Scudder
Global
Discovery Fund
Semiannual Report
April 30, 1996
formerly Scudder Global Small Company Fund
o For investors seeking above-average capital appreciation over the long term by
investing primarily in the equity securities of small companies located
throughout the world.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
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 GLOBAL DISCOVERY FUND
CONTENTS
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
11 Investment Portfolio
19 Financial Statements
22 Financial Highlights
23 Notes to Financial Statements
29 Report of Independent
Accountants
30 Investment Products
and Services
31 How to Contact
Scudder
IN BRIEF
o Scudder Global Discovery Fund provided a total return of 16.77% for the six
months ended April 30, 1996, comparing favorably to both the 13.37% return
of the unmanaged MSCI World Index and the return of 15.72% for the average
of the 23 global small company funds tracked by Lipper Analytical Services.
o For the 12 months ended April 30, the Fund's return of 33.71% exceeded by a
significant margin the returns for both the MSCI World Index and the Lipper
average, which were 18.71% and 29.66%, respectively.
o Japanese stocks rebounded after being in the doldrums for most of 1995. In
addition, the first four months of 1996 were marked by renewed enthusiasm
worldwide for smaller companies.
o International markets appear favorably valued versus the U.S. market over
the near term, and nearly two-thirds of the Fund is currently invested
overseas.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
Dear Shareholders,
We are pleased to present this semiannual report for Scudder Global
Discovery Fund, covering the six months ended April 30, 1996. For the period,
Global Discovery Fund provided a strong total return of 16.77%, well above the
return for the average global small company fund tracked by Lipper Analytical
Services. The Fund's total return of 33.71% for the 12 months through the end of
April is also gratifying to report.
Investor interest in the stocks of smaller companies -- the principal
focus of Global Discovery Fund -- has experienced an upsurge in 1996. Moreover,
most major overseas markets are responding to early signs of strengthening
economic growth. Japanese stocks in particular have staged a rally in recent
months, driven in part by more favorable currency levels. While U.S. stock
prices have been on the rise for most of the past year and a half, they have
recently shown signs of becoming more volatile. Investors have been responding
daily to uncertain and even conflicting indicators of where the United States is
in its economic cycle. While a modest correction would not be unusual after such
an extended period of gains, the long-term outlook for investors here and around
the world remains positive. Global Discovery Fund will continue to search world
markets for those individual companies positioned to experience earnings growth.
We would like to take this opportunity to note a recent addition to our
family of funds: Scudder Emerging Markets Growth Fund. The Fund, which became
available to investors on May 8, seeks to provide long-term growth of capital by
investing primarily in the stock markets of such developing regions as the
Pacific Rim, Latin America and Eastern Europe. For more information on Scudder
Emerging Markets Growth Fund and other Scudder products and services, please see
page 30.
Thank you for your continued confidence and investment in Scudder Global
Discovery Fund. Please do not hesitate to contact us at 1-800-225-2470 with any
questions about your account.
Sincerely,
/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder Global Discovery Fund
3
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
PERFORMANCE UPDATE as of April 30, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER GLOBAL DISCOVERY FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $13,371 33.71% 33.71%
Life of
Fund* $17,793 77.93% 13.22%
MSCI WORLD INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $11,871 18.71% 18.71%
Life of
Fund* $16,338 63.38% 11.31%
*The Fund commenced operations on
September 10, 1991. Index comparisons
begin September 30, 1991.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Scudder Global Discovery Fund
Year Amount
- ----------------------
9/91* $10,000
10/91 $ 9,770
4/92 $10,107
10/92 $ 9,894
4/93 $11,558
10/93 $13,459
4/94 $13,496
10/94 $13,837
4/95 $13,090
10/95 $14,988
4/96 $17,502
MSCI World Index
Year Amount
- ----------------------
9/91* $10,000
10/91 $10,159
4/92 $ 9,696
10/92 $ 9,628
4/93 $11,213
10/93 $12,228
4/94 $12,542
10/94 $13,163
4/95 $13,763
10/95 $14,412
4/96 $16,338
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 taxes 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 APRIL 30
1992* 1993 1994 1995 1996
---------------------------------------
NET ASSET VALUE... $12.31 $13.86 $15.87 $15.31 $19.74
INCOME DIVIDENDS.. $ .02 $ .07 $ .18 $ -- $ .20
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ .12 $ .15 $ .08 $ .44
FUND TOTAL
RETURN (%)....... 2.76 14.35 16.77 -3.01 33.71
INDEX TOTAL
RETURN (%)........ -3.04 15.66 11.86 9.74 18.71
On March 6, 1996, the Fund adopted its current name. Prior to that date,
the Fund was known as the Scudder Global Small Company Fund.
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 maintained the Fund's expenses, the average annual
total return for the one year and life of Fund periods would have been lower.
4
<PAGE>
PORTFOLIO SUMMARY as of April 30, 1996
- ---------------------------------------------------------------------------
GEOGRAPHICAL (Excludes 9% Cash Equivalents)
- ---------------------------------------------------------------------------
U.S. & Canada 35%
Europe 36% Almost two-thirds of the
Japan 17% portfolio is invested outside
Pacific Basin 8% of the United States.
Latin America 4%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS (Excludes 9% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 17%
Health 13%
Technology 11%
Service Industries 10% The Fund's approach is to
Consumer Staples 9% focus on individual stock
Consumer Discretionary 9% selection rather than
Manufacturing 7% attempt to make sector
Energy 6% bets.
Durables 5%
Other 13%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
- --------------------------------------------------------------------------
1. ATMEL CORP.
U.S. developer and manufacturer of integrated circuits
2. STERLING SOFTWARE INC.
Computer software products in the U.S.
3. SHOHKOH FUND & CO. LTD.
Finance company for small and medium-sized firms in Japan
4. IHC CALAND N.V.
Dredging and offshore services in the Netherlands
5. JAPAN ASSOCIATED FINANCE CO.
Venture capital company
6. BANK OF IRELAND PLC
Bank
7. HBO & COMPANY
U.S. designer of computerized information systems to the healthcare
industry
8. SERCO GROUP PLC
Facilities management company in the United Kingdom
9. JERONIMO MARTINS
Food producer and retailer in Portugal
10. MILLICOM INTERNATIONAL CELLULAR SA
Developer and operator of cellular telephone networks i Luxembourg
The portfolio's core includes market leaders with strong balance sheets
and capable managements.
- -----------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 11.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Scudder Global Discovery Fund provided a total return of 16.77% for the six
months ended April 30, 1996, comparing favorably with both the 13.37% return of
the unmanaged MSCI World Index and the return of 15.72% for the average of the
23 global small company funds tracked by Lipper Analytical Services. Fund
performance was especially strong in the most recent fiscal quarter, when the
total return was 11.27% versus 4.62% for the Index and 11.03% for the Lipper
average. Results are impressive when viewed from the perspective of the 12
months ended April 30: the Fund's return of 33.71% exceeded by a significant
margin the returns for both the MSCI World Index and the Lipper average, which
were 18.71% and 29.66%, respectively.
Market Sentiment Shifts Toward Smaller Stocks
Most major equity markets performed well over the last six months, with
Japanese stocks in particular rebounding after being in the doldrums for most of
1995. The overriding factor in Japan has been the success of government efforts
to weaken the yen. Record currency strength had hampered Japanese exporters and
placed a severe strain on the economy. In Europe, weak growth and high
unemployment have held sway. Economic activity has been muted by the struggle to
restrain government spending in preparation for European Monetary Union. U.S.
stocks, which have experienced an extended bull market, became more volatile in
March in response to conflicting signals about the direction of domestic growth
and inflation. Nevertheless, the market's overall tone during the period can be
described as optimism bordering on speculation.
When the period began, investor interest was principally focused on larger
capitalization stocks. Indeed, large cap outperformance was a nearly universal
phenomenon throughout 1995. By contrast, the first four months of 1996 have been
marked by enthusiasm for smaller companies. For example, in the U.S., the NASDAQ
Industrial Index was up 15.98% in the first four months of the year versus 6.92%
for the Standard and Poor's 500 Index.
6
<PAGE>
Focus on Individual Stock Selection
In managing the Fund, we are cognizant of broad macroeconomic trends
and political developments. Our approach, however, is "bottom up" in that its
starting point is the selection of individual stocks. Sometimes, we are able to
identify themes encompassing the activities of a number of companies. It has
been our intention from the inception of the Fund to emphasize superior
companies (rather than countries) and to let their earnings growth drive
portfolio returns. In selecting a company as a core holding for the portfolio,
we look for such key attributes as a leadership position with respect to its
target market, a solid balance sheet, and capable management. Having identified
a company as fundamentally strong, we are willing to take a long-term view of
its stock price performance if necessary.
A number of individual holdings displayed outstanding performance over the
period. The table below lists the top ten positive contributors to Fund
performance, in order of percentage impact (which is dependent both on a stock's
performance and its weighting within the portfolio).
Top Ten Positive Contributors to Fund Performance
(10/31/95 - 4/30/96)
Price
Company Country Increase Business
- ------- ------- -------- --------
Sterling Software United States 68% software
Fresenius Germany 114 kidney dialysis
HBO & Co. United States 66 hospital info. systems
Atmel United States 29 semiconductor mfg.
BE Aerospace United States 97 airplane refurbishing
Jeronimo Martins Portugal 60 food distribution
Grupo Casa Autrey Mexico 74 drug and food distribution
Millicom Luxembourg 36 cellular phone service
IHC Caland Netherlands 48 marine services
Shohkoh Fund Japan 82 specialty finance
7
<PAGE>
These companies are, by and large, leaders in rapidly expanding market
niches. Of these stocks, seven are currently among the Fund's top 10 holdings.
All but two were owned by the Fund a year ago, illustrating our buy-and-hold,
low-turnover approach for the companies with strong fundamentals that make up
the core of the portfolio. While this approach relies on earnings growth rather
than rising price-earnings ratios, over the period, the market placed a higher
valuation on earnings for nine of the 10 listed stocks.
Leadership in Growing Markets Key to Approach
A review of some of these strong performers over the period helps
demonstrate our emphasis in stock selection on both the competitive position of
a company and the prospects for expansion of its chosen niche. For example, our
analysis directed us to focus two years ago on a poorly understood portion of
Sterling Software's business which was growing at an annual rate of over thirty
percent with higher margins than any of Sterling's other divisions. At the time
of purchase in May of 1994, we anticipated that this division would drive
corporate earnings growth and margins to new highs. While electronic commerce is
still in its infancy, the division had already established a leadership position
among major U.S. corporations. Management's decision in December 1995, to spin
off the division to shareholders forced the marketplace to recognize the
potential of the new company, Sterling Commerce, as well as that of the parent
company, which currently holds an 84% stake.
As the preceding table indicates, the acknowledgment by the market of
Fresenius during the period was especially gratifying. This German provider of
dialysis products and care is known for the quality and reliability of its
products. The demand for dialysis is increasing by about 8-9% per year due
primarily to aging populations in the developed world. Like many areas of
healthcare, the dialysis care industry is undergoing consolidation. With the
announcement in February of its acquisition of the National Medical Care Unit of
W.R. Grace, the largest provider of dialysis care in the U.S., Fresenius
signaled to the investing world a new aggressiveness on a global scale. The new
company will be the world's largest supplier of dialysis products, with 624
centers worldwide.
Atmel, currently the largest holding in the portfolio, demonstrates our
philosophy of maintaining our commitment to companies that have strong
fundamentals. Despite the nose-dive experienced by virtually all technology
stocks (particularly
8
<PAGE>
semiconductor stocks) in the last half of 1995, this company has a
leadership position in many product areas, including the fast growing flash
memory segment, and is not overly dependent on commodity business lines. Many of
Atmel's products are produced for the communications industry, where growth
continues to soar. The company is still relatively small as measured by revenues
($250 million), and the stock has been trading at approximately the same
earnings multiple as the overall stock market. Moreover, relative to many
technology stocks, Atmel is not broadly followed by brokerage analysts. As the
market capitalization of the stock now exceeds $3.7 billion, the stock can no
longer be considered "small" and is therefore subject to trimming as we look for
the Atmels of tomorrow.
Other strong contributors include HBO & Co., which provides healthcare
information systems to more than 2700 hospitals, focusing on large hospitals,
where it has an estimated 50% share of market. The company and its entire
industry are beneficiaries of the need for hospitals to have better information
regarding costs if they are to survive in today's competitive climate. Another
holding, U.S.-based BE Aerospace, has become the world's largest supplier of
commercial aircraft cabin interiors, serving virtually all major airlines, and
stands to capitalize on an improved industry environment.
Turning abroad, Jeronimo Martins of Portugal and Mexico's Grupo Casa Autrey
have leadership positions in the distribution of food, drugs, and other basic
necessities within their respective developing markets. Luxembourg-based
Millicom, on the other hand, demonstrates the increasing irrelevance of
corporate domicile for many businesses. Its headquarters is in the heart of
Europe but the bulk of its cellular phone business is in "pre-emerging"
countries such as Cambodia. IHC Caland (Netherlands) is a global leader in the
manufacture of specialized marine equipment. The development and upgrading of
ports worldwide to handle growing trade has created a strong market for its
dredging vessels, while increased offshore loading and transportation from
offshore wells of natural resources has heightened demand for the company's
moorings and floating production systems. Finally, Shohkoh Fund is a Japanese
specialty finance company focusing on making small loans (average size of
$38,000) to small businesses. Shohkoh has recognized the opportunity to maintain
close contact with a market that the larger Japanese banks, distracted by their
fiscal woes, cannot serve well.
9
<PAGE>
Outlook: Overseas Markets May Outperform
While weak economies and falling interest rates were the primary catalyst
for market activity overseas in 1995 and into this year, sentiment abroad has
generally shifted towards stronger economic growth. Moreover, most international
bourses have received a boost from corporate restructuring activity, favorable
currency levels, and/or increased clarity on the political front. We have not
changed our country allocations substantially, although we have added select
holdings in Japan, where we have been taking a sharper look at possible
opportunities in view of a seemingly improved investment climate. Japanese
holdings, at 17% of portfolio assets, remain somewhat underweight versus the
MSCI World Index. In Europe, we will continue to limit exposure to companies
that are sensitive to domestic economies in those countries grappling with the
fiscal requirements for monetary union.
Over the past few years, the contribution to Fund performance from
companies headquartered in the U.S. has exceeded that of overseas domiciles by a
wide margin, despite the fact that U.S. companies have at all times represented
less than 40% of the holdings. This is partly because of the extraordinary
strength of domestic technology companies in world markets (with about half of
their sales and earnings abroad). Going forward, international markets may
outperform the U.S. market over the near term, and we are comfortable with the
portfolio's nearly two-thirds allocation to "offshore" venues. As noted above,
however, the increasingly global nature of trade is diminishing the importance
of this distinction. All markets may be due for a rest fairly soon, as it is not
realistic to expect the level of returns we have been seeing to continue
uninterrupted.
Over the second half of the Fund's fiscal year, we will continue to seek
out small companies positioned to benefit from expanding markets anywhere in the
world. We believe that Scudder Global Discovery Fund remains an appropriate
vehicle for long-term investors seeking capital appreciation, and thank you for
your continued investment.
Sincerely,
Your Portfolio Management Team
/s/Gerald J. Moran /s/Elizabeth J. Allan
Gerald J. Moran Elizabeth J. Allan
/s/Sewall P. Hodges /s/Joan R. Gregory
Sewall P. Hodges Joan R. Gregory
10
<PAGE>
INVESTMENT PORTFOLIO as of April 30, 1996
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9.1% REPURCHASE AGREEMENT
27,551,000 Repurchase Agreement with Donaldson,
Lufkin & Jenrette dated 4/30/96 at 5.32%,
to be repurchased at $27,555,071 on 5/1/96,
collateralized by a $27,496,000 U.S. Treasury
Bill, 4/30/97 (Cost $27,551,000) ................ 27,551,000
----------
4.5% PREFERRED STOCKS
Shares
----------------------------------------------------------------------------
Germany 32,900 Fresenius AG (Manufacturer and distributor of
pharmaceutical and medical systems
products) ....................................... 5,092,779
24,500 Hornbach Holding AG (Supermarket chain
specializing in building materials and
gardening products) ............................. 1,568,205
3,800 Marschollek Lautenschlaeger und Partner AG
(Leading independent life insurance company) 3,834,623
24,900 SAP AG (Computer software manufacturer) ........... 3,306,339
----------
Total Preferred Stocks (Cost $4,682,239) .......... 13,801,946
----------
86.4% COMMON STOCKS
----------------------------------------------------------------------------
Argentina 1.0% 776,200 Dalmine Siderca (Steel producer) .................. 900,496
51,800 Quilmes Industrial S.A. (Leading beer
distributor) .................................... 621,600
125,900 Quilmes Industrial S.A.* (ADR) .................... 1,495,063
----------
3,017,159
----------
Australia 2.2% 673,807 Ampol Exploration Ltd.* (Oil and gas
exploration company) ............................ 2,302,788
241,882 Coca Cola Amatil Ltd. (Soft drink bottler and
distributor) .................................... 2,544,564
1,645,045 E.R.G. Australia Ltd. (Producer and installer
of electronic ticketing equipment, and
manufacturer of radio communication
equipment) ...................................... 1,964,494
----------
6,811,846
----------
Brazil 1.1% 222,000,000 Banco Bradesco S.A. (pfd.)
(Commercial bank) ............................... 2,506,325
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
21,400,000 Lojas Renner S.A. (pfd.) (Specialty retailer of
apparel, cosmetics, electronics, household
appliances and furniture) ....................... 765,788
----------
3,272,113
----------
Canada 0.3% 132,100 Reko International Group, Inc.* (Designer and
manufacturer of injection moulds and other
industrial tools) ............................... 281,384
30,000 Renaissance Energy Ltd.* (Exploration,
production and marketing of crude oil and
natural gas, operating in Alberta) .............. 792,170
----------
1,073,554
----------
Czech Republic 1.6% 171,100 Central European Media Enterprises Ltd. "A"*
(Owner and operator of national and regional
private commercial television stations in
central Europe and Germany) ..................... 4,897,738
----------
France 1.2% 14,100 Essilor International (Manufacturer of various
types of lenses, eyeglasses, contact lenses
and optical measuring instruments) .............. 3,567,066
----------
Hong Kong 0.3% 1,068,600 Jinhui Shipping and Transportation Ltd.
(Operator of cargo fleet of ships transporting
steel, iron ore, non-ferrous metals and
agricultural products) .......................... 1,015,170
---------
Indonesia 3.1% 616,000 Bakrie & Brothers (Manufacturer of industrial
steel products, steel pipes, corrugated sheet
iron, asbestos and fiber cements) ............... 1,004,851
32,000 Indonesia Satellite Corp. (ADR) (International
telecommunication services) ..................... 1,116,000
702,640 Kalbe Farma (Foreign registered)
(Pharmaceutical producer and distributor) ....... 2,035,982
100,000 Merck-Indonesia (Foreign registered)
(Pharmaceutical company) (b) .................... 558,060
238,000 Modern Photo Film Co. (Foreign registered)
(Photographic film distributor) ................. 1,174,930
677,500 Mustika Ratu* (Foreign registered) (Consumer
cosmetics producer) ............................. 1,396,008
373,000 Panin Bank (Foreign registered) (Bank) ............ 380,285
382,000 Sekar Bumi* (Foreign registered) (Producer of
frozen raw shrimp, prawns and fish) ............. 297,220
487,000 Steady Safe Transportation Service (Operator
of taxis and buses in Jakarta) .................. 726,476
51,743 Unilever-Indonesia (Foreign registered)
(Consumer products manufacturer) ................ 832,952
----------
9,522,764
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ireland 3.2% 850,468 Bank of Ireland PLC (Bank) ........................ 6,142,214
133,305 Irish Continental Group PLC (Transport of
passengers, freight and containers between
Ireland, the U.K. and the continent) ............ 1,120,442
640,750 Irish Life PLC (Provider of life and disability
insurance and pensions) ......................... 2,483,345
----------
9,746,001
----------
Italy 3.0% 47,600 De Rigo SpA* (ADR) (Manufacturer and
distributor of sunglasses and prescription
eyeglass frames) ................................ 1,463,700
77,000 Gucci Group* (New York Shares) (Designer
and producer of personal luxury accessories
and apparel) .................................... 4,186,875
32,300 Luxottica Group SpA (ADR) (Manufacturer and
marketer of eyeglasses) ......................... 2,600,150
445,300 Merloni Elettrodomestici SpA (Manufacturer of a
variety of household appliances, sold throughout
western Europe) ................................. 972,625
----------
9,223,350
----------
Japan 15.1% 122,000 Bandai Co., Ltd. (Leading toy manufacturer) ....... 5,003,394
38,500 FCC Co., Ltd. (Manufacturer of motorcycle and
automobile clutches) ............................ 1,435,400
25,000 Fast Retailing Co., Ltd. (Operator of casual
clothes retail chain) ........................... 1,003,776
57,200 Genki Sushi Co., Ltd. (North Kanto-based
fast-food sushi chain) .......................... 1,126,447
51,000 Japan Associated Finance Co. (Venture capital
company) ........................................ 6,338,129
110,000 Maeda Road Construction Co., Ltd.
(Major road paver) .............................. 2,019,024
63,000 Nichiei Co., Ltd. (Finance company for small-
and medium-sized firms) ......................... 4,215,860
129,000 Nippon Electric Glass Co., Ltd. (Leading
producer of cathode-ray tube glass) ............. 2,404,761
30,500 Riso Kagaku Corp. (Manufacturer of copying
machines) ....................................... 2,589,169
86,400 Rock Field Co., Ltd. (Major delicatessen
food processor) ................................. 1,486,736
103,400 Royal Ltd. (Wholesaler and retailer of automobile
equipment and parts) ............................ 3,538,760
114,000 ShinMaywa Industries, Ltd. (Leading maker of
dump trucks and other specialty vehicles) ....... 1,111,610
28,000 Shohkoh Fund & Co., Ltd. (Finance company
for small and medium-sized firms) ............... 7,307,490
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
44,000 Square Co., Ltd. (Producer of software for video
games) .......................................... 2,814,015
139,000 Takasago Thermal Engineering Co., Inc.
(Leading engineering firm, specializing
in air-conditioning) ............................ 2,538,024
19,200 Tsutsumi Jewelry Co., Ltd. (Manufacturer,
wholesaler and retailer of jewelry) ............. 961,790
----------
45,894,385
----------
Korea 0.3% 180 units Korea 1990 Trust IDR (Investment company) (c) ..... 1,035,000
----------
Luxembourg 1.8% 116,500 Millicom International Cellular SA (Developer
and operator of cellular telephone networks) .... 5,504,625
----------
Mexico 1.3% 166,600 Grupo Casa Autrey SA (ADR) (Consumer
specialty manufacturer) ......................... 3,810,975
----------
Netherlands 3.6% 183,300 Boskalis Westminster NV (International
contractor specializing in dredging activities) . 2,706,443
169,900 IHC Caland N.V. (Dredging and offshore
services) ....................................... 6,673,049
8,700 Telegraaf Holdings CVA (Newspaper publisher) ...... 1,553,662
----------
10,933,154
----------
Norway 0.9% 32,000 Netcom AS* (Mobile telecommunication
services) ....................................... 460,376
127,800 Unitor A/S (Provider of broad range of ship
services, leading supplier of marine chemicals) . 2,159,655
---------
2,620,031
----------
Peru 0.7% 956,000 Telefonica del Peru S.A. "B"
(Public and cellular telephone services) ........ 2,137,439
----------
Philippines 0.6% 28,100 C&P Homes, Inc. (Home construction
company) ........................................ 24,159
64,847 Keppel Philippines Shipyard "B"* (Shipbuilding
and repair) (b) ................................. 19,080
6,804 Kepphil Shipyard Inc.* (Shipbuilding and repair) .. 364
4,282,000 Republic Glass Holdings Corp.* (Maker of
glass products for passenger cars and light
commercial vehicles) ............................ 1,718,036
----------
1,761,639
----------
Poland 0.8% 33,800 Gorazdze Cement SA (Cement producer) .............. 1,086,224
3 Pioneer Poland Fund* (Closed-end investment
company) (b) (d) ................................ 1,442,347
----------
2,528,571
----------
Portugal 1.8% 68,760 Jeronimo Martins (Food producer and retailer) ..... 5,527,627
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Singapore 0.3% 400,000 GP Batteries International, Ltd. (Developer,
manufacturer and distributor of batteries
and battery-related products) ................... 988,000
100,000 GP Batteries International, Ltd. Warrants* ........ 73,000
----------
1,061,000
----------
Spain 0.4% 124,000 Uralita, SA (Processor of concrete pipes and
cement for the construction industry) ........... 1,218,075
----------
Sweden 1.6% 90,200 Autoliv AB (Free) (Manufacturer of safety
airbags for automobiles) ........................ 4,922,056
----------
Switzerland 1.5% 3,000 Phoenix Mecano AG (Bearer) (Manufacturer
of housings and components for computers) ....... 1,653,391
2,650 Schindler Holdings AG (PC) (Leading elevator
and escalator manufacturer) ..................... 2,899,670
2,650 Schindler Holdings AG Warrants*
(expire 12/16/96) ............................... 5,543
----------
4,558,604
----------
Thailand 0.2% 28,200 American Standard Sanitaryware (Foreign
registered) (Manufacturer of bathroom
fixtures) (b) ................................... 456,920
99 Bangkok Dusit Medical Services Co., Ltd.
(Health services) ............................... 129
----------
457,049
----------
United Kingdom 6.9% 180,300 Brake Brothers PLC (Specialist supplier of
frozen foods to the catering industry) .......... 1,941,973
325,700 Expro International Group PLC (Provider of
oilfield services) .............................. 1,812,817
903,300 Hambros Insurance Services Group PLC
(Insurance company) ............................. 1,250,127
886,000 Hardy Oil & Gas PLC (Oil and gas exploration
and development) ................................ 3,431,985
43,000 Harvey Nichols PLC* (Operator of high fashion
retail clothing outlet) ......................... 208,285
191,000 Millenium & Copthorne Hotels PLC*
(Hotel operator) ................................ 916,555
145,000 Orange PLC* (Operator of digital mobile
telephone network) .............................. 519,134
2,000 Planning Sciences Int.* (ADR) (Business software) 48,250
703,700 Serco Group PLC (Facilities management
company) ........................................ 5,557,524
574,100 Tibbett and Britten Group PLC (Transportation
services for manufacturing and retail
industries) ..................................... 5,224,893
----------
20,911,543
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States 31.6% 50,000 Alaska Air Group Inc.* (Scheduled and charter
airline services) ............................... 1,268,750
20,000 Ansoft Corp.* (Developer and supporter of
electronic design automation software) .......... 142,500
250,000 Atmel Corp. (Developer and manufacturer of
integrated circuits) ............................ 10,000,000
2,000 Axent Technologies, Inc.* (Developer and
supporter of information security systems) ...... 36,000
253,500 BE Aerospace* (Airline audio/video control
systems) ........................................ 3,897,562
90,600 Bell & Howell Holdings Co.* (Information access
and dissemination services) ..................... 2,853,900
200,000 Benton Oil & Gas Co.* (Oil and gas exploration,
development and production) ..................... 3,500,000
100,000 CapMAC Holdings Inc. (Provider of financial
guaranty insurance) ............................. 2,912,500
45,000 Cintas Corp. (Uniform rentals) .................... 2,418,750
90,900 ContiFinancial Corp.* (Provider of financing for a
broad range of loans) ........................... 2,897,438
56,250 Corestaff, Inc. (Provider of temporary and
contract personnel) ............................. 2,179,688
80,000 CytoTherapeutics, Inc.* (Developer of
therapeutic products for treatment of certain
chronic and disabling diseases) ................. 1,180,000
120,800 Enron Global Power & Pipelines L.L.C.
(Owner and manager of power plants and a
natural gas pipeline system) .................... 2,989,800
142,000 First Colony Corp. (Holding company which
sells individual life insurance and annuity
products throughout the U.S.) ................... 3,656,500
120,775 Fiserv Inc. (Data processing services) 3,683,638
118,000 Fresenius USA, Inc.* (Manufacturer and
distributor of medical products for
treatment of kidney failure) .................... 2,360,000
47,000 HBO & Company (Designer of computerized
information systems to the healthcare industry) . 5,581,250
1,000 Heartport, Inc.* (Developer of minimally invasive
heart surgery systems and procedures) ........... 35,750
313,300 IGEN Inc.* (Producer of medical supplies) ......... 1,527,338
59,700 Liposome Co., Inc.* (Developer of lipid and
liposome-based pharmaceuticals) ................. 1,462,650
46,700 Lydall, Inc.* (Engineered fiber materials) ........ 1,097,450
96,300 M.S. Carriers Inc.* (Truckload carrier of general
freight) ........................................ 1,835,719
53,000 Matrix Pharmaceutical, Inc.* (Developer of
site-specific treatments for cancer and serious
skin diseases) .................................. 1,378,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
17,900 Nordson Corp. (Industrial application equipment) .. 1,082,950
87,300 OccuSystems Inc.* (Provider of primary care
physician and case management services) ......... 2,531,700
2,500 Outdoor Systems, Inc.* (Outdoor advertising
company) ........................................ 57,500
100,000 PHAMIS, Inc.* (Developer and installer of
patient-centered healthcare information
systems) ........................................ 1,475,000
5,000 Planet Hollywood International, Inc. "A"*
(Restaurant chain) .............................. 126,875
22,300 R.P. Scherer Corp.* (Manufacturer of drug delivery
system) ......................................... 880,850
170,000 Raytel Medical Corp.* (Provider of healthcare
services) ....................................... 1,912,500
50,000 Ribozyme Pharmaceuticals, Inc.* (Developer of
human therapeutics) ............................. 718,750
167,000 Rohr Industries Inc.* (Manufacturer of jet engine
assemblies) ..................................... 3,047,750
145,500 Silicon Valley Group Inc.* (Manufacturer of
equipment for semiconductor industry) ........... 3,892,125
7,500 Sterling Commerce, Inc.* (Producer of electronic
data interchange products and services) ......... 262,500
119,700 Sterling Software Inc.* (Computer software
products) ....................................... 9,306,675
80,800 Stillwater Mining Co.* (Exploration and
development of mines in Montana producing
platinum, palladium and associated metals) ...... 1,939,200
1,500 Sykes Enterprises, Inc. (Producer of information
technology services) ............................ 53,250
120,962 Thomas Nelson, Inc. (Publisher) ................... 1,648,108
50,000 Tiffany & Co. (Retailer of jewelry and gift items). 3,262,500
8,000 Transition Systems, Inc.* (Provider of integrated
clinical and financial decision support systems). 194,000
8,500 Trimedyne Inc. Warrants* (expire 12/9/96) (b) ..... 17,340
101,850 Vivra, Inc.* (Provider of dialysis services) ...... 3,221,006
91,200 Wandel & Goltermann Technologies, Inc.*
(Manufacturer of test, measurement, diagnostic
and monitoring products for local and wide area
networks) ....................................... 1,527,600
-----------
96,053,362
-----------
Total Common Stocks (Cost $201,462,799) ........... 263,081,896
-----------
- -----------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0%
(Cost $233,696,038) (a) ......................... 304,434,842
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $235,797,615. At April 30,
1996, net unrealized appreciation for all securities based on tax cost was
$68,637,227. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $79,262,260 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$10,625,033.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors. The cost of these securities at April 30, 1996 aggregated
$2,579,100. See Note A of the Notes to Financial Statements.
(c) 1,000 shares = 1 IDR unit for Korea 1990 Trust.
(d) Market value and cost reflect full payment. The remaining installments
which total $1,108,125 will be payable upon thirty days prior notice from
Pioneering Management Limited.
* Non-income producing security. Sector breakdown of the Fund's equity
securities is noted on page 5.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $233,696,038)
(Note A) .......................................... $ 304,434,842
Cash .................................................. 246
Foreign currency holdings, at market
(identified cost $12,291) (Note A) ................ 12,325
Unrealized appreciation on forward currency
exchange contracts (Notes A and D) ................ 1,244
Other receivables:
Investments sold .................................. 1,357,693
Fund shares sold .................................. 695,382
Dividends and interest ............................ 470,075
Foreign taxes recoverable ......................... 37,979
Deferred organization expenses (Note A) ............... 3,681
-----------
Total assets ................................... 307,013,467
LIABILITIES
Payables:
Investments purchased ............................. $ 2,507,841
Fund shares redeemed .............................. 329,256
Accrued management fee (Note C) ................... 259,926
Other accrued expenses (Note C) ................... 185,473
Unrealized depreciation on forward currency
exchange contracts (Notes A and D) ................ 463,955
------------
Total liabilities .............................. 3,746,451
-------------
Net assets, at market value ........................... $ 303,267,016
=============
NET ASSETS
Net assets consist of:
Accumulated net investment loss ................... $ (830,804)
Unrealized appreciation (depreciation) on:
Investments .................................... 70,738,804
Foreign currency related transactions .......... (467,035)
Accumulated net realized gain ..................... 8,328,163
Capital stock ..................................... 153,637
Additional paid-in capital ........................ 225,344,251
-------------
Net assets, at market value ........................... $ 303,267,016
=============
Net asset value, offering and redemption price per
share ($303,267,01615,363,670 shares
of capital stock outstanding, $.01 par value,
100,000,000 shares authorized) .................... $19.74
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld of $97,810) .. $ 917,956
Interest .............................................. 627,228
---------
1,545,184
Expenses:
Management fee (Note C) ............................... $ 1,426,042
Services to shareholders (Note C) ..................... 345,344
Custodian and accounting fees (Note C) ................ 190,239
Directors' fees and expenses (Note C) ................. 22,205
Reports to shareholders ............................... 72,347
Auditing .............................................. 38,495
Legal ................................................. 8,065
Registration expense .................................. 19,098
Amortization of organization expense (Note A) ......... 5,169
Other ................................................. 18,760 2,145,764
----------- ------------
Net investment loss ................................... (600,580)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments ....................................... 11,099,379
Foreign currency related transactions ............. (642,427) 10,456,952
-----------
Net unrealized appreciation (depreciation)
during the period on:
Investments ....................................... 32,775,682
Foreign currency related transactions ............. (679,476) 32,096,206
Net gain on investment transactions ................... 42,553,158
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .. $ 41,952,578
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
Six Months
Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets 1996 1995
- --------------------------------------------------------------------------------
Operations:
Net investment loss ........................... $ (600,580) $ (292,576)
Net realized gain from investment
transactions .............................. 10,456,952 8,877,150
Net unrealized appreciation on investment
transactions during the period ............ 32,096,206 8,320,983
------------ ------------
Net increase in net assets resulting from
operations ................................ 41,952,578 16,905,557
------------ ------------
Distributions to shareholders from:
Net investment income ($.20 per share) .... (2,817,790) --
------------ ------------
Net realized gains ($.44 and $.08
per share, respectively) .................. (6,128,748) (1,236,433)
------------ ------------
Fund share transactions:
Proceeds from shares sold ..................... 60,307,872 77,102,527
Net asset value of shares issued to
shareholders in reinvestment of
distributions ............................. 8,373,036 1,187,647
Cost of shares redeemed ....................... (53,508,574) (94,864,766)
------------ ------------
Net increase (decrease) in net assets from
Fund share transactions ................... 15,172,334 (16,574,592)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS ............. 48,178,374 (905,468)
Net assets at beginning of period ............. 255,088,642 255,994,110
------------ ------------
NET ASSETS AT END OF PERIOD (including
accumulated net investment loss of
$830,804 and undistributed net investment
income of $2,587,566, respectively) ....... $303,267,016 $255,088,642
============ ============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ..... 14,547,124 15,734,564
------------ ------------
Shares sold ................................... 3,354,215 4,678,309
Shares issued to shareholders in
reinvestment of distributions ............. 487,939 79,071
Shares redeemed ............................... (3,025,608) (5,944,820)
------------ ------------
Net increase (decrease) in Fund shares ........ 816,546 (1,187,440)
------------ ------------
Shares outstanding at end of period ........... 15,363,670 14,547,124
============ ============
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
September 10, 1991
Six Months (commencement
Ended Years Ended October 31, of operations)
April 30, --------------------------------------------- to October 31,
1996 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .............. $ 17.54 $ 16.27 $ 16.14 $ 12.05 $ 11.92 $ 12.00
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (a) ................ (.03) (.03) (.02) .04 .07 .01
Net realized and unrealized gain (loss)
on investment transactions ................... 2.87 1.38 .48 4.24 .08 (.09)
-------- -------- -------- -------- -------- --------
Total from investment operations .................. 2.84 1.35 .46 4.28 .15 (.08)
-------- -------- -------- -------- -------- --------
Less distributions:
From net investment income ...................... (.20) -- -- (.07) (.02) --
In excess of net investment income .............. -- -- (.18) -- -- --
From net realized gains on
investment transactions ....................... (.44) (.08) (.15) (.12) -- --
-------- -------- -------- -------- -------- --------
Total distributions ............................... (.64) (.08) (.33) (.19) (.02) --
-------- -------- -------- -------- -------- --------
Net asset value, end of period .................... $ 19.74 $ 17.54 $ 16.27 $ 16.14 $ 12.05 $ 11.92
======== ======== ======== ======== ======== ========
TOTAL RETURN (%) .................................. 16.77* 8.32 2.80 36.04 1.26 (.67)*
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ( $millions) ............ 303 255 256 198 55 9
Ratio of operating expenses net, to
average daily net assets (%) (a) ................ 1.65** 1.69 1.70 1.50 1.50 1.50**
Ratio of net investment income (loss) to
average daily net assets (%) .................... (.46)** (.12) (.28) .53 .78 2.47**
Portfolio turnover rate (%) ....................... 72.2** 43.7 45.8 54.6 23.4 --
Average commission rate paid (b) .................. $ .0016 $ -- $ -- $ -- $ -- $ --
<FN>
(a) Reflects a per share amount of expenses,
exclusive of management fees,
reimbursed by the Adviser of ............ $ -- $ -- $ -- $ -- $ -- $ .06
Reflects a per share amount of
management fee not imposed by
the Adviser of .......................... $ -- $ -- $ .01 $ .04 $ .09 $ .01
Operating expense ratio before
expense reductions (%) .................. -- -- 1.76 2.01 2.53 15.34**
(b) Average commission rate paid per share of portfolio securities is
calculated for fiscal years beginning on or after September 1, 1995.
* Not annualized
** Annualized
</FN>
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
A. Significant Accounting Policies
- --------------------------------------------------------------------------------
Scudder Global Discovery Fund (the "Fund") is a diversified series of Scudder
Global Fund, Inc., a Maryland corporation registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The 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 $2,493,747 (0.82% of net assets) and have been noted in the
investment portfolio as of April 30, 1996.
23
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
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.
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
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
changes in exchange rates relating to foreign currency denominated assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
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.
25
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
Accordingly, the Fund may periodically make reclassifications among certain of
its capital accounts without impacting the net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
ORGANIZATION COSTS. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are being
amortized on a straight-line basis over a five-year period.
OTHER. Investment security transactions are accounted for on a trade-date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. Purchases and Sales of Securities
- --------------------------------------------------------------------------------
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended April 30, 1996 aggregated $99,373,453 and $87,290,197,
respectively.
C. Related Parties
- --------------------------------------------------------------------------------
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund has agreed to pay to the Adviser
a fee equal to an annual rate of 1.10% of the Fund's average daily net assets,
computed and accrued daily and payable monthly. As manager of the assets of the
Fund, the Adviser directs the investments of the Fund in accordance with its
investment objectives, policies, and restrictions. The Adviser determines the
securities, instruments, and other contracts relating to investments to be
purchased, sold or entered into by the Fund. In addition to portfolio management
services, the Adviser provides certain administrative services in accordance
with the Agreement. The Agreement provides that if the Fund's expenses,
exclusive of taxes, interest, and extraordinary expenses, exceed specified
limits, such excess, up to the amount of the management fee, will be paid by the
Adviser. For the six months ended April 30, 1996, the fee pursuant to the
Agreement amounted to $1,426,042.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 $246,842 charged to the Fund by SSC during the
six months ended April 30, 1996, of which $42,029 is unpaid at April 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 six months ended April 30,
1996, the amount charged to the Fund by STC aggregated $42,578, of which $7,415
is unpaid at April 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 six months
ended April 30, 1996, the amount charged to the Fund by SFAC aggregated $87,373,
of which $14,830 is unpaid at April 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 six
months ended April 30, 1996, Directors' fees and expenses aggregated $22,205.
D. Commitments
- --------------------------------------------------------------------------------
As of April 30, 1996, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$462,711.
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
- --------------------------- ------------------------ ---------- ---------------
Japanese Yen 193,000,000 U.S. Dollars 1,863,384 7/8/96 1,244
Japanese Yen 1,378,437,500 U.S. Dollars 13,015,244 10/16/96 (463,955)
---------
(462,711)
=========
27
<PAGE>
SCUDDER GLOBAL DISCOVERY FUND
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.
28
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Scudder Global Fund, Inc. and to the Shareholders
of Scudder Global Discovery Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Global Discovery Fund (formerly Scudder Global Small Company Fund) including the
investment portfolio, as of April 30, 1996, and the related statement of
operations for the six months then ended, the statements of changes in net
assets for the six months then ended and for the year ended October 31, 1995,
and the financial highlights for the six months ended April 30, 1996, for each
of the four years in the period ended October 31, 1995, and for the period
September 10, 1991 (commencement of operations) to October 31, 1991. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
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 Discovery Fund as of April 30, 1996, the results of its
operations for the six months then ended, the changes in net assets for the six
months then ended and for the year ended October 31, 1995, and the financial
highlights for the six months ended April 30, 1996, for each of the four years
in the period ended October 31, 1995, and for the period September 10, 1991
(commencement of operations) to October 31, 1991 in conformity with generally
accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
June 21, 1996
29
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PRODUCTS AND SERVICES
<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 Income Fund
Scudder California Tax Free Money Fund* Scudder International Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Bond Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Emerging Markets Growth Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Fund
Scudder Massachusetts Tax Free Fund* Scudder Global Discovery Fund
Scudder Medium Term Tax Free Fund Scudder Gold Fund
Scudder New York Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Ohio Tax Free Fund* Scudder International Fund
Scudder Pennsylvania Tax Free Fund* Scudder Latin America Fund
Growth and Income Scudder Pacific Opportunities Fund
Scudder Balanced Fund Scudder Quality Growth Fund
Scudder Growth and Income 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>
<TABLE>
<CAPTION>
HOW TO CONTACT SCUDDER
<S> <C> <C>
Account Service and Information
- --------------------------------------------------------------------------------------------------------------
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your Scudder accounts;
exchanges and redemptions; or information on any Scudder fund
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
- --------------------------------------------------------------------------------------------------------------
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
- --------------------------------------------------------------------------------------------------------------
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
- --------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal,
one-on-one service of the Scudder Funds
Centers. Check for a Funds Center near
you--they can be found in the following
cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
- --------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
- --------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a prospectus
with more complete information, including management fees and expenses.
Please read it carefully before you invest or send money.
</TABLE>
31
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore
Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the
first independent investment counsel firm
in the United States. Since its birth,
Scudder's pioneering spirit and commitment
to professional long-term investment
management have helped shape the
investment industry. In 1928, we
introduced the nation's first no-load
mutual fund. Today we offer 38 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.
