Scudder
Global
Discovery Fund
Annual Report
October 31, 1997
Pure No-Load(TM) Funds
For investors seeking above-average capital appreciation over the long term by
investing primarily in the equity securities of small companies located
throughout the world.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
In Brief
o For the twelve-month period ended October 31, 1997, Scudder Global Discovery
Fund returned 11.14%, exceeding the 10.07% average return of global small-cap
funds for the same period, according to Lipper Analytical Services.
o Morningstar assigned the Fund a 4-star rating for its risk-adjusted
performance among 637 international funds as of October 31, 1997^1
o The Fund benefited from a steadily increasing emphasis on U.S. small-cap
stocks, one of the strongest performing global small-cap markets.
o A limited exposure in Asia and the Pacific Rim helped the Fund avoid some of
the fallout from currency devaluations in Southeast Asia.
^1 Morningstar's proprietary ratings reflect historical, risk-adjusted
performance. Ratings are subject to change monthly and are calculated from
the Fund's three-, five-, and ten-year average annual returns in excess of
90-day Treasury bill returns with appropriate fee adjustments, and a risk
factor that reflects Fund performance below 90-day T-bill returns. In an
investment category, the top 10% of funds receive 5 stars and the next
22.5% receive 4 stars. In the international category, the Fund received a
4-star rating for the three- and five-year periods among 637 and 261 funds,
respectively. The Fund was not rated for the ten-year period because it
commenced operations on September 10, 1991. Past performance is no
guarantee of future results.
Table of Contents
3 Letter from the Fund's Chairman 21 Notes to Financial Statements
4 Performance Update 25 Report of Independent Accountants
5 Portfolio Summary 26 Tax Information
6 Portfolio Management Discussion 26 Officers and Directors
11 Glossary of Investment Terms 27 Shareholder Meeting Results
12 Investment Portfolio 29 Investment Products and Services
17 Financial Statements 30 Scudder Solutions
20 Financial Highlights
2 - Scudder Global Discovery Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to present the annual report for Scudder Global Discovery
Fund for the twelve-month period ended October 31, 1997.
The period proved to be an ideal environment to test the Fund's
diversified, global approach, as the Fund's U.S. and foreign small-cap stock
holdings took turns leading performance during the twelve months. In the end,
U.S. small-caps, an area that Fund management had been increasing throughout the
year, provided the majority of the Fund's positive performance. The Fund also
benefited from only token exposure to the emerging markets of Southeast Asia,
which experienced significantly increased volatility in the wake of several
currency devaluations. A detailed discussion of the Fund's activities begins on
page 6.
In this environment, we believe a sound investment approach is based on
careful diversification. This can be accomplished with exposure to small-cap,
foreign, emerging market, and fixed income securities, in addition to large-cap
U.S. stocks. Scudder Global Discovery Fund can serve as an important holding in
this type of diversified portfolio, which, when combined with a habit of
investing regularly and a long-term perspective, can help many investors meet
their investing goals.
For those of you who are interested in new Scudder products, we recently
introduced Scudder International Growth and Income Fund, which pursues a
yield-oriented approach to investing in international equities. The Fund seeks
to provide long-term growth of capital plus current income. Investors who desire
international exposure but wish to take a more conservative approach may
appreciate the Fund's emphasis on dividend-paying stocks of established
companies listed on foreign exchanges. For further information on this new fund,
please turn to page 31.
Thank you for your investment in Scudder Global Discovery Fund. If you have
any questions about your investment, please call Scudder Investor Relations at
1-800-225-2470, or visit our web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Global Discovery Fund
3 - Scudder Global Discovery Fund
<PAGE>
PERFORMANCE UPDATE as of October 31, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/97 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER GLOBAL DISCOVERY FUND
TICKER SYMBOL: SGSCX
- --------------------------------------------
1 Year $ 11,114 11.14% 11.14%
5 Year $ 20,367 103.67% 15.29%
Life of Fund* $ 20,487 104.87% 12.38%
- --------------------------------------------
SALOMON BROTHERS WORLD EQUITY EMI
- --------------------------------------------
1 Year $ 11,334 13.34% 13.34%
5 Year $ 19,351 93.51% 14.11%
Life of Fund* $ 18,778 87.78% 10.91%
- --------------------------------------------
MSCI WORLD INDEX
- --------------------------------------------
1 Year $ 11,676 16.76% 16.76%
5 Year $ 20,326 103.26% 15.23%
Life of Fund* $ 19,569 95.69% 11.65%
- --------------------------------------------
* The Fund commenced operations on September 10, 1991.
Index comparisons begin September 30, 1991.
- ----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- ----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
SCUDDER PACIFIC OPPORTUNITIES FUND
Year Amount
- ----------------------
9/91* $10,000
'91 $ 9,770
'92 $ 9,894
'93 $13,459
'94 $13,837
'95 $14,988
'96 $18,131
'97 $20,151
MSCI WORLD INDEX
Year Amount
- ----------------------
9/91* $10,000
'91 $10,159
'92 $ 9,627
'93 $12,229
'94 $13,164
'95 $14,410
'96 $16,760
'97 $19,569
SALOMON BROTHERS WORLD EQUITY EMI
Year Amount
- ----------------------
9/91* $10,000
'91 $10,148
'92 $10,245
'93 $13,422
'94 $14,245
'95 $15,225
'96 $17,492
'97 $19,825
YEARLY PERIODS ENDED OCTOBER 31
The Salomon Brothers World Equity Extended Market Index is an unmanaged small
capitalization stock universe of 22 countries. Index returns assume dividends
reinvested net of withholding tax and, unlike Fund returns, do not reflect
any fees or expenses.
With this report, the Fund has adopted the Salomon Brothers World Equity
Extended Market Index (EMI) as its primary securities market index over the
Morgan Stanley Capital International World Index. The Salomon EMI comprises the
smallest 20% of global small-cap stocks and better represents the securities
and markets in which the Fund typically invests.
- ----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- ----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED OCTOBER 31
<TABLE>
<CAPTION>
1991* 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------
NET ASSET VALUE... $ 11.92 $ 12.05 $ 16.14 $ 16.27 $ 17.54 $ 20.45 $ 21.64
INCOME DIVIDENDS.. $ -- $ .02 $ .07 $ .18 $ -- $ .20 $ .13
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ -- $ .12 $ .15 $ .08 $ .44 $ .86
FUND TOTAL
RETURN (%)........ -.67 1.26 36.04 2.80 8.32 20.97 11.14
INDEX TOTAL
RETURN (%)........ 1.48 -4.37 31.01 6.13 6.88 14.89 13.34
</TABLE>
On March 6, 1996, the Fund adopted its current name. Prior to that date,
the Fund was known as the Scudder Global Small Company Fund. All performance is
historical, assumes reinvestment of all dividends and capital gains, and is not
indicative of future results. Investment return and principal value will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than when purchased. If the Adviser had not maintained the Fund's expenses, the
total returns for the five year and life of Fund periods would have been lower.
4 - Scudder Global Discovery Fund
<PAGE>
PORTFOLIO SUMMARY as of October 31, 1997
- ---------------------------------------------------------------------------
GEOGRAPHICAL
(Excludes 5% Cash Equivalents)
- ---------------------------------------------------------------------------
U.S. & Canada 49%
Europe 42%
Japan 7%
Other 2%
- --------------------------------------
100%
- --------------------------------------
Increases in holdings of U.S. stocks
benefited the portfolio, as the U.S.
market led the performance of global
small-cap stocks.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS
(Excludes 5% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 17%
Service Industries 16%
Technology 16%
Consumer Staples 9%
Consumer Discretionary 8%
Health 7%
Energy 6%
Media 5%
Manufacturing 5%
Other 11%
- --------------------------------------
100%
- --------------------------------------
The Fund's individual stock selection
approach resulted in an increased
presence in U.S. technology stocks,
one of the strongest performing
sectors during the period.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
(27% of Portfolio)
- --------------------------------------------------------------------------
1. BANK OF IRELAND PLC
Bank in Ireland
2. BILLING CONCEPTS
Billing and information management services
in the United States
3. NETWORK APPLIANCE, INC.
Designer and manufacturer of network data
storage devices in the United States
9. STERLING COMMERCE, INC.
Producer of electronic data interchange
products and services in the United State
5. SERCO GROUP PLC
Facilities management company in the United
Kingdom
6. SHOHKOH FUND & CO., LTD.
Finance company for small- and
medium-sized firms in Japan
7. VITESSE SEMICONDUCTOR CORP.
Manufacturers of digital integrated circuits
in the United State
8. IHC CALAND NV
Dredging and offshore services in the
Netherlands
9. JERONIMO MARTINS SA
Food producer and retailer in Portugal
10. CENTRAL EUROPEAN MEDIA
ENTERPRISES LTD.
Owner and operator of national and regional
private commercial television stations in
Central Europe and Germany
Reflecting the significance of the Fund's
"bottom-up" approach, about 85% of the
Fund's return is attributed to 10 stock
holdings.
For more complete details about the Fund's investment portfolio, see page 12.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5 - Scudder Global Discovery Fund
<PAGE>
Portfolio Management Discussion
We asked Gerald J. Moran, lead portfolio manager of Scudder Global Discovery
Fund, to discuss the market environment and the Fund's current investment
strategy.
Q: How did the global markets perform over the twelve months ended October 31,
1997?
A: Within the small-cap sector, U.S. stocks led the performance of the global
markets by a significant margin. Domestic small-caps came from behind to nearly
match the returns of large-cap U.S. stocks, as solid economic growth, relatively
low interest rates, and benign inflation provided a favorable background. After
the summer, investors reacted to global economic anxiety by selling large-cap
stocks, which had been favored for over a year. As a consequence, the relative
performance of U.S. small-cap stocks accelerated in the last three months of the
period.
Overseas, European stocks fared reasonably well, despite the Socialist victory
in the French elections and worries over German policy toward EMU (European
Monetary Union). Restructuring momentum helped propel German stocks, and all
other major European markets participated in the rally. Within the portfolio,
companies in Ireland and the U.K. were the second and third best-performing
after U.S. holdings. Nevertheless, the performance of foreign small-cap stocks
failed to overtake the returns of their larger cap counterparts for the period.
In Asia and the Pacific Rim, the markets experienced a significant correction
triggered by currency devaluations in Southeast Asia beginning in July. As a
result, interest rates soared, growth expectations were lowered and stocks fell
across the region, including in Japan, where we continued to trim our already
small exposure (7% of assets on October 31, 1997). Elsewhere in the Pacific, the
Fund had little exposure as we exited our lone Southeast Asian holding (Arab
Malaysian Bank). The currency crisis in Southeast Asia was brought on largely by
poor macroeconomic policies. Banks became over-extended as the risks inherent in
profligate lending materialized. In addition, overcapacity intensified, as
countries in the region engaged in competitive currency devaluations in an
attempt to sustain exports. We expect that bargains may emerge but, at this
point, we need to see more transparency; that is, the interests of management,
local owners, and large local investors must be aligned with the interests of
foreign stockholders. The custom of governments bailing out favored local
stockholders to the detriment of all others has tainted the markets and has to
stop before meaningful foreign investment returns. The IMF (International
Monetary Fund) bailout of Korea might mark a turning point for investor
sentiment, but we remain cautious on stocks in this part of the world.
We have had a very small portion of the portfolio invested in developing markets
but, looking forward, we expect to favor companies in both Latin America and
Eastern Europe.
Q: Japan's market and economy have continued to struggle. What is your
assessment?
A: The well-publicized banking and real estate problems have been overhanging
the Japanese market for years. Denial has been the official order of the day.
For a market to function efficiently, the risk of failure must be present.
Without that risk, banks have been encouraged to make questionable loans and,
6 - Scudder Global Discovery Fund
<PAGE>
over time, the foundation of the system has become suspect. Now, the environment
in Japan may be changing. We are encouraged by the recent announcement that
Hokkaido Takushoku Bank (one of Japan's "top ten") was allowed to fail. Also,
the bankruptcy of one of the country's leading brokerage houses, Yamaichi, may
potentially also prove beneficial in the long run, marking a significant turn
toward a genuine open market system. Despite poor market performance in Japan,
especially among small-cap stocks, two of our holdings -- Nichei and Shohkoh
Fund -- were among the top contributors to the Fund's performance. For the
period, Nichei was up 65% and Shohkoh was up 54%.
Q: How did global small-cap stocks perform?
A: We saw a shift over the period: during the first six months, foreign
small-caps led the markets; over the second half, U.S. small-caps led. This was
an environment in which a global investment approach was particularly valuable.
We were able to take advantage of this environment by shifting into some U.S.
securities at reasonable valuations in the spring of 1997. For the twelve months
ended October 31, 1997, U.S. small-cap stocks captured the lion's share of
global small-cap gains, returning 29.34%, as measured by the unmanaged Russell
2000 Index. Foreign small-cap stocks had more modest returns, detracting from
the performance of the Salomon Brothers Extended Market Index (representing the
smallest 20% of the global small-cap universe), which returned 13.34% for the
same period. Within the U.S. small-cap universe, value stocks outperformed
growth stocks.
THE PRINTED DOCUMENT HAS A HORIZONTAL BAR CHART HERE
BAR CHART TITLE:
Stock Market and Currency Performance
Twelve Months Ended October 31, 1997
Currency Return Stock Return
--------------- ------------
Italy -10% 39.3%
Mexico -6.5% 38.3%
Netherlands -10.5% 32.6%
Germany -11% 29.0%
Brazil -5.8% 27.6%
U.S. 0% 23.5%
France -10.4% 18.3%
U.K. -2.3% 17.6%
Argentina 0% 10.4%
Taiwan -11.1% 5.5%
Japan -3.5% -13.2%
Hong Kong 0.1% -21.0%
Indonesia -33% -21.5%
Korea -12.4% -27.7%
Singapore -11% -28.5%
Philippines -25.7% -42.7%
Thailand -37.5% -46.2%
Malaysia -25.1% -46.3%
Source: Factset
7 - Scudder Global Discovery Fund
<PAGE>
Q: And the Fund?
A: The Fund returned 11.14% for the twelve months, exceeding the 10.07% average
return of global small-cap funds for the same period, according to Lipper
Analytical Services. The Fund maintained its 4-star rating from Morningstar,
which ranked the Fund's risk-adjusted performance among the top third of 637
funds in the international category.
Q: What were the major factors that contributed to performance?
A: Individual stock selection remained a major factor in the overall results.
About 85% of the Fund's total return for the fiscal year can be attributed to
ten stocks. This concentration reflects our emphasis on individual stock
selection over "top down" country or regional decisions. We mitigate individual
security risk by making sure that major stock weightings are not all highly
correlated to one event. Thus, the volatility of individual stocks is not
translated to the portfolio as a whole.
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART TITLE:
Performance of Foreign v. U.S. Small-Cap
Markets
Foreign Small-Caps^1 U.S. Small-Caps^2
-------------------- -----------------
12/89 100.0 % 100.0 %
85.7 96.7
94.4 100.0
12/90 73.9 79.8
77.5 88.1
84.3 108.8
79.7 108.9
12/91 84.2 117.5
82.5 128.1
74.5 130.6
77.5 127.5
12/92 73.4 131.9
70.0 148.7
80.5 156.7
89.0 159.7
12/93 94.5 171.0
91.8 173.1
100.0 166.9
103.7 161.4
12/94 103.0 172.2
99.6 168.6
99.0 180.7
98.9 197.0
12/95 102.9 216.9
104.8 222.3
110.9 233.7
115.7 242.5
12/96 113.1 248.3
112.4 262.6
110.4 252.0
118.3 290.3
9/97 113.4 334.9
U.S. small-caps outperformed foreign small-caps during the period
and over the longer term.
^1 Salomon Extended Market Index (excluding U.S.)
^2 Salomon Extended Market Index (U.S. only)
In addition, our increased weighting in U.S. small-caps was an important
contributor to performance. At the end of the period, U.S. small-caps
constituted 47% of Fund assets, a historically high weighting.
Q: Do you have some specific names?
A: We have several holdings that worked well for us over the period, including
top Fund holding Bank of Ireland, a consistent workhorse with a below-average
price earnings ratio and an above-average dividend. The stock increased in value
by 54% for the period. Billing Concepts and Vitesse Semiconductor are two
U.S.-based companies in the top ten that also increased in value by 50% or more,
as did Jeronimo Martins (Portugal) and Serco (UK).
Q: U.S.-based high tech, high growth stocks were important contributors to the
Fund's performance over the period. What was the story in tech?
A: We don't have many technology companies in the portfolio, but the few we have
we watch very closely, such as Vitesse Semiconductor. This U.S. company is the
largest manufacturer of gallium arsenide semiconductors and is a leader in
producing high speed semiconductors for telecommunications and PC applications.
Vitesse has mastered the efficient and low cost production of "GaAs," as they
are called. The company fits in well with our principal criteria for stock
selection: unique product, market leader, and fast growing. We believe the
company is positioned to grow at a well above-average rate, as the demand for
8 - Scudder Global Discovery Fund
<PAGE>
faster speeds in telecommunications appears almost limitless. Vitesse was up 74%
from our initial purchase in November of 1996.
Octel Communications (up 78%) was another big winner in the U.S. technology
area. The company is a leader in the voice messaging business. We picked up the
stock after the company announced a bad quarter in November of 1996. In
September of 1997, we sold this position to Lucent Technologies, which made a
public offering for all of Octel's shares. We think Lucent shared our view that
Octel has a solid market position plus excellent technology and should fare well
over the long term.
Another strong performer was Billing Concepts, up 50%. The company operates in
the fast growing outsourcing and telecommunications areas. The company is an
innovator, providing billing services for small regional and long distance
telephone companies (many of which came into existence within the last ten
years). With contractual agreements to collect and bill customers, it is able to
perform this service at a lower cost than if their corporate clients were to do
it themselves. As the stock price declined at certain points during the year, we
continued to add shares to our position to the point where it is now the second
largest in the portfolio. As a small, niche player in a huge, fast-growing
industry, we think this company continues to have considerable promise.
Q: Were there any stocks that didn't work out the way you expected?
A: There always seem to be a few, but the important thing is to recognize them,
and then act quickly. We had stuck our toe in the water in Malaysia with Arab
Malaysian Bank, where the fundamentals looked very strong given the "old rules,"
that is, before the currency crisis in Southeast Asia. We liked the fact that
the bank's management was aligned with the interests of foreign investors and
the attractive valuation of the stock. After the devaluations, the firm's solid
fundamentals didn't matter. We sold the stock in the summer of 1997. Fresenius,
the German manufacturer of kidney dialysis equipment, was another
disappointment. The company had been a strong performer in previous years, and
we simply held the stock too long. However, we still exited the holding with
significant gains. In the case of Sitel, a U.S. telemarketing company (inbound
and outbound calls), the stock declined substantially, as the company decided to
forgo earnings for market share in the short term. We continued to hold the
stock because we think the market has overreacted to the absence of current
earnings and that the company has a bright future.
Q: What was your approach to managing currencies?
A: The strength of the dollar offset some of the advances in stock prices
overseas; however, hedging currencies provided meaningful gains for the Fund
during the twelve months. We hedged both the yen and the major European
currencies during the year, profiting the portfolio on all positions. We unwound
all currency hedges toward the end of the period and are currently willing to
sit on the sidelines. We are still inclined to think that the new Euro currency
will be weak relative to the dollar over the long term, but we anticipate
continuing volatility in the near-term with no clear direction. We have little
9 - Scudder Global Discovery Fund
<PAGE>
confidence in our ability to evaluate the direction of the yen over the next
year, as policy decisions will probably be the prime determinant of the
direction of the currency. Therefore, the portfolio remained unhedged at the end
of the period. As noted above, we have not had meaningful stock holdings in
those countries experiencing significant currency devaluations. We expect to
hedge defensively only in attempting to protect our stock selections.
Q: What is your strategy going forward?
A: Over the next few months, we expect our stock selection efforts to focus on
Europe, and to a much lesser extent, the Pacific region where we have less than
7% of assets. With the Fund's U.S. holdings at the highest level of
concentration since the Fund's inception, we intend to selectively sell stocks
we believe are overpriced. Elsewhere in the developed world, the critical issue
continues to be the acceptance of U.S./U.K.-style restructuring and shareholder
orientation. The restructuring process has acquired momentum in Europe and
appears sustainable at this point. We think that investor interest in small
stocks abroad will increase in the months ahead, as the relative attractiveness
of small-caps, which have not kept pace with larger cap issues, begins to be
recognized. We will continue to emphasize stock selection, stressing niche
leadership among the companies we purchase, while seeking changing business
environments conducive to corporate growth in shareholder earnings. As we
perceive greater value among smaller issues, the portfolio's average market
capitalization should decrease.
Scudder Global Discovery Fund: A Team Approach to Investing
Scudder Global Discovery Fund is run 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. They are supported by Scudder's large staff of
economists, research analysts, traders, and other investment specialists who
work in Scudder 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 Gerald J. Moran has set Scudder Global Discovery Fund's
investment strategy and overseen its daily operation since the Fund was
introduced in 1991. Gerry joined Scudder's equity research and management area
in 1968 and has been a portfolio manager since 1985. Sewall Hodges, Portfolio
Manager, joined Scudder in 1995 and the team in 1996. Sewall, who has 11
years' experience in global analysis and portfolio management, focuses on
stock selection and research. Portfolio Manager Elizabeth Allan, who joined
the team in 1994, concentrates on the Fund's Pacific Basin investments.
Elizabeth has been a portfolio manager at Scudder since 1991 and joined the
firm in 1987. Joan Gregory, Portfolio Manager, joined the team in 1994 and
focuses on stock selection, a role she has played since she joined Scudder in
1992. Joan has been selecting global and international stocks since 1989.
10 - Scudder Global Discovery Fund
<PAGE>
Glossary of Investment Terms
CURRENCY DEVALUATION A significant decline of a currency's value
relative to other currencies, such as the U.S.
dollar. This may be prompted by trading or central
bank intervention (or the lack of intervention) in
the currency markets. For U.S. investors who are
investing overseas, a devaluation of a foreign
currency can have the effect of reducing the total
return of their investment.
FUNDAMENTAL RESEARCH Analysis of companies based on the projected
impact of management, products, sales, and
earnings on balance sheets and income statements.
Distinct from technical analysis, which evaluates
the attractiveness of a stock based on historical
price and trading volume movements, rather than
the financial results of the underlying company.
LIQUIDITY A stock that is liquid has enough shares
outstanding and a substantial enough market
capitalization to allow large purchases and sales
to occur without causing a significant change in
its market price.
MARKET CAPITALIZATION The value of a company's outstanding shares of
common stock, calculated by multiplying the number
of shares outstanding by the share price (Shares x
Price = Market Capitalization). The universe of
publicly traded companies is frequently divided
into large-, mid-, and small-capitalizations. In
general, "large-cap" stocks tend to be more liquid
than "small-cap" stocks.
PRICE-EARNINGS RATIO (P-E) A widely used gauge of a stock's valuation that
(ALSO "EARNINGS MULTIPLE") indicates what investors are paying for a
company's earnings on a per share basis. Typically
based on a company's projected earnings for the
next 12 months, a higher "earnings multiple"
indicates a higher expected growth rate and the
potential for greater price fluctuations.
TRANSPARENCY The degree to which investors can evaluate if a
company is managed in the interests of
shareholders. Transparency is often an issue in
developing markets where disclosure requirements
may be less stringent, and protectionism,
subsidies, and cronyism may distort the business
environment.
(Sources: Scudder; Barron's Dictionary of Finance and Investment Terms)
11 - Scudder Global Discovery Fund
<PAGE>
Investment Portfolio as of October 31, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 5.1%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 10/31/97 at 5.7%,
to be repurchased at $17,784,443 on 11/3/97, collateralized by a $17,549,000 -----------
U.S. Treasury Note, 6.75%, 4/30/00 (Cost $17,776,000) ................................. 17,776,000 17,776,000
-----------
U.S. Treasury Obligations 0.0%
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bill, 1/8/98 (Cost $99,070) ............................................... 100,000 99,070
-----------
<CAPTION>
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 94.9%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 0.8%
Banco Rio de la Plata S.A. (Private bank) ............................................... 60,000 630,000
Dalmine Siderca (Steel producer) ........................................................ 832,653 2,041,235
-----------
2,671,235
-----------
Austria 0.9%
Schoeller Bleckmann Oilfield Equipment AG (Manufacturer of components for oil
and gas drilling equipment) ........................................................... 12,800 1,513,825
VAE Eisenbahnsysteme AG (Manufacturer of electronic railroad control systems) ........... 18,000 1,765,360
-----------
3,279,185
-----------
Canada 0.6%
Canadian 88 Energy Corp.* (Oil and natural gas exploration and production) .............. 384,500 1,596,002
StressGen Biotechnologies Corp. "A"* (Developer of products for treatment of
cancer and certain infectious diseases) ............................................... 205,000 530,919
-----------
2,126,921
-----------
Czech Republic 2.1%
Central European Media Enterprises Ltd. "A"* (Owner and operator of national
and regional private commercial television stations in Central Europe
and Germany) .......................................................................... 257,700 7,537,725
-----------
France 1.3%
Dassault Systemes S.A.* (Computer aided design, manufacturing and engineering
software products) .................................................................... 113,600 3,407,065
Group AB S.A.* (ADR) (Producer and distributor of television programming) ............... 150,000 1,115,625
-----------
4,522,690
-----------
Germany 3.6%
Beta Systems Software AG* (Developer of processing automation software) ................. 17,270 1,652,584
Marschollek Lautenschlaeger und Partner AG (pfd.) (Leading independent life
insurance company) .................................................................... 31,100 7,124,340
Moebel Walther AG (pfd.) (Furniture retailer) (b) ....................................... 45,500 1,847,126
Pfeifer Vacuum Technology AG* (Manufacturer of various pumps and vacuum systems) ........ 58,000 1,885,000
-----------
12,509,050
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Global Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hungary 0.5%
Richter Gedeon Rt (Pharmaceutical company) .............................................. 19,800 1,841,400
-----------
Indonesia 0.0%
Steady Safe Transportation Service (Operator of taxis and buses in Jakarta) ............. 443 120
-----------
Ireland 6.9%
Bank of Ireland PLC (Bank) .............................................................. 922,568 11,678,445
Irish Continental Group PLC (Transport of passengers, freight and containers
between Ireland, the U.K. and the continent) .......................................... 184,505 2,246,817
Irish Life PLC (Provider of life and disability insurance and pensions) ................. 814,550 4,286,080
Irish Permanent PLC (Retail financial services group) ................................... 182,152 1,738,930
Jury's Hotel Group PLC (Hotel operator) ................................................. 501,255 3,052,026
Ryan Hotels PLC (Owner and operator of hotel chain) ..................................... 1,213,200 1,094,355
-----------
24,096,653
-----------
Italy 3.1%
Aeroporti di Roma SpA* (Management of Fiumicino and Ciampino airports) .................. 239,000 2,167,018
Bulgari SpA (Manufacturer and retailer of fine jewelry, luxury watches and perfumes) .... 444,800 2,416,392
Saes Getters SpA di Risparmio (Manufacturer of getters, refined chemicals used
in cathode-ray tubes and other monitors) .............................................. 208,300 2,189,395
Saipem SpA (International contractor in oil and gas exploration and drilling,
construction of refineries and pipelines) ............................................. 748,000 4,198,252
-----------
10,971,057
-----------
Japan 6.8%
Albis Co Limited (Food wholesaler) ...................................................... 78,000 417,313
FCC Co., Ltd. (Manufacturer of motorcycle and automobile clutches) ...................... 41,000 647,171
Nichiei Co., Ltd. (Finance company for small and medium-sized firms) .................... 63,000 6,908,698
Riso Kagaku Corp. (Manufacturer of copying machines) .................................... 50,900 2,998,098
Shohkoh Fund & Co., Ltd. (Finance company for small and medium-sized firms) ............. 28,000 9,072,028
Square Co., Ltd. (Producer of software for video games) ................................. 108,200 3,928,171
-----------
23,971,479
-----------
Luxembourg 2.0%
Millicom International Cellular S.A.* (Developer and operator of cellular
telephone networks) ................................................................... 168,100 7,060,200
-----------
Mexico 0.9%
TV Azteca, S.A. de C.V. (ADR) (Owner and operator of national television networks) ...... 174,200 3,331,575
-----------
Netherlands 3.8%
De Telegraaf Holding NV (Leading publisher of newspapers, magazines and books) .......... 69,600 1,431,510
IHC Caland NV (Dredging and offshore services) .......................................... 129,000 7,919,889
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Global Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Koninklijke Nedlloyd Groep NV (Container shipping and transportation) ................... 138,100 4,097,270
-----------
13,448,669
-----------
Poland 0.7%
Debica S.A. "A" (Tire manufacturer) ..................................................... 44,900 1,185,308
Pioneer Poland Fund (Closed-end investment company) (b) (c) ............................. 3 1,381,993
-----------
2,567,301
-----------
Portugal 3.3%
Jeronimo Martins S.A. (Food producer and retailer) ...................................... 117,470 7,682,144
Telecel-Comunicacoes Pessoais, S.A.* (Cellular communication services) .................. 44,366 4,011,484
-----------
11,693,628
-----------
Spain 0.9%
Aldeasa S.A. (Operator of airport duty-free shops) ...................................... 49,500 1,025,933
Tele Pizza, S.A.* (Operator of fast-food pizza restaurants in Spain, Portugal,
Poland, Mexico and Chile) ............................................................. 29,000 1,991,545
-----------
3,017,478
-----------
Sweden 1.0%
OM Gruppen AB (Free) (Operator of financial exchanges and clearing organizations) ....... 57,400 1,851,292
TV 4 AB (Broadcaster of news, sports, documentaries, entertainment; program producer) ... 92,500 1,491,677
-----------
3,342,969
-----------
Switzerland 0.5%
Phoenix Mecano AG (Bearer) (Manufacturer of housings and components for computers) ...... 3,537 1,830,615
-----------
United Kingdom 9.1%
Avis Europe PLC (Car rental services) ................................................... 1,171,100 2,927,480
Corporate Services Group PLC (Employment services and training) ......................... 1,106,100 4,156,778
Expro International Group PLC (Provider of oilfield services) ........................... 438,900 4,381,239
Games Workshop Group PLC (Manufacturer of table top war game systems and miniatures) .... 110,600 1,271,043
Logica PLC (Producer of custom-build software and associated hardware systems for
government and industry) .............................................................. 137,600 1,962,238
Provident Financial PLC (Personal finance group) ........................................ 581,600 6,722,921
RM PLC (Information technology solutions for educational markets) ....................... 47,400 733,600
Serco Group PLC (Facilities management company) ......................................... 703,700 9,769,446
-----------
31,924,745
-----------
United States 46.1%
Aptargroup, Inc. (Manufacturer of packaging equipment components) ....................... 97,100 5,334,431
Autoliv Inc. (Manufacturer of automobile safety bags) ................................... 61,200 2,413,575
Axogen Ltd. Units* (Future development of therapeutic products for treatment
of neurological disorders) ............................................................ 106,100 4,137,900
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Global Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BE Aerospace* (Airline audio/video control systems) ..................................... 84,400 2,373,750
Barrett Resources Corp.* (Oil and gas exploration and production) ....................... 74,000 2,603,875
Benton Oil & Gas Co.* (Oil and gas exploration, development and production) ............. 200,000 4,025,000
Billing Concepts* (Billing and information management services) ......................... 275,500 10,813,375
CapMAC Holdings Inc. (Provider of financial guaranty insurance) ......................... 133,300 3,999,000
Cintas Corp. (Uniform rentals) .......................................................... 45,000 3,251,250
Cognex Corp.* (Manufacturer of machine vision systems) .................................. 179,400 4,798,950
Concentra Managed Care, Inc.* (Provider of integrated nonrisk-bearing workers'
compensation managed care) ............................................................ 148,100 4,831,763
Consolidated Freightways Corp.* (Less-than-truckload shipping services) ................. 235,700 3,329,263
Corporate Express, Inc.* (Retailer of office supply products through telephone
ordering system, fax and electronic data interchange) ................................. 424,500 6,234,844
CytoTherapeutics, Inc.* (Developer of therapeutic products for treatment of
certain chronic and disabling diseases) ............................................... 2,200 11,550
DuPont Photomasks, Inc.* (Manufacturer of photomasks used in
semiconductor production) ............................................................. 57,600 2,476,800
Fiserv Inc.* (Data processing services) ................................................. 120,775 5,404,681
G & K Services Inc. "A" (Uniform rentals) ............................................... 52,100 1,875,600
General Communication, Inc. "A"* (Telecommunication services) ........................... 332,200 2,491,500
Hain Food Group, Inc.* (Provider of specialty food products) ............................ 115,700 1,243,775
Healthcare Recoveries, Inc.* (Provider of recovery services for private
healthcare payors) .................................................................... 500 9,250
IDX Systems Corp.* (Provider of health care information systems to physician
groups and academic medical centers) .................................................. 109,500 3,695,625
JLK Direct Distribution Inc. "A"* (Manufacturer of metalworking tools) .................. 500 14,938
Kelly Services, Inc. "A" (Temporary help services) ...................................... 18,400 653,200
La Quinta Inns, Inc. (Owner and operator of motel chain) ................................ 81,600 1,458,600
Midwest Express Holding, Inc.* (Operator of passenger airline catering
to business travelers) ................................................................ 66,500 2,136,313
Network Appliance, Inc.* (Designer and manufacturer of network data storage devices) .... 209,400 10,522,350
Parametric Technology Corp.* (Mechanical design software producer) ...................... 84,600 3,732,975
Samsonite Corp.* (Luggage manufacturer) ................................................. 130,100 6,033,388
Security Dynamics Technologies, Inc.* (Designer, developer and supporter
of a family of security products used to manage access to computer-based
information resources) ................................................................ 24,400 826,550
Sepracor, Inc.* (Developer of enhanced forms of existing pharmaceuticals) ............... 64,700 2,321,113
Sitel Corp.* (Nebraska based telemarketing company for major credit card and
insurance companies) .................................................................. 397,300 3,526,038
Sola International, Inc.* (Manufacturer of plastic eyeglass lenses) ..................... 220,100 7,510,913
Sterling Commerce, Inc.* (Producer of electronic data interchange products
and services) ......................................................................... 307,934 10,219,560
Suiza Foods Corp.* (Food distributor) ................................................... 71,400 3,596,775
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Global Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TCI Satellite Entertainment, Inc.* (Television programming via digital satellite) ....... 190,200 1,378,950
Tech Data Corp.* (Distributor of microcomputers, hardware and software) ................. 100,000 4,450,000
Tiffany & Co. (Retailer of jewelry and gift items) ...................................... 125,400 4,953,300
Total Renal Care Holdings, Inc.* (Provides dialysis services for sufferers
of chronic kidney failure) ............................................................ 156,900 4,834,481
Tower Realty Trust, Inc. (REIT) (Developer and manager of office properties) ............ 55,200 1,393,800
Triton Energy Ltd.* (Independent oil and gas exploration and production company) ........ 101,200 3,959,450
Vincam Group Inc.* (Provider of solutions to complexities and costs
of employment and personnel) .......................................................... 20,000 627,500
Vitesse Semiconductor Corp. (Manufacturer of digital integrated circuits) ............... 200,200 8,683,675
Wackenhut Corrections Corp.* (Manager of privatized correctional and
detention facilities) ................................................................. 65,700 1,888,875
Wesley Jessen VisionCare, Inc.* (Manufacturer of soft contact lenses) ................... 65,300 1,910,025
-----------
161,988,526
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $246,232,018) 333,733,221
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $264,107,088) (a) 351,608,291
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $274,053,512. At October 31,
1997, net unrealized appreciation for all securities based on tax cost was
$77,554,779. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $93,497,418 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$15,942,639.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $3,229,119 (0.92% of net assets).
Their values have been estimated by the Valuation Committee in the absence
of readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of
these securities at October 31, 1997 aggregated $4,003,900.
(c) Market value and cost reflect full payment. The remaining installments
which total $738,750 will be payable upon thirty days prior notice from
Pioneering Management Limited.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
16 - Scudder Global Discovery Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of October 31, 1997
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $264,107,088) ............... $ 351,608,291
Cash ................................................................ 519
Receivable for investments sold ..................................... 3,080,937
Receivable for Fund shares sold ..................................... 2,533,568
Dividends and interest receivable ................................... 211,318
Foreign taxes recoverable ........................................... 49,330
Other assets ........................................................ 5,262
----------------
Total assets ........................................................ 357,489,225
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................... 6,603,238
Payable for Fund shares redeemed .................................... 387,698
Accrued management fee .............................................. 357,145
Other payables and accrued expenses ................................. 1,019,190
----------------
Total liabilities ................................................... 8,367,271
--------------------------------------------------------------------------------------------
Net assets, at market value $ 349,121,954
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income ........ (113,840)
Unrealized appreciation (depreciation) on:
Investments ...................................................... 87,501,203
Foreign currency related transactions ............................ (13,155)
Accumulated net realized gain ....................................... 21,747,987
Paid-in capital ..................................................... 239,999,759
--------------------------------------------------------------------------------------------
Net assets, at market value $ 349,121,954
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($349,121,954 / 16,134,908 shares of capital stock outstanding, ----------------
$.01 par value, 100,000,000 shares authorized) ................... $21.64
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Global Discovery Fund
<PAGE>
Statement of Operations
year ended October 31, 1997
<TABLE>
<S> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $226,485) ............... $ 2,304,339
Interest ............................................................ 1,467,465
-----------------
3,771,804
Expenses:
Management fee ...................................................... 3,960,949
Services to shareholders ............................................ 1,170,313
Custodian and accounting fees ....................................... 434,085
Directors' fees and expenses ........................................ 51,127
Reports to shareholders ............................................. 111,148
Auditing ............................................................ 52,949
Legal ............................................................... 20,130
Registration fees ................................................... 25,731
Other ............................................................... 36,138
-----------------
5,862,570
---------------------------------------------------------------------------------------------
Net investment loss (2,090,766)
---------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ......................................................... 22,558,007
Futures contracts ................................................... (80,095)
Foreign currency related transactions ............................... 4,396,378
-----------------
26,874,290
Net unrealized appreciation (depreciation) during the period on:
Investments ......................................................... 12,677,607
Foreign currency related transactions ............................... (430,248)
-----------------
12,247,359
---------------------------------------------------------------------------------------------
Net gain on investment transactions 39,121,649
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 37,030,883
---------------------------------------------------------------------------------------------
</TABLE>
18 - Scudder Global Discovery Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended October 31,
Increase (Decrease) in Net Assets 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment loss ......................................... $ (2,090,766) $ (573,365)
Net realized gain from investment transactions .............. 26,874,290 16,936,926
Net unrealized appreciation (depreciation) on investment
transactions during the period ........................... 12,247,359 37,065,126
-------------- --------------
Net increase (decrease) in net assets resulting from
operations ............................................... 37,030,883 53,428,687
-------------- --------------
Distributions to shareholders from:
Net investment income .................................... (2,252,537) (2,817,790)
-------------- --------------
Net realized gains ....................................... (14,901,393) (6,128,748)
-------------- --------------
Fund share transactions:
Proceeds from shares sold ................................... 129,503,033 140,375,546
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................ 16,335,810 8,373,037
Cost of shares redeemed ..................................... (167,423,822) (97,489,394)
-------------- --------------
Net increase (decrease) in net assets from Fund share
transactions ............................................. (21,584,979) 51,259,189
-------------- --------------
Increase (decrease) in net assets ........................... (1,708,026) 95,741,338
Net assets at beginning of period ........................... 350,829,980 255,088,642
-------------- --------------
Net assets at end of period (including accumulated
distributions in excess of net investment -------------- --------------
income of $113,840 and $747,671, respectively) ........... $349,121,954 $350,829,980
-------------- --------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ................... 17,152,364 14,547,124
-------------- --------------
Shares sold ................................................. 6,176,506 7,361,025
Shares issued to shareholders in reinvestment of ............ 829,650 487,939
distributions
Shares redeemed ............................................. (8,023,612) (5,243,724)
-------------- --------------
Net increase (decrease) in Fund shares ...................... (1,017,456) 2,605,240
-------------- --------------
Shares outstanding at end of period ......................... 16,134,908 17,152,364
-------------- --------------
</TABLE>
19 - Scudder Global Discovery Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
September 10,
1991
(commencement
of operations)
Years Ended October 31, to October 31,
1997 (a) 1996 (a) 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
Net asset value, beginning of period ............ $20.45 $17.54 $16.27 $16.14 $12.05 $11.92 $12.00
------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) .................... (.12) (.04) (.03) (.02) .04 .07 .01
Net realized and unrealized gain (loss)
on investment transactions ................... 2.30 3.59 1.38 .48 4.24 .08 (.09)
------------------------------------------------------------------------
Total from investment operations ................ 2.18 3.55 1.35 .46 4.28 .15 (.08)
------------------------------------------------------------------------
Less distributions:
From net investment income ...................... (.13) (.20) -- -- (.07) (.02) --
In excess of net investment income .............. -- -- -- (.18) -- -- --
From net realized gains on investment
transactions ................................. (.86) (.44) (.08) (.15) (.12) -- --
------------------------------------------------------------------------
Total distributions ............................. (.99) (.64) (.08) (.33) (.19) (.02) --
------------------------------------------------------------------------
------------------------------------------------------------------------
Net asset value, end of period .................. $21.64 $20.45 $17.54 $16.27 $16.14 $12.05 $11.92
- --------------------------------------------------------------------------------------------------------------------------
Total Return (%) ................................ 11.14 20.97 8.32 2.80 36.04 1.26 (.67)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .......... 349 351 255 256 198 55 9
Ratio of operating expenses, net to
average daily net assets (%) ................. 1.63 1.60 1.69 1.70 1.50 1.50 1.50*
Ratio of operating expenses before
expense reductions, to average
daily net assets (%) ......................... 1.63 1.60 1.69 1.76 2.01 2.53 15.34*
Ratio of net investment income (loss)
to average daily net assets (%) .............. (.58) (.20) (.12) (.28) .53 .78 2.47*
Portfolio turnover rate (%) ..................... 60.5 63.0 43.7 45.8 54.6 23.4 --
Average commission rate paid (b) ................ $.0019 $.0026 $ -- $ -- $ -- $ -- $ --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years beginning on or after October 31, 1996.
* Annualized
** Not annualized
20 - Scudder Global Discovery Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Global Discovery Fund (the "Fund"), formerly Scudder Global Small
Company Fund, is a diversified series of Scudder Global Fund, Inc., a Maryland
corporation registered under the Investment Company Act of 1940, as amended, as
an open-end management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq System, for which
there have been sales, are valued at the most recent sale price reported on such
system. If there are no such sales, the value is the most recent bid quotation.
Securities which are not quoted on the Nasdaq System but are traded in another
over-the-counter market are valued at the most recent sale price on such market.
If no sale occurred, the security is then valued at the calculated mean between
the most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities other than money market securities are valued by
pricing agents approved by the officers of the Fund, which quotations reflect
broker/dealer-supplied valuations and electronic data processing techniques. If
the pricing agents are unable to provide such quotations, the most recent bid
quotation supplied by a bona fide market maker shall be used. Money market
instruments purchased with an original maturity of sixty days or less are valued
at amortized cost. All other securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at the
daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest income
and certain expenses at the rates of exchange prevailing on the respective
dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
21 - Scudder Global Discovery Fund
<PAGE>
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 securities index futures as a temporary substitute for purchasing
selected investments.
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.
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, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no federal
income tax provision was required.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to
22 - Scudder Global Discovery Fund
<PAGE>
investments in forward contracts, passive foreign investment companies, and
certain securities sold at a loss. As a result, net investment income (loss) and
net realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. Accordingly, the
Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade-date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. Purchases and Sales of Securities
During the year ended October 31, 1997, purchases and sales of investment
securities (excluding short-term investments) aggregated $198,157,026 and
$207,984,186, respectively. The aggregate face value of futures contracts opened
and closed during the year ended October 31, 1997 was $2,837,457.
C. Related Parties
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund has agreed to pay to the Adviser
a fee equal to an annual rate of 1.10% of the Fund's average daily net assets,
computed and accrued daily and payable monthly. As manager of the assets of the
Fund, the Adviser directs the investments of the Fund in accordance with its
investment objectives, policies, and restrictions. The Adviser determines the
securities, instruments, and other contracts relating to investments to be
purchased, sold or entered into by the Fund. In addition to portfolio management
services, the Adviser provides certain administrative services in accordance
with the Agreement. For the year ended October 31, 1997, the fee pursuant to the
Agreement amounted to $3,960,949, of which $357,145 is unpaid at October 31,
1997.
On June 26, 1997, the Adviser entered into an agreement with The Zurich
Insurance Company ("Zurich"), an international insurance and financial services
organization, pursuant to which Zurich will acquire a majority interest in the
Adviser, and the Adviser will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc. and change
its name to Scudder Kemper Investments, Inc. Subject to the receipt of the
required regulatory and shareholder approvals, the transaction is expected to
close by the end of the fourth quarter of 1997.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Fund. Included
in services to shareholders is $851,578 charged to the Fund by SSC for the year
ended October 31, 1997, of which $64,821 is unpaid at October 31, 1997.
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 October 31,
1997, the amount charged to the Fund by STC aggregated $186,872, of which
$15,665 is unpaid at October 31, 1997.
23 - Scudder Global Discovery Fund
<PAGE>
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
October 31, 1997, the amount charged to the Fund by SFAC aggregated $207,838, of
which $35,323 is unpaid at October 31, 1997.
The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the year
ended October 31, 1997, Directors' fees and expenses aggregated $51,127.
D. Lines of Credit
The Fund and several affiliated Funds (the "Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
24 - Scudder Global Discovery Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder Global Fund, Inc. and to the Shareholders
of Scudder Global Discovery Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Global Discovery Fund (formerly Scudder Global Small Company Fund) including the
investment portfolio, as of October 31, 1997, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the six years in the period ended October 31, 1997, and for the period
September 10, 1991 (commencement of operations) to October 31, 1991. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Global Discovery Fund as of October 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the six years in the period ended October 31, 1997, and for the period September
10, 1991 (commencement of operations) to October 31, 1991 in conformity with
generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 12, 1997
25- Scudder Global Discovery Fund
<PAGE>
Tax Information
The Fund will mail shareholders IRS Form 1099-Div in late January, summarizing
all taxable distributions paid for 1997.
The Fund paid distributions of $.75 per share from net long-term capital gains
during its fiscal year ended October 31, 1997. Pursuant to Section 852 of the
Internal Revenue Code, the Fund designates $21,887,011 as capital gain dividends
for its fiscal year ended October 31, 1997.
The Fund paid foreign taxes of $226,485 and the Fund recognized $1,484,744 of
foreign source income during the fiscal year ended October 31, 1997. Pursuant to
section 853 of the Internal Revenue Code, the Fund designates $.01 per share of
foreign taxes and $.09 of income from foreign sources as having been paid in the
fiscal year ended October 31, 1997.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Scudder Fund account, please call a Scudder Investor Relations
Representative at 1-800-225-5163.
Officers and Directors
Daniel Pierce*
Chairman of the Board,
Director, and Vice President
Nicholas Bratt*
President
Paul Bancroft III
Director; Venture Capitalist and
Consultant
Sheryle J. Bolton
Director; Consultant
William T. Burgin
Director; General Partner,
Bessemer Venture Partners
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; Private Equity
Investor, Exeter Capital
Management Corporation
William H. Gleysteen, Jr.
Director; Consultant
William H. Luers
Director; President, The
Metropolitan Museum of Art
Kathryn L. Quirk*
Director; Vice President and
Assistant Secretary
Robert W. Lear
Honorary Director;
Executive-in-Residence, Visiting
Professor, Columbia University
Graduate School of Business
Robert G. Stone, Jr.
Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
Susan E. Gray*
Vice President
Jerard K. Hartman*
Vice President
Gary P. Johnson*
Vice President
Thomas W. Joseph*
Vice President
Gerald J. Moran*
Vice President
M. Isabel Saltzman*
Vice President
David S. Lee*
Vice President and Assistant
Treasurer
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant
Treasurer
*Scudder, Stevens & Clark, Inc.
26 - Scudder Global Discovery Fund
<PAGE>
Stockholder Meeting Results
A Special Meeting of Stockholders (the "Meeting") of Scudder Global Discovery
Fund (the "Fund") was held on October 27, 1997, at the offices of Scudder,
Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York,
New York 10154. At the Meeting, as adjourned and reconvened, the following
matters were voted upon by the stockholders (the resulting votes for each matter
are presented below). With regard to certain proposals, it was recommended that
the Meeting be reconvened in order to provide stockholders with an additional
opportunity to return their proxies. The date of the reconvened meeting at which
the matters were decided is noted after the proposed matter.
1. To elect Directors.
Number of Votes:
----------------
Director For Withheld
-------- --- --------
Paul Bancroft III 8,607,700 463,245
Sheryle J. Bolton 8,599,774 471,171
William T. Burgin 8,612,240 458,705
Thomas J. Devine 8,599,452 471,493
Keith R. Fox 8,600,721 470,224
William H. Gleysteen, Jr. 8,607,221 463,724
William H. Luers 8,597,647 473,298
Daniel Pierce 8,613,949 456,996
Kathryn L. Quirk 8,581,204 489,741
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
8,394,813 429,470 246,662 203,961
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise. (Approved on December 2, 1997.)
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
8,397,029 752,157 417,172 186,292
27 - Scudder Global Discovery Fund
<PAGE>
4. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Fundamental Policies For Against Abstain Broker Non-Votes*
-------------------- --- ------- ------- -----------------
<S> <C> <C> <C> <C>
4.1 diversification 7,911,548 585,998 369,438 203,961
4.2 borrowing 7,869,198 640,453 357,333 203,961
4.3 senior securities 7,899,167 602,779 365,038 203,961
4.4 commodities 7,879,634 626,028 361,322 203,961
4.5 concentration 7,901,015 597,924 368,045 203,961
4.6 underwriting of securities 7,916,486 587,751 362,747 203,961
4.7 investment in real estate 7,918,867 466,441 481,676 203,961
4.8 lending 7,894,547 484,822 487,615 203,961
</TABLE>
5. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
8,564,639 173,363 332,943
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
28 - Scudder Global Discovery Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
Scudder World Income Opportunities
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. +++Funds within categories are listed
in order from expected least risk to most risk. Certain Scudder funds may not be
available for purchase or exchange. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *A class of shares of
the Fund. **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.
29 - Scudder Global Discovery Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from that account.
fewer when it's higher, which can reduce your average
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you designate.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
30 - Scudder Global Discovery Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
- ------------------------------------------------------------------------------------------------------------------------------
New From Scudder: Scudder International Growth and Income Fund
Scudder International Growth and Income Fund takes a yield-oriented approach to investing in international equities. The
Fund seeks to provide long-term growth of capital plus current income. Investors who desire international exposure but
who wish to take a more conservative approach may appreciate the Fund's emphasis on the dividend paying stocks of
well-established companies outside the United States.
- ------------------------------------------------------------------------------------------------------------------------------
The share price of Scudder International Growth and Income Fund will fluctuate. International investing involves special
risks including currency fluctuation and political instability. Contact Scudder Investor Services, Inc., Distributor,
for a prospectus which contains more complete information, including management fees and other expenses. Please read it
carefully before you invest or send money.
</TABLE>
31 - Scudder Global Discovery Fund
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven Clark,
Scudder, Stevens & Clark was the first independent investment counsel firm in
the United States. Since its birth, Scudder's pioneering spirit and commitment
to professional long-term investment management have helped shape the investment
industry. In 1928, we introduced the nation's first no-load mutual fund. Today
we offer over 40 pure no load(TM) funds, including the first international
mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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