This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder
Short Term
Global Income
Fund
Annual Report
October 31, 1995
o A fund designed to provide high current income by investing primarily in
short-term, high-grade fixed-income securities denominated in foreign
currencies and the U.S. dollar.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
CONTENTS
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
13 Financial Statements
16 Financial Highlights
17 Notes to Financial Statements
25 Report of Independent
Accountants
26 Shareholder Meeting Results
29 Officers and Directors
30 Investment Products
and Services
31 How to Contact
Scudder
IN BRIEF
* On December 6, 1995, a majority of shareholders of Scudder Short Term
Global Income Fund approved a measure to change the Fund's name and
investment objective and strategies. The revisions will become effective on
December 27, 1995, including the new name: Scudder Global Bond Fund.
* Scudder Short Term Global Income Fund provided a total return of 5.43% for
the 12-month period ended October 31, 1995, considerably higher than the
3.18% average return of the 44 short world multimarket funds tracked by
Lipper Analytical Services, Inc.
(BAR CHART TITLE)
Investment Returns
(12 months ended October 31, 1995)
(BAR CHART DATA)
Scudder Short Term Global Income Fund 5.43%
Lipper Average 3.18%
* Given the challenging investment environment early in the fiscal year, the
Fund adopted a relatively conservative investment strategy, emphasizing
markets with high real (inflation-adjusted) interest rates, stable
fundamentals, and stable currencies.
* As bond markets improved later in the year, we emphasized securities in the
longer end of the Fund's stated maturity range (one to three years),
particularly in the peripheral European markets.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
- --------------------------------------------------------------------------------
Dear Shareholders,
The global bond markets emerged from an especially difficult period early
this year to provide strong overall performance for the 12 months ended October
31, 1995--Scudder Short Term Global Income Fund's 1995 fiscal year. Interest
rates fell throughout 1995, based on indications of slower economic growth
worldwide. Beginning in the United States, the decline in rates spread to Europe
and dollar-bloc countries like Canada and Australia, helping to push bond prices
higher.
Scudder Short Term Global Income Fund provided above-average performance
during the period, outpacing the average return of the 44 short world
multimarket funds tracked by Lipper Analytical Services. Commensurate with the
decline in interest rates around the world, however, the Fund's 30-day net
annualized SEC yield declined during the period to 6.92% on October 31, 1995,
from 8.13% on October 31, 1994. Understandably, many investors have been
unsatisfied with the returns of short-term global income funds in general, and
with the price volatility that has accompanied the collapse of the European
exchange-rate mechanism and disruptions in the world's emerging markets.
For these and other reasons detailed in the supplement to this report,
shareholders of Scudder Short Term Global Income Fund voted on December 6, 1995,
to change the Fund's name and investment strategies to that of a longer-maturity
investment vehicle. There also has been a change in your Fund's portfolio
management team, which now consists of Lead Manager Adam Greshin and Margaret D.
Hadzima. Mr. Greshin, who also manages Scudder International Bond Fund, joined
the Fund's management team earlier this year and brings years of global bond
investment experience.
If you have any questions about the Fund or the many recent changes, please
call a Scudder Investor Relations representative at 1-800-225-2470. Thank you
for choosing Scudder Short Term Global Income Fund to help meet your investment
needs.
Sincerely,
/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder Short Term Global Income Fund
3
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
PERFORMANCE UPDATE as of October 31, 1995
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER SHORT TERM GLOBAL INCOME FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,543 5.43% 5.43%
Life of
Fund* $12,958 29.58% 5.70%
SALOMON BROTHERS CURRENCY-HEDGED
WORLD GOVERNMENT BOND INDEX (1-3 YEARS)
- ---------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,968 9.68% 9.68%
Life of
Fund* $13,392 33.92% 6.58%
*The Fund commenced operations on
March 1, 1991. Index comparisons
begin March 31, 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:
YEARLY PERIODS ENDED OCTOBER 31
Scudder Short Term Global Income Fund
Year Amount
- ----------------------
3/31/91* $10,000
91 $10,653
92 $11,487
93 $12,307
94 $12,277
95 $12,944
Salomon Brothers Currency-Hedged World
Government Bond Index (1-3 years)
Year Amount
- ----------------------
3/31/91* $10,000
91 $10,556
92 $11,354
93 $12,044
94 $12,210
95 $13,392
The unmanaged Salomon Brothers Currency-Hedged World Government
Bond Index (1-3 years) consists of worldwide fixed-rate government
bonds with one to three years to maturity. 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 OCTOBER 31
1991* 1992 1993 1994 1995
---------------------------------------
NET ASSET VALUE... $12.01 $11.84 $11.68 $10.78 $10.53
INCOME DIVIDENDS.. $ .76 $ 1.08 $ .95 $ .87 $ .80
CAPITAL GAINS
DIVIDENDS......... $ -- $ -- $ .02 $ -- $ --
FUND TOTAL
RETURN (%)........ 6.65 7.83 7.14 -.25 5.43
INDEX TOTAL
RETURN (%)........ 5.56 7.56 6.08 1.87 9.68
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not temporarily capped expenses, the average annual
total return for the Fund for the one year and life of Fund periods
would have been lower.
4
<PAGE>
PORTFOLIO SUMMARY as of October 31, 1995
- ---------------------------------------------------------------------------
MARKET EXPOSURE
- ---------------------------------------------------------------------------
Geographical Interest Rate
- --------------------------- -------------------------
United States 27.2% United States 27.1%
U.K. 15.9% ECU 8.7%
Italy 8.6% Italy 8.6%
Netherlands 8.6% Netherlands 8.6%
Germany 7.5% U.K. 7.6%
Denmark 6.4% Denmark 6.4%
Canada 6.1% Canada 6.1%
Australia 5.2% Germany 5.3%
Sweden 4.9% Australia 5.2%
Spain 4.2% Sweden 4.9%
France 2.4% Spain 4.3%
Indonesia 2.1% Czech Republic 2.7%
Czech Republic 0.5% France 2.4%
Mexico 0.4% Indonesia 2.1%
---- ----
100% 100%
==== ====
Graphs in the form of pie charts appears here,
illustrating the exact data points in the above tables.
<TABLE>
<C> <C> <S>
Currency Exposure (a)
- -------------------------------------------------------------
Australia 3.7% Indonesia 2.1%
Belgium -1.3% Italy 2.9% The Fund's hedging strategy
Canada 0.4% Netherlands 8.6% helped limit declines when the
Czech Republic 2.7% Spain -0.2% emerging markets were
Denmark -0.4% Sweden -0.1% experiencing significant
ECU 1.9% Switzerland -4.4% currency volatility and has
France -4.5% U.K. 2.7% contributed significantly to the
Germany -2.7% U.S. 88.6% Fund's returns in recent months.
----
100%
====
</TABLE>
(a) Currency exposure after taking into account the effects of foreign
currency options, futures, and forward contracts.
- --------------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 9.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Dear Shareholders,
A favorable combination of moderate economic growth and very little
inflation prevailed for much of Scudder Short Term Global Income Fund's fiscal
year ended October 31, 1995. However, the year started on a difficult note, as
the Mexican peso devaluation prompted much price volatility in the world's
developing bond markets. The Fund provided a total return of 5.43% for the
12-month period from a combination of price change and income distributions
totaling $0.80 per share. While comfortably higher than the 3.18% average return
of the 44 short world multimarket funds tracked by Lipper, the Fund's return
failed to keep pace with its benchmark index. The unmanaged Salomon Brothers
Currency-Hedged World Government Bond Index (1-3 years) returned 9.68% during
the year.
The Fund's 30-day net annualized SEC yield declined to 6.92% on October 31,
1995, from 8.13% a year earlier. A shift away from the high-yielding Italian and
emerging bond markets, along with the general decline in global interest rates,
contributed to the lower yield.
A Difficult Start
The first few months of the fiscal year were characterized by substantial
currency and bond market volatility. In the weeks after the Mexican peso
devaluation of December 1994, investor confidence was noticeably shaken. As a
result, high-yielding European markets with lofty debt levels and uncertain
political landscapes--such as Italy, Sweden, and Spain--suffered. Sounder fiscal
and monetary regimes in Germany, the Netherlands, and Denmark enabled those bond
markets to pull ahead.
In the currency markets, the deutschemark strengthened dramatically
relative to the U.S. dollar, in part reflecting investor confidence in Germany.
The Japanese yen climbed sharply relative to the dollar as Japanese investors
continued to keep their money at home, thus contributing to the yen's scarcity
in capital markets.
In response to these events, the Fund adopted a conservative investment
strategy. Anticipating that the price volatility in Latin America would spill
over into other emerging markets, we first disposed of the Fund's Asian bonds,
thus protecting the Fund from the subsequent decline in Asian markets. We then
sold holdings in Latin America, reducing the Fund's total position in emerging
markets to 5% of portfolio holdings by early February. In addition, we scaled
back investments in the smaller
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
European economies, particularly those with burdensome debt levels, and directed
the proceeds into more stable European bond markets, primarily the Netherlands
and Germany. In the dollar-bloc markets, we established a position in Canadian
bonds, which have provided attractive real (inflation-adjusted) yields.
Markets Respond to Improving Fundamentals
Since March, a much more favorable combination of slowing economic growth,
moderate inflation, and calmer currency markets has prevailed. Economic
catastrophes outside of Mexico failed to materialize, and the bonds of
developing markets around the world have rallied as a result. Political
developments also served to bolster the bond markets. In France, statements from
President Chirac concerning his commitment to reducing the budget deficit were
well received; and Canadian bond prices gained following the Quebec sovereignty
referendum, where a narrow majority voted in favor of remaining part of Canada.
(We took advantage of the market uneasiness that preceded the referendum by
increasing the Fund's holdings in Canadian bonds prior to the vote.)
Throughout this period, we maintained the Fund's emphasis on European
holdings (59% of portfolio holdings as of October 31, 1995), which we believed
offered the best value relative to other markets around the world. Prudent
monetary policy in the core European countries, combined with favorable
inflation data across the European continent, have been the basis for strong
returns in recent months. As investor concern for the stability of developing
markets has subsided, we have increased the Fund's weighting in the smaller,
higher-yielding markets of Sweden, Italy, and Spain, where we expect the best
overall returns. To gain maximum exposure to the total return potential of these
markets, we have invested in securities at the longer end of the Fund's stated
maturity range (one to three years). Meanwhile, an emphasis on the dollar-bloc
markets of Canada, New Zealand, and Australia provided the Fund with an
attractive yield advantage over U.S. securities of equivalent maturity. The
dollar-bloc markets generally lagged the U.S. in early 1995, and we have
positioned the portfolio to take advantage of this relative value.
The Fund remained primarily hedged back to the U.S. dollar throughout the
year (roughly 90% of all currency exposure). This conservative strategy helped
limit price volatility when the
7
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
emerging markets were experiencing significant upheaval and has contributed
significantly to the Fund's returns in recent months. The first signs of the
long-awaited resurgence in the U.S. dollar that began during July confirmed our
belief that the U.S. dollar had been oversold. However, we have maintained some
currency exposure in the peripheral European markets of Italy and Sweden, due to
our conviction that the lira and the krona also had been oversold earlier in the
year and thus had room for appreciation.
Outlook
The rally in the bond markets of Europe and elsewhere this year has been
gratifying but has also provided cause for caution. Slowing economic growth
rates in the United States and Europe could potentially develop into recessions,
which would re-focus attention on the riskier markets in Europe and elsewhere.
In 1992, European economic malaise crippled the exchange rate mechanism and
resulted in much currency volatility, as countries sought to stimulate growth
through lower interest rates and cheaper currencies. On the positive side, the
dollar's recovery is re-liquifying the international capital markets, drawing
savings out of Japan for the first time in years.
Going forward, the change in the Fund's objective has provided us with much
greater flexibility to pursue opportunities that exist in the global bond
markets for attractive yields and total returns. We look forward to taking
advantage of those opportunities in 1996, and we thank shareholders for their
interest in and commitment to the Fund during this period of transition.
Sincerely,
Your Portfolio Management Team
/s/Adam M. Greshin /s/Margaret D. Hadzima
Adam M. Greshin Margaret D. Hadzima
Scudder Short Term
Global Income Fund:
A Team Approach to Investing
Scudder Short Term Global Income Fund is managed by a team of Scudder
investment professionals who each play an important role in the Fund's
management process. Team members work together to develop investment strategies
and select securities for the Fund's portfolio. They are supported by Scudder's
large staff of economists, research analysts, traders and other investment
specialists who work in Scudder's offices across the United States and abroad.
Scudder believes its team approach benefits Fund investors by bringing together
many disciplines and leveraging Scudder's extensive resources.
Lead Portfolio Manager Adam M. Greshin assumed responsibility for the
Fund's day-to-day management and investment strategies in November 1995. Adam
joined Scudder in 1986 as an international bond analyst and is Product Leader
for Scudder's global and international fixed-income investing. Portfolio Manager
Margaret D. Hadzima is Chairman of Scudder's Global Bond Strategy Committee and
Director of Global Bond Research. Margaret, who joined Scudder in 1973 and the
team in 1995, plays an active role in setting the Fund's overall bond strategy.
8
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO as of October 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
% of Principal Market
Portfolio Amount Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
68.2% FOREIGN DENOMINATED DEBT OBLIGATIONS
<S> <C> <C> <C> <C> <C>
AUSTRALIAN DOLLARS 5.2% AUD 22,600,000 Commonwealth of Australia, 12.5%, 1/15/98 . . . . . . 18,749,887
-----------
BRITISH POUNDS 7.6% GBP 8,220,000 United Kingdom Treasury Bond, 8.75%, 9/1/97 . . . . . 13,441,845
8,250,000 United Kingdom Treasury Bond, 9.75%,
1/19/98 . . . . . . . . . . . . . . . . . . . . . . . 13,800,945
-----------
27,242,790
-----------
CANADIAN DOLLARS 6.1% CAD 3,120,000 Government of Canada,6.25%, 2/1/98. . . . . . . . . . 2,302,057
7,760,000 Government of Canada, 6.5%, 9/1/98. . . . . . . . . . 5,731,441
17,500,000 Government of Canada, 9.5%, 10/1/98 . . . . . . . . . 13,932,684
-----------
21,966,182
-----------
CZECH KORUNA 0.5% CSK 40,000,000 Czech Republic, 14.6%, 3/18/97. . . . . . . . . . . . 1,607,189
-----------
DANISH KRONER 6.4% DKK 45,000,000 Kingdom of Denmark, 9%, 11/15/96. . . . . . . . . . . 8,502,953
74,000,000 Kingdom of Denmark, 9%, 11/15/98. . . . . . . . . . . 14,488,014
-----------
22,990,967
-----------
DEUTSCHEMARKS 5.2% DEM 8,600,000 Federal Republic of Germany, 6%, 2/20/98. . . . . . . 6,298,523
17,000,000 Federal Republic of Germany, 6.625%, 1/20/98. . . . . 12,599,077
-----------
18,897,600
-----------
DUTCH GUILDERS 8.5% NLG 26,500,000 Government of the Netherlands, 6.25%, 7/15/98 . . . . 17,390,683
19,500,000 Government of the Netherlands, 7.5%, 6/15/99. . . . . 13,276,231
-----------
30,666,914
-----------
EUROPEAN
CURRENCY UNITS 8.6% ECU 1,000,000 Nacional Financiera SNC, 10.25%, 3/11/97. . . . . . . 1,300,186
8,400,000 United Kingdom Treasury Bond, 5.25%, 1/21/97. . . . . 10,883,240
14,000,000 United Kingdom Treasury Bond, 8%, 1/27/98 . . . . . . 18,925,232
-----------
31,108,658
-----------
FRENCH FRANCS 2.4% FRF 40,000,000 Government of France, 8.5%, 3/12/97 . . . . . . . . . 8,447,994
-----------
ITALIAN LIRE 8.6% ITL 19,000,000,000 Republic of Italy, 8.5%, 8/1/97 . . . . . . . . . . . 11,502,041
33,000,000,000 Republic of Italy, 8.5%, 1/1/99 . . . . . . . . . . . 19,398,269
-----------
30,900,310
-----------
SPANISH PESETAS 4.2% ESP 995,000,000 Kingdom of Spain, 10.25%, 11/30/98. . . . . . . . . . 8,157,407
835,000,000 Kingdom of Spain, 11.45%, 8/30/98 . . . . . . . . . . 7,042,133
-----------
15,199,540
-----------
SWEDISH KRONOR 4.9% SEK 110,000,000 Kingdom of Sweden, 11%, 1/21/99 . . . . . . . . . . . 17,568,505
-----------
TOTAL FOREIGN DENOMINATED DEBT
OBLIGATIONS (Cost $235,503,958) . . . . . . . . . . 245,346,536
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
---
9
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
27.0% U.S. DOLLAR DENOMINATED DEBT OBLIGATIONS
<S> <C> <C> <C> <C> <C>
U.S. DOLLARS USD 54,163 Federal Home Loan Mortgage Corp., REMIC,
Series 1543 PN, Interest only, 2/15/08 . . . . . . . 93,992
2,003,981 Federal Home Loan Mortgage Corp.,
Series 1223 C, 7.25%, 7/15/20. . . . . . . . . . . . 2,018,071
2,278,681 Federal National Mortgage Association,
7.422%, 11/1/21. . . . . . . . . . . . . . . . . . . 2,319,983
2,704,455 Federal National Mortgage Association,
7.696%, 3/1/22 . . . . . . . . . . . . . . . . . . . 2,760,234
3,333,125 General Electric Capital Mortgage Services, Inc.,
1991#5 Series A (PT), 8.5%, 9/25/06. . . . . . . . . 3,404,993
18,323,117 Government National Mortgage Association
Pass-thru, 10% with various maturities to
2/15/25. . . . . . . . . . . . . . . . . . . . . . . 20,079,461
17,300,000 Home Savings of America Subordinated Note,
10.5%, 6/12/97 . . . . . . . . . . . . . . . . . . . 17,581,125
11,923,000 Household Finance Corp., Commercial Paper,
5.82%, 11/1/95 . . . . . . . . . . . . . . . . . . . 11,923,000
4,500,000 RJR Nabisco Inc., Medium-Term Note,
6.8%, 9/1/01 . . . . . . . . . . . . . . . . . . . . 4,567,500
3,500,000 Time Warner Inc., Senior Note, 7.45%,
2/1/98 . . . . . . . . . . . . . . . . . . . . . . . 3,571,750
13,000,000 U.S. Treasury Bill, 5/2/96. . . . . . . . . . . . . . 12,645,851
1,500,000 U.S. Treasury Note, 6%, 6/30/96 . . . . . . . . . . . 1,503,516
5,011,230 United Companies Financial Corp., Home
Loan Trust, Series 1993 B1, 6.075%, 7/25/14. . . . . 4,929,797
10,000,000 United Savings Association of Texas,
9.05%, 5/15/98 . . . . . . . . . . . . . . . . . . . 9,875,000
-----------
TOTAL U.S. DOLLAR DENOMINATED DEBT
OBLIGATIONS (Cost $98,800,041) . . . . . . . . . . . 97,274,273
-----------
<CAPTION>
4.4% PRINCIPAL INDEXED SECURITIES
<S> <C> <C> <C> <C> <C>
U.S. DOLLARS USD 8,000,000 Bayerische Landesbank Girozentrale,
indexed to Czech Koruna performance
10.2%, 1/16/96 . . . . . . . . . . . . . . . . . . . 8,050,400
7,650,000 Citibank Time Deposit, indexed to Indonesian
Rupiah performance 13.6%, 12/15/95 . . . . . . . . . 7,629,728
-----------
TOTAL PRINCIPAL INDEXED SECURITIES
(Cost $15,650,000) . . . . . . . . . . . . . . . . . 15,680,128
-----------
TOTAL INVESTMENTS (Cost $349,953,999) . . . . . . . . 358,300,937
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- ----
10
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
0.4% PURCHASED OPTIONS
<S> <C> <C> <C> <C> <C>
AUD 8,157,835 Put on Australian Dollars, strike price AUD .6875,
expiration date 1/8/96 . . . . . . . . . . . . . . . 351
GBP 8,400,000 Put on British Pounds, strike price GBP 1.463,
expiration date 11/14/95 . . . . . . . . . . . . . . --
CAD 18,701,220 Put on Canadian Dollars, strike price
CAD 1.3407, expiration date 1/9/96 . . . . . . . . . 181,402
DEM 28,300,000 Put on Deutschemarks, strike price
DEM 1.489, expiration date 4/19/96 . . . . . . . . . 241,512
DEM 19,400,000 Put on Deutschemarks, strike price
DEM 1.495, expiration date 2/1/96. . . . . . . . . . 91,568
DEM 42,975,000 Put on Deutschemarks, strike price
DEM 1.43250, expiration date 2/1/96. . . . . . . . . 497,092
FRF 100,000,000 Call on French Francs, strike price FRF 4.40
expiration date 11/28/95 . . . . . . . . . . . . . . --
FRF 125,000,000 Put on French Francs, strike price FRF 5,
expiration date 2/8/96 . . . . . . . . . . . . . . . 312,500
FRF 100,000,000 Put on French Francs, strike price FRF 5.07,
expiration date 11/28/95 . . . . . . . . . . . . . . 24,800
ITL 25,000,000,000 Put on Italian Lire, strike price ITL 1636.9,
expiration date 11/9/95. . . . . . . . . . . . . . . 12,500
<CAPTION>
Number of
Contracts
-------------
2,500 Put on December 1995 Eurodeutschemarks,
strike price 94.5, expiration date 12/18/95. . . . . 44,389
65 Put on December 1995 Eurolira, strike
price 88.5, expiration date 12/18/95 . . . . . . . . 8,175
80 Put on March 1996 Mibor, strike
price 90.25, expiration date, 3/16/96. . . . . . . . 18,036
-----------
TOTAL PURCHASED OPTIONS (Cost $3,374,923) . . . . . . 1,432,325
-----------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $353,328,922) (a). . . . . . . . . . . . . . . 359,733,262
-----------
-----------
</TABLE>
(a) The cost for federal income tax purposes was $353,365,447. At October 31,
1995, net unrealized appreciation for all securities based on tax cost was
$6,367,815. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $10,813,907 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$4,446,092.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
----
11
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
WRITTEN OPTIONS
At October 31, 1995 outstanding written options were as follows
(Notes A and B):
<TABLE>
<CAPTION>
Principal
Amount Expiration Strike Market
Call Options (000's) Date Price Value($)
- ------------ -------------------------------------------------------
<S> <C> <C> <C> <C>
GBP . . . . . . . . 8,400 11/14/95 GBP1.55 271,841
CAD . . . . . . . . 10,500 11/17/95 CAD1.3675 156,104
ITL . . . . . . . . 25,000,000 11/22/95 ITL1621.95 275,000
ECU . . . . . . . . 16,500 11/24/95 ECU1.2893 353,546
SEK . . . . . . . . 101,000 11/24/95 SEK6.992 782,750
ITL . . . . . . . . 25,300,000 12/22/95 ITL1613 290,950
AUD . . . . . . . . 8,158 1/8/96 AUD.715 359,385
CAD . . . . . . . . 18,701 1/9/96 CAD1.337 140,259
DEM . . . . . . . . 33,750 2/8/96 DEM1.35 297,000
GBP . . . . . . . . 9,000 4/26/96 GBP1.5723 371,254
</TABLE>
<TABLE>
<CAPTION>
Number of
Contracts
-------------
<S> <C> <C> <C> <C>
Eurodollar
Futures . . . . . . 99 6/17/96 94.25 123,750
Eurodollar
Futures . . . . . . 99 9/1/96 94.25 143,550
Eurodollar
Futures . . . . . . 99 12/16/96 94 173,250
---------
Total outstanding written options (Premiums received $3,198,757) 3,738,639
---------
---------
</TABLE>
CURRENCY ABBREVIATIONS
- --------------------------------------------------------------------------------
AUD Australian Dollar DEM Deutschemark
BEF Belgian Franc IDR Indonesian Rupiah
GBP British Pound ITL Italian Lira
CAD Canadian Dollar JPY Japanese Yen
CSK Czech Koruna NZD New Zealand Dollar
DKK Danish Krone ESP Spanish Peseta
NLG Dutch Guilder SEK Swedish Krona
ECU European Currency Unit CHF Swiss Franc
FRF French Franc USD United States Dollar
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- ----
12
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments, at market (identified cost
$349,953,999) (Note A) . . . . . . . . . . . . . . . . . . . $358,300,937
Purchased options, at market (identified cost
$3,374,923) (Note A) . . . . . . . . . . . . . . . . . . . . 1,432,325
Foreign currency, at market (identified cost
$345,935) (Note A) . . . . . . . . . . . . . . . . . . . . . 347,831
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . 12,169,478
Receivable on fund shares sold . . . . . . . . . . . . . . . . . 88,645
Unrealized appreciation on forward currency
exchange contracts (Notes A & E) . . . . . . . . . . . . . . 1,590,629
Deferred organization expenses (Note A). . . . . . . . . . . . . 3,818
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 23,615
------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 373,957,278
LIABILITIES
Payables:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . $2,330,663
Fund shares redeemed . . . . . . . . . . . . . . . . . . . . 1,238,808
Accrued management fee (Note C). . . . . . . . . . . . . . . 214,652
Other accrued expenses (Note C) . . . . . . . . . . . . . . 242,197
Written options, at market (premiums received
$3,198,757) (Note A) . . . . . . . . . . . . . . . . . . 3,738,639
Net payable on closed forward foreign currency
exchange contracts (Note A). . . . . . . . . . . . . . . 4,915,950
Unrealized depreciation on forward currency
exchange contracts (Notes A & E) . . . . . . . . . . . . 3,936,873
-------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . 16,617,782
------------
Net assets, at market value. . . . . . . . . . . . . . . . . . . $357,339,496
------------
------------
Net Assets
Net assets consist of:
Net unrealized appreciation (depreciation) on:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . $ 8,346,938
Options. . . . . . . . . . . . . . . . . . . . . . . . . . . (2,482,480)
Foreign currency related transactions. . . . . . . . . . . . (2,169,359)
Accumulated net realized loss. . . . . . . . . . . . . . . . . . (8,376,015)
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . 339,244
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 361,681,168
------------
Net assets, at market value. . . . . . . . . . . . . . . . . . . $357,339,496
------------
------------
NET ASSET VALUE, offering and redemption price per
share ($357,339,496 DIVIDED BY 33,924,422 shares of
capital stock outstanding, $.01 par value,
300,000,000 shares authorized) . . . . . . . . . . . . . . . $10.53
------
------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
----
13
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C>
Interest (net of foreign taxes withheld of $311,268) . . . . . . $37,661,488
Expenses:
Management fee (Note C). . . . . . . . . . . . . . . . . . . . . $2,392,536
Services to shareholders (Note C). . . . . . . . . . . . . . . . 946,861
Directors' fees and expenses (Note C). . . . . . . . . . . . . . 46,857
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . 577,357
Reports to shareholders. . . . . . . . . . . . . . . . . . . . . 117,057
Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,060
Legal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,932
State registration fees. . . . . . . . . . . . . . . . . . . . . 31,823
Amortization of organization expenses (Note A) . . . . . . . . . 11,706
Interest (Note D). . . . . . . . . . . . . . . . . . . . . . . . 17,788
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,216 4,321,193
--------------------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . 33,340,295
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . 4,530,521
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,414,222)
Futures contracts . . . . . . . . . . . . . . . . . . . . . . (1,142,640)
Foreign currency related transactions . . . . . . . . . . . . (30,136,115) (28,162,456)
-----------
Net unrealized appreciation during the period on:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . 5,952,232
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,588
Futures contracts . . . . . . . . . . . . . . . . . . . . . . 351,349
Foreign currency related transactions . . . . . . . . . . . . 8,242,666 14,695,835
--------------------------
Net loss on investment transactions. . . . . . . . . . . . . . . (13,466,621)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . $19,873,674
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
- ----
14
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended October 31,
------------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . $ 33,340,295 $ 59,953,874
Net realized loss from investment transactions . . . . . . . (28,162,456) (52,947,602)
Net unrealized appreciation (depreciation)
on investment transactions during the
period . . . . . . . . . . . . . . . . . . . . . . . . . 14,695,835 (12,317,902)
------------ -------------
Net increase (decrease) in net assets resulting
from operations. . . . . . . . . . . . . . . . . . . . . 19,873,674 (5,311,630)
------------ -------------
Distributions to shareholders from:
Net investment income ($.36 and $.02
per share, respectively) . . . . . . . . . . . . . . . . (14,850,406) (1,254,033)
------------ -------------
Tax return of capital ($.44 and $.85 per
share, respectively) . . . . . . . . . . . . . . . . . . (18,185,444) (58,437,746)
------------ -------------
Fund share transactions:
Proceeds from shares sold. . . . . . . . . . . . . . . . . . 51,277,133 212,114,019
Net asset value of shares issued to
shareholders in reinvestment of
distributions. . . . . . . . . . . . . . . . . . . . . . 23,158,972 45,034,626
Cost of shares redeemed. . . . . . . . . . . . . . . . . . . (263,863,651) (673,153,473)
------------ -------------
Net decrease in net assets from Fund
share transactions . . . . . . . . . . . . . . . . . . . (189,427,546) (416,004,828)
------------ -------------
DECREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . (202,589,722) (481,008,237)
Net assets at beginning of period. . . . . . . . . . . . . . 559,929,218 1,040,937,455
------------ -------------
NET ASSETS AT END OF PERIOD. . . . . . . . . . . . . . . . . $ 357,339,496 $ 559,929,218
------------ -------------
------------ -------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period. . . . . . . . . . 51,959,978 89,107,607
------------ -------------
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . 4,874,517 18,796,142
Shares issued to shareholders in reinvestment
of distributions . . . . . . . . . . . . . . . . . . . . 2,204,979 4,010,556
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . (25,115,052) (59,954,327)
------------ -------------
Net decrease in Fund shares. . . . . . . . . . . . . . . . . (18,035,556) (37,147,629)
------------ -------------
Shares outstanding at end of period. . . . . . . . . . . . . 33,924,422 51,959,978
------------ -------------
------------ -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
----
15
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 1, 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 . . . . . . . . . . . . . . $10.78 $11.68 $11.84 $12.01 $12.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (a) . . . . . . . . . . . . . . . . . . .80 .87 .95 1.08 .76
Net realized and unrealized gain (loss) on
investment transactions. . . . . . . . . . . . . . . . . . . (.25) (.90) (.14) (.17) .01
------ ------ ------ ------ ------
Total from investment operations . . . . . . . . . . . . . . . . .55 (.03) .81 .91 .77
------ ------ ------ ------ ------
Less distributions from:
Net investment income . . . . . . . . . . . . . . . . . . . . (.36) (.02) (.95) (1.08) (.76)
Net realized gains on investments . . . . . . . . . . . . . . -- -- (.02) -- --
Tax return of capital . . . . . . . . . . . . . . . . . . . . (.44) (.85) -- -- --
------ ------ ------ ------ ------
Total distributions. . . . . . . . . . . . . . . . . . . . . . . (.80) (.87) (.97) (1.08) (.76)
------ ------ ------ ------ ------
Net asset value, end of period . . . . . . . . . . . . . . . . . $10.53 $10.78 $11.68 $11.84 $12.01
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (%) . . . . . . . . . . . . . . . . . . . . . . . . 5.43 (.25) 7.14 7.83 6.65**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) . . . . . . . . . . . . . 357 560 1,041 1,369 205
Ratio of operating expenses, net to average daily
net assets (%) (a). . . . . . . . . . . . . . . . . . . . . . 1.00 1.00 1.00 1.00 1.00*
Ratio of net investment income to average daily
net assets (%). . . . . . . . . . . . . . . . . . . . . . . . 7.73 7.76 8.10 8.94 9.97*
Portfolio turnover rate (%). . . . . . . . . . . . . . . . . . . 182.8 272.4 259.8 274.2 26.1*
(a) Reflects a per share amount of management fee not
imposed by the Adviser. . . . . . . . . . . . . . . . . . . $ .02 $ .02 $ .01 $ .03 $ .06
Operating expense ratio including management fee
and other expenses not imposed (%). . . . . . . . . . . . . 1.20 1.15 1.11 1.23 1.89*
</TABLE>
* Annualized
** Not annualized
- ----
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
Scudder Short Term Global Income Fund (the "Fund") is a non-diversified series
of Scudder Global Fund, Inc., a Maryland corporation registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The policies described below are followed consistently by the Fund in
the preparation of its financial statements in conformity with generally
accepted accounting principles.
SECURITY VALUATION. Portfolio debt securities with remaining maturities greater
than sixty days are valued by pricing agents approved by the officers of the
Fund, which prices reflect broker/dealer-supplied valuations and electronic data
processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. All other debt securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
OPTIONS. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the
period, the Fund purchased put options and wrote call options on currencies as a
hedge against potential adverse price movements in the value of portfolio
assets. In addition, during the period, the Fund purchased call options and
wrote put options on currencies to lock in the purchase price of a security or
currency which it expects to purchase in the near future and to enhance
potential gain.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium
----
17
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
- -------------------------------------------------------------------------------
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 may not correlate exactly with changes in the value of the
securities or currencies hedged.
FUTURES CONTRACTS. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased interest rate futures to increase the duration of the portfolio,
as a temporary substitute for purchasing selected investments, and to lock in
the purchase price of a security which it expects to purchase in the near
future. During the period, the Fund sold interest rate futures to hedge against
declines in the value of portfolio securities.
- ---
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Upon entering into a futures contract, the Fund is required to deposit with
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
INDEXED SECURITIES. Indexed securities held by the Fund are investments whose
value is indexed to another financial instrument, index, currency, or commodity
(the "reference instrument"). For principal indexed securities, the principal
amount payable at maturity may be more or less than the amounts shown depending
on fluctuations in the value of the reference instrument. For coupon indexed
securities, the principal amount payable at maturity is fixed. However, the
coupon is indexed to the reference instrument. The price sensitivity of these
securities may be greater than that of non-indexed securities with similar
maturities.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities
at the daily rates of exchange, and
(ii) purchases and sales of investment securities, interest income and
certain expenses at the daily rates of exchange prevailing on the
respective dates of such transactions.
----
19
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
- -------------------------------------------------------------------------------
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. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge against changes in exchange rates
relating to foreign currency denominated assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
companies, and to distribute all of its taxable income to its shareholders.
Accordingly, the Fund paid no federal income taxes, and no federal income tax
provision was required. At October 31, 1995, the Fund had a net tax basis
capital loss carryforward of approximately $9,472,000 which may be applied
against any realized net taxable capital gains of each succeeding year until
fully utilized or until October 31, 2002 ($4,463,000) and October 31, 2003
($5,009,000), the respective expiration dates, whichever occurs first.
- ----
20
<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.
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 foreign
currency contracts and foreign currency denominated investments. 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.
For the year ended October 31, 1995, a portion of the Fund's income dividends
will be treated as nontaxable return of capital distributions under U.S. tax
rules. The final tax status of 1995 distributions will be provided to
shareholders in January 1996.
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.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. All
discounts are accreted for both tax and financial reporting purposes.
---
21
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
- -------------------------------------------------------------------------------
B. Purchases and Sales of Securities
- -------------------------------------------------------------------------------
During the year ended October 31, 1995, purchases and sales
(including maturities) of investment securities (excluding short-
term investments) aggregated $664,284,533 and $816,592,171,
respectively.
The aggregate face value of futures contracts opened and closed
during the year ended October 31, 1995 was $332,702,513 and
$884,125,795, respectively.
Transactions in written options for the year ended October 31, 1995
are summarized as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
OPTIONS ON CURRENCIES (000 OMITTED)
-----------------------------------------------------------------
Number of
Contracts Premiums AUD CAD DEM DKK Premiums
------------------------- ----------------------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning
of Period 920 $ 402,334 39,193 - - - $ 436,337
Written... 3,836 3,627,514 197,947 135,565 146,799 371,100 4,614,973
Closed.... (4,459) (3,621,969) (124,331) (93,864) (113,049) (91,700) (2,417,715)
Exercised - - (58,704) - - (279,400) (1,331,284)
Expired... - - (45,947) (12,500) - - (415,623)
------ --------- -------- --------- -------- -------- -----------
End of
Period... 297 $ 407,879 8,158 29,201 33,750 - $ 886,688
------ --------- -------- --------- -------- -------- -----------
------ --------- -------- --------- -------- -------- -----------
-----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
OPTIONS ON CURRENCIES (000 OMITTED)
--------------------------------------------------------------------------------------------
ECU ESP FRF GBP ITL JPY Premiums
-------------------------------------------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning
of Period - - - - - 934,928 $ 455,325
Written... 16,500 16,915,000 100,000 50,600 437,137,848 - 8,025,455
Closed.... - (10,340,000) (100,000) (33,200) (323,000,000) (934,928) (5,511,030)
Exercised - (5,750,000) - - (45,500,000) - (720,313)
Expired.. - (825,000) - - (18,337,848) - (557,025)
-------- ----------- -------- ------- ------------ --------- ----------
End of
Period.. 16,500 - - 17,400 50,300,000 - $ 1,692,412
-------- ----------- -------- ------- ------------ --------- ----------
-------- ----------- -------- ------- ------------ --------- ----------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
OPTIONS ON CURRENCIES (000 OMITTED)
--------------------------------------------------------------------------------
NZD SEK ESP/DEM ITL/DEM SEK/DEM Premiums
-------------------------------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Beginning
of Period 35,500 - 2,540,000 43,000,000 160,000 $ 878,376
Written... 121,296 101,000 1,500,000 118,000,000 545,000 2,310,649
Closed.... (141,596) - (1,500,000) (32,000,000) (190,000) (1,508,025)
Exercised (15,200) - - - (351,000) (516,271)
Expired.. - - (2,540,000) (129,000,000) (164,000) (952,951)
----------- ----------- ------------ ------------- ---------- -----------
End of
Period.. - 101,000 - - - $ 211,778
----------- ----------- ------------ ------------- ---------- -----------
----------- ----------- ------------ ------------- ---------- -----------
-------------------------------------------------------------------------------------------------------
</TABLE>
C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the 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 0.75% of the first $1,000,000,000 of average
daily net assets and 0.70% of such assets in excess of $1,000,000,000 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 also provides that if the Fund's expenses, exclusive of
taxes, interest, and extraordinary expenses, exceed specified limits, such
excess, up to the amount of the management fee, will be paid by the Adviser. The
Adviser has agreed not to impose all or a portion of its management fee until
February 29, 1996, and during such period to maintain the annualized expenses of
the Fund at not more than 1.00% of average daily net assets. For the year ended
October 31, 1995, the Adviser did not impose a portion of its management fee
aggregating $844,364 and the amount imposed aggregated $2,392,536 which was
equivalent to an annual effective rate of 0.55% of the Fund's average daily net
assets.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend paying and shareholder service agent for the Fund. For
the year ended October 31, 1995, the amount charged by SSC aggregated $720,994,
of which $51,237 is unpaid at October 31, 1995.
----
23
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
- -------------------------------------------------------------------------------
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 $46,857.
D. SHORT-TERM DEBT
- -------------------------------------------------------------------------------
During the year ended October 31, 1995, the Fund periodically borrowed amounts
from a bank at the existing prime rates. The arrangement with the bank allows
the Fund to borrow a maximum amount based on net asset value. There were no
month-end borrowings outstanding during the year ended October 31, 1995.
During the year ended October 31, 1995, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $4,617,471 with a weighted average interest rate of 8.24%. Interest expense
for the year ended October 31, 1995 was $17,788 (less than $.01 per share).
E. COMMITMENTS
- -------------------------------------------------------------------------------
As of October 31, 1995, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$2,346,244.
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (U.S.$)
- ------------------------ --------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
SEK 53,835,810 USD 7,334,579 11/6/95 (773,346)
USD 4,689,163 SEK 32,689,090 11/6/95 242,806
DKK 133,609,943 USD 24,367,205 11/22/95 to 1/26/96 (94,365)
ESP 2,850,000,000 USD 22,188,509 12/15/95 (1,058,294)
USD 7,367,355 ESP 915,762,213 12/15/95 111,772
FRF 64,069,454 USD 12,921,918 1/5/96 (178,344)
DEM 45,651,350 USD 32,939,238 1/29/96 384,613
USD 27,400,433 DEM 38,485,000 1/29/96 65,311
ECU 11,777,001 USD 15,347,788 2/20/96 (2,839)
USD 4,242,161 ECU 3,275,800 2/20/96 32,666
BEF 517,548,200 USD 17,194,292 2/22/96 (765,717)
USD 12,447,997 BEF 380,000,000 2/22/96 753,461
CHF 18,068,105 USD 15,056,754 3/13/96 (1,063,968)
--------------
(2,346,244)
--------------
--------------
</TABLE>
- ----
24
<PAGE>
SCUDDER SHORT TERM GLOBAL INCOME FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS OF SCUDDER GLOBAL FUND, INC. AND TO THE SHAREHOLDERS
OF SCUDDER SHORT TERM GLOBAL INCOME FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
Short Term Global Income 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 March 1, 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. 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 Short Term Global Income Fund as of October 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the four years in the period then ended and for the period March 1, 1991
(commencement of operations) to October 31, 1991 in conformity with generally
accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 19, 1995
----
25
<PAGE>
SHAREHOLDER MEETING RESULTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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 three matters
voted upon by Shareholders of Scudder Short Term Global Income 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*
--- -------- -----------------
<S> <C> <C> <C>
Edmond D. Villani 20,580,325 688,602 0
Nicholas Bratt 20,548,437 720,491 0
Daniel Pierce 20,548,367 720,560 0
Paul Bancroft III 20,523,637 745,290 0
Sheryle J. Bolton 20,485,387 783,540 0
Thomas J. Devine 20,522,688 746,239 0
William H. Gleysteen, Jr. 20,520,409 748,518 0
William H. Luers 20,522,276 746,651 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*
--- ------- ------- -----------------
20,333,747 366,126 569,054 0
3. Approval of the change to the name, investment objective and certain investment policies of Scudder
Short Term Global Income Fund.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
17,735,111 1,010,791 879,211 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.
</TABLE>
26
<PAGE>
(This page intentionally left blank.)
27
<PAGE>
(This page intentionally left blank.)
28
<PAGE>
OFFICERS AND DIRECTORS
- --------------------------------------------------------------------------------
Edmond D. Villani*
Chairman of the Board and Director
Nicholas Bratt*
President and Director
Sheryle J. Bolton
Director; Consultant
Paul Bancroft III
Director; Venture Capitalist and Consultant
Thomas J. Devine
Director; Consultant
William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.
William H. Luers
Director; President, The Metropolitan Museum of Art
Daniel Pierce*
Director and Vice President
Robert G. Stone, Jr.
Honorary Director; Chairman of the Board and Director, Kirby Corporation
Robert W. Lear
Honorary Director; Executive-in-Residence, 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 M. Small*
Vice President
David S. Lee*
Vice President and Assistant Treasurer
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Juris Padegs*
Vice President and Assistant Secretary
Kathryn L. Quirk*
Vice President and Assistant Secretary
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
29
<PAGE>
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>
30
<PAGE>
HOW TO CONTACT SCUDDER
- --------------------------------------------------------------------------------
<TABLE>
<C> <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.
* Contact Scudder Investor Services, Inc., Distributor, to receive a prospectus with more complete
information, including management fees and expenses. Please read it carefully before you invest or send money.
</TABLE>
31
<PAGE>
Celebrating Over 75 Years of Serving Investors
- --------------------------------------------------------------------------------
Established in 1919 by Theodore Scudder, Sidney Stevens, and
F. Haven Clark, Scudder, Stevens & Clark was the first independent investment
counsel firm in the United States. Since its birth, Scudder's pioneering spirit
and commitment to professional long-term investment management have helped shape
the investment industry. In 1928, we introduced the nation's first no-load
mutual fund. Today we offer 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.
