SCUDDER GLOBAL FUND INC, 497, 1996-11-08

SCUDDER GLOBAL FUND INC
497, 1996-11-08

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

If you require more detailed information, a Statement of Additional Information
dated November 1, 1996, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statement, which is
incorporated by reference into this prospectus, has been filed with the
Securities and Exchange Commission.

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

Contents--see page 4.

Scudder Global Fund

Prospectus
November 1, 1996

A pure no-load(TM) (no sales charges) mutual fund series which seeks long-term
growth of capital from worldwide investing.

<PAGE>

Expense information

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

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

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

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

2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended June 30, 1996.

Investment management fee 0.96%
12b-1 fees NONE
Other expenses 0.38%
----
Total Fund operating expenses 1.34%
====

Example

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

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$14 $42 $73 $161

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

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

2
<PAGE>

Financial highlights

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

If you would like more detailed information concerning the Fund's performance, a
complete portfolio listing and audited financial statements are available in the
Fund's Annual Report dated June 30, 1996 and may be obtained without charge by
writing or calling Scudder Investor Services, Inc.

FOR THE PERIOD
JULY 23, 1986
YEARS ENDED JUNE 30, (COMMENCEMENT OF
OPERATIONS)
TO JUNE 30,
1996 1995 1994(e) 1993 1992 1991 1990 1989 1988 1987
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
-------------------------------------------------------------------------------------------
beginning of period ..... $25.64 $23.93 $21.63 $19.56 $18.06 $20.36 $17.64 $14.47 $15.42 $12.00
-------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income ..... .24 .25 .23 .15 .19 .40 .19 .19 .18 .05
Net realized and
unrealized gain (loss)
on investment
transactions ............ 3.94 1.91 2.57 2.42 2.28 (1.50) 3.28 3.20 (.82) 3.37
Total from investment -------------------------------------------------------------------------------------------
operations .............. 4.18 2.16 2.80 2.57 2.47 (1.10) 3.47 3.39 (.64) 3.42
-------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ..... (.25) (.11) (.24) (.16) (.31) (.37) (.20) (.14) (.06) -
Net realized gains
from investment
transactions ............ (.84) (.34) (.26) (.34) (.66) (.83) (.55) (.08) (.25) -
-------------------------------------------------------------------------------------------
Total distributions ....... (1.09) (.45) (.50) (.50) (.97) (1.20) (.75) (.22) (.31) -
-------------------------------------------------------------------------------------------
Net asset value, end of -------------------------------------------------------------------------------------------
period ............ $28.73 $25.64 $23.93 $21.63 $19.56 $18.06 $20.36 $17.64 $14.47 $15.42
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) .......... 16.65 9.11 12.99 13.45 14.09 (5.20) 20.00 23.90 (4.45) 28.50**
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of
period ($ millions) ..... 1,368 1,168 1,096 577 371 268 257 91 81 102
Ratio of operating
expenses, to average
daily net assets (%) ... 1.34 1.38 1.45 1.48 1.59 1.70 1.81 1.98 1.71(c) 1.84*(a)
Ratio of net investment
income to average
daily net assets (%) .... .84 1.03 .97 .90 1.09 2.21 1.77 1.22 1.23 .63*
Portfolio turnover
rate (%) ................ 29.1 44.4 59.7 64.9 44.6 85.0(d) 38.3 30.7 53.8 32.2*
Average commission rate

paid (b) ................ $.0272 $ - $ - $ - $ - $ - $ - $ - $ - $ -

<FN>

(a) The Adviser did not impose all of its management fee during the period July
23, 1986 (commencement of operations) to December 31, 1986, amounting to
$.01 per share.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years ending on or after June 30, 1996.
(c) The Adviser absorbed a portion of the Fund's expenses exclusive of
management fees, amounting to $.03 per share.
(d) The portfolio turnover rate on equity securities and debt securities was
62.7% and 174.4%, respectively, based on average monthly equity holdings
and average monthly debt holdings.
(e) Per share amounts have been calculated using weighted average shares
outstanding.
* Annualized
** Not annualized.

</FN>
</TABLE>

3
<PAGE>

A message from Scudder's chairman

Scudder, Stevens & Clark, Inc., investment adviser to the Scudder Family of
Funds, was founded in 1919. We offered America's first no-load mutual fund in
1928. Today, we manage in excess of $100 billion for many private accounts and
over 50 mutual fund portfolios. We manage the mutual funds in a special program
for the American Association of Retired Persons, as well as the fund options
available through Scudder Horizon Plan, a tax-advantaged variable annuity. We
also advise The Japan Fund and nine closed-end funds that invest in countries
around the world.

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

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

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

/s/Daniel Pierce

Scudder Global Fund

Investment objective

o long-term growth of capital from global investment

Investment characteristics

o worldwide investing with international investment risk

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

Contents

Investment objective and policies 5

Investment results 6

Risks of global investing 6

Why invest in the Fund? 7

International investment experience 8

Additional information about policies and investments 8

Distribution and performance information 11

Purchases 12

Exchanges and redemptions 13

Fund organization 14

Transaction information 14

Shareholder benefits 18

Directors and Officers 21

Investment products and services 22

How to contact Scudder 23

4
<PAGE>

Investment objective and policies

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

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

Investments

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

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

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

5
<PAGE>

Investment objective and policies (cont'd)

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

Risks of global investing

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

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

<TABLE>
<CAPTION>
Annual capital changes**
------------------------
<S> <C> <C> <C> <C>
Years Ended Net Asset Capital Gains
June 30, Value/Share Dividends Distributions Capital Change
-------- ----------- --------- ------------- --------------
1987* $15.42 -- -- --
1988 14.47 $.06 $ .25 - 4.88%
1989 17.64 .14 .08 + 22.69
1990 20.36 .20 .55 + 19.33
1991 18.06 .37 .83 - 8.47
1992 19.56 .31 .66 + 12.24
1993 21.63 .16 .34 + 12.53
1994 23.93 .24 .26 + 11.88
1995 25.64 .11 .34 + 8.63
1996 28.73 .25 .84 + 15.33

Growth of a $10,000 investment Total Return
------------------------------ ------------
Years Ended Value of Initial
June 30, 1996 $10,000 Investment Average Annual Cumulative
------------- ------------------ -------------- ----------
One Year $11,665 + 16.65% + 16.65%
Five Years 18,616 + 13.23 + 86.16
Life of the Fund 32,239 + 12.49 + 222.39

Performance figures are historical and all total return calculations assume reinvestment of capital gains and income
distributions. Investor returns and principal value fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. *For the period July 23, 1986 (commencement of operations) to June 30,
1987. **For a definition of "capital change," see "Distribution and performance information."
These results are not intended to indicate future investment performance.
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

6
<PAGE>

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

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

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

Why invest in the Fund?

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

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

7
<PAGE>

Why invest in the Fund? (cont'd)

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

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

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

International investment
experience

The Adviser has been a leader in international investment management for over 40
years. Its investment company clients include Scudder International Fund, which
invests primarily in foreign securities and was initially incorporated in Canada
in 1953 as the first foreign investment company registered with the United
States Securities and Exchange Commission, Scudder International Bond Fund,
which invests internationally, Scudder Global Bond Fund and Scudder Global
Discovery Fund which invest worldwide, Scudder Greater Europe Growth Fund which
invests primarily in the equity securities of European companies, The Japan
Fund, Inc., which invests primarily in securities of Japanese companies, Scudder
Latin America Fund, which invests in Latin American issuers, Scudder Pacific
Opportunities Fund, which invests in issuers located in the Pacific Basin with
the exception of Japan, Scudder Emerging Markets Income Fund, which invests in
debt securities issued in emerging markets and Scudder Emerging Markets Growth
Fund, which invests in equity securities issued in emerging markets. The Adviser
also manages the assets of eight closed-end investment companies investing in
foreign securities: The Argentina Fund, Inc., The Brazil Fund, Inc., The First
Iberian Fund, Inc., The Korea Fund, Inc., The Latin America Dollar Income Fund,
Inc., Scudder New Asia Fund, Inc., Scudder New Europe Fund, Inc. and Scudder
World Income Opportunities Fund, Inc. Assets of international investment company
clients of the Adviser exceeded $8 billion as of September 30, 1996.

Additional information about policies and investments

Investment restrictions

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

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

A complete description of these and other policies and restrictions is contained

8
<PAGE>

under "Investment Restrictions" in the Fund's Statement of Additional
Information.

Common stocks

Under normal circumstances, the Fund invests primarily in common stocks. Common
stock is issued by companies to raise cash for business purposes and represents
a proportionate interest in the issuing companies. Therefore, the Fund
participates in the success or failure of any company in which it holds stock.
The market values of common stock can fluctuate significantly, reflecting the
business performance of the issuing company, investor perception and general
economic or financial market movements. Smaller companies are especially
sensitive to these factors and may even become valueless. Despite the risk of
price volatility, however, common stocks also offer the greatest potential for
gain on investment, compared to other classes of financial assets such as bonds
or cash equivalents.

Repurchase agreements

Strategic Transactions and derivatives

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

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

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

9
<PAGE>

Additional information about policies and investments (cont'd)

requirements when implementing these strategies, techniques and instruments.
Strategic Transactions involving financial futures and options thereon will be
purchased, sold or entered into only for bona fide hedging, risk management or
portfolio management purposes and not for speculative purposes. Please refer to
"Risk factors--Strategic Transactions and derivatives" for more information.

Risk factors

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

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

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

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

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

10
<PAGE>

transaction without incurring substantial losses, if at all. Although the use of
futures contracts and options transactions for hedging should tend to minimize
the risk of loss due to a decline in the value of the hedged position, at the
same time they tend to limit any potential gain which might result from an
increase in value of such position. Finally, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium. Losses resulting from the use of Strategic
Transactions would reduce net asset value, and possibly income, and such losses
can be greater than if the Strategic Transactions had not been utilized. The
Strategic Transactions that the Fund may use and some of their risks are
described more fully in the Fund's Statement of Additional Information.

Distribution and performance information

Dividends and capital gains distributions

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

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

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

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

Performance information

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

11
<PAGE>

Purchases

<S> <C> <C> <C>
Opening
an account Minimum initial investment: $2,500; IRAs $1,000
Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.

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

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

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

Purchasing Minimum additional investment: $100; IRAs $50
additional Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
shares See appropriate plan literature.

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

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

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

o By Telephone Please see Transaction information--Purchasing shares--
By AutoBuy or By telephone order for more details.

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

12
<PAGE>

Exchanges and redemptions

Exchanging Minimum investments: $2,500 to establish a new account;
shares $100 to exchange among existing accounts

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

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

Send your instructions

by regular mail to: or by express, registered, or by fax to:
or certified mail to:

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

Redeeming o By Telephone To speak with a service representative, call 1-800-225-5163 from
shares 8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day). You may have
redemption proceeds sent to your predesignated bank account, or
redemption proceeds of up to $100,000 sent to your address of record.

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

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

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

13
<PAGE>

Fund organization

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

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

Investment adviser

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

For the fiscal year ended June 30, 1996, the Adviser received an investment
management fee of 0.96% of the Fund's average daily net assets.

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

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

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

Transfer agent

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

Underwriter

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

Fund accounting agent

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

Custodian

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

Transaction information

Purchasing shares

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

14
<PAGE>

the Fund may hold redemption proceeds until the purchase check has cleared. If
you purchase shares by federal funds wire, you may avoid this delay. Redemption
requests by telephone prior to the expiration of the seven-day period will not
be accepted.

By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent. Accounts cannot be opened
without a completed, signed application and a Scudder fund account number.
Contact your bank to arrange a wire transfer to:
The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552

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

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

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

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

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

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

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

By "AutoBuy." If you elected "AutoBuy" for your account, you can call toll-free
to purchase shares. The money will be automatically transferred from your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "AutoBuy," call
1-800-225-5163 for more information.

To purchase additional shares, call 1-800-225-5163. Purchases must be for at
least $250 but not more than $250,000. Proceeds in the amount of your purchase
will be transferred from your bank checking account in two or three business
days following your call. For requests received by the close of regular trading
on the Exchange, shares will be purchased at the net asset value per share
calculated at the close of trading on the day of your call. "AutoBuy" requests
received after the close of regular trading on the Exchange will begin their
processing and be purchased at the net asset value calculated the following
business day.

If you purchase shares by "AutoBuy" and redeem them within seven days of the
purchase, the

15
<PAGE>

Transaction information (cont'd)

Fund may hold the redemption proceeds for a period of up to seven business days.
If you purchase shares and there are insufficient funds in your bank account,
the purchase will be canceled and you will be subject to any losses or fees
incurred in the transaction. "AutoBuy" transactions are not available for
Scudder IRA accounts and most other retirement plan accounts.

Redeeming shares

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

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

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

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

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

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

By "AutoSell." If you elected "AutoSell" for your account, you can call
toll-free to redeem shares. The money will be automatically transferred to your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "AutoSell,"
call 1-800-225-5163 for more information.

To redeem shares, call 1-800-225-5163. Redemptions must be for at least $250.
Proceeds in the amount of your redemption will be transferred to your bank
checking account in two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
redeemed at the net asset value per share calculated at the close of trading on
the day of your call. "AutoSell" requests received after the close of regular
trading on the Exchange will begin their processing and be redeemed at the net
asset value calculated the following business day.

"AutoSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.

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

16
<PAGE>

Telephone transactions

Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $100,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. The Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If the Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Fund will not be liable for acting upon instructions
communicated by telephone that it reasonably believes to be genuine.

Share price

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

Processing time

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

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

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

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

Purchase restrictions

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

Tax information

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

Tax identification number

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

Minimum balances

Shareholders should maintain a share balance worth at least $2,500, which amount
may be changed by the Board of Directors. Scudder retirement plans and certain
other accounts have similar or lower minimum balance requirements. A shareholder
may open an account with at least

17
<PAGE>

Transaction information (cont'd)

$1,000, if an automatic investment plan of $100/month is established.

Shareholders who maintain a non-fiduciary account balance of less than $2,500 in
the Fund, without establishing an automatic investment plan, will be assessed an
annual $10.00 per fund charge with the fee to be paid to the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder. Reductions in
value that result solely from market activity will not trigger an involuntary
redemption. Retirement accounts and certain other accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation. Please refer to
"Exchanges and Redemptions--Other information" in the Fund's Statement of
Additional Information for more information.

Third party transactions

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

Redemption-in-kind

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

Shareholder benefits

Experienced professional management

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

A team approach to investing

Scudder Global Fund is managed by a team of Scudder investment professionals,
who each play an important role in the Fund's management process. Team members
work together to develop investment strategies and select securities for the
Fund's portfolio. They are supported by Scudder's large staff of economists,
research analysts, traders, and other investment specialists who work in
Scudder's offices across the United States and abroad. Scudder believes its team
approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.

Lead Portfolio Manager William E. Holzer has had day-to-day responsibility for
Scudder Global Fund's worldwide strategy and investment themes since its
inception in 1986. Mr. Holzer, who has over 20 years' experience in global
investing, joined Scudder in 1980. Nicholas Bratt, Portfolio Manager, directs
Scudder's overall global equity investment strategies. Mr. Bratt joined Scudder
in 1976 and the team in 1993. Alice Ho, Portfolio Manager, joined the team in

18
<PAGE>

1994 and is also responsible for implementing the Fund's strategy. Ms. Ho, who
joined Scudder in 1986 as a member of the institutional and private investment
counsel areas, has worked as a portfolio manager since 1989.

SAIL(TM)--Scudder Automated Information Line

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

Investment flexibility

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

Dividend reinvestment plan

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

Shareholder statements

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

Shareholder reports

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

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

Newsletters

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

Scudder Funds Centers

As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Funds Centers in Boca Raton, Boston, Chicago,
New York, and San Francisco.

T.D.D. service for the hearing impaired

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

19
<PAGE>

Scudder tax-advantaged retirement plans

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

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

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

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

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

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

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

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

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

20
<PAGE>

Directors and Officers

Daniel Pierce*
Chairman of the Board,
Director and Vice President

William E. Holzer*
President

Paul Bancroft III
Director; Venture Capitalist and Consultant

Sheryle J. Bolton
Director; Consultant

Nicholas Bratt*
Director

Thomas J. Devine
Director; Consultant

William H. Gleysteen, Jr.
Director; Consultant

Dudley H. Ladd*
Director

William H. Luers
Director; President, The Metropolitan Museum of Art

Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business

Robert G. Stone, Jr.
Honorary Director; Chairman of the Board and Director, Kirby Corporation

Adam M. Greshin*
Vice President

Jerard K. Hartman*
Vice President

Thomas W. Joseph*
Vice President

Gerald J. Moran*
Vice President

Isabel Saltzman*
Vice President

Thomas F. McDonough*
Vice President and Secretary

Pamela A. McGrath*
Vice President and Treasurer

David S. Lee*
Vice President and Assistant Treasurer

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

Juris Padegs*
Vice President and Assistant Secretary

Kathryn L. Quirk*
Vice President and Assistant Secretary

Coleen Downs Dinneen*
Assistant Secretary

*Scudder, Stevens & Clark, Inc.

21
<PAGE>

Investment products and services

The Scudder Family of Funds

Money market
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund

Tax free money market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*

Tax free+
Scudder California Tax Free Fund*
Scudder High Yield Tax Free Fund
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited Term Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder Medium Term Tax Free Fund
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*

Income
Scudder Emerging Markets Income Fund
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund

Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund

Growth
Scudder Capital Growth Fund
Scudder Classic Growth Fund
Scudder Development Fund
Scudder Emerging Markets Growth Fund
Scudder Global Discovery Fund
Scudder Global Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Latin America Fund
Scudder Micro Cap Fund
Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder 21st Century Growth Fund
Scudder Value Fund The Japan Fund

- --------------------------------------------------------------------------------
Closed-end Funds#
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities Fund, Inc.

- --------------------------------------------------------------------------------
Retirement Plans and
Tax-Advantaged Investments
IRAs
Keogh Plans
Scudder Horizon Plan*+++ (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase Pension Plans

- --------------------------------------------------------------------------------
Institutional Cash Management
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++

- --------------------------------------------------------------------------------
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +A portion of the income from the tax-free funds may
be subject to federal, state and local taxes. *Not available in all states. +++A
no-load variable annuity contract provided by Charter National Life Insurance
Company and its affiliate, offered by Scudder's insurance agencies,
1-800-225-2470. #Funds advised by Scudder, Stevens & Clark, Inc. and traded on
various stock exchanges. ++An institutional cash management service that
utilizes certain portfolios of Scudder Fund, Inc. ($100,000 minimum). Call
1-800-541-7703 for information.

22
<PAGE>

<TABLE>
<CAPTION>
How to contact Scudder

Account Service and Information: Scudder Brokerage Services:

<S> <C> <C> <C>
For existing account Scudder Investor To receive information Scudder Brokerage
service and transactions Relations about this discount Services**
1-800-225-5163 brokerage service and 1-800-700-0820
to obtain an application

For personalized Scudder Automated Please address all correspondence to:
information about your Information Line The Scudder Funds
Scudder accounts; (SAIL) P.O. Box 2291
exchanges and 1-800-343-2890 Boston, Massachusetts
redemptions; or 02107-2291
information on any
Scudder fund
Visit the Scudder World Wide Web Site at:

http://funds.scudder.com

Investment Information: Or Stop by a Scudder Funds Center:

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

For establishing 401(k) Scudder Defined Boca Raton New York
and 403(b) plans Contribution Boston San Francisco
Services Chicago
1-800-323-6105

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

Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.

* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.

** Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA
02061--Member NASD/SIPC.
</TABLE>
23
<PAGE>
This prospectus sets forth concisely the information about Scudder International
Bond Fund, a series of Scudder Global Fund, Inc., an open-end management
investment company, that a prospective investor should know before investing.
Please retain it for future reference.

Contents--see page 4.

Scudder
International
Bond Fund

Prospectus
November 1, 1996

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

Expense information

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

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

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

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

Investment management fee 0.85%
12b-1 fees NONE
Other expenses 0.41%
------
Total Fund operating expenses 1.26%
======

Example

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

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$13 $40 $69 $152

2
<PAGE>

Financial highlights

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

If you would like more detailed information concerning the Fund's performance,
a complete portfolio listing and audited financial statements are available in
the Fund's Annual Report dated June 30, 1996 and may be obtained without charge
by writing or calling Scudder Investor Services, Inc.

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 6, 1988
(COMMENCEMENT
YEARS ENDED JUNE 30, OF OPERATIONS)
--------------------------------------------------------------------- TO JUNE 30,
1996 1995 1994(b) 1993 1992 1991 1990 1989
--------------------------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $11.43 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27 $12.00
------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (a) ............. .73 .98 .92 1.03 1.08 1.21 1.10 1.00
Net realized and unrealized gain (loss)
on investment transactions (c) ....... (.45) (.54) (1.22) .52 2.15 .56 .80 (.73)
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations ......... .28 .44 (.30) 1.55 3.23 1.77 1.90 .27
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
From net investment income ........... (.12) -- (.91) (1.04) (1.09) (1.21) (1.09) (1.00)
From net realized gains on investment
transactions ....................... -- -- -- (.62) (.81) (.29) -- --
In excess of net realized gains on
investment transactions ............ -- -- (.39) -- -- -- -- --
Tax return of capital ................ (.61) (.98) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions ...................... (.73) (.98) (1.30) (1.66) (1.90) (1.50) (1.09) (1.00)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period ........... $10.98 $11.43 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) ......................... 2.59 3.92 (2.83) 12.24 28.25 14.88 17.59 2.16**

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) ... 515 910 1,231 1,017 542 144 73 13
Ratio of operating expenses, net to
average net assets (%) (a) ........... 1.26 1.30 1.27 1.25 1.25 1.25 1.25 1.00*
Ratio of net investment income to
average net assets (%) ............... 6.50 8.52 6.86 7.69 8.31 9.48 9.57 8.58*
Portfolio turnover rate (%) .............. 275.7 318.5 232.9 249.7 147.9 260.1 215.6 103.8*

<S> <C> <C> <C> <C> <C> <C> <C> <C>
(a) Reflects a per share amount of
expenses, exclusive of management
fees, reimbursed by the Adviser of . $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ .39
Reflects a per share amount of
management fee not imposed
by the Adviser of .................. $ -- $ -- $ -- $ .02 $ .04 $ .06 $ .10 $ .10
Operating expense ratio before
expense reductions (%) ............. -- -- 1.29 1.37 1.57 1.75 2.51 5.59*
(b) Per share amounts have been calculated using weighted average shares outstanding.
(c) Includes exchange gain (loss) of $.01, $.01 and ($.02) for the periods ended June 30, 1991, 1990 and 1989, previously
included in net investment income.
* Annualized
** Not annualized

</TABLE>

3
<PAGE>

A message from Scudder's chairman

/s/Daniel Pierce

Scudder International Bond Fund

Investment objectives

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

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

Investment characteristics

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

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

Contents

Investment objectives and policies 5

International bond investing 5

Why invest in the Fund? 6

International investment experience 6

Special risk considerations 6

Investments 7

Additional information about policies
and investments 8

Purchases 12

Exchanges and redemptions 13

Distribution and performance information 14

Fund organization 15

Transaction information 16

Shareholder benefits 19

Directors and Officers 22

Investment products and services 23

How to contact Scudder Back cover

4
<PAGE>

Investment objectives and policies

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

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

International bond investing

Opening of foreign markets

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

Globalization of capital flows

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

International participation

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

Investment opportunity

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

5
<PAGE>

Why invest in the Fund?

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

International investment
experience

The Adviser has been a leader in international investment management for over 40
years. Its investment company clients include Scudder International Fund, which
invests primarily in foreign securities and was initially incorporated in Canada
in 1953 as the first foreign investment company registered with the United
States Securities and Exchange Commission, Scudder Global Fund, Scudder Global
Bond Fund and Scudder Global Discovery Fund, which invest worldwide, Scudder
Greater Europe Growth Fund, which invests primarily in the equity securities of
European companies, The Japan Fund, Inc., which invests primarily in securities
of Japanese companies, Scudder Latin America Fund, which invests in Latin
American issuers, Scudder Pacific Opportunities Fund, which invests in issuers
located in the Pacific Basin with the exception of Japan, Scudder Emerging
Markets Income Fund, which invests in debt securities issued in emerging markets
and Scudder Emerging Markets Growth Fund, which invests in equity securities
issued in emerging markets. The Adviser also manages the assets of eight
closed-end investment companies investing in foreign securities: The Argentina
Fund, Inc., The Brazil Fund, Inc., The First Iberian Fund, Inc., The Korea Fund,
Inc., The Latin America Dollar Income Fund, Inc., Scudder New Asia Fund, Inc.,
Scudder New Europe Fund, Inc., and Scudder World Income Opportunities Fund, Inc.
Assets of international investment company clients of the Adviser exceeded $8
billion as of September 30, 1996.

Special risk considerations

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

Since the Fund's investments are primarily denominated in foreign currencies,
exchange rates are likely to have a significant impact on total Fund

6
<PAGE>

performance. For example, a fall in the U.S. dollar's value relative to the
Japanese yen will increase the U.S. dollar value of a Japanese bond held in the
portfolio, even though the price of that bond in yen terms remains unchanged.
Conversely, if the U.S. dollar rises in value relative to the yen, the U.S.
dollar value of a Japanese bond will fall. Investors should be aware that
exchange rate movements can be significant and endure for long periods of time.

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

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

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

Investments

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

The high-grade debt securities in which the Fund primarily invests will be rated
in one of the three highest rating categories of one of the major U.S.

7
<PAGE>

Investments (cont'd)

rating services or, if not rated, considered to be of equivalent quality in
local currency terms by the Adviser. These securities are rated AAA, AA or A by
Standard & Poor's ("S&P") or Aaa, Aa, or A by Moody's Investors Service, Inc.
("Moody's").

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

During the year ended June 30, 1996, the average monthly dollar-weighted market
value of the bonds in the Fund's portfolio were as follows: 43.0% rated Aaa,
45.0% rated Aa, 11.2% rated A, 0.0% rated Baa and 0.8% rated Ba. The bonds are
rated by Moody's or S&P, or of equivalent quality as determined by the Adviser.

The Fund's investments may include:

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

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

o Corporate debt securities

o Bank or bank holding company debt securities

o Other debt securities, including those convertible into common stock

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

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

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

Additional information about policies and investments

Investment restrictions

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

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

8
<PAGE>

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

Short-term investments

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

Indexed securities

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

Repurchase agreements

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

Dollar roll transactions

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

When-issued securities

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

Strategic Transactions and derivatives

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

9
<PAGE>

Additional information about policies and investments (cont'd)

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

Risk factors

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

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

10
<PAGE>

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

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

11
<PAGE>

Purchases

<TABLE>

<S> <C> <C>
Opening Minimum initial investment: $2,500; IRAs $1,000
an account Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.

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

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

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

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

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

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

o By Telephone Please see Transaction information--Purchasing shares--
By AutoBuy for more details.

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

12
<PAGE>

Exchanges and redemptions

Exchanging Minimum investments: $2,500 to establish a new account;
shares $100 to exchange among existing accounts

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

Send your instructions

by regular mail to: or by express, registered, or by fax to:
or certified mail to:

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

o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:

- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem;
- your signature(s) as it appears on your account; and
- a daytime telephone number.

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

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

13
<PAGE>

Distribution and performance information

Dividends and capital gains distributions

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

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

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

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

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

Performance information

From time to time quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance figures
are historical, show the performance of a hypothetical investment and are not
intended to indicate future performance. The "SEC yield" of the Fund is an
annualized expression of the net income generated by the Fund over a specified
30-day (one month) period, as a percentage of the Fund's share price on the last
day of that period. This yield is calculated according to methods required by
the Securities and Exchange Commission (the "SEC"), and therefore may not equate
to the level of income paid to shareholders. Yield is expressed as an annualized
percentage. "Total return" is the change in value of an investment in the Fund
for a specified period. The "average annual total return" of the Fund is the
average annual compound rate of return of an investment in the Fund assuming
that the investment has been held for one year and the life of the Fund.
"Cumulative total return" represents the cumulative change in value of an
investment in the Fund for various periods. All types of total return
calculations assume that all dividends and capital gains distributions during

14
<PAGE>

the period were reinvested. "Capital change" measures return from capital,
including reinvestment of any capital gains distributions but does not include
the reinvestment of dividends. Performance will vary based upon, among other
things, changes in market conditions and the level of the Fund's expenses.

Fund organization

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

Investment adviser

For the fiscal year ended June 30, 1996, the Adviser received an investment
management fee of 0.85% of the Fund's average daily net assets. The fee is
graduated so that increases in the Fund's net assets may result in a lower fee
rate and decreases in the Fund's net assets may result in a higher fee rate.

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

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

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

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

Transfer agent

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

Underwriter

Fund accounting agent

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

Custodian

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

15
<PAGE>

Transaction information

Purchasing shares

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

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

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

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

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

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

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

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

If you purchase shares by "AutoBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven
business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any

16
<PAGE>

losses or fees incurred in the transaction. "AutoBuy" transactions are not
available for Scudder IRA accounts and most other retirement plan accounts.

By telephone order. Certain financial institutions may call Scudder before the
close of regular trading on the Exchange, normally 4 p.m. eastern time, and
purchase shares at that day's price. Such purchased shares will begin to earn
dividends on the day on which the payment is received by the Fund. If payment by
check or wire is not received from the financial institution within three
business days, the order is subject to cancellation and the financial
institution will be responsible for any loss to the Fund resulting from this
cancellation. Please call 1-800-854-8525 for more information.

Redeeming shares

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

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

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

"AutoSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.

17
<PAGE>

Transaction information (cont'd)

requirements for corporations, other organizations, trusts, fiduciaries, agents,
institutional investors and retirement plans may be different from those for
regular accounts. For more information, please call 1-800-225-5163.

Telephone transactions

Share price

Processing time

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

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

Purchase restrictions

Tax information

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

Tax identification number

18
<PAGE>

Minimum balances

Third party transactions

Redemption-in-kind

Shareholder benefits

Experienced professional management

A team approach to investing

Scudder International Bond Fund is managed by a team of Scudder investment
professionals, who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. Scudder believes
its team approach benefits Fund investors by bringing together many disciplines
and leveraging Scudder's extensive resources.

19
<PAGE>

Shareholder benefits (cont'd)

Lead Portfolio Manager Adam M. Greshin assumed responsibility for the Fund's
day-to-day management and investment strategies in March 1995. Mr. Greshin, who
specializes in global and international bond investments, was involved in the
original design of Scudder International Bond Fund and has been a portfolio
manager of the Fund since its inception in 1988. Christopher B. Steward,
Portfolio Manager, joined Scudder in 1992 and the Fund's team in 1996. Mr.
Steward, who has nine years of investment industry experience, helps set the
Fund's investment strategy and contributes special expertise in European
investments.

SAIL(TM)--Scudder Automated Information Line

Investment flexibility

Dividend reinvestment plan

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

Shareholder statements

Shareholder reports

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

Newsletters

Scudder Funds Centers

As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Funds Centers in Boca Raton, Boston, Chicago,
New York and San Francisco.

T.D.D. service for the hearing impaired

20
<PAGE>

Scudder tax-advantaged retirement plans

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

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

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

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

21
<PAGE>

Directors and Officers

Daniel Pierce*
Chairman of the Board,
Director and Vice President

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; Consultant

Dudley H. Ladd*
Director

William H. Luers
Director; President, The Metropolitan Museum
of Art

Robert W. Lear
Honorary Director; Executive-in-Residence,
Visiting Professor, Columbia University
Graduate School of Business

Robert G. Stone, Jr.
Honorary Director; Chairman of the Board
and Director, Kirby Corporation

Adam M. Greshin*
Vice President

Jerard K. Hartman*
Vice President

Thomas W. Joseph*
Vice President

Gerald J. Moran*
Vice President

Isabel Saltzman*
Vice President

Thomas F. McDonough*
Vice President and Secretary

Pamela A. McGrath*
Vice President and Treasurer

David S. Lee*
Vice President and Assistant Treasurer

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

Juris Padegs*
Vice President and Assistant Secretary

Kathryn L. Quirk*
Vice President and Assistant Secretary

Coleen Downs Dinneen*
Assistant Secretary

* Scudder, Stevens & Clark, Inc.

22
<PAGE>

Investment products and services

The Scudder Family of Funds

Money market
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund

Tax free money market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*

Income
Scudder Emerging Markets Income Fund
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder Income Fund
Scudder Internationa Bond Fund
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund

Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund

- --------------------------------------------------------------------------------
Institutional Cash Management
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++

23
<PAGE>

How to contact Scudder

Account Service and Information: Scudder Brokerage Services:
<S> <C> <C> <C>
For existing account Scudder Investor To receive information Scudder Brokerage
service and transactions Relations about this discount Services**
1-800-225-5163 brokerage service and 1-800-700-0820
to obtain an application

Visit the Scudder World Wide Web Site at:
http://funds.scudder.com

Investment Information: Or Stop by a Scudder Funds Center:

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

For establishing 401(k) Scudder Defined Boca Raton New York
and 403(b) plans Contribution Boston San Francisco
Services Chicago
1-800-323-6105

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

Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.

** Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061--
Member NASD/SIPC.

</TABLE>
<PAGE>

SCUDDER GLOBAL FUND

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

and

SCUDDER INTERNATIONAL BOND FUND

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

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

STATEMENT OF ADDITIONAL INFORMATION

November 1, 1996

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

This combined Statement of Additional Information is not a prospectus
and should be read in conjunction with the prospectus of Scudder Global Fund
dated November 1, 1996, and the prospectus of Scudder International Bond Fund
dated November 1, 1996, each as amended from time to time, copies of which may
be obtained without charge by writing to Scudder Investor Services, Inc., Two
International Place, Boston, Massachusetts 02110-4103.

<PAGE>

TABLE OF CONTENTS
Page
<S> <C>

THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES.........................................................................1
General Investment Objective and Policies of Global Fund.....................................................1
General Investment Objectives and Policies of International Bond Fund........................................1
Special Investment Considerations of the Funds...............................................................2
Investments and Investment Techniques........................................................................3
Investment Restrictions.....................................................................................14
Other Investment Policies...................................................................................15

PURCHASES............................................................................................................17
Additional Information About Opening an Account.............................................................17
Additional Information About Making Subsequent Investments By Telephone Order...............................17
Additional Information About Making Subsequent Investments by AutoBuy.......................................17
Checks......................................................................................................18
Wire Transfer of Federal Funds..............................................................................18
Share Price.................................................................................................18
Share Certificates..........................................................................................19
Other Information...........................................................................................19

EXCHANGES AND REDEMPTIONS............................................................................................19
Exchanges...................................................................................................19
Redemption by Telephone.....................................................................................20
Redemption by AutoSell......................................................................................21
Redemption by Mail or Fax...................................................................................21
Redemption-in-Kind..........................................................................................21
Other Information...........................................................................................22

FEATURES AND SERVICES OFFERED BY THE FUNDS...........................................................................23
The Pure No-Load(TM) Concept................................................................................23
Dividend and Capital Gain Distribution Options..............................................................24
Diversification.............................................................................................24
Scudder Funds Centers.......................................................................................24
Reports to Shareholders.....................................................................................24
Transaction Summaries.......................................................................................24

THE SCUDDER FAMILY OF FUNDS..........................................................................................25

SPECIAL PLAN ACCOUNTS................................................................................................28
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension Plans for
Corporations and Self-Employed Individuals.............................................................28
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for Corporations and
Self-Employed Individuals..............................................................................29
Scudder IRA: Individual Retirement Account.................................................................29
Scudder 403(b) Plan.........................................................................................30
Automatic Withdrawal Plan...................................................................................30
Group or Salary Deduction Plan..............................................................................30
Automatic Investment Plan...................................................................................31
Uniform Transfers/Gifts to Minors Act.......................................................................31

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS............................................................................31

i
<PAGE>

PERFORMANCE INFORMATION..............................................................................................32
Average Annual Total Return.................................................................................32
Cumulative Total Return.....................................................................................32
Total Return................................................................................................33
Capital Change..............................................................................................33
Yield of International Bond Fund............................................................................33
Comparison of Portfolio Performance.........................................................................33

ORGANIZATION OF THE FUNDS............................................................................................39

INVESTMENT ADVISER...................................................................................................39
Personal Investments by Employees of the Adviser............................................................42

DIRECTORS AND OFFICERS...............................................................................................43

REMUNERATION.........................................................................................................45

DISTRIBUTOR..........................................................................................................46

TAXES................................................................................................................47

PORTFOLIO TRANSACTIONS...............................................................................................50
Brokerage Commissions.......................................................................................50
Portfolio Turnover..........................................................................................51

NET ASSET VALUE......................................................................................................52

ADDITIONAL INFORMATION...............................................................................................53
Experts.....................................................................................................53
Other Information...........................................................................................53

FINANCIAL STATEMENTS.................................................................................................54

APPENDIX
</TABLE>

<PAGE>

THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES

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

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

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

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

General Investment Objective and Policies of Global Fund

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

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

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

General Investment Objectives and Policies of International Bond Fund

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

<PAGE>

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

Special Investment Considerations of the Funds

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

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

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

2
<PAGE>

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

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

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

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

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

Investments and Investment Techniques

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

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

For purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"), a repurchase agreement is deemed to be a loan from a Fund to the
seller of the Obligation subject to the repurchase agreement and is therefore
subject to that Fund's investment restrictions applicable to loans. It is not
clear whether a court would consider the Obligation purchased by a Fund subject
to a repurchase agreement as being owned by the Fund or as being collateral for

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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<PAGE>

the Fund will be able to have its beneficial ownership of zero coupon securities
recorded directly in the book-entry record-keeping system in lieu of having to
hold certificates or other evidences of ownership of the underlying U.S.
Treasury securities.

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

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

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

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

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

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

Indexed securities differ from other types of debt securities in which
the Fund may invest in several respects. First, the interest rate or, unlike
other debt securities, the principal amount payable at maturity of an indexed
security may vary based on changes in one or more specified reference
instruments, such as an interest rate compared with a fixed interest rate or the
currency exchange rates between two currencies (neither of which need be the
currency in which the instrument is denominated). The reference instrument need

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<PAGE>

not be related to the terms of the indexed security. For example, the principal
amount of a U.S. dollar denominated indexed security may vary based on the
exchange rate of two foreign currencies. An indexed security may be positively
or negatively indexed; that is, its value may increase or decrease if the value
of the reference instrument increases. Further, the change in the principal
amount payable or the interest rate of an indexed security may be a multiple of
the percentage change (positive or negative) in the value of the underlying
reference instrument(s).

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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<PAGE>

OTC option sold by it (the cost of the sell-back plus the in-the-money amount,
if any) are illiquid, and are subject to a Fund's limitation on investing no
more than 10% of its total assets in illiquid securities.

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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<PAGE>

enters into a currency hedging transaction, the Fund will comply with the asset
segregation requirements described below.

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

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

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

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

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<PAGE>

Eurodollar Instruments. Each Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. Each Fund might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and fixed
income instruments are linked.

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

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

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

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

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

With respect to swaps, a Fund will accrue the net amount of the excess,
if any, of its obligations over its entitlements with respect to each swap on a
daily basis and will segregate an amount of cash or liquid high grade securities

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<PAGE>

having a value equal to the accrued excess. Caps, floors and collars require
segregation of assets with a value equal to a Fund's net obligation, if any.

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

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

Investment Restrictions

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

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

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

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

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

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

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

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

14
<PAGE>

are considered to be in the industry of their parents if their
activities are primarily related to financing the activities
of their parents).

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

Other Investment Policies

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

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

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

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

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

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

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

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

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

15
<PAGE>

(h) enter into futures contracts or purchase options thereon
unless immediately after the purchase, the value of the
aggregate initial margin with respect to all futures contracts
entered into on behalf of the Fund and the premiums paid for
options on futures contracts does not exceed 5% of the Fund's
total assets, provided that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount
may be excluded in computing the 5% limit;

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

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

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

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

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

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

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

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

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

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

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

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

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

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<PAGE>

PURCHASES

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

Additional Information About Opening an Account

Clients having a regular investment counsel account with the Adviser or
its affiliates and members of their immediate families, officers and employees
of the Adviser or of any affiliated organization and their immediate families,
members of the National Association of Securities Dealers, Inc. ("NASD") and
banks may, if they prefer, subscribe initially for at least $2,500 of Fund
shares through Scudder Investor Services, Inc. (the "Distributor") by letter,
telegram, or telephone.

Shareholders of other Scudder funds who have submitted an account
application and have certified a tax identification number, clients having a
regular investment counsel account with the Adviser or its affiliates and
members of their immediate families, officers and employees of the Adviser or of
any affiliated organization and their immediate families, members of the NASD,
and banks may open an account by wire. These investors must call 1-800-225-5163
to get an account number. During the call, the investor will be asked to
indicate the Fund name, amount to be wired ($2,500 minimum), name of bank or
trust company from which the wire will be sent, the exact registration of the
new account, the tax identification or Social Security number, address and
telephone number. The investor must then call the bank to arrange a wire
transfer to The Scudder Funds, State Street Bank and Trust Company, Boston, MA
02110, ABA Number 011000028, DDA Account Number 9903-5552. The investor must
give the Scudder fund name, account name and the new account number. Finally,
the investor must send a completed and signed application form to the Fund
promptly.

The minimum initial purchase amount is less than $2,500 under certain
special plan accounts.

Additional Information About Making Subsequent Investments By Telephone Order

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

Additional Information About Making Subsequent Investments by AutoBuy

Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the AutoBuy program, may purchase shares of a Fund by telephone. Through this
service shareholders may purchase up to $250,000 but not less than $250. To
purchase shares by AutoBuy, shareholders should call before 4 p.m. eastern time.
Proceeds in the amount of your purchase will be transferred from your bank
checking account two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
purchased at the net asset value per share calculated at the close of trading on
the day of your call. AutoBuy requests received after the close of regular
trading on the Exchange will begin their processing and be purchased at the net
asset value calculated the following business day. If you purchase shares by
AutoBuy and redeem them within seven days of the purchase, a Fund may hold the
redemption proceeds for a period of up to seven business days. If you purchase
shares and there are insufficient funds in your bank account the purchase will
be canceled and you will be subject to any losses or fees incurred in the
transaction. AutoBuy transactions are not available for Scudder IRA accounts and
most other retirement plan accounts.

17
<PAGE>

In order to request purchases by AutoBuy, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account from which the purchase payment will be debited.
New investors wishing to establish AutoBuy may so indicate on the application.
Existing shareholders who wish to add AutoBuy to their account may do so by
completing an AutoBuy Enrollment Form. After sending in an enrollment form
shareholders should allow for 15 days for this service to be available.

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

Checks

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

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

Wire Transfer of Federal Funds

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

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

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

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

Share Price

Purchases will be filled without sales charge at the net asset value
next computed after receipt of the application in good order. Net asset value
normally will be computed as of the close of regular trading on the Exchange on
each day during which the Exchange is open for trading. Orders received after
the close of regular trading on the Exchange will receive the next day's net

18
<PAGE>

asset value. If the order has been placed by a member of the NASD, other than
the Distributor, it is the responsibility of that member broker, rather than the
Funds, to forward the purchase order to the Transfer Agent in Boston by the
close of regular trading on the Exchange.

Share Certificates

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

Other Information

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

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

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

EXCHANGES AND REDEMPTIONS

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

Exchanges

Exchanges are comprised of a redemption from one Scudder fund and a
purchase into another Scudder fund. The purchase side of the exchange either may
be an additional investment into an existing account or may involve opening a
new account in the other fund. When an exchange involves a new account, the new
account will be established with the same registration, tax identification
number, address, telephone redemption option, "Scudder Automated Information
Line" (SAIL) transaction authorization and dividend option as the existing
account. Other features will not carry over automatically to the new account.
Exchanges to a new fund account must be for a minimum of $2,500. When an
exchange represents an additional investment into an existing account, the
account receiving the exchange proceeds must have identical registration, tax
identification number, address, and account options/features as the account of
origin. Exchanges into an existing account must be for $100 or more.

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

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

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

19
<PAGE>

depleted. The Corporation and the Transfer Agent each reserves the right to
suspend or terminate the privilege of the Automatic Exchange Program at any
time.

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

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

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

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

Redemption by Telephone

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

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

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

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

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

20
<PAGE>

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

Redemption by AutoSell

Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the AutoSell program may sell shares of a Fund by telephone. To sell shares
by AutoSell, shareholders should call before 4 p.m. eastern time. Redemptions
must be for at least $250. Proceeds in the amount of your redemption will be
transferred to your bank checking account two or three business days following
your call. For requests received by the close of regular trading on the
Exchange, shares will be redeemed at the net asset value per share calculated at
the close of trading on the day of your call. AutoSell requests received after
the close of regular trading on the Exchange will begin their processing and be
redeemed at the net asset value calculated the following business day. AutoSell
transactions are not available for Scudder IRA accounts and most other
retirement plan accounts.

In order to request redemptions by AutoSell, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account from which the purchase payment will be debited.
New investors wishing to establish AutoSell may so indicate on the application.
Existing shareholders who wish to add AutoSell to their account may do so by
completing an AutoSell Enrollment Form. After sending in an enrollment form,
shareholders should allow for 15 days for this service to be available.

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

Redemption by Mail or Fax

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

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

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

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

Redemption-in-Kind

The Corporation reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase order by
making payment in whole or in part in readily marketable securities chosen by
the Corporation and valued as they are for purposes of computing a Fund's net

21
<PAGE>

asset value (a redemption-in-kind). If payment is made in securities, a
shareholder may incur transaction expenses in converting these securities into
cash. The Corporation has elected, however, to be governed by Rule 18f-1 under
the 1940 Act as a result of which the Corporation is obligated to redeem shares,
with respect to any one shareholder during any 90-day period, solely in cash up
to the lesser of $250,000 or 1% of the net asset value of the relevant Fund at
the beginning of the period.

Other Information

Clients, officers or employees of the Adviser or of an affiliated
organization, and members of such clients', officers' or employees' immediate
families, banks and members of the NASD may direct repurchase requests to a Fund
through Scudder Investor Services, Inc. at Two International Place, Boston,
Massachusetts 02110-4103 by letter, fax, TWX, or telephone. A two-part
confirmation will be mailed out promptly after receipt of the repurchase
request. A written request in good order with a proper original signature
guarantee, as described in each Fund's prospectus under "Transaction
information--Signature guarantees," should be sent with a copy of the invoice to
Scudder Funds, c/o Scudder Confirmed Processing, Two International Place,
Boston, Massachusetts 02110-4103. Failure to deliver shares or required
documents (see above) by the settlement date may result in cancellation of the
trade and the shareholder will be responsible for any loss incurred by a Fund or
the principal underwriter by reason of such cancellation. Net losses on such
transactions which are not recovered from the shareholder will be absorbed by
the principal underwriter. Any net gains so resulting will accrue to a Fund. For
this group, repurchases will be carried out at the net asset value next computed
after such repurchase requests have been received. The arrangements described in
this paragraph for repurchasing shares are discretionary and may be discontinued
at any time.

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

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

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

Shareholders should maintain a share balance worth at least $2,500
($1,000 for IRAs, Uniform Gift to Minor Act, and Uniform Trust to Minor Act
accounts), which amount may be changed by the Board of Directors. Scudder
retirement plans have similar or lower minimum balance requirements. A
shareholder may open an account with at least $1,000 ($500 for an UGMA, UTMA,
IRA and other retirement accounts), if an automatic investment plan (AIP) of
$100/month ($50/month for an UGMA, UTMA, IRA and other retirement accounts) is
established.

Shareholders who maintain a non-fiduciary account balance of less than
$2,500 in a Fund, without establishing an AIP, will be assessed an annual $10.00
per fund charge with the fee to be reinvested in the Fund. The $10.00 charge
will not apply to shareholders with a combined household account balance in any
of the Scudder Funds of $25,000 or more. Each Fund reserves the right, following
60 days' written notice to shareholders, to redeem all shares in accounts below
$250, including accounts of new investors, where a reduction in value has
occurred due to a redemption or exchange out of the account. Each Fund will mail
the proceeds of the redeemed account to the shareholder at the address of
record. Reductions in value that result solely from market activity will not
trigger an involuntary redemption. UGMA, UTMA, IRA and other retirement accounts
will not be assessed the $10.00 charge or be subject to automatic liquidation.

22
<PAGE>

FEATURES AND SERVICES OFFERED BY THE FUNDS

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

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

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

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

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

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

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

<TABLE>

======================== ---------------------- ---------------------- ---------------------- ======================

Scudder Load Fund with 0.75% No-Load Fund with
YEARS Pure No-Load(TM)Fund 8.50% Load Fund 12b-1 Fee 0.25% 12b-1 Fee

======================== ---------------------- ---------------------- ---------------------- ======================

10 $ 25,937 $ 23,733 $24,222 $25,354
======================== ---------------------- ---------------------- ---------------------- ======================

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

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

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

23
<PAGE>

Dividend and Capital Gain Distribution Options

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

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

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

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

Diversification

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

Scudder Funds Centers

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

Reports to Shareholders

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

Transaction Summaries

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

24
<PAGE>

THE SCUDDER FAMILY OF FUNDS

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

The Scudder Family of Funds is America's first family of mutual funds
and the nation's oldest family of no-load mutual funds. To assist investors in
choosing a Scudder fund, descriptions of the Scudder funds' objectives follow.
Initial purchases in each Scudder fund must be at least $2,500 or $1,000 in the
case of IRAs. Subsequent purchases must be for $100 or more. Minimum investments
for special plan accounts may be lower.

MONEY MARKET

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

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

INCOME

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

Scudder Global Bond Fund seeks to provide total return with an emphasis
on current income by investing primarily in high-grade bonds
denominated in foreign currencies and the U.S. dollar. As a secondary
objective, the Fund will seek capital appreciation.

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

Scudder High Yield Bond Fund seeks to provide a high level of current
income and, secondarily, capital appreciation through investment
primarily in below investment grade domestic debt securities.

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

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

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

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

25
<PAGE>

TAX FREE MONEY MARKET

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

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

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

TAX FREE

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

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

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

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

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

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

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

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

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

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

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

26
<PAGE>

GROWTH AND INCOME

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

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

GROWTH

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

Scudder Classic Growth Fund seeks long-term growth of capital with
reduced share price volatility compared to other growth mutual funds.

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

Scudder Emerging Markets Growth Fund seeks long-term growth of capital
primarily through equity investment in emerging markets around the
globe.

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

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

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

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

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

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

Scudder Micro Cap Fund seeks long-term growth of capital by investing
primarily in a diversified portfolio of U.S. micro-cap stocks.

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

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

27
<PAGE>

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

Scudder 21st Century Growth Fund seeks long-term growth of capital by
investing primarily in securities of emerging growth companies poised
to be leaders in the 21st century.

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

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

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

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

SPECIAL PLAN ACCOUNTS

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

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

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

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

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

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

28
<PAGE>

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

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

Scudder IRA: Individual Retirement Account

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

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

An eligible individual may contribute as much as $2,000 of qualified
income (earned income or, under certain circumstances, alimony) to an IRA each
year (beginning in 1997, up to $2,000 per individual for married couples if only
one spouse has earned income). All income and capital gains derived from IRA
investments are reinvested and compound tax-deferred until distributed. Such
tax-deferred compounding can lead to substantial retirement savings.

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

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

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

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

29
<PAGE>

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

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

Scudder 403(b) Plan

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

Automatic Withdrawal Plan

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

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

Group or Salary Deduction Plan

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

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

30
<PAGE>

Automatic Investment Plan

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

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

Uniform Transfers/Gifts to Minors Act

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

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

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

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

Each Fund intends to follow the practice of distributing substantially
all and in no event less than 90% of its investment company taxable income
including any excess of net realized short-term capital gains over net realized
long-term capital losses. A Fund may follow the practice of distributing the
entire excess of net realized long-term capital gains over net realized
short-term capital losses. However, a Fund may retain all or part of such gain
for reinvestment, after paying the related federal income taxes for which the
shareholders may then claim a credit against their federal income tax liability.
If a Fund does not distribute an amount of capital gains and/or ordinary income
required to be distributed by an excise tax provision of the Code, it may be
subject to such tax. In certain circumstances, a Fund may determine that it is
in the interest of shareholders to distribute less than such an amount. (See
"TAXES.")

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

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

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

31
<PAGE>

PERFORMANCE INFORMATION

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

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

Average Annual Total Return

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

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

Average Annual Total Return for periods ended June 30, 1996

One Year Five Year Life of the Fund

Global Fund 16.65% 13.23% 12.49%(1)
International Bond Fund 2.59% 8.32% 9.46%(2)

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

Cumulative Total Return

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

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

32
<PAGE>

Cumulative Total Return for periods ended June 30, 1996

One Year Five Year Life of the Fund

Global Fund 16.65% 86.16% 222.39%(1)
International Bond Fund 2.59% 49.13% 105.81%(2)

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

Total Return

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

Capital Change

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

Yield of International Bond Fund

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

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

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

The SEC yield of International Bond Fund for the 30-day period ended
June 30, 1996 was 5.30%.

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

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

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

Comparison of Portfolio Performance

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

33
<PAGE>

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

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

From time to time, in advertising and marketing literature, a Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as,
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc., Value
Line Mutual Fund Survey and other independent organizations. When these
organizations' tracking results are used, a Fund will be compared to the
appropriate fund category, that is, by fund objective and portfolio holdings, or
to the appropriate volatility grouping, where volatility is a measure of a
fund's risk. For instance, a Scudder growth fund will be compared to funds in
the growth fund category; a Scudder income fund will be compared to funds in the
income fund category; and so on. Scudder funds (except for money market funds)
may also be compared to funds with similar volatility, as measured statistically
by independent organizations. In addition, a Fund's performance may also be
compared to the performance of broad groups of comparable mutual funds.
Unmanaged indices with which a Fund's performance may be compared include, but
are not limited to, the following:

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

The following graph illustrates the historical risks and returns of
selected unmanaged indices which track the performance of various combinations
of United States and international securities for the 26 year period ended
December 31, 1995; results for other periods may vary. The graph uses 26 year
annualized international returns represented by the Morgan Stanley Capital
International Europe, Australia and Far East (EAFE) Index and 26 year annualized
United States returns represented by the S&P 500 Index. Risk is measured by the
standard deviation in overall portfolio performance within each index.
Performance of an index is historical, and does not represent the performance of
a Fund, and is not a guarantee of future results.

34
<PAGE>

THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART TITLE:
---------------------------------------------------------
EFFICIENT FRONTIER
S&P 500 vs. MSCI EAFE Index (12/31/69-12/31/95)
---------------------------------------------------------
BAR CHART DATA:
Total Return Standard Deviation

100% Int'l MSCI EAFE 13.15 17.18
10 US/90 Int'l 13.16 16.24
20/80 13.14 15.43
30 U.S./70 Int'l 13.09 14.76
40/60 13.01 14.26
50 U.S./50Int'l 12.9 13.94
60/40 12.76 13.82
70 U.S./30 Int'l 12.59 13.9
80/20 12.39 14.17
90 U.S./10 Int'l 12.15 14.64
100% U.S. S&P 500 11.89 15.27

Data Source: Ibbotson Associates. (Data as of 12/31/95)

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

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

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

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

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

35
<PAGE>

maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.

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

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

Internet access

World Wide Web Site -- The address of the Scudder Funds site is
http://funds.scudder.com. The site offers guidance on global investing and
developing strategies to help meet financial goals and provides access to the
Scudder investor relations department via e-mail. The site also enables users to
access or view fund prospectuses and profiles with links between summary
information in Profiles and details in the Prospectus. Users can fill out new
account forms on-line, order free software, and request literature on funds.

The site is designed for interactivity, simplicity and maneuverability.
A section entitled "Planning Resources" provides information on asset
allocation, tuition, and retirement planning to users who fill out interactive
"worksheets." Investors can easily establish a "Personal Page," that presents
price information, updated daily, on funds they're interested in following. The
"Personal Page" also offers easy navigation to other parts of the site. Fund
performance data from both Scudder and Lipper Analytical Services, Inc. are
available on the site. Also offered on the site is a news feature, which
provides timely and topical material on the Scudder Funds.

Scudder has communicated with shareholders and other interested parties
on Prodigy since 1988 and has participated since 1994 in GALT's Networth
"financial marketplace" site on the Internet. The firm made Scudder Funds
information available on America Online in early 1996.

Account Access -- Scudder is among the first mutual fund families to allow
shareholders to manage their fund accounts through the World Wide Web. Scudder
Fund shareholders can view a snapshot of current holdings, review account
activity and move assets between Scudder Fund accounts.

Scudder's personal portfolio capabilities -- known as SEAS (Scudder
Electronic Account Services) -- are accessible only by current Scudder Fund
shareholders who have set up a Personal Page on Scudder's Web site. Using a
secure Web browser, shareholders sign on to their account with their Social
Security number and their SAIL password. As an additional security measure,
users can change their current password or disable access to their portfolio
through the World Wide Web.

An Account Activity option reveals a financial history of transactions
for an account, with trade dates, type and amount of transaction, share price
and number of shares traded. For users who wish to trade shares between Scudder
Funds, the Fund Exchange option provides a step-by-step procedure to exchange
shares among existing fund accounts or to new Scudder Fund accounts.

A Call Me(TM) feature enables users to speak with a Scudder Investor
Relations telephone representative while viewing their account on the Web site.
In order to use the Call MeTM feature, an individual must have two phone lines
and enter on the screen the phone number that is not being used to connect to
the Internet. They are connected to the next available Scudder Investor
Relations representative from 8 a.m. to 8 p.m. eastern time.

36
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

37
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

USA Today, a leading national daily newspaper.

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

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

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

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

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

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

38
<PAGE>

ORGANIZATION OF THE FUNDS

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

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

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

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

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

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

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

INVESTMENT ADVISER

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

Scudder, Stevens & Clark, Inc., an investment counsel firm, acts as
investment adviser to each Fund. This organization is one of the most
experienced investment management firms in the U.S.. It was established as a
partnership in 1919 and pioneered the practice of providing investment counsel

39
<PAGE>

to individual clients on a fee basis. In 1928 it introduced the first no-load
mutual fund to the public. In 1953, the Adviser introduced Scudder International
Fund, the first mutual fund registered with the SEC in the U.S. investing
internationally in securities of issuers in several foreign countries. The firm
reorganized from a partnership to a corporation on June 28, 1985.

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

The Adviser also provides investment advisory services to the mutual
funds which comprise the AARP Investment Program from Scudder. The AARP
Investment Program from Scudder has assets over $12 billion and includes the
AARP Growth Trust, AARP Income Trust, AARP Tax Free Income Trust and AARP Cash
Investment Funds.

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

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

The continuance of the Investment Management Agreement between
International Bond Fund and the Adviser was approved by the Directors on
September 4, 1996. The Investment Management Agreement between Global Fund and
the Adviser was approved by the Directors on September 4, 1996. The
International Bond Fund Agreement dated September 8, 1994 and the Global Fund
Agreement dated September 6, 1995 (collectively, the "Agreements") will continue
in effect until September 30, 1997 and from year to year thereafter only if
their continuance is approved annually by the vote of a majority of those
Directors who are not parties to such Agreements or interested persons of the
Adviser or the Corporation, cast in person at a meeting called for the purpose
of voting on such approval, and either by vote of the Corporation's Directors or
of the outstanding voting securities of the respective Fund. The Agreements may
be terminated at any time without payment of penalty by either party on sixty
days written notice, and automatically terminate in the event of their
assignment.

Under each Agreement, the Adviser regularly provides a Fund with
continuing investment management for the Fund's portfolio consistent with the
Fund's investment objectives, policies and restrictions and determines what
securities shall be purchased for the portfolio of the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the provisions of the

40
<PAGE>

Corporation's Articles of Incorporation and By-Laws, of the 1940 Act and the
Code and to the Fund's investment objectives, policies and restrictions, and
subject, further, to such policies and instructions as the Directors of the
Corporation may from time to time establish. The Adviser also advises and
assists the officers of the Corporation in taking such steps as are necessary or
appropriate to carry out the decisions of its Directors and the appropriate
committees of the Directors regarding the conduct of the business of the
Corporation.

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

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

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

The net investment advisory fees for the Global Fund for the fiscal
years ended June 30, 1996, 1995 and 1994, were $12,360,809, $11,015,077 and
$9,049,260, respectively.

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

For the fiscal years ended June 30, 1996, 1995 and 1994, the fees
imposed for the International Bond Fund amounted to $6,133,574, $9,197,192 and
$10,598,081, respectively, and the fees not imposed amounted to $0, $0 and
$341,680, respectively.

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

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<PAGE>

The Adviser has agreed in each Agreement to reimburse the Funds for
annual expenses to the extent required by the most restrictive expense
limitations imposed by any state in which the Corporation is at the time
offering the Fund's shares for sale, although no payments are required to be
made by the Adviser pursuant to this reimbursement provision in excess of the
annual fee paid by the Fund to the Adviser. Management has been advised that the
lowest of such limitations is presently 2 1/2% of such net assets up to $30
million, 2% of the next $70 million of such net assets and 1 1/2% of such net
assets in excess of that amount. Certain expenses such as brokerage commissions,
taxes, extraordinary expenses and interest are excluded from such limitations
and other expenses may be excluded from time to time. For the fiscal years ended
June 30, 1996, 1995 and 1994, expenses, net of reimbursement, equaled 1.34%,
1.38% and 1.45%, of the average net assets of Global Fund. For each of the
fiscal years ended June 30, 1996, 1995 and 1994, expenses, net of reimbursement,
equaled 1.26%, 1.30% and 1.27% of the average net assets of International Bond
Fund. If reimbursement is required, it will be made as promptly as practicable
after the end of a Fund's fiscal year. However, no fee payment will be made to
the Adviser during any fiscal year which will cause year-to-date expenses to
exceed the cumulative pro-rata expense limitation at the time of such payment.

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

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

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

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

Personal Investments by Employees of the Adviser

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

42
<PAGE>
<TABLE>
<CAPTION>

DIRECTORS AND OFFICERS

Position Position with Underwriter,
Name and Address with Corporation Principal Occupation** Scudder Investor Services, Inc.
- ---------------- ---------------- ---------------------- -------------------------------
<S> <C> <C> <C>

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

Nicholas Bratt++*#@ President, Scudder Managing Director of --
Emerging Markets Scudder, Stevens & Clark,
Income Fund, Inc.
Scudder
International Bond
Fund, Scudder
Global Discovery
Fund and Scudder
Global Bond Fund

William E. Holzer++ @ President, Scudder Managing Director of --
Global Fund Scudder, Stevens & Clark,
Inc.

Paul Bancroft III Director Venture Capitalist and --
79 Pine Lane Consultant; Retired,
Box 6639 President, Chief Executive
Snowmass Village, CO 81615 Officer and Director,
Bessemer Securities
Corporation

Sheryle J. Bolton Director Consultant --
Old Post Road Professional
Building
892 Route 35
P.O. Box 159
Cross River, NY 10518

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

William H. Gleysteen, Jr. Director Consultant; President, The --
390 Riverside Drive Japan Society, Inc.
New York, NY 10025 (1989-December 1995); Vice
President of Studies,
Council on Foreign
Relations (until 1989)

Dudley H. Ladd+# Director Managing Director of Senior Vice President & Director
Scudder, Stevens & Clark,
Inc.

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

43
<PAGE>

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

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

Adam M. Greshin+ Vice President Principal of Scudder, --
Stevens & Clark, Inc.

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

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

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

Isabel M. Saltzman+ Vice President Principal of Scudder, --
Stevens & Clark, Inc.

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

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

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

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

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

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

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

</TABLE>

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<PAGE>

* Messrs. Bratt, Ladd and Pierce are considered by the Corporation and
its counsel to be persons who are "interested persons" of the Adviser
or of the Corporation (within the meaning of the 1940 Act).

** Unless otherwise stated, all the Directors and officers have been
associated with their respective companies for more than five years,
but not necessarily in the same capacity.

# Messrs. Bratt and Ladd are members of the Executive Committee,
which may exercise the powers of the Directors when they are not in
session.

+ Address: Two International Place, Boston, Massachusetts

++ Address: 345 Park Avenue, New York, New York

@ The President of a series shall have the status of Vice President of
the Corporation.

As of September 30, 1996, all Directors and Officers as a group owned
beneficially (as that term is defined in Section 13(d) of the Securities
Exchange Act of 1934) 809,595 shares, or 1.65% of the shares of the Global Fund
outstanding on such date.

As of September 30, 1996 all Directors and Officers as a group owned
beneficially (as the term is defined in Section 13(d) under the Securities
Exchange Act of 1934) less than 1% of the shares of International Bond Fund
outstanding on such date.

As of September 30, 1996, 3,652,971 shares in the aggregate, 7.42% of
the outstanding shares of Global Fund, were held in the name of Charles Schwab &
Co., Inc., 101 Montgomery Street, San Francisco, CA 94104-4122, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.

As of September 30, 1996, 6,504,658 shares in the aggregate, 16.30% of
the outstanding shares of International Bond Fund, were held in the name of
Northern Trust Company for the benefit of Teacher Retirement Systems of Texas,
P.O. Box 92956, Mutual Funds, Chicago, IL, 60675 who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.

As of September 30, 1996, 3,825,540 shares in the aggregate, 9.60% of
the outstanding shares of International Bond Fund, were held in the name of
Charles Schwab & Co., Inc., 101 Montgomery Street, San Francisco, CA 94104-4122,
who may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.

Except as stated above, to the best of the Corporation's knowledge, as
of September 30, 1996, no person owned beneficially more than 5% of a Fund's
outstanding shares.

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

REMUNERATION

Several of the officers and Directors of the Corporation may be
officers or employees of the Adviser, Scudder Investor Services, Inc., Scudder
Service Corporation, Scudder Trust Company or Scudder Fund Accounting
Corporation and participate in the fees paid by a Fund. The Funds pay no direct
remuneration to any officer of the Corporation. However, each of the Directors
who is not affiliated with the Adviser will be paid by the Corporation on behalf
of a Fund. Each of these unaffiliated Directors receives an annual Director's
fee of $4,000 from the series and fees of $400 for attending each Directors'
meeting, audit committee meeting or meeting held for the purpose of considering
arrangements between the Corporation on behalf of a Fund and the Adviser or any
of its affiliates. Each unaffiliated Director also receives $150 per committee
meeting attended other than those set forth above. For the fiscal year ended
June 30, 1996, Directors' fees amounted to $51,183 for Global Fund, and $51,129
for International Bond Fund.

The following Compensation Table shows the aggregate compensation received by
each unaffiliated Trustee during 1995 from the Registrant and from all Scudder
Funds as a group.

45
<PAGE>
<TABLE>

Name Scudder Global Fund, Inc. * All Scudder Funds
<S> <C> <C> <C>
Paul Bancroft III $51,000 $142,067 (15 funds)
Sheryle J. Bolton** $3,415 $5,101 (7 funds)
Thomas J. Devine $50,600 $146,267 (17 funds)
William H. Gleysteen $51,000 $134,650 (13 funds)
William H. Luers $51,000 $102,267*** (10 funds)
</TABLE>

* Scudder Global Fund, Inc. consists of five mutual funds.
** Ms. Bolton became a Trustee for the Trusts on January 1, 1996.
*** This amount does not reflect $4,133 in pension or retirement benefits
accrued as part of Fund Complex expenses, and $3000 in estimated annual
benefits payable upon retirement.

DISTRIBUTOR

The Corporation has an underwriting agreement with Scudder Investor
Services, Inc., a Massachusetts corporation, which is a wholly-owned subsidiary
of Scudder, Stevens & Clark, Inc., a Delaware corporation. The Corporation's
underwriting agreement dated July 24, 1986 will remain in effect until September
30, 1997 and from year to year thereafter only if its continuance is approved
annually by a majority of the Directors who are not parties to such agreement or
interested persons of any such party and either by vote of a majority of the
Board of Directors or a majority of the outstanding voting securities of the
Corporation. The underwriting agreement was most recently approved by the
Directors on September 4, 1996.

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

The Distributor will pay for printing and distributing prospectuses or
reports prepared for its use in connection with the offering of the Funds'
shares to the public and preparing, printing and mailing any other literature or
advertising in connection with the offering of shares of a Fund to the public.
The Distributor will pay all fees and expenses in connection with its
qualification and registration as a broker or dealer under federal and state
laws, a portion of the cost of toll-free telephone service and expenses of
service representatives, a portion of the cost of computer terminals, and of any
activity which is primarily intended to result in the sale of shares issued by
the Corporation unless a Rule 12b-1 Plan is in effect which provides that a Fund
shall bear some or all of such expenses.

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

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

46
<PAGE>

TAXES

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

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

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

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

Net investment income is made up of dividends and interest, less
expenses. Net realized capital gains for a fiscal year are computed by taking
into account any capital loss carryforward or post-October loss of a Fund.
Global Fund and International Bond Fund intend to offset realized capital gains
by using their capital loss carryforwards "if any" before distributing any
capital gains. In addition, Global Fund and International Bond Fund intend to
offset realized capital gains by using their post-October losses "if any" before
distributing any capital gains. As of June 30, 1996, Global Fund had no capital
loss carryforward. At June 30, 1996, the International Bond Fund had a net tax
basis capital loss carryforward of approximately $83,774,000, which may be
applied against any realized net taxable capital gains of each succeeding year
until fully utilized or until June 30, 2003, ($77,681,000) and June 30, 2004
($6,093,000), the respective expiration dates, whichever occurs first.

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

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

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

47
<PAGE>

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

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

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

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

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

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

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

48
<PAGE>

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

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

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

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

Positions of a Fund which consist of at least one stock and at least
one stock option or other position with respect to a related security which
substantially diminishes a Fund's risk of loss with respect to such stock could
be treated as a "straddle" which is governed by Section 1092 of the Code, the
operation of which may cause deferral of losses, adjustments in the holding
periods of stock or securities and conversion of short-term capital losses into
long-term capital losses. An exception to these straddle rules exists for any
"qualified covered call options" on stock written by the Fund.

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

Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues receivables or
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables, or pays such liabilities, generally are treated as
ordinary income or ordinary loss. Similarly, on disposition of debt securities

49
<PAGE>

denominated in a foreign currency and on disposition of certain futures and
forward contracts, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or contract and
the date of disposition are also treated as ordinary gain or loss. These gains
or losses, referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of a Fund's investment company taxable income to
be distributed to its shareholders as ordinary income.

A portion of the difference between the issue price of zero coupon
securities and their face value ("original issue discount") is considered to be
income to a Fund each year, even though the Fund will not receive cash interest
payments from these securities. This original issue discount imputed income will
comprise a part of the investment company taxable income of the Funds which must
be distributed to shareholders in order to maintain the qualification of the
Funds as regulated investment companies and to avoid federal income tax at the
Fund's level. In addition, if a Fund invests in certain high yield original
issue discount obligations issued by corporations, a portion of the original
discount accruing on the obligation may be eligible for the deduction for
dividends received by corporations. In such an event, dividends of investment
company taxable income received from a Fund by its corporate shareholders, to
the extent attributable to such portion of accrued original issue discount, may
be eligible for this deduction for dividends received by corporations if so
designated by a Fund in a written notice to shareholders.

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

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

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

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

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

PORTFOLIO TRANSACTIONS

Brokerage Commissions

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

50
<PAGE>

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

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

When it can be done consistently with the policy of obtaining the most
favorable net results, it is the Adviser's practice to place such orders with
brokers and dealers who supply research, market and statistical information to a
Fund or the Adviser. The term "research, market and statistical information"
includes advice as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities, and furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. The Adviser is authorized
when placing portfolio transactions for a Fund to pay a brokerage commission in
excess of that which another broker might have charged for executing the same
transaction solely on account of the receipt of research, market or statistical
information. The Adviser does not place orders with brokers or dealers on the
basis that the broker or dealer has or has not sold Fund shares. In effecting
transactions in over-the-counter securities, orders are placed with the
principal market makers for the security being traded unless, after exercising
care, it appears that more favorable results are available otherwise.

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

In the fiscal years ended June 30, 1996, 1995 and 1994, Global Fund paid
brokerage commissions of $1,291,901, $1,786,237 and $1,322,674, respectively
For the fiscal year ended June 30, 1996, $180,866, (14%) of the total brokerage
commissions paid by the Fund resulted from orders placed, consistent with the
policy of obtaining the most favorable net results, with brokers and dealers who
provided supplementary research, market and statistical information to the Fund
or the Adviser. The amount of such transactions aggregated $118,258,693, (16%)
of all brokerage transactions. Such brokerage was not allocated to any
particular brokers or dealers or with any regard to the provision of market
quotations for purposes of valuing the Fund's portfolio or to any other special
factors.

In the fiscal years ended June 30, 1996, 1995 and 1994, International
Bond Fund paid no brokerage commissions.

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

Portfolio Turnover

Average annual portfolio turnover rate is the ratio of the lesser of
sales or purchases to the monthly average value of the portfolio securities
owned during the year, excluding from both the numerator and the denominator all
securities with maturities at the time of acquisition of one year or less.
Global Fund's portfolio turnover rate for the fiscal years ended June 30, 1996

51
<PAGE>

and 1995 were 29.1% and 44.4%, respectively. International Bond Fund's portfolio
turnover rate for the fiscal years ending June 30, 1996 and 1995 were 275.7% and
318.5%, respectively. Recent economic and market conditions necessitated more
active trading, resulting in the higher portfolio turnover rates. A higher rate
involves greater transaction expenses to a Fund and may result in the
realization of net capital gains, which would be taxable to shareholders when
distributed. Purchases and sales are made for a Fund's portfolio whenever
necessary, in management's opinion, to meet the Fund's objectives.

NET ASSET VALUE

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

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

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

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

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

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

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

52
<PAGE>

ADDITIONAL INFORMATION

Experts

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

Other Information

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

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

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

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

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

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

Scudder Fund Accounting Corporation ("SFAC"), Two International Place,
Boston, Massachusetts, 02210-4103, a subsidiary of the Adviser, computes net
asset value for the Funds. Global Fund pays Scudder Fund Accounting Corporation
an annual fee equal to 0.065% of the first $150 million of average daily net
assets, 0.040% of such assets in excess of $150 million, 0.020% of such assets
in excess of $1 billion, plus holding and transaction charges for this service.
International Bond Fund pays Scudder Fund Accounting Corporation an annual fee
equal to 0.08% of the first $150 million of average net assets, 0.06% of such
assets in excess of $150 million and 0.04% of such assets in excess of $1
billion. For the fiscal year ended June 30, 1996, SFAC charged Global Fund
aggregate fees of $524,974, of which $91,449 is unpaid. For the fiscal year
ended June 30, 1996, SFAC charged International Bond Fund aggregate fees of
$464,475, of which $68,430 is unpaid.

Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts
02107-2291, a subsidiary of the Adviser, is the transfer, dividend-paying and
shareholder service agent for each Fund. Global Fund pays Scudder Service
Corporation an annual fee of $17.55 for each account maintained for a
participant. International Bond Fund pays Scudder Service Corporation an annual
fee of $25.00 for each account maintained for a participant. Scudder Service
Corporation charged Global Fund aggregate fees of $1,754,520 during the Fund's
last fiscal year, of which $141,291 is unpaid. Scudder Service Corporation
charged International Bond Fund aggregate fees of $948,215 during the Fund's
last fiscal year, of which $63,421 is unpaid.

Scudder Trust Company, an affiliate of the Adviser, provides
subaccounting and recordkeeping services for shareholder accounts in certain
retirement and employee benefit plans. Annual service fees are paid by the Fund
to Scudder Trust Company, Two International Place, Boston, Massachusetts
02110-4103 for such accounts. Each Fund pays Scudder Trust Company an annual fee
of $17.55 per shareholder account. Scudder International Bond Fund incurred fees
of $99,670, of which $15,163 is unpaid at June 30, 1996. Scudder Global Fund
incurred fees of $438,410, of which $82,157 is unpaid at June 30, 1996.

53
<PAGE>

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

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

FINANCIAL STATEMENTS

Each Fund's Annual Report for the fiscal year ended June 30, 1996,
together with the Report of Independent Accountants, is incorporated into this
Statement of Additional Information by reference in its entirety.

54
<PAGE>

<PAGE>

APPENDIX

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

Ratings of Municipal and Corporate Bonds

S&P:

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

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

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

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

Moody's:

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

<PAGE>

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

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

Annual Report
June 30, 1996

Pure No-Load(TM) Funds

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

A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.

<PAGE>

Table of Contents

2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
16 Financial Statements
19 Financial Highlights
20 Notes to Financial Statements
23 Report of Independent Accountants
24 Tax Information
25 Officers and Directors
26 Investment Products and Services
27 How to Contact Scudder

In Brief

Scudder Global Fund provided a 16.65% total return for the fiscal year ended
June 30, 1996, compared with 18.44% for the unmanaged Morgan Stanley Capital
International World Index.

We now feel that the restructuring of industries under the umbrella of high
stock prices has become excessively fashionable and is less fertile ground for
exploration of stock ideas.

We are exploring a different approach to emerging market investments. Instead of
focusing on the countries as the important variable, we are looking at their
companies in terms of their ability to be among the world's low-cost producers.

2 - SCUDDER GLOBAL FUND
<PAGE>

Letter From the Fund's Chairman

Dear Shareholders,

We hope you enjoy our newly redesigned shareholder report. The new format,
which is being implemented on a test basis with select Scudder funds, is
designed to enhance the attractiveness and readability of the reports. Let us
know what you think.

In this era of electronic information we have also taken a look at our
short-form quarterly reports, which you generally receive two or more weeks
after the end of your fund's first and third fiscal quarters. Going forward, in
lieu of these printed reports, portfolio information will be made available on a
more timely basis -- each month, in most cases -- through Scudder's Web site
(http://funds.scudder.com) and SAIL, Scudder's automated information line
(1-800-343-2890). Of course, you may also call a Scudder Investor Relations
representative for performance and portfolio information, Monday through Friday,
8 a.m. through 8 p.m., eastern time.

Turning to Scudder Global Fund, we are pleased to report on the fiscal year
ended June 30, 1996. The Fund provided a total return of 16.65% for the 12-month
period, a time during which the U.S. outpaced most other markets despite
conflicting signals about economic growth and corporate profits. The Fund's
portfolio management team views the marketplace as a single global entity and
seeks stocks of those companies best positioned to benefit in the global
economy. We believe Scudder Global Fund will continue its tradition of rewarding
investors over time through the intelligent application of its unique investment
approach, which relies on the identification of global themes rather than the
pursuit of specific markets.

Please do not hesitate to call an Investor Relations representative at
1-800-225-2470 if you have any questions regarding Scudder Global Fund. Page 27
contains more information on how to contact us.

Sincerely,

/s/Daniel Pierce

Daniel Pierce
Chairman,
Scudder Global Fund

3 - SCUDDER GLOBAL FUND
<PAGE>

PERFORMANCE UPDATE as of June 30, 1996
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------

Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER GLOBAL FUND
- --------------------------------------
1 Year $11,665 16.65% 16.65%
5 Year $18,616 86.16% 13.23%
Life of
Fund* $32,239 222.39% 12.49%

- --------------------------------------
MSCI World Index
- --------------------------------------
1 Year $11,844 18.44% 18.44%
5 Year $17,583 75.83% 11.94%
Life of
Fund* $28,166 181.66% 11.01%

*The Fund commenced operations on July 23, 1986.
Index comparisons begin July 31, 1986.
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------

A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:

YEARLY PERIODS ENDED JUNE 30

SCUDDER GLOBAL FUND
Year Amount
- ----------------------
7/31/86 $10,000
'87 $12,850
'88 $12,286
'89 $15,223
'90 $18,268
'91 $17,318
'92 $19,758
'93 $22,417
'94 $25,329
'95 $27,638
'96 $32,239

MSCI WORLD INDEX
Year Amount
- ----------------------
7/3186 $10,000
'87 $14,131
'88 $13,983
'89 $15,728
'90 $16,843
'91 $16,019
'92 $16,695
'93 $19,492
'94 $21,488
'95 $23,781
'96 $28,166

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 an, unlike Fund returns, do not reflect any
fees or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------

A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.

YEARLY PERIODS ENDED JUNE 30

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987* 1988 1989 1990 1991 1992 1993 1994 1995 1996
-------------------------------------------------------------------------------
NET ASSET VALUE... $15.42 $14.47 $17.64 $20.36 $18.06 $19.56 $21.63 $23.93 $25.64 $28.73
INCOME
DISTRIBUTIONS.. $ - $ .06 $ .14 $ .20 $ .37 $ .31 $ .16 $ .24 $ .11 $ .25
CAPITAL GAINS
DISTRIBUTIONS..... $ - $ .25 $ .08 $ .55 $ .83 $ .66 $ .34 $ .26 $ .34 $ .84
FUND TOT
RETURN (%)........ 28.50 -4.45 23.90 20.00 -5.20 14.09 13.45 12.99 9.11 16.65
INDEX TOTAL
RETURN (%)........ 41.31 -1.05 12.48 7.09 -4.90 4.22 16.75 10.23 10.67 18.44
</TABLE>

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

4 - SCUDDER GLOBAL FUND
<PAGE>

PORTFOLIO SUMMARY as of June 30, 1996
- ---------------------------------------------------------------------------
GEOGRAPHICAL (Excludes Cash Equivalents & Debt)
- ---------------------------------------------------------------------------
Europe 44%
U.S.& Canada 26%
Pacific Basin 13%
Japan 10%
Latin America 3%
Other 4%
- --------------------------------------
100%
- --------------------------------------

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

In emerging markets, the Fund's focus is turning to companies
with the ability to be among the world's low-cost producers rather
than those in specific countries.
- --------------------------------------------------------------------------
SECTORS (Excludes Cash Equivalents & Debt)
- --------------------------------------------------------------------------
Manufacturing 22%
Financial 16%
Metals & Minerals 11%
Technology 7%
Utilities 7%
Health 6%
Consumer Staples 6%
Durables 5%
Service Industries 5%
Other 15%
- ------------------------------------------
100%
- ------------------------------------------

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

Our emphasis on metals and minerals reflects our belief that prices
for gold and platinum are at an historic low in yen terms.
- --------------------------------------------------------------------------
10 LARGEST EQUITY HOLDINGS
(17% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. SAP AG
German computer software manufacturer

2. CIBA-GEIGY AG
Pharmaceutical company in Switzerland

3. HOECHST AG
German chemical producer

4. RTZ CORP., PLC
Mining and finance company in Switzerland

5. SANDOZ LTD. AG
Pharmacuetical company in Switzerland

6. VEBA AG
Electric utility, distributor of oil and chemicals in Germany

7. BROWN, BOVERI & CIE. AG
Manufacturer of electrical equipment in Switzerland

8. WOODSIDE PETROLEUM LTD.
Major oil and gas producer in Australia

9. INTERNATIONALE-NEDERLANDED GROEP CVA
Banking and insurance holding company in the Netherlands

10. ASTRA AB
Pharmaceutical company in Sweden

Hoechst is an example of our focus on German companies that are restructuring
and joining the global capital markets.
- -----------------------------------------------------------------------------
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 - SCUDDER GLOBAL FUND
<PAGE>

Portfolio Management Discussion

Dear Shareholders,

Scudder Global Fund provided a 16.65% total return for the fiscal year ended
June 30, 1996, compared with 18.44% for the unmanaged Morgan Stanley Capital
International (MSCI) World Index. For the calendar-year to date, the comparable
returns were 6.37% and 7.08%, respectively, and returns for the quarter were
1.56% and 2.90%.

The MSCI World Index finished the period at an all time high. It has risen
almost continuously since the end of 1994 with the U.S. market leading the way.
U.S. mutual fund buyers have led demand for stocks, stimulated by low returns on
cash and a desire to build wealth for retirement. Corporations have also been
buying their own stock. This favorable environment has also been enhanced by
lenders' willingness to finance consumption and Japanese investors' willingness
to buy the U.S. government's debt. U.S. investors' appetite for common stocks
has spilled over into foreign markets, especially Japan and "emerging markets."

But European and Japanese investors are not nearly so optimistic about the
future, and have acted as a damper on their stock markets. Our research suggests
that they dwell more on the problems of their own economies and view the U.S. as
enjoying little more than a stock market mania. In Europe, the political agenda
is dominated by the Franco-German desire to implement a common currency and the
rising specter of pension burdens. Both imply tight fiscal budgets, which are
evident on a continuing basis. The corporate sector has little choice but to
look for opportunities abroad and press ahead with cost cutting at home. In
Japan, there is little evidence to suggest that the government has devised any
strategy but to rely on the passage of time to heal their broken economic
system. Policy continues to be largely ineffective and the confidence of the
man-on-the-street is the essential element in the evolution of that economy and
its financial markets.

IN PRINTED DOCUMENT, BAR CHART INSERTED HERE

BAR CHART TITLE: U.S. Leads World Economy, Markets
CHART PERIOD: (Cumulative total returns for regional stock markets,
1/1/94 to 6/30/96)

CHART DATA:
North
America Japan Europe
------- ----- ------

48.67% 22.91% 29.57%

The United States is leading the world economy, and geography seems
unlikely to be a very useful diversification mechanism in the near future.

Focusing on Solid Picks
Given High Overall Prices

The day-to-day management of Scudder Global Fund has been predicated on the
assumption that stocks are expensive. The corollary is that increasingly we look
for the solid rather than the exciting. We look to the longer term rather than
the medium term and put cash to work on a gradual basis. This is not a veiled
prediction of an imminent crash, but merely the expectation that, given today's
prices, returns will be less generous than in the past and we should be
increasingly price-sensitive.

6 - SCUDDER GLOBAL FUND
<PAGE>

Core Portfolio Themes
Remain Intact

Our portfolio themes are unchanged, although we are continually adjusting the
lens through which we focus on potential portfolio holdings. For example, we now
feel that the restructuring of industries under the umbrella of high stock
prices has become excessively fashionable and is less fertile ground for
exploration of stock ideas. Its natural consequence: industrial concentration
and reduced competition are new areas of interest. Another area of increased
interest to us is the industrial gases industry, which has the appeal of a
stable price structure, growth potential from both new technology and emerging
markets, and reasonable valuations. Lastly, we are exploring a different
approach to emerging market investments. Instead of focusing on the countries as
the important variable, we are looking at their companies in terms of their
ability to be among the world's low-cost producers. Until these ideas are
formalized, our themes remain the following:

The Last of the Light Side Restructurings -- Corporations in the United States,
United Kingdom, Canada, and Australia are taking advantage of buoyant capital
markets to sell their loss-making activities. Portfolio holdings include
Canadian Pacific and Foster's Brewing.

The First of the Dark Side Restructurings -- German companies and most recently
their French counterparts are restructuring and joining the global capital
markets. Examples are Daimler-Benz and Hoechst.

The Life Insurers -- Individuals have lost faith in the governments that
promised to provide their pension benefits. They have higher confidence in
private pensions. AEGON, I nternational-Nederlanden Groep, and Skandia are
current portfolio holdings.

Aging population: Healthcare -- Pharmaceutical products and health providers
worldwide will continue to thrive. Examples: Astra, Ciba-Geigy, and Sandoz.

The Installed Base and Standard Setters -- Companies with new technologies which
secure large market shares and set the standards so other players must conform
to their strategies. Portfolio examples are Reuters and First Data.

Yen End Game -- Earnings of blue-chip exporters in Japan have been and will
continue to benefit from a weaker yen.

Gold/Platinum -- Prices in yen terms are at historic lows. Demand for gold and
platinum as jewelry and/or store of value are very likely underestimated,
particularly in the Far East.

Emerging Markets -- It is in the First World's interest for some new economies
to emerge. Some will succeed but others will fail. Few will achieve
self-sustaining growth and others will merely become subcontractors and
represent cyclical opportunities only. The portfolio has invested about 4.2% in
Korea as a consequence of this theme.

The Reinsurers -- The improved profitability of the sector is recognized but is
being sustained at higher levels and valuations are reasonable.

Global Stock Market
Versus Global Economy:
Who Is Leading Whom?

The 2 1/2 by 2 1/2 world (2.5% GNP growth, 2.5% inflation) of which many
economists talk seems ideal for investors. Certainly anything else would cause
consternation. However, these are averages which obscure a tumultuous period of
change in the way the world creates wealth and in the regions and industries in
which wealth is created and destroyed.

7 - SCUDDER GLOBAL FUND
<PAGE>

The essential point is that in a deregulated environment, global capital markets
have convincingly replaced national governments in the process of resource
allocation. It is the efficiency generated from the reallocation process that is
the heart of global economic growth. It is in turn this economic growth which
facilitates one country running trade deficits or budget deficits and others
being in a position to finance them. It also lubricates an economy, like that of
the United States, which has an almost record low unemployment rate even as
major corporations are laying off employees. An important caveat: Should for any
reason all important parts of the world not share in the benefits, then they
will not be interested in the free flow of resources, and the spell will be
broken.

A final word on the role of the global stock market. The circulation of capital
is dependent on the smooth workings of the global stock market. So important has
the market become relative to other sources of capital that any major decline
will have a strong impact on growth. We believe that the market is leading the
economy, not the reverse. For these reasons, our focus remains specific
opportunities rather than general levels of economic growth.

Sincerely,
Your Portfolio Management Team

/s/William E. Holzer /s/Nicholas Bratt

William E. Holzer Nicholas Bratt

/s/Alice Ho

Alice Ho

Scudder Global Fund:
A Team Approach to Investing

Scudder Global Fund is managed by a team of Scudder investment professionals,
who each play an important role in the Fund's management process. Team members
work together to develop investment strategies and select securities for the
Fund's portfolio. They are supported by Scudder's large staff of economists,
research analysts, traders, and other investment specialists who work in
Scudder's offices across the United States and abroad. We believe our team
approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.

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

8 - SCUDDER GLOBAL FUND
<PAGE>

<TABLE>
INVESTMENT PORTFOLIO AS OF JUNE 30, 1996
<CAPTION>

PRINCIPAL MARKET
AMOUNT($) VALUE($)
- -----------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 0.6%
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 6/28/96 at 5.45%, to be repurchased at $7,612,456
on 7/1/96, collateralized by a $5,104,000 U.S. Treasury
Bond, 13.875%, 5/15/11 (Cost $7,609,000) ..................... 7,609,000 7,609,000
----------
BONDS 3.7%
- -----------------------------------------------------------------------------------------------
U.S. Treasury Note, 5.625%, 6/30/97 (Cost $49,839,844) .......... 50,000,000 49,922,000
----------
CONVERTIBLE BONDS 1.2%
- -----------------------------------------------------------------------------------------------
CANADA 0.5%
Teck Corp., 3.75%, 7/15/06 (Major mining complex) ............... 6,657,000 6,790,140
KOREA 0.3% ---------
Cheil Food and Chemical Co., Ltd., 3%, 12/31/06, put date
12/31/96 (Leading sugar refiner and major integrated
food processor) .............................................. 625,000 753,125
Ssangyong Cement Industrial Co., Ltd., 3%, 12/31/05, put
date 11/14/96 (Major cement producer) ........................ 2,700,000 3,307,500
Ssangyong Oil Refining Co., Ltd., 3.75%, 12/31/08, put
date 7/20/01 (Major oil refiner) ............................. 650,000 666,250
----------
4,726,875
----------
MEXICO 0.4%
Empresa ICA Sociedad Controladora S.A., 5%,
3/15/04 (Construction company) ............................... 8,200,000 5,227,500
- -----------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (Cost $18,501,666) ...................... 16,744,515
- -----------------------------------------------------------------------------------------------

SHARES
- -----------------------------------------------------------------------------------------------
PREFERRED STOCKS 3.9%
- -----------------------------------------------------------------------------------------------
GERMANY
RWE AG (Producer and marketer of petroleum and
chemical products) ........................................... 589,435 18,137,654
SAP AG (Computer software manufacturer) ......................... 182,200 27,038,293
Spar Handels AG (Food and beverage wholesaler
and retailer) ................................................ 30,000 8,363,469
- -----------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (Cost $25,123,759) ....................... 53,539,416
- -----------------------------------------------------------------------------------------------

COMMON STOCKS 90.6%
- -----------------------------------------------------------------------------------------------
ARGENTINA 0.5%
Electricidad Argentina S.A. "A" (ADR)
(Electric utility) (c) ....................................... 253,143 3,544,002
Perez Companc S.A. "B" (ADR)
(Industrial conglomerate)* ................................... 44,200 582,887
YPF S.A. "D" (ADR) (Petroleum company) .......................... 134,100 3,017,250
----------
7,144,139
----------
AUSTRALIA 3.8%
Broken Hill Proprietary Co. Ltd. (Petroleum,
minerals and steel) .......................................... 876,470 12,101,763
Coca Cola Amatil Ltd. (Soft drink bottler
and distributor) ............................................. 1,083,002 12,025,724
Foster's Brewing Group, Ltd. (Leading brewery) .................. 4,178,400 7,191,077

</TABLE>

The accompanying notes are an integral part of the financial statements.
- -------------------------------------------------------------------------------
Pure No-Load[Trademark] Funds Pure No-Load[Trademark] Funds Pure No-Load
- -------------------------------------------------------------------------------

9 - SCUDDER GLOBAL FUND

MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Woodside Petroleum Ltd. (Major oil and gas producer) ....... 3,339,900 20,052,413
----------
51,370,977
----------
AUSTRIA 0.3%
Flughafen Wien AG (Operator of terminals and facilities
at Vienna International Airport) ........................ 61,900 4,236,344
----------
BERMUDA 2.0%
Mid Ocean Limited* (Property and casualty
insurance company) ...................................... 378,150 15,504,150
PartnerRe Holdings Ltd. (Property and casualty
insurance company) ...................................... 399,100 11,923,113
----------
27,427,263
----------
BRAZIL 2.0%
Aracruz Celulose S.A. (ADR) (Producer of
eucalyptus kraft pulp) .................................. 1,210,800 11,502,600
Centrais Eletricas Brasileiras S/A "B" (pfd.)
(Electric utility) ...................................... 30,401,230 8,689,093
Companhia Energetica de Minas Gerais (pfd.)
(Electric power utility) ................................ 126,000,000 3,350,296
Companhia Energetica de Sao Paulo (pfd.)
(Electric utility) ...................................... 70,200,000 2,446,846
Companhia Siderurgica Belgo-Mineira (Manufacturer
of steel wires and wire products) ....................... 10,591,625 710,847
Light Participacoes SA (Electric utility) (c) .............. 8,447,000 286,011
----------
26,985,693
----------
CANADA 3.9%
Alcan Aluminium Ltd. (Manufacturer of aluminum
and finished products) .................................. 197,026 5,996,287
Barrick Gold Corp. (CN) (Gold exploration and
production in North and South America) .................. 222,200 6,027,175
Barrick Gold Corp. ......................................... 218,000 5,916,059
Cambior, Inc. (Medium-sized gold producer with
a major mine in Guyana) ................................. 314,900 4,163,300
Canadian Pacific Ltd. (Ord.) (Transportation and
natural resource conglomerate) .......................... 869,766 19,048,528
Placer Dome Inc. (CN) (Gold, silver and copper
mining company) ......................................... 240,300 5,746,783
Placer Dome Inc. ........................................... 236,000 5,634,500
----------
52,532,632
----------
CHINA 1.1%
American Standard China "B" (Plumbing products) (c) ........ 526 5,260,000
Huaneng Power International, Inc. Series N (ADR)
(Developer and operator of large coal-fired power
plants) ................................................. 551,500 9,858,062
----------
15,118,062
----------
DENMARK 1.0%
FLS Industries "B" (Machinery for cement and allied
industries; manufacturer and shipper of cement) ......... 138,500 13,948,110
----------
FRANCE 0.7%
Alcatel Alsthom (Manufacturer of transportation,
telecommunication and energy equipment) ................ 35,525 3,100,690
Compagnie Financiere de Paribas
(Finance and investment company) ........................ 119,294 7,049,692
----------
10,150,382
----------

</TABLE>

10 - SCUDDER GLOBAL FUND

MARKET
SHARES VALUE($)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
GERMANY 11.5%
Bayer AG (Leading chemical producer) .................... 394,790 13,952,240
Bayerische Vereinsbank Girozentrale
(Commercial bank) .................................... 441,000 12,381,287
Daimler-Benz AG (Automobile and truck manufacturer)* .... 24,830 13,297,413
Daimler-Benz AG Rights (expiration 7/5/96)* ............. 24,830 3,428
Hoechst AG (Chemical producer) .......................... 781,250 26,505,687
Mannesmann AG (Bearer) (Diversified construction
and technology company) .............................. 47,812 16,535,678
Muenchener Rueckversicherungs AG
(Insurance company) .................................. 2,446 4,084,976
Muenchener Rueckversicherungs AG (Registered) ........... 5,619 11,600,802
Schering AG (Pharmaceutical and chemical producer) ...... 179,000 13,028,667
Siemens AG (Leading electrical engineering and
electronics company) ................................. 180,400 9,643,316
VEBA AG (Electric utility, distributor of
oil and chemicals) ................................... 445,000 23,661,746
VIAG AG (Provider of electrical power and natural
gas services, aluminum products, chemicals,
ceramics and glass) .................................. 22,000 8,780,327
VIAG AG (New) (d) ....................................... 6,284 2,425,346
-----------
155,900,913
-----------
GHANA 0.4%
Ashanti Goldfields Co., Ltd. (ADS)
(Leading gold producer) .............................. 307,400 6,071,150
-----------
HONG KONG 1.4%
Hutchison Whampoa, Ltd. (Container terminal and
real estate company) ................................. 1,446,000 9,097,336
Jardine Matheson Holdings, Ltd. (Conglomerate: real
estate, merchandising and engineering) ............... 1,004,296 7,381,576
Television Broadcasts, Ltd. .............................
(Television broadcasting) ............................ 608,000 2,281,743
-----------
18,760,655
-----------
HUNGARY 0.3%
First Hungary Fund (Investment company) (c) ............. 3,619 3,226,881
-----------
INDONESIA 0.9%
Asia Pulp & Paper Co., Ltd. (ADR)
(Producer of pulp and paper)* ........................ 186,200 2,280,950
HM Sampoerna (Foreign registered) (Tobacco company) ..... 411,500 4,685,177
Indah Kiat Pulp & Paper (Producer of pulp and paper) .... 400,000 390,977
Indah Kiat Pulp & Paper (Foreign registered) ............ 3,530,375 3,450,742
Indah Kiat Pulp & Paper Warrants (expiration 4/13/01)* .. 348,525 175,947
Pabrik Kertas Tjiwi Kimia (Foreign registered)
(Operator of a pulp and paper factory) ............... 781,000 796,939
-----------
11,780,732
-----------
JAPAN 10.0%
Bridgestone Corp. (Leading automobile
tire manufacturer) ................................... 824,000 15,746,903
Canon Inc. (Leading producer of visual image
and information equipment) ........................... 704,000 14,676,725
Hitachi Ltd. (General electronics manufacturer) ......... 1,278,000 11,919,353

</TABLE>

11 - SCUDDER GLOBAL FUND

<PAGE>

MARKET
SHARES VALUE($)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Hitachi Metals, Ltd. (Major producer of
high-quality specialty steels) ........................... 148,000 1,705,116
Iino Kaiun Kaisha, Ltd. (Operator of tankers
and specialized carriers) ................................ 1,001,000 5,427,632
Kyocera Corp. (Leading ceramic package manufacturer) ........ 191,000 13,534,952
Matsushita Electric Industrial Co., Ltd.
(Leading manufacturer of consumer electronic products) .. 788,000 14,698,670
NSK Ltd. (Leading manufacturer of bearings and
other machinery parts) ................................... 794,000 6,018,617
Nichiei Co., Ltd. (Finance company for small-
and medium-sized firms) .................................. 165,000 11,013,578
SMC Corp. (Leading maker of pneumatic equipment) ............ 43,000 3,334,156
Sony Corp. (Consumer electronic products manufacturer) ...... 144,000 9,493,348
Sumitomo Metal Industries, Ltd. (Leading integrated
crude steel producer) .................................... 4,124,000 12,670,086
Sumitomo Metal Mining Co., Ltd. (Leading gold, nickel
and copper mining company) ............................... 1,690,000 14,664,746
-----------
134,903,882
-----------
KOREA 3.9%
Baik Yang Co. (Leading maker of under garments) ............. 10,000 1,232,742
Cheil Food and Chemical Co., Ltd. (Korea's largest
sugar refiner and major integrated food processor) ....... 9 588
Daewoo Heavy Industries Ltd. (Leading manufacturer of
heavy industrial equipment) .............................. 334,374 2,835,914
Daewoo Securities Co., Ltd. (Brokerage and
financial services)* ..................................... 115,516 2,691,386
Hanil Bank (Major commercial bank) .......................... 121,464 1,211,346
Korea Asia Fund (IDR) (Investment company) (b) .............. 138 units 1,656,000
Korea Electric Power Co.* (Electric utility) ................ 25,000 862,919
Korea Electric Power Co. (ADR) .............................. 353,000 8,560,250
Korea Equity Trust (IDR) (Investment company) (b) ........... 140 units 1,435,000
Korea Express Co., Ltd. (General freight
transport company) ....................................... 98,545 3,583,675
Korea Long Term Credit Bank* (Major commercial bank) ........ 49,799 1,289,175
Korea Mobile Telecom (Mobile telecommunication
company) (c) ............................................. 3,850 4,738,462
Korea Zinc Co. (Zinc mining and manufacturing) .............. 80,000 1,834,320
Lotte Confectionery Co., Ltd.
(Major producer of snack food) ........................... 26,390 2,927,885
Pang-Rim Spinning Co., Ltd. (Leading manufacturer of
cotton-polyester spun fabrics) ........................... 25,000 1,232,742
Pohang Iron & Steel Co., Ltd.
(Leading steel producer) (c) ............................. 7,030 577,852
Samsung Electromechanics Co., Ltd.
(Major electronics parts company) ........................ 19,761 708,882
Samsung Electromechanics Co., Ltd. (New) (d)* ............... 4,945 162,151
Samsung Electronics Co., Ltd.
(Major electronics manufacturer) ......................... 48 4,030
Samsung Electronics Co., Ltd. (GDS) (1/2 voting) ............ 8,850 453,563
Samsung Electronics Co., Ltd. (GDS) (Voting)(New) (d) ....... 6,934 311,163
Samsung Electronics Co., Ltd. (New)* ........................ 14 1,113
Samsung Electronics Co., Ltd. (GDS)(Non-voting) ............. 267,946 6,497,691
Samsung Electronics Co., Ltd. (GDS)
(Non-voting)(New) (d) .................................... 80,752 1,736,168

</TABLE>

12 - SCUDDER GLOBAL FUND

MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------
<S> <C> <C>

Samsung Heavy Industries Co., Ltd.
(Machinery manufacturer) ........................ 106,906 1,660,522
Samsung Heavy Industries Co., Ltd. (New) (d) ...... 10,369 146,996
Samsung Securities (Securities company) ........... 40,000 1,232,742
Samsung Securities Rights (expiration
7/23/96) (c)* ................................... 6,400 59,172
Seoul International Trust (Investment
company) (b) .................................... 43 units 1,784,500
Ssangyong Cement Industrial Co., Ltd.
(Major cement company) .......................... 37,206 889,788
----------
52,318,737
----------
NETHERLANDS 2.8%
AEGON Insurance Group NV (Insurance company) ...... 404,492 18,641,496
Internationale-Nederlanden Groep CVA
(Banking and insurance holding company) ......... 653,815 19,512,860
----------
38,154,356
----------
NEW ZEALAND 0.8%
Telecom Corp. of New Zealand
(Telecommunication services) .................... 2,600,000 10,947,459
----------
SINGAPORE 0.3%
Jardine Strategic Holdings Ltd. (Conglomerate:
auto distribution, food retailing, property
investment and development) ..................... 1,008,000 3,225,600
----------
SOUTH AFRICA 1.3%
Impala Platinum Holdings (ADR)
(Leading platinum producer) ..................... 468,500 6,793,250
Malbak Ltd. (GDR) (Diversified holding company
involved in food, packaging and paper,
healthcare, consumer products and investments) .. 962,755 4,693,431
Rustenburg Platinum Holdings, Ltd. (ADR)
(Leading platinum producer)* .................... 77,419 1,219,349
Sasol Limited (Producer of coal and crude oil) .... 451,096 4,840,979
----------
17,547,009
----------
SWEDEN 4.2%
Astra AB "A" (Free) (Pharmaceutical company) ...... 438,050 19,388,014
S.K.F. AB "B" (Free)*
(Manufacturer of roller bearings) ............... 676,300 16,090,219
Skandia Foersaekrings AB (Free)
(Financial conglomerate) ........................ 511,300 13,554,857
Swedish Match AB (Leading producer of matches) .... 298,900 930,112
Volvo AB "B" (Free) (Automobile manufacturer) ..... 298,900 6,817,810
----------
56,781,012
----------
SWITZERLAND 8.4%
Brown, Boveri & Cie. AG (Bearer)
(Manufacturer of electrical equipment) .......... 17,915 22,183,274
Ciba-Geigy AG (Bearer) (Pharmaceutical company) ... 8,250 10,017,598
Ciba-Geigy AG (Registered) ........................ 13,735 16,754,689
Nestle SA (Registered) (Food manufacturer) ........ 9,621 10,997,407
Sandoz Ltd. AG (Registered)
(Pharmaceutical company) ........................ 21,640 24,770,500
Schindler Holdings AG (PC) (Leading elevator
and escalator manufacturer) ..................... 2,675 2,845,858

</TABLE>

13 - SCUDDER GLOBAL FUND

<PAGE>

<TABLE>

MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------------
<S> <C> <C>

Swiss Bank Corp. Warrants (Registered)
(expiration 6/30/00)* .............................. 6,345 20,809
Swiss Reinsurance (Registered) (Life, accident
and health insurance company) ...................... 11,750 12,077,551
Zurich Insurance Group (Registered)
(Insurance company) ................................ 50,750 13,842,939
-----------
113,510,625
-----------

TAIWAN 0.2%
Taiwan Semiconductor Manufacturing Co.
(Manufacturer of integrated circuits
and other semiconductor devices)* .................. 1,620,000 3,384,811
-----------

UNITED KINGDOM 8.7%
BOC Group PLC (Producer of industrial gases)* ........ 652,900 9,363,862
Carlton Communications PLC (Television post
production products and services) .................. 1,772,000 14,254,925
Grand Metropolitan PLC (Food and drink
producer and retailer) ............................. 1,417,720 9,401,341
Great Universal Stores PLC "A" (Catalog home shopping,
retailing, finance and property investment) ........ 677,600 6,876,864
London & Overseas Freighters (ADR)
(Operator of a fleet of oil tankers) ............... 140,900 1,796,475
Lonrho PLC (Widely diversified industrial
holding company) ................................... 900,000 2,585,745
PowerGen PLC (Electric utility) ...................... 1,400,134 10,197,974
RTZ Corp., PLC (Mining and finance company) .......... 1,764,714 26,117,926
Reuters Holdings PLC (International news agency) ..... 1,123,500 13,591,957
Shell Transport & Trading PLC
(Part owner of Royal Dutch Shell Co.) .............. 987,100 14,455,872
St. James's Place Capital PLC
(Money management and insurance) ................... 3,069,900 5,792,579
Waste Management International PLC*
(Waste collection and disposal services) ........... 599,100 3,349,448
-----------
117,784,968
-----------
UNITED STATES 20.2%
APL Ltd. (Ocean, rail and truck container
distribution and transportation) ................... 212,500 5,551,563
American Telephone & Telegraph Co.
(Telecommunication services and business systems) .. 185,400 11,494,800
Biogen Inc.* (Biotechnology research and development) 150,410 8,253,749
Boeing Co. (Manufacturer of jet airplanes) ........... 92,400 8,050,350
Charles Schwab Corp. (Discount brokerage services) ... 286,500 7,019,250
Destec Energy Inc. (Non-utility producer of
cogeneration and coal gasification power) .......... 479,000 6,107,250
EXEL, Ltd. (Provider of liability insurance) ......... 228,300 16,095,150
Enron Corp. (Major natural gas pipeline system) ...... 356,300 14,563,762
First Data Corp. (Credit-card processing services) ... 95,700 7,620,112
General Re Corp. (Property and casualty reinsurance) . 80,635 12,276,679
Homestake Mining Co.
(Major international gold producer) ................ 627,000 10,737,375
International Business Machines Corp. (Principal
manufacturer and servicer of business and computing
machines) .......................................... 151,420 14,990,580
J.P. Morgan & Co., Inc. (Commercial banking
and financial services) ............................ 76,322 6,458,749

</TABLE>

14 - SCUDDER GLOBAL FUND

<PAGE>

<TABLE>

<CAPTION>
MARKET
SHARES VALUE($)
- ----------------------------------------------------------------------------------------
<S> <C> <C>
LaFarge Corp. (Leading cement producer) .............. 739,100 14,966,775
Louisiana-Pacific Corp. (Producer of lumber,
plywood and pulp) .................................. 400,000 8,850,000
MBIA Inc. (Insurer of municipal bonds) ............... 202,650 15,781,369
National Semiconductor Corp.* (Manufacturer of
integrated circuits and transistors) ............... 346,100 5,364,550
Newmont Mining Corp. (International gold
exploration and mining company) .................... 256,400 12,659,750
Parker-Hannifin Group (Fluid control components) ..... 325,200 13,780,350
Policy Management Systems Corp. (Insurance
company software and services) ..................... 107,500 5,375,000
Public Service Co. of New Mexico* (Large electric
utility serving the southwest) ..................... 259,400 5,317,700
Thermo Electron Corp.* (Engineered industrial products
and environmental instruments) ..................... 121,500 5,057,438
Unicom Corp. (Electric utility in northern Illinois) . 250,000 6,968,750
United Technologies Corp. (Manufacturer of aerospace
equipment, climate control systems, and elevators) . 163,500 18,802,500
WMX Technologies Inc. (Solid and chemical waste
management services) ............................... 409,100 13,398,025
Xerox Corp. (Leading manufacturer of copiers
and duplicators) ................................... 329,850 17,646,975
-------------
273,188,551
-------------
VENEZUELA 0.0%
Venezolana de Prerreducidos Caroni C.A. (GDS)
(Manufacturer of steel pellets) .................... 62,160 334,110
- ----------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $948,215,737) .............. 1,226,735,053
- ----------------------------------------------------------------------------------------

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

- ----------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0% (Cost $1,049,290,006) (a) 1,354,549,984
- ----------------------------------------------------------------------------------------

<FN>

* Non-income producing security.

(a) The cost for federal income tax purposes was $1,051,717,031. At June 30,
1996, net unrealized appreciation for all securities based on tax cost was
$302,832,953. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $333,339,027 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$30,506,074.

(b) 500 shares = 1 IDR unit (International Depository Receipt) for Korea Asia
Fund
1,000 shares = 1 IDR unit for Korea Equity Trust
1,000 shares = 1 unit for Seoul International Trust

(c) Securities valued in good faith by the Valuation Committee of the Board of
Directors. The cost of these securities at June 30, 1996, aggregated
$17,673,610. See Note A of the Notes to Financial Statements.

(d) New shares issued during 1996, eligible for a pro rata share of 1996
dividends.

See page 5 for sector breakdown.

</FN>
</TABLE>

15 - SCUDDER GLOBAL FUND

<PAGE>

FINANCIAL STATEMENTS

<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
AS OF JUNE 30, 1996

<S> <C>
ASSETS
- --------------------------------------------------------------------------------------------------
Investments, at market (identified cost $1,049,290,006) (Note A) .... $1,354,549,984
Cash ................................................................ 3,102
Foreign currency, at market (identified cost $4,021,113) ............ 4,051,037
Receivable on investments sold ...................................... 14,153,510
Receivable on Fund shares sold ...................................... 2,061,829
Dividends and interest receivable ................................... 4,070,399
Foreign taxes recoverable ........................................... 645,507
Net receivable on closed forward currency exchange contracts
(Note A) .......................................................... 17,604
Other assets ........................................................ 1,242
---------
Total assets ........................................................ 1,379,554,214

LIABILITIES
- --------------------------------------------------------------------------------------------------
Payable for investments purchased ................................... $ 9,039,855
Payable for Fund shares redeemed .................................... 1,081,228
Accrued management fee (Note C) ..................................... 1,087,620
Other accrued expenses (Note C) ..................................... 630,825
--------------
Total liabilities ................................................... 11,839,528
----------------------------------------------------------------------------------------
NET ASSETS, AT MARKET VALUE ......................................... $1,367,714,686
----------------------------------------------------------------------------------------

NET ASSETS
- --------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................. $ 9,106,858
Net unrealized appreciation on:
Investments .................................................... 305,259,978
Foreign currency related transactions .......................... 8,908
Accumulated net realized gain ....................................... 53,123,352
Capital stock ....................................................... 476,065
Additional paid-in capital .......................................... 999,739,525
----------------------------------------------------------------------------------------
NET ASSETS, AT MARKET VALUE ......................................... $1,367,714,686
----------------------------------------------------------------------------------------

NET ASSET VALUE
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE, offering and redemption price per share
($1,367,714,686 /47,606,518 shares of capital stock
--------------
outstanding, $.01 par value, 100,000,000 shares authorized) ...... $ 28.73
--------------

</TABLE>

16 - SCUDDER GLOBAL FUND

<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996

<S> <C>
INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------
Income:
Dividends (net of withholding taxes of $2,292,595) ............. $ 22,428,205
Interest ....................................................... 5,585,859
-------------
28,014,064

Expenses:
Management fee (Note C) ........................................ 12,360,809
Services to shareholders (Note C) .............................. 2,657,807
Custodian and accounting fees (Note C) ......................... 1,389,179
Directors' fees (Note C) ....................................... 51,183
Reports to shareholders ........................................ 516,350
Legal .......................................................... 18,948
Auditing ....................................................... 104,862
Federal and state registration ................................. 35,921
Other .......................................................... 129,963
-------------
17,265,022
----------------------------------------------------------------------------------
NET INVESTMENT INCOME 10,749,042
----------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
- -------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .................................................... 77,612,311
Foreign currency related transactions .......................... (308,203)
-------------
77,304,108
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................... 106,267,277
Foreign currency related transactions .......................... (40,778)
-------------
106,226,499
-------------
Net gain on investment transactions ............................ 183,530,607
----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........... $ 194,279,649
----------------------------------------------------------------------------------

</TABLE>

17 - SCUDDER GLOBAL FUND

<PAGE>

<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS

YEARS ENDED JUNE 30
INCREASE (DECREASE) IN NET ASSETS 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................ $ 10,749,042 $ 11,643,651
Net realized gain from investment transactions ....... 77,304,108 11,948,024
Net unrealized appreciation on investment transactions
during the period ................................ 106,226,499 72,766,161
-------------- --------------
Net increase in net assets resulting from operations . 194,279,649 96,357,836
-------------- --------------
Distributions to shareholders from:
Net investment income ($.25 and $.11 per
share, respectively) ............................. (11,338,078) (5,208,927)
Net realized gains from investment transactions
($.84 and $.34 per share, respectively) .......... (38,563,130) (16,100,320)
-------------- --------------
Fund share transactions:
Proceeds from shares sold ............................ 276,103,348 294,309,148
Net asset value of shares issued to shareholders in
reinvestment of distributions .................... 46,815,558 20,010,200
Cost of shares redeemed .............................. (267,766,187) (316,718,412)
-------------- --------------
Net increase (decrease) in net assets from
Fund share transactions .......................... 55,152,719 (2,399,064)
-------------- --------------
Increase in net assets ............................... 199,531,160 72,649,525
Net assets at beginning of period .................... 1,168,183,526 1,095,534,001
Net assets at end of period (including undistributed
net investment income of $9,106,858 and -------------- --------------
$9,361,946, respectively) ........................ $1,367,714,686 $1,168,183,526
-------------- --------------

OTHER INFORMATION
- ---------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ............ 45,559,445 45,787,687
-------------- --------------
Shares sold .......................................... 10,053,643 12,199,342
Shares issued to shareholders in reinvestment
of distributions .................................. 1,745,054 810,995
Shares redeemed ...................................... (9,751,624) (13,238,579)
-------------- --------------
Net increase (decrease) in Fund shares ............... 2,047,073 (228,242)
-------------- --------------
Shares outstanding at end of period .................. 47,606,518 45,559,445
-------------- --------------

</TABLE>

18 - SCUDDER GLOBAL FUND

<PAGE>

FINANCIAL HIGHLIGHTS

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

<FN>

</FN>
</TABLE>

- -------------------------------------------------------------------------------
Pure No-Load[Trademark] Funds Pure No-Load[Trademark] Funds Pure No-Load
- -------------------------------------------------------------------------------

19 - SCUDDER GLOBAL FUND

<PAGE>
NOTES TO FINANCIAL STATEMENTS

A. SIGNIFICANT ACCOUNTING POLICIES

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

The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.

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 $17,692,380 (1.3% of net assets) and have been noted in the
investment portfolio as of June 30, 1996. Their values have been estimated by
the Board of Directors in the absence of readily ascertainable market values.
However, because of the inherent uncertainty of valuation, those estimated
values may differ significantly from the values that would have been used had a
ready market for the securities existed, and the difference could be material.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the resale price.

FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:

(i) market value of investment securities, other assets and liabilities at the
daily rates of exchange, and

(ii) purchases and sales of investment securities, dividend and interest income
and certain expenses at the rates of exchange prevailing on the respective
dates of such transactions.

20 - SCUDDER GLOBAL FUND

<PAGE>

The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.

Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies and as a
hedge against changes in exchange rates relating to foreign currency denominated
assets.

Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.

Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.

FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. The Fund paid
no federal income taxes and no federal income tax provision was required.

DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax.

The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in forward contracts, passive
foreign investment companies, and certain securities sold at a loss. As a
result, net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.

The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.

OTHER. Investment security transactions are accounted for on a trade date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Original
issue discounts are accreted for both tax and financial reporting purposes.

21 - SCUDDER GLOBAL FUND

<PAGE>

B. PURCHASES AND SALES OF SECURITIES

Purchases and sales of investment securities (excluding short-term investments)
for the year ended June 30, 1996 aggregated $374,224,593 and $365,251,612,
respectively.

C. RELATED PARTIES

Under the Investment Management Agreement (the "Management Agreement") with
Scudder, Stevens & Clark, Inc. (the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Management Agreement. For the
period July 1, 1995 to September 5, 1995, the management fee payable under the
Management Agreement was equal to an annual rate of 1% of the first $500,000,000
of average daily net assets and 0.95% of such assets in excess of $500,000,000
computed and accrued daily and payable monthly. Effective September 6, 1995, the
management fee payable under the Management Agreement is equal to an annual rate
of 1% of the first $500,000,000 of average daily net assets, .95% of the next
$500,000,000 of such assets and 0.90% of such assets in excess of $1,000,000,000
computed and accrued daily and payable monthly. The Management Agreement also
provides that if the Fund's expenses, exclusive of taxes, interest, and
extraordinary expenses, exceed specified limits, such excess, up to the amount
of the management fee, will be paid by the Adviser. For the year ended June 30,
1996, the fee pursuant to the Management Agreement amounted to $12,360,809,
which was equivalent to an annualized effective rate of .96% of the Fund's
average daily net assets.

Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Fund. Included
in services to shareholders is $1,754,520 charged to the Fund by SSC during the
year ended June 30, 1996, of which $141,291 is unpaid at June 30, 1996.

Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended June 30, 1996,
the amount charged to the Fund by STC aggregated $438,410, of which $82,157 is
unpaid at June 30, 1996.

Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
June 30, 1996, the amount charged to the Fund by SFAC aggregated $524,974, of
which $91,449 is unpaid at June 30, 1996.

The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the year
ended June 30, 1996, Directors' fees aggregated $51,183.

D. LINES OF CREDIT

The Fund and several affiliated Funds ("The Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.

22 - SCUDDER GLOBAL FUND

<PAGE>

Report of Independent Accountants

To the Directors of Scudder Global Fund, Inc. and to the Shareholders
of Scudder Global Fund:

We have audited the accompanying statement of assets and liabilities of Scudder
Global Fund including the investment portfolio, as of June 30, 1996, 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 nine years in the period then ended
and for the period July 23, 1986 (commencement of operations) to June 30, 1987.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Global Fund as of June 30, 1996, 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 nine years in
the period then ended, and for the period July 23, 1986 (commencement of
operations) to June 30, 1987 in conformity with generally accepted accounting
principles.

Boston, Massachusetts COOPERS & LYBRAND L.L.P.
August 14, 1996

23 - SCUDDER GLOBAL FUND

<PAGE>

Tax Information

The Fund paid distributions of $.74 per share from net long-term capital gains
during its fiscal year ended June 30, 1996.

Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$49,311,240 as a long-term capital gain dividend for the fiscal year ended June
30, 1996.

For its fiscal year ended June 30, 1996, the total amount of income received by
the Fund from sources within foreign countries and possessions of the United
States was $.182 per share (representing a total of $8,653,144). The total
amount of taxes paid by the Fund to such countries was $.048 per share
(representing a total of $2,292,595).

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.

24 - SCUDDER GLOBAL FUND

<PAGE>

Officers and Directors

Daniel Pierce*
Chairman of the Board, Director and Vice President

William E. Holzer*
President

Paul Bancroft III
Director; Venture Capitalist and Consultant

Sheryle J. Bolton
Director; Consultant

Nicholas Bratt*
Director

Thomas J. Devine
Director; Consultant

William H. Gleysteen, Jr.
Director; Consultant

Dudley H. Ladd*
Director

William H. Luers
Director; President, The Metropolitan Museum of Art

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 M. Greshin*
Vice President

Jerard K. Hartman*
Vice President

Thomas W. Joseph*
Vice President

Gerald J. Moran*
Vice President

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.

25 - SCUDDER GLOBAL FUND
<PAGE>

Investment Products and Services

The Scudder Family of Funds

Money Market

Scudder Cash Investment Trust

Scudder U.S. Treasury Money Fund

Tax Free Money Market+

Scudder Tax Free Money Fund

Scudder California Tax Free Money Fund*

Scudder New York Tax Free Money Fund*

Tax Free+

Scudder California Tax Free Fund*

Scudder High Yield Tax Free Fund

Scudder Limited Term Tax Free Fund

Scudder Managed Municipal Bonds

Scudder Massachusetts Limited Term
Tax Free Fund*

Scudder Massachusetts Tax Free Fund*

Scudder Medium Term Tax Free Fund

Scudder New York Tax Free Fund*

Scudder Ohio Tax Free Fund*

Scudder Pennsylvania Tax Free Fund*

Growth and Income

Scudder Balanced Fund

Scudder Growth and Income Fund

Income

Scudder Emerging Markets Income Fund

Scudder Global Bond Fund

Scudder GNMA Fund

Scudder High Yield Bond Fund

Scudder Income Fund

Scudder International Bond Fund

Scudder Short Term Bond Fund

Scudder Zero Coupon 2000 Fund

Growth

Scudder Capital Growth Fund

Scudder Development Fund

Scudder Emerging Markets Growth Fund

Scudder Global Discovery Fund

Scudder Global Fund

Scudder Gold Fund

Scudder Greater Europe Growth Fund

Scudder International Fund

Scudder Latin America Fund

Scudder Micro Cap Fund

Scudder Pacific Opportunities Fund

Scudder Quality Growth Fund

Scudder Small Company Value Fund

Scudder Value Fund

The Japan Fund

Retirement Plans and Tax-Advantaged Investments

IRAs

Keogh Plans

Scudder Horizon Plan*+++ (a variable annuity)

401(k) Plans

403(b) Plans

SEP-IRAs

Profit Sharing and Money Purchase
Pension Plans

Closed-End Funds#

The Argentina Fund, Inc.

The Brazil Fund, Inc.

The First Iberian Fund, Inc.

The Korea Fund, Inc.

The Latin America Dollar Income Fund, Inc.

Montgomery Street Income Securities, Inc.

Scudder New Asia Fund, Inc.

Scudder New Europe Fund, Inc.

Scudder World Income Opportunities
Fund, Inc.

Institutional Cash Management

Scudder Institutional Fund, Inc.

Scudder Fund, Inc.

Scudder Treasurers Trust(TM)++

For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +A portion of the income from the tax-free funds may
be subject to federal, state, and local taxes. *Not available in all states.
+++A no-load variable annuity contract provided by Charter National Life
Insurance Company and its affiliate, offered by Scudder's insurance agencies,
1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark, Inc., are
traded on various stock exchanges. ++For information on Scudder Treasurers
Trust,(TM) an institutional cash management service that utilizes certain
portfolios of Scudder Fund, Inc. ($100,000 minimum), call 1-800-541-7703.

26 - SCUDDER GLOBAL FUND
<PAGE>

How to Contact Scudder

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

Visit the Scudder World Wide Web Site at:

http://funds.scudder.com

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 Treasurers Trust(TM), an
institutional cash management service for corporations,
non-profit organizations and trusts which utilizes certain
portfolios of Scudder Fund, Inc.* ($100,000 minimum), call:
1-800-541-7703.

For information on Scudder Institutional Funds*, funds designed
to meet the broad investment management and service needs of
banks and other institutions, call:
1-800-854-8525.

Scudder Investor 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.

27 - SCUDDER GLOBAL FUND
<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 40 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.

This information must be preceded or accompanied by a current prospectus.

Portfolio changes should not be considered recommendations for action by
individual investors.
<PAGE>
Scudder
International
Bond Fund

Annual Report
June 30, 1996

o For investors seeking an easy and low-cost way to broaden their
income-oriented investments beyond U.S. borders. Invests primarily in high-grade
bonds denominated in foreign currencies.

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

This information must be preceded or accompanied by a current prospectus.

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

<PAGE>

SCUDDER INTERNATIONAL BOND FUND

CONTENTS

2 In Brief

3 Letter from the Fund's Chairman

4 Performance Update

5 Portfolio Summary

6 Portfolio Management Discussion

9 Investment Portfolio

13 Financial Statements

16 Financial Highlights

17 Notes to Financial Statements

25 Report of Independent Accountants

29 Officers and Directors

30 Investment Products and Services

31 How to Contact Scudder

IN BRIEF

o International bond market performance was mixed during the year, with most
markets moving higher during the first two quarters and retreating in the
second half. The Fund's 2.59% total return for the 12 months ended June 30,
1996, stands in contrast to a dollar-based negative 1.70% for non-U.S.
markets overall, as measured by the unmanaged Salomon Brothers Non-U.S.
Dollar World Government Bond Index.

BAR CHART TITLE:
Investment Returns
(for the year ended June 30, 1996)

BAR CHART DATA:
- -------------------------------------------------------------------------------
Scudder International Bond Fund 2.59%
- -------------------------------------------------------------------------------
Salomon Brothers Non-U.S. Dollar World Government Bond Index -1.70%
- -------------------------------------------------------------------------------
Bond Market returns in U.S. dollars

o Stronger growth in the United States, combined with German and Japanese
central bank activity, led to a rise in the U.S. dollar versus other
currencies, which suppressed international bond returns for U.S.
investors.

o In response to stronger economic activity in core markets and renewed
investor interest in high-yielding and emerging markets, Scudder
International Bond Fund shifted portfolio assets during the period to
emphasize some of Europe's peripheral markets while de-emphasizing Japan.

2
<PAGE>

LETTER FROM THE FUND'S CHAIRMAN

Dear Shareholders,

For the fiscal year ended June 30, 1996, Scudder International Bond
Fund provided a total return of 2.59%. Bond prices in such key markets as
Germany and Japan were stymied by strong economic growth and the accompanying
threat of inflation. At the same time, performance gains throughout the world
were muted by a steady rise in the U.S. dollar. While lackluster in absolute
terms, the Fund's performance outpaced that of its benchmark index, the
unmanaged Salomon Brothers Non-U.S. Dollar World Government Bond Index, which
declined 1.70% during the period.

Despite the results of the past 12 months, the growth of the foreign
bond marketplace has been one of the more exciting facets of investing in the
1990s. The top-performing bond market has been outside the United States each of
the last 10 years, reinforcing the idea that fixed-income investors can benefit
by investing a portion of their portfolio overseas. Moreover, since foreign
markets do not necessarily move in tandem with those in the United States,
international diversification can lend a degree of stability to an otherwise
purely U.S. portfolio. We believe Scudder International Bond Fund remains an
effective vehicle for fixed-income investors seeking to harness the income and
appreciation potential of foreign bonds along with the risk-reducing benefits of
global diversification.

Finally, in this era of electronic information we have taken a look at
our short-form quarterly reports, which you generally receive two or more weeks
after the end of your fund's first and third fiscal quarters. Going forward, in
lieu of these printed reports, portfolio information will be made available on a
more timely basis -- each month, in most cases -- through Scudder's Web site,
Scudder's automated information line (SAIL), and by calling a Scudder Investor
Relations representative.

If you have questions about your fund or your investments, please
contact a Scudder Investor Relations representative at 1-800-225-2470. Page 31
provides more information on how to contact Scudder. Thank you for choosing
Scudder International Bond Fund to help meet your investment needs.

Sincerely,
/S/Daniel Pierce
Daniel Pierce
Chairman,
Scudder International Bond Fund

3
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
PERFORMANCE UPDATE as of June 30, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER INTERNATIONAL BOND FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,259 2.59% 2.59%
5 Year $14,913 49.13% 8.32%
Life of
Fund* $20,581 105.81 % 9.46%

SALOMON BROTHERS NON-U.S. DOLLAR
WORLD GOVERNMENT BOND INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $ 9,830 -1.70% -1.70%
5 Year $18,444 84.44% 13.01%
Life of
Fund* $21,360 113.60% 10.06%

*The Fund commenced operations on July 6, 1988.
Index comparisons begin July 31, 1988.

A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:

YEARLY PERIODS ENDED JUNE 30

Scudder Gold Fund
Year Amount
- ----------------------
7/88 $10,000
'89 $10,216
'90 $12,013
'91 $13,800
'92 $17,699
'93 $19,866
'94 $19,304
'95 $20,062
'96 $20,581

S&P 500 Index
Year Amount
- ----------------------
7/88 $10,000
'89 $ 9,831
'90 $10,544
'91 $11,581
'92 $14,741
'93 $16,176
'94 $17,707
'95 $21,729
'96 $21,360

The unmanaged Salomon Brothers Non-U.S. Dollar World Government Bond Index
consists of worldwide fixed-rate government bonds with remaining maturities
greater than one year. Index returns assume reinvestment of dividends, and
unlike Fund returns, do not reflect any fees or expenses.

- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------

A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.

YEARLY PERIODS ENDED JUNE 30

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989* 1990 1991 1992 1993 1994 1995 1996
--------------------------------------------------------------
NET ASSET VALUE... $11.27 $12.08 $12.35 $13.68 $13.57 $11.97 $11.43 $10.98
INCOME DIVIDENDS.. $ 1.00 $ 1.09 $ 1.21 $ 1.09 $ 1.04 $ .91 $ .98 $ .73
CAPITAL GAINS
DISTRIBUTIONS..... $ - $ - $ .29 $ .81 $ .62 $ .39 $ - $ -
FUND TOTAL
RETURN (%)........ 2.16 17.59 14.88 28.25 12.24 -2.83 3.92 2.59
INDEX TOTAL
RETURN (%)........ -1.69 7.25 9.84 27.29 9.74 9.46 22.71 -1.70
</TABLE>

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

4
<PAGE>

PORTFOLIO SUMMARY as of June 30, 1996
- ---------------------------------------------------------------------------
MARKET EXPOSURE
- ---------------------------------------------------------------------------
Geographical

Germany 22.6%
Italy 10.9%
United Kingdom 9.3%
Spain 7.8%
Japan 6.9%
Canada 6.5%
New Zealand 5.9%
Sweden 5.8%
Australia 5.4%
Denmark 5.4%
Austria 4.9%
Belgium 3.2%
United States 2.9%
Supranational Agencies 2.5%
------
100.0%
======

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

Geographical

Germany 22.6%
Japan 17.5%
Italy 10.9%
United Kingdom 9.3%
Spain 7.8%
Canada 6.5%
New Zealand 5.9%
Sweden 5.8%
Australia 5.4%
Denmark 5.4%
United States 2.9%
------
100.0%
======

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

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

CURRENCY EXPOSURE (a)
Australia 4.0% Netherlands -1.9%
Canada 6.5% New Zealand 5.3%
Denmark 5.4% Spain 7.8%
Germany 25.6% Sweden 2.6%
Italy 10.9% United Kingdom 4.2%
Japan 19.8% United States 9.8%
------
100.0%
======

(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 INTERNATIONAL BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION

Dear Shareholders,

Despite continuing evidence of low inflation around the globe, bond
investors watched and reacted nervously to data confirming stronger economic
growth, particularly in Japan and Germany. As a result, bond returns hampered
further by an appreciating U.S. dollar were modest. Scudder International Bond
Fund posted a total return of 2.59% for the twelve months ended June 30, 1996,
outpacing the unmanaged Salmon Brothers Non-U.S. Dollar World Government Bond
Index, which declined 1.70%. The Fund's 30-day net annualized SEC was 5.30% at
the end of the period. Shareholders received a total of $0.73 per share in
distributions for the 12-month period.

Shift Toward Higher-Yielding Markets, Away From Japan

Two key events influenced world bond market performance during the
year. First, after a prolonged recession in Japan and months of economic malaise
in Germany, the two countries are experiencing stronger economic activity. Both
the Bundesbank and the Bank of Japan have walked a fine line of fostering
sustainable long-term growth while containing inflation. While neither had
raised interest rates by June 30, prospects of higher growth rates and inflation
have alarmed bond investors. Both markets posted negative returns in dollar
terms during the period, with Japan declining a dramatic 21.13%. The change in
market sentiment, both abroad and in the United States, prompted us to reduce
interest rate exposure for the portfolio as a whole.

A second factor contributing to bond market performance this year has
been the push by investors to trade in their relatively lower-yielding bonds
from Japan, the United States, and Germany in favor of higher-yielding bonds in
select European countries and the emerging markets. European markets were helped
by an improving fiscal situation in Sweden and, in the case of Italy and Spain,
recent political elections. In such emerging markets as Indonesia, Thailand, and
the Philippines, the allure of yields often twice that of their western
counterparts sparked investor interest and helped attract foreign capital. In
many developing countries, the need for capital to fund business investment and
infrastructure development has prompted governments to compete for foreign
investors through high-yielding government debt. Generally, these bonds become
more attractive as local economies improve, since governments are better able to
meet their obligations -- a fact that explains why emerging bond markets often
outperform developed markets during periods of economic expansion.

6
<PAGE>

PORTFOLIO MANAGEMENT DISCUSSION

Not surprisingly, the Fund's positive performance can be explained
largely by an emphasis on Europe's smaller, higher-yielding markets (Italy,
Spain, and Sweden), an underweighting in Japan, and exposure to select emerging
markets. Clearly, any exposure to the Japanese market hindered returns this
year. The fact that the index's exposure was greater than the Fund's in part
explains the fund's outperformance. The Fund's emerging market holdings
performed nicely well into the third quarter despite a sharp price decline in
the Fund's South African holding. After several positive months, in which
emerging market holdings peaked near 10% of the portfolio, we eliminated the
Fund's positions. At this point, currency trends and volatile cash flows suggest
that the relative risks outweigh any performance potential.

Continued Strength In Dollar Undercuts Gains Overseas

After declining several years against the yen and other currencies, the
U.S. dollar exhibited strength throughout the year. Central to this turnaround
has been a concerted effort on the part of the Japanese and German central
bankers to deflate their currencies and thereby improve the competitiveness of
local exporters. The stronger U.S. dollar had the effect this year of
diminishing positive returns and magnifying losses, particularly in Japan, which
returned almost 2% in yen terms but -21% when converted to U.S. dollars.

The Fund's exposure to foreign currencies was approximately 90% on June
30, an increase from 80% mid-year. While the Fund's currency selection helped
returns relative to the index, the decreased exposure to the U.S. dollar hurt
absolute returns during this period of dollar strength. Although the fund
remained underweight in yen throughout the period, the impact of that currency's
decline has been particularly disappointing. The portfolio's exposure had
climbed as high as 20% on our belief that stronger economic growth in Japan
would ultimately increase demand for the yen, driving up its value. While the
yen's continued weakness could be a reason to increase the fund's position, we
will remain underweight in anticipation of further gains in the U.S. dollar in
the short term.

Current Course: Underweight Japan In Favor Of European and Dollar Block Markets

In the months ahead, we expect European government bonds will continue to
comprise the lion's share of portfolio assets (70% as of June 30). The Fund's
strategy will emphasize higher-yielding, peripheral markets such as Sweden,

7
<PAGE>

Spain, and Italy and de-emphasize core markets, particularly France and the
Benelux countries. We plan to maintain the portfolio's currency and
interest-rate exposure in Europe. We expect to continue building exposure to
dollar-bloc countries which, despite some gains, are relatively undervalued in
our opinion. Japanese holdings will remain light for the foreseeable future. Our
decision to eliminate emerging market debt during the last quarter will be
sustained into the new fiscal year as we work to improve the Fund's credit
quality and bolster core holdings. Our research suggests that risk premiums in
these high-yielding but less-established market economies are too low to justify
the added risk.

Importantly, inflation has shown scant sign of reemergence. In this
environment, and after the markets have adequately digested economic growth, we
look forward to a period that we believe will be marked by more attractive total
returns.

Sincerely,

Your Portfolio Management Team

/s/Adam M. Greshin /s/Margaret D. Hadzima
Adam M. Greshin Margaret D. Hadzima

Scudder International
Bond Fund:
A Team Approach to Investing

Scudder International Bond Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. We believe our
team approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.

Lead Portfolio Manager Adam M. Greshin assumed responsibility for the Fund's
day-to-day management and investment strategies in March 1995. Mr. Greshin, who
specializes in global and international bond investments, was involved in the
original design of Scudder International Bond Fund and has been a portfolio
manager of the Fund since its inception in 1988. Portfolio Manager Margaret D.
Hadzima is Chairman of Scudder's Global Bond Strategy Committee and Director of
Global Bond Research. Ms. Hadzima, who joined Scudder in 1973 and the team in
1995, plays an active role in setting the Fund's overall bond strategy.

8
<PAGE>

INVESTMENT PORTFOLIO as of June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- ---------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------
96.8% FOREIGN DENOMINATED DEBT OBLIGATIONS
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUSTRALIAN DOLLARS 5.4% AUD 18,150,000 Commonwealth of Australia, 12%, 11/15/01 ... 16,349,781
16,315,000 Commonwealth of Australia, 6.75%, 11/15/06 . 11,053,412
-----------
27,403,193
-----------
BRITISH POUNDS 9.3% GBP 11,250,000 Abbey National Treasury Corp., 6%, 8/10/99 . 16,920,360
4,700,000 Barclays Bank PLC, 6.5%, 2/16/04 ........... 6,622,010
2,020,000 United Kingdom Treasury Bond, 8%, 12/7/00 .. 3,231,215
3,180,000 United Kingdom Treasury Bond, 7%, 11/6/01 .. 4,856,878
4,250,000 United Kingdom Treasury Bond, 9.75%, 8/27/02 7,309,717
5,350,000 United Kingdom Treasury Bond, 8%, 6/7/21 ... 8,124,441
-----------
47,064,621
-----------

CANADIAN DOLLARS 6.5% CAD 7,750,000 Government of Canada, 7.5%, 3/1/01 ......... 5,797,799
23,005,000 Government of Canada, 6.5%, 6/1/04 ......... 15,864,436
7,830,000 Government of Canada, 7%, 12/1/06 .......... 5,460,249
2,050,000 Government of Canada, 8%, 6/1/23 ........... 1,484,843
5,650,000 Rogers Cantel Ltd., 10.5%, 6/1/06 .......... 4,121,367
-----------
32,728,694
-----------

DANISH KRONER 5.4% DKK 18,000,000 Kingdom of Denmark, 8%, 5/15/03 ............ 3,251,494
52,000,000 Kingdom of Denmark, 7%, 12/15/04 ........... 8,778,680
86,100,000 Kingdom of Denmark, 8%, 3/15/06 ............ 15,253,885
-----------
27,284,059
-----------

DEUTSCHEMARKS 22.5% DEM 20,660,000 Bayerische Landesbank, 6%, 2/27/06 ......... 12,884,119
31,480,000 DEPFA Bank, 4.5%, 4/2/98 ................... 20,780,125
25,930,000 Federal Republic of Germany, 6.625%, 1/20/98 17,666,051
21,920,000 Federal Republic of Germany, 5.25%, 10/20/98 14,665,108
71,570,000 Federal Republic of Germany, 6.25%, 1/4/24 . 41,543,141
10,000,000 Westdeutsche Landesbank, 3%, 4/15/98 ....... 6,432,438
-----------
113,970,982
-----------

ITALIAN LIRE 10.9% ITL 15,000,000,000 Republic of Italy, 8.5%, 8/1/97 ............ 9,770,898
18,300,000,000 Republic of Italy, 10.5%, 7/15/98 .......... 12,398,794
37,400,000,000 Republic of Italy, 8.5%, 8/1/99 ............ 24,427,922
2,000,000,000 Republic of Italy, 10.5%, 4/1/00 ........... 1,380,218
10,000,000,000 Republic of Italy, 10.5%, 9/1/05 ........... 7,023,627
-----------
55,001,459
-----------

JAPANESE YEN 17.5% JPY 1,835,000,000 Export-Import Bank of Japan, 4.375%,10/1/03 18,216,180
538,000,000 International Bank for Reconstruction &
Development, 5.25%, 3/20/02 .............. 5,605,597
</TABLE>

The accompanying notes are an integral part of the financial statements.
----
9

<PAGE>

SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
700,400,000 International Bank for Reconstruction &
Development, 4.75%, 12/20/04 ........ 7,200,010
1,500,000,000 Japan Development Bank, 6.5%, 9/20/01 . 16,381,039
1,450,000,000 Kingdom of Belgium, 6.875%, 7/9/01 .... 16,000,228
2,250,000,000 Republic of Austria, 6.25%, 10/16/03 .. 24,889,471
-----------
88,292,525
-----------

NEW ZEALAND
DOLLARS 5.8% NZD 16,700,000 Government of New Zealand, 10%, 7/15/97 11,503,618
10,270,000 Government of New Zealand, 8%, 4/15/04 6,706,572
17,500,000 Government of New Zealand, 8%, 11/15/06 11,402,728
-----------
29,612,918
-----------

SPANISH PESETAS 7.7% ESP 1,600,000,000 Kingdom of Spain, 11.45%, 8/30/98 ..... 13,436,381
1,300,000,000 Kingdom of Spain, 10.3%, 6/15/02 ...... 11,023,513
1,500,000,000 Kingdom of Spain, 8%, 5/30/04 ......... 11,260,675
400,000,000 Kingdom of Spain, 10.15%, 1/31/06 ..... 3,375,317
-----------
39,095,886
-----------
SWEDISH KRONOR 5.8% SEK 48,300,000 Kingdom of Sweden, 11%, 1/21/99 ....... 8,005,963
162,000,000 Kingdom of Sweden, 6%, 2/9/05 ......... 21,219,001
-----------
29,224,964
-----------
TOTAL FOREIGN DENOMINATED DEBT ........
(Cost $493,530,670) ................... 489,679,301
-----------
----------------------------------------------------------------------------
2.9% U.S. DOLLAR DENOMINATED DEBT OBLIGATIONS
----------------------------------------------------------------------------

US DOLLARS USD 13,196,609 Ford Motor Credit Co. Commercial Paper,
5.63%, 7/1/96 ....................... 13,196,609
1,000,000 U.S. Treasury Bill, 5.02%, 9/19/96 .... 988,760
300,000 U.S. Treasury Bill, 5.07%, 10/17/96 ... 295,392
-----------
TOTAL U.S. DOLLAR DENOMINATED DEBT ....
(Cost $14,480,879) .................. 14,480,761
-----------
TOTAL INVESTMENTS (Cost $508,011,549) . 504,160,062
-----------
----------------------------------------------------------------------------
0.3% PURCHASED OPTIONS
----------------------------------------------------------------------------

GBP 12,950,000 Put on British Pounds, strike price GBP
2.342, expiration date 7/9/96 ....... 12,473
DEM 49,765,388 Put on Deutschemarks, strike price
DEM 1.5525, expiration date 8/30/96 . 158,503
DEM 64,524,226 Put on Deutschemarks, strike price
DEM 1.5293, expiration date 7/3/96 .. 70,038
DEM 58,309,076 Put on Deutschemarks, strike price
DEM 1.5245, expiration date 7/1/96 .. 55,743
</TABLE>
The accompanying notes are an integral part of the financial statements.

----
10

<PAGE>
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Value ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEM 58,309,076 Put on Deutschemarks, strike price
DEM 1.55, expiration date 7/1/96 ............ 2,915
SEK 131,462,000 Put on Swedish Kronor versus Deutschemarks,
strike price SEK 4.4521, expiration date
7/18/96 ..................................... 14,119
NZD 44,500,000 Put on New Zealand Dollars, strike price
NZD .663, expiration date 7/15/96 ........... 851

Number
of contracts
------------

JPY 110 Put on Japanese 10-year Government Bond,
strike price JPY 118, expiration date
8/30/96 ..................................... 391,067
USD 450 Call on U.S. Treasury Bond Futures, strike
price USD 110, expiration date 8/28/96 ...... 675,000
-----------
TOTAL PURCHASED OPTIONS (Cost $3,614,903) ..... 1,380,709
-----------
============================================================================================================

TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $511,626,452) (a) ..................... 505,540,771
===========

<FN>
(a) The cost for federal income tax purposes was $513,642,708. At June 30, 1996, net
unrealized depreciation for all securities based on tax cost was $8,101,937. This
consisted of aggregate gross unrealized appreciation for all securities in which
there was an excess of market value over tax cost of $6,452,780 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax cost
over market value of $14,554,717.

</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.

----
11

<PAGE>

SCUDDER INTERNATIONAL BOND FUND
- -------------------------------------------------------------
<TABLE>
- -------------------------------------------------------------
----------------------------------------------
WRITTEN OPTIONS
----------------------------------------------

At June 30, 1996, outstanding written options were as follows (Note A):
<CAPTION>
Principal
Amount Expiration Market
Call Options (000's) Date Strike Price Value ($)
- ------------ ----------------------------------------------
<S> <C> <C> <C> <C>
GBP ....... 12,950 7/9/96 GBP 2.362 68,168
AUD ....... 20,794 7/15/96 AUD .7913 46,024
SEK vs DEM 131,462 7/18/96 SEK 4.405 225,326

Put Options
- ------------
DEM ....... 58,309 7/1/96 DEM 1.5245 87,463
DEM ....... 64,524 7/3/96 DEM 1.5293 64,847

Number of
Call Option Contracts
- ------------ ---------
LIFFE BUND
Future .... 220 7/24/96 USD 95 331,988
-------
Total outstanding written options
(Premiums received $1,308,789) .............. 823,816
=======
<FN>
CURRENCY ABBREVIATIONS
- -----------------------------------------------------------
AUD Australian Dollar ITL Italian Lira
GBP British Pound JPY Japanese Yen
CAD Canadian Dollar NZD New Zealand Dollar
DKK Danish Kroner ESP Spanish Peseta
DEM Deutschemark SEK Swedish Krona
NLG Dutch Guilders USD United States Dollar
FRF French Franc

</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.

----
12

<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
- -------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------------
<CAPTION>
JUNE 30, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $508,011,549) (Note A) ... $504,160,062
Purchased options, at market (identified cost $3,614,903) (Note A) 1,380,709
Foreign currency at market (identified cost $596,840) (Note A) ... 601,272
Receivables:
Investments sold .............................................. 142,822,905
Interest ...................................................... 13,865,431
Fund shares sold .............................................. 212,459
Unrealized appreciation on forward currency exchange
contracts (Notes A & D) ....................................... 232,521
------------
Total assets ............................................ 663,275,359

LIABILITIES
Payables:
Investments purchased ......................................... $142,009,372
Fund shares redeemed .......................................... 1,561,865
Dividends ..................................................... 1,010,075
Accrued management fee (Note C) ............................... 375,484
Other accrued expenses (Note C) ............................... 350,654
Written options at market (premiums received $1,308,789)
(Note A) ................................................ 823,816
Net payable on closed forward currency exchange contracts
(Note A) ...................................................... 166,156
Unrealized depreciation on forward currency exchange
contracts (Notes A & D) ....................................... 1,403,571
Daily variation margin on futures contracts (Note A) ............. 132,028
Total liabilities ....................................... ------------ 147,833,021
------------
Net assets, at market value ...................................... $515,442,338
============
NET ASSETS
Net assets consist of:
Net unrealized depreciation on:
Investments ............................................ $ (3,851,487)
Options ................................................ (1,749,221)
Foreign currency related transactions .................. (1,129,288)
Accumulated net realized loss ................................ (86,247,772)
Capital stock ................................................ 469,228
Additional paid-in capital ................................... 607,950,878
------------
Net assets, at market value ...................................... $515,442,338
NET ASSET VALUE, offering and redemption price per share ============
($515,442,338 [divided by] 46,922,766 shares of capital stock
outstanding, $.01 par value, 200,000,000 shares of capital
stock authorized) ............................................ $ 10.98
============
</TABLE>

The accompanying notes are an integral part of the finacial statements.

----
13

<PAGE>

SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
- -------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED JUNE 30, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest (net of withholding taxes of $932,505) .................. $56,125,689

Expenses:
Management fee (Note C) .......................................... $ 6,133,574
Services to shareholders (Note C) ................................ 1,432,640
Custodian and accounting fees (Note C) ........................... 957,371
Directors' fees (Note C) ......................................... 51,129
Reports to shareholders .......................................... 235,066
Auditing ......................................................... 111,085
Legal ............................................................ 18,375
State and Federal registration ................................... 34,220
Other ............................................................ 148,791 9,122,251
---------------------------
Net investment income ............................................ 47,003,438
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments .................................................. 23,157,219
Options ...................................................... 3,556,191
Futures contracts ............................................ (20,364,037)
Foreign currency related transactions ........................ (18,571,467) (12,222,094)
-----------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................. (23,387,651)
Options ...................................................... 4,549,305
Foreign currency related transactions ........................ 4,157,634 (14,680,712)
---------------------------
Net loss on investment transactions .............................. (26,902,806)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. $20,100,632
===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

----
14

<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
- ---------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED JUNE 30,
-----------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .......................................... $ 47,003,438 $ 92,566,481
Net realized loss from investment transactions ................. (12,222,094) (189,123,181)
Net unrealized appreciation (depreciation) on investment
transactions during the period .............................. (14,680,712) 130,714,791
------------ --------------
Net increase in net assets resulting from operations ........... 20,100,632 34,158,091
------------ --------------

Distributions to shareholders:
From net investment income ($.12 per share for
June 30, 1996) ........................................... (7,878,363) --
------------ --------------
Tax return of capital ($.61 and $.98 per share, respectively) (39,125,075) (92,566,481)
------------ --------------
Fund share transactions:
Proceeds from shares sold ...................................... 81,445,370 318,060,128
Net asset value of shares issued to shareholders
in reinvestment of distributions ............................ 39,214,810 72,680,706
Cost of shares redeemed ........................................ (487,822,648) (653,886,791)
------------ --------------
Net decrease in net assets from Fund share transactions ........ (367,162,468) (263,145,957)
------------ --------------
DECREASE IN NET ASSETS ......................................... (394,065,274) (321,554,347)

Net assets at beginning of period .............................. 909,507,612 1,231,061,959
------------ --------------
Net assets at end of period .................................... $515,442,338 $ 909,507,612
============ ==============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ...................... 79,574,801 102,881,085
------------ --------------
Shares sold .................................................... 7,198,026 27,314,845
Shares issued to shareholders in reinvestment of distributions . 3,472,904 6,274,380
Shares redeemed ................................................ (43,322,965) (56,895,509)
------------ --------------
Net decrease in Fund shares .................................... (32,652,035) (23,306,284)
------------ --------------
Shares outstanding at end of period ............................ 46,922,766 79,574,801
============ ==============
</TABLE>

The accompanying notes are an integral part of the finacial statements.

----
15

<PAGE>
SCUDDER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD AND OTHER PERFORMANCE INFORMATION
DERIVED FROM THE FINANCIAL STATEMENTS.
<CAPTION>
FOR THE PERIOD
JULY 6, 1988
(COMMENCEMENT
YEARS ENDED JUNE 30, OF OPERATIONS)
--------------------------------------------------------------------- TO JUNE 30,
1996 1995 1994(b) 1993 1992 1991 1990 1989
--------------------------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $11.43 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27 $12.00
------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (a) ............. .73 .98 .92 1.03 1.08 1.21 1.10 1.00
Net realized and unrealized gain (loss)
on investment transactions (c) ....... (.45) (.54) (1.22) .52 2.15 .56 .80 (.73)
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations ......... .28 .44 (.30) 1.55 3.23 1.77 1.90 .27
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
From net investment income ........... (.12) -- (.91) (1.04) (1.09) (1.21) (1.09) (1.00)
From net realized gains on investment
transactions ....................... -- -- -- (.62) (.81) (.29) -- --
In excess of net realized gains on
investment transactions ............ -- -- (.39) -- -- -- -- --
Tax return of capital ................ (.61) (.98) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions ...................... (.73) (.98) (1.30) (1.66) (1.90) (1.50) (1.09) (1.00)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period ........... $10.98 $11.43 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) ......................... 2.59 3.92 (2.83) 12.24 28.25 14.88 17.59 2.16**

<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

A. SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------

Scudder International Bond Fund (the "Fund") is a non-diversified series of
Scudder Global Fund, Inc., a Maryland corporation registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's financial statements are prepared in accordance with
generally accepted accounting principles which require the use of management
estimates. The policies described below are followed consistently by the Fund in
the preparation of its financial statements.

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 securities and
currencies primarily as a hedge against potential adverse price movements in the
value of portfolio assets. In addition, during the period, the Fund purchased
call options and wrote put options on securities and currencies to lock in the
exchange rate component of the purchase price of securities expected to be
purchased in the near future and to enhance potential gain.

If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial

----
17

<PAGE>

SCUDDER INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------

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 may not correlate exactly with changes in the value of the
securities or currencies hedged.

FUTURES CONTRACTS. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased interest rate futures to manage the duration of the portfolio. In
addition, the Fund sold

----
18

<PAGE>

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

interest rate futures to hedge against declines in the value of portfolio
securities.

Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the 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.

FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:

(i) market value of investment securities, other assets and liabilities at
the daily rates of exchange, and

(ii) purchases and sales of investment securities, interest income and
certain expenses at the rates of exchange prevailing on the respective
dates of such transactions.

Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement

----
19

<PAGE>

SCUDDER INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------

dates on securities transactions, gains and losses arising from the sales of
foreign currency, and gains and losses between the accrual and payment dates on
interest and foreign withholding taxes.

Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.

FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
companies, and to distribute all of its taxable income to its shareholders.
Accordingly, the Fund paid no federal income taxes, and no federal income tax
provision was required. At June 30, 1996, the Fund had a net tax basis capital
loss carryforward of approximately $83,774,000, which may be applied against any
realized net taxable capital gains of each succeeding year until fully utilized
or until June 30, 2003, ($77,681,000) and June 30, 2004 ($6,093,000), 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. Distributions of net realized gains to
shareholders are recorded on the ex-dividend date.

The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences relate primarily to investments in options, futures, forward
contracts, foreign denominated investments and certain securities sold at a
loss. As a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.

The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.

OTHER. Investment security transactions are accounted for on a trade date basis.
Interest income is recorded on the accrual basis. All discounts are accreted
for both tax and financial reporting purposes.

B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------

For the year ended June 30, 1996, purchases and sales of investment securities
(excluding short-term investments) aggregated $1,836,443,347, and
$2,181,122,628, respectively.

The aggregate face value of futures contracts opened and closed during the
year ended June 30, 1996 was $10,848,857,635, respectively.

----
21

<PAGE>

SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------

<TABLE>
Transactions in written options for the year ended June 30, 1996 are summarized
as follows:

-------------------------------------------------------------------------
OPTION CONTRACTS OPTIONS ON CURRENCIES (000 OMITTED)
--------------------- ------------------------------------------------
NUMBER OF PREMIUMS PREMIUMS
CONTRACTS RECEIVED ($) DEM ITL AUD RECEIVED ($)
--------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period -- $ -- 51,803 -- -- $ 415,203
Written ........... 1,127 1,640,909 709,846 271,771,945 37,044 9,440,228
Closed ............ (907) (1,470,544) (351,695) (99,650,000) (16,250) (4,788,886)
Exercised ......... -- -- (181,803) (172,121,945) -- (3,482,658)
Expired ........... -- -- (105,318) -- -- (693,508)
----- ----------- -------- ------------ ------- -----------
End of Period ..... 220 $ 170,365 122,833 -- 20,794 $ 890,379
----- ----------- -------- ------------ ------- -----------
===== =========== ======== ============ ======= ===========
-------------------------------------------------------------------------
<CAPTION>

-------------------------------------------------------------
OPTIONS ON CURRENCIES (000 OMITTED) (CONTINUED)
-------------------------------------------------------------
PREMIUMS
GBP FRF JPY SEK RECEIVED ($)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning of Period 11,773 241,600 2,219,500 273,521 $ 1,645,040
Written ........... 43,178 -- 29,748,468 1,621,300 7,155,642
Closed ............ (15,114) -- (26,173,934) (1,019,753) (5,926,196)
Exercised ......... (26,887) -- (5,794,034) (743,606) (2,189,870)
Expired ........... -- (241,600) -- -- (436,571)
------- -------- ----------- ---------- -----------
End of Period ..... 12,950 -- -- 131,462 $ 248,045
======= ======== =========== ========== ===========
--------------------------------------------------------------
</TABLE>

----
22

<PAGE>

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Management Agreement") with
Scudder, Stevens & Clark, Inc. (the "Adviser") the Adviser directs the
investments of the Fund in accordance with its investment objective, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Management Agreement. The
Management 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
management fee payable under the Management Agreement is equal to an annual rate
of 0.85% on the first $1,000,000,000 of average daily net assets and 0.80% of
such net assets in excess of $1,000,000,000, computed and accrued daily and
payable monthly. For the year ended June 30, 1996, the fee pursuant to the
Management Agreement amounted to $6,133,574, which is equivalent to an annual
effective rate of .85% of the Fund's average daily net assets.

Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended June 30, 1996, the amount charged by SSC aggregated $948,215, of
which $63,421 is unpaid at June 30, 1996.

Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended June 30, 1996,
the amount charged to the Fund by STC aggregated $99,670, of which $15,163 is
unpaid at June 30, 1996

Effective August 3, 1995, Scudder Fund Accounting Corporation ("SFAC"), a
subsidiary of the Adviser, assumed responsibility for determining the daily net
asset value per share and maintaining the portfolio and general accounting
records of the Fund. For the year ended June 30, 1996, the amount charged to the
Fund by SFAC aggregated $464,475, of which $68,430 is unpaid at June 30, 1996.

----
23

<PAGE>

SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------

D. COMMITMENTS
- --------------------------------------------------------------------------------
<TABLE>

As of June 30, 1996, the Fund had entered into the following forward currency
exchange contracts resulting in net unrealized depreciation of ($1,171,050).
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (U.S.$)
- -------------------- -------------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
DEM 5,004,056 USD 3,285,658 8/26/96 (8,577)
DKK 43,904,995 JPY 780,497,779 7/9/96 (356,583)
GBP 7,239,404 USD 11,231,936 8/5/96 (7,595)
ITL 14,806,020,636 USD 9,432,016 7/10/96 (210,538)
JPY 1,166,982,948 USD 10,797,000 9/12/96 48,371
JPY 809,564,203 DKK 43,904,995 7/9/96 91,352
JPY 370,302,328 NLG 5,823,554 7/9/96 31,291
JPY 635,680,000 NLG 10,000,000 7/9/96 55,466
NLG 32,500,000 JPY 1,998,847,500 7/9/96 (792,664)
USD 9,636,513 ITL 14,806,020,636 7/10/96 6,041
USD 10,770,692 JPY 1,166,982,948 9/12/96 (22,063)
USD 2,709,839 JPY 293,605,607 9/12/96 (5,551)
----------
(1,171,050)
==========
</TABLE>

E. Lines of Credit
- --------------------------------------------------------------------------------
The Fund and several affiliated Funds ("The Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.

----
24

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE DIRECTORS OF SCUDDER GLOBAL FUND, INC. AND TO THE SHAREHOLDERS OF SCUDDER
INTERNATIONAL BOND FUND:

We have audited the accompanying statement of assets and liabilities of Scudder
International Bond Fund including the investment portfolio, as of June 30, 1996,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years then ended, and the financial
highlights for each of the seven years in the period then ended and for the
period July 6, 1988 (commencement of operations) to June 30, 1989. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder International Bond Fund as of June 30, 1996, the results of its
operations for the year then ended, the changes in net assets for each of the
two years then ended, and the financial highlights for each of the seven years
in the period then ended and for the period July 6, 1988 (commencement of
operations) to June 30, 1989, in conformity with generally accepted accounting
principles.

Boston, Massachusetts COOPERS & LYBRAND L.L.P.
August 20, 1996

----
25
<PAGE>

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26
<PAGE>

(This page intentionally left blank.)

27
<PAGE>

(This page intentionally left blank.)

28
<PAGE>

OFFICERS AND DIRECTORS

Daniel Pierce*
Chairman of the Board, Director and Vice President

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; Consultant

Dudley H. Ladd*
Director

William H. Luers
Director; President, The Metropolitan Museum of Art

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 M. Greshin*
Vice President

Jerard K. Hartman*
Vice President

Thomas W. Joseph*
Vice President

David S. Lee*
Vice President and Assistant Treasurer

Thomas F. McDonough*
Vice President and Secretary

Pamela A. McGrath*
Vice President and Treasurer

Gerald J. Moran*
Vice President

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

Juris Padegs*
Vice President and Assistant Secretary

Kathryn L. Quirk*
Vice President and Assistant Secretary

Isabel Saltzman*
Vice President

Cornelia M. Small*
Vice President

Coleen Downs Dinneen*
Assistant Secretary

*Scudder, Stevens & Clark, Inc.

29
<PAGE>

INVESTMENT PRODUCTS AND SERVICES

<TABLE>
<CAPTION>
<S> <C> <C>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------

Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder Global Bond Fund
Tax Free Money Market+ Scudder GNMA Fund
Scudder Tax Free Money Fund Scudder High Yield Bond Fund
Scudder California Tax Free Money Fund* Scudder Income Fund
Scudder New York Tax Free Money Fund* Scudder International Bond Fund
Tax Free+ Scudder Short Term Bond Fund
Scudder California Tax Free Fund* Scudder Zero Coupon 2000 Fund
Scudder High Yield Tax Free Fund Growth
Scudder Limited Term Tax Free Fund Scudder Capital Growth Fund
Scudder Managed Municipal Bonds Scudder Development Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Emerging Markets Growth Fund
Scudder Massachusetts Tax Free Fund* Scudder Global Fund
Scudder Medium Term Tax Free Fund Scudder Global Discovery Fund
Scudder New York Tax Free Fund* Scudder Gold Fund
Scudder Ohio Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Pennsylvania Tax Free Fund* Scudder International Fund
Growth and Income Scudder Latin America Fund
Scudder Balanced Fund Scudder Micro Cap Fund
Scudder Growth and Income Fund Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value 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>
<CAPTION>
Account Service and Information
-------------------------------------------------------------------------------------------------------------

<S> <C>

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

Visit the Scudder World Wide Web Site at:
-------------------------------------------------------------------------------------------------------------

http://funds.scudder.com

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>

31
<PAGE>

Celebrating Over 75 Years of Serving Investors