This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder
Global Bond
Fund
Semiannual Report
April 30, 1996
o A fund designed 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.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER GLOBAL 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
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
26 Report of Independent Accountants
29 Officers and Directors
30 Investment Products and Services
31 How to Contact Scudder
IN BRIEF
o An uptick in economic growth in the United States ignited fears of
inflation in March and April. Expecting continued rate declines,
disappointed investors pushed bond prices lower in the U.S. and other
markets.
o The Fund anticipated the recent surge in economic growth and reduced the
portfolio's sensitivity to rising interest rates early in the period, which
helped limit price declines. However, a stronger-than-expected U.S. dollar
reduced returns on foreign bonds for U.S. investors and was a significant
contributor to the Fund's -1.63% total return. The Fund's benchmark index
returned -0.13% for the period.
o The Fund's 6.32% 30-day net annualized SEC yield as of April 30 reflects a
greater emphasis on higher-yielding bond markets around the world.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
Dear Shareholders,
These are uncertain times for bond investors. In the United States,
evidence of economic strength has pushed interest rates higher at a time when
inflation remains remarkably tame. Foreign markets, particularly Japan and the
core of Europe, have confounded investors by declining along with the United
States, even though their economic circumstances differ.
After last year's interest rate declines, some economic strength and
accompanying rise in rates were to be expected. Scudder Global Bond Fund
employed a somewhat cautious investment approach during the six-month period
covered by this report, seeking attractive total returns by emphasizing
higher-yielding bonds over those expected to appreciate in price. In fact, the
Fund's 6.32% 30-day net annualized SEC yield is among the highest in the Scudder
family of funds. As the global economic landscape becomes more settled, we
believe Scudder Global Bond Fund will continue to provide competitive total
return potential for investors seeking to complement a portfolio of domestic and
foreign stocks and bonds.
In closing, we would like to take this opportunity to announce that on
May 8, 1996, we introduced an exciting addition to the Scudder family of funds:
Scudder Emerging Markets Growth Fund. The Fund is designed to provide long-term
growth of capital by investing primarily in the Pacific Rim, Latin America,
Eastern Europe, and other developing regions of the world. For more information
about Scudder Emerging Markets Growth Fund and other Scudder products and
services, please see page 30.
As always, if you have any questions about Scudder Global Bond Fund or
your Scudder account, please do not hesitate to call a Scudder Investor
Relations representative at 1-800-225-2470. Thank you for your continued
interest in Scudder Global Bond Fund.
Sincerely,
/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder Global Bond Fund
3
<PAGE>
SCUDDER GLOBAL BOND
PERFORMANCE UPDATE as of April 30, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER GLOBAL BOND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,367 3.67% 3.67%
5 Year $12,642 26.42% 4.80%
Life of
Fund* $12,747 27.47% 4.81%
SALOMON BROTHERS WORLD GOVERNMENT
BOND INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,297 2.97% 2.97%
5 Year $16,429 64.29% 10.43%
Life of
Fund* $16,682 66.82% 10.58%
SALOMON BROTHERS CURRENCY-HEDGED
WORLD GOVERNMENT BOND INDEX (1-3 YEARS)
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,854 8.54% 8.54%
5 Year $13,733 37.33% 6.54%
Life of
Fund* $13,836 38.36% 6.60%
*The Fund commenced operations on
March 1, 1991. Index comparisons
begin March 31, 1991.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
YEARLY PERIODS ENDED APRIL 30
Scudder Global Bond Fund
Year Amount
- ----------------------
3/91* $10,000
'91 $10,072
'92 $11,087
'93 $11,859
'94 $12,169
'95 $12,282
'96 $12,733
Salomon Brothers World Government Bond Index
Year Amount
- ----------------------
3/91* $10,000
'91 $10,194
'92 $11,409
'93 $13,305
'94 $14,207
'95 $16,201
'96 $16,682
Salomon Brothers Currency-Hedged World
Government Bond Index (1-3 years)
Year Amount
- ----------------------
3/91* $10,000
'91 $10,075
'92 $10,896
'93 $11,702
'94 $12,058
'95 $12,748
'96 $13,836
The unmanaged Salomon Brothers 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 APRIL 30
Scudder Global Bond Fund
Salomon Brothers World Government Bond Index
1991* 1992 1993 1994 1995 1996
-----------------------------------------------
NET ASSET VALUE... $11.93 $11.95 $11.72 $11.12 $10.39 $10.00
INCOME DIVIDENDS.. $ .17 $ 1.14 $ 1.01 $ .91 $ .84 $ .76
CAPITAL GAINS
DIVIDENDS......... $ -- $ -- $ .02 $ -- $ -- $ --
FUND TOTAL
RETURN (%)........ .83 10.08 6.97 2.61 .93 3.67
INDEX TOTAL
RETURN (%)........ .75 8.15 7.40 3.04 5.72 2.97
On December 27, 1995, the Fund adopted its current name and objectives.
Prior to that date, the Fund was known as the Scudder Short Term Global
Income Fund and its investment objective was to provide high current
income through short-term instruments. Since adopting its current
objectives, the cumulative return is -3.04. **Prior to December 27, 1995,
the Salomon Brothers Currency-Hedged World Government Bond Index (1-3 years)
was used as a comparative index.
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased. If
the Adviser had not maintained expenses, the total returns for the Fund
would have been lower.
4
<PAGE>
PORTFOLIO SUMMARY as of April 30, 1996
- ---------------------------------------------------------------------------
MARKET EXPOSURE
- ---------------------------------------------------------------------------
Geographical Interest Rate
- --------------------------- -------------------------
U.S. 22.3% U.S. 21.0%
Germany 15.2% Japan 14.5%
Italy 9.3% Germany 12.8%
Supranational 6.4% Italy 9.3%
U.K. 6.3% U.K. 6.3%
Spain 6.1% Spain 6.1%
Australia 5.3% Australia 5.3%
New Zealand 5.2% New Zealand 5.2%
Japan 4.4% Netherlands 3.6%
Canada 4.3% Denmark 3.4%
Belgium 3.7% Canada 3.1%
Netherlands 3.6% Sweden 2.8%
Denmark 3.4% Philippines 2.5%
Sweden 2.8% Indonesia 2.4%
South Africa 1.7% South Africa 1.7%
---- ----
100% 100%
==== ====
Graphs in the form of pie charts appears here,
illustrating the exact data points in the above tables.
<TABLE>
<C> <C> <S>
Currency Exposure (a)
- -------------------------------------------------------------
Australia 4.9% Netherlands 3.6%
Canada 3.1% New Zealand 5.2% Although a drag on returns
Denmark 3.4% Philippines 2.5% during the period, the Fund's
France -2.5% Spain 6.1% yen exposure should contribute
Germany 5.4% Sweden 1.4% positively in the future, given
Indonesia 2.4% U.K. 6.3% recent signs of economic
Italy 9.3% U.S. 31.2% strength in Japan.
Japan 17.7% -----
100%
=====
</TABLE>
(a) Currency exposure after taking into account the effects of foreign
currency options, futures, and forward contracts.
- -----------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 9.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER GLOBAL BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
In recent months, an uptick in economic growth ignited fears of rising
inflation in the United States and led to disappointing bond market returns.
Intermediate-maturity U.S. government bonds declined more than 3% in the first
quarter, as measured by the Lehman Brothers Intermediate Government Bond Index.
(U.S. long-maturity bonds declined almost 10% in the three months through
April.) Inflation-related declines in one market often affect other markets,
despite the fact that their underlying economic circumstances differ. This was
certainly the case in March and April as bond prices fell -- although to a
lesser degree -- in Japan and in the core of Europe. The Fund's emerging market
and peripheral European holdings generated attractive returns, but these gains
were erased by declines in other currencies and a stronger U.S. dollar. For the
six-month period covered by this report, Scudder Global Bond Fund returned
- -1.63% compared with -0.13% for the Salomon Brothers World Government Bond
Index. The Fund's 30-day net annualized SEC yield at the end of April was 6.32%.
Strategy Shift In Favor Of Higher Yields, Shorter Maturities
We anticipated stronger economic growth late in 1995 and reduced the
portfolio's exposure to rising interest rates by shortening the average maturity
of our holdings. Also, we increased the portfolio's emphasis on income rather
than price appreciation. Importantly, we focused a portion of the portfolio on
such higher-yielding European markets as Italy, Spain, and Sweden. These
countries all have had their share of fiscal, economic, and political
difficulties, making their sovereign debt less attractive in the eyes of
investors. In Sweden and Spain, inflation measured more than 10% per year in the
not-too-distant past. In Italy, the national debt soared to 130% of gross
domestic product at the same time that political turmoil called into question
the government's progress toward fiscal rectitude. To compensate for their
spotty track records, these governments must issue bonds with coupons
significantly higher than more fiscally conservative countries such as Germany
and the United States. Portfolio holdings from Italy, Spain, and Sweden
currently yield from 9% to 10%.
Of course, the Fund's overall yield is based on the entire portfolio,
which includes the lower-yielding, less-risky bonds of the dollar bloc countries
6
<PAGE>
(35% of portfolio holdings as of April 30) and Japan (15% of holdings). Japanese
bond yields are among the lowest. Just now emerging from its worst recession
since WWII, Japan has reduced interest rates dramatically in an effort to
stimulate economic growth. The result is a 10-year government bond that yields
roughly 3%, versus 7% in the United States and 10% in Italy. At period end,
other markets well represented in the portfolio were the United States (21% of
holdings), Germany (13%), and the United Kingdom (6%).
Currency Considerations
The Fund's exposure to low-yielding Japanese bonds was driven by our
desire to hold yen over dollars or deutschemarks. A strengthening foreign
currency relative to the U.S. dollar can contribute greatly to positive
performance since the return on an investment denominated in that foreign
currency will buy more dollars when it returns to the United States. With Japan
showing signs of economic recovery, we anticipated a stronger yen as money
flowed back into the region. Instead, money flowed to the United States, largely
in the form of short-term investments by German and Japanese central banks
striving to keep their currencies weak relative to the U.S. dollar. (This
weakness helps exporters in those countries stay competitive.) Another source of
demand came from German and Japanese private and institutional foreign investors
attracted to the relatively higher yields here in the United States. In the end,
our yen exposure hampered the Fund's performance. Currencies that aided Fund
performance during the period were those of the smaller peripheral European
countries.
1996 And Beyond
The poor performance of U.S. and dollar bloc bond markets in the
absence of accelerating inflation suggests that these markets have become
oversold in recent months and may now be poised for a rebound. Accordingly, we
have increased our exposure. Likewise, we are reducing our exposure to select
European countries based on their strong performance in past months. We expect
to keep the portfolio's average maturity shorter than that of our benchmark
index (6.9 years versus 7.2 years for the index as of April 30) until the global
economic climate settles. Also, despite its adverse effect on Fund performance
7
<PAGE>
during the semiannual period, our yen position will be maintained in light of
recent signs of U.S. economic weakness and Japanese strength.
We appreciate your continued investment in the Fund during these
uncertain times and look forward to providing more competitive total returns in
the future.
Sincerely,
Your Portfolio Management Team
/s/Adam M. Greshin /s/Margaret D. Hadzima
Adam M. Greshin Margaret D. Hadzima
8
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO as of April 30, 1996
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount Value($)
- --------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
73.8% FOREIGN DENOMINATED DEBT OBLIGATIONS
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUSTRALIAN DOLLARS 5.2% AUD 8,970,000 Commonwealth of Australia, 7%, 4/15/00 .......... 6,741,544
7,170,000 Commonwealth of Australia, 13%, 7/15/00 ......... 6,545,547
----------
13,287,091
----------
BRITISH POUNDS 6.3% GBP 2,910,000 United Kingdom Treasury Bond,
9.5%, 1/15/99 ................................. 4,645,405
6,800,000 United Kingdom Treasury Bond,
9.75%, 8/27/02 ................................ 11,258,473
----------
15,903,878
----------
CANADIAN DOLLARS 3.1% CAD 3,520,000 Government of Canada, 7.5%, 3/1/01 .............. 2,628,503
7,600,000 Government of Canada, 6.5%, 6/1/04 .............. 5,183,394
----------
7,811,897
----------
DANISH KRONER 3.4% DKK 47,900,000 Kingdom of Denmark, 8%, 5/15/03 ................. 8,658,971
----------
DEUTSCHEMARKS 12.7% DEM 13,630,000 Federal Republic of Germany, 7%, 1/13/00 ........ 9,559,279
8,415,000 Federal Republic of Germany, 8.375%, 5/21/01 .... 6,223,042
14,680,000 Federal Republic of Germany, 8%, 1/21/02 ........ 10,681,763
9,345,000 Federal Republic of Germany, 6%, 2/16/06 ........ 5,935,647
----------
32,399,731
----------
DUTCH GUILDERS 3.5% NLG 9,300,000 Government of the Netherlands, 7.75%,
1/15/00 ....................................... 5,962,638
5,000,000 Government of the Netherlands, 6.5%,
4/15/03 ....................................... 3,026,554
----------
8,989,192
----------
ITALIAN LIRE 9.3% ITL 15,540,000,000 Republic of Italy, 8.5%, 8/1/99 ................. 9,827,408
4,140,000,000 Republic of Italy, 10.5%, 4/1/00 ................ 2,773,164
8,700,000,000 Republic of Italy, 8.5%, 1/1/04 ................. 5,269,014
8,475,000,000 Republic of Italy, 10.5%, 9/1/05 ................ 5,712,215
----------
23,581,801
----------
JAPANESE YEN 14.5% JPY 790,000,000 Export-Import Bank of Japan, 4.375%, 10/1/03 .... 8,030,100
935,000,000 International Bank for Reconstruction &
Development, 5.25%, 3/20/02 ................... 10,039,791
589,200,000 International Bank for Reconstruction &
Development, 4.75%,12/20/04 ................... 6,183,655
268,000,000 Japan Development Bank, 6.5%, 9/20/01 ........... 3,021,856
830,000,000 Kingdom of Belgium, 6.875%, 7/9/01 .............. 9,461,447
----------
36,736,849
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
SCUDDER GLOBAL BOND FUND
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount Value($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NEW ZEALAND DOLLARS 5.2% NZD 3,800,000 Government of New Zealand, 9%, 11/15/96 ......... 2,601,954
15,400,000 Government of New Zealand, 10%, 7/15/97 ......... 10,663,578
-----------
13,265,532
-----------
SOUTH AFRICAN RANDS 1.7% SAR 5,850,000 Republic of South Africa, 11.5%, 5/30/00 ........ 1,180,943
5,850,000 Republic of South Africa, 12.5%, 1/15/02 ........ 1,177,701
17,215,000 Republic of South Africa, 12%, 2/28/05 .......... 2,008,387
-----------
4,367,031
-----------
SPANISH PESETAS 6.1% ESP 499,600,000 Kingdom of Spain, 10.3%, 6/15/02 ................ 4,194,536
730,000,000 Kingdom of Spain, 8%, 5/30/04 ................... 5,394,854
710,000,000 Kingdom of Spain, 10.15%, 1/31/06 ............... 5,919,177
-----------
15,508,567
-----------
SWEDISH KRONA 2.8% SEK 55,300,000 Kingdom of Sweden, 6%, 2/9/05 ................... 7,046,288
-----------
TOTAL FOREIGN DENOMINATED DEBT OBLIGATIONS
(Cost $192,386,298) ............................ 187,556,828
-----------
-----------------------------------------------------------------------------------
20.9% U.S. DOLLAR DENOMINATED DEBT OBLIGATIONS
-----------------------------------------------------------------------------------
U.S. DOLLARS USD 10,240,000 American Express Credit Corp., Commercial
Paper, 5.06%, 6/10/96 ......................... 10,179,022
1,572,582 Associates Corp. of North America,
Commercial Paper, 5.3%, 5/1/96 ................ 1,572,582
5,200,000 360 Communications Co., 7.125%, 3/1/03 .......... 4,978,428
470,237 Federal National Mortgage Association, 7%,
8/1/25 ........................................ 453,336
395,070 Federal National Mortgage Association, 7%,
9/1/25 ........................................ 380,872
3,119,013 Federal National Mortgage Association, 7%,
11/1/25 ....................................... 3,006,916
9,066,536 Federal National Mortgage Association, 7%,
12/1/25 ....................................... 8,740,685
2,800,000 Hydro-Quebec Global Series HY, 8.4%,
1/15/22 ....................................... 2,948,176
2,100,000 ITT Corp., 6.75%, 11/15/05 ...................... 2,000,943
6,000,000 Tele-Communications, Inc. Senior note,
9.250%, 4/15/02 ............................... 6,322,740
4,300,000 Time Warner Inc., 9.125%, 1/15/13 ............... 4,500,724
8,900,000 U.S. Treasury Bond, 6.25%, 8/15/23* ............. 8,026,643
-----------
TOTAL U.S. DOLLAR DENOMINATED DEBT
OBLIGATIONS (Cost $55,965,950) ................ 53,111,067
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount Value($)
- --------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
4.9% PRINCIPAL INDEXED SECURITIES
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. DOLLARS USD 6,100,000 Bayerische Landesbank Girozentrale, indexed to
Indonesian Rupiah, 14.1%, 8/30/96 ............. 6,071,940
3,715,000 Citibank Philippine Peso-linked Time
Deposit, 12.6%, 5/13/96 ....................... 3,703,261
2,630,000 Citibank Philippine Peso-linked Time
Deposit, 12.5%,5/15/96 ........................ 2,619,007
-----------
TOTAL PRINCIPAL INDEXED SECURITIES
(Cost $12,445,000) ............................ 12,394,208
-----------
TOTAL INVESTMENTS (Cost $260,797,248) ........... 253,062,103
-----------
-----------------------------------------------------------------------------------
0.4% PURCHASED OPTIONS
-----------------------------------------------------------------------------------
DEM 27,348,006 Put on Deutschemarks, strike price DEM 1.5245,
expiration date 7/1/96 ....................... 271,776
DEM 26,370,330 Put on Deutschemarks, strike price DEM 1.47,
expiration date 5/30/96 ...................... 692,437
FRF 50,000,000 Put on French Francs, strike price FRF 5.1083,
expiration date 5/30/96 ...................... 143,750
JPY 1,802,000,000 Call on Japanese Yen, strike price JPY 102,
expiration date 6/3/96 ....................... 89,988
-----------
TOTAL PURCHASED OPTIONS
(Cost $847,963) .............................. 1,197,951
-----------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $261,645,211) (a) ...................... 254,260,054
===========
- ----------
<FN>
(a) The cost for federal income tax purposes was $261,645,211. At April 30,
1996, net unrealized depreciation for all securities based on tax cost was
$7,385,157. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $1,544,212 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$8,929,369.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
SCUDDER GLOBAL BOND FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
At April 30, 1996 outstanding written options were as follows (Notes A and B):
<CAPTION>
Principal
Amount Expiration Strike Market
Call Options (000's) Date Price Value($)
- ------------ ------------------------------------------------------
<S> <C> <C> <C> <C>
DEM ............. 8,371 5/30/96 DEM1.4 115
FRF ............. 50,000 5/30/96 FRF4.77 50
Put Options
- -----------
DEM ............. 26,370 5/30/96 DEM1.47 684,373
JPY ............. 1,802,000 6/3/96 JPY108 46,774
-------
Total outstanding written options (Premiums received $996,638) 731,312
=======
</TABLE>
- -------------------------------------------------------------------------------
FUTURES
- -------------------------------------------------------------------------------
* At April 30, 1996, these securities, in whole or in part, were pledged to
cover initial margin requirements on open futures contracts.
<TABLE>
At April 30, 1996, open futures contracts purchased were as follows (Note A):
<CAPTION>
Number of Aggregate Market
Futures Expiration Contracts Face Value($)(1) Value($)(1)
- ------- ---------- --------- ---------------- -----------
<S> <C> <C> <C> <C>
German Bonds Jun 1996 54 8,806,121 8,546,579
== ========= =========
Net unrealized depreciation on open futures contracts
purchased ...................................................... (259,542)
---------
</TABLE>
<TABLE>
At April 30, 1996, open futures contracts sold short were as follows (Note A):
<CAPTION>
Number of Aggregate Market
Futures Expiration Contracts Face Value($)(1) Value($)(1)
- ------- ---------- --------- ---------------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury
Bonds .......... Jun 1996 72 7,963,843 7,859,250
Italian Bonds .... Jun 1996 79 11,558,883 11,563,739
--- ---------- ----------
151 19,522,726 19,422,989
=== ========== ==========
Net unrealized appreciation on open futures contracts
sold short ...................................................... 99,737
----------
Total unrealized depreciation on open futures contracts .......... (159,805)
==========
- ----------
<FN>
(1) For purposes of these tables, values of foreign denominated futures
contracts have been translated into U.S. dollars using the period ended
foreign exchange rates.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CURRENCY ABBREVIATIONS
---------------------------------------------------------------------
AUD Australian Dollar ITL Italian Lira
GBP British Pound JPY Japanese Yen
CAD Canadian Dollar NZD New Zealand Dollar
NLG Dutch Guilder SAR South African Rand
ECU European Currency Unit ESP Spanish Peseta
FRF French Franc SEK Swedish Krona
DKK Danish Kroner USD United States Dollar
DEM Deutschemark
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER GLOBAL BOND FUND
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
<CAPTION>
APRIL 30, 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost
$260,797,248) (Note A) .......................... $253,062,103
Purchased options, at market (identified cost
$847,963) (Note A) .............................. 1,197,951
Foreign currency, at market (identified cost
$175,491) (Note A) .............................. 171,890
Interest receivable ................................ 6,227,241
Receivable on investments sold ..................... 24,417,621
Receivable on fund shares sold ..................... 16,801
Unrealized appreciation on forward currency
exchange contracts (Notes A & D) ................ 218,213
Daily variation margin on open futures contracts
(Note A) ........................................ 101,074
Other assets ....................................... 19,830
------------
Total assets .................................... 285,432,724
LIABILITIES
Payable for investments purchased .................. $17,950,761
Dividends payable .................................. 440,608
Payable for fund shares redeemed ................... 519,402
Accrued management fee (Note C) .................... 80,028
Other accrued expenses (Note C) ................... 219,679
Written options, at market (premiums received
$996,638) (Note A) .............................. 731,312
Unrealized depreciation on forward currency
exchange contracts (Notes A & D) ................ 436,034
Net payable on closed forward currency
exchange contracts (Note A) ..................... 18,563
-----------
Total liabilities ............................... 20,396,387
------------
Net assets, at market value ........................ $265,036,337
============
NET ASSETS
Net assets consist of:
Net unrealized appreciation (depreciation) on:
Investments ..................................... $ (7,735,145)
Options ......................................... 615,314
Futures ......................................... (159,805)
Foreign currency related transactions ........... (329,486)
Accumulated net realized loss ...................... (12,912,034)
Capital stock ...................................... 265,136
Additional paid-in capital ......................... 285,292,357
------------
Net assets, at market value ........................ $265,036,337
============
NET ASSET VALUE, offering and redemption price per
share ($265,036,337 [divided by] 26,513,580
shares of capital stock outstanding, $.01 par value,
300,000,000 shares authorized) .................. $10.00
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -----------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED APRIL 30, 1996
- -----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest (net of foreign taxes withheld of $205,685) .... $ 12,669,595
Expenses:
Management fee (Note C) ................................. $ 1,179,529
Services to shareholders (Note C) ....................... 383,765
Custodian and accounting fees (Note C) .................. 238,660
Directors' fees and expenses (Note C) ................... 21,992
Reports to shareholders ................................. 70,501
Auditing ................................................ 50,460
Legal ................................................... 6,934
State registration fees ................................. 13,334
Amortization of organization expenses (Note A) .......... 3,818
Other ................................................... 35,633
------------
Total expenses before reductions ........................ 2,004,626
Expense reductions (Note C) ............................. (434,960)
------------
Expenses, net ........................................... 1,569,666
------------
Net investment income ................................... 11,099,929
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments ......................................... 3,846,159
Options ............................................. (1,866,135)
Futures contracts ................................... (2,281,952)
Foreign currency related transactions ............... (4,234,091) (4,536,019)
------------
Net unrealized appreciation (depreciation)
during the period on:
Investments ......................................... (16,082,083)
Options ............................................. 3,097,794
Futures contracts ................................... (159,805)
Foreign currency related transactions ............... 1,839,873 (11,304,221)
--------------------------
Net loss on investment transactions ..................... (15,840,240)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $ (4,740,311)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
SCUDDER GLOBAL BOND FUND
- -------------------------------------------------------------------------------
<TABLE>
- -------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
INCREASE (DECREASE) IN NET ASSETS 1996 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................... $ 11,099,929 $ 33,340,295
Net realized loss from investment transactions .......... (4,536,019) (28,162,456)
Net unrealized appreciation (depreciation)
on investment transactions during the period ......... (11,304,221) 14,695,835
------------ -------------
Net increase (decrease) in net assets resulting
from operations ...................................... (4,740,311) 19,873,674
------------ -------------
Distributions to shareholders from:
Net investment income ($.36 and $.36
per share, respectively) ............................. (11,099,929) (14,850,406)
------------ -------------
Tax return of capital ($.44 per share) .................. -- (18,185,444)
------------ -------------
Fund share transactions:
Proceeds from shares sold ............................... 11,358,897 51,277,133
Net asset value of shares issued to
shareholders in reinvestment of
distributions ........................................ 9,265,760 23,158,972
Cost of shares redeemed ................................. (97,087,576) (263,863,651)
------------ -------------
Net decrease in net assets from Fund
share transactions ................................... (76,462,919) (189,427,546)
------------ -------------
DECREASE IN NET ASSETS .................................. (92,303,159) (202,589,722)
Net assets at beginning of period ....................... 357,339,496 559,929,218
------------ -------------
NET ASSETS AT END OF PERIOD ............................. $265,036,337 $ 357,339,496
============ =============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ............... 33,924,422 51,959,978
------------ -------------
Shares sold ............................................. 1,093,470 4,874,517
Shares issued to shareholders in reinvestment
of distributions ..................................... 895,916 2,204,979
Shares redeemed ......................................... (9,400,228) (25,115,052)
------------ -------------
Net decrease in Fund shares ............................. (7,410,842) (18,035,556)
------------ -------------
Shares outstanding at end of period ..................... 26,513,580 33,924,422
============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<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>
FOR THE PERIOD
MARCH 1, 1991
SIX MONTHS (COMMENCEMENT
APRIL 30, YEARS ENDED OCTOBER 31, OF OPERATIONS)
ENDED ------------------------------------ TO OCTOBER 31,
1996 1995 1994 1993 1992 1991
---------------------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $10.53 $10.78 $11.68 $11.84 $12.01 $12.00
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (a) ............... .36 .80 .87 .95 1.08 .76
Net realized and unrealized gain (loss) on
investment transactions ................ (.53) (.25) (.90) (.14) (.17) .01
------ ------ ------ ------ ------ ------
Total from investment operations .......... (.17) .55 (.03) .81 .91 .77
------ ------ ------ ------ ------ ------
Less distributions from:
Net investment income ................... (.36) (.36) (.02) (.95) (1.08) (.76)
Net realized gains on investments ....... -- -- -- (.02) -- --
Tax return of capital ................... -- (.44) (.85) -- -- --
------ ------ ------ ------ ------ ------
Total distributions ....................... (.36) (.80) (.87) (.97) (1.08) (.76)
------ ------ ------ ------ ------ ------
Net asset value, end of period ............ $10.00 $10.53 $10.78 $11.68 $11.84 $12.01
====== ====== ====== ====== ====== ======
TOTAL RETURN (%) .......................... (1.63)** 5.43 (.25) 7.14 7.83 6.65**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) .... 265 357 560 1,041 1,369 205
Ratio of operating expenses, net to
average daily net assets (%) (a) ....... 1.00* 1.00 1.00 1.00 1.00 1.00*
Ratio of net investment income to
average daily net assets (%) ........... 7.08* 7.73 7.76 8.10 8.94 9.97*
Portfolio turnover rate (%) ............... 370.2* 182.8 272.4 259.8 274.2 26.1*
(a) Reflects a per share amount of
management fee not imposed
by the Adviser ...................... $ .01 $ .02 $ .02 $ .01 $ .03 $ .06
Operating expense ratio including
expense reductions (%) .............. 1.28* 1.20 1.15 1.11 1.23 1.89*
- ----------
<FN>
* Annualized
** Not annualized
On December 27, 1995, the Fund adopted its current name and objectives.
Prior to that date, the Fund was known as the Scudder Short Term Global
Income Fund and its investment objective was to provide high current income
through short-term instruments. Financial information prior to December 27,
1995 should not be considered representative of the present Fund.
</FN>
</TABLE>
17
<PAGE>
SCUDDER GLOBAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
Scudder Global 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 Board of Directors and the shareholders of the Fund
approved, effective December 27, 1995, a change to the Fund's name and
investment objective, as well as certain investment policies. The new
objective of the Fund is 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. Prior to December 27, 1995, the
name of the Fund was Scudder Short Term Global Income Fund. 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 currencies as a hedge against potential adverse price movements
in the value of portfolio assets. In addition, during the period, the Fund
purchased call options and wrote put options on currencies to lock in the
purchase price of a security or currency which it expects to purchase in
the near future and to enhance potential gain. If the Fund writes an option
and the option expires unexercised, the Fund will realize income, in the
form of a capital gain, to the extent of the amount received for the option
(the "premium"). If the Fund elects to close out the option it would
recognize a gain or loss based on the difference between the cost of
closing the option and the initial premium
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
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 increase the
duration of the portfolio, as a temporary substitute for purchasing
selected investments, and to lock in the purchase price of a security which
it expects to purchase in the near future. Also, during the period, the
Fund sold interest rate futures to hedge against declines in the value of
portfolio securities.
19
<PAGE>
SCUDDER GLOBAL BOND FUND
- -------------------------------------------------------------------------------
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.
INDEXED SECURITIES. Indexed securities held by the Fund are investments
whose value is indexed to another financial instrument, index, currency, or
commodity (the "reference instrument"). For principal indexed securities,
the principal amount payable at maturity may be more or less than the
amounts shown depending on fluctuations in the value of the reference
instrument. For coupon indexed securities, the principal amount payable at
maturity is fixed. However, the coupon is indexed to the reference
instrument. The price sensitivity of these securities may be greater than
that of non-indexed securities with similar maturities.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are
maintained in U.S. dollars. Foreign currency transactions are translated
into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities at
the daily rates of exchange, and
(ii) purchases and sales of investment securities, interest income and
certain expenses at the daily rates of exchange prevailing on the
respective dates of such transactions.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Fund does not isolate that portion of gains and losses on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included
with the net realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates
on securities transactions, gains and losses arising from the sales of
foreign currency, and gains and losses between the accrual and payment
dates on interest and foreign withholding taxes.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract (forward contract) is a commitment to purchase or sell a
foreign currency at the settlement date at a negotiated rate. During the
period, the Fund utilized forward contracts as a hedge 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.
Accordingly, the Fund paid no federal income taxes, and no federal income
tax provision was required. At October 31, 1995, the Fund had a net tax
basis capital loss carryforward of approximately $9,472,000 which may be
applied
21
<PAGE>
SCUDDER GLOBAL BOND FUND
- -------------------------------------------------------------------------------
against any realized net taxable capital gains of each succeeding year
until fully utilized or until October 31, 2002 ($4,463,000) and October 31,
2003 ($5,009,000), the respective expiration dates, whichever occurs first.
DISTRIBUTION OF INCOME AND GAINS. Distribution of net investment income is
declared as a dividend to shareholders of record as of the close of
business each day and is distributed to shareholders monthly. During any
particular year net realized gains and certain unrealized gains (which for
federal income tax reporting purposes may be considered realized) from
investment transactions, in excess of available capital loss carryforwards,
would be taxable to the Fund if not distributed and, therefore, will be
distributed to shareholders. An additional distribution may be made to the
extent necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
These differences relate primarily to investments in options, futures,
forward currency contracts and foreign currency denominated investments. As
a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly
from distributions during such period. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting the net asset value of the Fund.
For the fiscal year ending October 31,1996, it is likely that a portion of
the Fund's income dividends will be treated as nontaxable return of capital
distributions under U.S. tax rules. The final tax status of 1996
distributions will be provided to shareholders in January 1997 on Form
1099-DIV. The Fund uses the identified cost method for determining realized
gain or loss on investments for both financial and federal income tax
reporting purposes.
ORGANIZATION COSTS. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are
being amortized on a straight-line basis over a five-year period.
OTHER. Investment security transactions are accounted for on a trade date
basis. Distributions of net realized gains to shareholders are recorded on
the ex-dividend date. Interest income is recorded on the accrual basis. All
discounts are accreted for both tax and financial reporting purposes.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
B. PURCHASES AND SALES OF SECURITIES
- -------------------------------------------------------------------------------
During the six months ended April 30, 1996, purchases and sales (including
maturities) of investment securities (excluding short-term investments)
aggregated $541,116,357 and $634,002,836, respectively.
The aggregate face value of futures contracts opened and closed during the six
months ended April 30, 1996 was $1,362,921,824 and $1,352,205,219, respectively.
<TABLE>
Transactions in written options for the six months ended April 30, 1996 are
summarized as follows:
<CAPTION>
----------------------------------------------------------------------------
OPTIONS ON CURRENCIES (000 OMITTED)
------------------------------------------------
NUMBER OF
CONTRACTS PREMIUMS AUD CAD DEM PREMIUMS
--------------------- ------------------------------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning
of Period ... 297 $ 407,879 8,158 29,201 33,750 $ 886,688
Written ..... 182 416,933 16,000 10,500 79,785 1,127,542
Closed ...... (479) (824,812) -- (29,201) (50,494) (817,038)
Exercised ... -- -- (8,158) (10,500) (28,300) (373,273
Expired ..... -- -- (16,000) -- -- (101,280)
---- --------- ------- ------- ------- ----------
End of
Period ...... -- $ -- -- -- 34,741 $ 722,639
==== ========= ======= ======= ======= ==========
----------------------------------------------------------------------------
</TABLE>
<TABLE>
--------------------------------------------------------------------------------------------
OPTIONS ON CURRENCIES (000 OMITTED)
--------------------------------------------------------------------------------------------
<CAPTION>
ECU FRF GBP ITL JPY SEK PREMIUMS
----------------------------------------------------------------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning
of Period ... 16,500 -- 17,400 50,300,000 -- 101,000 $ 1,904,190
Written ..... 16,500 100,000 17,400 40,584,835 4,825,244 318,829 2,077,968
Closed ...... -- (50,000) (17,400) -- -- (217,236) (909,017)
Exercised ...(16,500) -- (8,400) (65,884,835) (3,023,244) (202,593) (2,089,362)
Expired .....(16,500) -- (9,000) (25,000,000) -- -- (709,780)
------- ------- ------- ----------- ---------- --------- -----------
End of
Period ...... -- 50,000 -- -- 1,802,000 -- $ 273,999
======= ======= ======= =========== ========== ========= ===========
--------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
SCUDDER GLOBAL BOND FUND
- -------------------------------------------------------------------------------
C. RELATED PARTIES
- -------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund has agreed to pay to the
Adviser a fee equal to an annual rate of 0.75% of the first $1,000,000,000
of average daily net assets and 0.70% of such assets in excess of
$1,000,000,000 computed and accrued daily and payable monthly. As manager
of the assets of the Fund, the Adviser directs the investments of the Fund
in accordance with its investment objectives, policies, and restrictions.
The Adviser determines the securities, instruments, and other contracts
relating to investments to be purchased, sold or entered into by the Fund.
In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. The Agreement
also provides that if the Fund's expenses, exclusive of taxes, interest,
and extraordinary expenses, exceed specified limits, such excess, up to the
amount of the management fee, will be paid by the Adviser. The Adviser has
agreed not to impose all or a portion of its management fee until February
28, 1997, and during such period to maintain the annualized expenses of the
Fund at not more than 1.00% of average daily net assets. For the six months
ended April 30, 1996, the Adviser did not impose a portion of its
management fee aggregating $434,960 and the amount imposed aggregated
$744,569 which was equivalent to an annual effective rate of 0.47% 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 six months ended April 30, 1996, the amount charged to the Fund by SSC
aggregated $262,495, of which $41,081 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 $7,015, of which
$1,200 is unpaid at April 30, 1996
Effective November 29, 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 six months ended April 30, 1996,
the amount charged to the Fund by SFAC aggregated $119,536, of which
$22,608 is unpaid at April 30, 1996.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
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 $21,992.
D. COMMITMENTS
- -------------------------------------------------------------------------------
<TABLE>
As of April 30, 1996, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$217,821.
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (U.S.$)
- -------------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
AUD 1,008,685 USD 775,275 5/15/96 (17,575)
DEM 17,115,372 USD 11,318,418 6/26/96 111,991
DEM 12,905,971 GBP 8,507,333 5/13/96 79,584
DEM 4,125,000 USD 2,716,854 5/28/96 20,823
DEM 5,471,861 USD 3,587,800 6/26/96 5,055
SEK 24,392,519 USD 3,587,800 6/3/96 207
SAR 18,803,363 USD 4,149,645 5/14/96 (174,477)
GBP 8,505,535 DEM 12,738,740 5/13/96 (186,989)
USD 2,720,958 DEM 4,125,000 5/28/96 (24,927)
USD 2,721,874 DEM 4,125,000 6/26/96 (20,997)
USD 4,435,266 DEM 6,756,995 6/26/96 (11,069)
USD 925,445 DEM 96,907,939 5/28/96 553
--------
(217,821)
========
</TABLE>
E. LINE 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.
25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS OF SCUDDER GLOBAL BOND FUND, INC. AND TO THE
SHAREHOLDERS OF SCUDDER GLOBAL BOND FUND:
We have audited the accompanying statement of assets and liabilities of
Scudder Global Bond Fund (formerly Scudder Short Term Global Income Fund)
including the investment portfolio, as of April 30, 1996, and the related
statement of operations for the six month period then ended, the statements
of changes in net assets for the six month period then ended, and for the
year ended October 31, 1995, and the financial highlights for the six month
period ended April 30, 1996, for each of the four years in the period ended
October 31, 1995 and for the period March 1, 1991 (commencement of
operations) to October 31, 1991. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of 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 Bond Fund as of April 30, 1996, the results of its
operations for the six month period then ended, the changes in its net
assets for the six month period then ended, and for the year ended October
31, 1995, and the financial highlights for the six month period ended April
30,1996, for each of the four years in the period ended October 31, 1995
and for the period March 1, 1991 (commencement of operations) to October
31, 1991 in conformity with generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
June 21, 1996
26
<PAGE>
(This page intentionally left blank.)
27
<PAGE>
(This page intentionally left blank.)
28
<PAGE>
OFFICERS AND DIRECTORS
Edmond D. Villani*
Chairman of the Board and Director
Nicholas Bratt*
President and Director
Daniel Pierce*
Director and Vice President
Paul Bancroft III
Director; Venture Capitalist and Consultant
Sheryle J. Bolton
Director; Consultant
Thomas J. Devine
Director; Consultant
William H. Gleysteen, Jr.
Director; Consultant
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, Columbia University Graduate
School of Business
Adam M. Greshin*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Douglas M. Loudon*
Vice President
Gerald J. Moran*
Vice President
M. Isabel Saltzman*
Vice President
Cornelia M. Small*
Vice President
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.
29
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder 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#
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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.
-----------------------------------------------------------------------------------------------------------------
<FN>
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.
</FN>
</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
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
-------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM)an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
-------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
<FN>
* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
</FN>
</TABLE>
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.
