Scudder
Global
Discovery Fund
Semiannual Report
April 30, 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>
Table of Contents
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
8 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
22 Report of Independent Accountants
24 Officers and Directors
25 Investment Products and Services
26 Scudder Solutions
In Brief
o U.S.small cap stocks significantly underperformed U.S. large cap stocks and
small cap stocks around the globe for the six months ended April 30, 1997.
o Scudder Global Discovery Fund avoided much of the U.S. small cap weakness
by investing nearly two-thirds of assets outside the United States. The
Fund returned -3.03% for the six-month period.
o Morningstar assigned the Fund a 4-star rating for its risk-adjusted
performance among 961 international equity funds as of April 30, 1997.*
* Morningstar's proprietary ratings reflect historical risk-adjusted performance
as of April 30, 1997. 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 20%
receive 4 stars. In the international category, the Fund received a 3 star
rating for the one-year period, and a 4 star rating for the three- and
five-year periods among 961, 492, and 223 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.
2-SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
Letter From the Fund's Chairman
Dear Shareholders,
We are pleased to present the semiannual report for Scudder Global
Discovery Fund for the six-month period ended April 30, 1997.
Your Fund encountered an increasingly difficult environment during the six
months as U.S. small cap stocks underperformed the broader U.S. and global stock
markets. However, the Fund's significant investments in non-U.S. small cap
stocks helped it to avoid declines of 30%-40% or more that were common for many
U.S. small cap stocks. In this divergent and volatile environment, the Fund's
diversification and flexibility to invest in many different markets proved
valuable. Your portfolio management team discusses the Fund's activities in more
detail beginning on page 6.
For those of you who are interested in new products and services, we
recently introduced the Scudder Pathway Series. Pathway simplifies investing
through the "fund of funds" approach offering four distinct portfolios:
Conservative, Balanced, Growth, and International. Each portfolio invests in a
select mix of Scudder Funds, providing flexibility, diversification, and
simplicity for regular and retirement plan investors. For more complete
information on Scudder products and services, please turn to page 25.
Thank you for your continued investment in Scudder Global Discovery Fund.
If you have questions about your account, please call our Investor Relations
representatives at 1-800-225-2470; they will be happy to assist you. You can
also obtain information by visiting our Internet 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 April 30, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/97 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER GLOBAL DISCOVERY FUND
- --------------------------------------------
1 Year $ 10,045 .45% .45%
5 Year $ 17,394 73.94% 11.71%
Life of Fund* $ 17,874 78.74% 10.85%
- --------------------------------------------
SALOMON BROTHERS WORLD EQUITY EMI
- --------------------------------------------
1 Year $ 9,871 -1.29% -1.29%
5 Year $ 16,752 67.52% 10.86%
Life of Fund* $ 16,521 65.21% 9.40%
- --------------------------------------------
MSCI WORLD INDEX
- --------------------------------------------
1 Year $ 11,034 10.34% 10.34%
5 Year $ 18,591 85.91% 13.20%
Life of Fund* $ 18,025 80.25% 11.12%
- --------------------------------------------
* 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
'92 $10,107
'93 $11,558
'94 $13,496
'95 $13,090
'96 $17,502
'97 $17,581
MSCI WORLD INDEX
Year Amount
- ----------------------
9/91* $10,000
'92 $ 9,696
'93 $11,214
'94 $12,543
'95 $13,763
'96 $16,336
'97 $18,025
SALOMON BROTHERS WORLD EQUITY EMI
Year Amount
- ----------------------
9/91* $10,000
'92 $ 9,862
'93 $11,556
'94 $13,233
'95 $13,692
'96 $16,737
'97 $16,521
YEARLY PERIODS ENDED APRIL 30
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.
- ----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- ----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED APRIL 30
1992* 1993 1994 1995 1996 1997
---------------------------------------------------------
NET ASSET VALUE... $ 12.31 $ 13.86 $ 15.87 $ 15.31 $ 19.74 $ 18.88
INCOME DIVIDENDS.. $ .02 $ .07 $ .18 $ -- $ .20 $ .13
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ .12 $ .15 $ .08 $ .44 $ .86
FUND TOTAL
RETURN (%)........ 2.76 14.35 16.77 -3.01 33.71 .45
INDEX TOTAL
RETURN (%)........ -3.04 15.66 11.86 9.74 18.71 -1.29
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.
** The MSCI World Index was used as a comparative index for yearly periods
before April 30, 1997.
4 - SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
PORTFOLIO SUMMARY as of April 30, 1997
- ---------------------------------------------------------------------------
GEOGRAPHICAL
(Excludes 8% Cash Equivalents)
- ---------------------------------------------------------------------------
Europe 44%
U.S. & Canada 40%
Japan 9%
Latin America 3%
Pacific Basin 3%
Other 1%
- --------------------------------------
100%
- --------------------------------------
Non-U.S. small company stocks
provided some of the best returns
during the period.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS
(Excludes 8% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 20%
Health 14%
Technology 12%
Service Industries 10%
Consumer Staples 9%
Energy 7%
Manufacturing 6%
Durables 6%
Consumer Discretionary 5%
Other 11%
- --------------------------------------
100%
- --------------------------------------
The portfolio remained broadly
diversified across several industry
sectors.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
(23% of Portfolio)
- --------------------------------------------------------------------------
1. BANK OF IRELAND PLC
Bank in Ireland
2. MARSCHOLLEK LAUTENSCHLAEGER UND
PARTNER AG (PFD.)
Leading independent life insurance company
in Germany
3. JERONIMO MARTINS SA
Food producer and retailer in Portugal
4. SERCO GROUP PLC
Facilities management company in the United
Kingdom
5. FRESENIUS AG
Manufacturer and distributor of
pharmaceutical and medical systems products
in Germany
6. CENTRAL EUROPEAN MEDIA
ENTERPRISES LTD.
Owner and operator of national and regional
private commercial television stations in
Central Europe and Germany
7. BILLING INFORMATION CONCEPTS
Billing and information management services
in the United States
8. SHOHKOH FUND & CO., LTD.
Finance company for small- and
medium-sized firms in Japan
9. AUTOLIV AB
Manufacturer of automobile safety bags in
Sweden
10. IHC CALAND NV
Dredging and offshore services in the
Netherlands
Management considers both the
overall environmental and
individual company fundamentals
in selecting stocks for the
portfolio.
For more complete details about the Fund's investment portfolio, see page 8.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5 - SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Scudder Global Discovery Fund recorded a total return of -3.03% for the six
months ended April 30, 1997. The unmanaged Salomon Brothers World Equity
Extended Market Index (EMI), which is comprised of stocks with small market
capitalizations from around the world, returned -0.3% for the same six-month
period. This index measures the performance of the bottom 20% of stocks (based
on market cap) around the world.
The period covered by this report was very difficult for small cap stocks, which
are the issues that we primarily emphasize in the portfolio. Large cap stocks
outperformed small cap stocks by a wide margin during this period. This is
illustrated by comparing the 8.4% return of the unmanaged Salomon Primary Market
Index (consisting of the largest 80% of stocks ranked by market capitalization)
to the EMI. The most dramatic performance differential occurred in the United
States where the returns of large cap stocks exceeded those of small caps by
12%, as represented by the S&P 500 and the Russell 2000, respectively. For the
twelve months ended April 30, the difference between these two indices was a
whopping 22%. We are pleased to report that in this environment your Fund, due
to holding nearly two-thirds of assets overseas, was able to offset much of the
devastation experienced in the U.S. small cap market.
Portfolio Highlights
Our approach to investing during this challenging period for stock prices was to
look for selected long-term opportunities in areas experiencing significant
difficulty. A global approach to investing in small companies makes this easier
to accomplish. The positive performance of the stocks of financial companies
outside of the U.S. was the major factor in offsetting U.S. losses in the
portfolio. The Bank of Ireland, now your portfolio's largest holding, advanced
by 37% and ranked second in positive contribution to the portfolio during the
period. This company has been in the portfolio for five years, has increased in
value from date of first purchase by 270%, and still carries an attractive
price/earnings ratio of 13.3 times 1997 estimated earnings. Your portfolio's
second largest holding, Germany's MLP, ranked first in performance contribution.
MLP is a rapidly growing services firm specializing in providing financial
products and planning to German professionals. It has found success by executing
the dictum "know your customer." The stock gained 67% in the last six months as
the perceived value of the company's prospects has increased dramatically. The
company serves as a good example of the benefits of spotting early a long term
growth business, as shares have increased in value by 1,166% since the Fund's
first purchase in December of 1991.
Your Fund's holdings in Europe performed in a satisfactory manner with some of
the strength offset by the surge in the dollar. We reduced the negative impact
of currency weakness in those countries preparing for European Monetary Union by
executing forward hedges. As of the end of the period the Fund had in place
hedges on the U.K. pound, the Irish punt, the Swiss and French francs, and the
Dutch guilder. As always, we hedge defensively and tactically; it is not a major
thrust of portfolio strategy as our emphasis remains on stock selection.
6-SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
Stocks in Japan continued to be a drag on portfolio performance, although the
Fund's results were significantly better than those recorded by the small cap
index for that country. As in the United States, Japanese large cap stocks did
much better than small cap stocks -- the Nikkei 225 Index returned -6.4% in U.S.
dollars whereas the Nikkei OTC index recorded a 23.2% decline. We continued to
narrow our focus in Japan, eliminating five companies from the portfolio in the
process and redeploying some of those proceeds into existing holdings. Toward
the end of the period the entire Japanese market recovered sharply and the
Fund's holdings fully participated in the rally associated with smaller stocks.
The portfolio's total holdings in Japan are now somewhat less than 10% of the
Fund's total equity position. The sector focus within the country is primarily
in export-oriented and specialty finance companies.
We added several U.S.-based technology companies to the portfolio over the six
months including DuPont Photomasks Inc., Network Appliance Inc., Octel, Tech
Data Corp., and Vitesse Semiconductor. We had trimmed our total exposure to the
technology sector substantially about a year ago, thereby avoiding much of last
summer's downturn. We increased our technology exposure gradually throughout the
period, notwithstanding the poor stock performance of this sector in the early
part of calendar 1997.
Favorable Outlook for
Small Companies
Global macroeconomic and political factors are looking increasingly favorable
for small companies around the world. The significant unemployment in the United
States in the early 1990s has been largely absorbed by vibrant U.S. small
companies, with unemployment now below 5%. Small companies in the United States
are supported by a well established venture capital system, strong
entrepreneurial drive, and advanced technology. However, in many other regions,
particularly Europe, the unemployment created from large company restructuring
has not yet been mitigated. The lack of an adequate small business formation
infrastructure has left many who lost jobs without a place to find new work.
Political leaders in countries suffering from this problem are starting to
realize the importance of developing a base of growing small companies. This
political realization is being driven by the social and financial pressures
created by unemployment, as well as by observing the employment success of the
United States. As a result, we expect over time a proliferation of small company
investment possibilities in many markets where the opportunities are now quite
limited.
Sincerely,
Your Portfolio Management Team
/s/Gerald J. Moran /s/Sewall F. Hodges
Gerald J. Moran Sewall F. Hodges
/s/Elizabeth J. Allan /s/Joan R. Gregory
Elizabeth J. Allan Joan R. Gregory
7-SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
Investment Portfolio as of April 30, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 8.0%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/97 at 5.375%, to be
repurchased at $26,126,900 on 5/1/97, collateralized by a $17,010,000 U.S. Treasury ----------
Bond, 14%, 11/15/11 (Cost $26,123,000) .................................................................. 26,123,000 26,123,000
----------
Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stocks 92.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Argentina 0.5%
Dalmine Siderca (Steel producer) .......................................................................... 776,200 1,630,256
----------
Austria 0.5%
VAE Eisenbahnsysteme AG (Manufacturer of electronic railroad control systems) ............................. 18,000 1,741,007
----------
Bermuda 0.9%
Terra Nova (Bermuda) Holdings Ltd. "A" (Property, casualty and marine insurance and
reinsurance company) .................................................................................... 157,900 2,960,625
----------
Brazil 1.2%
Banco Bradesco S.A. (pfd.) (Commercial bank) .............................................................. 333,000,000 2,755,560
Lojas Renner S.A. (pfd.) (Specialty retailer of apparel, cosmetics, electronics, household appliances
and furniture) .......................................................................................... 21,400,000 1,287,884
----------
4,043,444
----------
Canada 0.6%
Canadian 88 Energy Corp.* (Oil and natural gas exploration and production) ................................ 384,500 1,651,100
Stressgen Biotechnologies Corp. "A"* (Developer of products for treatment of cancer and certain
infectious diseases) .................................................................................... 105,000 274,289
----------
1,925,389
----------
Czech Republic 2.2%
Central European Media Enterprises Ltd. "A"* (Owner and operator of national and regional
private commercial television stations in central Europe and Germany) ................................... 257,700 7,312,238
----------
France 2.5%
Dassault Systemes S.A.* (Computer aided design, manufacturing and engineering
software products) ...................................................................................... 56,800 3,487,002
Essilor International (Manufacturer of various types of lenses, eyeglasses, contact lenses and
optical measuring instruments) .......................................................................... 13,134 3,617,587
Group AB S.A.* (ADR) (Producer and distributor of television programming) ................................. 150,000 1,087,500
----------
8,192,089
----------
Germany 5.7%
BHW Holding AG* (Mortgage banking, insurance and real estate investment) .................................. 37,500 623,467
Fresenius AG (pfd.) (Manufacturer and distributor of pharmaceutical and
medical systems products) ............................................................................... 32,900 7,397,633
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fresenius AG Rights* ...................................................................................... 32,900 127,251
Marschollek Lautenschlaeger und Partner AG (pfd.) (Leading independent life insurance
company) ................................................................................................ 41,800 8,445,663
Moebel Walther AG (pfd.) (Furniture retailer) ............................................................. 45,500 2,101,313
----------
18,695,327
----------
Indonesia 0.5%
Kalbe Farma (Ordinary)* (Pharmaceutical producer and distributor) ......................................... 280 277
Merck-Indonesia (Foreign registered) (Pharmaceutical company) (b) ......................................... 96,500 655,247
Modern Photo Film Co. (Foreign registered) (Photographic film distributor) ................................ 171,000 562,963
Mustika Ratu (Foreign registered) (Consumer cosmetics producer) (b) ....................................... 173,000 204,681
Steady Safe Transportation Service (Operator of taxis and buses in Jakarta) ............................... 433 423
Unilever-Indonesia (Foreign registered) (Consumer products manufacturer) .................................. 743 14,906
----------
1,438,497
----------
Ireland 5.7%
Bank of Ireland PLC (Bank) ................................................................................ 915,068 9,542,753
Irish Continental Group PLC (Transport of passengers, freight and containers between Ireland,
the U.K. and the continent) ............................................................................. 138,405 1,246,059
Irish Life PLC (Provider of life and disability insurance and pensions) ................................... 814,550 3,960,030
Irish Permanent PLC (Retail financial services group) ..................................................... 118,889 1,106,035
Jury's Hotel Group PLC (Hotel operator) ................................................................... 486,255 2,663,132
----------
18,518,009
----------
Italy 3.9%
Bulgari SpA (Manufacturer and retailer of fine jewelry, luxury watches and perfumes) ...................... 111,200 2,008,808
Gucci Group (New York Shares) (Designer and producer of personal luxury accessories
and apparel) ............................................................................................ 77,000 5,341,875
Saes Getters SpA di Risparmio (Manufacturer of getters, refined chemicals used in cathode-ray
tubes and other monitors) ............................................................................... 208,300 1,884,490
Saipem SpA (International contractor in oil and gas exploration and drilling, construction of
refineries and pipelines) ............................................................................... 748,000 3,529,836
----------
12,765,009
----------
Japan 8.7%
Albis Co Limited (Food wholesaler) ........................................................................ 78,000 737,443
FCC Co., Ltd. (Manufacturer of motorcycle and automobile clutches) ........................................ 41,800 1,146,063
Genki Sushi Co., Ltd. (North Kanto-based fast-food sushi chain) ........................................... 8,600 102,651
Matsumotokiyoshi (Operator of supermarket chain) .......................................................... 111,500 3,469,963
Nichiei Co., Ltd. (Finance company for small and medium-sized firms) ...................................... 63,000 5,062,832
Nippon Electric Glass Co., Ltd. (Leading producer of cathode-ray tube glass) .............................. 129,000 1,981,879
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Riso Kagaku Corp. (Manufacturer of copying machines) ...................................................... 50,900 3,007,682
Sagami Chain Co., Ltd. (Operator of noodle restaurant chain) .............................................. 82,000 956,155
Shohkoh Fund & Co., Ltd. (Finance company for small and medium-sized firms) ............................... 28,000 6,573,961
Square Co., Ltd. (Producer of software for video games) ................................................... 108,200 4,645,972
Sundrug Co., Ltd. (Operator of outlet drug store chain) ................................................... 36,000 575,773
----------
28,260,374
----------
Korea 0.2%
Korea 1990 Trust IDR* (Investment company) (c) ............................................................ 180,000 675,000
----------
Luxembourg 1.7%
Millicom International Cellular S.A.* (Developer and operator of cellular telephone networks) ............. 118,600 5,396,300
----------
Malaysia 1.2%
Arab Malaysian Finance Bhd. (Foreign registered) (Licensed finance company) ............................... 137,000 300,139
Arab-Malaysian Corp. (Investment holding company with interests in financial services,
infrastructure and property) ............................................................................ 842,000 3,488,070
----------
3,788,209
----------
Mexico 0.9%
Grupo Casa Autrey S.A. (ADR) (Consumer specialty manufacturer) ............................................ 166,600 2,894,675
----------
Netherlands 2.8%
De Telegraaf Holding NV (Leading publisher of newspapers, magazines and books) ............................ 69,600 1,428,352
IHC Caland NV (Dredging and offshore services) ............................................................ 132,600 6,544,621
Qiagen NV* (Biopharmaceutical company) .................................................................... 37,400 1,299,650
----------
9,272,623
----------
Poland 0.4%
Pioneer Poland Fund* (Closed-end investment company) (b) (d) .............................................. 3 1,399,642
----------
Portugal 3.0%
Jeronimo Martins S.A. (Food producer and retailer) ........................................................ 137,520 8,222,894
Jeronimo Martins S.A. Warrants* ........................................................................... 11,460 207,549
Telecel-Comunicacoes Pessoais, S.A.* (Cellular communication services) .................................... 17,316 1,490,373
----------
9,920,816
----------
Singapore 0.4%
GP Batteries International, Ltd. (Developer, manufacturer and distributor of batteries and
battery-related products) ............................................................................... 400,000 1,180,000
----------
Sweden 2.0%
Autoliv AB (Manufacturer of automobile safety bags) ....................................................... 180,500 6,567,819
----------
Switzerland 1.5%
Phoenix Mecano AG (Bearer) (Manufacturer of housings and components for computers) ........................ 3,537 1,620,275
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Schindler Holdings AG (PC) (Leading elevator and escalator manufacturer) .................................. 2,650 3,210,214
----------
4,830,489
----------
Thailand 0.1%
American Standard Sanitaryware (Foreign registered) (Manufacturer of bathroom fixtures) (b) ............... 28,200 349,767
Bangkok Dusit Medical Services Co., Ltd. (Health services) ................................................ 99 127
----------
349,894
----------
United Kingdom 8.5%
Avis Europe PLC* (Car rental services) .................................................................... 341,000 745,813
Brake Brothers PLC (Specialist supplier of frozen foods to the catering industry) ......................... 180,300 1,466,362
Expro International Group PLC (Provider of oilfield services) ............................................. 325,700 2,532,799
Hardy Oil & Gas PLC (Oil and gas exploration and development) ............................................. 649,300 3,271,504
Provident Financial PLC (Personal finance group) .......................................................... 691,700 6,432,375
Serco Group PLC (Facilities management company) ........................................................... 703,700 7,638,429
Tibbett and Britten Group PLC (Transportation services for manufacturing and retail industries) ........... 574,100 5,720,110
----------
27,807,392
----------
United States 36.4%
Aptargroup, Inc. (Manufacturer of packaging equipment components) ......................................... 97,100 3,884,000
Axogen Ltd. Units* (Future development of therapeutic products for treatment
of neurological disorders) .............................................................................. 106,100 2,705,550
BE Aerospace* (Airline audio/video control systems) ....................................................... 84,400 2,078,350
Barrett Resources Corp.* (Oil and gas exploration and production) ......................................... 74,000 2,423,500
Benton Oil & Gas Co.* (Oil and gas exploration, development and production) ............................... 200,000 2,925,000
Billing Information Concepts* (Billing and information management services) ............................... 275,500 6,577,563
CapMAC Holdings Inc. (Provider of financial guaranty insurance) ........................................... 133,300 3,465,800
Cintas Corp. (Uniform rentals) ............................................................................ 45,000 2,463,750
Consolidated Freightways Corp.* (Less-than-truckload shipping services) ................................... 235,700 2,592,700
ContiFinancial Corp.* (Provider of financing for a broad range of loans) .................................. 90,900 2,613,375
CytoTherapeutics, Inc.* (Developer of therapeutic products for treatment of certain chronic
and disabling diseases) ................................................................................. 80,000 520,000
DuPont Photomasks, Inc.* (Manufacturer of photomasks used in semiconductor production) .................... 80,100 3,834,788
Enron Global Power & Pipelines L.L.C. (Owner and manager of power plants and a natural gas
pipeline system) ........................................................................................ 14,900 439,548
Fiserv Inc.* (Data processing services) ................................................................... 120,775 4,559,256
HBO & Company, Inc. (Designer of computerized information systems to the
healthcare industry) .................................................................................... 111,200 5,949,200
Hertz Corp.* (Leading car rental company) ................................................................. 19,100 553,900
IGEN Inc.* (Producer of medical supplies) ................................................................. 278,900 1,638,538
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Karrington Health, Inc* (Owner and operator of private pay assisted living residences) .................... 144,900 1,593,900
Matrix Pharmaceutical, Inc.* (Developer of site-specific treatments for cancer and serious
skin diseases) .......................................................................................... 81,100 466,325
Midwest Express Holding, Inc.* (Operator of passenger airline catering to business travelers) ............. 60,000 2,475,000
Network Appliance, Inc.* (Designer and manufacturer of network data storage devices) ...................... 202,200 5,889,075
Neurogen Corp.* (Developer of biopharmaceuticals for treatment of psychiatric and
neurological disorders) ................................................................................. 100,000 1,425,000
OccuSystems Inc.* (Provider of primary care physician and case management services) ....................... 148,100 3,054,563
Octel Communications Corp. (Manufacturer of voice processing systems) ..................................... 373,900 6,075,875
PHAMIS, Inc.* (Developer and installer of patient-centered healthcare information systems) ................ 100,000 1,775,000
R.P. Scherer Corp.* (Manufacturer of drug delivery system) ................................................ 72,300 3,325,800
Raytel Medical Corp.* (Provider of healthcare services) ................................................... 190,900 1,598,788
Ribozyme Pharmaceuticals, Inc.* (Developer of human therapeutics) ......................................... 100,000 1,200,000
Rofin-Sinar Technologies Inc.* (Manufacturer of laser products used for cutting and welding) .............. 214,200 3,186,225
Sitel Corp. (Nebraska based telemarketing company for major credit card and
insurance companies) .................................................................................... 129,000 1,273,875
Sterling Commerce, Inc.* (Producer of electronic data interchange products and services) .................. 198,134 5,126,717
Sterling Software Inc.* (Computer software products) ...................................................... 119,700 3,650,850
Stillwater Mining Co.* (Exploration and development of mines in Montana producing platinum,
palladium and associated metals) ........................................................................ 48,600 978,075
Suiza Foods Corp.* (Food distributor) ..................................................................... 52,300 1,497,088
Tech Data Corp.* (Distributor of microcomputers, hardware and software) ................................... 100,000 2,450,000
Thomas Nelson, Inc. (Publisher) ........................................................................... 109,062 995,191
Tiffany & Co. (Retailer of jewelry and gift items) ........................................................ 100,000 3,962,500
Total Renal Care Holdings* (Provides dialysis services for sufferers of chronic kidney failure) ........... 87,200 2,801,300
Triton Energy Ltd.* (Independent oil and gas exploration and production company) .......................... 110,800 4,071,900
Vincam Group Inc.* (Provider of solutions to complexities and costs of employment
and personnel) .......................................................................................... 20,000 650,000
Vitesse Semiconductor Corp. (Manufacturer of digital integrated circuits) ................................. 168,900 5,320,350
Vivra, Inc.* (Provider of dialysis services) .............................................................. 128,350 3,321,056
Wandel & Goltermann Technologies, Inc.* (Manufacturer of test, measurement, diagnostic and
monitoring products for local and wide area networks) ................................................... 118,200 1,460,878
-----------
118,850,149
- ------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $238,237,581) 300,415,272
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $264,360,581) (a) 326,538,272
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $266,838,005. At April 30,
1997, net unrealized appreciation for all securities based on tax cost was
$59,700,267. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $83,841,863 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$24,141,596.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $2,609,337 (0.79% 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 April 30, 1997 aggregated $2,741,615.
(c) 1,000 shares = 1 IDR unit for Korea 1990 Trust.
(d) 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.
13 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1997
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $264,360,581) ................ $ 326,538,272
Cash ................................................................. 795
Foreign currency, at value (cost $478,190) ........................... 477,370
Unrealized appreciation on forward currency exchange contracts ....... 1,569,817
Receivable for investments sold ...................................... 1,227,149
Receivable for Fund shares sold ...................................... 119,351
Dividends and interest receivable .................................... 515,018
Foreign taxes recoverable ............................................ 50,403
Other assets ......................................................... 6,581
--------------
Total assets ......................................................... 330,504,756
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased .................................... 605,252
Payable for Fund shares redeemed ..................................... 375,575
Accrued management fee ............................................... 302,175
Other payables and accrued expenses .................................. 962,873
Net payable on forward exchange ...................................... 5,378
--------------
Total liabilities .................................................... 2,251,253
-----------------------------------------------------------------------------------------
Net assets, at market value $ 328,253,503
-----------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income ......... (4,031,168)
Unrealized appreciation on:
Investments ....................................................... 62,177,691
Foreign currency related transactions ............................. 1,558,470
Accumulated net realized gain ........................................ 1,505,135
Paid-in capital ...................................................... 267,043,375
-----------------------------------------------------------------------------------------
Net assets, at market value $ 328,253,503
-----------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($328,253,503 /
17,390,898 shares of capital stock outstanding, $.01 par value, --------------
100,000,000 shares authorized) .................................... $18.88
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
Statement of Operations
six months ended April 30, 1997
<TABLE>
<S> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $112,143) ................ $ 1,111,270
Interest ............................................................. 770,065
--------------
1,881,335
Expenses:
Management fee ....................................................... 1,949,834
Services to shareholders ............................................. 617,207
Custodian and accounting fees ........................................ 210,945
Directors' fees and expenses ......................................... 18,547
Reports to shareholders .............................................. 63,696
Auditing ............................................................. 17,895
Legal ................................................................ 8,950
Registration fees .................................................... 7,720
Other ................................................................ 17,492
--------------
2,912,286
-----------------------------------------------------------------------------------------
Net investment loss (1,030,951)
-----------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain from:
Investments .......................................................... 340,384
Foreign currency related transactions ................................ 1,313,913
--------------
1,654,297
Net unrealized appreciation (depreciation) during the period on:
Investments .......................................................... (12,645,905)
Foreign currency related transactions ................................ 1,141,377
--------------
(11,504,528)
-----------------------------------------------------------------------------------------
Net loss on investment transactions (9,850,231)
-----------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ (10,881,182)
-----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment loss ........................................ $ (1,030,951) $ (573,365)
Net realized gain from investment transactions ............. 1,654,297 16,936,926
Net unrealized appreciation (depreciation) on investment
transactions during the period .......................... (11,504,528) 37,065,126
-------------- --------------
Net increase (decrease) in net assets resulting from
operations .............................................. (10,881,182) 53,428,687
-------------- --------------
Distributions to shareholders from:
Net investment income ................................... (2,252,546) (2,817,790)
-------------- --------------
Net realized gains ...................................... (14,901,384) (6,128,748)
-------------- --------------
Fund share transactions:
Proceeds from shares sold .................................. 55,751,786 140,375,546
Net asset value of shares issued to shareholders in
reinvestment of distributions ........................... 16,335,810 8,373,037
Cost of shares redeemed .................................... (66,628,961) (97,489,394)
-------------- --------------
Net increase (decrease) in net assets from Fund share
transactions ............................................ 5,458,635 51,259,189
-------------- --------------
Increase (decrease) in net assets .......................... (22,576,477) 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 -------------- --------------
$4,031,168 and $747,671, respectively) .................. $328,253,503 $350,829,980
-------------- --------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................. 17,152,364 14,547,124
-------------- --------------
Shares sold ................................................ 2,785,726 7,361,025
Shares issued to shareholders in reinvestment of
distributions ........................................... 829,650 487,939
Shares redeemed ............................................ (3,376,842) (5,243,724)
-------------- --------------
Net increase (decrease) in Fund shares ..................... 238,534 2,605,240
-------------- --------------
Shares outstanding at end of period ........................ 17,390,898 17,152,364
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 -- 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
Six Months (commencement
Ended Years Ended October 31, of operations)
April 30, 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) ............ (.06) (.04) (.03) (.02) .04 .07 .01
Net realized and unrealized gain (loss)
on investment transactions ........... (.52) 3.59 1.38 .48 4.24 .08 (.09)
------------------------------------------------------------------------------------
Total from investment operations ........ (.58) 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 .......... $18.88 $20.45 $17.54 $16.27 $16.14 $12.05 $11.92
------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ........................ (3.03)** 20.97 8.32 2.80 36.04 1.26 (.67)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .. 328 351 255 256 198 55 9
Ratio of operating expenses, net to
average daily net assets (%) ......... 1.66* 1.60 1.69 1.70 1.50 1.50 1.50*
Ratio of operating expenses before
expense reductions, to average daily
net assets (%) ....................... 1.66* 1.60 1.69 1.76 2.01 2.53 15.34*
Ratio of net investment income (loss) to
average daily net assets (%) ......... (.59)* (.20) (.12) (.28) .53 .78 2.47*
Portfolio turnover rate (%) ............. 45.1* 63.0 43.7 45.8 54.6 23.4 --
Average commission rate paid (b) ........ $.0339 $.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 September 1, 1995.
* Annualized
** Not annualized
17 -- 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 National Association of
Securities Dealers Automatic Quotation ("NASDAQ") System, for which there have
been sales, are valued at the most recent sale price reported on such system. If
there are no such sales, the value is the high or "inside" bid quotation.
Securities which are not quoted on the NASDAQ System but are traded in another
over-the-counter market are valued at the most recent sale price on such market.
If no sale occurred, the security is then valued at the calculated mean between
the most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
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.
18 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
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.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in forward contracts, passive
foreign investment companies, and certain securities sold at a loss. As a
result, net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period.
Accordingly, the Fund may periodically make reclassifications among certain of
its capital accounts without impacting the net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade-date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. Purchases and Sales of Securities
During the six months ended April 30, 1997, purchases and sales of investment
securities (excluding short-term investments) aggregated $77,106,553 and
$72,683,786, respectively.
19 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
C. Related Parties
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund has agreed to pay to the Adviser
a fee equal to an annual rate of 1.10% of the Fund's average daily net assets,
computed and accrued daily and payable monthly. As manager of the assets of the
Fund, the Adviser directs the investments of the Fund in accordance with its
investment objectives, policies, and restrictions. The Adviser determines the
securities, instruments, and other contracts relating to investments to be
purchased, sold or entered into by the Fund. In addition to portfolio management
services, the Adviser provides certain administrative services in accordance
with the Agreement. The Agreement provides that if the Fund's expenses,
exclusive of taxes, interest, and extraordinary expenses, exceed specified
limits, such excess, up to the amount of the management fee, will be paid by the
Adviser. For the six months ended April 30, 1997, the fee pursuant to the
Agreement amounted to $1,949,834.
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 $453,880 charged to the Fund by SSC for the six
months ended April 30, 1997, of which $68,722 is unpaid at April 30, 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 six months ended April 30,
1997, the amount charged to the Fund by STC aggregated $96,193, of which $15,083
is unpaid at April 30, 1997.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended April 30, 1997, the amount charged to the Fund by SFAC aggregated
$103,306, of which $16,971 is unpaid at April 30, 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 six
months ended April 30, 1997, Directors' fees and expenses aggregated $18,547.
D. Commitments
As of April 30, 1997, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized appreciation of
$1,569,817.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
- ------------------------------------ -------------------------------- --------------- ---------------------
<S> <C> <C> <C> <C> <C>
German Marks 13,760,800 U.S. Dollars 8,345,291 5/12/97 395,765
British Pounds 8,584,600 U.S. Dollars 13,962,637 5/12/97 57,118
Netherland Guilders 19,580,830 U.S. Dollars 10,559,688 5/12/97 506,507
French Francs 24,248,000 U.S. Dollars 4,295,483 5/14/97 138,704
Irish Punts 4,729,000 U.S. Dollars 7,495,701 5/14/97 402,204
Swiss Francs 3,281,000 U.S. Dollars 2,299,229 5/14/97 69,519
---------
1,569,817
=========
</TABLE>
20 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
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.
21 -- 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 April 30, 1997, and the related statement of
operations for the six months then ended, the statements of changes in net
assets for the six months then ended and for the year ended October 31, 1996,
and the financial highlights for the six months ended April 30, 1997, for each
of the five years in the period ended October 31, 1996, and for the period
September 10, 1991 (commencement of operations) to October 31, 1991. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 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 April 30, 1997, the results of its
operations for the six months then ended, the changes in its net assets for the
six months then ended and for the year ended October 31, 1996, and the financial
highlights for the six months ended April 30, 1997, for each of the five years
in the period ended October 31, 1996, and for the period September 10, 1991
(commencement of operations) to October 31, 1991 in conformity with generally
accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
June 12, 1997
22 -- SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
This Page
intentionally
left blank
23-SCUDDER GLOBAL DISCOVERY FUND
<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 Emeritus and Director, Kirby Corporation
Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business
Adam Greshin*
Vice President
Susan E. Gray*
Vice President
Jerard K. Hartman*
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
Kathryn L. Quirk*
Vice President and Assistant Secretary
*Scudder, Stevens & Clark, Inc.
24-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
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
- ---------
Scudder 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
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
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 First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities Fund, Inc.
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. +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.
25-SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan AutoBuy
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:
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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:
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Automatic Withdrawal Plan AutoSell
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
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26-SCUDDER GLOBAL DISCOVERY FUND
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
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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
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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 Funds 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 Funds Centers. Check for a Funds 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
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New From Scudder: Pathway Series
In a complex financial world, Scudder Pathway Series is a refreshingly simple concept. With one
investment, Pathway gives you instant access to broad diversification in U.S. markets and
across the globe. Select from four Portfolios -- Conservative, Balanced, Growth, or
International -- each with a distinct investment objective that can match your goals. Each
Portfolio, rather than investing in individual securities, invests in carefully selected
Scudder mutual funds.
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The share price of each Pathway Series portfolio will fluctuate and the risk associated with
each portfolio is determined by the securities held in each underlying Scudder fund. 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>
27-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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