Scudder
Global
Fund
Annual Report
June 30, 1998
Pure No-Load (TM) Funds
For investors seeking long-term growth of capital from a professionally managed
portfolio consisting primarily of global equity securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder Global Fund
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Date of Inception: 7/23/86 Total Net Assets as of Ticker Symbol: SCOBX
6/30/98: $1.77 billion
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o For the fiscal year ended June 30, 1998, Scudder Global Fund provided a total
return of 14.93%, compared to the 17.02% of the Fund's benchmark, the unmanaged
Morgan Stanley Capital International World Index.
o Worldwide, significant growth in Europe and the United States was tempered by
continued deterioration in Southeast Asian markets and the recession in Japan.
o The portfolio's 55% weighting in Europe has allowed the portfolio to
participate significantly in the European restructuring now underway.
Table of Contents
3 Letter from the Fund's Chairman 20 Financial Highlights
4 Performance Update 21 Notes to Financial Statements
5 Portfolio Summary 25 Report of Independent Accountants
6 Portfolio Management Discussion 26 Tax Information
10 Glossary of Investment Terms 28 Officers and Directors
11 Investment Portfolio 29 Investment Products and Services
17 Financial Statements 30 Scudder Solutions
2 - Scudder Global Fund
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Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to present the annual report for Scudder Global Fund for the
fiscal year ended June 30, 1998.
During the period covered by this report, the U.S. economy enjoyed ongoing
strength, including a still-climbing stock market, a strong dollar, high
consumer confidence, and low unemployment. Earlier this year the Federal Reserve
worried that the U.S. economy was growing too rapidly, but so far the Fed has
left interest rates unchanged. Bond prices generally rose during the period and
the 30-year Treasury bond yield declined to a new low.
For its most recent fiscal year ended June 30, 1998, the Fund provided a
positive total return of 14.93%. For more detail on the events of the past 12
months and the managers' outlook for the year ahead, please turn to the
discussion beginning on page 6.
For those of you interested in new Scudder products and services, we would
like to take this opportunity to highlight two upcoming additions to our
international category, both of which are scheduled to begin operations on
September 1st. Scudder International Growth Fund will seek long-term capital
appreciation by investing primarily in the equity securities of non-U.S.
companies with high growth potential, and Scudder International Value Fund will
seek long-term capital appreciation by investing primarily in undervalued
foreign equity securities. For further information on these new funds, please
call 1-800-225-2470.
Thank you for choosing Scudder Global Fund to help meet your investment
needs. If you should have any questions regarding your investment, or any of the
Scudder Funds, please do not hesitate to call us at the number above, or visit
our Web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Global Fund
3 - Scudder Global Fund
<PAGE>
PERFORMANCE UPDATE as of June 30, 1998
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FUND INDEX COMPARISONS
- -----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/98 $10,000 Cumulative Annual
- ---------------------------------------
SCUDDER GLOBAL FUND
- ---------------------------------------
1 Year $ 11,493 14.93% 14.93%
5 Year $ 20,646 106.46% 15.60%
10 Year $ 37,669 276.69% 14.18%
- ---------------------------------------
MSCI WORLD INDEX
- ---------------------------------------
1 Year $ 11,702 17.02% 17.02%
5 Year $ 20,671 106.71% 15.62%
10 Year $ 28,821 188.21% 11.16%
- ---------------------------------------
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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:
Yearly periods ended June 30, 1998
SCUDDER GLOBAL FUND
Year Amount
- ---------------------------
'88 $10,000
'89 $12,390
'90 $14,869
'91 $14,096
'92 $16,081
'93 $18,245
'94 $20,616
'95 $22,494
'96 $26,240
'97 $32,776
'98 $37,669
MSCI WORLD INDEX
Year Amount
- ---------------------------
'88 $10,000
'89 $11,247
'90 $12,047
'91 $11,457
'92 $11,941
'93 $13,943
'94 $15,369
'95 $17,007
'96 $20,143
'97 $24,628
'98 $28,821
The Morgan Stanley Capital International (MSCI) World Index is an unmanaged
capitalization-weighted measure of global stock markets including the U.S.,
Canada, Europe, Australia, and the Far East. Index returns assume dividends
reinvested net of withholding 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 June 30
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------
NET ASSET VALUE... $ 17.64 $ 20.36 $ 18.06 $ 19.56 $ 21.63 $ 23.93 $ 25.64 $ 28.73 $ 33.67 $ 32.41
INCOME
DISTRIBUTIONS..... $ .14 $ .20 $ .37 $ .31 $ .16 $ .24 $ .11 $ .25 $ .28 $ .88
CAPITAL GAINS
DISTRIBUTIONS..... $ .08 $ .55 $ .83 $ .66 $ .34 $ .26 $ .34 $ .84 $ 1.53 $ 4.58
FUND TOTAL
RETURN (%)........ 23.90 20.00 -5.20 14.09 13.45 12.99 9.11 16.65 24.91 14.93
INDEX TOTAL
RETURN (%)........ 12.48 7.09 -4.90 4.22 16.75 10.23 10.67 18.44 22.27 17.02
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results. Investment return
and principal value will fluctuate, so an investor's shares, when redeemed,
may be worth more or less than when purchased.
4 - Scudder Global Fund
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PORTFOLIO SUMMARY as of June 30, 1998
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GEOGRAPHICAL
(EXCLUDES CASH EQUIVALENTS AND BONDS)
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Europe 55%
United States 27%
Japan 6%
Pacific Basin 4%
Latin America 3%
Other 5%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Our largest portfolio theme was
European restructuring, which has
been a major contributor to
returns.
- --------------------------------------------------------------------------
SECTOR
(EXCLUDES CASH EQUIVALENTS AND BONDS)
- --------------------------------------------------------------------------
Financial 28%
Manufacturing 20%
Technology 8%
Health 6%
Consumer Staples 6%
Energy 5%
Service Industries 5%
Utilities 5%
Metals & Minerals 4%
Other 13%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The portfolio remained
overweighted in the financial
sector, while reducing its
weighting in utilities.
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TEN LARGEST EQUITY HOLDINGS
(17% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. RWE AG
Producer and marketer of petroleum
and chemical products in Germany
2. MUENCHENER RUECKVERSICHERUNGS-
GESELLSCHAFT AG
Insurance company in Germany
3. NOVARITS AG
Pharmaceutical company in Switzerland
4. UNILEVER PLC
Manufacturer of branded and packaged
consumer goods, food, detergents and
personal care products in the
United Kingdom
5. INTERNATIONAL BUSINESS MACHINES
CORP.
Principal manufacturer and servicer of
business and computing machines in the
United States
6. VEBA AG
Electric utility, distributor of oil
and chemicals in Germany
7. US AIRWAYS GROUP
Major airline in the United States
8. BAYER AG
Leading chemical producer in Germany
9. SAP AG
Computer software manufacturer in
Germany
10. ALLIANZ AG
Multi-line insurance company in Germany
More than half of the portfolio's
top ten holdings at the end of the
period were in German
corporations.
For more complete details about the Fund's investment portfolio,
see page 11. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - Scudder Global Fund
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Portfolio Management Discussion
Dear Shareholders,
National equity markets diverged markedly in the first half of 1998, with
significant advances in U.S. and European markets being tempered by continued
declines in Asia. For its fiscal year ended June 30, 1998, Scudder Global Fund
provided a total return of 14.93%. The Fund's benchmark, the unmanaged Morgan
Stanley Capital International (MSCI) World Index, returned 17.02% (all returns
are reported in terms of U.S. dollars) for the same period.
Market Environment
At the end of the first quarter of 1998, a combination of International Monetary
Fund financing and government restructuring moves had helped stem the fourth
quarter's deterioration in the Asian markets. This stability was short-lived,
however, as rapidly deteriorating Asian economic fundamentals and a sliding yen
led to further market declines. Meanwhile, President Clinton's visit to China
highlighted that country's importance to the United States and the changing
politics of Asia. In our view, China has what U.S. investors need -- a useful
home for investment capital. Japan does not.
Domestically, the infatuation with large growth stocks continued, leading the
U.S. stock market up almost 18% year-to-date. However, corporate profit growth
in the United States has slowed to a crawl. While the Asian crisis, a high
dollar, and pricing pressures are often cited as reasons, the slowdown looks
suspiciously like the maturing of an economic cycle. Record numbers of takeovers
and mergers indicate a move by corporations to dominate their markets. These
events beg the question: will the earnings growth demanded by investors be
achieved via further cost cutting or volume growth?
The real star so far in 1998 has been Continental Europe, with the MSCI Europe
Index up 26.5% year-to-date. The current situation has certainly changed since
the days of the so-called "Eurosclerosis." A friendly interest rate environment
has been created to facilitate the completion of the European Monetary Union
(EMU) arrangements which will give 11 countries one currency on January 1, 1999.
The confirmation of Italy and Spain's inclusion in EMU set off sizable rallies
in these markets, propelling the MSCI Italy Index up 33.2% and the MSCI Spain
Index up 43.9% in the last six months. These increases seem to have occurred as
investors realized the benefits of broader European, rather than local, monetary
policy. Equally important, however, is the perception of investors that European
corporations are rapidly developing a new view of the world. Learning lessons
from the U.S. revival, these corporations seem to be striving to use their
resources more efficiently -- an imperative if the living standards of Europe's
aging population are to be maintained.
Japan's stock market has continued to languish, with the MSCI Japan Index
dropping 2.6% in the first six months of 1998. The recently confirmed economic
recession in Japan is pressuring the already debilitated banking system and
demands further government intervention in the system. In the short term, the
choice is between enforcing outright loss on the banks and their customers or
wholesale money printing, which could lead to a devaluing currency and
6 - Scudder Global Fund
<PAGE>
inflation. This unattractive but necessary choice continues to be deferred.
Longer term, Japan can choose between freer markets or the continuation of an
economy where social harmony is a different goal than economic gain. Against
this backdrop of unresolved tangle, it is little surprise that Japanese
securities have become relatively cheaper.
Portfolio Strategy
On June 30, 1998, the portfolio was 55% invested in Europe, 27% in the United
States, 4% in the Asia/Pacific (excluding Japan) region, and 14% in Latin
America, Canada, and other countries.
With respect to themes, European restructuring remains the largest theme within
our portfolio and has been a major contributor to returns. We foresee this
continuing for some years to come, as its ideas are now well appreciated by
investors. The largest concentration in the restructuring theme is in German
chemical/pharmaceutical giants and the German utility/conglomerates which are
responding to the deregulation of the European electricity industry. Recently we
added the French auto company Peugeot, which has new leadership, a strong profit
outlook, and new appeal in the context of what appears to be a consolidating
global auto industry.
Influenced by valuation, our second most heavily weighted theme is entitled
"Secure Streams of Income." We anticipate that the same generation that inflated
house prices in the 1980s and stock prices in the 1990s will choose to lock in
their gains and opt for security as they approach retirement. In our last
report, we discussed our investments in
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
CHART TITLE:
World Stock Market Returns
CHART PERIOD:
Twelve months ended June 30, 1998
CHART DATA:
-----------------------------------------------
Finland 65.33%
Italy 62.21%
Spain 49.49%
Germany 45.64%
France 42.23%
Switzerland 32.34%
Denmark 31.07%
U.S. 29.97%
U.K. 29.89%
Sweden 27.18%
Netherlands 26.66%
Czech Republic 4.13%
Norway -3.43%
Mexico -8.42%
Australia -14.64%
Brazil -30.55%
Japan -31.84%
Hong Kong -48.39%
Singapore -57.77%
Philippines -59.36%
Korea -68.47%
Thailand -72.34%
Malaysia -74.64%
Indonesia -89.71%
-----------------------------------------------
Source: Morgan Stanley Capital International indices in U.S. dollars.
7 - Scudder Global Fund
<PAGE>
U.S. Treasury bonds and electric utilities. More recently we have added Lockheed
Martin, whose profits are underpinned by an increasing defense budget and a
strong internal efficiency plan. We have recently initiated a position in
American Greetings, whose long record of success should be enhanced by some new
product initiatives. Equity Residential Properties, a real estate investment
trust with national coverage, was also added.
Elsewhere, life insurance investments in our "First World Savings" theme, which
are principally in Europe, have continued to appreciate and are now valued on
their brand names and distribution systems rather than on the basis of the
assets on their balance sheets. Currently, we view this part of the portfolio as
a source of funds. The portfolio's emerging market investments have done poorly
in recent months, and since the beginning of the year, our weighting in the
emerging markets has dropped slightly. While these investments are at the
riskier end of the risk-reward spectrum, we remind ourselves that it is only
here that the huge amounts of wealth that are being generated today can be
absorbed.
The portfolio's largest positions include the Swiss pharmaceutical firm
Novartis, the German industrial conglomerate RWE, and the U.K.-based consumer
product firm Unilever.
Outlook
The key question for the portfolio management team is whether our
European-oriented themes are nearing maturity given the market's enthusiasm for
these stocks and their resulting valuations. The valuations of some insurance
stocks, for instance, have begun to reflect a great deal of optimism on the
8 - Scudder Global Fund
<PAGE>
growth rate and profitability of new policies, as well as on the possibility of
takeovers. In part, our response to this challenge has been, together with the
Scudder Kemper Investments analysts, to focus on identifying those companies
whose valuations fully reflect their restructuring or earnings potential, making
them potential sell candidates. Value remains in most of our holdings, but in
some it is eroding. Ultimately, however, the best judge of value is the
attractiveness of alternative investments, and the search for these, as always,
prompts us to examine what is going on in the broader global context.
In our view, the global environment is one characterized by a particularly
powerful long-term demographic trend -- one which is oversupplying the world
with capital. Going forward, we expect this imbalance to have important
implications for many of our themes, particularly "Secure Streams of Income."
Positioning the portfolio ahead of these expected events remains a primary focus
of the portfolio management team.
Sincerely,
Your Portfolio Management Team
/s/William E. Holzer /s/Diego Espinosa
William E. Holzer Diego Espinosa
/s/Nicholas Bratt
Nicholas Bratt
Scudder Global Fund:
A Team Approach to Investing
Scudder Global Fund is managed by a team of Scudder Kemper Investments, Inc.
(the "Adviser") professionals who each play an important role in the Fund's
management process. Team members work together to develop investment
strategies and select securities for the Fund's portfolio. They are supported
by the Adviser's large staff of economists, research analysts, traders, and
other investment specialists who work in our offices across the United States
and abroad. We believe our team approach benefits Fund investors by bringing
together many disciplines and leveraging our extensive resources.
Lead Portfolio Manager William E. Holzer has had day-to-day responsibility for
Scudder Global Fund's worldwide strategy and investment themes since its
inception in 1986. Mr. Holzer, who has over 21 years' experience in global
investing, joined the Adviser in 1980. Diego Espinosa, Portfolio Manager,
joined the team in 1997 and the Adviser in 1996. Mr. Espinosa is also
responsible for development of the Fund's strategy and management of the
portfolio on a daily basis. Mr. Espinosa has seven years of investment
industry experience. Nicholas Bratt, Portfolio Manager, directs Scudder's
overall global equity investment strategies. Mr. Bratt joined the Adviser in
1976 and the team in 1993.
9 - Scudder Global 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 an investment's total
return.
EXCHANGE RATE The price at which one country's currency is
exchangeable for another currency. Currencies
represent a store of value in the economic,
political, and financial health of the home
country. Changes in its value add to or
subtract from an investor's return.
FUNDAMENTAL RESEARCH Analysis of a company's financial statements
to project future stock price changes.
Considers past records of sales and earnings
as well as the future impact of products,
consumer markets, and management in weighting
a company's prospects. Distinct from
technical analysis, which evaluates the
attractiveness of a stock based on historical
price and trading volume movements.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into
cash within a reasonably short period of
time.
MARKET CAPITALIZATION The value of a company's outstanding shares
of common stock, determined 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.
"Large-cap" stocks tend to be more liquid and
less volatile, while "small-cap" stocks have
greater potential earnings growth and are
typically more volatile.
PRICE/EARNINGS RATIO A widely used gauge of a stock's valuation
(also "P/E" or "earnings that indicates what investors are paying for
multiple") a company's earnings on a per share basis. A
high earnings multiple indicates a high
expected growth rate and greater risk; a
lower multiple is associated with mature or
out-of-favor companies, and lower stock price
volatility.
TRANSPARENCY The degree to which investors can evaluate
whether a company is managed in the interests
of shareholders. Transparency is often not as
good in developing markets where disclosure
requirements may be less stringent, and
protectionism, subsidies, and cronyism may
distort the business environment.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
10 - Scudder Global Fund
<PAGE>
Investment Portfolio as of June 30, 1998
<TABLE>
<CAPTION>
Principal Market
Amount ($) (c) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 2.4%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 6/30/1998 at 5.75%
to be repurchased at $40,921,535 on 7/1/1998, collateralized by a $40,906,000 -------------
U.S. Treasury Note, 3.625%, 1/15/2008 (Cost $40,915,000) .............................. 40,915,000 40,915,000
-------------
Bonds 9.1%
- ------------------------------------------------------------------------------------------------------------------------------
Japan 0.6%
SB Treasury Company LLC, 9.4% to 6/30/2008, variable rate to 12/29/2049 ................. 11,000,000 10,945,000
-------------
United Kingdom 2.8%
United Kingdom Treasury Bond, 8.5%, 7/16/2007 .........................................GBP 21,798,000 42,816,623
United Kingdom Treasury Bond, 3.5%, 12/29/2049 ........................................GBP 6,014,200 6,178,887
-------------
48,995,510
-------------
United States 5.7%
U.S. Treasury Bond, 6.375%, 8/15/2027 ................................................... 43,315,000 47,565,068
U.S. Treasury Separate Trading of Registered Interest and Principal of Securities
(Principal only), 8/15/2021 ........................................................... 195,700,000 52,226,459
-------------
99,791,527
- ------------------------------------------------------------------------------------------------------------------------------
Total Bonds (Cost $146,542,048) 159,732,037
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 88.5%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 0.9%
Electricidad Argentina S.A. "A" (ADS)* (Electric utility) (b) ........................... 253,143 3,797,145
YPF S.A. "D" (ADR) (Petroleum company) .................................................. 422,300 12,695,394
-------------
16,492,539
-------------
Australia 1.7%
Broken Hill Proprietary Co. Ltd. (Petroleum, minerals and steel) ........................ 811,800 6,878,576
Foster's Brewing Group, Ltd. (Leading brewery) .......................................... 3,682,700 8,686,940
WMC Ltd. (Mineral exploration and production) ........................................... 269,200 812,135
Woodside Petroleum Ltd. (Major oil and gas producer) .................................... 2,763,700 13,827,472
-------------
30,205,123
-------------
Austria 0.4%
Flughafen Wien AG (Operator of terminals and facilities at Vienna International
Airport) .............................................................................. 146,900 7,051,200
-------------
Bermuda 1.1%
EXEL Ltd. (ADR) (Provider of liability insurance) ....................................... 142,700 11,103,844
Mid Ocean, Ltd. (Property and casualty insurance company) ............................... 92,250 7,241,625
-------------
18,345,469
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Brazil 1.7%
Aracruz Celulose S.A. (ADR) (Producer of eucalyptus kraft pulp) ......................... 605,400 6,924,263
Companhia Cervejaria Brahma (pfd.) (Leading beer producer and distributor) .............. 16,940,000 10,545,848
Companhia Vale do Rio Doce (pfd.) "A" (Diverse mining and industrial complex) ........... 621,200 12,675,907
-------------
30,146,018
-------------
Canada 2.7%
BCE, Inc. (Telecommunication services) .................................................. 235,000 9,957,018
Canadian National Railway Co. (Railroad operator) ....................................... 261,400 13,891,122
Canadian Pacific Ltd. (Ord.) (Transportation and natural resource conglomerate) ......... 492,656 13,860,187
Molson Cos., Ltd. "A" (Brewery) ......................................................... 484,000 8,798,206
-------------
46,506,533
-------------
China 0.5%
American Standard China "B"* (Plumbing products) (b) .................................... 526 5,260,000
Huaneng Power International, Inc. Series "N" (ADR)* (Developer and operator of
large coal-fired power plants) ........................................................ 319,300 4,290,594
-------------
9,550,594
-------------
France 5.2%
AXA S.A. (Insurance group providing insurance, finance and real estate services) ........ 166,205 18,694,179
Assurances Generales de France (Health, life, and liability insurance) .................. 293,957 16,633,755
Canal Plus (Leading pay television network) ............................................. 51,486 9,623,233
Michelin "B" (Leading tire manufacturer) ................................................ 251,493 14,517,931
PSA Peugeot Citroen (Manufacturer of automobiles and light commercial vehicles) ......... 65,670 14,120,945
Rhodia S.A.* (Drug manufacturer and chemicals specialist) ............................... 41,138 1,147,240
Schneider S.A. (Manufacturer of electronic components and automated manufacturing
systems) ............................................................................. 200,480 15,986,802
-------------
90,724,085
-------------
Germany 19.2%
Allianz AG (Multi-line insurance company) ............................................... 82,017 27,359,468
Allianz AG (New) ........................................................................ 2,412 797,914
BASF AG (Leading international chemical producer) ....................................... 424,799 20,201,600
BHF-Bank AG (Universal banking services) ................................................ 201,800 7,688,578
Bayer AG (Leading chemical producer) .................................................... 551,474 28,565,384
Bayerische Vereinsbank AG (Commercial bank) ............................................. 316,463 26,852,363
Commerzbank AG (Worldwide multi-service bank) ........................................... 222,386 8,472,905
Deutsche Telekom AG (Telecommunication services) ........................................ 329,341 9,022,791
Deutsche Telekom AG (ADR) ............................................................... 241,700 6,646,750
Heidelberger Druckmaschinen AG (Manufacturer of commercial printing presses) ............ 63,043 5,226,924
Hoechst AG (Chemical producer) .......................................................... 512,301 25,783,388
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Muenchener Rueckversicherungs-Gesellschaft AG (Insurance company) ....................... 20,234 7,226,629
Muenchener Rueckversicherungs-Gesellschaft AG (Registered) .............................. 52,343 26,009,665
RWE AG (pfd.) (Producer and marketer of petroleum and chemical products) ................ 644,114 38,150,667
SAP AG (pfd.) (Computer software manufacturer) .......................................... 41,867 28,443,044
Schering AG (Pharmaceutical and chemical producer) ...................................... 145,918 17,196,337
VEBA AG (Electric utility, distributor of oil and chemicals) ............................ 430,095 28,944,918
VIAG AG (Provider of electrical power and natural gas services, aluminum products,
chemicals, ceramics and glass) ........................................................ 34,476 23,746,883
-------------
336,336,208
-------------
Ghana 0.0%
Ashanti Goldfields Co., Ltd. (GDR) (Leading gold producer) .............................. 27,194 220,951
-------------
Hong Kong 1.2%
Cheung Kong Holdings Ltd. (Real estate company) ......................................... 648,000 3,194,837
Citic Pacific Ltd. (Diversified holding company) ........................................ 3,230,000 5,773,813
Hutchison Whampoa, Ltd. (Container terminal and real estate company) .................... 1,795,000 9,452,246
New World Development Co., Ltd. (Property investment and development,
construction and engineering, hotels and restaurants, telecommunications) ............. 1,693,751 3,279,074
-------------
21,699,970
-------------
Hungary 0.2%
The First Hungary Fund Limited "A"* (Investment company) ................................ 3,619 4,342,800
-------------
India 0.0%
Housing Development Finance Corp. Ltd. (Housing finance provider to individuals,
corporations and developers) .......................................................... 340 24,000
-------------
Italy 0.8%
Istituto Nazionale delle Assicurazioni (Insurance company) .............................. 5,032,900 14,304,852
-------------
Japan 5.0%
Canon Inc. (Leading producer of visual image and information equipment) ................. 378,000 8,620,765
Daiwa Securities Co., Ltd. (Brokerage and other financial services) ..................... 1,192,000 5,152,215
Matsushita Electric Industrial Co., Ltd. (Leading manufacturer of consumer
electronic products) .................................................................. 788,000 12,722,560
Minebea Co., Ltd. (Manufacturer of bearings, electronic equipment, machinery parts) ..... 1,024,000 10,238,517
Nichiei Co., Ltd. (Finance company for small- and medium-sized firms) ................... 120,340 8,224,802
Nomura Securities Co., Ltd. (Financial advisor, securities broker and underwriter) ...... 1,182,000 13,820,808
Ono Pharmaceutical Co., Ltd. (Producer of medicines for human and veterinary uses) ...... 141,000 3,389,227
Shohkoh Fund & Co., Ltd. (Finance company for small- and medium-sized firms) ............ 29,800 7,357,226
Sumitomo Metal Mining Co., Ltd. (Leading gold, nickel and copper mining company) ........ 1,427,000 5,816,688
The Nichido Fire & Marine Insurance Co., Ltd. (Property and casualty insurance company) . 1,005,000 5,275,304
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Yamanouchi Pharmaceutical Co., Ltd. (Leading manufacturer of ethical drugs) ............. 342,000 7,155,951
-------------
87,774,063
-------------
Korea 0.2%
Samsung Display Devices Co. (Leading manufacturer of CRT and picture tubes) ............. 12,963 354,051
Samsung Electronics Co. Ltd. (Non-voting GDS) (Major electronics manufacturer) .......... 348,698 2,963,933
Samsung Electronics Co. Ltd. (Voting GDR) ............................................... 21,831 346,567
-------------
3,664,551
-------------
Netherlands 2.2%
AEGON Insurance Group NV (Insurance company) ............................................ 252,544 21,994,926
ING Groep NV (Insurance and financial services) ......................................... 240,315 15,750,607
-------------
37,745,533
-------------
Singapore 0.0%
Development Bank of Singapore (Foreign Registered) (Banking and financial services) ..... 4,000 22,209
Overseas Union Bank Ltd. (Foreign registered) (Provider of banking and
financial services) ................................................................... 10,000 21,972
-------------
44,181
-------------
South Africa 0.8%
Anglo American Platinum Corp., Ltd. (ADR) (Leading platinum producer) ................... 302,586 3,328,446
Anglo American Platinum Corp., Ltd. ..................................................... 60,000 652,614
Impala Platinum Holdings Ltd. (ADR) (Mines and markets platinum group metals) ........... 468,500 4,029,100
Sasol Ltd. (Coal mining and processing, crude oil exploration and refining,
petrochemical production) ............................................................. 921,600 5,338,442
-------------
13,348,602
-------------
Sweden 2.6%
AGA AB "B" (Free) (Producer and distributor of industrial and medical gases) ............ 509,700 7,800,226
Astra AB "A" (Free) (Pharmaceutical company) ............................................ 713,233 14,583,163
Skandia Forsakrings AB (Free) (Financial conglomerate) .................................. 1,599,600 22,874,360
-------------
45,257,749
-------------
Switzerland 8.5%
Ciba Specialty Chemicals AG (Registered) (Manufacturer of chemical products for
plastics, coatings, fibers and fabrics) ............................................... 161,271 20,740,624
Clariant AG (Registered) (Manufacturer of color chemicals) .............................. 32,159 21,215,638
Credit Suisse Group (Registered) (Provider of bank services, management services
and life insurance) ................................................................... 117,808 26,256,488
Nestle SA (Registered) (Food manufacturer) .............................................. 9,609 20,597,513
Novartis AG (Registered) (Pharmaceutical company) ....................................... 19,095 31,827,102
Swiss Reinsurance (Registered) (Life, accident and health insurance company) ............ 10,774 27,292,521
-------------
147,929,886
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom 10.0%
BOC Group PLC (Producer of industrial gases) ............................................ 1,056,541 14,403,929
Carlton Communications PLC (Television post production products and services) ........... 2,105,894 18,811,729
General Electric Co., PLC (Manufacturer of power, communications and defense
equipment and other various electrical components) .................................... 3,243,400 27,971,082
National Grid Group PLC (Owner and operator of electric transmission systems) ........... 2,613,920 17,632,427
Railtrack Group PLC (Operator of railway infrastructure) ................................ 542,500 13,306,382
Reuters Group PLC (International news agency) ........................................... 1,607,532 18,386,058
Rio Tinto PLC (Mining and finance company) .............................................. 510,530 5,753,915
Shell Transport & Trading PLC (Part owner of Royal Dutch Shell Co.)
(Petroleum producer) .................................................................. 2,152,100 15,163,985
SmithKline Beecham PLC (Manufacturer of ethical drugs and healthcare products) .......... 972,106 11,873,162
Unilever PLC (Manufacturer of branded and packaged consumer goods, food, detergents
and personal care products) ........................................................... 2,895,900 30,849,113
-------------
174,151,782
-------------
United States 23.6%
Advanced Micro Devices Inc.* (Manufacturer of semiconductors and integrated circuits) ... 557,000 9,503,806
American Greeting Corp., "A" (Designer of greeting cards) ............................... 87,400 4,451,938
Biogen Inc.* (Biotechnology research and development) ................................... 143,820 7,047,180
Boeing Co. (Manufacturer of jet airplanes) .............................................. 331,900 14,790,294
Boston Scientific Corp.* (Developer and producer of medical devices) .................... 165,000 11,818,125
CINergy Corp. (Holding company of electrical utilities in Ohio, Indiana and Kentucky) ... 799,100 27,968,500
Charles Schwab Corp. (Discount brokerage services) ...................................... 167,650 5,448,625
Duke Energy Corp. (Electric utility in the Carolinas) ................................... 165,400 9,799,950
Electronic Data Systems Corp.* (Provider of information technology services) ............ 561,000 22,440,000
Enron Corp. (Major natural gas pipeline system) ......................................... 354,700 19,175,969
Equity Residential Properties Trust (REIT) (Owner of apartment properties) .............. 363,300 17,234,044
First Data Corp. (Credit-card processing services) ...................................... 576,800 19,214,650
Guidant Corp. (Developer and manufacturer of products used in minimally
invasive surgery) ..................................................................... 111,700 7,965,606
International Business Machines Corp. (Principal manufacturer and servicer of
business and computing machines) ...................................................... 253,640 29,121,043
Lockheed Martin Corp. (Manufacturer of aircraft, missiles and space equipment) .......... 159,700 16,908,238
MBIA, Inc. (Insurer of municipal bonds) ................................................. 353,500 26,468,313
Newmont Mining Corp. (International gold exploration and mining company) ................ 221,700 5,237,663
Parametric Technology Corp.* (Mechanical design software producer) ...................... 529,400 14,359,975
Praxair, Inc. (Producer of industrial gases and specialized coatings) ................... 325,900 15,256,194
Sabre Group Holdings Inc.* (Travel reservation system provider) ......................... 346,200 13,155,600
Prologis Trust (REIT) (Global owner of corporate distribution facilities) ............... 219,800 5,495,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sterling Commerce, Inc.* (Producer of electronic data interchange products
and services) ......................................................................... 81,600 3,957,600
Stillwater Mining Co.* (Exploration and development of mines in Montana
producing platinum, palladium and associated metals) .................................. 472,900 12,827,413
Tele-Communications Inc. "A"* (New) (Cable TV systems and microwave services) ........... 429,800 16,520,438
Tele-Communications International, Inc. "A"* (Telecommunication and broadband
cable television services) ............................................................ 306,100 6,150,697
UNUM Corp. (Provider of disability, health and life insurance and group
pension products) ..................................................................... 468,100 25,979,550
US Airways Group, Inc.* (Major airline) ................................................. 361,200 28,625,100
Williams Cos., Inc. (Gas pipeline operator, petroleum producer) ......................... 487,600 16,456,500
-------------
413,378,011
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $1,091,116,935) 1,549,244,700
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $1,278,573,983) (a) 1,749,891,737
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $1,287,319,520. At June 30,
1998, net unrealized appreciation for all securities based on tax cost was
$462,572,217. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $540,737,850 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$78,165,633.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $9,057,145 (0.51% of net assets).
Their values have been estimated by the Board of Directors in the absence
of readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of
these securities at June 30, 1998 aggregated $9,690,003. These securities
may also have certain restrictions as to resale.
(c) Principal amount is stated in U.S. dollars unless otherwise noted.
Currency Abbreviation
GBP British Pound
The accompanying notes are an integral part of the financial statements.
16 - Scudder Global Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of June 30, 1998
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $1,278,573,983) ............... $1,749,891,737
Cash .................................................................. 402,100
Receivable for investments sold ....................................... 15,111,172
Receivable for Fund shares sold ....................................... 3,680,096
Dividends and interest receivable ..................................... 4,518,988
Foreign taxes recoverable ............................................. 1,383,146
Unrealized appreciation on forward currency exchange contracts ........ 198,653
Other assets .......................................................... 15,940
----------------
Total assets .......................................................... 1,775,201,832
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Due to custodian ...................................................... 2,433,022
Payable for investments purchased ..................................... 2,617,017
Payable for Fund shares redeemed ...................................... 1,341,597
Unrealized depreciation on forward currency exchange contracts ........ 425,716
Accrued management fee ................................................ 1,347,054
Other payables and accrued expenses ................................... 829,684
----------------
Total liabilities ..................................................... 8,994,090
--------------------------------------------------------------------------------------------
Net assets, at market value $1,766,207,742
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................... 19,397,657
Net unrealized appreciation (depreciation) on:
Investments ........................................................ 471,317,754
Foreign currency related transactions .............................. (558,172)
Accumulated net realized gain ......................................... 91,853,687
Paid-in capital ....................................................... 1,184,196,816
--------------------------------------------------------------------------------------------
Net assets, at market value $1,766,207,742
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($1,766,207,742 / 54,499,264 shares of capital stock outstanding,
$.01 par value, 100,000,000 shares authorized) ..................... $32.41
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Global Fund
<PAGE>
Statement of Operations
year ended June 30, 1998
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of withholding taxes of $2,574,387) .................... $ 26,308,042
Interest .............................................................. 15,319,879
----------------
41,627,921
----------------
Expenses:
Management fee ........................................................ 15,502,974
Services to shareholders .............................................. 4,366,811
Custodian and accounting fees ......................................... 1,346,108
Directors' fees ....................................................... 64,604
Reports to shareholders ............................................... 369,994
Legal ................................................................. 35,644
Auditing .............................................................. 110,033
Registration fees ..................................................... 44,853
Other ................................................................. 180,148
----------------
22,021,169
--------------------------------------------------------------------------------------------
Net investment income 19,606,752
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ........................................................... 196,385,956
Foreign currency related transactions ................................. 16,473,631
----------------
212,859,587
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ........................................................... 2,598,086
Foreign currency related transactions ................................. (4,768,271)
----------------
(2,170,185)
--------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 210,689,402
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $230,296,154
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder Global Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended June 30,
Increase (Decrease) in Net Assets 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................. $ 19,606,752 $ 8,405,280
Net realized gain (loss) from investment transactions . 212,859,587 149,183,592
Net unrealized appreciation (depreciation) on
investment transactions during the period .......... (2,170,185) 167,660,881
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ......................................... 230,296,154 325,249,753
---------------- ----------------
Distributions to shareholders from:
Net investment income ................................. (41,122,886) (13,198,024)
---------------- ----------------
Net realized gains from investment transactions ....... (214,025,939) (72,385,950)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ............................. 528,099,294 286,843,471
Net asset value of shares issued to shareholders in
reinvestment of distributions ...................... 242,394,548 80,805,423
Cost of shares redeemed ............................... (583,899,199) (370,563,589)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ....................................... 186,594,643 (2,914,695)
---------------- ----------------
Increase (decrease) in net assets ..................... 161,741,972 236,751,084
Net assets at beginning of period ..................... 1,604,465,770 1,367,714,686
Net assets at end of period (including undistributed
net investment income of $19,397,657 and ---------------- ----------------
$21,810,028, respectively) ......................... $1,766,207,742 $1,604,465,770
---------------- ----------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------
Shares outstanding at beginning of period ............. 47,646,208 47,606,518
---------------- ----------------
Shares sold ........................................... 16,505,655 9,673,152
Shares issued to shareholders in reinvestment of
distributions ...................................... 8,610,819 2,905,119
Shares redeemed ....................................... (18,263,418) (12,538,581)
---------------- ----------------
Net increase (decrease) in Fund shares ................ 6,853,056 39,690
---------------- ----------------
Shares outstanding at end of period ................... 54,499,264 47,646,208
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 - Scudder Global 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>
Years Ended June 30,
1998(a) 1997(a) 1996 1995 1994(a)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------
Net asset value, beginning of period .......................... $ 33.67 $ 28.73 $ 25.64 $ 23.93 $ 21.63
-----------------------------------------------------------
Income from investment operations:
Net investment income ......................................... .38 .17 .24 .25 .23
Net realized and unrealized gain (loss) on investments ........ 3.82 6.58 3.94 1.91 2.57
-----------------------------------------------------------
Total from investment operations .............................. 4.20 6.75 4.18 2.16 2.80
-----------------------------------------------------------
Less distributions from:
Net investment income ......................................... (.88) (.28) (.25) (.11) (.24)
Net realized gains from investment transactions ............... (4.58) (1.53) (.84) (.34) (.26)
-----------------------------------------------------------
Total distributions ........................................... (5.46) (1.81) (1.09) (.45) (.50)
-----------------------------------------------------------
-----------------------------------------------------------
Net asset value, end of period ................................ $ 32.41 $ 33.67 $ 28.73 $ 25.64 $ 23.93
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) .............................................. 14.93 24.91 16.65 9.11 12.99
Ratios and Supplemental Data
Net assets, end of period ($ millions) ........................ 1,766 1,604 1,368 1,168 1,096
Ratio of operating expenses to average daily net assets (%) ... 1.34 1.37 1.34 1.38 1.45
Ratio of net investment income to average daily net
assets (%) .................................................. 1.19 .59 .84 1.03 .97
Portfolio turnover rate (%) ................................... 51.3 40.5 29.1 44.4 59.7
</TABLE>
(a) Per share amounts have been calculated using weighted average shares
outstanding.
20 - Scudder Global Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Global Fund (the "Fund") is a diversified series of Global/International
Fund, Inc. (formerly Scudder Global Fund, Inc.), a Maryland corporation (the
"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 Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on Nasdaq. If there are no such sales, the value is the most
recent bid quotation. Securities which are not quoted on Nasdaq 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 instruments with an original
maturity over 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. 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.
21 - Scudder Global Fund
<PAGE>
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies and as a
hedge against 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. The Fund paid no federal income taxes and no federal income tax
provision was required.
Distribution of Income and Gains. Distribution of net investment income is 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 foreign denominated investments,
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. Original
issue discounts are accreted for both tax and financial reporting purposes.
22 - Scudder Global Fund
<PAGE>
B. Purchases and Sales of Securities
For the year ended June 30, 1998, purchases and sales of investment securities
(excluding short-term investments and U.S. Government obligations) aggregated
$630,003,661 and $693,632,315, respectively. Purchases and sales of U.S.
Government obligations aggregated $201,632,151 and $114,322,079, respectively.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. (the "Adviser"), the Adviser directs the investments of the
Fund in accordance with its investment objective, policies, and restrictions.
The Adviser determines the securities, instruments, and other contracts relating
to investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Management Agreement. The management fee payable
under the Management Agreement is equal to an annual rate of 1% of the first
$500,000,000 of average daily net assets, .95% of the next $500,000,000 of such
assets, 0.90% of such assets in excess of $1,000,000,000 and effective September
11, 1997, .85% on such net assets in excess of $1,500,000,000 computed and
accrued daily and payable monthly. For the year ended June 30, 1998, the fee
pursuant to the agreement amounted to $15,502,974, which was equivalent to an
annualized effective rate of .94% of the Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. Included
in services to shareholders is $2,508,727 charged to the Fund by SSC during the
year ended June 30, 1998, of which $201,807 is unpaid at June 30, 1998.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended June 30, 1998,
the amount charged to the Fund by STC aggregated $1,195,885, of which $112,140
is unpaid at June 30, 1998.
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
June 30, 1998, the amount charged to the Fund by SFAC aggregated $601,315, of
which $53,367 is unpaid at June 30, 1998.
The Fund pays each Director not affiliated with the Adviser an annual retainer,
divided equally among the series of the Corporation, plus specified amounts for
attended board and committee meetings. For the year ended June 30, 1998,
Directors' fees and expenses aggregated $64,604.
23 - Scudder Global Fund
<PAGE>
D. Commitments
As of June 30, 1998, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$227,063.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
--------------------------------- --------------------------------- -------------- --------------------
--------------------------------- --------------------------------- -------------- --------------------
<S> <C> <C> <C> <C>
Deutsche Marks 18,742,507 U.S. Dollars 10,497,063 7/31/98 83,600
Deutsche Marks 47,325,548 U.S. Dollars 26,435,900 8/17/98 115,053
Deutsche Marks 31,100,934 U.S. Dollars 17,095,000 8/17/98 (202,273)
Japanese Yen 6,262,963,580 U.S. Dollars 45,716,397 9/28/98 (223,443)
--------
(227,063)
========
</TABLE>
E. Lines of Credit
The Fund and several affiliated funds (the "Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
24 - Scudder Global Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Global/International Fund, Inc. and to the
Shareholders of Scudder Global Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder Global Fund, Inc. (the
"Fund") at June 30, 1998, the results of its operations for the year then ended
and 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 five years in the period
then ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at June
30, 1998 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
August 12, 1998
25 - Scudder Global Fund
<PAGE>
Tax Information
The Fund paid distributions of $4.38 per share from net long-term capital gains
during its year ended June 30, 1998, of which 61.40% represents 20% rate gains.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$187,000,000 as capital gains dividends for its year ended June 30, 1998, of
which 97% represents 20% rate gains.
The Fund paid foreign taxes of $2,574,387 and earned $15,779,736 of foreign
source income during the year ended June 30, 1998. Pursuant to Section 853 of
the Internal Revenue Code, the Fund designates $.05 per share as foreign taxes
paid and $.29 per share as income earned from foreign sources for the year ended
June 30, 1998.
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.
26 - Scudder Global Fund
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27 - Scudder Global Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board, Director
and Vice President
William E. Holzer*
President
Paul Bancroft III
Director; Venture Capitalist and
Consultant
Sheryle J. Bolton
Director; Chief Executive Officer
and Director, Scientific Learning
Center
Nicholas Bratt*
Director
William T. Burgin*
Director; General Partner,
Bessemer Venture Partners
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; Private Equity Investor
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 G. Stone, Jr.
Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
Susan E. Dahl*
Vice President
Jerard K. Hartman*
Vice President
Gary P. Johnson*
Vice President
Thomas W. Joseph*
Vice President
Gerald J. Moran*
Vice President
Isabel M. Saltzman*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
28 - Scudder Global Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
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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+
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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
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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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment 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 Equity
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Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth 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.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
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Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
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The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal 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. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++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 Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
29 - Scudder Global Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
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<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
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:
- ------------------------------------------------------------------------------------------------------------------------------
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 previously designated.
Distributions Direct
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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30 - Scudder Global 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 8,000 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 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
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31 - Scudder Global Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
United States.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
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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