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 Small
Company Fund
Annual Report
October 31, 1995
o For investors seeking above-average capital appreciation over the long term
by investing primarily in the equity securities of small companies located
throughout the world.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
CONTENTS
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
11 Investment Portfolio
20 Financial Statements
23 Financial Highlights
24 Notes to Financial Statements
30 Report of Independent Accountants
31 Tax Information
32 Shareholder Meeting Results
33 Officers and Directors
34 Investment Products and Services
35 How to Contact Scudder
IN BRIEF
o For the year ended October 31, 1995, Scudder Global Small Company Fund
generated a total return of 8.32%, including a capital gain distribution of
$0.08 per share. The Fund's return reflects the fact that most
international markets failed to keep pace with the U.S. stock market over
the fiscal period.
o Investor enthusiasm for technology-related companies has been supported by
a rapid increase in the earnings generated by these businesses. Outstanding
performers in the U.S. technology sector included Atmel, a U.S.
semiconductor manufacturer specializing in the production of
high-performance, low voltage devices for portable computing and
communications applications. Outside the U.S., German software manufacturer
SAP AG, the Fund's largest position, has appreciated 614% since the Fund's
purchase, with a 136% gain coming in fiscal 1995.
o Going forward, we believe that U.S. companies will continue to push
aggressively for productivity gains, and we are constructive long-term on
the domestic market despite current high valuations. In Europe, the
possibility of widespread business reorganization is a leading principle
behind our continued investment focus on that region. Japan, by contrast,
remains an expensive and troubled country from an investment perspective.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
Dear Shareholders,
Scudder Global Small Company Fund provided a positive total return of
8.32% for the annual period ended October 31, 1995. The Fund's return reflects
the fact that most international markets have failed to keep pace with the U.S.
stock market, which returned 26.44% for the same 12 months.
The outperformance of U.S. stocks suggests that a degree of caution is
warranted with respect to that market going forward. We expect U.S. valuations
relative to international markets to change in the coming months as our domestic
market peaks under pressure from slowing earnings growth and as several factors
combine to heighten demand for non-U.S. investments. Furthermore, we believe
economic cycles in many foreign markets are more favorable for equity investment
than in the United States, where the benefits of corporate restructuring have
been most fully realized. As always, smaller companies provide some of the best
opportunities for significant capital appreciation, and we are confident that
Scudder Global Small Company Fund is well-positioned to provide attractive
returns for its shareholders over time.
We would also like to take this opportunity to announce that on October
6, 1995, we introduced Scudder Small Company Value Fund, a pure no-load(TM)
mutual fund designed to seek long-term growth of capital through a disciplined,
value-oriented approach to investing in U.S. small stocks. For more information
about Scudder Small Company Value Fund and other investment products and
services, see page 34.
Sincerely,
/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder Global Small Company Fund
3
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
PERFORMANCE UPDATE as of October 31, 1995
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER GLOBAL SMALL COMPANY FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,832 8.32% 8.32%
Life of
Fund* $15,237 52.37% 10.70%
MSCI WORLD INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,948 9.48% 9.48%
Life of
Fund* $14,412 44.12% 9.37%
* The Fund commenced operations on
September 10, 1991. Index comparisons
begin September 30, 1991.
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:
Scudder Global Small Company Fund
Year Amount
- ----------------------
9/91* $10,000
10/91 $ 9,770
4/92 $10,107
10/92 $ 9,894
4/93 $11,558
10/93 $13,459
4/94 $13,496
10/94 $13,837
4/95 $13,090
10/95 $14,988
MSCI World Index
Year Amount
- ----------------------
9/91* $10,000
10/91 $10,159
4/92 $ 9,696
10/92 $ 9,628
4/93 $11,213
10/93 $12,228
4/94 $12,542
10/94 $13,163
4/95 $13,763
10/95 $14,412
The 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 OCTOBER 31
1991* 1992 1993 1994 1995
----------------------------------------
NET ASSET VALUE... $11.92 $12.05 $16.14 $16.27 $17.54
INCOME DIVIDENDS.. $ -- $ .02 $ .07 $ .18 $ --
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ -- $ .12 $ .15 $ .08
FUND TOTAL
RETURN (%)........ -.67 1.26 36.04 2.80 8.32
INDEX TOTAL
RETURN (%)........ 1.59 -5.23 27.01 7.65 9.48
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 and life of Fund periods would have been
lower.
4
<PAGE>
PORTFOLIO SUMMARY as of October 31, 1995
- ---------------------------------------------------------------------------
GEOGRAPHICAL (Excludes 11% Cash Equivalents)
- ---------------------------------------------------------------------------
Europe 39%
U.S. & Canada 32% The Fund's Japan position
Pacific Basin 12% has been reduced in favor of
Japan 11% the U.S., the Pacific Basin,
Latin America 6% and, in particular, Europe.
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS (Excludes 11% Cash Equivalents)
- --------------------------------------------------------------------------
Technology 15%
Financial 13%
Health 11% The Fund's technology position
Manufacturing 10% has been trimmed, but is still
Service Industries 9% significant, partly as the result
Consumer Staples 9% of price appreciation of these
Consumer Discretionary 8% holdings.
Energy 6%
Durables 4%
Other 15%
----
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. ATMEL CORP.
U.S. developer and manufacturer of integrated circuits
3. ARAN ENERGY PLC
Oil and natural gas exploration in Ireland
4. THOMAS NELSON, INC.
U.S. publisher
5. BANK OF IRELAND PLC
Bank
6. STERLING SOFTWARE INC.
Computer software products in the U.S.
7. AUTOLIV AB
Swedish manufacturer of safety airbags for automobiles
8. JAPAN ASSOCIATED FINANCE CO.
Venture capital company
9. SERCO GROUP PLC
Facilities management company in the United Kingdom
10. TIBBETT AND BRITTEN GROUP PLC
British transportation services for manufacturing and
retail industries
German SAP AG has become a dominant provider of software applications
for businesses employing client-server technology.
- --------------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 11.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
For the year ended October 31, 1995, Scudder Global Small Company Fund
generated a total return of 8.32%. Net asset value per share rose from $16.27 to
$17.54 over the 12-month period. Included in the Fund's total return is a
capital gain distribution of $0.08 per share. The unmanaged Morgan Stanley
Capital International (MSCI) World Index, which has a higher weighting in large
capitalization stocks than your Fund, returned 9.48% for the same period.
U.S. Market Leads the Way
One year ago, the consensus outlook for U.S. stocks was negative.
Consensus opinion was proven wrong, however, as 1995 unfolded into one of the
best years for domestic equity performance in the last decade. During the Fund's
fiscal year, U.S. companies produced earnings gains in a slow-growth,
low-inflation economy, while interest rates reversed course and trended down
after rising for most of 1994. Cost cutting, increased global competitiveness,
the weak U.S. dollar, and the explosion in deployment of technology generated
exceptional profit growth in several sectors of the economy. In addition,
legislative efforts were undertaken to reduce personal income and capital gains
taxation and to address the federal budget deficit. This set of circumstances,
clearly positive for equity investing, was not matched in any other part of the
world.
In Latin America, by contrast, the fiscal year began with the collapse
of the Mexican peso and the unraveling of the region's equity markets. The
Fund's Latin American losses were quite modest, however, as we held only a small
percentage of the portfolio in this part of the world.
Japan is impossible to ignore due to its 24% weighting in the MSCI
World Index. From our perspective, the Japanese market remains expensive.
Price-to-earnings ratios -- the conventional valuation yardstick -- are still
significantly higher in Japan than in virtually all other world markets, even
after a five-year bear market. In addition, real estate values remain inflated,
and corporate restructuring measures are not being implemented at a rate we
consider acceptable. We continue to find it difficult to identify Japanese
investments at attractive prices. Nevertheless, our analysts have detected some
signs of recovery and attitude changes on the part of government and business.
What is needed is renewed confidence at the consumer level.
6
<PAGE>
Our participation in Asian markets continues to include Malaysia,
Korea, Hong Kong, Singapore, Thailand, and Australia. We have become
increasingly interested in Indonesia and less optimistic regarding Hong Kong and
Malaysia. Indonesia possesses a number of investment attributes we find
particularly attractive, including one of the world's largest populations and a
rapidly emerging consumer market. Moreover, our research indicates that the
country does not face the near-term prospects for overheating now appearing in
Malaysia and some of the other Pacific Rim countries. In Hong Kong, we believe
China's sovereignty in 1997 over the colony poses considerable risk and we are
cautious about investments there.
European markets started the fiscal year slowly but appreciated
modestly in local currency terms later in the period. The decline in the value
of the U.S. dollar aided returns for the Fund's European holdings through
currency translation effects. Overall, however, European equity markets were not
able to attract as much investment interest as our domestic market. One reason:
Interest rates did not fall as much in Europe as in the United States. Another
source of unease was the volatile European political landscape, as investors
continue to fret about the challenges of achieving the fiscal policy goals laid
out by the Maastricht Treaty. Finally, European companies have not been as
aggressive as those in the United States regarding the restructuring of their
operations. We believe European management will be forced to respond
increasingly to more efficient global competition by undertaking many of the
streamlining measures already implemented in the United States. The outcome will
be significantly more profitable businesses.
Technology Sector Gains Help Performance
For much of the year the Fund's industry exposure was increasingly
weighted toward the technology sector, as this area clearly was producing the
most significant returns in the world markets. Investor enthusiasm for
technology-related companies has been supported by a rapid increase in the
earnings generated by these businesses. We believe this growth in earnings
derives from unusually robust conditions for four major technological product
groups. Specifically, cellular telephone penetration rose significantly,
personal computer sales were driven by a new product cycle and home purchases,
corporate data processing is undergoing a shift toward network-distributed
computing, and the commercialization of the Internet and other on-line services
7
<PAGE>
is establishing the basis for new transaction-processing industries. One
byproduct of this boom has been a semiconductor parts shortage, accompanied by
higher parts prices and increased profits for that group as well. The Fund
participated in each of these developments through a number of holdings that
produced significant gains.
Outstanding performers in the U.S. technology sector included Atmel,
one of the Fund's largest holdings. Atmel is a U.S. semiconductor manufacturer
specializing in the production of high-performance, low-voltage devices for
portable computing and communications applications. Atmel has produced an
exceptional record of sales and earnings growth over the past five years. Other
successful U.S. technology investments for the Fund included Ascend
Communications, U.S. Robotics, Shiva Corp., and Sterling Software.
Outside the U.S., German software manufacturer SAP AG, the Fund's
largest position, is worthy of special comment. In late 1993, SAP introduced its
multicurrency R/3 client/server software product for multinational corporations.
The rollout of the R/3 met with success on a global scale and rapidly growing
sales of this high margin product translated quickly into significant profits.
From a virtually unknown position, SAP now ranks among the world's largest
software enterprises, has been added to the German DAX index, and has a market
value in excess of many top German companies, including BMW. SAP shares have
appreciated 614% since the Fund's purchase, with a 136% gain in fiscal 1995.
In August, it began to appear to us that valuations in the technology
sector were probably reflecting optimistic earnings projections too far into the
future. We therefore took action to reduce the Fund's exposure to the group in
September through the sale or reduction of several holdings, including Silicon
Valley Group, Integrated Process Equipment, Shiva Corp., and Maxim Integrated
Products.
Investments not predominantly related to technology that have performed
well for the Fund and deserve mention include the Australian soft drink company
Coca-Cola Amatil, the Swedish automobile airbag manufacturer Autoliv, the
Eastern European media business Central European Media, the German-based kidney
dialysis company Fresenius, Spanish energy enterprise Gas Natural, and the
Italian eyeglass producer Luxottica. In addition, your Fund was the beneficiary
of several takeovers during the year, each of which produced significant gains.
8
<PAGE>
On the negative side of the ledger, many of the Fund's Japanese
holdings declined markedly in value, as Japanese small stocks underperformed
even the weak broader market. Also, two substantial Fund holdings outside of
Japan proved particularly disappointing. Tibbett & Britten, the U.K.
transportation logistics company, suffered from a deterioration in the economics
of its auto transport contract with Ford Motor Company. The company is currently
working with Ford to renegotiate the contract on terms that would allow for a
reasonable rate of return. U.S. publisher Thomas Nelson reported an earnings
disappointment just before the close of the Fund's fiscal year. This was
particularly surprising in that management had recently conducted a public
offering of new shares. Purchasers of those shares sold aggressively on the
news, driving down Nelson's share price from $25 to $15.88 in one day.
The Fund's currency hedging activities are generally modest and
implemented on an opportunistic basis. In the second half of 1995, the Fund
hedged its Japanese holdings at a particularly good time. During the summer, the
yen became overbought in our view, and a significant hedge was accordingly
placed against the Fund's Japan holdings. As the U.S. dollar subsequently
strengthened, the dollar value of your Japanese holdings was preserved. We
engaged in no hedging as it pertains to European currencies during the year.
Outlook and Strategy
Going forward, the most pressing issues are the prospects in 1996 for
our U.S. holdings and the development of an investment perspective on Asia,
particularly Japan. We believe that U.S. companies will continue to push
aggressively for productivity gains. Moreover, there are encouraging signs from
Washington that the government is on the road to becoming more fiscally
responsible. Taken together, these trends bode well for the long-term health of
U.S. industry and we are bullish long-term on our domestic economy. However, we
realize that equity markets rarely proceed upward in a smooth fashion, and
valuations by any standard are high. Our relatively low position in U.S.
securities reflects our view that superior returns for fiscal 1996 lie mostly
outside the U.S.
Europe appears reasonably valued compared with the United States, but
aggressive restructuring must take place to improve competitive positions and
potential profits. As outlined above, we believe that these changes are coming;
9
<PAGE>
the possibility of business reorganization throughout Europe is a leading
principle behind our continued investment focus on this region. Over the long
term, however, higher growth in earnings will probably come from companies in
Asia, and we continue to hunt for opportunity there.
Scudder Global Small Company Fund remains focused on finding small
growth companies worldwide with the potential for increasing earnings at
well-above-average rates. We believe the Fund's careful stock selection process
continues to make it an excellent vehicle for long-term investors seeking the
benefits of small stock investing.
Sincerely,
Your Portfolio Management Team
/s/Gerald J. Moran /s/Elizabeth J. Allan
Gerald J. Moran Elizabeth J. Allan
/s/Carol L. Franklin /s/Joan R. Gregory
Carol L. Franklin Joan R. Gregory
Scudder Global Small Company Fund: A Team Approach to
Investing
Scudder Global Small Company Fund is run 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. They are supported by Scudder's large staff of
economists, research analysts, traders, and other investment specialists who
work in Scudder 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 Gerald J. Moran has set Scudder Global Small Company
Fund's investment strategy and overseen its daily operation since the Fund was
introduced in 1991. Gerry joined Scudder's equity research and management area
in 1968 and has been a portfolio manager since 1985. Portfolio Manager Elizabeth
Allan, who joined the team in 1994, concentrates on the Fund's Pacific Basin
investments. Elizabeth has been a portfolio manager at Scudder since 1991 and
joined the firm in 1987. Carol L. Franklin, Portfolio Manager, contributes
expertise on the Fund's European investments, a role she has filled since the
Fund commenced operations. Carol has worked on international equity investing as
a portfolio manager at Scudder since 1981. Joan Gregory, Portfolio Manager,
joined the team in 1994 and focuses on stock selection, a role she has played
since she joined Scudder in 1992. Joan has been involved with investment in
global and international stocks as an assistant portfolio manager since 1989.
10
<PAGE>
INVESTMENT PORTFOLIO AS OF OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.9% REPURCHASE AGREEMENT
19,822,000 Repurchase Agreement with Donaldson, Lufkin & Jenrette dated
10/31/95 at 5.875% to be repurchased at $19,825,235 on
11/1/95, collateralized by a $14,085,000 U.S. Treasury
Note, 11.875%, 11/15/03 (Cost $19,822,000)................. 19,822,000
-----------
3.6% COMMERCIAL PAPER
9,000,000 General Electric Capital Corp., 5.73%, 11/7/95 (Cost
$8,991,405)................................................ 8,991,405
-----------
7.5% PREFERRED STOCKS
<CAPTION>
Shares
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GERMANY 3,700 Fresenius AG (Developer, manufacturer and distributor of
pharmaceutical and medical systems products)............... 2,956,951
3,040 Hornbach Holding AG (Supermarket chain specializing in
building materials and gardening products)................. 3,055,765
3,080 Marschollek Lautenschlaeger und Partner AG (Leading
independent life insurance company)........................ 2,067,628
70,200 SAP AG (Computer software manufacturer)..................... 10,771,613
-----------
TOTAL PREFERRED STOCKS (Cost $6,008,191).................... 18,851,957
-----------
81.0% COMMON STOCKS
ARGENTINA 1.2% 585,035 Central Costanera "B" (Electric utility).................... 1,620,466
776,200 Dalmine Siderca (Steel producer)............................ 582,121
51,800 Quilmes Industrial S.A. (Leading beer distributor).......... 911,680
-----------
3,114,267
-----------
AUSTRALIA 2.0% 673,807 Ampol Exploration Ltd.* (Oil and gas exploration company)... 1,334,508
240,000 Coca Cola Amatil Ltd.* (Soft drink bottler and
distributor)............................................... 1,857,451
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
----
11
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1,627,100 E.R.G. Australia Ltd. (Producer and installer of electronic
ticketing equipment, and manufacturer of radio
communication equipment)................................... 1,970,715
-----------
5,162,674
-----------
AUSTRIA 0.8% 9,620 Flughafen Wien AG (Operator of terminals and facilities at
Vienna International Airport).............................. 617,919
20,100 Mayr Meinhof Karton AG (Leading carton producer)............ 1,173,337
3,700 VAE Eisenbahnsysteme AG (Manufacturer of electronic control
systems for use in rail transportation technology)......... 331,081
-----------
2,122,337
-----------
BRAZIL 1.4% 773,000 Rhodia-Ster (Manufacturer of PET resin, polyester and
acrylic fibers)............................................ 1,036,829
182,800 Rhodia-Ster (GDR)........................................... 2,422,100
-----------
3,458,929
-----------
CANADA 0.6% 179,000 Petromet Resources Ltd* (Exploration and production of
natural gas in Alberta).................................... 427,463
132,100 Reko International Group, Inc.* (Designer and manufacturer
of injection moulds and other industrial tools)............ 418,974
30,000 Renaissance Energy Ltd.* (Exploration, production and
marketing of crude oil and natural gas, operating in
Alberta)................................................... 663,246
-----------
1,509,683
-----------
CHILE 1.5% 76,400 Cristalerias de Chile (ADR) (Glassworks).................... 1,852,700
80,000 Santa Isabel S.A.* (Supermarket chain)...................... 1,810,000
-----------
3,662,700
-----------
CZECH REPUBLIC 1.5% 171,100 Central European Media Enterprises Ltd. "A"* (Owner and
operator of national and regional private commercial
television stations in central Europe and Germany)......... 3,935,300
-----------
FRANCE 1.5% 14,100 Essilor International (Manufacturer of various types of
lenses, eyeglasses, contact lenses and optical measuring
instruments)............................................... 2,614,857
14,550 Sligos SA (Electrical payment and computing engineering
services company).......................................... 1,261,199
-----------
3,876,056
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- ----
12
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GERMANY 0.2% 12,600 Hornbach Baumarkt AG (Do-it-yourself home improvement
retailer).................................................. 635,505
-----------
HONG KONG 1.3% 6,436,000 Hong Kong Toy Centre International, Ltd. (Major toy
manufacturer).............................................. 395,398
1,068,600 Jinhui Shipping and Transportation Ltd.* (Operator of cargo
fleet of ships transporting steel, iron ore, non-ferrous
metals and agricultural products).......................... 1,415,895
357,000 Johnson Electric Holdings Ltd. (Designer and manufacturer of
micrometers for domestic and commercial uses).............. 745,703
700,000 Sime Darby Hong Kong (Vehicle distributor).................. 765,032
1,501 Yips Hang Cheung (Manufacturer of mixed solvents and
paints).................................................... 233
-----------
3,322,261
-----------
INDIA 0.4% 95,700 Indian Rayon & Industries Ltd. (GDR) (Manufacturer and
marketer of rayon yarn and textiles)....................... 1,112,513
-----------
INDONESIA 3.8% 331,000 Bakrie & Brothers (Manufacturer of industrial steel
products, steel pipes, corrugated sheet iron, asbestos and
fiber cements)............................................. 588,469
61,000 Indonesia Satellite Corp. (ADR) (International
telecommunication services)................................ 2,020,625
55,000 Kabelmetal Indonesia (Foreign registered) (Cable
manufacturer).............................................. 49,950
702,640 Kalbe Farma (Foreign registered) (Pharmaceutical producer
and distributor)........................................... 2,227,657
116,500 Medco Energi Corp. (Foreign registered) (Oil and gas
exploration and production, drilling services)............. 189,806
100,000 Merck-Indonesia (Foreign registered) (Pharmaceutical
company) (b)............................................... 418,318
238,000 Modern Photo Film Co. (Photographic film distributor)....... 1,446,235
546,500 Mustika Ratu* (Foreign registered) (Consumer cosmetics
producer).................................................. 890,379
373,000 Panin Bank (Foreign registered) (Bank)...................... 410,612
382,000 Sekar Bumi* (Foreign registered) (Producer of frozen raw
shrimp, prawns and fish)................................... 479,392
51,743 Unilever-Indonesia (Foreign registered) (Consumer products
manufacturer) (b).......................................... 729,095
-----------
9,450,538
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
----
13
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IRELAND 4.9% 5,161,000 Aran Energy PLC* (Oil and natural gas exploration).......... 6,099,633
841,313 Bank of Ireland PLC (Bank).................................. 5,598,174
70,205 Irish Continental Group PLC (Transport of passengers,
freight and containers between Ireland, the U.K. and the
continent)................................................. 534,211
-----------
12,232,018
-----------
ITALY 1.1% 10,000 De Rigo SpA* (ADR) (Manufacturer and distributor of
sunglasses and prescription eyeglass frames)............... 206,250
32,300 Luxottica Group SpA (ADR) (Manufacturer and marketer of
eyeglasses)................................................ 1,574,625
445,300 Merloni Elettrodomestici SpA (Manufacturer of a variety of
household appliances sold throughout western Europe)....... 994,834
-----------
2,775,709
-----------
JAPAN 9.4% 47,000 Cox Co., Ltd. (Men's and women's wear chain store
operator).................................................. 372,159
17,000 Eyeful Home Technology Inc. (Homebuilding franchise
operator).................................................. 320,739
52,000 Genki Sushi Co., Ltd. (North Kanto-based fast-food sushi
chain) (b)................................................. 1,321,668
25,000 Horipro Inc. (Growing entertainment production company)..... 371,475
57,000 JAMCO Corp. (Leading manufacturer of galleys and lavatories
for commercial aircraft)................................... 534,924
51,000 Japan Associated Finance Co. (Venture capital company)...... 4,960,653
43,000 Kyokuto Kaihatsu Kogyo Co., Ltd. (Leading maker of dump
trucks and other specialty vehicles)....................... 945,794
125,000 Maeda Road Construction Co., Ltd. (Major road paver)........ 2,236,180
63,000 Nichiei Co., Ltd. (Finance company for small and
medium-sized firms)........................................ 3,910,748
39,500 Nissen Co., Ltd. (Mail-order women's apparel distributor)... 1,139,107
72,000 Rock Field Co., Ltd. (Major delicatessen food processor).... 1,266,924
94,000 Royal Ltd. (Wholesaler and retailer of automobile equipment
and parts)................................................. 3,216,188
114,000 ShinMaywa Industries, Ltd. (Leading maker of dump trucks and
other specialty vehicles).................................. 885,967
90,000 Ten Allied Co., Ltd. (Tavern chain operator)................ 1,170,145
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- ----
14
<PAGE>
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
19,200 Tsutsumi Jewelry Co., Ltd. (Manufacturer, wholesaler and
retailer of jewelry)....................................... 947,847
-----------
23,600,518
-----------
KOREA 2.1% 180 units Korea 1990 Trust IDR* (Investment company) (c).............. 968,400
182,080 Korea Fund, Inc.* (Investment company)...................... 3,937,480
16,000 Ottogi Foods (Manufacturer of various food products)........ 480,951
-----------
5,386,831
-----------
MALAYSIA 0.4% 279,000 Westmont Bhd. (Conglomerate: construction and repair of
ships and offshore oil platforms, power transmission,
garment manufacturing, and marketing services)............. 966,234
-----------
MEXICO 0.4% 71,500 Grupo Casa Autrey SA (ADR) (Consumer specialty
manufacturer).............................................. 911,625
-----------
NETHERLANDS 2.9% 81,000 IHC Caland N.V. (Dredging and offshore services)............ 2,305,045
8,700 Telegraaf Holdings CVA (Newspaper publisher)................ 1,251,680
40,708 Wolters Kluwer CVA (Publisher).............................. 3,704,949
-----------
7,261,674
-----------
NORWAY 0.6% 127,800 Unitor A/S (Provider of broad range of ship services,
leading supplier of marine chemicals)...................... 1,579,931
-----------
PERU 1.1% 1,500,000 Compania Peruana de Telefonos S.A. "B" (Public and cellular
telephone services)........................................ 2,678,571
-----------
PHILIPPINES 0.0% 51,878 Keppel Philippines Shipyard "B"* (Shipbuilding and repair)
(b)........................................................ 21,441
6,804 Kepphil Shipyard Inc.* (Shipbuilding and repair)............ 471
-----------
21,912
-----------
POLAND 0.6% 3 Pioneer Poland Fund (Closed-end investment company) (b)
(d)........................................................ 1,443,091
-----------
PORTUGAL 2.1% 59,460 Jeronimo Martins (Food producer and retailer)............... 3,165,110
126,000 Uniao Cervejaria, S.A. (Brewery)............................ 2,046,089
-----------
5,211,199
-----------
SINGAPORE 0.4% 400,000 GP Batteries International, Ltd. (Developer, manufacturer
and distributor of batteries and battery-related
products).................................................. 976,000
100,000 GP Batteries International, Ltd. Warrants* (b).............. 50,000
-----------
1,026,000
-----------
SPAIN 1.3% 14,500 Gas Natural SDG, S.A. (Distributor of natural and
manufactured gas).......................................... 1,989,346
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
----
15
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
124,000 Uralita, SA (Processor of concrete pipes and cement for the
construction industry)..................................... 1,250,010
-----------
3,239,356
-----------
SWEDEN 3.1% 91,600 Autoliv AB (Free) (Manufacturer of safety airbags for
automobiles)............................................... 5,254,342
38,800 Hennes & Mauritz AB 'B' (Free) (Clothing and cosmetics
retailer throughout Europe)................................ 2,535,241
-----------
7,789,583
-----------
SWITZERLAND 1.6% 3,000 Phoenix Mecano AG (Bearer) (Manufacturer of housings and
components for computers).................................. 1,451,826
2,650 Schindler Holdings AG (PC) (Leading elevator and escalator
manufacturer).............................................. 2,483,282
-----------
3,935,108
-----------
THAILAND 0.2% 28,200 American Standard Sanitaryware (Foreign registered)
(Manufacturer of bathroom fixtures) (b).................... 458,327
99 Bangkok Dusit Medical Services Co., Ltd. (Health services)
(b)........................................................ 128
-----------
458,455
-----------
UNITED KINGDOM 4.5% 180,300 Brake Brothers PLC (Specialist supplier of frozen foods to
the catering industry)..................................... 1,966,875
903,300 Hambros Insurance Services Group PLC (Insurance company).... 1,213,900
57,100 Hardy Oil & Gas PLC (Oil and gas exploration and
development)............................................... 166,106
703,700 Serco Group PLC (Facilities management company)............. 4,116,434
574,100 Tibbett and Britten Group PLC (Transportation services for
manufacturing and retail industries)....................... 3,948,287
-----------
11,411,602
-----------
UNITED STATES 28.1% 7,500 AHI Healthcare Systems, Inc.* (Operator of comprehensive
locally managed healthcare delivery networks).............. 105,000
105,100 American Classic Voyager Co. (North American operator of
steamboat cruises)......................................... 1,261,200
263,800 Atmel Corp.* (Developer and manufacturer of integrated
circuits).................................................. 8,243,750
266,500 BE Aerospace* (Airline audio/video control systems)......... 2,098,687
200,000 Benton Oil & Gas Co.* (Oil and gas exploration, development
and production)............................................ 2,425,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- ----
16
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
17,000 Bio-Vascular, Inc.* (Marketer of tissue and
biosynthetic-based medical products and grafts for
cardiovascular surgery).................................... 242,250
16,900 Ceridian Corp.* (Information services and defense
electronics)............................................... 735,150
59,200 Cerner Corp.* (Developer of patient-focused clinical
information systems)....................................... 1,568,800
24,400 Department 56, Inc.* (Designer, importer and distributor of
collectibles and specialty giftware)....................... 1,107,150
75,900 Enron Global Power & Pipelines L.L.C. (Owner and manager of
power plants and a natural gas pipeline system)............ 1,831,087
142,000 First Colony Corp. (Holding company which sells individual
life insurance and annuity products throughout the U.S.)... 3,869,500
120,775 Fiserv Inc.* (Data processing services)..................... 3,109,956
118,000 Fresenius USA, Inc.* (Manufacturer and distributor of
medical products for treatment of kidney failure).......... 1,932,250
47,000 HBO & Company (Designer of computerized information systems
to the health-care industry)................................ 3,325,250
313,300 IGEN Inc.* (Producer of medical supplies)................... 1,840,638
68,400 KLA Instruments Corp.* (Developer, manufacturer and marketer
of automated image processing systems)..................... 2,924,100
17,000 LeCroy Corp.* (Developer and manufacturer of digital
oscilloscopes which capture electronic signals)............ 208,250
96,300 M.S. Carriers Inc.* (Truckload carrier of general
freight)................................................... 1,492,650
116,500 Millicom International Cellular SA* (Developer and operator
of cellular telephone networks)............................ 3,844,500
17,900 Nordson Corp. (Industrial application equipment)............ 1,033,725
183,000 Nu-Kote Holdings Inc. 'A'* (Manufacturer of office and home
printing products)......................................... 3,797,250
24,300 OccuSystems Inc.* (Provider of primary care physician and
case management services).................................. 502,706
105,525 PhyCor Inc.* (Operator of specialty medical clinics)........ 3,878,044
13,900 Premenos Technology Corp.* (Developer, marketer and
supporter of electronic products and services for
exchanging information via e-mail)......................... 545,575
22,300 R.P. Scherer Corp.* (Manufacturer of drug delivery system).. 992,350
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
----
17
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
43,300 Silicon Valley Group Inc.* (Manufacturer of equipment for
semiconductor industry).................................... 1,401,838
119,700 Sterling Software Inc.* (Computer software products)........ 5,521,163
80,800 Stillwater Mining Co.* (Exploration and development of mines
in Montana producing platinum, palladium and associated
metals).................................................... 1,363,500
351,062 Thomas Nelson, Inc. (Publisher)............................. 5,836,406
8,500 Trimedyne Inc. Warrants* (expire 12/9/96) (b)............... 12,495
6,600 United Dental Care, Inc.* (Provider of a comprehensive range
of prepaid dental plans)................................... 201,300
8,900 Verity, Inc.* (Developer and supporter of software tools and
applications for locating information on various networks
and databases)............................................. 327,075
67,900 Vivra, Inc.* (Provider of dialysis services)................ 2,240,700
91,200 Wandel & Goltermann Technologies, Inc.* (Manufacturer of
test, measurement, diagnostic and monitoring products for
local and wide area networks).............................. 912,000
-----------
70,731,295
-----------
TOTAL COMMON STOCKS (Cost $178,904,119)..................... 204,023,475
-----------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $213,725,715) (a).................................... 251,688,837
-----------
-----------
</TABLE>
(a) The cost for federal income tax purposes was $215,827,292. At October 31,
1995, net unrealized appreciation for all securities based on tax cost was
$35,861,545. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of
$57,340,824 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $21,479,279.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors. The cost of these securities at October 31, 1995 aggregated
$4,526,828. See Note A of the Notes to Financial Statements.
(c) 1,000 shares = 1 IDR unit for Korea 1990 Trust.
(d) Market value and cost reflect full payment. The remaining installments which
total $1,108,125 will be payable upon thirty days prior notice from
Pioneering Management Limited.
* Non-income producing security.
Sector breakdown of the Fund's equity securities is noted on page 5.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- ----
18
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
Transactions in written call options on currencies during the year ended
October 31, 1995 were:
<TABLE>
<CAPTION>
PRINCIPAL PREMIUMS
AMOUNT RECEIVED ($)
---------------------------------------------
<S> <C> <C>
Outstanding at
October 31, 1994............ Y923,000,000 448,218
Contracts closed............ Y923,000,000 448,218
---------------------------------------------
Outstanding at
October 31, 1995............ -- --
----------- -------
----------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
----
19
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS
Investments, at market (identified cost $213,725,715)
(Note A)................................................... $251,688,837
Cash........................................................ 125
Foreign currency holdings, at market (identified cost
$80,259) (Note A).......................................... 80,333
Unrealized appreciation on forward currency exchange
contracts (Notes A and D) 212,489
Other receivables:
Investments sold.......................................... 962,049
Fund shares sold.......................................... 6,316,864
Dividends and interest.................................... 213,674
Foreign taxes recoverable................................. 46,262
Deferred organization expenses (Note A)..................... 8,849
------------
Total assets............................................ 259,529,482
LIABILITIES
Payables:
Investments purchased..................................... $1,813,725
Fund shares redeemed...................................... 174,272
Accrued management fee (Note C)........................... 234,793
Other accrued expenses (Note C)........................... 268,143
Payable on closed forward foreign currency exchange
contracts (Note A)....................................... 1,949,907
----------
Total liabilities....................................... 4,440,840
------------
Net assets, at market value................................. $255,088,642
------------
------------
NET ASSETS
Net assets consist of:
Undistributed net investment income....................... $ 2,587,566
Unrealized appreciation on:
Investments............................................. 37,963,122
Foreign currency related transactions................... 212,441
Accumulated net realized gain............................. 3,999,959
Capital stock............................................. 145,471
Additional paid-in capital................................ 210,180,083
------------
Net assets, at market value................................. $255,088,642
------------
------------
NET ASSET VALUE, offering and redemption price per share
($255,088,642 DIVIDED BY 14,547,124 shares of capital stock
outstanding, $.01 par value, 100,000,000 shares
authorized)................................................ $17.54
------
------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- ----
20
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld of $236,274)....... $ 2,464,226
Interest.................................................... 1,220,013
-----------
3,684,239
Expenses:
Management fee (Note C)..................................... $2,573,030
Services to shareholders (Note C)........................... 710,463
Custodian and accounting fees (Note C)...................... 352,733
Directors' fees and expenses (Note C)....................... 46,658
Reports to shareholders..................................... 151,281
Auditing.................................................... 73,630
Legal....................................................... 19,054
Amortization of organization expense (Note A)............... 10,423
Other....................................................... 39,543 3,976,815
---------- -----------
Net investment loss......................................... (292,576)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
TRANSACTIONS
Net realized gain from:
Investments............................................... 8,268,669
Options................................................... 243,429
Foreign currency related transactions..................... 365,052 8,877,150
----------
Net unrealized appreciation (depreciation) during the period
on:
Investments............................................... 5,921,203
Options................................................... (88,248)
Foreign currency related transactions..................... 2,488,028 8,320,983
---------- -----------
Net gain on investment transactions......................... 17,198,133
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $16,905,557
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
----
21
<PAGE>
<TABLE>
<CAPTION>
SCUDDER GLOBAL SMALL COMPANY FUND
- ------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended October 31,
-----------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
---------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment loss. . . . . . . . . . . . . . . . $ (292,576) $ (668,612)
Net realized gain from investment
transactions. . . . . . . . . . . . . . . . . . 8,877,150 1,326,728
Net unrealized appreciation on investment
transactions during the period. . . . . . . . . 8,320,983 3,962,657
------------ ------------
Net increase in net assets resulting from
operations. . . . . . . . . . . . . . . . . . . 16,905,557 4,620,773
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
In excess of net investment income ($.18
per share). . . . . . . . . . . . . . . . . . . - (2,271,808)
------------ ------------
From net realized gains ($.08 and $.15
per share, respectively). . . . . . . . . . . . (1,236,433) (1,947,264)
------------ ------------
FUND SHARE TRANSACTIONS:
Proceeds from shares sold. . . . . . . . . . . . . 77,102,527 167,361,242
Net asset value of shares issued to
shareholders in reinvestment of
distributions . . . . . . . . . . . . . . . . . 1,187,647 3,818,846
Cost of shares redeemed. . . . . . . . . . . . . . (94,864,766) (113,105,251)
------------ ------------
Net increase (decrease) in net assets from
Fund share transactions . . . . . . . . . . . . (16,574,592) 58,074,837
------------ ------------
Increase (decrease) in net assets. . . . . . . . . (905,468) 58,476,538
Net assets at beginning of period. . . . . . . . . 255,994,110 197,517,572
------------ ------------
Net assets at end of period (including
undistributed net investment income of
$2,587,566 and accumulated distributions
in excess of net investment income of
$1,776,624, respectively) . . . . . . . . . . . $255,088,642 $255,994,110
------------ ------------
------------ ------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period. . . . . 15,734,564 12,238,526
------------ ------------
Shares sold. . . . . . . . . . . . . . . . . . . . 4,678,309 10,300,657
Shares issued to shareholders in
reinvestment of distributions . . . . . . . . . 79,071 232,856
Shares redeemed. . . . . . . . . . . . . . . . . . (5,944,820) (7,037,475)
------------ ------------
Net increase (decrease) in Fund shares . . . . . . (1,187,440) 3,496,038
------------ ------------
Shares outstanding at end of period. . . . . . . . 14,547,124 15,734,564
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- ----
22
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
September 10, 1991
(commencement
Years Ended October 31, of operations)
-------------------------------------------------- to October 31
1995 1994 1993 1992 1991
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . $16.27 $16.14 $12.05 $11.92 $12.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) . . . . . . . . . . (.03) (.02) .04 .07 .01
Net realized and unrealized gain (loss) on investment
transactions . . . . . . . . . . . . . . . . . . . 1.38 .48 4.24 .08 (.09)
------ ------ ------ ------ ------
Total from investment operations . . . . . . . . . . . 1.35 .46 4.28 .15 (.08)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income . . . . . . . . . . . . . - - (.07) (.02) -
In excess of net investment income . . . . . . . . . - (.18) - - -
From net realized gains on investment transactions . (.08) (.15) (.12) - -
------ ------ ------ ------ ------
Total distributions. . . . . . . . . . . . . . . . . . (.08) (.33) (.19) (.02) -
------ ------ ------ ------ ------
Net asset value, end of period . . . . . . . . . . . . $17.54 $16.27 $16.14 $12.05 $11.92
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Return (%) . . . . . . . . . . . . . . . . . . . 8.32 2.80 36.04 1.26 (.67)*
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) . . . . . . . . 255 256 198 55 9
Ratio of operating expenses net, to average daily
net assets (%) (a) . . . . . . . . . . . . . . . . . 1.69 1.70 1.50 1.50 1.50**
Ratio of net investment income (loss) to average daily
net assets (%) . . . . . . . . . . . . . . . . . . . (.12) (.28) .53 .78 2.47**
Portfolio turnover rate (%). . . . . . . . . . . . . . 43.7 45.8 54.6 23.4 -
(a) Reflects a per share amount of expenses, exclusive of
management fees, reimbursed by the Adviser of . . $ - $ - $ - $ - $ .06
Reflects a per share amount of management fee not
imposed by the Adviser of . . . . . . . . . . . . $ - $ .01 $ .04 $ .09 $ .01
Operating expense ratio including expenses
reimbursed, management fee and other expenses
not imposed (%) . . . . . . . . . . . . . . . . . - 1.76 2.01 2.53 15.34**
* Not annualized
** Annualized
</TABLE>
----
23
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Global Small Company Fund (the "Fund") is a 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 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 $4,454,563 (1.75% of net assets) and have been noted in the
investment portfolio as of October 31, 1995.
- ----
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 wrote call options on currencies as a hedge against
potential adverse price movements in the value of portfolio assets.
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 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
----
25
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
may not correlate exactly with changes in the value of the securities or
currencies hedged.
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.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies and as a
hedge against changes in exchange rates relating to foreign currency denominated
assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity
to profit from favorable exchange rate movements during the term of the
contract.
- ----
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
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.
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.
----
27
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
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.
ORGANIZATION COSTS. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are being
amortized on a straight-line basis over a five-year period.
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.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
For the year ended October 31, 1995, purchases and sales of investment
securities (excluding short-term investments) aggregated $95,167,714 and
$123,456,571, respectively.
C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund has agreed to pay to the Adviser
a fee equal to an annual rate of 1.10% of the Fund's average daily net assets,
computed and accrued daily and payable monthly. As manager of the assets of
the Fund, 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 Agreement. The Agreement 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 October 31, 1995, the fee pursuant to
the Agreement amounted to $2,573,030.
- ----
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 October 31, 1995, the amount charged by SSC aggregated
$594,078, of which $54,590 is unpaid at October 31, 1995.
Effective June 15, 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 October 31, 1995, the amount
charged to the Fund by SFAC aggregated $63,829, of which $14,378 is unpaid at
October 31, 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 October 31, 1995, Directors' fees and expenses aggregated $46,658.
D. COMMITMENTS
- --------------------------------------------------------------------------------
As of October 31, 1995, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized appreciation of
$212,489.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
- ------------------------------- ------------------------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Japanese Yen 623,329,250 U.S. Dollars 6,336,201 3/19/96 109,433
Japanese Yen 623,329,250 U.S. Dollars 6,356,351 4/17/96 103,056
-------
212,489
-------
-------
</TABLE>
----
29
<PAGE>
SCUDDER GLOBAL SMALL COMPANY FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS OF SCUDDER GLOBAL FUND, INC. AND TO THE SHAREHOLDERS
OF SCUDDER GLOBAL SMALL COMPANY FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
Global Small Company Fund including the investment portfolio, as of October
31, 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 four years in the
period then ended and for the period September 10, 1991 (commencement of
operations) to October 31, 1991. 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
October 31, 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 Small Company Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the four years in the period then ended and for the period September 10, 1991
(commencement of operations) to October 31, 1991 in conformity with generally
accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 15, 1995
- ----
30
<PAGE>
TAX INFORMATION
- --------------------------------------------------------------------------------
The Fund will mail shareholders IRS Form 1099-Div in late January, summarizing
all taxable distributions paid for 1995.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$6,170,292 as capital gain dividends for its taxable year ended October 31,
1995.
The Fund paid foreign taxes of $236,274 and the Fund recognized $1,029,969
of foreign source income during the taxable year ended October 31, 1995.
Pursuant to section 853 of the Internal Revenue Code, the Fund designates $.016
per share of foreign taxes and $.071 of income from foreign sources as having
been paid in the taxable year ended October 31, 1995.
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.
----
31
<PAGE>
SHAREHOLDER MEETING RESULTS
A Special Meeting of Shareholders of Scudder Global Fund, Inc.,
consisting of Scudder Emerging Markets Income Fund, Scudder Global Fund, Scudder
Global Small Company Fund, Scudder International Bond Fund and Scudder Short
Term Global Income Fund was held on Wednesday, December 6, 1995, at the offices
of Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue, New York, New
York 10154. The two matters voted upon by Shareholders of Scudder Global Small
Company Fund and the resulting votes for each matter are presented below.
1. The election of eight Directors to hold office until their respective
successors shall have been duly elected and qualified.
Director: Number of Votes:
--------- ----------------
For Withheld Broker Non-Votes*
--- -------- -----------------
Edmond D. Villani 8,173,630 196,058 0
Nicholas Bratt 8,171,658 198,031 0
Daniel Pierce 8,169,955 199,734 0
Paul Bancroft III 8,163,658 206,030 0
Sheryle J. Bolton 8,125,667 244,021 0
Thomas J. Devine 8,152,628 217,060 0
William H. Gleysteen, Jr. 8,155,571 214,118 0
William H. Luers 8,127,506 242,182 0
2. Ratification or rejection of the action taken by the Board of Directors in
selecting Coopers & Lybrand L.L.P. as independent accountants for the
fiscal year ending October 31, 1996.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
8,069,349 83,583 216,755 0
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
32
<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
Sheryle J. Bolton
Director; 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.
Honorary 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
Adam Greshin*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Douglas M. Loudon*
Vice President
Gerald J. Moran*
Vice President
M. Isabel Saltzman*
Vice President
Cornelia 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.
33
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
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 Small Company Value Fund
Scudder Growth and Income Fund Scudder Value 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 Treasurers Trust(TM)++
Scudder Fund, Inc.
-----------------------------------------------------------------------------------------------------------------
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>
34
<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 personalized information about your
Scudder accounts; exchanges and
redemptions; or information on any
Scudder fund 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.
<FN>
* 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.
</FN>
</TABLE>
35
<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 37 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.
