Scudder
International
Bond Fund
Annual Report
June 30, 1996
o For investors seeking an easy and low-cost way to broaden their
income-oriented investments beyond U.S. borders. Invests primarily in high-grade
bonds denominated in foreign currencies.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
CONTENTS
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
13 Financial Statements
16 Financial Highlights
17 Notes to Financial Statements
25 Report of Independent Accountants
29 Officers and Directors
30 Investment Products and Services
31 How to Contact Scudder
IN BRIEF
o International bond market performance was mixed during the year, with most
markets moving higher during the first two quarters and retreating in the
second half. The Fund's 2.59% total return for the 12 months ended June 30,
1996, stands in contrast to a dollar-based negative 1.70% for non-U.S.
markets overall, as measured by the unmanaged Salomon Brothers Non-U.S.
Dollar World Government Bond Index.
BAR CHART TITLE:
Investment Returns
(for the year ended June 30, 1996)
BAR CHART DATA:
- -------------------------------------------------------------------------------
Scudder International Bond Fund 2.59%
- -------------------------------------------------------------------------------
Salomon Brothers Non-U.S. Dollar World Government Bond Index -1.70%
- -------------------------------------------------------------------------------
Bond Market returns in U.S. dollars
o Stronger growth in the United States, combined with German and Japanese
central bank activity, led to a rise in the U.S. dollar versus other
currencies, which suppressed international bond returns for U.S.
investors.
o In response to stronger economic activity in core markets and renewed
investor interest in high-yielding and emerging markets, Scudder
International Bond Fund shifted portfolio assets during the period to
emphasize some of Europe's peripheral markets while de-emphasizing Japan.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
Dear Shareholders,
For the fiscal year ended June 30, 1996, Scudder International Bond
Fund provided a total return of 2.59%. Bond prices in such key markets as
Germany and Japan were stymied by strong economic growth and the accompanying
threat of inflation. At the same time, performance gains throughout the world
were muted by a steady rise in the U.S. dollar. While lackluster in absolute
terms, the Fund's performance outpaced that of its benchmark index, the
unmanaged Salomon Brothers Non-U.S. Dollar World Government Bond Index, which
declined 1.70% during the period.
Despite the results of the past 12 months, the growth of the foreign
bond marketplace has been one of the more exciting facets of investing in the
1990s. The top-performing bond market has been outside the United States each of
the last 10 years, reinforcing the idea that fixed-income investors can benefit
by investing a portion of their portfolio overseas. Moreover, since foreign
markets do not necessarily move in tandem with those in the United States,
international diversification can lend a degree of stability to an otherwise
purely U.S. portfolio. We believe Scudder International Bond Fund remains an
effective vehicle for fixed-income investors seeking to harness the income and
appreciation potential of foreign bonds along with the risk-reducing benefits of
global diversification.
Finally, in this era of electronic information we have taken a look at
our short-form quarterly reports, which you generally receive two or more weeks
after the end of your fund's first and third fiscal quarters. Going forward, in
lieu of these printed reports, portfolio information will be made available on a
more timely basis -- each month, in most cases -- through Scudder's Web site,
Scudder's automated information line (SAIL), and by calling a Scudder Investor
Relations representative.
If you have questions about your fund or your investments, please
contact a Scudder Investor Relations representative at 1-800-225-2470. Page 31
provides more information on how to contact Scudder. Thank you for choosing
Scudder International Bond Fund to help meet your investment needs.
Sincerely,
/S/Daniel Pierce
Daniel Pierce
Chairman,
Scudder International Bond Fund
3
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
PERFORMANCE UPDATE as of June 30, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER INTERNATIONAL BOND FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,259 2.59% 2.59%
5 Year $14,913 49.13% 8.32%
Life of
Fund* $20,581 105.81 % 9.46%
SALOMON BROTHERS NON-U.S. DOLLAR
WORLD GOVERNMENT BOND INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $ 9,830 -1.70% -1.70%
5 Year $18,444 84.44% 13.01%
Life of
Fund* $21,360 113.60% 10.06%
*The Fund commenced operations on July 6, 1988.
Index comparisons begin July 31, 1988.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
YEARLY PERIODS ENDED JUNE 30
Scudder Gold Fund
Year Amount
- ----------------------
7/88 $10,000
'89 $10,216
'90 $12,013
'91 $13,800
'92 $17,699
'93 $19,866
'94 $19,304
'95 $20,062
'96 $20,581
S&P 500 Index
Year Amount
- ----------------------
7/88 $10,000
'89 $ 9,831
'90 $10,544
'91 $11,581
'92 $14,741
'93 $16,176
'94 $17,707
'95 $21,729
'96 $21,360
The unmanaged Salomon Brothers Non-U.S. Dollar World Government Bond Index
consists of worldwide fixed-rate government bonds with remaining maturities
greater than one year. Index returns assume reinvestment of dividends, and
unlike Fund returns, do not reflect any fees or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED JUNE 30
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989* 1990 1991 1992 1993 1994 1995 1996
--------------------------------------------------------------
NET ASSET VALUE... $11.27 $12.08 $12.35 $13.68 $13.57 $11.97 $11.43 $10.98
INCOME DIVIDENDS.. $ 1.00 $ 1.09 $ 1.21 $ 1.09 $ 1.04 $ .91 $ .98 $ .73
CAPITAL GAINS
DISTRIBUTIONS..... $ - $ - $ .29 $ .81 $ .62 $ .39 $ - $ -
FUND TOTAL
RETURN (%)........ 2.16 17.59 14.88 28.25 12.24 -2.83 3.92 2.59
INDEX TOTAL
RETURN (%)........ -1.69 7.25 9.84 27.29 9.74 9.46 22.71 -1.70
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased. If
the Adviser had not temporarily capped expenses, the average annual
total return for the Fund for the five year and life of Fund periods would
have been lower.
4
<PAGE>
PORTFOLIO SUMMARY as of June 30, 1996
- ---------------------------------------------------------------------------
MARKET EXPOSURE
- ---------------------------------------------------------------------------
Geographical
Germany 22.6%
Italy 10.9%
United Kingdom 9.3%
Spain 7.8%
Japan 6.9%
Canada 6.5%
New Zealand 5.9%
Sweden 5.8%
Australia 5.4%
Denmark 5.4%
Austria 4.9%
Belgium 3.2%
United States 2.9%
Supranational Agencies 2.5%
------
100.0%
======
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Geographical
Germany 22.6%
Japan 17.5%
Italy 10.9%
United Kingdom 9.3%
Spain 7.8%
Canada 6.5%
New Zealand 5.9%
Sweden 5.8%
Australia 5.4%
Denmark 5.4%
United States 2.9%
------
100.0%
======
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- -----------------------------------------------------------------------
CURRENCY EXPOSURE (a)
Australia 4.0% Netherlands -1.9%
Canada 6.5% New Zealand 5.3%
Denmark 5.4% Spain 7.8%
Germany 25.6% Sweden 2.6%
Italy 10.9% United Kingdom 4.2%
Japan 19.8% United States 9.8%
------
100.0%
======
(a) Currency exposure after taking into account the effects of foreign
currency options, futures, and forward contracts.
- -----------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 9.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Despite continuing evidence of low inflation around the globe, bond
investors watched and reacted nervously to data confirming stronger economic
growth, particularly in Japan and Germany. As a result, bond returns hampered
further by an appreciating U.S. dollar were modest. Scudder International Bond
Fund posted a total return of 2.59% for the twelve months ended June 30, 1996,
outpacing the unmanaged Salmon Brothers Non-U.S. Dollar World Government Bond
Index, which declined 1.70%. The Fund's 30-day net annualized SEC was 5.30% at
the end of the period. Shareholders received a total of $0.73 per share in
distributions for the 12-month period.
Shift Toward Higher-Yielding Markets, Away From Japan
Two key events influenced world bond market performance during the
year. First, after a prolonged recession in Japan and months of economic malaise
in Germany, the two countries are experiencing stronger economic activity. Both
the Bundesbank and the Bank of Japan have walked a fine line of fostering
sustainable long-term growth while containing inflation. While neither had
raised interest rates by June 30, prospects of higher growth rates and inflation
have alarmed bond investors. Both markets posted negative returns in dollar
terms during the period, with Japan declining a dramatic 21.13%. The change in
market sentiment, both abroad and in the United States, prompted us to reduce
interest rate exposure for the portfolio as a whole.
A second factor contributing to bond market performance this year has
been the push by investors to trade in their relatively lower-yielding bonds
from Japan, the United States, and Germany in favor of higher-yielding bonds in
select European countries and the emerging markets. European markets were helped
by an improving fiscal situation in Sweden and, in the case of Italy and Spain,
recent political elections. In such emerging markets as Indonesia, Thailand, and
the Philippines, the allure of yields often twice that of their western
counterparts sparked investor interest and helped attract foreign capital. In
many developing countries, the need for capital to fund business investment and
infrastructure development has prompted governments to compete for foreign
investors through high-yielding government debt. Generally, these bonds become
more attractive as local economies improve, since governments are better able to
meet their obligations -- a fact that explains why emerging bond markets often
outperform developed markets during periods of economic expansion.
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
Not surprisingly, the Fund's positive performance can be explained
largely by an emphasis on Europe's smaller, higher-yielding markets (Italy,
Spain, and Sweden), an underweighting in Japan, and exposure to select emerging
markets. Clearly, any exposure to the Japanese market hindered returns this
year. The fact that the index's exposure was greater than the Fund's in part
explains the fund's outperformance. The Fund's emerging market holdings
performed nicely well into the third quarter despite a sharp price decline in
the Fund's South African holding. After several positive months, in which
emerging market holdings peaked near 10% of the portfolio, we eliminated the
Fund's positions. At this point, currency trends and volatile cash flows suggest
that the relative risks outweigh any performance potential.
Continued Strength In Dollar Undercuts Gains Overseas
After declining several years against the yen and other currencies, the
U.S. dollar exhibited strength throughout the year. Central to this turnaround
has been a concerted effort on the part of the Japanese and German central
bankers to deflate their currencies and thereby improve the competitiveness of
local exporters. The stronger U.S. dollar had the effect this year of
diminishing positive returns and magnifying losses, particularly in Japan, which
returned almost 2% in yen terms but -21% when converted to U.S. dollars.
The Fund's exposure to foreign currencies was approximately 90% on June
30, an increase from 80% mid-year. While the Fund's currency selection helped
returns relative to the index, the decreased exposure to the U.S. dollar hurt
absolute returns during this period of dollar strength. Although the fund
remained underweight in yen throughout the period, the impact of that currency's
decline has been particularly disappointing. The portfolio's exposure had
climbed as high as 20% on our belief that stronger economic growth in Japan
would ultimately increase demand for the yen, driving up its value. While the
yen's continued weakness could be a reason to increase the fund's position, we
will remain underweight in anticipation of further gains in the U.S. dollar in
the short term.
Current Course: Underweight Japan In Favor Of European and Dollar Block Markets
In the months ahead, we expect European government bonds will continue to
comprise the lion's share of portfolio assets (70% as of June 30). The Fund's
strategy will emphasize higher-yielding, peripheral markets such as Sweden,
7
<PAGE>
Spain, and Italy and de-emphasize core markets, particularly France and the
Benelux countries. We plan to maintain the portfolio's currency and
interest-rate exposure in Europe. We expect to continue building exposure to
dollar-bloc countries which, despite some gains, are relatively undervalued in
our opinion. Japanese holdings will remain light for the foreseeable future. Our
decision to eliminate emerging market debt during the last quarter will be
sustained into the new fiscal year as we work to improve the Fund's credit
quality and bolster core holdings. Our research suggests that risk premiums in
these high-yielding but less-established market economies are too low to justify
the added risk.
Importantly, inflation has shown scant sign of reemergence. In this
environment, and after the markets have adequately digested economic growth, we
look forward to a period that we believe will be marked by more attractive total
returns.
Sincerely,
Your Portfolio Management Team
/s/Adam M. Greshin /s/Margaret D. Hadzima
Adam M. Greshin Margaret D. Hadzima
Scudder International
Bond Fund:
A Team Approach to Investing
Scudder International Bond Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. We believe our
team approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.
Lead Portfolio Manager Adam M. Greshin assumed responsibility for the Fund's
day-to-day management and investment strategies in March 1995. Mr. Greshin, who
specializes in global and international bond investments, was involved in the
original design of Scudder International Bond Fund and has been a portfolio
manager of the Fund since its inception in 1988. Portfolio Manager Margaret D.
Hadzima is Chairman of Scudder's Global Bond Strategy Committee and Director of
Global Bond Research. Ms. Hadzima, who joined Scudder in 1973 and the team in
1995, plays an active role in setting the Fund's overall bond strategy.
8
<PAGE>
INVESTMENT PORTFOLIO as of June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- ---------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------
96.8% FOREIGN DENOMINATED DEBT OBLIGATIONS
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUSTRALIAN DOLLARS 5.4% AUD 18,150,000 Commonwealth of Australia, 12%, 11/15/01 ... 16,349,781
16,315,000 Commonwealth of Australia, 6.75%, 11/15/06 . 11,053,412
-----------
27,403,193
-----------
BRITISH POUNDS 9.3% GBP 11,250,000 Abbey National Treasury Corp., 6%, 8/10/99 . 16,920,360
4,700,000 Barclays Bank PLC, 6.5%, 2/16/04 ........... 6,622,010
2,020,000 United Kingdom Treasury Bond, 8%, 12/7/00 .. 3,231,215
3,180,000 United Kingdom Treasury Bond, 7%, 11/6/01 .. 4,856,878
4,250,000 United Kingdom Treasury Bond, 9.75%, 8/27/02 7,309,717
5,350,000 United Kingdom Treasury Bond, 8%, 6/7/21 ... 8,124,441
-----------
47,064,621
-----------
CANADIAN DOLLARS 6.5% CAD 7,750,000 Government of Canada, 7.5%, 3/1/01 ......... 5,797,799
23,005,000 Government of Canada, 6.5%, 6/1/04 ......... 15,864,436
7,830,000 Government of Canada, 7%, 12/1/06 .......... 5,460,249
2,050,000 Government of Canada, 8%, 6/1/23 ........... 1,484,843
5,650,000 Rogers Cantel Ltd., 10.5%, 6/1/06 .......... 4,121,367
-----------
32,728,694
-----------
DANISH KRONER 5.4% DKK 18,000,000 Kingdom of Denmark, 8%, 5/15/03 ............ 3,251,494
52,000,000 Kingdom of Denmark, 7%, 12/15/04 ........... 8,778,680
86,100,000 Kingdom of Denmark, 8%, 3/15/06 ............ 15,253,885
-----------
27,284,059
-----------
DEUTSCHEMARKS 22.5% DEM 20,660,000 Bayerische Landesbank, 6%, 2/27/06 ......... 12,884,119
31,480,000 DEPFA Bank, 4.5%, 4/2/98 ................... 20,780,125
25,930,000 Federal Republic of Germany, 6.625%, 1/20/98 17,666,051
21,920,000 Federal Republic of Germany, 5.25%, 10/20/98 14,665,108
71,570,000 Federal Republic of Germany, 6.25%, 1/4/24 . 41,543,141
10,000,000 Westdeutsche Landesbank, 3%, 4/15/98 ....... 6,432,438
-----------
113,970,982
-----------
ITALIAN LIRE 10.9% ITL 15,000,000,000 Republic of Italy, 8.5%, 8/1/97 ............ 9,770,898
18,300,000,000 Republic of Italy, 10.5%, 7/15/98 .......... 12,398,794
37,400,000,000 Republic of Italy, 8.5%, 8/1/99 ............ 24,427,922
2,000,000,000 Republic of Italy, 10.5%, 4/1/00 ........... 1,380,218
10,000,000,000 Republic of Italy, 10.5%, 9/1/05 ........... 7,023,627
-----------
55,001,459
-----------
JAPANESE YEN 17.5% JPY 1,835,000,000 Export-Import Bank of Japan, 4.375%,10/1/03 18,216,180
538,000,000 International Bank for Reconstruction &
Development, 5.25%, 3/20/02 .............. 5,605,597
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
9
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount Value ($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
700,400,000 International Bank for Reconstruction &
Development, 4.75%, 12/20/04 ........ 7,200,010
1,500,000,000 Japan Development Bank, 6.5%, 9/20/01 . 16,381,039
1,450,000,000 Kingdom of Belgium, 6.875%, 7/9/01 .... 16,000,228
2,250,000,000 Republic of Austria, 6.25%, 10/16/03 .. 24,889,471
-----------
88,292,525
-----------
NEW ZEALAND
DOLLARS 5.8% NZD 16,700,000 Government of New Zealand, 10%, 7/15/97 11,503,618
10,270,000 Government of New Zealand, 8%, 4/15/04 6,706,572
17,500,000 Government of New Zealand, 8%, 11/15/06 11,402,728
-----------
29,612,918
-----------
SPANISH PESETAS 7.7% ESP 1,600,000,000 Kingdom of Spain, 11.45%, 8/30/98 ..... 13,436,381
1,300,000,000 Kingdom of Spain, 10.3%, 6/15/02 ...... 11,023,513
1,500,000,000 Kingdom of Spain, 8%, 5/30/04 ......... 11,260,675
400,000,000 Kingdom of Spain, 10.15%, 1/31/06 ..... 3,375,317
-----------
39,095,886
-----------
SWEDISH KRONOR 5.8% SEK 48,300,000 Kingdom of Sweden, 11%, 1/21/99 ....... 8,005,963
162,000,000 Kingdom of Sweden, 6%, 2/9/05 ......... 21,219,001
-----------
29,224,964
-----------
TOTAL FOREIGN DENOMINATED DEBT ........
(Cost $493,530,670) ................... 489,679,301
-----------
----------------------------------------------------------------------------
2.9% U.S. DOLLAR DENOMINATED DEBT OBLIGATIONS
----------------------------------------------------------------------------
US DOLLARS USD 13,196,609 Ford Motor Credit Co. Commercial Paper,
5.63%, 7/1/96 ....................... 13,196,609
1,000,000 U.S. Treasury Bill, 5.02%, 9/19/96 .... 988,760
300,000 U.S. Treasury Bill, 5.07%, 10/17/96 ... 295,392
-----------
TOTAL U.S. DOLLAR DENOMINATED DEBT ....
(Cost $14,480,879) .................. 14,480,761
-----------
TOTAL INVESTMENTS (Cost $508,011,549) . 504,160,062
-----------
----------------------------------------------------------------------------
0.3% PURCHASED OPTIONS
----------------------------------------------------------------------------
GBP 12,950,000 Put on British Pounds, strike price GBP
2.342, expiration date 7/9/96 ....... 12,473
DEM 49,765,388 Put on Deutschemarks, strike price
DEM 1.5525, expiration date 8/30/96 . 158,503
DEM 64,524,226 Put on Deutschemarks, strike price
DEM 1.5293, expiration date 7/3/96 .. 70,038
DEM 58,309,076 Put on Deutschemarks, strike price
DEM 1.5245, expiration date 7/1/96 .. 55,743
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
10
<PAGE>
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Value ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEM 58,309,076 Put on Deutschemarks, strike price
DEM 1.55, expiration date 7/1/96 ............ 2,915
SEK 131,462,000 Put on Swedish Kronor versus Deutschemarks,
strike price SEK 4.4521, expiration date
7/18/96 ..................................... 14,119
NZD 44,500,000 Put on New Zealand Dollars, strike price
NZD .663, expiration date 7/15/96 ........... 851
Number
of contracts
------------
JPY 110 Put on Japanese 10-year Government Bond,
strike price JPY 118, expiration date
8/30/96 ..................................... 391,067
USD 450 Call on U.S. Treasury Bond Futures, strike
price USD 110, expiration date 8/28/96 ...... 675,000
-----------
TOTAL PURCHASED OPTIONS (Cost $3,614,903) ..... 1,380,709
-----------
============================================================================================================
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $511,626,452) (a) ..................... 505,540,771
===========
<FN>
(a) The cost for federal income tax purposes was $513,642,708. At June 30, 1996, net
unrealized depreciation for all securities based on tax cost was $8,101,937. This
consisted of aggregate gross unrealized appreciation for all securities in which
there was an excess of market value over tax cost of $6,452,780 and aggregate gross
unrealized depreciation for all securities in which there was an excess of tax cost
over market value of $14,554,717.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
11
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- -------------------------------------------------------------
<TABLE>
- -------------------------------------------------------------
----------------------------------------------
WRITTEN OPTIONS
----------------------------------------------
At June 30, 1996, outstanding written options were as follows (Note A):
<CAPTION>
Principal
Amount Expiration Market
Call Options (000's) Date Strike Price Value ($)
- ------------ ----------------------------------------------
<S> <C> <C> <C> <C>
GBP ....... 12,950 7/9/96 GBP 2.362 68,168
AUD ....... 20,794 7/15/96 AUD .7913 46,024
SEK vs DEM 131,462 7/18/96 SEK 4.405 225,326
Put Options
- ------------
DEM ....... 58,309 7/1/96 DEM 1.5245 87,463
DEM ....... 64,524 7/3/96 DEM 1.5293 64,847
Number of
Call Option Contracts
- ------------ ---------
LIFFE BUND
Future .... 220 7/24/96 USD 95 331,988
-------
Total outstanding written options
(Premiums received $1,308,789) .............. 823,816
=======
<FN>
CURRENCY ABBREVIATIONS
- -----------------------------------------------------------
AUD Australian Dollar ITL Italian Lira
GBP British Pound JPY Japanese Yen
CAD Canadian Dollar NZD New Zealand Dollar
DKK Danish Kroner ESP Spanish Peseta
DEM Deutschemark SEK Swedish Krona
NLG Dutch Guilders USD United States Dollar
FRF French Franc
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
12
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
- -------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------------
<CAPTION>
JUNE 30, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $508,011,549) (Note A) ... $504,160,062
Purchased options, at market (identified cost $3,614,903) (Note A) 1,380,709
Foreign currency at market (identified cost $596,840) (Note A) ... 601,272
Receivables:
Investments sold .............................................. 142,822,905
Interest ...................................................... 13,865,431
Fund shares sold .............................................. 212,459
Unrealized appreciation on forward currency exchange
contracts (Notes A & D) ....................................... 232,521
------------
Total assets ............................................ 663,275,359
LIABILITIES
Payables:
Investments purchased ......................................... $142,009,372
Fund shares redeemed .......................................... 1,561,865
Dividends ..................................................... 1,010,075
Accrued management fee (Note C) ............................... 375,484
Other accrued expenses (Note C) ............................... 350,654
Written options at market (premiums received $1,308,789)
(Note A) ................................................ 823,816
Net payable on closed forward currency exchange contracts
(Note A) ...................................................... 166,156
Unrealized depreciation on forward currency exchange
contracts (Notes A & D) ....................................... 1,403,571
Daily variation margin on futures contracts (Note A) ............. 132,028
Total liabilities ....................................... ------------ 147,833,021
------------
Net assets, at market value ...................................... $515,442,338
============
NET ASSETS
Net assets consist of:
Net unrealized depreciation on:
Investments ............................................ $ (3,851,487)
Options ................................................ (1,749,221)
Foreign currency related transactions .................. (1,129,288)
Accumulated net realized loss ................................ (86,247,772)
Capital stock ................................................ 469,228
Additional paid-in capital ................................... 607,950,878
------------
Net assets, at market value ...................................... $515,442,338
NET ASSET VALUE, offering and redemption price per share ============
($515,442,338 [divided by] 46,922,766 shares of capital stock
outstanding, $.01 par value, 200,000,000 shares of capital
stock authorized) ............................................ $ 10.98
============
</TABLE>
The accompanying notes are an integral part of the finacial statements.
----
13
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
- -------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED JUNE 30, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest (net of withholding taxes of $932,505) .................. $56,125,689
Expenses:
Management fee (Note C) .......................................... $ 6,133,574
Services to shareholders (Note C) ................................ 1,432,640
Custodian and accounting fees (Note C) ........................... 957,371
Directors' fees (Note C) ......................................... 51,129
Reports to shareholders .......................................... 235,066
Auditing ......................................................... 111,085
Legal ............................................................ 18,375
State and Federal registration ................................... 34,220
Other ............................................................ 148,791 9,122,251
---------------------------
Net investment income ............................................ 47,003,438
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments .................................................. 23,157,219
Options ...................................................... 3,556,191
Futures contracts ............................................ (20,364,037)
Foreign currency related transactions ........................ (18,571,467) (12,222,094)
-----------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................. (23,387,651)
Options ...................................................... 4,549,305
Foreign currency related transactions ........................ 4,157,634 (14,680,712)
---------------------------
Net loss on investment transactions .............................. (26,902,806)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. $20,100,632
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
14
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
- ---------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED JUNE 30,
-----------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .......................................... $ 47,003,438 $ 92,566,481
Net realized loss from investment transactions ................. (12,222,094) (189,123,181)
Net unrealized appreciation (depreciation) on investment
transactions during the period .............................. (14,680,712) 130,714,791
------------ --------------
Net increase in net assets resulting from operations ........... 20,100,632 34,158,091
------------ --------------
Distributions to shareholders:
From net investment income ($.12 per share for
June 30, 1996) ........................................... (7,878,363) --
------------ --------------
Tax return of capital ($.61 and $.98 per share, respectively) (39,125,075) (92,566,481)
------------ --------------
Fund share transactions:
Proceeds from shares sold ...................................... 81,445,370 318,060,128
Net asset value of shares issued to shareholders
in reinvestment of distributions ............................ 39,214,810 72,680,706
Cost of shares redeemed ........................................ (487,822,648) (653,886,791)
------------ --------------
Net decrease in net assets from Fund share transactions ........ (367,162,468) (263,145,957)
------------ --------------
DECREASE IN NET ASSETS ......................................... (394,065,274) (321,554,347)
Net assets at beginning of period .............................. 909,507,612 1,231,061,959
------------ --------------
Net assets at end of period .................................... $515,442,338 $ 909,507,612
============ ==============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ...................... 79,574,801 102,881,085
------------ --------------
Shares sold .................................................... 7,198,026 27,314,845
Shares issued to shareholders in reinvestment of distributions . 3,472,904 6,274,380
Shares redeemed ................................................ (43,322,965) (56,895,509)
------------ --------------
Net decrease in Fund shares .................................... (32,652,035) (23,306,284)
------------ --------------
Shares outstanding at end of period ............................ 46,922,766 79,574,801
============ ==============
</TABLE>
The accompanying notes are an integral part of the finacial statements.
----
15
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD AND OTHER PERFORMANCE INFORMATION
DERIVED FROM THE FINANCIAL STATEMENTS.
<CAPTION>
FOR THE PERIOD
JULY 6, 1988
(COMMENCEMENT
YEARS ENDED JUNE 30, OF OPERATIONS)
--------------------------------------------------------------------- TO JUNE 30,
1996 1995 1994(b) 1993 1992 1991 1990 1989
--------------------------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $11.43 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27 $12.00
------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (a) ............. .73 .98 .92 1.03 1.08 1.21 1.10 1.00
Net realized and unrealized gain (loss)
on investment transactions (c) ....... (.45) (.54) (1.22) .52 2.15 .56 .80 (.73)
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations ......... .28 .44 (.30) 1.55 3.23 1.77 1.90 .27
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
From net investment income ........... (.12) -- (.91) (1.04) (1.09) (1.21) (1.09) (1.00)
From net realized gains on investment
transactions ....................... -- -- -- (.62) (.81) (.29) -- --
In excess of net realized gains on
investment transactions ............ -- -- (.39) -- -- -- -- --
Tax return of capital ................ (.61) (.98) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions ...................... (.73) (.98) (1.30) (1.66) (1.90) (1.50) (1.09) (1.00)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period ........... $10.98 $11.43 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) ......................... 2.59 3.92 (2.83) 12.24 28.25 14.88 17.59 2.16**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) ... 515 910 1,231 1,017 542 144 73 13
Ratio of operating expenses, net to
average net assets (%) (a) ........... 1.26 1.30 1.27 1.25 1.25 1.25 1.25 1.00*
Ratio of net investment income to
average net assets (%) ............... 6.50 8.52 6.86 7.69 8.31 9.48 9.57 8.58*
Portfolio turnover rate (%) .............. 275.7 318.5 232.9 249.7 147.9 260.1 215.6 103.8*
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(a) Reflects a per share amount of
expenses, exclusive of management
fees, reimbursed by the Adviser of . $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ .39
Reflects a per share amount of
management fee not imposed
by the Adviser of .................. $ -- $ -- $ -- $ .02 $ .04 $ .06 $ .10 $ .10
Operating expense ratio before
expense reductions (%) ............. -- -- 1.29 1.37 1.57 1.75 2.51 5.59*
(b) Per share amounts have been calculated using weighted average shares outstanding.
(c) Includes exchange gain (loss) of $.01, $.01 and ($.02) for the periods ended June 30, 1991, 1990 and 1989, previously
included in net investment income.
* Annualized
** Not annualized
</TABLE>
----
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
Scudder International Bond Fund (the "Fund") is a non-diversified series of
Scudder Global Fund, Inc., a Maryland corporation registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's financial statements are prepared in accordance with
generally accepted accounting principles which require the use of management
estimates. The policies described below are followed consistently by the Fund in
the preparation of its financial statements.
SECURITY VALUATION. Portfolio debt securities with remaining maturities greater
than sixty days are valued by pricing agents approved by the Officers of the
Fund, which prices reflect broker/dealer-supplied valuations and electronic data
processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. All other debt securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
OPTIONS. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the
period, the Fund purchased put options and wrote call options on securities and
currencies primarily as a hedge against potential adverse price movements in the
value of portfolio assets. In addition, during the period, the Fund purchased
call options and wrote put options on securities and currencies to lock in the
exchange rate component of the purchase price of securities expected to be
purchased in the near future and to enhance potential gain.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial
----
17
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------
premium received. If the Fund purchased an option and allows the option to
expire it would realize a loss to the extent of the premium paid. If the Fund
elects to close out the option it would recognize a gain or loss equal to the
difference between the cost of acquiring the option and the amount realized upon
the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked price are available. Over-the-counter written or purchased options are
valued using dealer supplied quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
FUTURES CONTRACTS. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased interest rate futures to manage the duration of the portfolio. In
addition, the Fund sold
----
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
interest rate futures to hedge against declines in the value of portfolio
securities.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at
the daily rates of exchange, and
(ii) purchases and sales of investment securities, interest income and
certain expenses at the rates of exchange prevailing on the respective
dates of such transactions.
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
----
19
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------
dates on securities transactions, gains and losses arising from the sales of
foreign currency, and gains and losses between the accrual and payment dates on
interest and foreign withholding taxes.
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 June 30, 1996, the Fund had a net tax basis capital
loss carryforward of approximately $83,774,000, which may be applied against any
realized net taxable capital gains of each succeeding year until fully utilized
or until June 30, 2003, ($77,681,000) and June 30, 2004 ($6,093,000), the
respective expiration dates, whichever occurs first.
----
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DISTRIBUTION OF INCOME AND GAINS. Distribution of net investment income is
declared as a dividend to shareholders of record as of the close of business
each day and is distributed to shareholders monthly. During any particular year
net realized gains and certain unrealized gains (which for federal income tax
reporting purposes may be considered realized) from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed and, therefore, will be distributed to shareholders. An
additional distribution may be made to the extent necessary to avoid the payment
of a four percent federal excise tax. Distributions of net realized gains to
shareholders are recorded on the ex-dividend date.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences relate primarily to investments in options, futures, forward
contracts, foreign denominated investments and certain securities sold at a
loss. As a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
OTHER. Investment security transactions are accounted for on a trade date basis.
Interest income is recorded on the accrual basis. All discounts are accreted
for both tax and financial reporting purposes.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
For the year ended June 30, 1996, purchases and sales of investment securities
(excluding short-term investments) aggregated $1,836,443,347, and
$2,181,122,628, respectively.
The aggregate face value of futures contracts opened and closed during the
year ended June 30, 1996 was $10,848,857,635, respectively.
----
21
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
Transactions in written options for the year ended June 30, 1996 are summarized
as follows:
<CAPTION>
-------------------------------------------------------------------------
OPTION CONTRACTS OPTIONS ON CURRENCIES (000 OMITTED)
--------------------- ------------------------------------------------
NUMBER OF PREMIUMS PREMIUMS
CONTRACTS RECEIVED ($) DEM ITL AUD RECEIVED ($)
--------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period -- $ -- 51,803 -- -- $ 415,203
Written ........... 1,127 1,640,909 709,846 271,771,945 37,044 9,440,228
Closed ............ (907) (1,470,544) (351,695) (99,650,000) (16,250) (4,788,886)
Exercised ......... -- -- (181,803) (172,121,945) -- (3,482,658)
Expired ........... -- -- (105,318) -- -- (693,508)
----- ----------- -------- ------------ ------- -----------
End of Period ..... 220 $ 170,365 122,833 -- 20,794 $ 890,379
----- ----------- -------- ------------ ------- -----------
===== =========== ======== ============ ======= ===========
-------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------
OPTIONS ON CURRENCIES (000 OMITTED) (CONTINUED)
-------------------------------------------------------------
PREMIUMS
GBP FRF JPY SEK RECEIVED ($)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning of Period 11,773 241,600 2,219,500 273,521 $ 1,645,040
Written ........... 43,178 -- 29,748,468 1,621,300 7,155,642
Closed ............ (15,114) -- (26,173,934) (1,019,753) (5,926,196)
Exercised ......... (26,887) -- (5,794,034) (743,606) (2,189,870)
Expired ........... -- (241,600) -- -- (436,571)
------- -------- ----------- ---------- -----------
End of Period ..... 12,950 -- -- 131,462 $ 248,045
======= ======== =========== ========== ===========
--------------------------------------------------------------
</TABLE>
----
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Management Agreement") with
Scudder, Stevens & Clark, Inc. (the "Adviser") the Adviser directs the
investments of the Fund in accordance with its investment objective, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Management Agreement. The
Management Agreement also provides that if the Fund's expenses, exclusive of
taxes, interest and extraordinary expenses, exceed specified limits, such
excess, up to the amount of the management fee, will be paid by the Adviser. The
management fee payable under the Management Agreement is equal to an annual rate
of 0.85% on the first $1,000,000,000 of average daily net assets and 0.80% of
such net assets in excess of $1,000,000,000, computed and accrued daily and
payable monthly. For the year ended June 30, 1996, the fee pursuant to the
Management Agreement amounted to $6,133,574, which is equivalent to an annual
effective rate of .85% of the Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended June 30, 1996, the amount charged by SSC aggregated $948,215, of
which $63,421 is unpaid at June 30, 1996.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended June 30, 1996,
the amount charged to the Fund by STC aggregated $99,670, of which $15,163 is
unpaid at June 30, 1996
Effective August 3, 1995, Scudder Fund Accounting Corporation ("SFAC"), a
subsidiary of the Adviser, assumed responsibility for determining the daily net
asset value per share and maintaining the portfolio and general accounting
records of the Fund. For the year ended June 30, 1996, the amount charged to the
Fund by SFAC aggregated $464,475, of which $68,430 is unpaid at June 30, 1996.
The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the year
ended June 30, 1996, Directors' fees and expenses aggregated $51,129.
----
23
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
D. COMMITMENTS
- --------------------------------------------------------------------------------
<TABLE>
As of June 30, 1996, the Fund had entered into the following forward currency
exchange contracts resulting in net unrealized depreciation of ($1,171,050).
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (U.S.$)
- -------------------- -------------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
DEM 5,004,056 USD 3,285,658 8/26/96 (8,577)
DKK 43,904,995 JPY 780,497,779 7/9/96 (356,583)
GBP 7,239,404 USD 11,231,936 8/5/96 (7,595)
ITL 14,806,020,636 USD 9,432,016 7/10/96 (210,538)
JPY 1,166,982,948 USD 10,797,000 9/12/96 48,371
JPY 809,564,203 DKK 43,904,995 7/9/96 91,352
JPY 370,302,328 NLG 5,823,554 7/9/96 31,291
JPY 635,680,000 NLG 10,000,000 7/9/96 55,466
NLG 32,500,000 JPY 1,998,847,500 7/9/96 (792,664)
USD 9,636,513 ITL 14,806,020,636 7/10/96 6,041
USD 10,770,692 JPY 1,166,982,948 9/12/96 (22,063)
USD 2,709,839 JPY 293,605,607 9/12/96 (5,551)
----------
(1,171,050)
==========
</TABLE>
E. Lines of Credit
- --------------------------------------------------------------------------------
The Fund and several affiliated Funds ("The Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
----
24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE DIRECTORS OF SCUDDER GLOBAL FUND, INC. AND TO THE SHAREHOLDERS OF SCUDDER
INTERNATIONAL BOND FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
International Bond Fund including the investment portfolio, as of June 30, 1996,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years then ended, and the financial
highlights for each of the seven years in the period then ended and for the
period July 6, 1988 (commencement of operations) to June 30, 1989. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder International Bond Fund as of June 30, 1996, the results of its
operations for the year then ended, the changes in net assets for each of the
two years then ended, and the financial highlights for each of the seven years
in the period then ended and for the period July 6, 1988 (commencement of
operations) to June 30, 1989, in conformity with generally accepted accounting
principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
August 20, 1996
----
25
<PAGE>
(This page intentionally left blank.)
26
<PAGE>
(This page intentionally left blank.)
27
<PAGE>
(This page intentionally left blank.)
28
<PAGE>
OFFICERS AND DIRECTORS
Daniel Pierce*
Chairman of the Board, Director and Vice President
Nicholas Bratt*
President and Director
Paul Bancroft III
Director; Venture Capitalist and Consultant
Sheryle J. Bolton
Director; Consultant
Thomas J. Devine
Director; Consultant
William H. Gleysteen, Jr.
Director; Consultant
Dudley H. Ladd*
Director
William H. Luers
Director; President, The Metropolitan Museum of Art
Robert G. Stone, Jr.
Honorary Director; Chairman of the Board and Director, Kirby Corporation
Robert W. Lear Honorary Director; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business
Adam M. Greshin*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Vice President and Assistant Treasurer
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Gerald J. Moran*
Vice President
Edward J. O'Connell*
Vice President and Assistant Treasurer
Juris Padegs*
Vice President and Assistant Secretary
Kathryn L. Quirk*
Vice President and Assistant Secretary
Isabel Saltzman*
Vice President
Cornelia M. Small*
Vice President
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
29
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
<S> <C> <C>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder Global Bond Fund
Tax Free Money Market+ Scudder GNMA Fund
Scudder Tax Free Money Fund Scudder High Yield Bond Fund
Scudder California Tax Free Money Fund* Scudder Income Fund
Scudder New York Tax Free Money Fund* Scudder International Bond Fund
Tax Free+ Scudder Short Term Bond Fund
Scudder California Tax Free Fund* Scudder Zero Coupon 2000 Fund
Scudder High Yield Tax Free Fund Growth
Scudder Limited Term Tax Free Fund Scudder Capital Growth Fund
Scudder Managed Municipal Bonds Scudder Development Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Emerging Markets Growth Fund
Scudder Massachusetts Tax Free Fund* Scudder Global Fund
Scudder Medium Term Tax Free Fund Scudder Global Discovery Fund
Scudder New York Tax Free Fund* Scudder Gold Fund
Scudder Ohio Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Pennsylvania Tax Free Fund* Scudder International Fund
Growth and Income Scudder Latin America Fund
Scudder Balanced Fund Scudder Micro Cap Fund
Scudder Growth and Income Fund Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc. Scudder Treasurers Trust(TM)++
Scudder Fund, Inc.
-----------------------------------------------------------------------------------------------------------------
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +A portion of the income from the tax-free funds may
be subject to federal, state, and local taxes. *Not available in all states.
+++A no-load variable annuity contract provided by Charter National Life
Insurance Company and its affiliate, offered by Scudder's insurance agencies,
1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark, Inc. are
traded on various stock exchanges. ++For information on Scudder Treasurers
Trust,(TM) an institutional cash management service that utilizes certain
portfolios of Scudder Fund, Inc. ($100,000 minimum), call 1-800-541-7703.
</TABLE>
30
<PAGE>
HOW TO CONTACT SCUDDER
<TABLE>
<CAPTION>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
<S> <C>
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your Scudder accounts;
exchanges and redemptions; or information on any Scudder fund
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
-------------------------------------------------------------------------------------------------------------
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
-------------------------------------------------------------------------------------------------------------
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Visit the Scudder World Wide Web Site at:
-------------------------------------------------------------------------------------------------------------
http://funds.scudder.com
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
-------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM)an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
-------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
<FN>
* 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 40 pure no load(TM) funds, including the first international mutual
fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
