a specified period. The "average annual total return" of the Fund is the
average annual compound rate of return of an investment in the Fund assuming
that the investment has been held for one year and the life of the Fund.
"Cumulative total return" represents the cumulative change in value of an
investment in the Fund for various periods. All types of total return
calculations assume that all dividends and capital gains distributions during
the period were reinvested. "Capital change" measures return from capital,
including reinvestment of any capital gains distributions but does not include
the reinvestment of dividends. Performance will vary based upon, among other
things, changes in market conditions and the level of the Fund's expenses.

Fund organization

The Fund is a non-diversified series of Scudder Global Fund, Inc. (the
"Corporation"), an open-end, management investment company registered under the
1940 Act. The Corporation was organized as a Maryland corporation in May 1986.

The Fund's activities are supervised by the Corporation's Board of Directors.
Shareholders have one vote for each share held on matters on which they are
entitled to vote. The Fund is not required to and has no current intention of
holding annual shareholder meetings, although special meetings may be called for
purposes such as electing or removing Directors, changing fundamental investment
policies or approving an investment management contract. Shareholders will be
assisted in communicating with other shareholders in connection with removing a
Director as if Section 16(c) of the 1940 Act were applicable.

Investment adviser

For the fiscal year ended June 30, 1995, the Adviser received an investment
management fee of 0.85% of the Fund's average daily net assets. The fee is
graduated so that increases in the Fund's net assets may result in a lower fee
rate and decreases in the Fund's net assets may result in a higher fee rate.

The fee is payable monthly, provided that the Fund will make such interim
payments as may be requested by the Adviser not to exceed 75% of the amount of
the fee then accrued on the books of the Fund and unpaid. This fee is higher
than that charged many funds which invest primarily in U.S. securities, though
it is not necessarily higher than the fees charged to funds with similar
investment objectives. However, management of the Fund involves market, credit
and currency relationships in a number of economies throughout the world.

Because the Fund's annual portfolio turnover rate may continue to be over 100%,
the Fund may have higher transaction costs and shareholders may incur taxes on
any realized capital gains.

All the Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment services.

Scudder, Stevens & Clark, Inc., is located at 345 Park Avenue, New York, New
York.

Transfer agent

Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
wholly-owned subsidiary of the Adviser, is the transfer,

15
<PAGE>

Fund organization (cont'd)

shareholder servicing and dividend-paying agent for the Fund.

Underwriter

Custodian

Brown Brothers Harriman & Co., is the Fund's custodian.

Fund accounting agent

Scudder Fund Accounting Corporation, a wholly- owned subsidiary of the Adviser,
is responsible for determining the daily net asset value per share and
maintaining the general accounting records of the Fund.

Transaction information

Purchasing shares

Redemption or exchange requests by telephone prior to the expiration of the
seven-day period will not be accepted.

Your wire instructions must also include:
- -- the name of the fund in which the money is to be invested,
- -- the account number of the fund, and
- -- the name(s) of the account holder(s).

The account will be established once the application and money order are
received in good order.

You may also make additional investments of $100 or more to your existing
account by wire.

By exchange. Your new account will have the same registration and address as
your existing account.

You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.

Redeeming shares

The Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.

16
<PAGE>

not elect telephone redemption to your bank on your application, call
1-800-225-5163 for more information.

You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.

In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.

Telephone transactions

Share price

Processing time

Purchase and redemption requests received after the close of regular trading on
the Exchange will be executed the following business day.

If you wish to make a purchase of $500,000 or more, you should notify Scudder
Investor Relations by calling 1-800-225-5163.

The Fund will normally send your redemption proceeds within one business day
following the

17
<PAGE>

Transaction information (cont'd)

redemption request, but may take up to seven business days (or longer in the
case of shares recently purchased by check).

Short-term trading

Purchases and sales should be made for long-term investment purposes only. The
Fund and Scudder Investor Services, Inc. each reserves the right to restrict
purchases of Fund shares (including exchanges) when a pattern of frequent
purchases and sales made in response to short-term fluctuations in the Fund's
share price appears evident.

Tax information

A redemption of shares, including an exchange into another Scudder fund, is a
sale of shares and may result in a gain or loss for income tax purposes.

Tax identification number

Minimum balances

Third party transactions

Redemption-in-kind

18
<PAGE>

Shareholder benefits

Experienced professional management

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. Scudder believes
its 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.

SAIL(TM)--Scudder Automated Information Line

Investment flexibility

Dividend reinvestment plan

You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.

Shareholder statements

19
<PAGE>

Shareholder benefits (cont'd)

Shareholder reports

In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.

Newsletters

Four times a year, Scudder sends you At the Helm, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.

Scudder Funds Centers

T.D.D. service for the hearing impaired

20
<PAGE>

Scudder tax-advantaged retirement plans

Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of $2,000 per person for anyone with earned income. Many
people can deduct all or part of their contributions from their taxable
income, and all investment earnings accrue on a tax deferred basis. The
Scudder No-Fee IRA charges no annual custodial fee.

401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee
communications and trustee services, as well as investment options.

Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make
annual, tax-deductible contributions of up to $30,000 for each person
covered by the plans. Plans may be adopted individually or paired to
maximize contributions. These are sometimes known as Keogh plans.

403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.

SEP-IRAs. Easily administered retirement plans for small businesses and
self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation.

Scudder Horizon Plan. A no-load variable annuity that lets you build
assets by deferring taxes on your investment earnings. You can start with
$2,500 or more.

Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s, please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA, Profit Sharing
or Pension Plan accounts, call 1-800-225-5163.

21
<PAGE>

Directors and Officers

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, The 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

Douglas M. Loudon*
Vice President

Gerald J. Moran*
Vice President

Cornelia M. Small*
Vice President

Thomas F. McDonough*
Vice President and Secretary

Pamela A. McGrath*
Vice President and Treasurer

David S. Lee*
Vice President and Assistant Treasurer

Edward J. O'Connell*
Vice President and Assistant Treasurer

Juris Padegs*
Vice President and Assistant Secretary

Kathryn L. Quirk*
Vice President and Assistant Secretary

Coleen Downs Dinneen*
Assistant Secretary

*Scudder, Stevens & Clark, Inc.

22
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Investment products and services

The Scudder Family of Funds

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
Scudder Zero Coupon 2000 Fund

Tax free+ Growth
Scudder California Tax Free Fund* Scudder Capital Growth Fund
Scudder High Yield Tax Free Fund Scudder Development Fund
Scudder Limited Term Tax Free Fund Scudder Global Fund
Scudder Managed Municipal Bonds Scudder Global Small Company Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Gold Fund
Scudder Massachusetts Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Medium Term Tax Free Fund Scudder International Fund
Scudder New York Tax Free Fund* Scudder Latin America Fund
Scudder Ohio Tax Free Fund* Scudder Pacific Opportunities Fund
Scudder Pennsylvania Tax Free Fund* Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder Value Fund
The Japan Fund

Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Retirement Plans and Tax-Advantaged Investments
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan +++ (a variable annuity) Profit Sharing and
401(k) Plans Money Purchase Pension Plans
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Closed-end Funds#
The Argentina Fund, Inc. Scudder New Europe Fund, Inc.
The Brazil Fund, Inc. Scudder World Income Opportunities Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc. Institutional Cash Management
The Latin America Dollar Income Fund, Inc. Scudder Institutional Fund, Inc.
Montgomery Street Income Securities, Inc. Scudder Fund, Inc.
Scudder New Asia 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>

23
<PAGE>

How to contact Scudder
<TABLE>
<CAPTION>

Account Service and Information: Please address all correspondence to:

For existing account service Scudder Investor The Scudder Funds
and transactions Relations P.O. Box 2291
1-800-225-5163 Boston, Massachusetts
02107-2291

For personalized Scudder Automated
information about your Information Line
Scudder accounts; (SAIL)
exchanges and 1-800-343-2890
redemptions; or
information on any
Scudder fund

Investment Information: Or Stop by a Scudder Funds Center:

For establishing 401(k) and Scudder Defined Baton Rouge New York
403(b) plans Contribution Services Boston Portland, OR
1-800-323-6105 Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale

For information on Scudder Treasurers Trust(TM), an For information on Scudder Institutional Funds*,
institutional cash management service for corporations, funds designed to meet the broad investment
non-profit organizations and trusts which utilizes management and service needs needs of banks and
certain portfolios of Scudder Fund, Inc.* ($100,000 other institutions, call: 1-800-854-8525.
minimum), call: 1-800-541-7703.

</TABLE>

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.

<PAGE>
SCUDDER GLOBAL FUND

A Pure No-Load(TM) (No Sales Charges) Mutual Fund
Series Which Seeks Long-Term Growth of Capital
from Worldwide Investing

and

SCUDDER INTERNATIONAL BOND FUND

A Pure No-Load(TM) (No Sales Charges) Mutual Fund Series Which Seeks
Income Primarily by Investing in High-Grade Bonds Denominated
in Foreign Currencies. As a Secondary Objective, the Fund
Seeks Protection and Possible Enhancement of Principal
Value by Actively Managing Currency, Bond Market and
Maturity Exposure and by Security Selection.

- --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

November 1, 1995

- --------------------------------------------------------------------------------

This combined Statement of Additional Information is not a prospectus
and should be read in conjunction with the prospectus of Scudder Global Fund
dated November 1, 1995, and the prospectus of Scudder International Bond Fund
dated November 1, 1995, each as amended from time to time, copies of which may
be obtained without charge by writing to Scudder Investor Services, Inc., Two
International Place, Boston, Massachusetts 02110-4103.

<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES.........................................................................1
General Investment Objective and Policies of Global Fund.....................................................1
General Investment Objectives and Policies of International Bond Fund........................................1
Special Investment Considerations of the Funds...............................................................2
Investments and Investment Techniques........................................................................3
Investment Restrictions.....................................................................................14
Other Investment Policies...................................................................................15

PURCHASES............................................................................................................17
Additional Information About Opening an Account.............................................................17
Additional Information About Making Subsequent Investments By Telephone Order...............................17
Checks......................................................................................................17
Wire Transfer of Federal Funds..............................................................................18
Share Price.................................................................................................18
Share Certificates..........................................................................................18
Other Information...........................................................................................18

EXCHANGES AND REDEMPTIONS............................................................................................19
Exchanges...................................................................................................19
Redemption by Telephone.....................................................................................20
Redemption by Mail or Fax...................................................................................20
Redemption-in-Kind..........................................................................................21
Other Information...........................................................................................21

FEATURES AND SERVICES OFFERED BY THE FUNDS...........................................................................21
The Pure No-Load(TM) Concept................................................................................21
Dividend and Capital Gain Distribution Options..............................................................22
Diversification.............................................................................................23
Scudder Funds Centers.......................................................................................23
Reports to Shareholders.....................................................................................23
Transaction Summaries.......................................................................................23

THE SCUDDER FAMILY OF FUNDS..........................................................................................23

SPECIAL PLAN ACCOUNTS................................................................................................26
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension Plans for Corporations and
Self-Employed Individuals..............................................................................27
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for Corporations and Self-Employed Individuals.........27
Scudder IRA: Individual Retirement Account.................................................................27
Scudder 403(b) Plan.........................................................................................28
Automatic Withdrawal Plan...................................................................................28
Group or Salary Deduction Plan..............................................................................29
Automatic Investment Plan...................................................................................29
Uniform Transfers/Gifts to Minors Act.......................................................................29
Scudder Trust Company.......................................................................................29

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS............................................................................29

PERFORMANCE INFORMATION..............................................................................................30
Average Annual Total Return.................................................................................30
Cumulative Total Return.....................................................................................31
Total Return................................................................................................31
Capital Change..............................................................................................31
Yield of International Bond Fund............................................................................31
Comparison of Fund Performance..............................................................................32

i
<PAGE>
TABLE OF CONTENTS (continued)
Page
----
ORGANIZATION OF THE FUNDS............................................................................................36

INVESTMENT ADVISER...................................................................................................37
Personal Investments by Employees of the Adviser............................................................40

DIRECTORS AND OFFICERS...............................................................................................40

REMUNERATION.........................................................................................................43

DISTRIBUTOR..........................................................................................................44

TAXES................................................................................................................45

PORTFOLIO TRANSACTIONS...............................................................................................49
Brokerage Commissions.......................................................................................49
Portfolio Turnover..........................................................................................50

NET ASSET VALUE......................................................................................................50

ADDITIONAL INFORMATION...............................................................................................51
Experts.....................................................................................................51
Other Information...........................................................................................51

FINANCIAL STATEMENTS.................................................................................................52

APPENDIX

ii
</TABLE>
<PAGE>

THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES

(See Scudder Global Fund--"Investment objective and
policies" and "Additional information about policies and
investments," Scudder International Bond Fund--
"Investment objectives and policies" and "Additional
information about policies and investments" in
the Funds' prospectuses.)

Scudder Global Fund, Inc., a Maryland corporation of which Scudder
Global Fund ("Global Fund") and Scudder International Bond Fund ("International
Bond Fund") are series, is referred to herein as the "Corporation." The
Corporation is a no-load, open-end, management investment company which
continuously offers and redeems its shares. The Corporation is a company of the
type commonly known as a mutual fund. Global Fund is a diversified series and
International Bond Fund is a non-diversified series of the Corporation. These
series sometimes are jointly referred to herein as the "Funds."

Except as otherwise indicated, the Funds' objectives and policies are
not fundamental and may be changed without a shareholder vote. There can be no
assurance that either Fund will achieve its objectives.

Changes in portfolio securities are made on the basis of investment
considerations, and it is against the policy of management to make changes for
trading purposes.

General Investment Objective and Policies of Global Fund

Global Fund seeks long-term growth of capital through a diversified
portfolio of marketable securities, primarily equity securities, including
common stocks, preferred stocks and debt securities convertible into common
stocks. The Fund invests on a worldwide basis in equity securities of companies
which are incorporated in the U.S. or in foreign countries. It may also invest
in the debt securities of U.S. and foreign issuers. Income is an incidental
consideration.

The management of the Fund believes that there is substantial
opportunity for long-term capital growth from a professionally managed portfolio
of securities selected from the U.S. and foreign equity markets. This global
investment framework takes advantage of the investment opportunities created by
the global economy. The world has become highly integrated in economic,
industrial and financial terms. Companies increasingly operate globally as they
purchase raw materials, produce and sell their products, and raise capital. As a
result, international trends such as movements in currency and trading
relationships are becoming more important to many industries than purely
domestic influences. To understand a company's business, it is frequently more
important to understand how it is linked to the world economy than whether or
not it is, for example, a U.S., French or Swiss company. Just as a company takes
a global perspective in deciding where to operate, so too may an investor
benefit from looking globally in deciding which industries are growing, which
producers are efficient and which companies' shares are undervalued. The Fund
affords the investor access to opportunities wherever they arise, without being
constrained by the location of a company's headquarters or the trading market
for its shares.

The Fund invests in companies that the Fund's investment adviser,
Scudder, Stevens & Clark, Inc. (the "Adviser"), believes will benefit from
global economic trends, promising technologies or products and specific country
opportunities resulting from changing geopolitical, currency, or economic
relationships. It is expected that investments will be spread broadly around the
world. The Fund will be invested usually in securities of issuers located in at
least three countries, one of which may be the U.S. The Fund may be invested
100% in non-U.S. issues, and for temporary defensive purposes may be invested
100% in U.S. issues, although under normal circumstances it is expected that
both foreign and U.S. investments will be represented in the Fund's portfolio.
It is expected that investments will include companies of varying size as
measured by assets, sales, or capitalization. More information about these
investment techniques is provided under "Investments and Investment Techniques."

General Investment Objectives and Policies of International Bond Fund

International Bond Fund offers investors a convenient way to invest in
a managed portfolio of debt securities denominated in foreign currencies
("international securities"). The Fund's objective is to provide income
primarily by investing in a managed portfolio of high-grade international bonds.
As a secondary objective, the Fund seeks protection and possible enhancement of
principal value by actively managing currency, bond market and maturity exposure

<PAGE>

and by security selection. To achieve its objectives, the Fund will primarily
invest in international bonds that are denominated in foreign currencies,
including bonds denominated in the European Currency Unit (ECU). The Fund's
investments may include debt securities issued or guaranteed by a foreign
national government, its agencies, instrumentalities or political subdivisions,
debt securities issued or guaranteed by supranational organizations, corporate
debt securities, bank or bank holding company debt securities and other debt
securities including those convertible into common stock. The Fund will invest
no more than 15% of its total assets in debt securities that are rated below BBB
by Standard and Poor's ("S&P") or below Baa by Moody's Investors Service, Inc.
("Moody's"), but rated no lower than B by S&P or Moody's, respectively. (See
"Risk factors" in the Fund's prospectus.)

Special Investment Considerations of the Funds

The Funds are intended to provide individual and institutional
investors with an opportunity to invest a portion of their assets in globally
and/or internationally oriented portfolios, according to the Funds' respective
objectives and policies, and are designed for long-term investors who can accept
international investment risk. Management of the Funds believes that allocation
of assets on a global or international basis decreases the degree to which
events in any one country, including the U.S., will affect an investor's entire
investment holdings. In the period since World War II, many leading foreign
economies have grown more rapidly than the U.S. economy, thus providing
investment opportunities; although there can be no assurance that this will be
true in the future. As with any long-term investment, the value of the Funds'
shares when sold may be higher or lower than when purchased.

Investors should recognize that investing in foreign securities
involves certain special considerations, including those set forth below, which
are not typically associated with investing in U.S. securities and which may
favorably or unfavorably affect the Funds' performance. As foreign companies are
not generally subject to uniform standards, practices and requirements, with
respect to accounting, auditing and financial reporting, as are domestic
companies, there may be less publicly available information about a foreign
company than about a domestic company. Many foreign securities markets, while
growing in volume of trading activity, have substantially less volume than the
U.S. market, and securities of some foreign issuers are less liquid and more
volatile than securities of domestic issuers. Similarly, volume and liquidity in
most foreign bond markets is less than in the U.S. and, at times, volatility of
price can be greater than in the U.S. Further, foreign markets have different
clearance and settlement procedures and in certain markets there have been times
when settlements have been unable to keep pace with the volume of securities
transactions making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems either could result in losses to a Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. Fixed commissions on some foreign securities
exchanges and bid to asked spreads in foreign bond markets are generally higher
than negotiated commissions on U.S. exchanges and bid to asked spreads in the
U.S. bond market, although the Funds will endeavor to achieve the most favorable
net results on their portfolio transactions. Further, the Funds may encounter
difficulties or be unable to pursue legal remedies and obtain judgments in
foreign courts. There is generally less government supervision and regulation of
business and industry practices, securities exchanges, brokers and listed
companies than in the U.S. It may be more difficult for the Funds' agents to
keep currently informed about corporate actions such as stock dividends or other
matters which may affect the prices of portfolio securities. Communications
between the U.S. and foreign countries may be less reliable than within the
U.S., thus increasing the risk of delayed settlements of portfolio transactions
or loss of certificates for portfolio securities. Payment for securities without
delivery may be required in certain foreign markets. In addition, with respect
to certain foreign countries, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect U.S. investments in those countries. Investments
in foreign securities may also entail certain risks, such as possible currency
blockages or transfer restrictions, and the difficulty of enforcing rights in
other countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. The management of the Funds seeks to mitigate the
risks associated with the foregoing considerations through continuous
professional management.

These considerations generally are more of a concern in developing
countries. For example, the possibility of revolution and the dependence on
foreign economic assistance may be greater in these countries than in developed

2
<PAGE>

countries. Investments in companies domiciled in developing countries may be
subject to potentially greater risks than investments in developed countries.

Investments in foreign securities usually will involve currencies of
foreign countries. Because of the considerations discussed above, the value of
the assets of the Funds as measured in U.S. dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations, and the Funds may incur costs in connection with conversions
between various currencies. Although the Funds value their assets daily in terms
of U.S. dollars, they do not intend to convert their holdings of foreign
currencies into U.S. dollars on a daily basis. They will do so from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to a Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer. The
Funds will conduct their foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through entering into strategic transactions involving currencies
(see "Strategic Transactions and Derivatives").

Because the Funds may be invested in both U.S. and foreign securities
markets, changes in a Fund's share price may have a low correlation with
movements in the U.S. markets. Each Fund's share price will reflect the
movements of both the different stock and bond markets in which it is invested
and of the currencies in which the investments are denominated; the strength or
weakness of the U.S. dollar against foreign currencies may account for part of
each Fund's investment performance. Foreign securities such as those purchased
by a Fund may be subject to foreign government taxes which could reduce the
yield on such securities, although a shareholder of the Fund may, subject to
certain limitations, be entitled to claim a credit or deduction for U.S. federal
income tax purposes for his or her proportionate share of such foreign taxes
paid by the Fund (see "TAXES"). U.S. and foreign securities markets do not
always move in step with each other, and the total returns from different
markets may vary significantly. The Funds invest in many securities markets
around the world in an attempt to take advantage of opportunities wherever they
may arise.

Because of the Funds' investment considerations discussed above and the
investment policies, investment in shares of the Funds is not intended to
provide a complete investment program for an investor.

Neither Fund can guarantee a gain or eliminate the risk of loss. The
net asset value of each Fund's shares will increase or decrease with changes in
the market price of the Fund's investments, and there is no assurance that each
Fund's objectives will be achieved.

Investments and Investment Techniques

Repurchase Agreements. Each Fund may enter into repurchase agreements
with member banks of the Federal Reserve System, any foreign bank or with any
domestic or foreign broker/dealer which is recognized as a reporting government
securities dealer, if the creditworthiness of the bank or broker/dealer has been
determined by the Adviser to be at least as high as that of other obligations a
Fund may purchase.

A repurchase agreement provides a means for a Fund to earn income on
funds for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., a Fund) acquires a debt security ("Obligation") and the seller
agrees, at the time of sale, to repurchase the Obligation at a specified time
and price. Securities subject to a repurchase agreement are held in a segregated
account and the value of such securities is kept at least equal to the
repurchase price on a daily basis. The repurchase price may be higher than the
purchase price, the difference being income to a Fund, or the purchase and
repurchase prices may be the same, with interest at a stated rate due to a Fund
together with the repurchase price on repurchase. In either case, the income to
a Fund is unrelated to the interest rate on the Obligation itself. Obligations
will be physically held by the Fund's custodian (State Street Bank and Trust
Company for Global Fund and Brown Brothers Harriman and Co. for International
Bond Fund) or in the Federal Reserve Book Entry system.

For purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"), a repurchase agreement is deemed to be a loan from a Fund to the
seller of the Obligation subject to the repurchase agreement and is therefore
subject to that Fund's investment restrictions applicable to loans. It is not

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clear whether a court would consider the Obligation purchased by a Fund subject
to a repurchase agreement as being owned by the Fund or as being collateral for
a loan by the Fund to the seller. In the event of the commencement of bankruptcy
or insolvency proceedings with respect to the seller of the Obligation before
repurchase of the Obligation under a repurchase agreement, a Fund may encounter
delay and incur costs before being able to sell the security. Delays may involve
loss of interest or decline in price of the Obligation. If the court
characterizes the transaction as a loan and a Fund has not perfected a security
interest in the Obligation, the Fund may be required to return the Obligation to
the seller's estate and be treated as an unsecured creditor of the seller. As an
unsecured creditor, a Fund would be at risk of losing some or all of the
principal and income involved in the transaction. As with any unsecured debt
instrument purchased for a Fund, the Adviser seeks to minimize the risk of loss
through repurchase agreements by analyzing the creditworthiness of the obligor,
in this case the seller of the Obligation. Apart from the risk of bankruptcy or
insolvency proceedings, there is also the risk that the seller may fail to
repurchase the security. However, if the market value of the Obligation subject
to the repurchase agreement becomes less than the repurchase price (including
interest), a Fund will direct the seller of the Obligation to deliver additional
securities so that the market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price. It is possible that a Fund
will be unsuccessful in seeking to enforce the seller's contractual obligation
to deliver additional securities. A repurchase agreement with foreign banks may
be available with respect to government securities of the particular foreign
jurisdiction, and such repurchase agreements involve risks similar to repurchase
agreements with U.S. entities.

The International Bond Fund may also enter into repurchase commitments
with any party deemed creditworthy by the Adviser, including foreign banks and
broker/dealers, if the transaction is entered into for investment purposes and
the counterparty's creditworthiness is at least equal to that of issuers of
securities which the Fund may purchase. Such transactions may not provide the
Fund with collateral which is marked-to-market during the term of the
commitment.

Debt Securities. Each Fund may purchase "investment-grade" bonds, which
are those rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P or, if
unrated, judged to be of equivalent quality as determined by the Adviser. Bonds
rated Baa or BBB may have speculative elements as well as investment-grade
characteristics. Global Fund may also invest up to 5% of its net assets in
securities rated Baa/BBB or lower and in unrated securities of equivalent
quality in the Adviser's judgment. International Bond Fund may invest up to 15%
of its total assets in securities rated below BBB or below Baa, but may not
invest in securities rated lower than B by Moody's and S&P or in equivalent
unrated securities. Global Fund may invest in debt securities which are rated as
low as C by Moody's or D by S&P. Such securities may be in default with respect
to payment of principal or interest.

High Yield, High Risk Securities. Below investment grade securities
(rated below Baa by Moody's and below BBB by S&P) or unrated securities of
equivalent quality in the Adviser's judgment, carry a high degree of risk
(including the possibility of default or bankruptcy of the issuers of such
securities), generally involve greater volatility of price and risk of principal
and income, and may be less liquid, than securities in the higher rating
categories and are considered speculative. The lower the ratings of such debt
securities, the greater their risks render them like equity securities. See the
Appendix to this Statement of Additional Information for a more complete
description of the ratings assigned by ratings organizations and their
respective characteristics.

An economic downturn could disrupt the high-yield market and impair the
ability of issuers to repay principal and interest. Also, an increase in
interest rates would likely have a greater adverse impact on the value of such
obligations than on higher quality debt securities. During an economic downturn
or period of rising interest rates, highly leveraged issues may experience
financial stress which could adversely affect their ability to service their
principal and interest payment obligations. Prices and yields of high-yield
securities will fluctuate over time and, during periods of economic uncertainty,
volatility of high-yield securities may adversely affect the Fund's net asset
value. In addition, investments in high-yield zero coupon or pay-in-kind bonds,
rather than income-bearing high-yield securities, may be more speculative and
may be subject to greater fluctuations in value due to changes in interest
rates.

The trading market for high-yield securities may be thin to the extent
that there is no established retail secondary market. A thin trading market may
limit the ability of the Fund to accurately value high-yield securities in its
portfolio and to dispose of those securities. Adverse publicity and investor
perceptions may decrease the values and liquidity of high-yield securities.
These securities may also involve special registration responsibilities,
liabilities and costs, and liquidity and valuation difficulties.

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<PAGE>

Credit quality in the high-yield securities market can change suddenly
and unexpectedly, and even recently issued credit ratings may not fully reflect
the actual risks posed by a particular high-yield security. For these reasons,
it is the policy of the Adviser not to rely exclusively on ratings issued by
established credit rating agencies, but to supplement such ratings with its own
independent and on-going review of credit quality. The achievement of a Fund's
investment objective by investment in such securities may be more dependent on
the Adviser's credit analysis than is the case for higher quality bonds. Should
the rating of a portfolio security be downgraded, the Adviser will determine
whether it is in the best interest of the Fund to retain or dispose of such
security.

Prices for below investment-grade securities may be affected by
legislative and regulatory developments. For example, new federal rules require
savings and loan institutions to gradually reduce their holdings of this type of
security. Also, recent legislation restricts the issuer's tax deduction for
interest payments on these securities. Such legislation may significantly
depress the prices of outstanding securities of this type. For more information
regarding tax issues related to high-yield securities (see "TAXES").

Illiquid Investments. Each Fund may invest a portion of its assets in securities
for which there is not an active trading market including securities which are
subject to restrictions on resale because they have not been registered under
the Securities Act of 1933 or which are otherwise not readily marketable. The
absence of a trading market can make it difficult to ascertain a market value
for illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for a Fund to sell them promptly at an acceptable price. Each Fund
may have to bear the extra expense of registering such securities for resale and
the risk of substantial delay in effecting such registration. Also market
quotations are less readily available. The judgment of the Adviser may at times
play a greater role in valuing these securities than in the case of unrestricted
securities.

Zero Coupon Securities. Each Fund may invest in zero coupon securities
which pay no cash income and are sold at substantial discounts from their value
at maturity. When held to maturity, their entire income, which consists of
accretion of discount, comes from the difference between the issue price and
their value at maturity. Zero coupon securities are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities which make current distributions of interest (cash). Zero
coupon securities which are convertible into common stock offer the opportunity
for capital appreciation as increases (or decreases) in market value of such
securities closely follows the movements in the market value of the underlying
common stock. Zero coupon convertible securities generally are expected to be
less volatile than the underlying common stocks, as they usually are issued with
maturities of 15 years or less and are issued with options and/or redemption
features exercisable by the holder of the obligation entitling the holder to
redeem the obligation and receive a defined cash payment.

Zero coupon securities include securities issued directly by the U.S.
Treasury, and U.S. Treasury bonds or notes and their unmatured interest coupons
and receipts for their underlying principal ("coupons") which have been
separated by their holder, typically a custodian bank or investment brokerage
firm. A holder will separate the interest coupons from the underlying principal
(the "corpus") of the U.S. Treasury security. A number of securities firms and
banks have stripped the interest coupons and receipts and then resold them in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" (TIGRS(TM)) and Certificate of Accrual on Treasuries
(CATS(TM)). The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer securities
(i.e., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof. Counsel to the
underwriters of these certificates or other evidences of ownership of the U.S.
Treasury securities have stated that, for federal tax and securities purposes,
in their opinion purchasers of such certificates, such as the Fund, most likely
will be deemed the beneficial holder of the underlying U.S. Government
securities. The Fund understands that the staff of the Division of Investment
Management of the Securities and Exchange Commission (the "SEC") no longer
considers such privately stripped obligations to be U.S. Government securities,
as defined in the 1940 Act; therefore, the Fund intends to adhere to this staff
position and will not treat such privately stripped obligations to be U.S.
Government securities for the purpose of determining if the Global Fund is
"diversified" under the 1940 Act.

The U.S. Treasury has facilitated transfers of ownership of zero coupon
securities by accounting separately for the beneficial ownership of particular
interest coupon and corpus payments on Treasury securities through the Federal
Reserve book-entry record keeping system. The Federal Reserve program as
established by the Treasury Department is known as "STRIPS" or "Separate Trading
of Registered Interest and Principal of Securities." Under the STRIPS program,
the Fund will be able to have its beneficial ownership of zero coupon securities

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<PAGE>

recorded directly in the book-entry record-keeping system in lieu of having to
hold certificates or other evidences of ownership of the underlying U.S.
Treasury securities.

When U.S. Treasury obligations have been stripped of their unmatured
interest coupons by the holder, the principal or corpus is sold at a deep
discount because the buyer receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest
(cash) payments. Once stripped or separated, the corpus and coupons may be sold
separately. Typically, the coupons are sold separately or grouped with other
coupons with like maturity dates and sold bundled in such form. Purchasers of
stripped obligations acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury sells
itself (see "TAXES").

Convertible Securities. Each Fund may invest in convertible securities,
that is, bonds, notes, debentures, preferred stocks and other securities which
are convertible into common stock. Investments in convertible securities can
provide an opportunity for capital appreciation and/or income through interest
and dividend payments by virtue of their conversion or exchange features.
International Bond Fund will limit its purchases of convertible securities to
debt securities convertible into common stocks.

The convertible securities in which a Fund may invest are either fixed
income or zero coupon debt securities which may be converted or exchanged at a
stated or determinable exchange ratio into underlying shares of common stock.
The exchange ratio for any particular convertible security may be adjusted from
time to time due to stock splits, dividends, spin-offs, other corporate
distributions or scheduled changes in the exchange ratio. Convertible debt
securities and convertible preferred stocks, until converted, have general
characteristics similar to both debt and equity securities. Although to a lesser
extent than with debt securities generally, the market value of convertible
securities tends to decline as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of the conversion or
exchange feature, the market value of convertible securities typically changes
as the market value of the underlying common stocks changes, and, therefore,
also tends to follow movements in the general market for equity securities. A
unique feature of convertible securities is that as the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis, and so may not experience market value declines
to the same extent as the underlying common stock. When the market price of the
underlying common stock increases, the prices of the convertible securities tend
to rise as a reflection of the value of the underlying common stock, although
typically not as much as the underlying common stock. While no securities
investments are without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same issuer.

As debt securities, convertible securities are investments which
provide for a stream of income (or in the case of zero coupon securities,
accretion of income) with generally higher yields than common stocks. Of course,
like all debt securities, there can be no assurance of income or principal
payments because the issuers of the convertible securities may default on their
obligations. Convertible securities generally offer lower yields than
non-convertible securities of similar quality because of their conversion or
exchange features.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Indexed Securities. The Fund may invest in indexed securities, the value of
which is linked to currencies, interest rates, commodities, indices or other
financial indicators ("reference instruments"). Most indexed securities have
maturities of three years or less.

Indexed securities differ from other types of debt securities in which
the Fund may invest in several respects. First, the interest rate or, unlike
other debt securities, the principal amount payable at maturity of an indexed
security may vary based on changes in one or more specified reference
instruments, such as an interest rate compared with a fixed interest rate or the
currency exchange rates between two currencies (neither of which need be the
currency in which the instrument is denominated). The reference instrument need
not be related to the terms of the indexed security. For example, the principal
amount of a U.S. dollar denominated indexed security may vary based on the

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<PAGE>

exchange rate of two foreign currencies. An indexed security may be positively
or negatively indexed; that is, its value may increase or decrease if the value
of the reference instrument increases. Further, the change in the principal
amount payable or the interest rate of an indexed security may be a multiple of
the percentage change (positive or negative) in the value of the underlying
reference instrument(s).

Investment in indexed securities involves certain risks. In addition to
the credit risk of the security's issuer and the normal risks of price changes
in response to changes in interest rates, the principal amount of indexed
securities may decrease as a result of changes in the value of reference
instruments. Further, in the case of certain indexed securities in which the
interest rate is linked to a reference instrument, the interest rate may be
reduced to zero, and any further declines in the value of the security may then
reduce the principal amount payable on maturity. Finally, indexed securities may
be more volatile than the reference instruments underlying indexed securities.

Dollar Rolls. International Bond Fund may enter into "dollar roll" transactions,
which consist of the sale by the Fund to a bank or broker/dealer (the
"counterparty") of GNMA certificates or other mortgage-backed securities
together with a commitment to purchase similar, but not identical, securities at
a future date, at the same price. The counterparty receives all principal and
interest payments, including prepayments, made on the security while the
counterparty is the holder. The Fund receives a fee from the counterparty as
consideration for entering into the commitment to purchase. Dollar rolls may be
renewed over a period of several months with a different repurchase price and a
cash settlement made at each renewal without physical delivery of securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which the Fund agrees to buy a security on a future date.

International Bond Fund will not use such transactions for leveraging
purposes and, accordingly, will segregate cash, U.S. Government securities or
other high grade debt obligations in an amount sufficient to meet its purchase
obligations under the transactions. The Fund will also maintain asset coverage
of at least 300% for all outstanding firm commitments, dollar rolls and other
borrowings. Notwithstanding such safeguards, the Fund's overall investment
exposure may be increased by such transactions to the extent that the Fund bears
a risk of loss on the securities it is committed to purchase, as well as on the
segregated assets.

Dollar rolls are treated for purposes of the 1940 Act as borrowings of
the Fund because they involve the sale of a security coupled with an agreement
to repurchase. Like all borrowings, a dollar roll involves costs to the Fund.
For example, while the Fund receives a fee as consideration for agreeing to
repurchase the security, the Fund forgoes the right to receive all principal and
interest payments while the counterparty holds the security. These payments to
the counterparty may exceed the fee received by the Fund, thereby effectively
charging the Fund interest on its borrowing. Further, although the Fund can
estimate the amount of expected principal prepayment over the term of the dollar
roll, a variation in the actual amount of prepayment could increase or decrease
the cost of the Fund's borrowing.

The entry into dollar rolls involves potential risks of loss which are
different from those of the securities underlying the transactions. For example,
if the counterparty becomes insolvent, the Fund's right to purchase from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before the Fund is able to purchase them. Similarly, the Fund
may be required to purchase securities in connection with a dollar roll at a
higher price than may otherwise be available on the open market. Since, as noted
above, the counterparty is required to deliver a similar, but not identical
security to the Fund, the security which the Fund is required to buy under the
dollar roll may be worth less than an identical security. Finally, there can be
no assurance that the Fund's use of the cash that it receives from a dollar roll
will provide a return that exceeds borrowing costs.

The Directors of the Corporation on behalf of International Bond Fund
have adopted guidelines to ensure that those securities received are
substantially identical to those sold. To reduce the risk of default, the Fund
will engage in such transactions only with banks and broker-dealers selected
pursuant to such guidelines.

Strategic Transactions and Derivatives. Each Fund may, but is not required to,
utilize various other investment strategies as described below to hedge various
market risks (such as interest rates, currency exchange rates, and broad or
specific equity or fixed-income market movements), to manage the effective
maturity or duration of the fixed-income securities in a Fund's portfolio, or to
enhance potential gain. These strategies may be executed through the use of
derivative contracts. Such strategies are generally accepted as a part of modern
portfolio management and are regularly utilized by many mutual funds and other
institutional investors. Techniques and instruments may change over time as new
instruments and strategies are developed or regulatory changes occur.

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<PAGE>

In the course of pursuing these investment strategies, a Fund may
purchase and sell exchange-listed and over-the-counter put and call options on
securities, equity and fixed-income indices and other financial instruments,
purchase and sell financial futures contracts and options thereon, enter into
various interest rate transactions such as swaps, caps, floors or collars, and
enter into various currency transactions such as currency forward contracts,
currency futures contracts, currency swaps or options on currencies or currency
futures (collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for a Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect a Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of the fixed-income
securities in a Fund's portfolio, or to establish a position in the derivatives
markets as a temporary substitute for purchasing or selling particular
securities. Some Strategic Transactions may also be used to enhance potential
gain although no more than 5% of a Fund's assets will be committed to Strategic
Transactions entered into for non-hedging purposes. Any or all of these
investment techniques may be used at any time and in any combination and there
is no particular strategy that dictates the use of one technique rather than
another, as use of any Strategic Transaction is a function of numerous variables
including market conditions. The ability of a Fund to utilize these Strategic
Transactions successfully will depend on the Adviser's ability to predict
pertinent market movements, which cannot be assured. Each Fund will comply with
applicable regulatory requirements when implementing these strategies,
techniques and instruments. Strategic Transactions involving financial futures
and options thereon will be purchased, sold or entered into only for bona fide
hedging, risk management or portfolio management purposes and not for
speculative purposes.

Strategic Transactions, including derivative contracts have risks
associated with them including possible default by the other party to the
transaction, illiquidity and, to the extent the Adviser's view as to certain
market movements is incorrect, the risk that the use of such Strategic
Transactions could result in losses greater than if they had not been used. Use
of put and call options may result in losses to a Fund, force the sale or
purchase of portfolio securities at inopportune times or for prices higher than
(in the case of put options) or lower than (in the case of call options) current
market values, limit the amount of appreciation a Fund can realize on its
investments or cause a Fund to hold a security it might otherwise sell. The use
of currency transactions can result in a Fund incurring losses as a result of a
number of factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of a Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
Fund might not be able to close out a transaction without incurring substantial
losses, if at all. Although the use of futures and options transactions for
hedging should tend to minimize the risk of loss due to a decline in the value
of the hedged position, at the same time they tend to limit any potential gain
which might result from an increase in value of such position. Finally, the
daily variation margin requirements for futures contracts would create a greater
ongoing potential financial risk than would purchases of options, where the
exposure is limited to the cost of the initial premium. Losses resulting from
the use of Strategic Transactions would reduce net asset value, and possibly
income, and such losses can be greater than if the Strategic Transactions had
not been utilized.

General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of Fund assets in special accounts, as described
below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option, upon payment of a
premium, the right to sell, and the writer the obligation to buy, the underlying
security, commodity, index, currency or other instrument at the exercise price.
For instance, a Fund's purchase of a put option on a security might be designed
to protect its holdings in the underlying instrument (or, in some cases, a
similar instrument) against a substantial decline in the market value by giving
a Fund the right to sell such instrument at the option exercise price. A call
option, upon payment of a premium, gives the purchaser of the option the right
to buy, and the seller the obligation to sell, the underlying instrument at the
exercise price. A Fund's purchase of a call option on a security, financial
future, index, currency or other instrument might be intended to protect a Fund

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against an increase in the price of the underlying instrument that it intends to
purchase in the future by fixing the price at which it may purchase such
instrument. An American style put or call option may be exercised at any time
during the option period while a European style put or call option may be
exercised only upon expiration or during a fixed period prior thereto. Each Fund
is authorized to purchase and sell exchange listed options and over-the-counter
options ("OTC options"). Exchange listed options are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"), which guarantees
the performance of the obligations of the parties to such options. The
discussion below uses the OCC as an example, but is also applicable to other
financial intermediaries.

With certain exceptions, OCC issued and exchange listed options
generally settle by physical delivery of the underlying security or currency,
although in the future cash settlement may become available. Index options and
Eurodollar instruments are cash settled for the net amount, if any, by which the
option is "in-the-money" (i.e., where the value of the underlying instrument
exceeds, in the case of a call option, or is less than, in the case of a put
option, the exercise price of the option) at the time the option is exercised.
Frequently, rather than taking or making delivery of the underlying instrument
through the process of exercising the option, listed options are closed by
entering into offsetting purchase or sale transactions that do not result in
ownership of the new option.

Each Fund's ability to close out its position as a purchaser or seller
of an OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the absence of a
liquid option market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities including
reaching daily price limits; (iv) interruption of the normal operations of the
OCC or an exchange; (v) inadequacy of the facilities of an exchange or OCC to
handle current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours
during which the underlying financial instruments are traded. To the extent that
the option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. A Fund
will only sell OTC options (other than OTC currency options) that are subject to
a buy-back provision permitting a Fund to require the Counterparty to sell the
option back to a Fund at a formula price within seven days. Each Fund expects
generally to enter into OTC options that have cash settlement provisions,
although it is not required to do so.

Unless the parties provide for it, there is no central clearing or
guaranty function in an OTC option. As a result, if the Counterparty fails to
make or take delivery of the security, currency or other instrument underlying
an OTC option it has entered into with a Fund or fails to make a cash settlement
payment due in accordance with the terms of that option, a Fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Adviser must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. Each Fund will engage in OTC option transactions only with U.S.
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers" or broker/dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-term credit rating of A-1 from S&P or P-1 from
Moody's or an equivalent rating from any nationally recognized statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions, are
determined to be of equivalent credit quality by the Adviser. The staff of the
SEC currently takes the position that OTC options purchased by a Fund, and
portfolio securities "covering" the amount of a Fund's obligation pursuant to an
OTC option sold by it (the cost of the sell-back plus the in-the-money amount,
if any) are illiquid, and are subject to a Fund's limitation on investing no
more than 10% of its total assets in illiquid securities.

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If a Fund sells a call option, the premium that it receives may serve
as a partial hedge, to the extent of the option premium, against a decrease in
the value of the underlying securities or instruments in its portfolio or will
increase the Fund's income. The sale of put options can also provide income.

Each Fund may purchase and sell call options on securities including
U.S. Treasury and agency securities, mortgage-backed securities, corporate debt
securities, equity securities (including convertible securities) and Eurodollar
instruments that are traded on U.S. and foreign securities exchanges and in the
over-the-counter markets, and on securities indices, currencies and futures
contracts. All calls sold by a Fund must be "covered" (i.e., the Fund must own
the securities or futures contract subject to the call) or must meet the asset
segregation requirements described below as long as the call is outstanding.
Even though a Fund will receive the option premium to help protect it against
loss, a call sold by the Fund exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying security or instrument and may require the Fund to hold a security or
instrument which it might otherwise have sold.

Each Fund may purchase and sell put options on securities including
U.S. Treasury and agency securities, mortgage-backed securities, foreign
sovereign debt, corporate debt securities, equity securities (including
convertible securities) and Eurodollar instruments (whether or not it holds the
above securities in its portfolio), and on securities indices, currencies and
futures contracts other than futures on individual corporate debt and individual
equity securities. Neither Fund will sell put options if, as a result, more than
50% of a Fund's assets would be required to be segregated to cover its potential
obligations under such put options other than those with respect to futures and
options thereon. In selling put options, there is a risk that a Fund may be
required to buy the underlying security at a disadvantageous price above the
market price.

General Characteristics of Futures. Each Fund may enter into financial futures
contracts or purchase or sell put and call options on such futures as a hedge
against anticipated interest rate, currency or equity market changes, for
duration management and for risk management purposes. Futures are generally
bought and sold on the commodities exchanges where they are listed with payment
of initial and variation margin as described below. The sale of a futures
contract creates a firm obligation by a Fund, as seller, to deliver to the buyer
the specific type of financial instrument called for in the contract at a
specific future time for a specified price (or, with respect to index futures
and Eurodollar instruments, the net cash amount). Options on futures contracts
are similar to options on securities except that an option on a futures contract
gives the purchaser the right in return for the premium paid to assume a
position in a futures contract and obligates the seller to deliver such
position.

Each Fund's use of financial futures and options thereon will in all
cases be consistent with applicable regulatory requirements and in particular
the rules and regulations of the Commodity Futures Trading Commission and will
be entered into only for bona fide hedging, risk management (including duration
management) or other portfolio management purposes. Typically, maintaining a
futures contract or selling an option thereon requires a Fund to deposit with a
financial intermediary as security for its obligations an amount of cash or
other specified assets (initial margin) which initially is typically 1% to 10%
of the face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of a Fund. If
a Fund exercises an option on a futures contract it will be obligated to post
initial margin (and potential subsequent variation margin) for the resulting
futures position just as it would for any position. Futures contracts and
options thereon are generally settled by entering into an offsetting transaction
but there can be no assurance that the position can be offset prior to
settlement at an advantageous price, nor that delivery will occur.

Neither Fund will enter into a futures contract or related option
(except for closing transactions) if, immediately thereafter, the sum of the
amount of its initial margin and premiums on open futures contracts and options
thereon would exceed 5% of a Fund's total assets (taken at current value);
however, in the case of an option that is in-the-money at the time of the
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation. The segregation requirements with respect to futures contracts and
options thereon are described below.

Options on Securities Indices and Other Financial Indices. Each Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve

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<PAGE>

through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Currency Transactions. Each Fund may engage in currency transactions with
Counterparties in order to hedge the value of portfolio holdings denominated in
particular currencies against fluctuations in relative value. Currency
transactions include forward currency contracts, exchange listed currency
futures, exchange listed and OTC options on currencies, and currency swaps. A
forward currency contract involves a privately negotiated obligation to purchase
or sell (with delivery generally required) a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. A currency swap is
an agreement to exchange cash flows based on the notional difference among two
or more currencies and operates similarly to an interest rate swap, which is
described below. A Fund may enter into currency transactions with Counterparties
which have received (or the guarantors of the obligations which have received) a
credit rating of A-1 or P-1 by S&P or Moody's, respectively, or that have an
equivalent rating from a NRSRO or are determined to be of equivalent credit
quality by the Adviser.

Each Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of a Fund, which will generally arise
in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.

Neither Fund will enter into a transaction to hedge currency exposure
to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to proxy hedging or cross hedging as described
below.

Each Fund may also cross-hedge currencies by entering into transactions
to purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which a Fund has or in which a Fund expects to
have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing
or anticipated holdings of portfolio securities, each Fund may also engage in
proxy hedging. Proxy hedging is often used when the currency to which a Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. For example, if the Adviser considers that
the Austrian schilling is correlated to the German deutschemark (the "D-mark"),
a Fund holds securities denominated in schillings and the Adviser believes that
the value of schillings will decline against the U.S. dollar, the Adviser may
enter into a commitment or option to sell D-marks and buy dollars. Currency
hedging involves some of the same risks and considerations as other transactions
with similar instruments. Currency transactions can result in losses to a Fund
if the currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived
correlation between various currencies may not be present or may not be present
during the particular time that the Fund is engaging in proxy hedging. If a Fund
enters into a currency hedging transaction, the Fund will comply with the asset
segregation requirements described below.

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<PAGE>

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to a Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Combined Transactions. Each Fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Adviser, it is in the best interests of the Fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
into based on the Adviser's judgment that the combined strategies will reduce
risk or otherwise more effectively achieve the desired portfolio management
goal, it is possible that the combination will instead increase such risks or
hinder achievement of the portfolio management objective.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which a
Fund may enter are interest rate, currency and index swaps and the purchase or
sale of related caps, floors and collars. Each Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio, to protect against currency fluctuations, as a
duration management technique or to protect against any increase in the price of
securities a Fund anticipates purchasing at a later date. Each Fund intends to
use these transactions as hedges and not as speculative investments and will not
sell interest rate caps or floors where it does not own securities or other
instruments providing the income stream a Fund may be obligated to pay. Interest
rate swaps involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments with respect to a notional amount of principal.
A currency swap is an agreement to exchange cash flows on a notional amount of
two or more currencies based on the relative value differential among them and
an index swap is an agreement to swap cash flows on a notional amount based on
changes in the values of the reference indices. The purchase of a cap entitles
the purchaser to receive payments on a notional principal amount from the party
selling such cap to the extent that a specified index exceeds a predetermined
interest rate or amount. The purchase of a floor entitles the purchaser to
receive payments on a notional principal amount from the party selling such
floor to the extent that a specified index falls below a predetermined interest
rate or amount. A collar is a combination of a cap and a floor that preserves a
certain return within a predetermined range of interest rates or values.

Each Fund will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with a Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, the Adviser
and the Funds believe such obligations do not constitute senior securities under
the 1940 Act and, accordingly, will not treat them as being subject to its
borrowing restrictions. Neither Fund will enter into any swap, cap, floor or
collar transaction unless, at the time of entering into such transaction, the
unsecured long-term debt of the Counterparty, combined with any credit
enhancements, is rated at least A by S&P or Moody's or has an equivalent rating
from a NRSRO or is determined to be of equivalent credit quality by the Adviser.
If there is a default by the Counterparty, a Fund may have contractual remedies
pursuant to the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps, floors and collars are more recent innovations for which standardized
documentation has not yet been fully developed and, accordingly, they are less
liquid than swaps.

Eurodollar Instruments. Each Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available

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<PAGE>

from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. Each Fund might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and fixed
income instruments are linked.

Risks of Strategic Transactions Outside the U.S. When conducted outside the
U.S., Strategic Transactions may not be regulated as rigorously as in the U.S.,
may not involve a clearing mechanism and related guarantees, and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the U.S. of data on which to
make trading decisions, (iii) delays in a Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the U.S., (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the U.S., and (v) lower trading volume and
liquidity.

Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that a Fund segregate liquid, high grade
assets with its custodian to the extent Fund obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency. In general, either the full amount of any obligation by a Fund to pay
or deliver securities or assets must be covered at all times by the securities,
instruments or currency required to be delivered, or, subject to any regulatory
restrictions, an amount of cash or liquid, high grade securities at least equal
to the current amount of the obligation must be segregated with the custodian.
The segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. For
example, a call option written by a Fund will require the Fund to hold the
securities subject to the call (or securities convertible into the needed
securities without additional consideration) or to segregate liquid, high grade
securities sufficient to purchase and deliver the securities if the call is
exercised. A call option sold by a Fund on an index will require the Fund to own
portfolio securities which correlate with the index or to segregate liquid, high
grade assets equal to the excess of the index value over the exercise price on a
current basis. A put option written by a Fund requires the Fund to segregate
liquid, high grade assets equal to the exercise price.

Except when a Fund enters into a forward contract for the purchase or
sale of a security denominated in a particular currency, which requires no
segregation, a currency contract which obligates a Fund to buy or sell currency
will generally require the Fund to hold an amount of that currency or liquid
securities denominated in that currency equal to the Fund's obligations or to
segregate liquid high grade assets equal to the amount of the Fund's obligation.

OTC options entered into by a Fund, including those on securities,
currency, financial instruments or indices and OCC issued and exchange listed
index options, will generally provide for cash settlement. As a result, when the
Fund sells these instruments it will only segregate an amount of assets equal to
its accrued net obligations, as there is no requirement for payment or delivery
of amounts in excess of the net amount. These amounts will equal 100% of the
exercise price in the case of a non cash-settled put, the same as an OCC
guaranteed listed option sold by the Fund, or the in-the-money amount plus any
sell-back formula amount in the case of a cash-settled put or call. In addition,
when a Fund sells a call option on an index at a time when the in-the-money
amount exceeds the exercise price, the Fund will segregate, until the option
expires or is closed out, cash or cash equivalents equal in value to such
excess. OCC issued and exchange listed options sold by the Fund other than those
above generally settle with physical delivery, or with an election of either
physical delivery or cash settlement and the Fund will segregate an amount of
assets equal to the full value of the option. OTC options settling with physical
delivery, or with an election of either physical delivery or cash settlement
will be treated the same as other options settling with physical delivery.

In the case of a futures contract or an option thereon, a Fund must
deposit initial margin and possible daily variation margin in addition to
segregating assets sufficient to meet its obligation to purchase or provide
securities or currencies, or to pay the amount owed at the expiration of an
index-based futures contract. Such assets may consist of cash, cash equivalents,
liquid debt or equity securities or other acceptable assets.

With respect to swaps, a Fund will accrue the net amount of the excess,
if any, of its obligations over its entitlements with respect to each swap on a
daily basis and will segregate an amount of cash or liquid high grade securities
having a value equal to the accrued excess. Caps, floors and collars require
segregation of assets with a value equal to a Fund's net obligation, if any.

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<PAGE>

Strategic Transactions may be covered by other means when consistent
with applicable regulatory policies. Each Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, a Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover, instead of segregating assets if the Fund held a
futures or forward contract, it could purchase a put option on the same futures
or forward contract with a strike price as high or higher than the price of the
contract held. Other Strategic Transactions may also be offset in combinations.
If the offsetting transaction terminates at the time of or after the primary
transaction no segregation is required, but if it terminates prior to such time,
assets equal to any remaining obligation would need to be segregated.

Each Fund's activities involving Strategic Transactions may be limited
by the requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), for qualification as a regulated investment company.
(See "TAXES.")

Investment Restrictions

The policies set forth below are fundamental policies of each Fund and
may not be changed with respect to a Fund without approval of a majority of the
outstanding voting securities of that Fund. As used in this Statement of
Additional Information a "majority of the outstanding voting securities of a
Fund" means the lesser of (1) 67% or more of the voting securities present at
such meeting, if the holders of more than 50% of the outstanding voting
securities of the Fund are present or represented by proxy; or (2) more than 50%
of the outstanding voting securities of the Fund.

As a matter of fundamental policy, each Fund may not:

1. borrow money, except as a temporary measure for extraordinary
or emergency purposes or except in connection with reverse
repurchase agreements provided that the Fund maintains asset
coverage of 300% for all borrowings;

2. purchase or sell real estate (except that the Fund may invest
in (i) securities of companies which deal in real estate or
mortgages, and (ii) securities secured by real estate or
interests therein, and that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of
the Fund's ownership of securities) or purchase or sell
physical commodities or contracts relating to physical
commodities;

3. act as underwriter of securities issued by others, except to
the extent that it may be deemed an underwriter in connection
with the disposition of portfolio securities of the Fund;

4. make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the entry into repurchase
agreements and the purchase of debt securities in accordance
with its investment objectives and investment policies may be
deemed to be loans;

5. issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur; and except for
shares of the separate classes or series of the Corporation
provided that collateral arrangements with respect to
currency-related contracts, futures contracts, options or
other permitted investments, including deposits of initial and
variation margin, are not considered to be the issuance of
senior securities for purposes of this restriction; or

6. purchase any securities which would cause more than 25% of the
market value of its total assets at the time of such purchase
to be invested in the securities of one or more issuers having
their principal business activities in the same industry,
provided that there is no limitation with respect to
investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (for the
purposes of this restriction, telephone companies are
considered to be in a separate industry from gas and electric
public utilities, and wholly-owned finance companies are
considered to be in the industry of their parents if their
activities are primarily related to financing the activities
of their parents).

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<PAGE>

In addition, as a matter of fundamental policy Global Fund may not,
with respect to 75% of its total assets taken at market value, purchase more
than 10% of the voting securities of any one issuer, or invest more than 5% of
the value of its total assets in the securities of any one issuer, except
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment companies.

Other Investment Policies

The Directors of the Corporation have voluntarily adopted certain
policies and restrictions which are observed in the conduct of the Funds'
affairs. These represent intentions of the Directors based upon current
circumstances. They differ from fundamental investment policies in that they may
be changed or amended by action of the Directors without requiring prior notice
to or approval of shareholders.

As a matter of nonfundamental policy, each Fund may not:

(a) purchase or retain securities of any open-end investment
company, or securities of closed-end investment companies
except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchases, or
except when such purchase, though not made in the open market,
is part of a plan of merger, consolidation, reorganization or
acquisition of assets; in any event the Fund may not purchase
more than 3% of the outstanding voting securities of another
investment company, may not invest more than 5% of its assets
in another investment company, and may not invest more than
10% of its assets in other investment companies;

(b) pledge, mortgage or hypothecate its assets in excess, together
with permitted borrowings, of 1/3 of its total assets;

(c) purchase or retain securities of an issuer any of whose
officers, directors, trustees or security holders is an
officer, director or trustee of the Fund or a member, officer,
director or trustee of the investment adviser of the Fund if
one or more of such individuals owns beneficially more than
one-half of one % (1/2%) of the outstanding shares or
securities or both (taken at market value) of such issuer and
such individuals owning more than one-half of one % (1/2%) of
such shares or securities together own beneficially more than
5% of such shares or securities or both;

(d) purchase securities on margin or make short sales, unless, by
virtue of its ownership of other securities, it has the right
to obtain securities equivalent in kind and amount to the
securities sold and, if the right is conditional, the sale is
made upon the same conditions, except in connection with
arbitrage transactions and except that the Fund may obtain
such short-term credits as may be necessary for the clearance
of purchases and sales of securities;

(e) invest more than 10% of its total assets in securities which
are not readily marketable, the disposition of which is
restricted under Federal securities laws, or in repurchase
agreements not terminable within 7 days and the Fund will not
invest more than 10% of its total assets in restricted
securities;

(f) purchase securities of any issuer with a record of less than
three years continuous operations, including predecessors,
except U.S. Government securities, and obligations issued or
guaranteed by any foreign government or its agencies or
instrumentalities, if such purchase would cause the
investments of the Fund in all such issuers to exceed 5% of
the total assets of the Fund taken at market value;

(g) buy options on securities or financial instruments, unless the
aggregate premiums paid on all such options held by the Fund
at any time do not exceed 20% of its net assets; or sell put
options on securities if, as a result, the aggregate value of
the obligations underlying such put options would exceed 50%
of the Fund's net assets;

(h) enter into futures contracts or purchase options thereon
unless immediately after the purchase, the value of the
aggregate initial margin with respect to all futures contracts
entered into on behalf of the Fund and the premiums paid for
options on futures contracts does not exceed 5% of the Fund's

15
<PAGE>

total assets, provided that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount
may be excluded in computing the 5% limit;

(i) invest in oil, gas or other mineral leases, or exploration or
development programs (although it may invest in issuers which
own or invest in such interests);

(j) purchase warrants if as a result warrants taken at the lower
of cost or market value would represent more than 5% of the
value of the Fund's total net assets or more than 2% of its
net assets in warrants that are not listed on the New York or
American Stock Exchanges or on an exchange with comparable
listing requirements (for this purpose, warrants attached to
securities will be deemed to have no value);

(k) make securities loans if the value of such securities loaned
exceeds 30% of the value of the Fund's total assets at the
time any loan is made; all loans of portfolio securities will
be fully collateralized and marked to market daily. The Fund
has no current intention of making loans of portfolio
securities that would amount to greater than 5% of the Fund's
total assets; or

(l) purchase or sell real estate limited partnership interests.

In addition, as a matter of nonfundamental policy, Global Fund may not:

(1) borrow money, including reverse repurchase agreements, in
excess of 5% of its total assets (taken at market value)
except for temporary or emergency purposes, or borrow other
than from banks; or

(2) invest more than 5% of its total assets in debt securities
rated Baa or below by Moody's, or BBB or below by S&P or
deemed by the Adviser to be of comparable quality.

Further, as a matter of nonfundamental policy, International Bond Fund may not:

(1) purchase securities which are not bonds denominated in foreign
currency ("international bonds") if, immediately after such
purchase, less than 65% of its total assets would be invested
in international bonds, except that for temporary defensive
purposes the Fund may purchase securities which are not
international bonds without limitation;

(2) borrow money in excess of 5% of its total assets (taken at
market value) except for temporary or emergency purposes or
borrow other than from banks; however, in the case of reverse
repurchase agreements, the Fund may invest in such agreements
with other than banks subject to total asset coverage of 300%
for such agreements and all borrowings; or

(3) invest more than 15% of its total assets in debt securities
rated lower than BBB (commonly referred to as "junk bonds") by
S&P or Baa by Moody's, or deemed by the Adviser to be of
comparable quality, and the Fund may not invest in debt
securities rated below B.

With respect to International Bond Fund, restrictions with respect to
repurchase agreements shall be construed to be for repurchase agreements entered
into for the investment of available cash consistent with the Fund's repurchase
agreement procedures, not repurchase commitments entered into for general
investment purposes.

If a percentage restriction on investment or utilization of assets as
set forth under "Investment Restrictions" and "Other Investment Policies" above
is adhered to at the time an investment is made, a later change in percentage
resulting from changes in the value or the total cost of a Fund's assets will
not be considered a violation of the restriction.

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<PAGE>

PURCHASES

(See "Purchases" and "Transaction information"
in the Funds' prospectuses.)

Additional Information About Opening an Account

With respect to Global Fund, clients having a regular investment
counsel account with the Adviser or its affiliates and members of their
immediate families, officers and employees of the Adviser or of any affiliated
organization and their immediate families, members of the National Association
of Securities Dealers, Inc. ("NASD") and banks may, if they prefer, subscribe
initially for at least $1,000 of Fund shares through Scudder Investor Services,
Inc. (the "Distributor") by letter, telegram, or telephone.

Shareholders of other Scudder funds who have submitted an account
application and have certified a tax identification number, clients having a
regular investment counsel account with the Adviser or its affiliates and
members of their immediate families, officers and employees of the Adviser or of
any affiliated organization and their immediate families, members of the NASD,
and banks may open an account by wire. These investors must call 1-800-225-5163
to get an account number. During the call, the investor will be asked to
indicate the Fund name, amount to be wired ($1,000 minimum), name of bank or
trust company from which the wire will be sent, the exact registration of the
new account, the tax identification or Social Security number, address and
telephone number. The investor must then call the bank to arrange a wire
transfer to The Scudder Funds, State Street Bank and Trust Company, Boston, MA
02110, ABA Number 011000028, DDA Account Number 9903-5552. The investor must
give the Scudder fund name, account name and the new account number. Finally,
the investor must send a completed and signed application form to the Fund
promptly.

The minimum initial purchase amount is less than $1,000 under certain
special plan accounts.

Additional Information About Making Subsequent Investments By Telephone Order

With respect to Global Fund, subsequent purchase orders for $10,000 or
more, and for an amount not greater than four times the value of the
shareholder's account, may be placed by telephone, telegram, etc., by
established shareholders (except by Scudder Individual Retirement Account (IRA),
Scudder Horizon Plan, Scudder Profit Sharing and Money Purchase Pension Plans,
Scudder 401(k) and Scudder 403(b) Plan holders), members of the NASD and banks.
Orders placed in this manner may be directed to any office of the Distributor
listed in the Fund's prospectus. A confirmation of the purchase will be mailed
out promptly following receipt of a request to buy. Federal regulations require
that payment be received within three business days. If payment is not received
within that time, the order is subject to cancellation. In the event of such
cancellation or cancellation at the purchaser's request, the purchaser will be
responsible for any loss incurred by the Fund or the principal underwriter by
reason of such cancellation. If the purchaser is a shareholder, the Corporation
shall have the authority, as agent of the shareholder, to redeem shares in the
account to reimburse the Fund or the principal underwriter for the loss
incurred. Net losses on such transactions which are not recovered from the
purchaser will be absorbed by the principal underwriter. Any net profit on the
liquidation of unpaid shares will accrue to the Fund.

Checks

A certified check is not necessary, but checks are only accepted
subject to collection at full face value in U.S. funds and must be drawn on, or
payable through, a U.S. bank.

If shares are purchased by a check which proves to be uncollectible,
the Corporation reserves the right to cancel the purchase immediately and the
purchaser will be responsible for any loss incurred by a Fund or the principal
underwriter by reason of such cancellation. If the purchaser is a shareholder,
the Corporation shall have the authority, as agent of the shareholder, to redeem
shares in the account to reimburse a Fund or the principal underwriter for the
loss incurred. Investors whose orders have been canceled may be prohibited from
or restricted in placing future orders in any of the Scudder funds.

17
<PAGE>

Wire Transfer of Federal Funds

To obtain the net asset value determined as of the close of regular
trading on the New York Stock Exchange (the "Exchange") (normally 4 p.m. eastern
time) on a selected day, your bank must forward federal funds by wire transfer
and provide the required account information so as to be available to a Fund
prior to 4 p.m.

To purchase shares of International Bond Fund and obtain the same day
dividend you must have your bank forward federal funds by wire transfer and
provide the required account information so as to be available to International
Bond Fund prior to twelve o'clock noon eastern time on that day. If you wish to
make a purchase of $500,000 or more you should notify the Fund's transfer agent,
Scudder Service Corporation (the "Transfer Agent") of such a purchase by calling
1-800-225-5163. If either the federal funds or the account information is
received after twelve o'clock noon eastern time, but both the funds and the
information are made available before the close of regular trading on the
Exchange on any business day, shares will be purchased at net asset value
determined on that day but will not receive the dividend; in such cases,
dividends commence on the next business day.

The bank sending an investor's federal funds by bank wire may charge
for the service. Presently, the Distributor pays a fee for receipt by State
Street Bank and Trust Company of "wired funds," but the right to charge
investors for this service is reserved.

Boston banks are presently closed on certain local holidays although
the Exchange may be open. These holidays are Martin Luther King, Jr. Day (the
3rd Monday in January), Columbus Day (the 2nd Monday in October) and Veterans
Day (November 11). Investors are not able to purchase shares by wiring federal
funds on such holidays because State Street Bank and Trust Company is not open
to receive such federal funds on behalf of a Fund.

Share Price

Purchases will be filled without sales charge at the net asset value
next computed after receipt of the application in good order. Net asset value
normally will be computed as of the close of regular trading on the Exchange on
each day during which the Exchange is open for trading. Orders received after
the close of regular trading on the Exchange will receive the next day's net
asset value. If the order has been placed by a member of the NASD, other than
the Distributor, it is the responsibility of that member broker, rather than the
Funds, to forward the purchase order to the Transfer Agent in Boston by the
close of regular trading on the Exchange.

Share Certificates

Due to the desire of the Corporation's management to afford ease of
redemption, certificates will not be issued to indicate ownership in the Funds.
Share certificates now in a shareholder's possession may be sent to the Funds'
Transfer Agent for cancellation and credit to such shareholder's account.
Shareholders who prefer may hold the certificates in their possession until they
wish to exchange or redeem such shares.

Other Information

If purchases or redemptions of the Funds' shares are arranged and
settlement is made, at an investor's election, through a member of the NASD,
other than the Distributor, that member may, at its discretion, charge a fee for
that service. The Board of Directors and the Distributor, also the Funds'
principal underwriter, each has the right to limit the amount of purchases by,
and to refuse to sell to, any person. The Directors and the Distributor may
suspend or terminate the offering of shares of either Fund at any time.

The "Tax Identification Number" section of the application must be
completed when opening an account. Applications and purchase orders without a
certified tax identification number and certain other certified information
(e.g., certification of exempt status from exempt organizations) will be
returned to the investor.

The Corporation may issue shares of either Fund at net asset value in
connection with any merger or consolidation with, or acquisition of the assets
of, any investment company or personal holding company, subject to the
requirements of the 1940 Act.

18
<PAGE>

EXCHANGES AND REDEMPTIONS

(See "Exchanges and redemptions" and "Transaction
information" in the Funds' prospectuses.)

Exchanges

Exchanges are comprised of a redemption from one Scudder fund and a
purchase of another Scudder fund. The purchase side of the exchange either may
be an additional investment into an existing account or may involve opening a
new account in the other fund. When an exchange involves a new account, the new
account will be established with the same registration, tax identification
number, address, telephone redemption option, "Scudder Automated Information
Line" (SAIL) transaction authorization and dividend option as the existing
account. Other features will not carry over automatically to the new account.
Exchanges to a new fund account must be for a minimum of $1,000. When an
exchange represents an additional investment into an existing account, the
account receiving the exchange proceeds must have identical registration, tax
identification number, address, and account options/features as the account of
origin. Exchanges into an existing account must be for $100 or more.

If the account receiving the exchange proceeds is to be different in any
respect, the exchange request must be in writing and must contain an original
signature guarantee as described under "Transaction information--Signature
guarantees" in the Funds' prospectuses.

Exchange orders received before the close of regular trading on the
Exchange on any business day will ordinarily be executed at respective net asset
values determined on that day. Exchange orders received after the close of
trading will be executed on the following business day.

Investors may also request, at no extra charge, to have exchanges
automatically executed on a predetermined schedule from one Scudder fund to an
existing account in another Scudder fund, at current net asset value, through
Scudder's Automatic Exchange Program. Exchanges must be for a minimum of $50.
Shareholders may add this free feature over the telephone or in writing.
Automatic Exchanges will continue until the shareholder requests by telephone or
in writing to have the feature removed, or until the originating account is
depleted. The Corporation and the Transfer Agent each reserves the right to
suspend or terminate the privilege of the Automatic Exchange Program at any
time.

There is no charge to the shareholder for any exchange described above.
An exchange into another Scudder fund is a redemption of shares, and therefore
may result in tax consequences (gain or loss) to the shareholder, and the
proceeds of such an exchange may be subject to backup withholding (see "TAXES").

Investors currently receive the exchange privilege, including exchange
by telephone, automatically without having to elect it. The Funds employ
procedures, including recording telephone calls, testing a caller's identity,
and sending written confirmation of telephone transactions, designed to give
reasonable assurance that instructions communicated by telephone are genuine,
and to discourage fraud. To the extent that each Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Funds will not be liable for acting upon
instructions communicated by telephone that they reasonably believe to be
genuine. The Funds and the Transfer Agent each reserves the right to suspend or
terminate the privilege of exchanging by telephone or fax at any time.

The Scudder funds into which investors may make an exchange are listed
under "THE SCUDDER FAMILY OF FUNDS" herein. Before making an exchange,
shareholders should obtain from the Distributor a prospectus of the Scudder fund
into which the exchange is being contemplated.

Scudder retirement plans may have different exchange requirements.
Please refer to appropriate plan literature.

19
<PAGE>

Redemption by Telephone

Shareholders currently receive the right, automatically without having
to elect it, to redeem by telephone up to $50,000 and have the proceeds mailed
to their address of record. Shareholders may request to have the proceeds mailed
or wired to their predesignated bank account. In order to request redemptions by
telephone, shareholders must have completed and returned to the Transfer Agent
an application, including the designation of a bank account to which the
redemption proceeds are to be sent.

(a) NEW INVESTORS wishing to establish the telephone redemption
privilege must complete the appropriate section on the
application.

(b) EXISTING SHAREHOLDERS (except those who are Scudder IRA,
Scudder pension and profit-sharing, Scudder 401(k) and Scudder
403(b) Planholders) who wish to establish telephone redemption
to a predesignated bank account or who want to change the bank
account previously designated to receive redemption proceeds
should either return a Telephone Redemption Option Form
(available upon request), or send a letter identifying the
account and specifying the exact information to be changed.
The letter must be signed exactly as the shareholder's name(s)
appears on the account. An original signature and an original
signature guarantee are required for each person in whose name
the account is registered.

If a request for a redemption to a shareholder's bank account is made
by telephone or fax, payment will be made by Federal Reserve bank wire to the
bank account designated on the application, unless a request is made that the
redemption be mailed to the designated bank account. There will be a $5 charge
for all wire redemptions.

Note: Investors designating a savings bank to receive their
telephone redemption proceeds are advised that if the savings
bank is not a participant in the Federal Reserve System,
redemption proceeds must be wired through a commercial bank
which is a correspondent of the savings bank. As this may
delay receipt by the shareholder's account, it is suggested
that investors wishing to use a savings bank discuss wire
procedures with their bank and submit any special wire
transfer information with the telephone redemption
authorization. If appropriate wire information is not
supplied, redemption proceeds will be mailed to the designated
bank.

The Funds employ procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that each Fund does not follow such procedures, it may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Funds will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.

Redemption by Mail or Fax

Any existing share certificates representing shares being redeemed must
accompany a request for redemption and be duly endorsed or accompanied by a
proper stock assignment form with a signature guarantee as explained in the
Funds' prospectuses.

In order to ensure proper authorization before redeeming shares, the
Transfer Agent may request additional documents such as, but not restricted to,
stock powers, trust instruments, certificates of death, appointments as
executor, certificates of corporate authority and waivers of tax required in
some states when settling estates.

It is suggested that shareholders holding share certificates or shares
registered in other than individual names contact the Transfer Agent prior to
redemptions to ensure that all necessary documents accompany the request. When
shares are held in the name of a corporation, trust, fiduciary agent, attorney
or partnership, the Transfer Agent requires, in addition to the stock power,
certified evidence of authority to sign. These procedures are for the protection
of shareholders and should be followed to ensure prompt payment. Redemption
requests must not be conditional as to date or price of the redemption. Proceeds
of a redemption will be sent within seven business days after receipt by the
Transfer Agent of a request for redemption that complies with the above
requirements. Delays of more than seven days of payment for shares tendered for
redemption may result but only until the purchase check has cleared.

20
<PAGE>

The requirements for IRA redemptions are different from those for
regular accounts. For more information please call 1-800-225-5163.

Redemption-in-Kind

The Corporation reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase order by
making payment in whole or in part in readily marketable securities chosen by
the Corporation and valued as they are for purposes of computing a Fund's net
asset value (a redemption-in-kind). If payment is made in securities, a
shareholder may incur transaction expenses in converting these securities into
cash. The Corporation has elected, however, to be governed by Rule 18f-1 under
the 1940 Act as a result of which the Corporation is obligated to redeem shares,
with respect to any one shareholder during any 90-day period, solely in cash up
to the lesser of $250,000 or 1% of the net asset value of the relevant Fund at
the beginning of the period.

Other Information

If a shareholder redeems all shares in the account after the record
date of a dividend, the shareholder will receive in addition to the net asset
value thereof, all declared but unpaid dividends thereon. The value of shares
redeemed or repurchased may be more or less than the shareholder's cost
depending on the net asset value at the time of redemption or repurchase. The
Corporation does not impose a redemption or repurchase charge. Redemption of
shares, including an exchange into another Scudder fund, may result in tax
consequences (gain or loss) to the shareholder and the proceeds of such
redemptions may be subject to backup withholding. (See "TAXES.")

Shareholders who wish to redeem shares from Special Plan Accounts
should contact the employer, trustee or custodian of the Plan for the
requirements.

The determination of net asset value may be suspended at times and a
shareholder's right to redeem shares and to receive payment may be suspended at
times during which (a) the Exchange is closed, other than customary weekend and
holiday closings, (b) trading on the Exchange is restricted for any reason, (c)
an emergency exists as a result of which disposal by a Fund of securities owned
by it is not reasonably practicable or it is not reasonably practicable for a
Fund fairly to determine the value of its net assets, or (d) the SEC may by
order permit such a suspension for the protection of the Corporation's
shareholders; provided that applicable rules and regulations of the SEC (or any
succeeding governmental authority) shall govern as to whether the conditions
prescribed in (b) or (c) exist.

If transactions at any time reduce a shareholder's account balance in a
Fund to below $1,000 in value, the Corporation may notify the shareholder that,
unless the account balance is brought up to at least $1,000, the Corporation
will redeem all shares, close the account and send the redemption proceeds to
the shareholder. The shareholder has sixty days to bring the account balance up
to $1,000 before any action will be taken by the Corporation. (This policy
applies to accounts of new shareholders, but does not apply to certain Special
Plan Accounts.) The Directors have the authority to change the minimum account
size.

FEATURES AND SERVICES OFFERED BY THE FUNDS

(See "Shareholder benefits" in the Funds' prospectuses.)

The Pure No-Load(TM) Concept

Investors are encouraged to be aware of the full ramifications of
mutual fund fee structures, and of how Scudder distinguishes its funds from the
vast majority of mutual funds available today. The primary distinction is
between load and no-load funds.

Load funds generally are defined as mutual funds that charge a fee for
the sale and distribution of fund shares. There are three types of loads:
front-end loads, back-end loads, and asset-based 12b-1 fees. 12b-1 fees are
distribution-related fees charged against fund assets and are distinct from
service fees, which are charged for personal services and/or maintenance of
shareholder accounts. Asset-based sales charges and service fees are typically
paid pursuant to distribution plans adopted under Rule 12b-1 under the 1940 Act.

21
<PAGE>

A front-end load is a sales charge, which can be as high as 8.50% of
the amount invested. A back-end load is a contingent deferred sales charge,
which can be as high as 8.50% of either the amount invested or redeemed. The
maximum front-end or back-end load varies, and depends upon whether or not a
fund also charges a 12b-1 fee and/or a service fee or offers investors various
sales-related services such as dividend reinvestment. The maximum charge for a
12b-1 fee is 0.75% of a fund's average annual net assets, and the maximum charge
for a service fee is 0.25% of a fund's average annual net assets.

A no-load fund does not charge a front-end or back-end load, but can
charge a small 12b-1 fee and/or service fee against fund assets. Under the NASD
Rules of Fair Practice, a mutual fund can call itself a "no-load" fund only if
the 12b-1 fee and/or service fee does not exceed 0.25% of a fund's average
annual net assets.

Because Scudder funds do not pay any asset-based sales charges or
service fees, Scudder developed and trademarked the phrase pure no-load(TM) to
distinguish Scudder funds from other no-load mutual funds. Scudder pioneered the
no-load concept when it created the nation's first no-load fund in 1928, and
later developed the nation's first family of no-load mutual funds.

The following chart shows the potential long-term advantage of
investing $10,000 in a Scudder pure no-load fund over investing the same amount
in a load fund that collects an 8.50% front-end load, a load fund that collects
only a 0.75% 12b-1 and/or service fee, and a no-load fund charging only a 0.25%
12b-1 and/or service fee. The hypothetical figures in the chart show the value
of an account assuming a constant 10% rate of return over the time periods
indicated and reinvestment of dividends and distributions.

<TABLE>
<CAPTION>
Scudder Load Fund with 0.75% No-Load Fund with
YEARS Pure No-Load(TM)Fund 8.50% Load Fund 12b-1 Fee 0.25% 12b-1 Fee
----- -------------------- --------------- --------- ---------------
<S> <C> <C> <C> <C>
10 $ 25,937 $ 23,733 $24,222 $25,354

15 41,772 38,222 37,698 40,371

20 67,275 61,557 58,672 64,282
</TABLE>

Investors are encouraged to review the fee tables on page 2 of the
Funds' prospectuses for more specific information about the rates at which
management fees and other expenses are assessed.

Dividend and Capital Gain Distribution Options

Investors have freedom to choose whether to receive cash or to reinvest
any dividends from net investment income or distributions from realized capital
gains in additional shares of a Fund. A change of instructions for the method of
payment must be received by the Transfer Agent at least five days prior to a
dividend record date. Shareholders also may change their dividend option either
by calling 1-800-225-5163 or by sending written instructions to the Transfer
Agent. See "How to contact Scudder" in the prospectuses for the address. Please
include your account number with your written request.

Reinvestment is usually made at the closing net asset value determined
on the business day following the record date. Investors may leave standing
instructions with the Transfer Agent designating their option for either
reinvestment or cash distribution of any income dividends or capital gains
distributions. If no election is made, dividends and distributions will be
invested in additional shares of a Fund.

Investors may also have dividends and distributions automatically
deposited to their predesignated bank account through Scudder's
DistributionsDirect Program. Shareholders who elect to participate in the

22
<PAGE>

DistributionsDirect Program, and whose predesignated checking account of record
is with a member bank of the Automated Clearing House Network (ACH) can have
income and capital gain distributions automatically deposited to their personal
bank account usually within three business days after the Fund pays its
distribution. A DistributionsDirect request form can be obtained by calling
1-800-225-5163. Confirmation statements will be mailed to shareholders as
notification that distributions have been deposited.

Investors choosing to participate in Scudder's Automatic Withdrawal
Plan must reinvest any dividends or capital gains. For most retirement plan
accounts, the reinvestment of dividends and capital gains is also required.

Diversification

An investment in Global Fund represents an interest in a large,
diversified portfolio of carefully selected securities. Diversification helps
protect you against the possible risks of concentrating in fewer securities.

Scudder Funds Centers

Investors may visit any of the Centers maintained by the Distributor
listed in the Funds' prospectuses. The Centers are designed to provide
individuals with services during any business day. Investors may pick up
literature or find assistance with opening an account, adding monies or special
options to existing accounts, making exchanges within the Scudder Family of
Funds, redeeming shares or opening retirement plans. Checks should not be mailed
to the Centers but should be mailed to "The Scudder Funds" at the address listed
under "How to contact Scudder" in the prospectuses.

Reports to Shareholders

The Corporation issues to each Fund's shareholders audited semiannual
financial statements, including a list of investments held and statements of
assets and liabilities, operations, changes in net assets and financial
highlights. The Corporation presently intends to distribute to each Fund's
shareholders informal quarterly reports during the intervening quarters,
containing certain performance and investment highlights for each Fund.

Transaction Summaries

Annual summaries of all transactions in each Fund account are available
to shareholders. The summaries may be obtained by calling 1-800-225-5163.

SCUDDER FAMILY OF FUNDSUNDS

(See "Investment products and services" in the Fund's prospectus.)

The Scudder Family of Funds is America's first family of mutual funds
and the nation's oldest family of no-load mutual funds. To assist investors in
choosing a Scudder fund, descriptions of the Scudder funds' objectives follow.
Initial purchases in each Scudder fund must be at least $1,000 or $500 in the
case of IRAs. Subsequent purchases must be for $100 or more. Minimum investments
for special plan accounts may be lower.

MONEY MARKET

Scudder Cash Investment Trust ("SCIT") seeks to maintain the stability
of capital, and consistent therewith, to maintain the liquidity of
capital and to provide current income through investment in a
supervised portfolio of short-term debt securities. SCIT intends to
seek to maintain a constant net asset value of $1.00 per share,
although in certain circumstances this may not be possible.

Scudder U.S. Treasury Money Fund seeks to provide safety, liquidity and
stability of capital and consistent therewith to provide current income
through investment in a supervised portfolio of U.S. Government and
U.S. Government guaranteed obligations with maturities of not more than
762 calendar days. The Fund intends to seek to maintain a constant net
asset value of $1.00 per share, although in certain circumstances this
may not be possible.

23
<PAGE>

INCOME

Scudder Emerging Markets Income Fund seeks to provide high current
income and, secondarily, long-term capital appreciation through
investments primarily in high-yielding debt securities issued in
emerging markets.

Scudder GNMA Fund seeks to provide investors with high current income
from a portfolio of high-quality GNMA securities.

Scudder Income Fund seeks to earn a high level of income consistent
with the prudent investment of capital through a flexible investment
program emphasizing high-grade bonds.

Scudder International Bond Fund seeks to provide income from a
portfolio of high-grade bonds denominated in foreign currencies. As a
secondary objective, the Fund seeks protection and possible enhancement
of principal value by actively managing currency, bond market and
maturity exposure and by security selection.

Scudder Short Term Bond Fund seeks to provide a higher and more stable
level of income than is normally provided by money market investments,
and more price stability than investments in intermediate-and long-term
bonds.

Scudder Short Term Global Income Fund seeks to provide high current
income from a portfolio of high-grade money market instruments and
short-term bonds denominated in foreign currencies and the U.S. dollar.

Scudder Zero Coupon 2000 Fund seeks to provide as high an investment
return over a selected period as is consistent with the minimization of
reinvestment risks through investments primarily in zero coupon
securities.

TAX FREE MONEY MARKET

Scudder Tax Free Money Fund ("STFMF") is designed to provide investors
with income exempt from regular federal income tax while seeking
stability of principal. STFMF seeks to maintain a constant net asset
value of $1.00 per share, although in certain circumstances this may
not be possible.

Scudder California Tax Free Money Fund* is designed to provide
California taxpayers income exempt from California state and regular
federal income taxes, and seeks stability of capital and the
maintenance of a constant net asset value of $1.00 per share, although
in certain circumstances this may not be possible.

Scudder New York Tax Free Money Fund* is designed to provide New York
taxpayers income exempt from New York state, New York City and regular
federal income taxes, and seeks stability of capital and the
maintenance of a constant net asset value of $1.00 per share, although
in certain circumstances this may not be possible.

TAX FREE

Scudder High Yield Tax Free Fund seeks to provide high income which is
exempt from regular federal income tax by investing in investment-grade
municipal securities.

Scudder Limited Term Tax Free Fund seeks to provide as high a level of
income exempt from regular federal income tax as is consistent with a
high degree of principal stability.

- --------------------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.

24
<PAGE>

Scudder Managed Municipal Bonds seeks to provide income which is exempt
from regular federal income tax primarily through investments in
long-term municipal securities with an emphasis on high quality.

Scudder Medium Term Tax Free Fund seeks to provide a high level of
income free from regular federal income taxes and to limit principal
fluctuation by investing in high-grade municipal securities of
intermediate maturities.

Scudder California Tax Free Fund* seeks to provide income exempt from
both California and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
California state, municipal and local government obligations.

Scudder Massachusetts Limited Term Tax Free Fund* seeks to provide as
high a level of income exempt from Massachusetts personal and regular
federal income tax as is consistent with a high degree of principal
stability.

Scudder Massachusetts Tax Free Fund* seeks to provide income exempt
from both Massachusetts and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
Massachusetts state, municipal and local government obligations.

Scudder New York Tax Free Fund* seeks to provide income exempt from New
York state, New York City and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
investments in New York state, municipal and local government
obligations.

Scudder Ohio Tax Free Fund* seeks to provide income exempt from both
Ohio and regular federal income taxes through the professional and
efficient management of a portfolio consisting of Ohio state, municipal
and local government obligations.

Scudder Pennsylvania Tax Free Fund* seeks to provide income exempt from
both Pennsylvania and regular federal income taxes through a portfolio
consisting of Pennsylvania state, municipal and local government
obligations.

GROWTH AND INCOME

Scudder Balanced Fund seeks to provide a balance of growth and income,
as well as long-term preservation of capital, from a diversified
portfolio of equity and fixed income securities.

Scudder Growth and Income Fund seeks to provide long-term growth of
capital, current income, and growth of income through a portfolio
invested primarily in common stocks and convertible securities by
companies which offer the prospect of growth of earnings while paying
current dividends.

GROWTH

Scudder Capital Growth Fund seeks to maximize long-term growth of
capital through a broad and flexible investment program emphasizing
common stocks.

Scudder Development Fund seeks to achieve long-term growth of capital
primarily through investments in marketable securities, principally
common stocks, of relatively small or little-known companies which in
the opinion of management have promise of expanding their size and
profitability or of gaining increased market recognition for their
securities, or both.

Scudder Global Fund seeks long-term growth of capital primarily through
a diversified portfolio of marketable equity securities selected on a
worldwide basis. It may also invest in debt securities of U.S.
and foreign issuers. Income is an incidental consideration.

- --------------------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.

25
<PAGE>

Scudder Global Small Company Fund seeks above-average capital
appreciation over the long term by investing primarily in the equity
securities of small companies located throughout the world.

Scudder Gold Fund seeks maximum return (principal change and income)
consistent with investing in a portfolio of gold-related equity
securities and gold.

Scudder Greater Europe Growth Fund seeks long-term growth of capital
through investments primarily in the equity securities of European
companies.

Scudder International Fund seeks long-term growth of capital through
investment principally in a diversified portfolio of marketable equity
securities selected primarily to permit participation in non-U.S.
companies and economies with prospects for growth. It also invests in
fixed-income securities of foreign governments and companies, with a
view toward total investment return.

Scudder Latin America Fund seeks to provide long-term capital
appreciation through investment primarily in the securities of Latin
American issuers.

Scudder Pacific Opportunities Fund seeks long-term growth of capital
through investment primarily in the equity securities of Pacific Basin
companies, excluding Japan.

Scudder Quality Growth Fund seeks to provide long-term growth of
capital through investment primarily in the equity securities of
seasoned, financially strong U.S. growth companies.

Scudder Small Company Value Fund invests for long-term growth of
capital by seeking out undervalued stocks of small U.S. companies.

Scudder Value Fund seeks long-term growth of capital through investment
in undervalued equity securities.

The Japan Fund, Inc. seeks capital appreciation through investment in
Japanese securities, primarily in common stocks of Japanese companies.

The net asset values of most Scudder Funds can be found daily in the
"Mutual Funds" section of The Wall Street Journal under "Scudder Funds," and in
other leading newspapers throughout the country. Investors will notice the net
asset value and offering price are the same, reflecting the fact that no sales
commission or "load" is charged on the sale of shares of the Scudder Funds. The
latest seven-day yields for the money-market funds can be found every Monday and
Thursday in the "Money-Market Funds" section of The Wall Street Journal. This
information also may be obtained by calling the Scudder Automated Information
Line (SAIL) at 1-800-343-2890.

The Scudder Family of Funds offers many conveniences and services,
including: active professional investment management; broad and diversified
investment portfolios; pure no-load funds with no commissions to purchase or
redeem shares or Rule 12b-1 distribution fees; individual attention from a
service representative of Scudder Investor Relations; easy telephone exchanges
into other Scudder funds; shares redeemable at net asset value at any time.

SPECIAL PLAN ACCOUNTS

(See "Scudder tax-advantaged retirement plans," "Purchases--By
Automatic Investment Plan" and "Exchanges and redemptions--By
Automatic Withdrawal Plan" in the Funds' prospectuses.)

Detailed information on any Scudder investment plan, including the
applicable charges, minimum investment requirements and disclosures made
pursuant to Internal Revenue Service (the "IRS") requirements, may be obtained
by contacting Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103 or by calling toll free, 1-800-225-2470. It is
advisable for an investor considering the funding of the investment plans

26
<PAGE>

described below to consult with an attorney or other investment or tax adviser
with respect to the suitability requirements and tax aspects thereof.

Shares of the Fund may also be a permitted investment under profit
sharing and pension plans and IRA's other than those offered by the Fund's
distributor depending on the provisions of the relevant plan or IRA.

None of the plans assures a profit or guarantees protection against
depreciation, especially in declining markets.

Scudder Retirement Plans: Profit-Sharing and Money Purchase
Pension Plans for Corporations and Self-Employed Individuals

Shares of the Fund may be purchased as the investment medium under a
plan in the form of a Scudder Profit-Sharing Plan (including a version of the
Plan which includes a cash-or-deferred feature) or a Scudder Money Purchase
Pension Plan (jointly referred to as the Scudder Retirement Plans) adopted by a
corporation, a self-employed individual or a group of self-employed individuals
(including sole proprietorships and partnerships), or other qualifying
organization. Each of these forms was approved by the IRS as a prototype. The
IRS's approval of an employer's plan under Section 401(a) of the Code will be
greatly facilitated if it is in such approved form. Under certain circumstances,
the IRS will assume that a plan, adopted in this form, after special notice to
any employees, meets the requirements of Section 401(a) of the Code.

Scudder 401(k): Cash or Deferred Profit-Sharing Plan
for Corporations and Self-Employed Individuals

Shares of the Fund may be purchased as the investment medium under a
plan in the form of a Scudder 401(k) Plan adopted by a corporation, a
self-employed individual or a group of self-employed individuals (including sole
proprietors and partnerships), or other qualifying organization. This plan has
been approved as a prototype by the IRS.

Scudder IRA: Individual Retirement Account

Shares of the Fund may be purchased as the underlying investment for an
Individual Retirement Account which meets the requirements of Section 408(a) of
the Code.

A single individual who is not an active participant in an
employer-maintained retirement plan, a simplified employee pension plan, or a
tax-deferred annuity program (a "qualified plan"), and a married individual who
is not an active participant in a qualified plan and whose spouse is also not an
active participant in a qualified plan, are eligible to make tax deductible
contributions of up to $2,000 to an IRA prior to the year such individual
attains age 70 1/2. In addition, certain individuals who are active participants
in qualified plans (or who have spouses who are active participants) are also
eligible to make tax-deductible contributions to an IRA; the annual amount, if
any, of the contribution which such an individual will be eligible to deduct
will be determined by the amount of his, her, or their adjusted gross income for
the year. Whenever the adjusted gross income limitation prohibits an individual
from contributing what would otherwise be the maximum tax-deductible
contribution he or she could make, the individual will be eligible to contribute
the difference to an IRA in the form of nondeductible contributions.

An eligible individual may contribute as much as $2,000 of qualified
income (earned income or, under certain circumstances, alimony) to an IRA each
year (up to $2,250 for married couples if one spouse has earned income of no
more than $250). All income and capital gains derived from IRA investments are
reinvested and compound tax-deferred until distributed. Such tax-deferred
compounding can lead to substantial retirement savings.

The table below shows how much individuals would accumulate in a fully
tax-deductible IRA by age 65 (before any distributions) if they contribute
$2,000 at the beginning of each year, assuming average annual returns of 5, 10,
and 15%. (At withdrawal, accumulations in this table will be taxable.)

27
<PAGE>

<TABLE>
<CAPTION>
Value of IRA at Age 65
Assuming $2,000 Deductible Annual Contribution

- ---------------------------- ------------------------- -------------------------- -------------------------
Starting Annual Rate of Return
Age of ------------------------------------------------------------------------------
Contributions 5% 10% 15%
- ---------------------------- ------------------------- -------------------------- -------------------------
<S> <C> <C> <C>
25 $253,680 $973,704 $4,091,908
35 139,522 361,887 999,914
45 69,439 126,005 235,620
55 26,414 35,062 46,699
</TABLE>

This next table shows how much individuals would accumulate in non-IRA
accounts by age 65 if they start with $2,000 in pretax earned income at the
beginning of each year (which is $1,380 after taxes are paid), assuming average
annual returns of 5, 10 and 15%. (At withdrawal, a portion of the accumulation
in this table will be taxable.)

<TABLE>
<CAPTION>
Value of a Non-IRA Account at
Age 65 Assuming $1,380 Annual Contributions
(post tax, $2,000 pretax) and a 31% Tax Bracket

- ---------------------------- ------------------------- -------------------------- -------------------------
Starting Annual Rate of Return
Age of ------------------------------------------------------------------------------
Contributions 5% 10% 15%
- ---------------------------- ------------------------- -------------------------- -------------------------
<S> <C> <C> <C>
25 $119,318 $287,021 $741,431
35 73,094 136,868 267,697
45 40,166 59,821 90,764
55 16,709 20,286 24,681
</TABLE>

Scudder 403(b) Plan

Shares of the Fund may also be purchased as the underlying investment
for tax sheltered annuity plans under the provisions of Section 403(b)(7) of the
Code. In general, employees of tax-exempt organizations described in Section
501(c)(3) of the Code (such as hospitals, churches, religious, scientific, or
literary organizations and educational institutions) or a public school system
are eligible to participate in a 403(b) plan.

Automatic Withdrawal Plan

Non-retirement plan shareholders who currently own shares of the Fund
may establish an Automatic Withdrawal Plan. The investor can then receive
monthly, quarterly or periodic redemptions from his or her account for any
designated amount of $50 or more. Payments are mailed at the end of each month.
The check amounts may be based on the redemption of a fixed dollar amount, fixed
share amount, percent of account value or declining balance. The Plan provides
for income dividends and capital gains distributions, if any, to be reinvested
in additional shares. Shares are then liquidated as necessary to provide for
withdrawal payments. Since the withdrawals are in amounts selected by the
investor and have no relationship to yield or income, payments received cannot
be considered as yield or income on the investment and the resulting
liquidations may deplete or possibly extinguish the initial investment. Requests
for increases in withdrawal amounts or to change payee must be submitted in
writing, signed exactly as the account is registered and contain signature
guarantee(s) as described under "Transaction information--Redeeming
shares--Signature guarantees" in the Funds' prospectuses. Any such requests must
be received by the Fund's transfer agent by the 15th of the month in which such
change is to take effect. An Automatic Withdrawal Plan may be terminated at any
time by the shareholder, the Corporation or its agent on written notice, and
will be terminated when all shares of the Fund under the Plan have been
liquidated or upon receipt by the Corporation of notice of death of the
shareholder.

An Automatic Withdrawal Plan request form can be obtained by calling
1-800-225-5163.

28
<PAGE>

Group or Salary Deduction Plan

An investor may join a Group or Salary Deduction Plan where
satisfactory arrangements have been made with the Distributor for forwarding
regular investments through a single source. The minimum annual investment is
$240 per investor which may be made in monthly, quarterly, semiannual or annual
payments. The minimum monthly deposit per investor is $20. Except for trustees
or custodian fees for certain retirement plans, at present there is no separate
charge for maintaining group or salary deduction plans; however, the Corporation
and its agents reserve the right to establish a maintenance charge in the future
depending on the services required by the investor.

The Corporation reserves the right, after notice has been given to the
shareholder, to redeem and close a shareholder's account in the event that the
shareholder ceases participating in the group plan prior to investment of $1,000
per individual or in the event of a redemption which occurs prior to the
accumulation of that amount or which reduces the account value to less than
$1,000 and the account value is not increased to $1,000 within a reasonable time
after notification. An investor in a plan who has not purchased shares for six
months shall be presumed to have stopped making payments under the plan.

Automatic Investment Plan

Shareholders may arrange to make periodic investments through automatic
deductions from checking accounts by completing the appropriate form and
providing the necessary documentation to establish this service. The minimum
investment is $50.

The Automatic Investment Plan involves an investment strategy called
dollar cost averaging. Dollar cost averaging is a method of investing whereby a
specific dollar amount is invested at regular intervals. By investing the same
dollar amount each period, when shares are priced low the investor will purchase
more shares than when the share price is higher. Over a period of time this
investment approach may allow the investor to reduce the average price of the
shares purchased. However, this investment approach does not assure a profit or
protect against loss. This type of regular investment program may be suitable
for various investment goals such as, but not limited to, college planning or
saving for a home.

Uniform Transfers/Gifts to Minors Act

Grandparents, parents or other donors may set up custodian accounts for
minors. The minimum initial investment is $1,000 unless the donor agrees to
continue to make regular share purchases for the account through Scudder's
Automatic Investment Plan. In this case, the minimum initial investment is $500.

The Corporation reserves the right, after notice has been given to the
shareholder and custodian, to redeem and close a shareholder's account in the
event that regular investments to the account cease before the $1,000 minimum is
reached.

Scudder Trust Company

Annual service fees are paid by the Fund to Scudder Trust Company, an
affiliate of the Adviser, for certain retirement plan accounts and are included
in the fees paid to the Transfer Agent.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

(See "Distribution and performance information--Dividends
and capital gains distributions" in the Funds' prospectuses.)

Each Fund intends to follow the practice of distributing substantially
all and in no event less than 90% of its investment company taxable income
including any excess of net realized short-term capital gains over net realized
long-term capital losses. A Fund may follow the practice of distributing the
entire excess of net realized long-term capital gains over net realized
short-term capital losses. However, a Fund may retain all or part of such gain
for reinvestment, after paying the related federal income taxes for which the
shareholders may then claim a credit against their federal income tax liability.

29
<PAGE>

If a Fund does not distribute an amount of capital gains and/or ordinary income
required to be distributed by an excise tax provision of the Code, it may be
subject to such tax. In certain circumstances, a Fund may determine that it is
in the interest of shareholders to distribute less than such an amount. (See
"TAXES.")

International Bond Fund intends to declare daily and distribute monthly
substantially all of its investment company taxable income resulting from Fund
investment activity. Distributions, if any, of net realized capital gains
normally will be distributed in November or December and, if necessary, within
three months after the Fund's fiscal year end on June 30. Distributions of
certain realized gains or losses on the sale or retirement of securities
denominated in foreign currencies held by the Fund, to the extent attributable
to fluctuations in currency exchange rates, as well as certain other gains or
losses attributable to exchange rate fluctuations, are treated as ordinary
income or loss and also normally will be made in December and, if necessary,
within three months after the Fund's fiscal year end on June 30.

Global Fund intends to distribute in September as well as in December
substantially all of its investment company taxable income and any net realized
capital gains resulting from Fund investment activity.

All distributions will be made in shares of a Fund and confirmations
will be mailed to each shareholder unless a shareholder has elected to receive
cash, in which case a check will be sent. Distributions are taxable, whether
made in shares or cash. (See "TAXES.")

PERFORMANCE INFORMATION

(See "Distribution and performance information--Performance
information" in the Funds' prospectuses.)

From time to time, quotations of the Funds' performance may be included
in advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures are calculated in the following manner:

Average Annual Total Return

Average annual total return is the average annual compound rate of
return for the periods of one year, five years and the life of a Fund, each
ended on the last day of a recent calendar quarter. Average annual total return
quotations reflect changes in the price of the Funds' shares and assume that all
dividends and capital gains distributions during the respective periods were
reinvested in Fund shares. Average annual total return is calculated by
computing the average annual compound rates of return of a hypothetical
investment over such periods, according to the following formula (average annual
total return is then expressed as a percentage):

T = (ERV/P)1/n - 1
Where:
P = a hypothetical initial investment of $1,000
T = Average Annual Total Return
n = number of years
ERV = ending redeemable value: ERV is
the value, at the end of the
applicable period, of a
hypothetical $1,000 investment made
at the beginning of the applicable
period.

Average Annual Total Return for periods ended June 30, 1995

One Year Five Year Life of the Fund
-------- --------- ----------------
Global Fund 9.11% 8.63% 12.04%(1)
International Bond Fund 3.92% 10.80% 10.48%(2)

(1) For the period beginning July 23, 1986.
(2) For the period beginning July 6, 1988.

30
<PAGE>

With respect to International Bond Fund, if the investment management
fee had been imposed and the expenses had not been reduced, the average annual
total return for the one year period and five year period ended June 30, 1995
and life of the Fund would have been lower.

Cumulative Total Return

Cumulative total return is the cumulative rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of the Funds' shares and
assume that all dividends and capital gains distributions during the period were
reinvested in Fund shares. Cumulative total return is calculated by computing
the cumulative rates of return of a hypothetical investment over such periods,
according to the following formula (cumulative total return is then expressed as
a percentage):

C = (ERV/P) -1
Where:
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is
the value, at the end of the
applicable period, of a
hypothetical $1,000 investment made
at the beginning of the applicable
period.

Cumulative Total Return for periods ended June 30, 1995

One Year Five Year Life of the Fund
-------- --------- ----------------
Global Fund 9.11% 51.29% 176.38%(1)
International Bond Fund 3.92% 67.00% 100.61%(2)

(1) For the period beginning July 23, 1986.
(2) For the period beginning July 6, 1988.

With respect to International Bond Fund, if the investment management
fee had been imposed and the expenses had not been reduced, the cumulative total
return for the one year period and five year period ended June 30, 1995 and life
of the Fund would have been lower.

Total Return

Total return is the rate of return on an investment for a specified
period of time calculated in the same manner as cumulative total return.

Capital Change

Capital change measures the return from invested capital including
reinvested capital gains distributions. Capital change does not include the
reinvestment of income dividends.

Yield of International Bond Fund

Yield of International Bond Fund is the net annualized SEC yield of the
Fund based on a specified 30-day (or one month) period assuming semiannual
compounding of income. Yield is calculated by dividing the net investment income
per share earned during the period by the maximum offering price per share on
the last day of the period, according to the following formula:

31
<PAGE>

YIELD = 2[(a-b/cd + 1)6-1]
Where:

a = dividends and interest earned during the period,
including amortization of market premium or
accretion of market discount
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

The yield of International Bond Fund for the 30-day period ended June
30, 1995 was 6.39%.

Calculation of the Fund's yield does not take into account "Section 988
Transactions." (See "TAXES.")

From time to time International Bond Fund may advertise potential
advantages of investing in foreign markets and may use these figures in an
updated form. Past market results are no guarantee of future performance. Data
are based on bonds with maturities of at least one year. Source: Salomon
Brothers World Government Bond Index.

Quotations of each Fund's performance are historical, show the
performance of a hypothetical investment, and are not intended to indicate
future performance. An investor's shares when redeemed may be worth more or less
than their original cost. Performance of a Fund will vary based on changed in
market conditions and the level of the Fund's expenses.

Comparison of Fund Performance

A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effects of the methods used to calculate performance when comparing
performance of a Fund with performance quoted with respect to other investment
companies or types of investments.

In connection with communicating its performance to current or
prospective shareholders, a Fund also may compare these figures to the
performance of unmanaged indices which may assume reinvestment of dividends or
interest but generally do not reflect deductions for administrative and
management costs. Examples include, but are not limited to the Dow Jones
Industrial Average, the Consumer Price Index, Standard & Poor's 500 Composite
Stock Price Index (S&P 500), the NASDAQ OTC Composite Index, the NASDAQ
Industrials Index, the Russell 2000 Index, and statistics published by the Small
Business Administration.

Because some or all each Fund's investments are denominated in foreign
currencies, the strength or weakness of the U.S. dollar as against these
currencies may account for part that Fund's investment performance. Historical
information on the value of the dollar versus foreign currencies may be used
from time to time in advertisements concerning the Funds. Such historical
information is not indicative of future fluctuations in the value of the U.S.
dollar against these currencies. In addition, marketing materials may cite
country and economic statistics and historical stock market performance for any
of the countries in which either Fund invests, including, but not limited to,
the following: population growth, gross domestic product, inflation rate,
average stock market price-earnings ratios and the total value of stock markets.
Sources for such statistics may include official publications of various foreign
governments and exchanges.

From time to time, in advertising and marketing literature, a Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as,
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc., Value
Line Mutual Fund Survey and other independent organizations. When these
organizations' tracking results are used, a Fund will be compared to the
appropriate fund category, that is, by fund objective and portfolio holdings, or
to the appropriate volatility grouping, where volatility is a measure of a
fund's risk. For instance, a Scudder growth fund will be compared to funds in
the growth fund category; a Scudder income fund will be compared to funds in the
income fund category; and so on. Scudder funds (except for money market funds)
may also be compared to funds with similar volatility, as measured statistically

32
<PAGE>

by independent organizations. In addition, a Fund's performance may also be
compared to the performance of broad groups of comparable mutual funds.
Unmanaged indices with which a Fund's performance may be compared include, but
are not limited to, the following:

The Europe/Australia/Far East (EAFE) Index
International Financial Corporation's Latin America Investable
Total Return Index
Morgan Stanley Capital International World Index
J.P. Morgan Global Traded Bond Index
Salomon Brothers World Government Bond Index
NASDAQ Composite Index
Wilshire 5000 Stock Index

The following graph illustrates the historical risks and returns of
selected unmanaged indices which track the performance of various combinations
of United States and international securities for the ten year period ended
September 30, 1995; results for other periods may vary. The graph uses ten year
annualized international returns represented by the Morgan Stanley Capital
International Europe, Australia and Far East (EAFE) Index and ten year
annualized United States returns represented by the S&P 500 Index. Risk is
measured by the standard deviation in overall portfolio performance within each
index. Performance of an index is historical, and does not represent the
performance of a Fund, and is not a guarantee of future results.

(X-Y CHART TITLE)
EFFICIENT FRONTIER
MSCI EAFE vs. S&P 500 (9/30/85-9/30/95)
(CHART DATA)
X-Axis Y-Axis
Standard Deviation Total Return
------------------ ------------
100% Int'l MSCI EAFE 14.92 19.43
10 US/90 Int'l 15.20 18.21
20/80 15.45 17.11
30 U.S./70 Int'l 15.66 16.14
40/60 15.83 15.34
50 U.S./50Int'l 15.97 14.72
60/40 16.06 14.33
70 U.S./30 Int'l 16.11 14.16
80/20 16.13 14.24
90 U.S./10 Int'l 16.10 14.56
100% U.S. S&P 500 16.04 15.10

Source: Lipper Analytical Services, Inc. (Data as of 9/30/95)

From time to time, in marketing and other Fund literature, Directors
and officers of the Funds, the Funds' portfolio manager, or members of the
portfolio management team may be depicted and quoted to give prospective and
current shareholders a better sense of the outlook and approach of those who
manage the Funds. In addition, the amount of assets that the Adviser has under
management in various geographical areas may be quoted in advertising and
marketing materials.

The Funds may be advertised as an investment choice in Scudder's
college planning program. The description may contain illustrations of projected
future college costs based on assumed rates of inflation and examples of
hypothetical fund performance, calculated as described above.

33
<PAGE>

Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.

Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in the Funds. The
description may include a "risk/return spectrum" which compares the Funds to
other Scudder funds or broad categories of funds, such as money market, bond or
equity funds, in terms of potential risks and returns. Money market funds are
designed to maintain a constant $1.00 share price and have a fluctuating yield.
Share price, yield and total return of a bond fund will fluctuate. The share
price and return of an equity fund also will fluctuate. The description may also
compare the Funds to bank products, such as certificates of deposit. Unlike
mutual funds, certificates of deposit are insured up to $100,000 by the U.S.
Government and offer a fixed rate of return.

Because bank products guarantee the principal value of an investment
and money market funds seek stability of principal, these investments are
considered to be less risky than investments in either bond or equity funds,
which may involve the loss of principal. However, all long-term investments,
including investments in bank products, may be subject to inflation risk, which
is the risk of erosion of the value of an investment as prices increase over a
long time period. The risks/returns associated with an investment in bond or
equity funds depend upon many factors. For bond funds these factors include, but
are not limited to, a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.

A risk/return spectrum generally will position the various investment
categories in the following order: bank products, money market funds, bond funds
and equity funds. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term bond funds. The same is
true of domestic bond funds relative to international bond funds, and bond funds
that purchase higher quality securities relative to bond funds that purchase
lower quality securities. Growth and income equity funds are generally
considered to be less risky and offer the potential for less return than growth
funds. In addition, international equity funds usually are considered more risky
than domestic equity funds but generally offer the potential for greater return.

Risk/return spectrums also may depict funds that invest in both
domestic and foreign securities or a combination of bond and equity securities.

Evaluation of Fund performance or other relevant statistical
information made by independent sources may also be used in advertisements
concerning the Funds, including reprints of, or selections from, editorials or
articles about these Funds. Sources for Fund performance information and
articles about the Funds include the following:

American Association of Individual Investors' Journal, a monthly publication of
the AAII that includes articles on investment analysis techniques.

Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.

Banxquote, an on-line source of national averages for leading money market and
bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.

Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.

Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.

34
<PAGE>

CDA Investment Technologies, Inc., an organization which provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate market
indices.

Consumer Digest, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.

Financial Times, Europe's business newspaper, which features from time to time
articles on international or country-specific funds.

Financial World, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.

Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.

Fortune, a national business publication that periodically rates the performance
of a variety of mutual funds.

The Frank Russell Company, a West-Coast investment management firm that
periodically evaluates international stock markets and compares foreign equity
market performance to U.S. stock market performance.

Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.

IBC/Donoghue's Money Fund Report, a weekly publication of the Donoghue
Organization, Inc., of Holliston, Massachusetts, reporting on the performance of
the nation's money market funds, summarizing money market fund activity and
including certain averages as performance benchmarks, specifically "Donoghue's
Money Fund Average," and "Donoghue's Government Money Fund Average."

Ibbotson Associates, Inc., a company specializing in investment research and
data.

Investment Company Data, Inc., an independent organization which provides
performance ranking information for broad classes of mutual funds.

Investor's Daily, a daily newspaper that features financial, economic, and
business news.

Kiplinger's Personal Finance Magazine, a monthly investment advisory publication
that periodically features the performance of a variety of securities.

Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a weekly
publication of industry-wide mutual fund averages by type of fund.

Money, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.

Morgan Stanley International, an integrated investment banking firm that
compiles statistical information.

Mutual Fund Values, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance, risk and portfolio
characteristics.

The New York Times, a nationally distributed newspaper which regularly covers
financial news.

The No-Load Fund Investor, a monthly newsletter, published by Sheldon Jacobs,
that includes mutual fund performance data and recommendations for the mutual
fund investor.

35
<PAGE>

No-Load Fund*X, a monthly newsletter, published by DAL Investment Company, Inc.,
that reports on mutual fund performance, rates funds and discusses investment
strategies for the mutual fund investor.

Personal Investing News, a monthly news publication that often reports on
investment opportunities and market conditions.

Personal Investor, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.

Smart Money, a national personal finance magazine published monthly by Dow Jones
and Company, Inc. and The Hearst Corporation. Focus is placed on ideas for
investing, spending and saving.

Success, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.

United Mutual Fund Selector, a semi-monthly investment newsletter, published by
Babson United Investment Advisors, that includes mutual fund performance data
and reviews of mutual fund portfolios and investment strategies.

USA Today, a leading national daily newspaper.

U.S. News and World Report, a national business weekly that periodically reports
mutual fund performance data.

Value Line Mutual Fund Survey, an independent organization that provides
biweekly performance and other information on mutual funds.

The Wall Street Journal, a Dow Jones and Company, Inc. newspaper which regularly
covers financial news.

Wiesenberger Investment Companies Services, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records and price ranges.

Working Woman, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.

Worth, a national publication put out 10 times per year by Capital Publishing
Company, a subsidiary of Fidelity Investments. Focus is placed on personal
financial journalism.

ORGANIZATION OF THE FUNDS

(See "Fund organization" in the Funds' prospectuses.)

The Funds are separate series of Scudder Global Fund, Inc., a Maryland
corporation organized on May 15, 1986. Scudder Short Term Global Income Fund,
Scudder Global Small Company Fund and Scudder Emerging Markets Income Fund are
other series of the Corporation.

The authorized capital stock of the Corporation consists of 800 million
shares with $0.01 par value, 100 million shares of which are allocated to Global
Fund and 200 million shares of which are allocated to International Bond Fund.
Each share of each series of the Corporation has equal voting rights as to each
other share of that series as to voting for directors, redemption, dividends and
liquidation. Shareholders have one vote for each share held. The Directors have
the authority to issue additional series of shares and to designate the relative
rights and preferences as between the different series. If a series were unable
to meet its obligations, the remaining series should not have to assume the
unsatisfied obligation of that series. All shares issued and outstanding are
fully paid and non-assessable, transferable, and redeemable at net asset value
at the option of the shareholder. Shares have no pre-emptive or conversion
rights.

36
<PAGE>

Shares of the Corporation entitle their holders to one vote per share;
however, separate votes are taken by each series on matters affecting an
individual series. For example, a change in investment policy for a series would
be voted upon only by shareholders of the series involved. Additionally,
approval of the investment advisory agreement is a matter to be determined
separately by each series. Approval by the shareholders of one series is
effective as to that series whether or not enough votes are received from the
shareholders of the other series to approve such agreement as to the other
series.

The shares of the Corporation have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election of
Directors can elect 100% of the directors if they choose to do so, and, in such
event, the holders of the remaining less than 50% of the shares voting for the
election of Directors will not be able to elect any person or persons to the
Board of Directors.

The Directors, in their discretion, may authorize the division of
shares of the Funds (or shares of either series) into different classes
permitting shares of different classes to be distributed by different methods.
Although shareholders of different classes of a series would have an interest in
the same portfolio of assets, shareholders of different classes may bear
different expenses in connection with different methods of distribution. The
Directors have no current intention of taking the action necessary to effect the
division of shares into separate classes, nor of changing the method of
distribution of shares of a Fund.

Maryland corporate law provides that a Director of the Corporation
shall not be liable for actions taken in good faith, in a manner he or she
reasonably believes to be in the best interests of the Corporation and with the
care that an ordinarily prudent person in a like position would use under
similar circumstances. In so acting, a Director shall be fully protected in
relying in good faith upon the records of the Corporation and upon reports made
to the Corporation by persons selected in good faith by the Directors as
qualified to make such reports. The By-Laws provide that the Corporation will
indemnify Directors and officers of the Corporation against liabilities and
expenses reasonably incurred in connection with litigation in which they may be
involved because of their positions with the Corporation, to the fullest extent
permitted by Maryland corporate law as amended from time to time. However,
nothing in the Articles of Incorporation or the By-Laws protects or indemnifies
a Director or officer against any liability to which he or she would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.

INVESTMENT ADVISER

(See "Fund organization--Investment adviser" in the Funds' prospectuses.)

Scudder, Stevens & Clark, Inc., an investment counsel firm, acts as
investment adviser to each Fund. This organization is one of the most
experienced investment management firms in the U.S.. It was established as a
partnership in 1919 and pioneered the practice of providing investment counsel
to individual clients on a fee basis. In 1928 it introduced the first no-load
mutual fund to the public. In 1953, the Adviser introduced Scudder International
Fund, the first mutual fund registered with the SEC in the U.S. investing
internationally in securities of issuers in several foreign countries. The firm
reorganized from a partnership to a corporation on June 28, 1985.

The principal source of the Adviser's income is professional fees
received from providing continuous investment advice, and the firm derives no
income from brokerage or underwriting of securities. Today, it provides
investment counsel for many individuals and institutions, including insurance
companies, colleges, industrial corporations, and financial and banking
organizations. In addition, it manages Montgomery Street Income Securities,
Inc., Scudder California Tax Free Trust, Scudder Cash Investment Trust, Scudder
Equity Trust, Scudder Fund, Inc., Scudder Funds Trust, Scudder Global Fund,
Inc., Scudder GNMA Fund, Scudder Portfolio Trust, Scudder Institutional Fund,
Inc., Scudder International Fund, Inc., Scudder Investment Trust, Scudder
Municipal Trust, Scudder Mutual Funds, Inc., Scudder New Asia Fund, Inc.,
Scudder New Europe Fund, Inc., Scudder Securities Trust, Scudder State Tax Free
Trust, Scudder Tax Free Money Fund, Scudder Tax Free Trust, Scudder U.S.
Treasury Money Fund, Scudder Variable Life Investment Fund, Scudder World Income
Opportunities Fund, Inc., The Argentina Fund, Inc., The Brazil Fund, Inc., The
First Iberian Fund, Inc., The Korea Fund, Inc., The Japan Fund, Inc. and The
Latin America Dollar Income Fund, Inc. Some of the foregoing companies or trusts
have two or more series.

37
<PAGE>

The Adviser also provides investment advisory services to the mutual
funds which comprise the AARP Investment Program from Scudder. The AARP
Investment Program from Scudder has assets over $11 billion and includes the
AARP Growth Trust, AARP Income Trust, AARP Tax Free Income Trust and AARP Cash
Investment Funds.

The Adviser maintains a large research department, which conducts
continual studies of the factors that affect the position of various industries,
companies and individual securities. In this work, the Adviser utilizes certain
reports and statistics from a wide variety of sources, including brokers and
dealers who may execute portfolio transactions for the Fund and for clients of
the Adviser, but conclusions are based primarily on investigations and critical
analyses by its own research specialists. The Adviser's international investment
management team travels the world, researching hundreds of companies.

Certain investments may be appropriate for a Fund and also for other
clients advised by the Adviser. Investment decisions for a Fund and other
clients are made with a view to achieving their respective investment objectives
and after consideration of such factors as their current holdings, availability
of cash for investment and the size of their investments generally. Frequently,
a particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients on the same day. In
such event, such transactions will be allocated among the clients in a manner
believed by the Adviser to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities purchased
or sold by a Fund. Purchase and sale orders for a Fund may be combined with
those of other clients of the Adviser in the interest of most favorable net
results to a Fund.

The continuance of the Investment Management Agreement between
International Bond Fund and the Adviser was approved by the Directors on
September 6, 1995. The Investment Management Agreement between Global Fund and
the Adviser was approved by the Directors on September 6, 1995. The
International Bond Fund Agreement dated September 8, 1994 and the Global Fund
Agreement dated September 6, 1995 (collectively, the "Agreements") will continue
in effect until September 30, 1996 and from year to year thereafter only if
their continuance is approved annually by the vote of a majority of those
Directors who are not parties to such Agreements or interested persons of the
Adviser or the Corporation, cast in person at a meeting called for the purpose
of voting on such approval, and either by vote of the Corporation's Directors or
of the outstanding voting securities of the respective Fund. The Agreements may
be terminated at any time without payment of penalty by either party on sixty
days written notice, and automatically terminate in the event of their
assignment.

Under each Agreement, the Adviser regularly provides a Fund with
continuing investment management for the Fund's portfolio consistent with the
Fund's investment objectives, policies and restrictions and determines what
securities shall be purchased for the portfolio of the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the provisions of the
Corporation's Articles of Incorporation and By-Laws, of the 1940 Act and the
Code and to the Fund's investment objectives, policies and restrictions, and
subject, further, to such policies and instructions as the Directors of the
Corporation may from time to time establish. The Adviser also advises and
assists the officers of the Corporation in taking such steps as are necessary or
appropriate to carry out the decisions of its Directors and the appropriate
committees of the Directors regarding the conduct of the business of the
Corporation.

Under each Agreement, the Adviser also renders significant
administrative services (not otherwise provided by third parties) necessary for
a Fund's operations as an open-end investment company including, but not limited
to, preparing reports and notices to the Directors and shareholders,
supervising, negotiating contractual arrangements with, and monitoring various
third-party service providers to the Fund (such as the Fund's transfer agent,
pricing agents, custodians, accountants and others); preparing and making
filings with the SEC and other regulatory agencies; assisting in the preparation
and filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax returns; assisting with investor and public
relations matters; monitoring the valuation of securities and the calculation of
net asset value; monitoring the registration of shares of the Fund under
applicable federal and state securities laws; maintaining the Fund's books and
records to the extent not otherwise maintained by a third party; assisting in
establishing accounting policies of the Funds; assisting in the resolution of
accounting and legal issues; establishing and monitoring the Fund's operating
budget; processing the payment of the Fund's bills; assisting the Fund in, and

38
<PAGE>

otherwise arranging for, the payment of distributions and dividends and
otherwise assisting the Fund in the conduct of its business, subject to the
direction and control of the Directors.

The Adviser pays the compensation and expenses (except those of
attending Board and committee meetings outside New York, New York and Boston,
Massachusetts) of all directors, officers and executive employees of the
Corporation affiliated with the Adviser and makes available, without expense to
the Funds, the services of such directors, officers and employees as may duly be
elected officers, subject to their individual consent to serve and to any
limitations imposed by law, and provides the Funds' office space and facilities.

For the Adviser's services, effective September 6, 1995, Global Fund
pays the Adviser an annual fee equal to 1.00% on the first $500 million of
average daily net assets, 0.95% on such assets in excess of $500 million and
0.90% on such assets in excess of $1 billion. The fee is payable monthly,
provided the Fund will make such interim payments as may be requested by the
Adviser not to exceed 75% of the amount of the fee then accrued on the books of
the Fund and unpaid.

From September 6, 1993 to September 5, 1995 Global Fund paid the
Adviser an annual fee equal to 1.00% on the first $500 million of average daily
net assets and 0.95% on such assets in excess of $500 million. The fee was paid
monthly, provided the Fund made such interim payments as requested by the
Adviser not to have exceeded 75% of the amount of the fee then accrued on the
books of the Fund and unpaid.

The net investment advisory fees for the Global Fund for the fiscal
years ended June 30, 1995, 1994 and 1993, were $11,015,077, $9,049,260 and
$4,300,271, respectively.

For the Adviser's services effective September 8, 1994, International
Bond Fund pays the Adviser an annual fee equal to 0.85% of the first $1 billion
of average daily net assets and 0.80% of such assets in excess of $1 billion.
The fee is payable monthly, provided the Fund will make such interim payments as
may be requested by the Adviser not to exceed 75% of the amount of the fee then
accrued on the books of the Fund and unpaid.

From December 14, 1990 to September 7, 1994, International Bond Fund
paid the Adviser an annual fee equal to 0.85 of 1% of the Fund's average daily
net assets. The fee was payable monthly, provided the Fund made such interim
payments as requested by the Adviser not to have exceeded 75% of the amount of
the fee then accrued on the books of the Fund and unpaid.

For the fiscal years ended June 30, 1995, 1994 and 1993, the fees
imposed for the International Bond Fund amounted to $9,197,192, $10,598,081 and
$5,669,210, respectively, and the fees not imposed amounted to $0, $341,680 and
$955,127, respectively.

Under each Agreement, a Fund is responsible for all of its other
expenses including organization expenses; fees and expenses incurred in
connection with membership in investment company organizations; broker's
commissions; legal, auditing and accounting expenses; taxes and governmental
fees; the fees and expenses of the Transfer Agent; the cost of preparing share
certificates or any other expenses, including clerical expenses of issue,
redemption or repurchase of shares of capital stock; the expenses of and the
fees for registering or qualifying securities for sale; the fees and expenses of
the Directors, officers and employees who are not affiliated with the Adviser;
the cost of printing and distributing reports and notices to shareholders; and
the fees and disbursements of custodians. The Corporation may arrange to have
third parties assume all or part of the expenses of sale, underwriting and
distribution of shares of Funds. Each Fund is also responsible for its expenses
incurred in connection with litigation, proceedings and claims and the legal
obligation it may have to indemnify its officers and Directors with respect
thereto. The custodian agreements provide that the custodian shall compute each
Fund's net asset value. The Agreements expressly provide that the Adviser shall
not be required to pay a pricing agent of the Funds for portfolio pricing
services, if any.

The Adviser has agreed in each Agreement to reimburse the Funds for
annual expenses to the extent required by the most restrictive expense
limitations imposed by any state in which the Corporation is at the time
offering the Fund's shares for sale, although no payments are required to be
made by the Adviser pursuant to this reimbursement provision in excess of the
annual fee paid by the Fund to the Adviser. Management has been advised that the
lowest of such limitations is presently 2 1/2% of such net assets up to $30
million, 2% of the next $70 million of such net assets and 1 1/2% of such net
assets in excess of that amount. Certain expenses such as brokerage commissions,

39
<PAGE>

taxes, extraordinary expenses and interest are excluded from such limitations
and other expenses may be excluded from time to time. For the fiscal years ended
June 30, 1995, 1994 and 1993, expenses, net of reimbursement, equaled 1.38%,
1.45% and 1.48%, of the average net assets of Global Fund. For each of the
fiscal years ended June 30, 1995, 1994 and 1993, expenses, net of reimbursement,
equaled 1.30%, 1.27% and 1.25% of the average net assets of International Bond
Fund. If reimbursement is required, it will be made as promptly as practicable
after the end of a Fund's fiscal year. However, no fee payment will be made to
the Adviser during any fiscal year which will cause year-to-date expenses to
exceed the cumulative pro-rata expense limitation at the time of such payment.

Each Agreement also provides that a Fund and the Corporation may use
any name derived from the name "Scudder, Stevens & Clark" only as long as the
Agreement or any extension, renewal or amendment thereof remains in effect.

Each Agreement provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the relevant
Fund in connection with matters to which the Agreements relate, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its duties or from reckless disregard by the
Adviser of its obligations and duties under the Agreements.

Officers and employees of the Adviser from time to time may have
transactions with various banks, including the Funds' custodian banks. It is the
Adviser's opinion that the terms and conditions of those transactions which have
occurred were not influenced by existing or potential custodial or other Fund
relationships.

None of the officers or Directors may have dealings with the Funds as
principals in the purchase or sale of securities, except as individual
subscribers or holders of shares of the Funds.

Personal Investments by Employees of the Adviser

Employees of the Adviser are permitted to make personal securities
transactions, subject to requirements and restrictions set forth in the
Adviser's Code of Ethics. The Code of Ethics contains provisions and
requirements designed to identify and address certain conflicts of interest
between personal investment activities and the interests of investment advisory
clients such as the Funds. Among other things, the Code of Ethics, which
generally complies with standards recommended by the Investment Company
Institute's Advisory Group on Personal Investing, prohibits certain types of
transactions absent prior approval, imposes time periods during which personal
transactions may not be made in certain securities, and requires the submission
of duplicate broker confirmations and monthly reporting of securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment advisory process.
Exceptions to these and other provisions of the Code of Ethics may be granted in
particular circumstances after review by appropriate personnel.

<TABLE>
<CAPTION>
DIRECTORS AND OFFICERS

Position Position with Underwriter,
Name and Address with Corporation Principal Occupation** Scudder Investor Services, Inc.
- ---------------- ---------------- ---------------------- -------------------------------
<S> <C> <C> <C>
Edmond D. Villani++*# Chairman of the President and Managing --
Board and Director Director of Scudder,
Stevens & Clark, Inc.

Nicholas Bratt++*#@ President, Short Managing Director of --
Term Global Income Scudder, Stevens & Clark,
Fund, Scudder Inc.
International Bond
Fund and Scudder
Global Small
Company Fund; and
Director

40
<PAGE>

DIRECTORS AND OFFICERS

Position Position with Underwriter,
Name and Address with Corporation Principal Occupation** Scudder Investor Services, Inc.
- ---------------- ---------------- ---------------------- -------------------------------
William E. Holzer++ @ President, Scudder Managing Director of --
Global Fund Scudder, Stevens & Clark,
Inc.

Paul Bancroft III Director Venture Capitalist and --
1120 Cheston Lane Consultant; Retired,
Queenstown, MD 21658 President, Chief Executive
Officer and Director,
Bessemer Securities
Corporation

Thomas J. Devine Director Consultant --
641 Lexington Avenue
New York, NY 10022

William H. Gleysteen, Jr. Director President, The Japan --
333 East 47th Street Society, Inc. (1989 until
New York, NY 10017 present); Vice President of
Studies, Council on Foreign
Relations (until 1989)

William H. Luers Director President, The Metropolitan --
993 Fifth Avenue Museum of Art (1986 until
New York, NY 10028 present)

Daniel Pierce+ Director and Vice Chairman of the Board and Vice President, Director &
President Managing Director of Assistant Treasurer
Scudder, Stevens & Clark,
Inc.

Robert G. Stone, Jr. Director Chairman of the Board and --
405 Lexington Avenue Director, Kirby Corporation
New York, NY 10174 (marine transportation,
diesel repair and property
and casualty insurance in
Puerto Rico)

Robert W. Lear Honorary Director Executive-in-Residence and --
429 Silvermine Road Visiting Professor,
New Canaan, CT 06840 Columbia University
Graduate School of Business

Jerard K. Hartman++ Vice President Managing Director of --
Scudder, Stevens & Clark,
Inc.

Thomas W. Joseph+ Vice President Principal of Scudder, Vice President, Director,
Stevens & Clark, Inc. Treasurer & Assistant Clerk

41
<PAGE>

DIRECTORS AND OFFICERS

Position Position with Underwriter,
Name and Address with Corporation Principal Occupation** Scudder Investor Services, Inc.
- ---------------- ---------------- ---------------------- -------------------------------
Douglas M. Loudon++ Vice President Managing Director of Senior Vice President
Scudder, Stevens & Clark,
Inc.

Gerald J. Moran++ Vice President Principal of Scudder, --
Stevens & Clark, Inc.

Cornelia M. Small++ Vice President Managing Director of --
Scudder, Stevens & Clark,
Inc.

Thomas F. McDonough+ Vice President and Principal of Scudder, Clerk
Secretary Stevens & Clark, Inc.

Pamela A. McGrath+ Vice President and Principal of Scudder, --
Treasurer Stevens & Clark, Inc.

David S. Lee+ Vice President and Managing Director of President, Assistant Treasurer
Assistant Treasurer Scudder, Stevens & Clark, and Director
Inc.

Edward J. O'Connell++ Vice President and Principal of Scudder, Assistant Treasurer
Assistant Treasurer Stevens & Clark, Inc.

Juris Padegs++ Vice President and Managing Director of Vice President and Director
Assistant Secretary Scudder, Stevens & Clark,
Inc.

Kathryn L. Quirk++ Vice President and Managing Director of Vice President
Assistant Secretary Scudder, Stevens & Clark,
Inc.

Coleen Downs Dinneen + Assistant Secretary Vice President
of Scudder, Assistant
Clerk Stevens & Clark,
Inc.

<FN>
* Messrs. Villani and Bratt are considered by the Corporation and its counsel to be persons who are
"interested persons" of the Adviser or of the Corporation (within the meaning of the 1940 Act).
** Unless otherwise stated, all the Directors and officers have been
associated with their respective companies for more than five years,
but not necessarily in the same capacity.
# Messrs. Villani and Bratt are members of the Executive Committee, which may exercise the powers of the
Directors when they are not in session.
+ Address: Two International Place, Boston, Massachusetts
++ Address: 345 Park Avenue, New York, New York
@ The President of a series shall have the status of Vice President of the Corporation.
</FN>
</TABLE>

As of September 30, 1995, all Directors and Officers as a group owned
beneficially (as that term is defined in Section 13(d) of the Securities
Exchange Act of 1934) 795,228 shares, or 1.72% of the shares of the Global Fund
outstanding on such date.

As of September 30, 1995 all Directors and Officers as a group owned
beneficially (as the term is defined in Section 13(d) under the Securities
Exchange Act of 1934) less than 1% of the shares of International Bond Fund
outstanding on such date.

42
<PAGE>

As of September 30, 1995, 3,500,232 shares in the aggregate, 7.56% of
the outstanding shares of Global Fund, were held in the name of Charles Schwab &
Co., Inc., 101 Montgomery Street, San Francisco, CA 94104-4122, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.

As of September 30, 1995, 10,764,382 shares in the aggregate, 15.11% of
the outstanding shares of International Bond Fund, were held in the name of
Northern Trust Company for the benefit of Teacher Retirement Systems of Texas,
P.O. Box 92956, Mutual Funds, Chicago, IL, 60675 who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.

As of September 30, 1995, 10,168,172 shares in the aggregate, 14.28% of
the outstanding shares of International Bond Fund, were held in the name of
Charles Schwab & Co., Inc., 101 Montgomery Street, San Francisco, CA 94104-4122,
who may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.

Except as stated above, to the best of the Corporation's knowledge, as
of September 30, 1995, no person owned beneficially more than 5% of a Fund's
outstanding shares.

The Directors and officers also serve in similar capacities with other
Scudder funds.

REMUNERATION

Several of the officers and Directors of the Corporation may be
officers or employees of the Adviser, Scudder Investor Services, Inc., Scudder
Service Corporation, Scudder Trust Company or Scudder Fund Accounting
Corporation and participate in the fees paid by a Fund. The Funds pay no direct
remuneration to any officer of the Corporation. However, each of the Directors
who is not affiliated with the Adviser will be paid by the Corporation on behalf
of a Fund. Each of these unaffiliated Directors receives an annual Director's
fee of $4,000 from the series and fees of $400 for attending each Directors'
meeting, audit committee meeting or meeting held for the purpose of considering
arrangements between the Corporation on behalf of a Fund and the Adviser or any
of its affiliates. Each unaffiliated Director also receives $150 per committee
meeting attended other than those set forth above. For the fiscal year ended
June 30, 1995, Directors' fees amounted to $45,725 for Global Fund, and $44,525
for International Bond Fund.

The following Compensation Table, provides in tabular form, the following data.

Column (1) All Directors who receive compensation from the Registrant.
Column (2) Aggregate compensation received by a Director from all series of the
Registrant - Scudder Global Fund, Inc., which is comprised of Scudder Global
Fund, Scudder International Bond Fund, Scudder Short Term Global Income Fund,
Scudder Global Small Company Fund and Scudder Emerging Markets Income Fund.
Columns (3) and(4) Pension or retirement benefits accrued or proposed to be paid
by the Fund Complex. Scudder Global Fund, Inc. does not pay its Directors such
benefits.
Column (5) Total compensation received by a Director from Scudder Global Fund,
Scudder International Bond Fund, Scudder Short Term Global Income Fund, Scudder
Global Small Company Fund and Scudder Emerging Markets Income Fund, plus
compensation received from all funds managed by Scudder for which a Director
serves. The total number of funds from which a Director receives such
compensation is also provided in Column (5). Generally, compensation received by
a Director for serving on the Board of a closed-end fund is greater than the
compensation received by a Director for serving on the Board of an open-end
fund.

43
<PAGE>

<TABLE>
<CAPTION>
Compensation Table
for the year ended December 31, 1994
============================= ========================= ==================== ================= ====================
(1) (2) (3) (4) (5)
Pension or
Retirement Total Compensation
Benefits Accrued Estimated From Registrant
Name of Person, Aggregate Compensation As Part of Fund Annual Benefits and Fund Complex
Position from Registrant* Complex Expenses Upon Retirement Paid to Director
============================= ========================= ==================== ================= ====================
<S> <C> <C> <C> <C>
Paul Bancroft III, $ 45,663 N/A N/A $ 120,238
Director (14 funds)

Thomas J. Devine, Director $ 45,663 N/A N/A $ 115,656
(16 funds)

William H. Gleysteen, Jr. $ 45,313 $ 3,804** $ 3,000** $ 110,213
Director (12 funds)

William H. Luers, Director $ 45,313 N/A N/A $ 83,713
(10 funds)

Robert G. Stone, Jr. $ 45,663 $6,289** $6,000** $ 134,438
Director (15 funds)

<FN>
* The Corporation consists of five funds.
** Retirement benefits accrued and proposed to be paid as additional
compensation for serving on the Board of The Japan Fund, Inc.
</FN>
</TABLE>

DISTRIBUTOR

The Corporation has an underwriting agreement with Scudder Investor
Services, Inc., a Massachusetts corporation, which is a wholly-owned subsidiary
of Scudder, Stevens & Clark, Inc., a Delaware corporation. The Corporation's
underwriting agreement dated July 24, 1986 will remain in effect until September
30, 1996 and from year to year thereafter only if its continuance is approved
annually by a majority of the Directors who are not parties to such agreement or
interested persons of any such party and either by vote of a majority of the
Board of Directors or a majority of the outstanding voting securities of the
Corporation. The underwriting agreement was most recently approved by the
Directors on September 6, 1995.

Under the principal underwriting agreement, the Corporation is
responsible for: the payment of all fees and expenses in connection with the
preparation and filing with the SEC of the Funds' registration statement and
prospectuses and any amendments and supplements thereto, the registration and
qualification of shares for sale in the various states, including registering
the Corporation as a broker/dealer in various states; the fees and expenses of
preparing, printing and mailing prospectuses annually to existing shareholders
(see below for expenses relating to prospectuses paid by the Distributor),
notices, proxy statements, reports or other communications to shareholders of a
Fund; the cost of printing and mailing confirmations of purchases of shares and
any prospectuses accompanying such confirmations; any issue taxes or any initial
transfer taxes; a portion of shareholder toll-free telephone charges and
expenses of shareholder service representatives, the cost of wiring funds for
share purchases and redemptions (unless paid by the shareholder who initiates
the transaction); the cost of printing and postage of business reply envelopes;
and a portion of the cost of computer terminals used by both the Corporation and
the Distributor.

The Distributor will pay for printing and distributing prospectuses or
reports prepared for its use in connection with the offering of the Funds'
shares to the public and preparing, printing and mailing any other literature or
advertising in connection with the offering of shares of a Fund to the public.
The Distributor will pay all fees and expenses in connection with its
qualification and registration as a broker or dealer under federal and state

44
<PAGE>

laws, a portion of the cost of toll-free telephone service and expenses of
service representatives, a portion of the cost of computer terminals, and of any
activity which is primarily intended to result in the sale of shares issued by
the Corporation unless a Rule 12b-1 Plan is in effect which provides that a Fund
shall bear some or all of such expenses.

NOTE: Although neither Fund has a 12b-1 Plan and the Directors have
no current intention of adopting one, the Funds would also pay
those fees and expenses permitted to be paid or assumed by a
Fund pursuant to a 12b-1 Plan, if any, adopted by a Fund,
notwithstanding any other provision to the contrary in the
underwriting agreement.

As agent, the Distributor currently offers the Funds' shares on a
continuous basis to investors in all states. The underwriting agreement provides
that the Distributor accepts orders for shares at net asset value as no sales
commission or load is charged the investor. The Distributor has made no firm
commitment to acquire shares of the Corporation.

TAXES

(See "Distribution and performance information--Dividends and capital gains
distributions" and "Transaction information--Tax information,
Tax identification number" in the Funds' prospectuses.)

Each Fund has elected to be treated as a regulated investment company
under Subchapter M of the Internal Revenue Code, and each has qualified as such
since its inception. They intend to continue to qualify for such treatment. Such
qualification does not involve governmental supervision or management of
investment practices or policy.

A regulated investment company qualifying under Subchapter M of the
Code is required to distribute to its shareholders at least 90% of its
investment company taxable income (including net short-term capital gain) and
generally is not subject to federal income tax to the extent that it distributes
annually its investment company taxable income and net realized capital gains in
the manner required under the Code. The Funds intend to distribute at least
annually substantially all, and in no event less than 90%, of their investment
company taxable income and net realized capital gains.

If any net realized long-term capital gains in excess of net realized
short-term capital losses are retained by a Fund for reinvestment, requiring
federal income taxes to be paid thereon by a Fund, each Fund intends to elect to
treat such capital gains as having been distributed to shareholders. As a
result, each shareholder will report such capital gains as long-term capital
gains, will be able to claim his/her share of federal income taxes paid by a
Fund on such gains as a credit against his/her own federal income tax liability,
and will be entitled to increase the adjusted tax basis of his/her Fund shares
by the difference between his/her pro rata share of such gains and his/her tax
credit.

Net investment income is made up of dividends and interest, less
expenses. Net realized capital gains for a fiscal year are computed by taking
into account any capital loss carryforward or post-October loss of a Fund.
Global Fund and International Bond Fund intend to offset realized capital gains
by using their capital loss carryforwards "if any" before distributing any
capital gains. In addition, Global Fund and International Bond Fund intend to
offset realized capital gains by using their post-October losses "if any" before
distributing any capital gains. As of June 30, 1995, Global Fund had no capital
loss carryforward. At June 30, 1995, the International Bond 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 International Bond
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 International
Bond Fund intends to elect to defer $26,583,252 of net realized capital losses
and $5,541,013 of net realized currency losses and treat them as arising in the
fiscal year ended June 30, 1996.

Each Fund is subject to a 4% nondeductible excise tax on amounts
required to be but not distributed under a prescribed formula. The formula
requires payment to shareholders during a calendar year of distributions
representing at least 98% of the Fund's ordinary income for the calendar year,
at least 98% of the excess of its capital gains over capital losses (adjusted
for certain ordinary losses prescribed by the Code) realized during the one-year
period ending October 31 during such year, and all ordinary income and capital
gains for prior years that were not previously distributed.

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Dividends from domestic corporations are expected to comprise some
portion of Global Fund's gross income. To the extent that such dividends
constitute a portion of the Fund's gross income, a portion of the income
distributions of the Fund may be eligible for the deduction for dividends
received by corporations. Shareholders will be informed of the portion of
dividends which so qualify. The dividends-received deduction is reduced to the
extent the Fund shares with respect to which the dividends are received are
treated as debt-financed under federal income tax law and is eliminated if the
shares are deemed to have been held for less than 46 days.

Distributions of the excess of net long-term capital gain over net
short-term capital loss, which a Fund designates as capital gains dividends are
taxable to shareholders as long-term capital gain, regardless of the length of
time the shares of a Fund have been held by such shareholders. Such
distributions are not eligible for the dividends-received deduction discussed
above. Any loss realized upon the redemption of shares held at the time of
redemption for six months or less from the date of their purchase will be
treated as a long-term capital loss to the extent of any amounts treated as
distributions of long-term capital gain during such six-month period.

Distributions of investment company taxable income are taxable to
shareholders as ordinary income. Investment company taxable income generally
includes dividends, interest, net short-term capital gains in excess of net
long-term capital losses, and net foreign currency gains, if any, less expenses.
Net realized capital gains for a fiscal year are computed by taking into account
any capital loss carryforward of a Fund.

Distributions of investment company taxable income and net realized
capital gains will be taxable as described above, whether received in shares or
in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share on the reinvestment
date.

All distributions of investment company taxable income and net realized
capital gain, whether received in shares or in cash, must be reported by each
shareholder on his or her federal income tax return. Dividends and capital gains
distributions declared in October, November or December and payable to
shareholders of record in such a month will be deemed to have been received by
shareholders on December 31 if paid during January of the following year.
Redemptions of shares, including exchanges for shares of another Scudder fund,
may result in tax consequences (gain or loss) to the shareholder and are also
subject to these reporting requirements.

An individual may make a deductible IRA contribution of up to $2,000
or, if less, the amount of the individual's earned income for any taxable year
only if (i) neither the individual nor his or her spouse (unless filing separate
returns) is an active participant in an employer's retirement plan, or (ii) the
individual (and his or her spouse, if applicable) has an adjusted gross income
below a certain level ($40,050 for married individuals filing a joint return,
with a phase-out of the deduction for adjusted gross income between $40,050 and
$50,000; $25,050 for a single individual, with a phase-out for adjusted gross
income between $25,050 and $35,000). However, an individual not permitted to
make a deductible contribution to an IRA for any such taxable year may
nonetheless make nondeductible contributions up to $2,000 to an IRA (up to
$2,250 to IRAs for an individual and his or her nonearning spouse) for that
year. There are special rules for determining how withdrawals are to be taxed if
an IRA contains both deductible and nondeductible amounts. In general, a
proportionate amount of each withdrawal will be deemed to be made from
nondeductible contributions; amounts treated as a return of nondeductible
contributions will not be taxable. Also, annual contributions may be made to a
spousal IRA even if the spouse has earnings in a given year if the spouse elects
to be treated as having no earnings (for IRA contribution purposes) for the
year.

Distributions by a Fund result in a reduction in the net asset value of
such Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should consider the tax implications of buying shares just
prior to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will then receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.

Each Fund intends to qualify for and may make the election permitted
under Section 853 of the Code so that shareholders may (subject to limitations)
be able to claim a credit or deduction on their federal income tax returns for,

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and may be required to treat as part of the amounts distributed to them, their
pro rata portion of qualified taxes paid by the Fund to foreign countries (which
taxes relate primarily to investment income). Each Fund may make an election
under Section 853 of the Code, provided that more than 50% of the value of the
total assets of a Fund at the close of the taxable year consists of securities
in foreign corporations. The foreign tax credit available to shareholders is
subject to certain limitations imposed by the Code.

If a Fund invests in stock of certain foreign investment companies,
that Fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the Fund, other than the taxable
year of the excess distribution or disposition, would be taxed to the Fund at
the highest ordinary income rate in effect for such year, and the tax would be
further increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from the ownership of the foreign company's stock. Any
amount of distribution or gain allocated to the taxable year of the distribution
or disposition would be included in the Fund's investment company taxable income
and, accordingly, would not be taxable to the Fund to the extent distributed by
the Fund as a dividend to its shareholders.

Proposed regulations have been issued which may allow each Fund to make
an election to mark to market its shares of these foreign investment companies
in lieu of being subject to U.S. federal income taxation. At the end of each
taxable year to which the election applies, each Fund would report as ordinary
income the amount by which the fair market value of the foreign company's stock
exceeds the Funds' adjusted basis in these shares. No mark to market losses
would be recognized. The effect of the election would be to treat excess
distributions and gain on dispositions as ordinary income which is not subject
to a fund level tax when distributed to shareholders as a dividend.
Alternatively, the Funds may elect to include as income and gain their share of
the ordinary earnings and net capital gain of certain foreign investment
companies in lieu of being taxed in the manner described above.

Equity options (including options on stock and options on narrow-based
stock indices) and over-the-counter options on debt securities written or
purchased by a Fund will be subject to tax under Section 1234 of the Code. In
general, no loss is recognized by a Fund upon payment of a premium in connection
with the purchase of a put or call option. The character of any gain or loss
recognized (i.e., long-term or short-term) will generally depend in the case of
a lapse or sale of the option on the Fund's holding period for the option and in
the case of an exercise of the option on the Fund's holding period for the
underlying stock. The purchase of a put option may constitute a short sale for
federal income tax purposes, causing an adjustment in the holding period of the
underlying stock or substantially identical stock in the Fund's portfolio. If a
Fund writes a put or call option, no gain is recognized upon its receipt of a
premium. If the option lapses or is closed out, any gain or loss is treated as a
short-term capital gain or loss. If a call option is exercised the character of
the gain or loss depends on the holding period of the underlying stock.

Many futures and forward contracts entered into by a Fund, and all
listed nonequity options written or purchased by a Fund (including options on
debt securities, options on futures contracts, options on securities indices and
options on broad-based stock indices) will be governed by Section 1256 of the
Code. Absent a tax election to the contrary, gain or loss attributable to the
lapse, exercise or closing out of any such position generally will be treated as
60% long-term and 40% short-term, and on the last trading day of the Fund's
fiscal year, all outstanding Section 1256 positions will be marked to market
(i.e. treated as if such positions were closed out at their closing price on
such day), with any resulting gain or loss recognized. Under certain
circumstances, entry into a futures contract to sell a security may constitute a
short sale for federal income tax purposes, causing an adjustment in the holding
period of the underlying security or a substantially identical security in a
Fund's portfolio. Under Section 988 of the Code, discussed below, foreign
currency gains or loss from foreign currency related forward contracts, certain
futures and similar financial instruments entered into or acquired by a Fund
will be treated as ordinary income or loss.

Subchapter M of the Code requires that each Fund realize less than 30%
of its annual gross income from the sale or other disposition of stock,
securities and certain options, futures and forward contracts held for less than
three months. Each Fund's options, futures and forward transactions may increase
the amount of gains realized by the Fund that are subject to this 30%
limitation. Accordingly, the amount of such transactions that a Fund may
undertake may be limited.

Positions of a Fund which consist of at least one stock and at least
one stock option or other position with respect to a related security which
substantially diminishes a Fund's risk of loss with respect to such stock could

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be treated as a "straddle" which is governed by Section 1092 of the Code, the
operation of which may cause deferral of losses, adjustments in the holding
periods of stock or securities and conversion of short-term capital losses into
long-term capital losses. An exception to these straddle rules exists for any
"qualified covered call options" on stock written by the Fund.

Positions of a Fund which consist of at least one position not governed
by Section 1256 and at least one futures contract or forward contract or
nonequity option governed by Section 1256 which substantially diminishes the
Fund's risk of loss with respect to such other position will be treated as a
"mixed straddle." Although mixed straddles are subject to the straddle rules of
Section 1092 of the Code, certain tax elections exist for them which reduce or
eliminate the operation of these rules. The Fund will monitor its transactions
in options and futures and may make certain tax elections in connection with
these investments.

Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues receivables or
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables, or pays such liabilities, generally are treated as
ordinary income or ordinary loss. Similarly, on disposition of debt securities
denominated in a foreign currency and on disposition of certain futures and
forward contracts, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or contract and
the date of disposition are also treated as ordinary gain or loss. These gains
or losses, referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of a Fund's investment company taxable income to
be distributed to its shareholders as ordinary income.

A portion of the difference between the issue price of zero coupon
securities and their face value ("original issue discount") is considered to be
income to a Fund each year, even though the Fund will not receive cash interest
payments from these securities. This original issue discount imputed income will
comprise a part of the investment company taxable income of the Funds which must
be distributed to shareholders in order to maintain the qualification of the
Funds as regulated investment companies and to avoid federal income tax at the
Fund's level.

Each Fund will be required to report to the IRS all distributions of
investment company taxable income and capital gains as well as gross proceeds
from the redemption or exchange of Fund shares, except in the case of certain
exempt shareholders. Under the backup withholding provisions of Section 3406 of
the Code, distributions of investment company taxable income and capital gains
and proceeds from the redemption or exchange of the shares of a regulated
investment company may be subject to withholding of federal income tax at the
rate of 31% in the case of non-exempt shareholders who fail to furnish the
investment company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if a Fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.

Shareholders of each Fund may be subject to state and local taxes on
distributions received from the Fund and on redemptions of the Fund's shares.

Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year the Corporation issues to
each shareholder a statement of the federal income tax status of all
distributions.

The foregoing discussion of U.S. federal income tax law relates solely
to the application of that law to U.S. persons, i.e., U.S. citizens and
residents and U.S. corporations, partnerships, trusts and estates. Each
shareholder who is not a U.S. person should consider the U.S. and foreign tax
consequences of ownership of shares of a Fund, including the possibility that
such a shareholder may be subject to a U.S. withholding tax at a rate of 30% (or
at a lower rate under an applicable income tax treaty) on amounts constituting
ordinary income received by him or her, where such amounts are treated as income
from U.S. sources under the Code.

Shareholders should consult their tax advisers about the application of
the provisions of tax law described in this Statement of Additional Information
in light of their particular tax situations.

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PORTFOLIO TRANSACTIONS

Brokerage Commissions

To the maximum extent feasible the Adviser places orders for portfolio
transactions on behalf of each Fund through the Distributor which in turn places
orders on behalf of a Fund with issuers, underwriters or other brokers and
dealers. The Distributor receives no commission, fees or other remuneration from
a Fund for this service.
Allocation of brokerage is supervised by the Adviser.

International Bond Fund's purchases and sales of portfolio securities
are generally placed by the Adviser with primary market makers for these
securities on a net basis, without any brokerage commission being paid by the
Fund. Trading does, however, involve transaction costs. Transactions with
dealers serving as primary market makers reflect the spread between the bid and
asked prices. Purchases of underwritten issues may be made which will include an
underwriting fee paid to the underwriter.

The primary objective of the Adviser in placing orders for the purchase
and sale of securities for each Fund's portfolios is to obtain the most
favorable net results, taking into account such factors as price, commission,
where applicable, (which is negotiable in the case of U.S. national securities
exchange transactions but which is generally fixed in the case of foreign
exchange transactions), size of order, difficulty of execution and skill
required of the executing broker/dealer. The Adviser seeks to evaluate the
overall reasonableness of brokerage commissions paid through the familiarity of
the Distributor with commissions charged on comparable transactions, as well as
by comparing commissions paid by a Fund to reported commissions paid by others,
if available. The Adviser reviews on a routine basis commission rates, execution
and settlement services performed, making internal and external comparisons.

When it can be done consistently with the policy of obtaining the most
favorable net results, it is the Adviser's practice to place such orders with
brokers and dealers who supply market quotations to the custodian of a Fund for
appraisal purposes, or who supply research, market and statistical information
to a Fund or the Adviser. The term "research, market and statistical
information" includes advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities, and furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. The Adviser is not
authorized when placing portfolio transactions for a Fund to pay a brokerage
commission in excess of that which another broker might have charged for
executing the same transaction solely on account of the receipt of research,
market or statistical information. The Adviser does not place orders with
brokers or dealers on the basis that the broker or dealer has or has not sold
Fund shares. Except for implementing the policy stated above, there is no
intention to place portfolio transactions with particular brokers or dealers or
groups thereof. In effecting transactions in over-the-counter securities, orders
are placed with the principal market makers for the security being traded
unless, after exercising care, it appears that more favorable results are
available otherwise.

Although certain research, market and statistical information from
brokers and dealers can be useful to a Fund and to the Adviser, it is the
opinion of the Adviser that such information is only supplementary to its own
research effort since the information must still be analyzed, weighed, and
reviewed by the Adviser's staff. Such information may be useful to the Adviser
in providing services to clients other than the Funds, and not all such
information is used by the Adviser in connection with the Funds. Conversely,
such information provided to the Adviser by brokers and dealers through whom
other clients of the Adviser effect securities transactions may be useful to the
Adviser in providing services to the Funds.

In the fiscal years ended June 30, 1995, 1994 and 1993, Global Fund
paid brokerage commissions of $1,786,237, $1,322,674 and $1,040,167.26,
respectively. For the fiscal year ended June 30, 1995, $221,602, (12%) of the
total brokerage commissions paid by the Fund resulted from orders placed,
consistent with the policy of obtaining the most favorable net results, with
brokers and dealers who provided supplementary research, market and statistical
information to the Fund or the Adviser. The amount of such transactions
aggregated $136,810,847 (13%) of all brokerage transactions. Such brokerage was
not allocated to any particular brokers or dealers or with any regard to the
provision of market quotations for purposes of valuing the Fund's portfolio or
to any other special factors.

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<PAGE>

In the fiscal years ended June 30, 1995, 1994 and 1993, International
Bond Fund paid no brokerage commissions.

The Directors of the Corporation review from time to time whether the
recapture for the benefit of each Fund of some portion of the brokerage
commissions or similar fees paid by a Fund on portfolio transactions is legally
permissible and advisable.

Portfolio Turnover

Average annual portfolio turnover rate is the ratio of the lesser of
sales or purchases to the monthly average value of the portfolio securities
owned during the year, excluding from both the numerator and the denominator all
securities with maturities at the time of acquisition of one year or less.
Global Fund's portfolio turnover rate for the fiscal years ended June 30, 1995
and 1994 were 44.4% and 59.7%, respectively. International Bond Fund's portfolio
turnover rate for the fiscal years ending June 30, 1995 and 1994 were 318.5% and
232.9%, respectively. Recent economic and market conditions necessitated more
active trading, resulting in the higher portfolio turnover rates. A higher rate
involves greater transaction expenses to a Fund and may result in the
realization of net capital gains, which would be taxable to shareholders when
distributed. Purchases and sales are made for a Fund's portfolio whenever
necessary, in management's opinion, to meet the Fund's objectives.

NET ASSET VALUE

The net asset value of shares of the Fund is computed as of the close
of regular trading on the Exchange on each day the Exchange is open for trading.
The Exchange is scheduled to be closed on the following holidays: New Year's
Day, Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. Net asset value per share is determined by dividing
the value of the total assets of the Fund, less all liabilities, by the total
number of shares outstanding.

An exchange-traded equity security is valued at its most recent sale
price. Lacking any sales, the security is valued at the calculated mean between
the most recent bid quotation and the most recent asked quotation (the
"Calculated Mean"). Lacking a Calculated Mean, the security is valued at the
most recent bid quotation. An equity security which is traded on the National
Association of Securities Dealers Automated Quotation ("NASDAQ") system is
valued at its most recent sale price. Lacking any sales, the security is valued
at the high or "inside" bid quotation. The value of an equity security not
quoted on the NASDAQ System, but traded in another over-the-counter market, is
its most recent sale price. Lacking any sales, the security is valued at the
Calculated Mean. Lacking a Calculated Mean, the security is valued at the most
recent bid quotation.

Debt securities, other than short-term securities, are valued at prices
supplied by the Fund's pricing agent(s) which reflect broker/dealer supplied
valuations and electronic data processing techniques. Short-term securities with
remaining maturities of sixty days or less are valued by the amortized cost
method, which the Board believes approximates market value. If it is not
possible to value a particular debt security pursuant to these valuation
methods, the value of such security is the most recent bid quotation supplied by
a bona fide marketmaker. If it is not possible to value a particular debt
security pursuant to the above methods, the Adviser may calculate the price of
that debt security, subject to limitations established by the Board.

An exchange traded options contract on securities, currencies, futures
and other financial instruments is valued at its most recent sale price on such
exchange. Lacking any sales, the options contract is valued at the Calculated
Mean. Lacking any Calculated Mean, the options contract is valued at the most
recent bid quotation in the case of a purchased options contract, or the most
recent asked quotation in the case of a written options contract. An options
contract on securities, currencies and other financial instruments traded
over-the-counter is valued at the most recent bid quotation in the case of a
purchased options contract and at the most recent asked quotation in the case of
a written options contract. Futures contracts are valued at the most recent
settlement price. Foreign currency exchange forward contracts are valued at the
value of the underlying currency at the prevailing exchange rate.

If a security is traded on more than one exchange, or upon one or more
exchanges and in the over-the-counter market, quotations are taken from the
market in which the security is traded most extensively.

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If, in the opinion of the Fund's Valuation Committee, the value of a
portfolio asset as determined in accordance with these procedures does not
represent the fair market value of the portfolio asset, the value of the
portfolio asset is taken to be an amount which, in the opinion of the Valuation
Committee, represents fair market value on the basis of all available
information. The value of other portfolio holdings owned by the Fund is
determined in a manner which, in the discretion of the Valuation Committee most
fairly reflects fair market value of the property on the valuation date.

Following the valuations of securities or other portfolio assets in
terms of the currency in which the market quotation used is expressed ("Local
Currency"), the value of these portfolio assets in terms of U.S. dollars is
calculated by converting the Local Currency into U.S. dollars at the prevailing
currency exchange rate on the valuation date.

ADDITIONAL INFORMATION

Experts

The Financial highlights of each Fund included in the Funds'
prospectuses and the Financial Statements incorporated by reference in this
Statement of Additional Information have been so included or incorporated by
reference in reliance on the report of Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109, independent accountants, and given on the
authority of that firm as experts in accounting and auditing.

Other Information

Many of the investment changes in a Fund will be made at prices
different from those prevailing at the time they may be reflected in a regular
report to shareholders of the Fund. These transactions will reflect investment
decisions made by the Adviser in the light of the objectives and policies of the
Fund, and such factors as its other portfolio holdings and tax considerations
and should not be construed as recommendations for similar action by other
investors.

The CUSIP number of Global Fund is 811150-10-1.

The CUSIP number of International Bond Fund is 811150-20-0.

Global Fund and International Bond Fund each have fiscal years ending
on June 30.

The law firm of Dechert Price & Rhoads is counsel for the Funds.

The Corporation employs State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02101 as Custodian for Global Fund. The
Corporation employs Brown Brothers Harriman and Co., 40 Water Street, Boston,
Massachusetts 02109 as Custodian for International Bond Fund. State Street Bank
and Trust Company and Brown Brothers Harriman and Co. have entered into
agreements with foreign subcustodians approved by the Directors of the
Corporation pursuant to Rule 17f-5 of the 1940 Act.

Scudder Fund Accounting Corporation, Two International Place, Boston,
Massachusetts, 02210-4103, a wholly-owned subsidiary of the Adviser, computes
net asset value for the Funds. Global Fund pays Scudder Fund Accounting
Corporation an annual fee equal to 0.065% of the first $150 million of average
daily net assets, 0.040% of such assets in excess of $150 million, 0.020% of
such assets in excess of $1 billion, plus holding and transaction charges for
this service. International Bond Fund pays Scudder Fund Accounting Corporation
an annual fee equal to 0.08% of the first $150 million of average net assets,
0.06% of such assets in excess of $150 million and 0.04% of such assets in
excess of $1 billion.

Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts
02107-2291, a wholly-owned subsidiary of the Adviser, is the transfer,
dividend-paying and shareholder service agent for each Fund. Global Fund pays
Scudder Service Corporation an annual fee of $17.55 for each account maintained
for a participant. International Bond Fund pays Scudder Service Corporation an
annual fee of $25.00 for each account maintained for a participant. Scudder
Service Corporation charged Global Fund aggregate fees of $2,144,775 during the
Fund's last fiscal year. Scudder Service Corporation charged International Bond
Fund aggregate fees of $1,435,234 during the Fund's last fiscal year.

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The Directors of the Corporation have considered the appropriateness of
using this combined Statement of Additional Information for the Funds. There is
a possibility that a Fund might become liable for any misstatement, inaccuracy,
or incomplete disclosure in this Statement of Additional Information concerning
the other Fund.

The Funds' prospectuses and this Statement of Additional Information
omit certain information contained in the Registration Statement which the
Corporation has filed with the SEC under the Securities Act of 1933 and
reference is hereby made to the Registration Statement for further information
with respect to the Fund and the securities offered hereby. This Registration
Statement is available for inspection by the public at the SEC in Washington,
D.C.

FINANCIAL STATEMENTS

Each Fund's Annual Report for the fiscal year ended June 30, 1995,
together with the Report of Independent Accountants, is incorporated into this
Statement of Additional Information by reference in its entirety.

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APPENDIX

The following is a description of the ratings given by Moody's and S&P
to corporate and municipal bonds.

Ratings of Municipal and Corporate Bonds

S&P:

Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong. Debt rated AA
has a very strong capacity to pay interest and repay principal and differs from
the highest rated issues only in small degree. Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories. Debt rated BBB is regarded as
having an adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.

Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest. While
such debt will likely have some quality and protective characteristics, these
are outweighted by large uncertainties or major exposures to adverse conditions.

Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating. Debt rated B has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.

Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating. The rating CC typically is applied to debt subordinated
to senior debt that is assigned an actual or implied CCC rating. The rating C
typically is applied to debt subordinated to senior debt which is assigned an
actual or implied CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued. The rating C1 is reserved for income bonds on which no interest
is being paid. Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period had not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Moody's:

Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Bonds which are rated Aa are
judged to be of high quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long term risks appear
somewhat larger than in Aaa securities. Bonds which are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.

<PAGE>

Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated Ba are
judged to have speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during other good and bad times over
the future. Uncertainty of position characterizes bonds in this class. Bonds
which are rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.

Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest. Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
<PAGE>
This information must be preceded or accompanied by a current prospectus.

Portfolio changes should not be considered recommendations for action by
individual investors.

Scudder
Global
Fund

Annual Report
June 30, 1995

o For investors seeking long-term growth of capital from a professionally
managed portfolio consisting primarily of U.S. and foreign common stocks.

o A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
<PAGE>
SCUDDER GLOBAL 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

19 Financial Statements

22 Financial Highlights

23 Notes to Financial Statements

28 Report of Independent Accountants

29 Tax Information

29 Officers and Directors

30 Investment Products and Services

31 How to Contact Scudder

IN BRIEF

o Scudder Global Fund provided a 9.11% total return for the 12 months ended
June 30, 1995, reflecting a significantly improved investment environment
in the final six months of the period.

o The Fund surpassed the 7.55% average return of the 108 global equity funds
tracked by Lipper Analytical Services, Inc. during the period but failed to
keep pace with the unmanaged Morgan Stanley Capital International (MSCI)
World Index. The 10.67% return of the Index reflects a greater exposure to
the strong United States stock market, without which the Index would have
returned 2.27%. Over longer periods, however, the Fund has generally
outperformed the Index.

(BAR CHART TITLE)
Average Annual Total Returns for Periods
Ended June 30, 1995
------------------------------------------------------------------
Scudder Global Fund MSCI World Index
------------------------------------------------------------------
(BAR CHART DATA)
Five years 8.63% 7.14%
------------------------------------------------------------------
Life of Fund* 12.04% 10.21%
------------------------------------------------------------------

* The Fund commenced operations on July 23, 1986. For the purpose of
comparison, Index returns are from July 31. Past performance is no
guarantee of future results.

o The Fund maintained exposure to a number of investment themes during the
year, while decreasing its emphasis on stocks likely to benefit from
synchronized world growth. A new theme, "Hidden German Wealth," was added
during the year to take advantage of the enormous wealth-creating potential
of German privatization.

2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
- --------------------------------------------------------------------------------
Dear Shareholders,

After a difficult 1994, stock prices improved dramatically in the first
half of this year as concerns about inflationary economic growth all but
disappeared. Economic growth in the United States and Europe has shown signs of
weakening in recent months, allowing investors to focus on the strong corporate
earnings increases that have characterized the past few years.

By and large, the U.S. stock market has reacted most favorably to this
confluence of circumstances, with a 20.21% rise in the unmanaged S&P 500 Index
for the first half of 1995. While growth in capital markets is always welcome,
rapid increases in asset prices often warn of excess -- and a 20% increase for
such a short period is not reflective of an economy late in its expansionary
cycle. Indeed, the recent surge in mergers and acquisitions suggests that U.S.
corporations may have exhausted the benefits of downsizing for this cycle and
are looking to other means of generating profits. At a minimum, we think it will
be difficult for the stock market to repeat in the next six months its
performance in the first half of the year, and caution investors not to be
surprised by any near-term corrections.

Fortunately, the Scudder Global Fund has roughly two thirds of its
holdings invested outside the United States, where such forces as privatization,
massive infrastructure development, and demographic changes are creating
unprecedented opportunities for financial reward. The world's capital markets
are being driven by disinflationary growth, manifested daily in technological
innovation, deregulation, and monetary restraint. While we believe this backdrop
is healthy for equity markets in general, Scudder Global Fund seeks to identify
those companies that will provide superior investment results based on their
participation in the dynamic of the world economy.

If you have any questions about your 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 the Scudder Global Fund.
Sincerely,
/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder Global Fund

3
<PAGE>

Scudder Global Fund
Performance Update as of June 30, 1995
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder Global Fund
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
6/30/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,911 9.11% 9.11%
5 Year $15,129 51.29% 8.63%
Life of
Fund* $27,638 176.38% 12.04%

MSCI World Index
- --------------------------------------
Total Return
Period Growth -------------
Ended of Average
6/30/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $11,067 10.67% 10.67%
5 Year $14,119 41.19% 7.14%
Life of
Fund* $23,781 137.81% 10.21%

*The Fund commenced operations on July 23, 1986.
Index comparisons begin July 31, 1986.

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 Global Fund
Year Amount
- ----------------------
7/31/86 10000
87 12850
88 12286
89 15223
90 18268
91 17318
92 19758
93 22417
94 25329
27638

MSCI World Index
Year Amount
- ----------------------
7/31/86 10000
87 14131
88 13983
89 15728
90 16843
91 16019
92 16696
93 19492
94 21488
95 23781

Morgan Stanley Capital International (MSCI) World Index is an
unmanaged capitalization-weighted measure of global stock markets
including the U.S., Canada, Europe, Australia, and the Far East.
Index returns assume dividends reinvested net of withholding tax
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> <C> <C>
1987* 1988 1989 1990 1991 1992 1993 1994 1995
-----------------------------------------------------------------------
Net Asset Value... $15.42 $14.47 $17.64 $20.36 $18.06 $19.56 $21.63 $23.93 $25.64
Income Distributions $ -- $ .06 $ .14 $ .20 $ .37 $ .31 $ .16 $ .24 $ .11
Capital Gains
Distributions..... $ -- $ .25 $ .08 $ .55 $ .83 $ .66 $ .34 $ .26 $ .34
Fund Total
Return (%)........ 28.50 -4.45 23.90 20.00 -5.20 14.09 13.45 12.99 9.11
Index Total
Return (%)........ 41.31 -1.05 12.48 7.09 -4.90 4.22 16.75 10.23 10.67
</TABLE>

All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not maintained the Fund's expenses, the average annual
total return for the one year, five year and life of Fund periods would
have been lower.

4
<PAGE>

Portfolio Summary as of June 30, 1995
- ---------------------------------------------------------------------------
Geographical (Excludes Cash Equivalents & Debt)
- ---------------------------------------------------------------------------
Europe 40%
U.S. & Canada 28% Investments in Germany, where the private
Pacific Basin 16% sector is increasingly the vehicle for
Japan 9% wealth creation and distribution, now
Latin America 3% account for 11.92% of the Fund's equity
Other 4% holdings.
----
100%
====

A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.

- --------------------------------------------------------------------------
Sectors (Excludes Cash Equivalents & Debt)
- --------------------------------------------------------------------------
Financial 20%
Manufacturing 14%
Metals & Minerals 12% Our belief that world economic growth
Utilities 10% will be capital-goods related rather
Energy 8% than consumer driven is reflected in
Technology 7% the Fund's top sectors.
Health 6%
Consumer Staples 5%
Construction 4%
Other 14%
----
100%
====

A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.

- --------------------------------------------------------------------------
Ten Largest Equity Holdings
- --------------------------------------------------------------------------
1. SAP AG
German computer software manufacturer
2. Brown, Boveri & Cie. AG
Manufacturer of electrical equipment in Switzerland
3. Sandoz Ltd. AG
Pharmaceutical company in Switzerland
4. Internationale-Nederlanden Groep CVA
Banking and insurance holding company in the Netherlands
5. VEBA AG
Electric utility, distributor of oil and chemicals in Germany
6. Samsung Electronics Co., Ltd.
Major electronics manufacturer in Korea
7. Muenchener Rueckversicherungs AG
Insurance company in Germany
8. Enron Corp.
Major U.S. natural gas pipeline system
9. Lasmo PLC
Oil production and exploration in the United Kingdom
10. Canadian Pacific Ltd.
Transportation and natural resource conglomerate

SAP AG, the Fund's largest holding, returned over 200% for the
12 months ended June 30, based on price appreciation and a strong
deutschemark.

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 GLOBAL FUND
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Dear Shareholders,

Scudder Global Fund returned 9.11% for the 12 months ended June 30, 1995,
based on a $1.71 increase in net asset value and distributions of income and
capital gains totaling $0.45 per share. While the Fund's return has been
competitive with global portfolios in general, outpacing the 7.55% average
return of its peers, it has lagged the U.S. market, which has shown superior
appreciation in recent months. Currency trends are critical to the explanation.

A Weak Dollar Bears Fruit

When changes in relative currency values persist for a long period of time,
they become the mechanism by which income is allocated between consumers and
producers. An expensive currency tilts the economy towards consumers, who buy
foreign goods more cheaply; a cheap one towards producers, who become more
competitive overseas. Until several years ago the dollar was chronically
overvalued, particularly versus the yen and the deutschemark. Americans
consumed, while other countries produced. The overvaluation reached a crescendo
in the middle of the 1980s and initiated many years of American cost-cutting to
meet the challenge of foreign and particularly Japanese competition. As the
relative valuations of the dollar and other currencies reversed, American
products suddenly became extremely competitive in world markets. As the
devaluation reached a climax early this year, American companies enjoyed a
veritable profits explosion. Even though the falling dollar raised the price of
foreign equities, it undermined the competitiveness of Japanese, German, and
other "hard currency" producers. This latter effect is more real and lasting
than the temporary effect of currency translation, in our opinion, and the
global markets have recognized it as such.

At the same time the openness of the U.S. economy has allowed for the
cheapest sources of imports and the widest possible use of information
technology with the result that inflation has been restrained, despite the
falling dollar. Japan and Germany are more regulated. This may preserve the
stability of relationships between individuals and groups within society but can
only delay access to the benefits of global markets and technology.

Emerging economies are subcontractors to the first world. When productive
capacity or investment opportunities in the developed economies wane, then
producers and investors seek opportunity in such places. When the global
economic cycle subsides, these are the first places to suffer. So violent is the

6
<PAGE>
roller coaster effect on national income that they usually feel the need to
regulate their economies heavily. One way in which they do this is to fix the
value of their currencies to the dollar. In recent months the combination of
healthy world growth and a low dollar has allowed many of them to show strong
recoveries.

The amount of goods that 100 yen would buy outside Japan has been
considerably higher than the amount it could buy inside Japan, and the disparity
has been rising. We have been anticipating for a long while that yen would flow
out of Japan and its value decline. The yen has been so far from reasonable
value, in our view, that we have been unwilling to invest heavily in companies
dependent on a high yen or a low dollar. To date, this has penalized the
portfolio. For example, it explains why the great exporting companies of Japan,
such as Hitachi and MEI, have not shown better performance. It also explains why
the portfolio does not own more U.S. technology stocks. We believe the earnings
of these stocks have been inflated by the competitive edge of a low currency,
though their success is obviously due to far more than that.

The Portfolio

By design the portfolio strategies are diverse, based as they are on
independent investment themes. They do not rely on a single view of the world or
our expectations for changes in currency values. Rather, individual stock
selections are made on the basis of each company's participation in the forces
we believe are changing the global economic landscape. Xerox is a good example.
The company was slow to understand the Japanese challenge. It responded by
cutting facilities and employees and deepening its investment in technology,
which has taken many years to flow through to profits. Just as it began to, the
yen rise inflated its principal competitors' costs -- but that has been a bonus.
IBM, another portfolio holding, has similar influences at work.

The biggest change in the Fund's country allocation in recent times has
been the increase in German companies. At the moment, we think that any firming
of the dollar relative to the yen will lead to a lower deutschemark. That should
boost the profits outlook. While not the basis of investment, the possibility of
a lower deutschemark has encouraged us to add to the theme "Hidden German
Wealth." There are various pressures on the German economy--an aging population,

7
<PAGE>
low global diversification in the corporate sector, economically and politically
unstable neighbors to the east, and a competitiveness problem related to the
weak currencies of Western Europe. The resources required to address these
challenges are far more likely to be found in the private sector, in our
estimation. More and more German companies are contemplating U.S. stock market
listings. Meanwhile, the Dresdner Bank's acquisition of a U.K. merchant bank
underscores that capital markets expertise is being bought outside Germany. The
importance of the German stock market as a mechanism for raising capital is
rapidly coming into question. The privatization of the huge Deutsche Telekom
will focus the mind of Germany's establishment on the whole question. For the
portfolio, we have invested primarily in companies such as VEBA, RWE, Viag, BV
Bank, and Munich RE, which have ownership of either a large number of
independent subsidiaries or valuable stakes in other companies. If the German
stock market is used as a mechanism for the more efficient allocation of
resources, the portfolio should benefit greatly.

The lesson of Switzerland's great global companies has surely not been lost
on the German industrialists. With a small capital market but large global
companies, Swiss business realized early that it needed access to the world
stock market. It has responded by reforming its accounting and communications
with investors. Far from being a bastion of secrecy, Swiss companies are eager
to tell us their story. It is partially for this reason that we have been more
heavily invested in Swiss global companies than German companies until recently.
Sandoz, Nestle, and Swiss Reinsurance are examples of portfolio holdings.

The emerging markets theme accounts for around 12% of the portfolio,
including the stocks that were bought because of the introduction of foreign
capital to hitherto capital-starved economies. That there are profitable
opportunities in such countries as China, Brazil, South Africa, and South Korea
is beyond question. However, equally true is that the political systems of such
countries may suffer considerable stress from time to time as the volatility of
their economies buffets individuals' expectations, which have been heightened in
recent times by the global media. The challenge is to understand the places that
can establish self-perpetuating growth. The Fund does not rely on the liquidity
of these stock markets to realize investment returns but rather intrinsic
growth. We have invested in South Korea on this basis.

8
<PAGE>
Elsewhere our approach is opportunistic, as evidenced by the portfolio's
investments in the Brazilian power generation industry, which we believe will
likely benefit from a number of restructurings and privatizations.

The other themes in the portfolio reviewed in the mid-year report to
shareholders are Capital Investment Led Growth, Gold/Platinum, Life Insurance,
Strategically Safe Oil, Thoroughly Modern Companies, and the Shortage of
Reinsurance Capacity. Since that time, the principal changes in the portfolio in
terms of individual issues have been the addition of Royal Dutch Petroleum and
Biogen. In addition, profits were taken in Argentine Par bonds following Carlos
Menem's re-election. Elsewhere, there was a small, across-the-board reduction in
the Fund's Japanese holdings.

Outlook

The economists tell us that growth and inflation prospects are favorable.
This has been recognized in the U.S. stock market so far this year. Foreign
stock markets are low relative to the United States and may have to wait for the
dollar to rise, thereby enhancing the competitiveness of their companies in
world markets. The level of the yen to the dollar is critical to the future
direction of capital markets, and its recent -- though admittedly small -- rise
bodes well for overseas investments. With roughly two thirds of assets domiciled
outside the United States, we believe the Fund is positioned to provide
competitive investment returns for shareholders.

Sincerely,

Your Portfolio Management Team

/s/William E. Holzer /s/Nicholas Bratt
William E. Holzer Nicholas Bratt

/s/Alice Ho
Alice Ho

(SIDEBAR)
Scudder Global Fund:
A Team Approach to Investing

Scudder Global 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 William E. Holzer has had day-to-day responsibility
for Scudder Global Fund's worldwide strategy and investment themes since its
inception in 1986. Willy, who has over 20 years' experience in global investing,
joined Scudder in 1980. Nicholas Bratt, Portfolio Manager, directs Scudder's
overall global equity investment strategies. Nick joined Scudder in 1976 and the
team in 1993. Alice Ho, Portfolio Manager, joined the team in 1994 and is also
responsible for implementing the Fund's strategy. Alice, who joined Scudder in
1986 as a member of the institutional and private investment counsel areas, has
worked as a portfolio manager since 1989.

9
<PAGE>
<TABLE>

SCUDDER GLOBAL FUND
INVESTMENT PORTFOLIO as of June 30, 1995
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------------------------
2.5% REPURCHASE AGREEMENTS
--------------------------------------------------------------------------------
29,000,000 Repurchase Agreement with Donaldson,
Lufkin & Jenrette, dated 6/30/95 at 6.07%,
to be repurchased at $29,014,669 on 7/3/95,
collateralized by a $29,789,000 U.S. Treasury
Bill, 10/19/95 (Cost $29,000,000).............. 29,000,000
----------
--------------------------------------------------------------------------------
4.2% BONDS
--------------------------------------------------------------------------------
50,000,000 U.S. Treasury Note, 5.625%, 6/30/97
(Cost $49,839,844)............................. 49,839,850
----------
--------------------------------------------------------------------------------
1.7% CONVERTIBLE BONDS
--------------------------------------------------------------------------------

CANADA 0.6% 6,657,000 Teck Corp., 3.75%, 7/15/06 (Major mining
complex)....................................... 6,773,498
----------
KOREA 0.4% 625,000 Cheil Food and Chemical Co., Ltd., 3%, 12/31/06
(Leading sugar refiner and major integrated
food processor)................................ 725,000
2,700,000 Ssangyong Cement Industrial Co., Ltd., 3%,
12/31/05 (Major cement producer)............... 3,145,500
650,000 Ssangyong Oil Refining Co., Ltd., 3.75%, 12/31/08
(Major oil refiner)............................ 692,250
----------
4,562,750
----------
MALAYSIA 0.4% 4,780,000 Telekom Malaysia Bhd., 4%, 10/3/04
(Telecommunication services)................... 4,588,800
----------
MEXICO 0.3% 8,200,000 Empresa ICA Sociedad Controladora S.A., 5%,
3/15/04 (Construction company)................. 4,387,000
----------
TOTAL CONVERTIBLE BONDS (Cost $22,689,173)....... 20,312,048
----------
--------------------------------------------------------------------------------
3.9% PREFERRED STOCKS
--------------------------------------------------------------------------------
Shares
--------------------------------------------------------------------------------
GERMANY 47,700 Rheinisch-Westfaelisches Elektrizitaetswerk AG
(Electric utility)............................. 13,121,510
</TABLE>

The accompanying notes are an integral part of the financial statements.

ARGENTINA 0.6% 253,143 Electricidad Argentina SA (ADR) (Electric
utility) (c)...................................... 4,430,002
134,100 YPF SA "D" (ADR) (Petroleum company)................ 2,531,138
----------
6,961,140
----------

AUSTRALIA 4.3% 1,056,000 Ampol Exploration Ltd. (Oil and gas exploration
company).......................................... 2,388,053
677,909 Australian Gas & Light Co. (Public utility)......... 2,150,103
1,001,960 Broken Hill Proprietary Co. Ltd. (Petroleum,
minerals and steel)............................... 12,341,023
547,000 CRA Ltd. (Mining, manufacturing and development).... 7,445,299
1,148,000 Central Pacific Minerals (Shale oil and mineral
development)...................................... 816,385
6,964,000 Fosters Brewing Group, Ltd. (Leading brewery)....... 6,190,442
4,113,496 M.I.M. Holdings Ltd. (Nonferrous metals and coal)... 5,119,199
3,711,000 Woodside Petroleum Ltd. (Major oil and gas producer) 14,567,430
----------
51,017,934
----------
AUSTRIA 0.3% 61,900 Flughafen Wien AG (Operator of terminals and
facilities at Vienna International Airport)....... 3,292,012
----------
BERMUDA 2.3% 378,150 Mid Ocean Limited (Property and casualty insurance
company).......................................... 11,958,994
570,200 PartnerRe Holdings Ltd. (Property and casualty
insurance company)................................ 14,896,475
----------
26,855,469
----------

BRAZIL 1.5% 30,401,230 Centrais Eletricas Brasileiras S/A "B" (pfd.)
(Electric utility)................................ 8,091,582
126,000,000 Companhia Energetica de Minas Gerais (pfd.)
(Electric power utility).......................... 2,463,878
70,200,000 Companhia Energetica de Sao Paulo (pfd.)
(Electric utility)................................ 2,775,970
</TABLE>

The accompanying notes are an integral part of the financial statements.

SCUDDER GLOBAL FUND

CANADA 4.8% 228,000 Alcan Aluminium Ltd. (CN) (Manufacturer of
aluminum and finished products)................... 6,888,218
188,856 Alcan Aluminum Ltd. ................................ 5,712,894
218,000 Barrick Gold Corp. (CN) (Gold exploration and
production in North and South America)............ 5,514,869
222,200 Barrick Gold Corp. ................................. 5,610,550
314,900 Cambior, Inc. (Medium-sized gold producer with a
major mine in Guyana)............................. 3,897,135
856,944 Canadian Pacific Ltd. (Ord.) (Transportation and
natural resource conglomerate).................... 14,738,334
100,000 Canadian Pacific Ltd. .............................. 1,737,500
240,300 Placer Dome Inc. (CN) (Gold, silver and copper
mining company)................................... 6,275,807
236,000 Placer Dome Inc. ................................... 6,165,500
----------
56,540,807
----------

CHINA 1.3% 526 American Standard China (c)......................... 5,260,000
551,500 Huaneng Power International, Inc. Series N (ADR)
(Developer and operator of large coal-fired power
plants)........................................... 10,133,813
----------
15,393,813
----------

DENMARK 1.2% 138,500 FLS Industries "B" (Machinery for cement and allied
industries; manufacturer and shipper of cement)... 13,720,489
----------
GERMANY 7.2% 44,100 Bayerische Vereinsbank AG (Universal bank).......... 13,378,132
23,000 Hoechst AG (Chemical producer)...................... 4,969,736
38,812 Mannesmann AG (Bearer) (Diversified construction and
technology company)............................... 11,858,170
2,446 Muenchener Rueckversicherungs AG (Insurance company) 4,634,284
5,619 Muenchener Rueckversicherungs AG (Registered)....... 12,311,943
18,040 Siemens AG (Bearer) (Manufacturer of electrical and
electronic equipment)............................. 8,955,751
44,500 VEBA AG (Electric utility, distributor of oil and
chemicals)........................................ 17,489,786
</TABLE>

The accompanying notes are an integral part of the financial statements.

HONG KONG 2.3% 1,750,000 Cheung Kong Holdings Ltd. (Real estate company)..... 8,684,639
834,600 China Light & Power Co., Ltd. (Electric utility).... 4,292,833
1,150,000 Hong Kong Telecommunications, Ltd.
(Telecommunication services)...................... 2,273,902
1,607,000 Hutchison Whampoa, Ltd. (Container terminal and real
estate company)................................... 7,788,066
2,225,000 Mandarin Oriental (Luxury hotel chain).............. 2,225,000
258 New World Development Co., Ltd. (Property
investment and development, construction and
engineering, hotels and restaurants,
telecommunications)............................... 859
608,000 Television Broadcasts, Ltd. (Television
broadcasting)..................................... 2,137,248
----------
27,402,547
----------

HUNGARY 0.3% 3,619 First Hungary Fund (Investment company) (c)......... 3,485,097
----------
JAPAN 8.4% 704,000 Canon Inc. (Leading producer of visual image and
information equipment)............................ 11,462,687
1,140,000 Hitachi Ltd. (General electronics manufacturer)..... 11,365,701
1,001,000 Iino Kaiun Kaisha, Ltd. (Operator of tankers and
specialized carriers)............................. 5,515,509
191,000 Kyocera Corp. (Leading ceramic package manufacturer) 15,729,809
659,000 Matsushita Electrical Industrial Co., Ltd.
(Consumer electronic products manufacturer)....... 10,263,465
794,000 NSK Ltd. (Leading manufacturer of bearings and other
machinery parts).................................. 4,581,039
90,000 Nichiei Co., Ltd. (Finance company for small and
medium-sized firms)............................... 5,553,655
35,000 Nintendo Co., Ltd. (Game equipment manufacturer).... 2,011,091
1,047,000 Nisshin Steel Co., Ltd. (Blast furnace steelmaker).. 3,841,862
157,000 Secom Co., Ltd. (Electronic security system operator) 9,873,282
144,000 Sony Corp. (Consumer electronic products
manufacturer)...................................... 6,914,990
1,690,000 Sumitomo Metal Mining Co., Ltd. (Leading gold,
nickel and copper mining company).................. 12,482,331
----------
99,595,421
----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>

SCUDDER GLOBAL FUND

- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Korea 4.8% 10,000 Baikyang (Underwear manufacturer)................... 1,688,432
91,549 Cheil Food and Chemical Co., Ltd. (Korea's largest
sugar refiner and major integrated food processor) 5,736,153
334,374 Daewoo Heavy Industries Ltd. (Leading manufacturer
of heavy industrial equipment).................... 3,969,616
53,251 Daewoo Securities Co., Ltd. (Brokerage and financial
services)......................................... 1,503,194
121,464 Hanil Bank (Major commercial bank).................. 1,374,701
69,000 units Korea Asia Fund (IDR) (Investment company) (b)...... 1,380,000
25,000 Korea Electric Power Co. (Electric utility)......... 936,552
140 units Korea Equity Trust IDR (Investment company) (b)..... 1,610,000
78,207 Korea Express Co., Ltd. (General freight transport
company).......................................... 3,012,326
20,338 Korea Express Co., Ltd. (New (d))................... 697,517
49,799 Korea Long Term Credit Bank (Major commercial bank). 1,425,456
2,000 Korea Mobile Telecom (Mobile telecommunication
company)* (c)..................................... 1,882,891
80,000 Korea Zinc Co. (Zinc mining and manufacturing)...... 1,899,486
14,220 Lotte Confectionery Co., Ltd. (Major producer of
snack food)....................................... 1,913,257
101,398 Oriental Brewery Co., Ltd. (Korea's largest brewer). 2,340,674
25,000 Pang-Rim Spinning Co., Ltd. (Leading manufacturer of
cotton-polyester spun fabrics).................... 1,559,821
13,933 Samsung Electromechanics Co., Ltd. (Major
electronics parts company)........................ 665,314
5,448 Samsung Electromechanics Co., Ltd. (New (d))........ 248,649
1,153 Samsung Electronics Co., Ltd. (Major electronics
manufacturer) (c)................................. 196,684
228 Samsung Electronics Co., Ltd. (New (d)) (c)......... 38,415
28,625 Samsung Electronics Co., Ltd. (GDS) (Voting)........ 2,061,000
5,664 Samsung Electronics Co., Ltd. (GDS) (Voting)
(New (d)) (c)..................................... 407,321
223,680 Samsung Electronics Co., Ltd. (GDS) (Non-voting).... 12,078,720
44,266 Samsung Electronics Co., Ltd. (GDS) (Non-voting)
(New (d)) (c)..................................... 2,386,292
94,557 Samsung Heavy Industries Co., Ltd. (Machinery
manufacturer)..................................... 2,644,253
12,349 Samsung Heavy Industries Co., Ltd. (New (d))........ 309,499
43 units Seoul International Trust (Investment company) (b).. 2,042,500
37,206 Ssangyong Cement Industrial Co., Ltd. (Major cement
company).......................................... 1,001,190
----------
57,009,913
----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NETHERLANDS 3.7% 426,422 AEGON Insurance Group NV (Insurance company)........ 14,750,706
324,786 Internationale-Nederlanden Groep CVA (Banking and
insurance holding company)........................ 17,963,317
92,600 Royal Dutch Petroleum Co. (New York shares)
(International energy company).................... 11,285,625
----------
43,999,648
----------
NEW ZEALAND 0.8% 2,600,000 Telecom Corp. of New Zealand (Telecommunication
services)......................................... 9,734,247
----------
NORWAY 0.1% 200,000 Smedvig Tankships Ltd. (Owner and operator of
tankers).......................................... 1,379,534
----------
PANAMA 0.5% 165,900 Banco Latinoamericano de Exportaciones, SA
(ADR) (Bank)...................................... 5,495,438
----------
SINGAPORE 0.9% 993,111 Jardine Matheson Holdings, Ltd. (Conglomerate: real
estate, merchandising, engineering)............... 7,299,366
1,008,000 Jardine Strategic Holdings Ltd. (Conglomerate: auto
distribution, food retailing, property investment
and development).................................. 3,245,760
----------
10,545,126
----------
SOUTH AFRICA 1.1% 468,500 Impala Platinum Holdings (ADR) (Leading platinum
producer)......................................... 11,829,625
75,000 Rustenburg Platinum Holdings, Ltd. (ADR) (Leading
platinum producer)................................ 1,556,250
----------
13,385,875
----------

SWEDEN 3.9% 502,000 Astra AB "A" (Free) (Pharmaceutical company)........ 15,484,460
78,800 Atlas Copco AB (Free) (Manufacturer of air and gas
compressors)...................................... 1,104,339
676,300 S.K.F. AB "B" (Free) (Manufacturer of roller
bearings)......................................... 13,659,435
417,300 Skandia Foersaekrings AB (Free) (Financial
conglomerate)..................................... 8,084,320
425,400 Volvo AB "B" (Free) (Automobile manufacturer)....... 8,095,120
----------
46,427,674
----------
SWITZERLAND 8.5% 17,915 Brown, Boveri & Cie. AG (Bearer) (Manufacturer of
electrical equipment)............................. 18,545,098
4,000 Ciba-Geigy AG (Bearer) (Pharmaceutical company)..... 2,928,354
13,735 Ciba-Geigy AG (Registered).......................... 10,067,165
</TABLE>

The accompanying notes are an integral part of the financial statements.

SCUDDER GLOBAL FUND

8,970 Zurich Insurance Group (Registered)................. 11,271,898
-----------
100,982,591
-----------

UNITED KINGDOM 8.3% 2,830,400 British Gas PLC (Integrated gas utility)............ 13,031,183
1,847,000 Enterprise Oil PLC (Oil and gas exploration and
production)....................................... 11,631,870
677,600 Great Universal Stores PLC "A" (Catalog home
shopping, retailing, finance and property
investment)....................................... 6,330,948
6,067,285 Lasmo PLC (Oil production and exploration).......... 16,548,018
140,900 London & Overseas Freighters (ADR) (Operator of a
fleet of oil tankers)............................. 1,690,800
1,356,000 PowerGen PLC (Electric utility)..................... 10,405,057
1,128,609 RTZ Corp. PLC (Mining and finance company).......... 14,708,891
1,680,000 Reuters Holdings PLC (International news agency).... 13,986,641
3,069,900 St. James's Place Capital PLC (Money management and
insurance)........................................ 5,321,551
1,063,000 Waste Management International PLC* (Waste
collection and disposal services)................. 4,900,146
-----------
98,555,105
-----------

UNITED STATES 20.5% 84,800 AMBAC Inc. (Insurer of municipal bonds)............. 3,402,600
227,500 AirTouch Communications, Inc.* (Wireless
telecommunication services)....................... 6,483,750
236,100 American President Companies, Ltd. (Major
containership operator)........................... 5,607,375
147,000 Biogen Inc.* (Biotechnology research and
development)...................................... 6,541,500
255,700 Boeing Co. (Manufacturer of jet airplanes and
missiles)......................................... 16,013,212
117,000 CMS Energy Corp. (Holding company, electric and gas
utility in Michigan).............................. 2,881,125
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>
INVESTMENT PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
230,000 Comsat Corp. (Provider of communication and
information services worldwide by fixed and mobile
technology)....................................... 4,513,750
141,600 Consolidated Freightways Inc. (Trucking, air
freight).......................................... 3,132,900
479,000 Destec Energy Inc. (Non-utility producer of
cogeneration and coal gasification power)......... 6,167,125
228,300 EXEL, Ltd. (Provider of liability insurance)........ 11,871,600
481,100 Enron Corp. (Major natural gas pipeline system)..... 16,898,637
136,700 Fluor Corp. (Engineering and construction company).. 7,108,400
99,635 General Re Corp. (Property and casualty reinsurance) 13,338,636
92,100 Harnischfeger Industries, Inc. (Manufacturer of
specialized machinery, equipment and systems)..... 3,188,962
627,000 Homestake Mining Co. (Major international gold
producer)......................................... 10,345,500
145,660 International Business Machines Corp. (Principal
manufacturer and servicer of business and
computing machines)............................... 13,983,360
74,850 J.P. Morgan & Co., Inc. (Commercial banking and
financial services)............................... 5,248,856
739,100 LaFarge Corp. (Leading cement producer)............. 13,858,125
202,650 MBIA Inc. (Insurer of municipal bonds).............. 13,476,225
334,900 MCI Communications Corp. (Long-distance
telecommunications network)....................... 7,367,800
107,500 Policy Management Systems Corp.* (Insurance company
software and services)............................ 4,945,000
259,400 Public Service Co. of New Mexico (Large electric
utility serving the southwest).................... 3,696,450
194,700 Southdown Inc. (Cement and concrete producer)....... 3,723,638
81,000 Thermo Electron Corp.* (Engineered industrial
products and environmental instruments)........... 3,260,250
250,000 Unicom Corp. (Electric utility in northern Illinois) 6,656,250
319,700 United Healthcare Corp. (Owner/manager of health
maintenance organizations and provider of other
speciality health services)....................... 13,227,588
202,700 United Technologies Corp. (Manufacturer of
aerospace, climate control systems and elevators). 15,835,938
266,100 WMX Technologies Inc. (Solid and chemical waste
management services).............................. 7,550,588
97,650 Xerox Corp. (Leading manufacturer of copiers and
duplicators)...................................... 11,449,463
-----------
241,774,603
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>

SCUDDER GLOBAL FUND

- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VENEZUELA 0.1% 195,000 Venezolana de Prerreducidos Caroni C.A. (GDS)
(Manufacturer of steel pellets)................... 1,194,375
-------------
TOTAL COMMON STOCKS (Cost $859,867,142)............. 1,037,256,034
-------------
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $983,485,721) (a)........................... 1,182,855,996
=============
<FN>
* Non-income producing security.

(a) The cost for federal income tax purposes was $985,871,156. At June 30, 1995, net unrealized appreciation for all
securities based on tax cost was $196,984,840. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of $231,864,561 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax cost over market value of
$34,879,721.

(b) 500 shares = 1 IDR unit (International Depository Receipt) for Korea Asia Fund
1,000 shares = 1 IDR unit for Korea Equity Trust
1,000 shares = 1 unit for Seoul International Trust

(c) Securities valued in good faith by the Valuation Committee of the Board of Directors. The cost of these securities
at June 30, 1995 aggregated $16,525,397. See Note A of the Notes to Financial Statements.

(d) New shares issued during 1995, eligible for a pro rata share of 1995 dividends.

See page 5 for sector breakdown.

</FN>
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------------------------------------

JUNE 30, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $983,485,721)
(Note A)....................................................... $ 1,182,855,996
Cash................................................................ 31,528,427
Receivables:
Investments sold............................................... 5,461,827
Dividends and interest......................................... 2,818,314
Foreign taxes recoverable...................................... 898,526
Fund shares sold............................................... 541,117
---------------
Total assets............................................... 1,224,104,207
LIABILITIES
Payables:
Investments purchased.......................................... $ 49,878,057
Fund shares redeemed........................................... 2,379,036
Accrued management fee (Note C)................................ 946,730
Other accrued expenses (Note C)................................ 708,876
Payable on closed forward foreign currency exchange contracts
(Note A).................................................... 2,007,982
---------------
Total liabilities 55,920,681
---------------
Net assets, at market value $ 1,168,183,526
===============
NET ASSETS
Net assets consist of:
Undistributed net investment income............................ $ 8,984,372
Net unrealized appreciation on:
Investments................................................ 199,370,275
Foreign currency related transactions...................... 49,686
Accumulated net realized gain.................................. 15,087,941
Capital stock.................................................. 455,594
Additional paid-in capital..................................... 944,235,658
---------------
Net assets, at market value......................................... $ 1,168,183,526
===============
NET ASSET VALUE, offering and redemption price per share
($1,168,183,526 -:- 45,559,445 shares of capital stock
outstanding, $.01 par value, 100,000,000 shares authorized).... $25.64
======
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>
SCUDDER GLOBAL FUND
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------------------------------------

YEAR ENDED JUNE 30, 1995
- --------------------------------------------------------------------------------------------------------------
<C> <C>

INVESTMENT INCOME
Income:
Dividends (net of withholding taxes of $1,706,060).................. $ 18,844,996
Interest............................................................ 8,411,924
---------------
27,256,920
Expenses:
Management fee (Note C)............................................. $ 11,015,077
Services to shareholders (Note C)................................... 2,494,640
Custodian and accounting fees (Note C).............................. 1,162,404
Directors' fees (Note C)............................................ 45,725
Reports to shareholders............................................. 517,034
Legal............................................................... 174,089
Auditing............................................................ 90,047
Federal and state registration...................................... 58,763
Other 55,490 15,613,269
--------------- ---------------
Net investment income............................................... 11,643,651
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS..
Net realized gain (loss) from:
Investments..................................................... 14,523,166
Foreign currency related transactions........................... (2,575,142) 11,948,024
---------------
Net unrealized appreciation during the period on:
Investments..................................................... 70,145,469
Foreign currency related transactions........................... 2,620,692 72,766,161
--------------- ---------------
Net gain on investment transactions................................. 84,714,185
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $ 96,357,836
===============
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
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............................................... $ 11,643,651 $ 8,994,599
Net realized gain from investment transactions...................... 11,948,024 15,689,031
Net unrealized appreciation on investment transactions during the
period......................................................... 72,766,161 55,680,309
--------------- ---------------
Net increase in net assets resulting from operations................ 96,357,836 80,363,939
--------------- ---------------
Distributions to shareholders from:
Net investment income ($.11 and $.24 per share, respectively)....... (5,208,927) (8,281,802)
--------------- ---------------
Net realized gains from investment transactions ($.34 and $.26 per
share, respectively)........................................... (16,100,320) (8,616,585)
--------------- ---------------
Fund share transactions:
Proceeds from shares sold........................................... 294,309,148 690,156,086
Net asset value of shares issued to shareholders in reinvestment of
distributions.................................................. 20,010,200 15,676,758
Cost of shares redeemed............................................. (316,718,412) (250,398,396)
--------------- ---------------
Net increase (decrease) in net assets from Fund share transactions.. (2,399,064) 455,434,448
--------------- ---------------
INCREASE IN NET ASSETS.............................................. 72,649,525 518,900,000
Net assets at beginning of period................................... 1,095,534,001 576,634,001
--------------- ---------------
Net assets at end of period (including undistributed net investment
income of $8,984,372 and $6,097,828, respectively)............. $ 1,168,183,526 $ 1,095,534,001
=============== ===============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period........................... 45,787,687 26,658,760
--------------- ---------------
Shares sold......................................................... 12,199,342 28,794,350
Shares issued to shareholders in reinvestment of distributions...... 810,995 670,735
Shares redeemed..................................................... (13,238,579) (10,336,158)
--------------- ---------------
Net increase (decrease) in Fund shares.............................. (228,242) 19,128,927
--------------- ---------------
Shares outstanding at end of period................................. 45,559,445 45,787,687
=============== ===============
</TABLE>

The accompanying notes are an integral part of the financial statements.

SCUDDER GLOBAL FUND
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 23, 1986
(COMMENCEMENT
YEARS ENDED JUNE 30, OF OPERATIONS)
------------------------------------------------------------------------- TO JUNE 30,
1995 1994(d) 1993 1992 1991 1990 1989 1988 1987
------------------------------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period............. $23.93 $21.63 $19.56 $18.06 $20.36 $17.64 $14.47 $15.42 $12.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income........... .25 .23 .15 .19 .40 .19 .19 .18 .05
Net realized and unrealized
gain (loss) on investment
transactions.................. 1.91 2.57 2.42 2.28 (1.50) 3.28 3.20 (.82) 3.37
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 2.16 2.80 2.57 2.47 (1.10) 3.47 3.39 (.64) 3.42
------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions from:
Net investment income........... (.11) (.24) (.16) (.31) (.37) (.20) (.14) (.06) -
Net realized gains on
investment transactions....... (.34) (.26) (.34) (.66) (.83) (.55) (.08) (.25) -
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.............. (.45) (.50) (.50) (.97) (1.20) (.75) (.22) (.31) -
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period... $25.64 $23.93 $21.63 $19.56 $18.06 $20.36 $17.64 $14.47 $15.42
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%)................. 9.11 12.99 13.45 14.09 (5.20) 20.00 23.90 (4.45) 28.50**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
($ millions)................... 1,168 1,096 577 371 268 257 91 81 102
Ratio of operating expenses,
to average daily net
assets (%)..................... 1.38 1.45 1.48 1.59 1.70 1.81 1.98 1.71(b) 1.84*(a)
Ratio of net investment income to
average daily net assets (%)... 1.03 .97 .90 1.09 2.21 1.77 1.22 1.23 .63*
Portfolio turnover rate (%)...... 44.4 59.7 64.9 44.6 85.0(c) 38.3 30.7 53.8 32.2*
<FN>
(a) The Adviser did not impose all of its management fee during the period July 23, 1986 (commencement of operations) to
December 31, 1986, amounting to $.01 per share.

(b) The Adviser absorbed a portion of the Fund's expenses exclusive of management fees, amounting to $.03 per share.

(c) The portfolio turnover rate on equity securities and debt securities was 62.7% and 174.4%, respectively, based on average
monthly equity holdings and average monthly debt holdings.

(d) Per share amounts have been calculated using weighted average shares outstanding.

* Annualized

** Not annualized

</FN>
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Global Fund (the "Fund") is a diversified series of Scudder Global
Fund, Inc., a Maryland corporation (the "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 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 National Association of
Securities Dealers Automatic Quotation ("NASDAQ") System, for which there have
been sales, are valued at the most recent sale price reported on such system.
If there are no such sales, the value is the high or "inside" bid quotation.
Securities which are not quoted on the NASDAQ System but are traded in another
over-the-counter market are valued at the most recent sale price on such
market. If no sale occurred, the security is then valued at the calculated
mean between the most recent bid and asked quotations. If there are no such bid
and asked quotations, the most recent bid quotation shall be used.

Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a 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. Securities valued in good
faith by the Valuation Committee of the Board of Directors at fair value
amounted to $18,086,702 (1.5% of net assets) and have been noted in the
investment portfolio as of June 30, 1995.

<PAGE>

SCUDDER GLOBAL FUND
- --------------------------------------------------------------------------------

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the resale price.

FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:

(i) market value of investment securities, other assets and
liabilities at the daily rates of exchange, and

(ii) purchases and sales of investment securities, dividend and
interest income and certain expenses at the rates of exchange
prevailing on the respective dates of such transactions.

The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes
in market prices of the investments. Such fluctuations are included with the
net realized and unrealized gains and losses from investments.

Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract (forward contract) is a commitment to purchase or sell a
foreign currency at the settlement date at a negotiated rate. During the
period, the Fund utilized forward contracts as a hedge in connection with
portfolio purchases and sales of securities denominated in foreign currencies
and as a hedge against changes in exchange rates relating to foreign currency
denominated assets.

<PAGE>

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

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. The
Fund paid no federal income taxes and no federal income tax provision was
required.

DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax.

The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
These differences primarily relate to investments in forward contracts, passive
foreign investment companies, and 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.

<PAGE>

SCUDDER GLOBAL FUND
- --------------------------------------------------------------------------------

The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.

OTHER. Investment security transactions are accounted for on a trade date
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Original
issue discounts are accreted for both tax and financial reporting purposes.

B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
Purchases and sales of investment securities (excluding short-term investments)
for the year ended June 30, 1995 aggregated $554,255,437 and $476,625,439,
respectively.

C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Management Agreement") with
Scudder, Stevens & Clark, Inc. (the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Management Agreement. The
management fee payable under the Management Agreement is equal to an annual rate
of 1% of the first $500,000,000 of average daily net assets and 0.95% of such
assets in excess of $500,000,000 computed and accrued daily and payable monthly.
The Management Agreement also provides 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 the Management Agreement
amounted to $11,015,077, which was equivalent to an annualized effective rate of
.97% 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.
Included in services to shareholders is $2,144,775 charged to the Fund by SSC
during the year ended June 30, 1995, of which $175,679 is unpaid at June 30,
1995.

<PAGE>

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

Effective March 14, 1995, Scudder Fund Accounting Corporation ("SFAC"), a
wholly-owned subsidiary of the Adviser, assumed responsibility for determining
the daily net asset value per share and maintaining the portfolio and general
accounting records of the Fund. For the year ended June 30, 1995, the amount
charged to the Fund by SFAC aggregated $151,979, of which $42,505 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 $45,725.

<PAGE>

SCUDDER GLOBAL FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

TO THE DIRECTORS OF SCUDDER GLOBAL FUND, INC. AND TO THE SHAREHOLDERS OF
SCUDDER GLOBAL FUND:

We have audited the accompanying statement of assets and liabilities of Scudder
Global 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 eight years in the period then ended
and for the period July 23, 1986 (commencement of operations) to June 30, 1987.
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 Global 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 eight
years in the period then ended, and for the period July 23, 1986 (commencement
of operations) to June 30, 1987 in conformity with generally accepted
accounting principles.

Boston, Massachusetts COOPERS & LYBRAND L.L.P.
August 11, 1995

<PAGE>
TAX INFORMATION
- --------------------------------------------------------------------------------
The Fund paid distributions of $.29 per share from net long-term capital
gains during its fiscal year ended June 30, 1995.

Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$15,519,523 as a long-term capital gain dividend for the fiscal year ended
June 30, 1995.

For its fiscal year ended June 30, 1995, the total amount of income
received by the Fund from sources within foreign countries and possessions
of the United States was $.174 per share (representing a total of
$7,927,334). The total amount of taxes paid by the Fund to such countries
was $.037 per share (representing a total of $1,706,060).

Please consult a tax adviser if you have questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have
specific questions about your Scudder Fund account, please call a Scudder
Investor Relations Representative at 1-800-225-5163.

- --------------------------------------------------------------------------------
OFFICERS AND DIRECTORS
- --------------------------------------------------------------------------------
Edmond D. Villani*
Chairman of the Board and Director
William E. Holzer*
President
Paul Bancroft III
Director; Venture Capitalist and Consultant
Nicholas Bratt*
Director
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
Douglas M. Loudon*
Vice President
Gerald J. Moran*
Vice President
Cornelia M. Small*
Vice President
David S. Lee*
Vice President and Assistant Treasurer
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Juris Padegs*
Vice President and Assistant Secretary
Kathryn L. Quirk*
Vice President and Assistant Secretary
Coleen Downs Dinneen*
Assistant Secretary

*Scudder, Stevens & Clark, Inc.

29
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PRODUCTS AND SERVICES
- --------------------------------------------------------------------------------
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<C> <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.

30
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HOW TO CONTACT SCUDDER
- --------------------------------------------------------------------------------
<C> <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.

31
</TABLE>
<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.

<PAGE>
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.

<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.

<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.

<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.

<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.

<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.

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.

<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>

<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

<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

<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.

<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.

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

<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.

<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>

<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.

<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).

<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.

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
-------------------------------------------------------------------------------------------------------------

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
- --------------------------------------------------------------------------------