This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder International Bond Fund
Semiannual Report
December 31, 1994
* 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.
* A pure no-load(tm) fund with no commissions to buy, sell, or exchange
shares.
SCUDDER INTERNATIONAL BOND FUND
CONTENTS
2 Highlights
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
25 Report of Independent Accountants
26 Tax Information
29 Officers and Directors
30 Investment Products and Services
31 How to Contact Scudder
HIGHLIGHTS
* Scudder International Bond Fund provided a -0.71% total return during
the six months ended December 31, 1994, reflecting the Fund's
defensive investment strategy in an environment of falling bond prices
and rising yields.
* Although the second half of 1994 was generally negative for bonds,
select investments performed well, including Canadian, Australian, and
United Kingdom bonds.
(BAR CHART TITLE) Government Bond Returns in Various Markets
June-December 1994
(CHART DATA)
<TABLE>
<CAPTION>
<S> <C>
Country Returns
Australia 7.87
Germany 3.08
Argentina -8.54
France 2.33
UK 5.48
Italy -1.38
Canada 3.53
Mexico -9.22
The chart above shows the dollar-based total returns of government bonds
issued in various foreign bond markets.
Source: J.P. Morgan
</TABLE>
* As part of our overall defensive strategy, we continued to hedge
against the possibility of weakening foreign currencies.
LETTER FROM THE FUND'S CHAIRMAN
Dear Shareholders,
The world's financial markets were shaken repeatedly in 1994 by a
variety of events. Rising global interest rates, currency volatility, and
losses for investors in highly leveraged derivatives were just some of the
factors that contributed to a challenging environment for global bond
investors.
The rise in global interest rates in the past year has posed a
challenge for income funds: to provide shareholders with the higher income
now available from bonds while protecting against price erosion. We expect
this challenge to remain in early 1995, since the possibility exists that
interest rates will rise somewhat further. However, we also believe that a
combination of factors, including the Federal Reserve's tightening efforts,
will keep global economic activity and inflation on a moderate course.
This, in turn, should ease the upward pressure on rates and help stabilize
currency fluctuations, which would be viewed as favorable for the financial
markets. We therefore expect investors to begin focusing on positive
long-term fundamentals rather than short-term uncertainties.
Additional increases in interest rates may, of course, spark episodes
of difficult adjustment for fixed-income markets. At times like these, it's
more important than ever to have a sound investment plan that can weather
market storms. The past year has demonstrated that virtually all financial
instruments, whether conservative or aggressive, are susceptible to poor
performance. But experience tells us that over the long term, maintaining a
diversified portfolio of bonds and stocks as well as more liquid
investments helps smooth out the periodic jolts that are characteristic of
the world's financial markets.
If you have 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
choosing Scudder International Bond Fund to help meet your investment
needs.
Sincerely,
/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder International Bond Fund
<PAGE>
Scudder International Bond Fund
Performance Update as of December 31, 1994
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder International Bond Fund
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
12/31/94 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $ 9,139 -8.61% -8.61%
5 Year $16,865 68.65% 11.02%
Life of
Fund* $19,166 91.66% 10.54%
Salomon Brothers Non-U.S. Dollar
World Government Bond Index
- --------------------------------------
Total Return
Period Growth -------------
Ended of Average
12/31/94 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,599 5.99% 5.99%
5 Year $17,128 71.28% 11.36%
Life of
Fund* $18,102 81.02% 9.69%
*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 December 31
Scudder International Bond Fund
Year Amount
- ----------------------
7/31/88 10000
88 10598
89 11365
90 13764
91 16824
92 18105
93 20971
94 19167
Salomon Brothers Non-U.S.
Dollar World Government
Bond Index
Year Amount
- ----------------------
7/31/88 10000
88 10942
89 10569
90 12184
91 14160
92 14835
93 17079
94 18102
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 December 31
- ----------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1988* 1989 1990 1991 1992 1993 1994
------------------------------------------------------
Net Asset Value... $12.21 $11.97 $12.90 $13.53 $12.83 $13.50 $11.38
Income Dividends.. $ .49 $ 1.05 $ 1.16 $ 1.17 $ 1.07 $ .92 $ .99
Capital Gains
Distributions..... $ -- $ -- $ .29 $ .81 $ .62 $ .39 $ --
Fund Total
Return (%)........ 5.98 7.23 21.11 22.23 7.62 15.83 -8.61
Index Total
Return (%)........ 9.42 -3.41 15.29 16.22 4.77 15.12 5.99
</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 temporarily capped the Fund's expenses, the average
annual total return for the one and five year periods and life of Fund
would have been lower.
Portfolio Summary as of December 31, 1994
- ---------------------------------------------------------------------------
Market Exposure
- ---------------------------------------------------------------------------
Interest Net
Rate Currency(a)
---------- -------------
Australia 14.1% -4.3%
Belgium 0.0 -5.5
Canada 5.2 10.6
Denmark 14.5 1.0
ECU 12.0 4.1 During the six
Finland 0.0 -1.0 months, the Fund's
France 7.0 -1.8 foreign currency
Germany 8.9 -6.0 exposure was hedged
Italy 10.8 8.3 back to U.S. dollars,
Mexico 3.0 3.0 which hampered overall
Netherlands 0.0 -5.0 performance.
New Zealand 1.2 0.1
South Africa 0.6 0.6
Spain 7.5 4.9
Sweden 0.9 -0.1
Switzerland 0.0 -4.5
U.K. 1.9 2.8
U.S. 12.4(b) 92.8
------ ------
100.0% 100.0%
====== ======
(a) Currency exposure after taking into account the effects of foreign
currency options, futures, and forward contracts
(b) Includes 11.5% in Latin America U.S. dollar denominated debt.
- --------------------------------------------------------------------------
Effective Maturity
- --------------------------------------------------------------------------
- ---------------------------
Less than 1 year 9%
1 - 3 years 5%
3 - 5 years 9% The Fund focused on intermediate-
5 - 7 years 9% term holdings, including a number of
7 - 10 years 44% bonds with 11-year maturities.
Greater than 10 years 24%
----
100%
====
- ---------------------------
Weighted average effective maturity: 9 years
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
For more complete details about the Fund's Investment Portfolio,
see page 10.
A monthly listing of the Investment Portfolio Summary is
available upon request.
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Higher interest rates in the second half of 1994 continued to pressure
bond prices around the world. In all, 1994 was a humbling year for global
bond markets, marked by price declines that stood in vivid contrast to the
double-digit gains of recent years. Scudder International Bond Fund's share
price for the six-month period declined from $11.97 on June 30 to $11.38 at
the end of the year. Offsetting the bulk of the decline, however, the Fund
paid a total of $0.51 per share in income distributions to shareholders
during the period. Together, the price change plus reinvestment of income
distributions produced a total return of -0.71%, versus 2.23% for the
unmanaged Salomon Brothers Non-U.S. Dollar World Government Bond Index.
Investment Environment--Hardly A Dull Moment
Weak prices were prevalent during much of the period as interest rates
rose around the world. Most economies continued to grow, and investors
remained fearful of rising inflation. Yet in reality, inflation rates
around the world were relatively low. Adding to the pressure on interest
rates was the lack of capital to invest in growing economies and financial
markets, motivating savings-poor nations to maintain higher interest rates
as a means to attract lenders. On a more positive note, as rates rose, so
did your Fund's current 30-day net annualized yield--from 8.14% six months
ago to 8.88% at the end of December.
Meanwhile, currencies were making news. The U.S. dollar remained weak
compared with key European currencies and especially the Japanese yen,
which advanced to new highs during the period. In general, those currencies
perceived to offer shelter from market uncertainty--the yen, the German
deutschemark, and the Swiss franc, for example--attracted the most
investment capital and strengthened. Far more troubling, the Mexican
government devalued the peso in late December, leading to declines in
Mexican bonds and prompting nervous investors to sell bonds in other
emerging markets as well. Scudder International Bond Fund was fortunate to
have had only minimal exposure to short-term, peso-denominated Mexican
securities at the time, and thus the direct effect of the devaluation on
the Fund was limited.
Strategy Seeks to Minimize Currency Risk and Price Volatility
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 a particular 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. For example, the
Fund was almost exclusively invested in foreign bonds during the period but
had little exposure to foreign currencies.
The currency strategy of the Fund has remained more or less unchanged
since the spring, as we sought to reduce the risk of loss from fluctuating
exchange rates. We expected to see a decline in European currency values
relative to the U.S. dollar. Consequently, we continued to hedge the Fund's
European currency-denominated investments by purchasing U.S. dollar forward
currency contracts, a conventional tool for managing currency risk. In
Japan too, we continued to avoid exposure to the local currency.
Historically strong versus the dollar, the yen's strength has had a
dampening effect on the competitiveness of Japan's exports and its
fledgling economic recovery, and was likely to weaken in our view. Though
the U.S. dollar made little progress at the start of the period, the Fund's
hedging strategies did work to its advantage during November and December,
when the dollar strengthened modestly.
The Fund's bond management strategy, meanwhile, sought price stability
by emphasizing so-called value markets characterized by high relative
yields and attractively low prices. In particular, we favored countries
such as Denmark and Australia that are waging successful battles against
inflation and lofty national debt burdens. As an added attraction,
dollar-bloc countries -- Australia, for example -- are generally far along in
their economic recoveries and thus in the latter stages of rising
interest-rate cycles. Because higher rates tend to brake the pace of
economic growth, we believed interest rates in these countries would soon
ease and lift bond prices. As global interest rates rose through the second
half of the year, however, countries that were big borrowers, such as
Canada, saw their bond and currency markets stumble in comparison to
creditor nations. Throughout the six months, the Fund held very few
Canadian bonds, having sold them early in the period.
In August, following the favorable outcome of the Mexican election, we
took profits on certain Latin American holdings purchased earlier in the
year at depressed prices. By late fall, however, we had rebuilt our
position in Latin America to roughly 12% of the portfolio by purchasing
Brazilian, Argentine, and Mexican securities denominated in U.S. dollars.
Though the Mexican peso devaluation may still be fresh in investors' minds,
it is important to recognize that Latin America today enjoys freer markets,
thanks to years of economic and political reform. Temporary crises, while
unsettling, can act as catalysts for markets to become stronger. The
short-term damage to Mexican and other Latin American bond markets should
not obscure the long-term merits of prudent fixed-income investing in the
emerging debt marketplace. In fact, since the peso devaluation began, we
have selectively added discounted, high-yielding investments in Argentina
and Brazil. To help protect the Fund from the adverse effects of currency
fluctuation, we have hedged back to the U.S. dollar approximately 90% of
the investment portfolio.
The Fund has the flexibility to invest in bonds across a range of
maturities. However, in view of the recent market volatility, we focused
primarily on bonds maturing in seven to 10 years. Where we saw exceptional
long-term opportunities, namely in Latin America, maturities were much
longer. Still, the average maturity of the portfolio was slightly longer
(by about one year) than the Salomon Brothers Non-U.S. Dollar World
Government Bond Index, which contributed to the Fund's underperformance. As
interest rates rose throughout 1994, prices of bonds with longer maturities
declined more than those of shorter-maturity bonds, given the greater
sensitivity of long-term bonds to shifts in interest rates.
Outlook
In the coming months, we expect the trend of global expansion to
continue, though not at the accelerated pace of 1994. Europe's
high-interest-rate environment may provide opportunities for capturing
attractive yields. In fact, we have already begun to purchase
longer-maturity European bonds at favorable prices. Meanwhile, countries
that have a greater likelihood of stable or even declining long-term rates
are generally those in the latter stages of economic expansion, such as
Canada and Australia. Fund holdings in such countries may offer exposure to
improving bond prices. With respect to currencies, we think the U.S. dollar
should remain relatively steady and rise gradually as the year progresses.
The Fund in turn should benefit, given its predominantly dollar-based
currency exposure. At the same time, we continue to track currencies
carefully, watching for opportunities to remove the Fund's dollar hedges to
again take advantage of favorable foreign currency trends.
Thank you for your continued interest in Scudder International Bond
Fund.
Sincerely,
Your Portfolio Management Team
/s/Lawrence Teitelbaum /s/Adam M. Greshin
Lawrence Teitelbaum Adam M. Greshin
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL BOND FUND
INVESTMENT PORTFOLIO as of December 31, 1994
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
86.6% FOREIGN DENOMINATED DEBT OBLIGATIONS
---------------------------------------------------------------------------------
AUSTRALIAN DOLLARS 13.1% AUD 60,000,000 Commonwealth of Australia, 6.75%, 11/15/06 . . . . 35,960,760
24,290,000 Commonwealth of Australia, 9%, 9/15/04 . . . . . . 17,606,826
32,120,000 Commonwealth of Australia, 10%, 10/15/07 . . . . . 24,902,533
2,640,000 Commonwealth of Australia, 10%, 10/15/02 . . . . . 2,038,883
13,500,000 New South Wales Treasury Bond, 6.5%, 5/1/06 . . . 7,734,180
72,500,000 New South Wales Treasury Corp., 7%, 4/1/04 . . . . 44,867,843
11,790,000 News Corp. Ltd. Global Holdings,
8.625%, 2/7/14 . . . . . . . . . . . . . . . . 6,855,151
-----------
139,966,176
-----------
BRITISH POUNDS 1.9% GBP 2,250,000 European Investment Bank, 9.5%, 12/9/09 . . . . . . 3,667,812
9,700,000 United Kingdom Treasury Bond, 7.25%, 3/30/98 . . . 14,639,476
1,000,000 United Mexican States, 12.25%, 12/3/98 . . . . . . 1,566,499
-----------
19,873,787
-----------
CANADIAN DOLLARS 5.1% CAD 57,450,000 Government of Canada, 6.5%, 6/1/04 . . . . . . . . 34,268,665
19,880,000 Government of Canada, 8.5%, 3/1/00 . . . . . . . . 13,906,655
10,000,000 Mobil Oil Canada, Ltd., 8.125%, 1/20/98 . . . . . . 6,869,249
-----------
55,044,569
-----------
DANISH KRONER 14.5% DKK 50,000,000 Kingdom of Denmark, 7%, 11/10/24 . . . . . . . . . 6,233,925
378,500,000 Kingdom of Denmark, 7%, 12/15/04 . . . . . . . . . 53,847,922
407,000,000 Kingdom of Denmark, 8%, 3/15/06 . . . . . . . . . 61,682,409
200,500,000 Kingdom of Denmark, 9%, 11/15/00 . . . . . . . . . 33,023,119
-----------
154,787,375
-----------
DEUTSCHEMARKS 8.9% DEM 98,600,000 Federal Republic of Germany, 6.5%, 7/15/03 . . . . 59,070,913
54,500,000 Federal Republic of Germany, 8%, 1/21/02 . . . . . 35,777,606
-----------
94,848,519
-----------
EUROPEAN CURRENCY
UNITS 12.0% ECU 5,000,000 Council of Europe, 9%, 11/14/01 . . . . . . . . . . 6,186,142
3,500,000 Credit Local de France, 8.5%, 1/30/97 . . . . . . . 4,323,002
13,100,000 Eurofima, 8.5%, 6/4/07 . . . . . . . . . . . . . . 15,466,963
10,000,000 Republic of Italy, 9.25%, 3/7/11 . . . . . . . . . 11,762,686
52,500,000 Republic of Portugal, 6%, 2/16/04 . . . . . . . . 52,700,266
30,400,000 United Kingdom Treasury Bond,
9.125%, 2/21/01 . . . . . . . . . . . . . . . . 38,092,752
-----------
128,531,811
-----------
FRENCH FRANCS 6.9% FRF 30,000,000 Credit Local de France, 7.5%, 3/31/04 . . . . . . . 5,310,849
25,000,000 Credit National, 9%, 11/4/02 . . . . . . . . . . . 4,788,739
</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> <C>
50,000,060 Government of France, Principal Strips, 10/25/99 . . . 6,453,277
1,755,000,000 Government of France, Principal Strips, 10/25/19 . . . 39,001,644
60,000,000 Government of France OAT, 5.5%, 4/25/04 . . . . . . . . 9,268,128
27,400,000 Government of France, 8.5%, 10/25/08 . . . . . . . . . 5,180,690
25,000,000 Republic of Finland, 7%, 6/15/04 . . . . . . . . . . . 4,249,578
-----------
74,252,905
-----------
ITALIAN LIRE 10.8% ITL 117,440,000,000 Republic of Italy, 8.5%, 4/1/04 . . . . . . . . . . . . 58,402,547
28,975,000,000 Republic of Italy, 8.5%, 1/1/99 . . . . . . . . . . . 15,990,934
76,120,000,000 Republic of Italy, 8.5%, 4/1/99 . . . . . . . . . . . 41,662,201
-----------
116,055,682
-----------
MEXICAN PESOS 3.0% MXN 7,537,067 Nacional Financiera SA Promissory Note,
1/12/95 . . . . . . . . . . . . . . . . . . . . . . . 1,495,595
40,209,840 Nacional Financiera SA Promissory Note,
1/19/95 . . . . . . . . . . . . . . . . . . . . . . . 7,968,786
72,247,500 Nacional Financiera SA Promissory Note,
1/31/95 . . . . . . . . . . . . . . . . . . . . . . . 14,142,375
19,204,570 Certificados de la Tesoreria, 4/12/95 . . . . . . . . . 3,576,659
26,177,020 Certificados de la Tesoreria, 1/12/95 . . . . . . . . . 5,212,644
-----------
32,396,059
-----------
NEW ZEALAND
DOLLARS 1.3% NZD 11,350,000 Government of New Zealand, 8%, 11/15/06 . . . . . . . . 7,022,559
10,475,000 Government of New Zealand, 8%, 4/15/04 . . . . . . . . 6,487,846
-----------
13,510,405
-----------
SOUTH AFRICAN RANDS 0.6% SAR 28,365,000 Republic of South Africa, 14%, 8/15/97. . . . . . . . . 6,652,401
-----------
SPANISH PESETAS 7.6% ESP 2,704,000,000 Kingdom of Spain, 8%, 5/30/04 . . . . . . . . . . . . . 16,199,393
3,700,000,000 Kingdom of Spain, 10.3%, 6/15/02 . . . . . . . . . . . 25,987,141
5,210,000,000 Kingdom of Spain, 11.3%, 1/15/02 . . . . . . . . . . . 38,535,084
-----------
80,721,618
-----------
SWEDISH KRONOR 0.9% SEK 83,000,000 Nordic Investment Bank, 6.25%, 2/8/99 . . . . . . . . . 9,507,278
-----------
TOTAL FOREIGN DENOMINATED DEBT
(Cost $958,893,298) . . . . . . . . . . . . . . . . . 926,148,585
-----------
12.2% U.S. DOLLAR DENOMINATED DEBT OBLIGATIONS
------------------------------------------------------------------------------------------
U. S. DOLLARS USD 93,550,000 Argentine Republic Collateralized Par Bond,
Series L, Step-Up Coupon, 4.25%, 3/31/23 . . . . . . 39,992,625
10,890,000 Argentine Republic Collateralized Floating Rate
Bond, LIBOR plus .8125%, 6.5%, 3/31/05 . . . . . . . 6,942,375
6,000,000 Federative Republic of Brazil Floating Rate
Debt Conversion "L", 6.75%, 4/15/12 . . . . . . . . . 3,555,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3,283,000 Federative Republic of Brazil IDU Bond,
LIBOR plus .8125%, 7.8125%, 1/1/01 . . . . . . . 2,737,200
83,181,000 Federative Republic of Brazil C Bond
Front-Loaded Interest Reduction with Interest
Capitalization, 8%, 4/15/14 . . . . . . . . . . 39,926,880
5,000,000 Fomento Economico Mexicano S.A.,
9.5%, 7/22/97 . . . . . . . . . . . . . . . . . 4,475,000
8,000,000 News America Holdings Inc., 9.25%, 2/1/13 . . . . 7,820,000
23,000,000 United Mexican States Collateralized Par
Bond (Detachable Oil Price Indexed
Value Recovery Rights), Series A, 6.25%,
12/31/19 . . . . . . . . . . . . . . . . . . . 12,506,250
24,500,000 United Mexican States Collateralized Par
Bond (Detachable Oil Price Indexed
Value Recovery Rights), Series B, 6.25%,
12/31/19 . . . . . . . . . . . . . . . . . . . 13,321,875
-------------
TOTAL U.S. DOLLAR DENOMINATED DEBT
(Cost $142,962,241) . . . . . . . . . . . . . . 131,277,205
-------------
0.1% CONVERTIBLE BONDS
----------------------------------------------------------------------------------
U. S. DOLLARS USD 1,250,000 Banco Nacional de Mexico, 7%, 12/15/99
(Cost $1,385,938) . . . . . . . . . . . . . . . 1,000,000
-------------
1.0% PRINCIPAL INDEXED SECURITIES
----------------------------------------------------------------------------------
AUSTRALIAN DOLLARS AUD 17,500,000 New South Wales Treasury Corp. Medium
Term Note, indexed to six-month swap rate
for Australian Dollar, 5%, 4/19/95
(Cost $12,739,122) . . . . . . . . . . . . . . . 10,810,768
-------------
TOTAL INVESTMENTS (Cost $1,115,980,599) . . . . . 1,069,236,558
-------------
0.1% PURCHASED OPTIONS
----------------------------------------------------------------------------------
CANADIAN DOLLARS 66,000,000 Put on Canadian Dollars, strike price 1.398
expires 1/27/95 . . . . . . . . . . . . . . . . 375,342
Number of
Contracts
---------
400 Call on Matif Pibor Future, expires 3/13/95 . . . 149,897
-------------
TOTAL PURCHASED OPTIONS (Cost $296,927) . . . . . 525,239
-------------
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $1,116,277,526)(a) . . . . . . . . . . . 1,069,761,797
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $1,116,277,526. At
December 31, 1994, net unrealized depreciation for all securities
based on tax cost was $46,515,729. This consisted of aggregate
gross unrealized appreciation for all securities in which there was
an excess of market value over tax cost of $9,710,597 and aggregate
gross unrealized depreciation for all securities in which there was
an excess of tax cost over market value of $56,226,326.
<TABLE>
<CAPTION>
CURRENCY ABBREVIATIONS
------------------------------------------------------------------
<S> <C> <C> <C>
AUD Australian Dollar MXN Mexican Peso
BEF Belgian Franc NLG Netherlands Guilder
GBP British Pound NZD New Zealand Dollar
CAD Canadian Dollar SAR South African Rand
DKK Danish Krone ESP Spanish Peseta
DEM Deutschemark SEK Swedish Krone
ECU European Currency Unit CHF Swiss Franc
FRF French Franc USD United States Dollar
ITL Italian Lira
</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
DECEMBER 31, 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $1,115,980,599) (Note A) . . . $1,069,236,558
Purchased options, at market (identified cost $296,927) (Note A) . . . 525,239
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365
Foreign currency at market (identified cost $78,515) (Note A) . . . . . 77,713
Forward foreign currency exchange contracts to buy, at market
(contract cost $180,077,226) (Notes A and D) . . . . . . . . . . . . 179,608,118
Receivable on forward foreign currency exchange contracts
to sell (Notes A and D) . . . . . . . . . . . . . . . . . . . . . . 1,021,100,624
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,216,664
Investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . 38,537,702
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . 891,401
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346,596
--------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . 2,349,540,980
LIABILITIES
Payables:
Investments purchased . . . . . . . . . . . . . . . . . . . . . . . $ 27,131,036
Short-term debt (Note E) . . . . . . . . . . . . . . . . . . . . . . 12,952,000
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,444,209
Fund shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . 7,332,135
Forward foreign currency exchange contracts to buy
(Notes A and D) . . . . . . . . . . . . . . . . . . . . . . . . . 180,077,226
Forward foreign currency exchange contracts to sell, at
market (contract cost $1,021,100,624) (Notes A and D) . . . . . . 1,032,200,314
Accrued management fee (Note C) . . . . . . . . . . . . . . . . . . 809,261
Other accrued expenses (Note C) . . . . . . . . . . . . . . . . . . 797,925
--------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 1,269,744,106
--------------
Net assets, at market value . . . . . . . . . . . . . . . . . . . . . . $1,079,796,874
==============
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net investment
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (9,538,822)
Unrealized appreciation (depreciation) on:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,744,041)
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228,312
Foreign currency related transactions . . . . . . . . . . . . . . (11,848,222)
Accumulated net realized loss . . . . . . . . . . . . . . . . . . . (139,717,472)
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 949,218
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 1,286,467,901
--------------
Net assets, at market value . . . . . . . . . . . . . . . . . . . . . . $1,079,796,874
==============
NET ASSET VALUE, offering and redemption price per share
($1,079,796,874 -:- 94,921,834 shares of capital stock
outstanding, $.01 par value, 200,000,000 shares of capital
stock authorized) . . . . . . . . . . . . . . . . . . . . . . . . . $11.38
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest (net of withholding taxes of $994,895) . . . . . . . . . . $ 59,775,027
Expenses:
Management fee (Note C) . . . . . . . . . . . . . . . . . . . . . . $ 5,050,741
Services to shareholders (Note C) . . . . . . . . . . . . . . . . . 1,098,220
Directors' fees (Note C) . . . . . . . . . . . . . . . . . . . . . 18,931
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,293,932
Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,580
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . 218,223
Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,072
State registration . . . . . . . . . . . . . . . . . . . . . . . . 20,165
Interest (Note E) . . . . . . . . . . . . . . . . . . . . . . . . . 81,094
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,520 7,910,478
------------ -------------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . 51,864,549
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . (79,096,779)
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,881,621)
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . 718,703
Foreign currency related transactions . . . . . . . . . . . . . (43,224,208) (124,483,905)
------------
Net unrealized appreciation (depreciation) during the period on:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 56,166,972
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,311,846
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . (1,416,313)
Foreign currency related transactions . . . . . . . . . . . . . 7,337,619 64,400,124
------------ -------------
Net loss on investment transactions . . . . . . . . . . . . . . . . (60,083,781)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . $ (8,219,232)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL BOND FUND
- ---------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
INCREASE (DECREASE) IN NET ASSETS 1994 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . . $ 51,864,549 $ 88,178,209
Net realized loss from investment transactions . . . . . . . . . (124,483,905) (5,029,105)
Net unrealized appreciation (depreciation) on investment
transactions during the period . . . . . . . . . . . . . . . . 64,400,124 (130,965,996)
-------------- --------------
Net decrease in net assets resulting from operations . . . . . . (8,219,232) (47,816,892)
-------------- --------------
Distributions to shareholders:
From net investment income ($.51 and $.91 per share,
respectively) . . . . . . . . . . . . . . . . . . . . . . . (51,864,549) (88,034,933)
-------------- --------------
In excess of net realized gains from investment
transactions ($.39 per share) . . . . . . . . . . . . . . . -- (37,671,614)
-------------- --------------
Fund share transactions:
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . 231,209,928 974,377,033
Net asset value of shares issued to shareholders
in reinvestment of distributions . . . . . . . . . . . . . . . 39,360,004 66,270,009
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . (361,751,236) (652,677,186)
-------------- --------------
Net increase (decrease) in net assets from Fund
share transactions . . . . . . . . . . . . . . . . . . . . . . (91,181,304) 387,969,856
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS . . . . . . . . . . . . . . . . (151,265,085) 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 at December 31, 1994 and June 30, 1994,
respectively) . . . . . . . . . . . . . . . . . . . . . . . . $1,079,796,874 $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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,607,858 72,265,334
Shares issued to shareholders in reinvestment of distributions. . 3,325,941 4,976,780
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . (30,893,050) (49,298,685)
-------------- --------------
Net increase (decrease) in Fund shares . . . . . . . . . . . . . (7,959,251) 27,943,429
-------------- --------------
Shares outstanding at end of period . . . . . . . . . . . . . . . 94,921,834 102,881,085
============== ==============
</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
SIX MONTHS (COMMENCEMENT
ENDED YEARS ENDED JUNE 30, OF OPERATIONS)
DECEMBER 31, --------------------------------------------- TO JUNE 30,
1994 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) . . . . . . . .51 .92 1.03 1.08 1.21 1.10 1.00
Net realized and unrealized gain (loss)
on investment transactions (c) . . . . (.59) (1.22) .52 2.15 .56 .80 (.73)
------ ------ ------ ------ ------ ------ ------
Total from investment operations . . . . . (.08) (.30) 1.55 3.23 1.77 1.90 .27
------ ------ ------ ------ ------ ------ ------
Less distributions:
From net investment income . . . . . . . (.51) (.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) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Total distributions . . . . . . . . . . . . (.51) (1.30) (1.66) (1.90) (1.50) (1.09) (1.00)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period . . . . . . $11.38 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) . . . . . . . . . . . . . (.71)** (2.83) 12.24 28.25 14.88 17.59 2.16**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) . . 1,080 1,231 1,017 542 144 73 13
Ratio of operating expenses, net to
average net assets (%) (a) . . . . . . . 1.31* 1.27 1.25 1.25 1.25 1.25 1.00*
Ratio of net investment income to
average net assets (%) . . . . . . . . . 8.61* 6.86 7.69 8.31 9.48 9.57 8.58*
Portfolio turnover rate (%) . . . . . . . . 288.6* 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
</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. The Fund may write (sell) exchange-listed and over-the-counter call and
put options on securities, currencies and other financial instruments. When the
Fund writes a call, it gives the purchaser of the call option the right to buy
the underlying security or currency at the price specified in the option (the
"exercise price") at any time during the option period, generally ranging up to
nine months. When the Fund writes a put option, it gives the purchaser of the
put option the right to sell the underlying security or currency to the Fund at
the exercise price at any time during the option period, generally ranging up to
nine months. If 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 option is exercised, a decision over which the Fund has
no control, the Fund must sell the underlying security or currency to the option
holder or purchase the underlying security or currency from the option holder at
the exercise price. Certain options, including options on indices will require
cash settlement by the Fund if the option is exercised. By writing a call
option, the Fund foregoes, in exchange for the premium less the commission ("net
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
By writing a put option, the Fund, in exchange for the net premium received,
accepts the risk of a decline in the market value of the underlying security or
currency below the exercise price. The liability representing the Fund's
obligation under an exchange traded written call or put 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 if no bid and asked price are
available. Over the counter written options are valued using dealer supplied
valuations.
In addition, the Fund may purchase, singly and in combination, call and put
options on securities, currencies and securities indices. Exchange traded
purchased options are valued at the last sales price or, in the absence of a
sale, the mean between the closing bid and asked prices or at the most recent
bid price if no bid and asked prices are available. Over-the-counter purchased
options are valued using dealer supplied valuations.
FUTURES CONTRACTS. The Fund may enter into interest rate, securities index and
currency futures contracts for bona fide hedging purposes. Upon entering into a
futures contract, the Fund is required to deposit with a broker an amount
("initial margin") equal to a certain percentage of the purchase price 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 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, for book purposes, 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 from the
contingency of imperfect market conditions.
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.
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities
at the daily rates of exchange, and
(ii) purchases and sales of investment securities, interest income and
certain expenses at the rates of exchange prevailing on the respective
dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes
in market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the accrual and payment dates on interest
and foreign withholding taxes.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. In connection with portfolio
purchases and sales of securities denominated in a foreign currency, the Fund
may enter into forward foreign currency exchange contracts ("contracts").
Additionally, the Fund may enter into contracts to hedge certain other foreign
currency denominated assets. Contracts are recorded at market value. Certain
risks may arise upon entering into these contracts from the potential inability
of counterparties to meet the terms of their contracts. Realized and unrealized
gains and losses arising from such transactions are included in net realized and
unrealized gain (loss) from foreign currency related transactions.
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. In addition, from November 1, 1993 through June 30,
1994, the Fund incurred $347,244 of net realized capital losses and $15,185,958
of net realized currency losses. As permitted by tax regulations, the Fund
intends to elect to defer these losses and treat them as arising in the fiscal
year ended June 30, 1995.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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. It appears likely that a significant portion of the
Fund's income distributions for fiscal year ending June 30, 1995 will be treated
as a non-taxable return of capital.
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 six months ended December 31, 1994, purchases and sales of investment
securities (excluding short-term investments) aggregated $1,591,044,612, and
$1,652,723,795, respectively.
The aggregate face value of futures contracts opened and closed during the six
months ended December 31, 1994 was $1,687,797,694 and $1,729,701,507,
respectively.
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
Transactions in written options for the six months ended December 31, 1994 are
summarized as follows:
<CAPTION>
------------------------------------------------------------------------------------------------
OPTION
CONTRACTS OPTIONS ON CURRENCIES (000 OMITTED)
----------------------- ---------------------------------------------------------------------
NUMBER OF PREMIUMS PREMIUMS
CONTRACTS RECEIVED ($) AUD DEM NZD SEK SEK/DEM RECEIVED ($)
----------------------- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of
Period ...... -- -- -- -- 25,305 -- -- 156,891
Written...... 1,340 1,965,320 143,530 323,714 -- 335,838 118,500 3,157,528
Closed....... (1,340) (1,965,320) (90,524) -- -- -- -- (588,291)
Exercised.... -- -- -- (173,096) (25,305) (166,916) (118,500) (1,415,629)
Expired...... -- -- (53,006) (150,618) -- (168,922) -- (1,310,499)
------ ---------- ------- -------- ------- --------- -------- ----------
End of
Period....... -- -- -- -- -- -- -- --
====== ========== ======= ======== ======= ======== ======== ==========
------------------------------------------------------------------------------------------------
</TABLE>
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 six months
ended December 31, 1994, the fee pursuant to both the
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Management Agreement and the Agreement amounted to $5,050,741, which is
equivalent to an annual effective rate of 0.84% 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 six months ended December 31, 1994 the amount charged by SSC aggregated
$770,652, of which $122,860 is unpaid at December 31, 1994.
The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the six
months ended December 31, 1994 Directors' fees aggregated $18,931.
<TABLE>
D. COMMITMENTS
- --------------------------------------------------------------------------------
As of December 31, 1994, the Fund had entered into the following forward
foreign currency exchange contracts resulting in net unrealized depreciation of
$11,568,798.
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (U.S.$)
- --------------------- ------------------ ----------------- --------------
<S> <C> <C> <C>
AUD 283,114,360 USD 214,979,112 1/3/95 to 1/30/95 (4,169,371)
CAD 4,259,734 USD 3,025,165 1/3/95 (11,538)
ESP 5,855,938,693 USD 44,534,421 1/5/95 to 2/6/95 181,487
USD 82,794,543 CAD 114,573,733 1/6/95 to 1/30/95 (1,037,919)
NLG 92,959,702 USD 53,363,778 1/23/95 (199,864)
NZD 28,897,521 USD 17,977,148 1/25/95 (479,466)
USD 6,018,922 NZD 9,384,185 1/25/95 (18,037)
DKK 884,867,553 USD 145,348,569 1/25/95 (23,879)
ITL 43,640,813,487 USD 27,088,429 1/25/95 226,596
USD 19,761,246 AUD 25,496,445 1/30/95 (5,748)
DEM 273,164,435 USD 173,990,086 1/30/95 (2,347,423)
FRF 503,395,244 USD 92,954,040 1/3-1/95 (1,360,653)
BEF 1,888,014,451 USD 58,626,706 2/2/95 (687,555)
USD 9,691,058 ESP 1,283,519,623 2/6/95 42,309
USD 2,769,601 ECU 2,287,452 2/8/95 37,433
USD 37,384,178 GBP 24,007,914 2/8/95 228,095
GBP 17,815,771 USD 27,773,005 2/8/95 (120,796)
CHF 63,541,456 USD 48,026,496 2/8/95 (600,928)
ECU 71,757,855 USD 86,904,538 2/8/95 (1,066,351)
USD 5,908,949 SEK 44,452,971 2/14/95 64,789
FIM 52,478,480 USD 10,760,402 2/16/95 (313,110)
SEK 118,500,000 DEM 24,684,414 3/13/95 93,131
-----------
(11,568,798)
===========
</TABLE>
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
E. SHORT-TERM DEBT
- --------------------------------------------------------------------------------
During the six months ended December 31, 1994, 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.
Borrowings of $12,952,000 were outstanding at December 31, 1994, and the
maximum month-end borrowing outstanding at any month during the period was
$12,952,000.
During the six months ended December 31, 1994, the weighted average outstanding
daily balance of bank loans (based on the number of days the loans were
outstanding) was $11,529,645 with a weighted average interest rate of 8.19%.
Interest expense for the six months ended December 31, 1994 was $81,094 (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 December 31,
1994, and the related statement of operations for the six-month period then
ended, the statements of changes in net assets for the six-month period then
ended and for the year ended June 30, 1994, and the financial highlights for
the six-month period ended December 31, 1994, for each of the five years in the
period ended June 30, 1994 and for the period July 6, 1988 (commencement of
operations) to June 30, 1989. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder International Bond Fund as of December 31, 1994, the results of its
operations for the six-month period then ended, the changes in its net assets
for the six-month period then ended and for the year ended June 30, 1994, and
the financial highlights for the six months ended December 31, 1994, for each
of the five years in the period ended June 30, 1994 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.
February 10, 1995
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
TAX INFORMATION
- --------------------------------------------------------------------------------
By now shareholders to which year-end tax reporting is required by the IRS
should have received their Form 1099-DIV and tax information letter form the
Fund. For corporate shareholders no amount of the income dividends paid by the
Fund qualified for the dividends received deduction.
Please consult a tax adviser if you have any 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.
<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 Small*
Vice President
Lawrence Teitelbaum*
Vice President
Coleen Downs Dinneen*
Assistant Secretary
* Scudder, Stevens & Clark, Inc.
INVESTMENT PRODUCTS AND SERVICES
The Scudder Family of Funds
Money market
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
Tax free money market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax free+
Scudder California Tax Free Fund*
Scudder High Yield Tax Free Fund
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited Term Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder Medium Term Tax Free Fund
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund
Income
Scudder Emerging Markets Income Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Scudder Short Term Global Income Fund
Scudder Zero Coupon 2000 Fund
Growth
Scudder Capital Growth Fund
Scudder Development Fund
Scudder Global Fund
Scudder Global Small Company Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Latin America Fund
Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
IRAs
Keogh Plans
Scudder Horizon Plan+++* (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase Pension Plans
Closed-end Funds#
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia 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.
HOW TO CONTACT SCUDDER
Account Service and Information
For existing account service and transactions
SCUDDER SERVICE CORPORATION
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 INFORMATION
1-800-225-2470
For establishing Keogh, 401(k) and 403(b) plans
SCUDDER GROUP RETIREMENT 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
Boston
Chicago
Cincinnati
Los Angeles
New York
Portland, OR
San Diego
San Francisco
Scottsdale
For information on Scudder Treasurers Trust(tm), an institutional cash
management service for corporations, non-profit organizations and trusts
which utilizes certain portfolios of Scudder Fund, Inc.* ($100,000
minimum), call: 1-800-541-7703.
For information on Scudder Institutional Funds,* funds designed to meet the
broad investment management and service needs of banks and other
institutions, call: 1-800-854-8525.
Scudder Investor Information 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.
Celebrating 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 Scudder
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 longstanding 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.
