Scudder
Global
Fund
Semiannual Report
December 31, 1997
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
- --------------------------------------------------------------------------------
Date of Inception: 7/23/86 Total Net Assets as of Ticker Symbol: SCOBX
12/31/97: $1.56 billion
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o While for the six-month period ended December 31, 1997, Scudder Global Fund
returned just 0.28%, for the 12 months it produced a total return of 17.24%,
compared to the 15.75% return of the Fund's benchmark, the unmanaged Morgan
Stanley Capital International World Index.
o Despite substantial 12-month gains in U.S. and European markets, the favorable
investment environment changed in the second half of 1997, triggered primarily
by the economic crisis in Asia.
o The Fund introduced a new investment theme ("Secure Streams of Income") and
made minor reallocations between existing themes during the 12 months, to
respond to the Asian crisis and focus on the more favorable international and
domestic markets.
Table of Contents
3 Letter from the Fund's Chairman 20 Notes to Financial Statements
4 Performance Update 24 Report of Independent Accountants
5 Portfolio Summary 25 Tax Information
6 Portfolio Management Discussion 26 Shareholder Meeting Results
9 Glossary of Investment Terms 28 Officers and Directors
10 Investment Portfolio 29 Investment Products and Services
16 Financial Statements 30 Scudder Solutions
19 Financial Highlights
2 - Scudder Global Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
The favorable investment environment of the first half of 1997 changed
during the second half of the year, with the investment community speculating on
the potential impact of Asia's economic woes on the global markets. Scudder
Global Fund remained focused on the European and U.S. markets, and provided a
positive return for the six-month period ended December 31, 1997, despite the
slowing of world markets. With a cautious eye on the events unfolding in Asia,
the Fund's management team remains committed to selecting investment themes that
draw upon the most attractive regions of the world. A complete discussion of the
investment environment and your Fund's activities begins on page 6.
As you may know, the Fund's investment adviser has changed its name to
Scudder Kemper Investments, Inc. from Scudder, Stevens & Clark, Inc., reflecting
the acquisition of a majority interest in Scudder by Zurich Insurance Company,
and the combining of Scudder's business with that of Zurich Kemper Investments,
Inc. We think these changes are positive and broaden our resources in managing
the Fund.
For those of you who are interested in new Scudder products, we recently
introduced a new industry sector fund, Scudder Financial Services Fund, one of
Scudder's Choice Series funds. The Fund seeks long-term growth by investing in
financial services companies in the U.S. and abroad. In addition, two other
Choice Series funds will be launched on March 2: Scudder Health Care Fund,
seeking long-term growth from health care companies located around the world,
and Scudder Technology Fund, pursuing long-term growth by investing in companies
that develop, produce, or distribute technology. For further information on
these new funds, please call 1-800-225-2470.
Thank you for your continued investment in Scudder Global Fund. If you have
any questions about your account, please call Scudder Investor Relations at the
toll-free number above, or visit our Internet 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 December 31, 1997
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FUND INDEX COMPARISONS
- -----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
12/31/97 $10,000 Cumulative Annual
- ---------------------------------------
SCUDDER GLOBAL FUND
- ---------------------------------------
1 Year $ 11,724 17.24% 17.24%
5 Year $ 20,169 101.69% 15.06%
10 Year $ 37,841 278.41% 14.23%
- ---------------------------------------
MSCI WORLD INDEX
- ---------------------------------------
1 Year $ 11,575 15.75% 15.75%
5 Year $ 20,409 104.09% 15.33%
10 Year $ 27,293 172.93% 10.55%
- ---------------------------------------
- -----------------------------------------------------------------
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 December 31
SCUDDER GLOBAL FUND
Year Amount
- ---------------------------
'87 $10,000
'88 $11,919
'89 $16,378
'90 $15,329
'91 $17,946
'92 $18,762
'93 $24,597
'94 $23,564
'95 $28,401
'96 $32,276
'97 $37,841
MSCI WORLD INDEX
Year Amount
- ---------------------------
'87 $10,000
'88 $12,326
'89 $14,375
'90 $11,929
'91 $14,110
'92 $13,373
'93 $16,383
'94 $17,213
'95 $20,777
'96 $23,579
'97 $27,293
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 December 31
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------
NET ASSET VALUE... $ 14.74 $ 19.48 $ 17.06 $ 18.96 $ 19.32 $ 24.80 $ 23.33 $ 27.01 $ 28.80 $ 28.28
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 (%)........ 19.19 37.41 -6.40 17.07 4.54 31.10 -4.20 20.53 13.65 17.24
INDEX TOTAL
RETURN (%)........ 23.29 16.61 -17.02 18.28 -5.23 22.50 5.08 20.72 13.48 15.75
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results. Investment return
and principal value will fluctuate, so an investor's shares, when redeemed,
may be worth more or less than when purchased. If the Adviser had not maintained
the Fund's expenses in 1988, the average annual and cumulative total returns for
the ten year period would have been lower.
4 - Scudder Global Fund
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PORTFOLIO SUMMARY as of December 31, 1997
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GEOGRAPHICAL
(EXCLUDES CASH EQUIVALENTS AND BONDS)
- ---------------------------------------------------------------------------
Europe 50%
United States 25%
Japan 8%
Pacific Basin 5%
Latin America 4%
Other 8%
- --------------------------------------
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 Europe and reduced its weighting
in Asia.
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SECTOR
(EXCLUDES CASH EQUIVALENTS AND BONDS)
- --------------------------------------------------------------------------
Financial 25%
Manufacturing 20%
Utilities 9%
Technology 8%
Health 6%
Consumer Staples 6%
Energy 6%
Service Industries 6%
Metals & Minerals 4%
Other 10%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
A new investment theme has prompted
the buying of "Utility Winners"--utilities
best positioned to prosper in a
deregulated environment.
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TEN LARGEST EQUITY HOLDINGS
(17% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. NOVARITS AG
Pharmaceutical company in Switzerland
2. CINERGY CORP.
Holding company of electrical utilities in the United States
3. VEBA AG
Electric utility, distributor of oil and chemicals in Germany
4. RWE AG
Producer and marketer of petroleum and chemical products in
Germany
5. UNILEVER PLC
Manufacturer of branded and packaged consumer goods, food, detergents
and personal care products in the United Kingdom
6. INTERNATIONAL BUSINESS MACHINES CORP.
Principal manufacturer and servicer of business and computing machines
in the United States
7. ASSURANCES GENERALES DE FRANCE
Markets health, life, and liability insurance in France
8. ELECTRONIC DATA SYSTEMS CORP.
Provider of information technology services in the United States
9. BAYERISCHE VEREINSBANK A.G.
Commercial bank in Germany
10. MBIA INC.
Insurer of municipal bonds in the United States
Top holdings include a number of
European companies that should
successfully weather deflationary
pressures.
For more complete details about the Fund's investment portfolio,
see page 10. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - Scudder Global Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
The second half of 1997 was a period of diverging returns for the global
markets, with Scudder Global Fund returning 0.28% for the six-month period ended
December 31, 1997. The Fund's benchmark, the unmanaged Morgan Stanley Capital
International (MSCI) World Index, returned 0.32% for the same period.
Shareholders should note, however, that the first half of 1997 provided a more
favorable investment environment that contributed to the Fund's strong 12-month
return of 17.24%, compared with the MSCI World Index's return of 15.75% for the
same period.
Market Environment
Despite substantial 12-month gains in U.S. and European markets, world markets
ended 1997 focused on the Asian financial crisis.
In the United States, low inflation and rising corporate profits boosted the S&P
500 Index to its third consecutive year of 20%+ gains. These gains, however, did
not come without increased volatility. Stocks declined in the first quarter as
the Federal Reserve raised short-term rates and transmitted its inflation
worries to the market. In October, an attack on Hong Kong's currency peg --
precipitated by crises in other Asian nations -- led the market to decline by
7%. However, once Hong Kong fended off speculative attacks on its currency, the
U.S. market found support from a positive aspect of deflation fears: a decline
in U.S. long bond yields, which fell from 6.4% to 5.9% over the year.
Pre-announcements of earnings disappointments -- some tied to Asia -- curbed
enthusiasm late in the fourth quarter, and utilities staged a significant rally
as investors searched for stocks shielded from deflation.
European markets were carried upwards in 1997, propelled by continued
restructuring and takeover activity. Fears of a delay in European Monetary Union
(EMU) implementation and German interest rate increases shook European stock
markets early in the third quarter, but the region managed to recover. Toward
year-end, the flat performance of the European market masked sharp divergences
between individual sectors. Insurers and banks staged a strong rally on the
strength of takeover activity such as the purchase of France's AGF by the German
insurer Allianz. Meanwhile, capital goods and commodities exporters slumped due
to fears over price competition originating in Asia.
Southeast Asian markets, already experiencing a tough year, fell into financial
crises in the third quarter, as strong currency devaluations originating in
Thailand spread to Malaysia, Indonesia, the Philippines and South Korea. Adding
to the currency problems were fears that the problems experienced by the region
were structural in nature (over-indebtedness, over-building) and likely to
result in slower medium-term growth. Japan experienced several high-profile
bankruptcies, calling into question the health of the financial system and
further accelerating the regional credit crunch. Korea, which skirted a
potential default on its external debt with the help of an International
Monetary Fund (IMF) bailout package, fell by 64.5% in the fourth quarter.
6 - Scudder Global Fund
<PAGE>
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART TITLE:
World Stock Market Returns
6 months as of December 31, 1997
----------------------------------------------------------
Italy 21.81%
Denmark 18.41
Mexico 17.76
U.K. 12.26
U.S. 10.38
Switzerland 9.84
Germany 6.71
Spain 3.89
Netherlands 3.12
France 2.55
Norway 0.63
Finland -0.15
Sweden -1.46
Czech Republic -2.89
Australia -15.68
Brazil -17.37
Japan -30.02
Hong Kong -30.11
Singapore -36.20
Philippines -57.64
Thailand -63.85
Malaysia -63.94
Korea -70.14
Indonesia -75.57
Source: Morgan Stanley Capital International indices in U.S. dollars.
On December 31, 1997, the portfolio was 50% invested in Europe, 25% in the
United States, 5% in Asia/Pacific (excluding Japan), and 20% in Latin America,
Japan, Canada, and other countries. Over the 12 months we introduced a new
investment theme and made minor reallocations between existing themes. Cash
remains at roughly 5% of the portfolio as we continue, in the midst of
increasingly volatile markets, to search for good stocks at the best possible
valuations. Given the outlook for global deflation, bonds comprise roughly 14%
of the portfolio. This asset mix is not the result of an asset-allocation
decision, but rather a product of our thematic approach. Bonds currently embody
many of the thematic attributes that we are looking for in equities and have
helped us implement new ideas more effectively.
A theme we call "Secure Streams of Income," which we have been developing during
the past six months, was introduced in the fourth quarter. The baby-boomer
cohort is edging closer to retirement age. As their need for secure retirement
income rises, so does their preference for yield (i.e. bonds and utility stocks)
over growth. Since the supply of bonds and regulated utilities is falling (due
to shrinking deficits and deregulation) the valuation of these instruments
should rise. Therefore, we have been buying what we call "Utility Winners" --
those utilities best positioned to prosper in a deregulated environment.
Working hand-in-hand with the build-up of our "Secure Streams of Income" theme
has been the reduction of our capital goods exposure through holdings of "Global
Oligopolists" and restructuring beneficiaries. While the thematic thinking for
7 - Scudder Global Fund
<PAGE>
these companies has not changed, we are looking to avoid the negative effects
that the Asian crisis may have on the demand for these firms' products.
In the past we have discussed our interest in the changes taking place in Japan.
However, we remain unconvinced that Japanese companies will undertake
restructuring unless a crisis -- such as that brewing in the financial sector --
forces them to do so. Recent turmoil in the region may present the opportunity
to purchase these companies at more attractive valuations than exist today.
We responded to the current Asian crisis by changing the composition of the
Fund's emerging markets holdings, an area that we believe has a strong long-term
outlook. We sold the majority of our Korean holdings in the second quarter and
reduced our Brazilian holdings in the third. Therefore, we were able to take
small positions in several Hong Kong stocks at reasonable valuations when the
Hang Seng crash occurred in late October.
Outlook
Looking ahead, the impact of the Asian crisis on equity valuations still remains
the big question mark. The deepening of Japan's financial problems raises the
possibility that most, if not all, of Asia is falling into a spiral of slow
growth and competitive devaluations. What impact will this have on valuations
elsewhere? In the United States, deflation (a period of declining prices) is
fast becoming part of consensus thinking, but nevertheless equity valuations
continue to discount double-digit earnings growth. Whether or not U.S.
corporations can meet expectations depends in large part on their ability to
sustain the pace of cost-cutting -- a tall order after years of restructuring.
In contrast, European corporations still have much restructuring ahead of them,
and may be better able to weather deflationary pressures.
Going forward, as we introduce new themes in the portfolio and evaluate the
relevance of existing themes, we will be keeping a watchful eye on Asia. The
troubles in Asia may give us the clearest example yet of the challenges which
exist in a truly global economy.
Sincerely,
Your Portfolio Management Team
/s/William E. Holzer /s/Diego Espinosa
William E. Holzer Diego Espinosa
/s/Nicholas Bratt
Nicholas Bratt
8 - 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 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 stock that is liquid has enough shares
outstanding and a substantial enough market
capitalization to allow large purchases and
sales to occur without causing a significant
change in its market price.
MARKET CAPITALIZATION The value of a company's outstanding shares
of common stock, 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.
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: SKI; Barron's Dictionary of Finance and Investment Terms)
9 - Scudder Global Fund
<PAGE>
Investment Portfolio as of December 31, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) (c) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 4.4%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 12/31/97 at 6.5% to be
repurchased at $69,102,945 on 1/2/98, collateralized by a $20,265,000 U.S. Treasury
Note, 6.375%, 5/15/99 and a $48,057,000 U.S. Treasury Note, 6.25%, 3/31/99 (Cost ------------
$69,078,000) ...................................................................... 69,078,000 69,078,000
------------
Bonds 14.3%
- ------------------------------------------------------------------------------------------------------------------------------
United Kingdom 3.0%
United Kingdom Treasury Bond, 8.5%, 7/16/07......................................... GBP 21,798,000 41,169,911
United Kingdom Treasury Bond, 3.5%, 12/29/49........................................ GBP 6,014,200 5,460,334
------------
46,630,245
------------
United States 11.3%
U.S. Treasury Bond, 6.375%, 8/15/27 ................................................ 122,755,000 129,468,471
U.S. Treasury STRIP (Principal only), 8/15/21....................................... 195,700,000 47,230,238
------------
176,698,709
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Total Bonds (Cost $213,634,022) 223,328,954
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 81.3%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 1.1%
Electricidad Argentina S.A. "A"* (ADS) (Electric utility) (b)....................... 253,143 3,544,002
YPF S.A. "D" (ADR) (Petroleum company).............................................. 422,300 14,437,381
------------
17,981,383
------------
Australia 1.9%
Coca Cola Amatil Ltd. (Soft drink bottler and distributor).......................... 792,228 5,920,291
Foster's Brewing Group, Ltd. (Leading brewery)...................................... 3,682,700 7,008,582
Woodside Petroleum, Ltd. (Major oil and gas producer)............................... 2,372,100 16,727,891
------------
29,656,764
------------
Austria 0.4%
Flughafen Wien AG (Operator of terminals and facilities at Vienna
International Airport)............................................................ 146,900 5,838,087
------------
Bermuda 1.3%
EXEL, Ltd. (ADR) (Provider of liability insurance).................................. 142,700 9,043,613
Mid Ocean, Ltd. (Property and casualty insurance company)........................... 209,050 11,340,963
------------
20,384,576
------------
Brazil 2.2%
Aracruz Celulose S.A. (ADR) (Producer of eucalyptus kraft pulp)..................... 605,400 8,702,625
Companhia Cervejaria Brahma (pfd.) (Leading beer producer and distributor).......... 16,940,000 11,383,894
Companhia Vale do Rio Doce (pfd.) (Diverse mining and industrial complex)........... 621,200 12,328,820
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Usinas Siderurgicas de Minas Gerais S.A. (pfd.) (Steel manufacturer)............... 328,610 1,943,305
------------
34,358,644
------------
Canada 2.6%
BCE, Inc. (Telecommunication services)............................................ 235,000 7,835,800
Canadian National Railway Co. (Major railroad operator)........................... 261,400 12,310,430
Canadian Pacific, Ltd. (Ord.) (Transportation and natural resource)............... 492,656 13,272,633
Molson Cos., Ltd. "A" (Brewery)................................................... 426,600 7,627,186
------------
41,046,049
------------
China 0.8%
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 7,403,769
------------
12,663,769
------------
France 3.1%
Assurances Generales de France (Markets health, life, and liability insurance).... 486,369 25,764,630
Michelin "B" (Leading tire manufacturer).......................................... 249,063 12,535,895
------------
Schneider S.A. (Manufacturer of electronic components and automated
manufacturing systems).......................................................... 200,480 10,883,200
------------
49,183,725
------------
Germany 15.4%
Allianz AG (Multi-line insurance company)......................................... 63,483 16,444,179
BASF AG (Leading international chemical producer)................................. 424,799 15,053,328
Bayer AG (Leading chemical producer).............................................. 368,442 13,762,814
Bayerische Vereinsbank AG (Commercial bank)....................................... 372,404 24,364,620
Commerzbank AG (Worldwide multi-service bank)..................................... 251,616 9,902,397
Deutsche Telekom AG (Telecommunication services).................................. 329,341 6,196,883
Deutsche Telekom AG (ADR)......................................................... 241,700 4,501,663
Heidelberger Druckmaschinen (Manufacturer of printing machinery).................. 63,043 3,469,292
Hoechst AG (Chemical producer).................................................... 512,301 17,940,502
Munich Reinsurance AG* (Insurance company)........................................ 45,747 17,240,948
Muenchener Rueckversicherungs-Gesellschaft AG* (Insurance company)................ 20,234 4,667,654
RWE AG (pfd.) (Producer and marketer of petroleum and chemical products).......... 686,135 28,986,248
SAP AG (pfd.) (Computer software manufacturer).................................... 64,506 21,101,601
Schering AG (Pharmaceutical and chemical producer)................................ 145,918 14,072,692
VEBA AG (Electric utility, distributor of oil and chemicals)...................... 430,095 29,286,625
VIAG AG (Provider of electrical power and natural gas services, aluminum
products, chemicals, ceramics and glass)........................................ 26,455 14,249,525
------------
241,240,971
------------
</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>
Ghana 0.2%
Ashanti Goldfields Co., Ltd. (GDR) (Leading gold producer)........................ 315,597 2,366,978
Hong Kong 1.9%
Cheung Kong Holdings, Ltd. (Real estate company).................................. 648,000 4,243,902
Citic Pacific, Ltd. (Diversified holding company)................................. 915,000 3,648,664
Hutchison Whampoa, Ltd. (Container terminal and real estate company).............. 1,795,000 11,234,675
Kerry Properties, Ltd. (Real estate company)...................................... 4,165,495 6,880,673
New World Development Co., Ltd. (Property investment and development,
construction and engineering, hotels and restaurants, telecommunications) ...... 1,235,000 4,271,261
------------
30,279,175
------------
Hungary 0.3%
First Hungary Fund "A"* (Investment company)...................................... 3,619 4,161,850
------------
Italy 0.8%
Istituto Nazionale delle Assicurazione (Insurance company)........................ 6,490,800 13,154,052
------------
Japan 6.7%
Canon Inc. (Leading producer of visual image and information equipment)........... 546,000 12,714,209
Daiwa Securities Co., Ltd. (Brokerage and other financial services)............... 1,451,000 5,001,532
Matsushita Electric Industrial Co., Ltd. (Leading manufacturer of
consumer electronic products)................................................... 788,000 11,528,763
Minebea Co., Ltd. (Manufacturer of bearings, electronic equipment,
machinery parts)................................................................ 1,024,000 10,981,233
Nichiei Co., Ltd. (Finance company for small and medium-sized firms).............. 156,500 16,662,964
Nomura Securities Co., Ltd. (Financial advisor, securities broker and
underwriter).................................................................... 1,182,000 15,753,964
Shohkoh Fund & Co., Ltd. (Finance company for small and medium-sized firms)....... 29,800 9,084,948
Sony Corp. (Consumer electronic products manufacturer)............................ 144,000 12,795,098
Sumitomo Metal Mining Co., Ltd. (Leading gold, nickel and copper mining company).. 1,427,000 4,700,192
The Nichido Fire & Marine Insurance Co., Ltd. (Property and casualty insurance
company)........................................................................ 1,005,000 5,234,776
------------
104,457,679
------------
Korea 0.3%
Samsung Display Devices Company (Leading manufacturer of CRT and picture tubes)... 89,569 1,690,978
Samsung Electronics Co., Ltd.* (Voting GDR) (Major electronics manufacturer)...... 21,831 338,381
Samsung Electronics Co., Ltd.* (Non-voting GDS)................................... 348,698 1,961,426
------------
3,990,785
------------
Netherlands 1.9%
AEGON Insurance Group NV (Insurance company)...................................... 150,392 13,387,462
ING Groep NV (Insurance and financial services)................................... 240,315 10,121,271
Philips Electronics NV (Leading manufacturer of electrical equipment)............. 103,000 6,176,851
------------
29,685,584
------------
</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>
South Africa 1.4%
Anglo American Platinum Corp., Ltd. (ADR) (Leading platinum producer)............. 79,586 1,078,390
Impala Platinum Holdings (ADR) (Leading platinum producer)........................ 468,500 4,263,350
Sasol, Ltd. (Coal mining and processing, crude oil exploration and
refining, petrochemical production)............................................. 921,600 9,658,194
South African Breweries (Brewery)................................................. 288,434 7,112,315
------------
22,112,249
------------
Sweden 2.2%
Astra AB "A" (Free) (Pharmaceutical company)...................................... 713,233 12,353,505
SKF AB "B" (Free) (Manufacturer of roller bearings)............................... 91,700 1,952,145
Skandia Foersaekrings AB (Free) (Financial conglomerate).......................... 431,000 20,332,237
------------
34,637,887
------------
Switzerland 6.8%
Ciba Specialty Chemical (Registered)* (Manufacturer of chemical products for
plastics, coatings, fibers and fabrics)......................................... 161,271 19,200,242
Clariant AG (Registered) (Manufacturer of color chemicals)........................ 20,593 17,190,188
Credit Suisse Group (Registered) (Provider of bank services, management
services and life insurance).................................................... 126,780 19,604,707
Novartis AG (Registered) (Pharmaceutical company)................................. 19,095 30,964,865
Swiss Reinsurance (Registered) (Life, accident and health insurance company)...... 10,774 20,139,971
------------
107,099,973
------------
United Kingdom 10.0%
BOC Group PLC (Producer of industrial gases) ..................................... 1,056,541 17,369,442
Carlton Communications PLC (Television post production products and services) .... 2,434,800 18,794,319
General Electric Co., PLC (Manufacturer of power, communications and
defense equipment and other various electrical components) .................... 3,243,400 21,014,205
National Grid Group PLC (Electric transmission system in England and Wales) ...... 3,075,200 14,596,094
Norwich Union PLC* (Multi-line insurance company) ................................ 488,500 2,928,350
PowerGen PLC (Electric utility) .................................................. 720,030 9,365,721
RTZ Corp., PLC (Mining and finance company) ...................................... 510,530 6,292,705
Reuters Holdings PLC (International news agency) ................................. 1,037,000 11,325,721
Shell Transport & Trading PLC (Part owner of Royal Dutch Shell Co.) .............. 2,152,100 15,092,312
SmithKline Beecham PLC (Manufacturer of ethical drugs and healthcare products) ... 1,207,806 12,447,334
Unilever PLC (Manufacturer of consumer goods, food, and personal care products) .. 3,298,800 28,372,918
------------
157,599,121
------------
</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>
United States 20.0%
Advanced Micro Devices Inc.* (Manufacturer of semiconductors and integrated
circuits) ..................................................................... 557,000 9,991,188
Biogen Inc.* (Biotechnology research and development) ............................ 143,820 5,231,453
Boeing Co. (Manufacturer of jet airplanes) ....................................... 184,800 9,043,650
Boston Scientific Corp.* (Developer and producer of medical devices) ............. 165,000 7,569,375
CINergy Corp. (Holding company of electrical utilities in Ohio, Indiana
and Kentucky) ................................................................. 769,200 29,469,975
Charles Schwab Corp. (Discount brokerage services.) .............................. 167,650 7,030,822
Chiron Corp. (Developer of therapeutic and diagnostic products) .................. 120,100 2,041,700
Duke Energy Corp. (Electric utility in the Carolinas) ............................ 165,400 9,159,025
Electronic Data Systems Corp. (Provider of information technology services) ...... 561,000 24,648,938
Enron Corp. (Major natural gas pipeline system) .................................. 333,200 13,848,625
Entergy Corp. (Holding company for five southern electric utilities) ............. 240,100 7,187,994
First Data Corp. (Credit-card processing services) ............................... 425,200 12,437,100
Guidant Corp. (Developer and manufacturer of products used in minimally
invasive surgery) ............................................................. 194,800 12,126,300
International Business Machines Corp. (Principal manufacturer and servicer of
business and computing machines) ............................................. 253,640 26,521,233
MBIA Inc. (Insurer of municipal bonds) ........................................... 353,500 23,618,219
Newmont Mining Corp. (International gold exploration and mining company) ......... 221,700 6,512,438
Parametric Technology Corp.* (Mechanical design software producer) ............... 264,700 12,540,163
Praxair Inc. (Producer of industrial gases and specialized coatings) ............. 325,900 14,665,500
Sabre Group Holdings Inc.* (Travel reservation system provider) .................. 346,200 9,996,525
Sterling Commerce, Inc.* (Producer of electronic data interchange products and
services) ..................................................................... 81,600 3,136,500
Stillwater Mining Co.* (Exploration and development of mines in Montana
producing platinum, palladium and associated metals) .......................... 472,900 7,921,075
Tele-Communications Inc. "A" (New)* (Cable TV systems and microwave services) .... 72,600 2,028,263
Tele-Communications International, Inc. "A"* (Telecommunication and broadband
cable television services) ................................................... 234,200 4,215,600
Toys "R" Us Inc.* (Discount toy supermarts) ...................................... 232,700 7,315,506
UNUM Corp. (Provider of disability, health and life insurance and group
pension products) ............................................................. 198,400 10,788,000
US Airways Group, Inc.* (Major airline) .......................................... 344,000 21,500,000
Williams Cos., Inc. (Gas pipeline operator, petroleum producer) .................. 487,600 13,835,650
------------
314,380,817
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $966,200,812) 1,276,280,118
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $1,248,912,834) (a) 1,568,687,072
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Global Fund
<PAGE>
- --------------------------------------------------------------------------------
* Non-income producing security.
(a) The cost for federal income tax purposes was $1,260,710,420. At December
31, 1997, net unrealized appreciation for all securities based on tax cost
was $307,976,652. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $376,984,886 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost
over market value of $69,008,234.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $8,804,002 (.56% 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 December 31, 1997 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 Abbreviations:
GBP British Pounds
The accompanying notes are an integral part of the financial statements.
15 - Scudder Global Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1997
<TABLE>
<CAPTION>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments, at market (identified cost $1,248,912,834) ........... $1,568,687,072
Cash .............................................................. 731,709
Receivable for investments sold ................................... 1,825,004
Receivable for Fund shares sold ................................... 7,644,788
Dividends and interest receivable ................................. 5,734,482
Foreign taxes recoverable ......................................... 407,064
Unrealized appreciation on forward currency exchange contracts .... 524,318
Other assets ...................................................... 21,054
----------------
Total assets 1,585,575,491
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................. 8,647,753
Payable for Fund shares redeemed .................................. 8,769,649
Unrealized depreciation on forward currency exchange contracts .... 1,945,396
Accrued management fee ............................................ 1,298,100
Other payables and accrued expenses ............................... 801,638
----------------
Total liabilities ................................................. 21,462,536
------------------------------------------------------------------------------------------
Net assets, at market value $1,564,112,955
------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distribution in excess of net investment income ....... (15,997,572)
Net unrealized appreciation (depreciation) on:
Investments .................................................... 319,774,238
Foreign currency related transactions .......................... (1,429,470)
Accumulated net realized gain ..................................... 54,078,360
Paid-in capital ................................................... 1,207,687,399
------------------------------------------------------------------------------------------
Net assets, at market value $1,564,112,955
------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($1,564,112,955 / 55,298,961 shares of capital stock
outstanding, $.01 par value, 100,000,000 shares ----------------
authorized) .................................................... $28.28
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Global Fund
<PAGE>
Statement of Operations
six months ended December 31, 1997
<TABLE>
<CAPTION>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Dividends (net of withholding taxes of $845,121) .................. $ 7,752,854
Interest .......................................................... 6,400,345
-----------------
14,153,199
-----------------
Expenses:
Management fee .................................................... 7,663,606
Services to shareholders .......................................... 2,022,896
Custodian and accounting fees ..................................... 790,648
Directors' fees ................................................... 31,648
Reports to shareholders ........................................... 164,496
Legal ............................................................. 27,232
Auditing .......................................................... 51,336
Registration fees ................................................. 17,296
Other ............................................................. 68,755
-----------------
10,837,913
-------------------------------------------------------------------------------------------
Net investment income 3,315,286
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ....................................................... 142,833,684
Foreign currency related transactions ............................. 12,846,813
-----------------
155,680,497
-----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ....................................................... (148,945,430)
Foreign currency related transactions ............................. (5,639,569)
-----------------
(154,584,999)
-------------------------------------------------------------------------------------------
Net gain on investment transactions 1,095,498
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 4,410,784
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Global Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets 1997 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ...................................... $ 3,315,286 $ 8,405,280
Net realized gain from investment transactions ............. 155,680,497 149,183,592
Net unrealized appreciation (depreciation) on
investment transactions during the period ............... (154,584,999) 167,660,881
---------------- ----------------
Net increase in net assets resulting from operations ....... 4,410,784 325,249,753
---------------- ----------------
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 .................................. 261,453,087 286,843,471
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 242,394,549 80,805,423
Cost of shares redeemed .................................... (293,462,410) (370,563,589)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................ 210,385,226 (2,914,695)
---------------- ----------------
Increase (decrease) in net assets .......................... (40,352,815) 236,751,084
Net assets at beginning of period .......................... 1,604,465,770 1,367,714,686
Net assets at end of period (including accumulated
distribution in excess of net investment income of
$15,997,572 and undistributed net investment ---------------- ----------------
income of $21,810,028) .................................. $1,564,112,955 $1,604,465,770
---------------- ----------------
Other Information
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in Fund shares
Shares outstanding at beginning of period .................. 47,646,208 47,606,518
---------------- ----------------
Shares sold ................................................ 7,811,450 9,673,152
Shares issued to shareholders in reinvestment of
distributions ........................................... 8,610,819 2,905,119
Shares redeemed ............................................ (8,769,516) (12,538,581)
---------------- ----------------
Net increase (decrease) in Fund shares ..................... 7,652,753 39,690
---------------- ----------------
Shares outstanding at end of period ........................ 55,298,961 47,646,208
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - 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>
Six Months
Ended Years Ended June 30,
December 31,
1997(a) 1997(a) 1996 1995 1994(a) 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning ------------------------------------------------------------------
of period ............. $33.67 $28.73 $25.64 $23.93 $21.63 $19.56
Income from investment ------------------------------------------------------------------
operations:
Net investment income ... .07 .17 .24 .25 .23 .15
Net realized and
unrealized gain (loss)
on investments ........ -- 6.58 3.94 1.91 2.57 2.42
Total from investment ------------------------------------------------------------------
operations ............ .07 6.75 4.18 2.16 2.80 2.57
------------------------------------------------------------------
Less distributions from:
Net investment income ... (.88) (.28) (.25) (.11) (.24) (.16)
Net realized gains from
investment
transactions .......... (4.58) (1.53) (.84) (.34) (.26) (.34)
------------------------------------------------------------------
Total distributions ..... (5.46) (1.81) (1.09) (.45) (.50) (.50)
------------------------------------------------------------------
Net asset value, end of ------------------------------------------------------------------
period ................ $28.28 $33.67 $28.73 $25.64 $23.93 $21.63
- ----------------------------------------------------------------------------------------------
Total Return (%) ........ .28** 24.91 16.65 9.11 12.99 13.45
Ratios and Supplemental
Data
Net assets, end of period
($ millions) .......... 1,564 1,604 1,368 1,168 1,096 577
Ratio of operating
expenses to average
daily net assets (%) .. 1.33* 1.37 1.34 1.38 1.45 1.48
Ratio of net investment
income to average daily
net assets (%) ........ .21(e) .59 .84 1.03 .97 .90
Portfolio turnover
rate (%) .............. 72.3* 40.5 29.1 44.4 59.7 64.9
Average commission rate
paid (b) .............. $.0061 $.0007 $.0272 -- -- --
</TABLE>
1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------
Net asset value,
beginning --------------------------------------------------
of period ............. $18.06 $20.36 $17.64 $14.47 $15.42
Income from investment --------------------------------------------------
operations:
Net investment income ... .19 .40 .19 .19 .18
Net realized and
unrealized gain (loss)
on investments ........ 2.28 (1.50) 3.28 3.20 (.82)
Total from investment --------------------------------------------------
operations ............ 2.47 (1.10) 3.47 3.39 (.64)
Less distributions from: --------------------------------------------------
Net investment income ... (.31) (.37) (.20) (.14) (.06)
Net realized gains from
investment
transactions .......... (.66) (.83) (.55) (.08) (.25)
--------------------------------------------------
Total distributions ..... (.97) (1.20) (.75) (.22) (.31)
--------------------------------------------------
Net asset value, end of --------------------------------------------------
period ................ $19.56 $18.06 $20.36 $17.64 $14.47
- -----------------------------------------------------------------------------
Total Return (%) ........ 14.09 (5.20) 20.00 23.90 (4.45)
Ratios and Supplemental
Data
Net assets, end of period
($ millions) .......... 371 268 257 91 81
Ratio of operating
expenses to average
daily net assets (%) .. 1.59 1.70 1.81 1.98 1.71(c)
Ratio of net investment
income to average daily
net assets (%) ........ 1.09 2.21 1.77 1.22 1.23
Portfolio turnover
rate (%) .............. 44.6 85.0(d) 38.3 30.7 53.8
Average commission rate
paid (b) .............. -- -- -- -- --
(a) Per share amounts have been calculated using weighted average shares
outstanding.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal periods ending on or after June 30, 1996.
(c) The Adviser absorbed a portion of the Fund's expenses exclusive of
management fees; the ratio of operating expenses before expense
reductions, to average daily net assets was 1.91%.
(d) The portfolio turnover rate on equity securities and debt securities was
62.7% and 174.4%, respectively, based on average monthly equity holdings
and average monthly debt holdings.
(e) The ratio for the six months ended December 31, 1997 has not been
annualized since the Fund believes it would not be appropriate because the
Fund's dividend income is not earned ratably throughout the fiscal year.
* Annualized
** Not annualized
19 - Scudder Global Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Global Fund (the "Fund") is a diversified series of 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 System, for which
there have been sales, are valued at the most recent sale price reported on such
system. If there are no such sales, the value is the most recent bid quotation.
Securities which are not quoted on the Nasdaq System but are traded in another
over-the-counter market are valued at the most recent sale price on such market.
If no sale occurred, the security is then valued at the calculated mean between
the most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities other than money market securities 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 Trustees.
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.
20 - 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. 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. Original
issue discounts are accreted for both tax and financial reporting purposes.
21 - Scudder Global Fund
<PAGE>
B. Purchases and Sales of Securities
For the six months ended December 30, 1997, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $367,654,138 and $515,452,940, respectively. Purchases and sales of
U.S. Government obligations aggregated $201,632,151 and $31,339,625,
respectively.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Directors and by the Fund's Shareholders. The
Management Agreement, which is effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, 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 1, 1997, .85% on such net assets in excess of
$1,500,000,000 computed and accrued daily and payable monthly. For the six
months ended December 31, 1997, the fee pursuant to the agreements amounted to
$7,663,606, 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 $1,272,584 charged to the Fund by SSC during the
six months ended December 31, 1997, of which $209,998 is unpaid at December 31,
1997.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the six months ended December
31, 1997, the amount charged to the Fund by STC aggregated $544,529, of which
$94,349 is unpaid at December 31, 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 December 31, 1997, the amount charged to the Fund by SFAC aggregated
$299,762, of which $50,356 is unpaid at December 31, 1997.
The Trust pays each Trustee not affiliated with the Adviser an annual retainer,
divided equally among the series of the Trust, plus specified amounts for
attended board and committee meetings. For the six months ended December 31,
1997, Trustees' fees and expenses aggregated $31,648.
22 - Scudder Global Fund
<PAGE>
D. Commitments
As of December 31, 1997, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$1,421,078.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Contracts to Deliver In Exchange For Settlement (Depreciation)
Date (U.S.$)
--------------------------------- --------------------------------- ------------ --------------------
<S> <C> <C> <C> <C> <C>
Deutsche Marks 115,911,495 U.S. Dollars 63,827,916 1/30/98 (701,377)
Deutsche Marks 47,325,548 U.S. Dollars 25,700,852 2/17/98 (672,332)
French Francs 549,850,500 U.S. Dollars 91,098,197 3/09/98 (571,687)
Japanese Yen 6,899,310,000 U.S. Dollars 54,000,000 3/26/98 524,318
----------
(1,421,078)
==========
</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.
23 - Scudder Global Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder Global Fund, Inc. and to the Shareholders
of Scudder Global Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Global Fund including the investment portfolio, as of December 31, 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 June
30, 1997, and the financial highlights for the six months ended December 31,
1997, and for each of the ten years in the period ended June 30, 1997. 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
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Global Fund as of December 31, 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 June 30, 1997, and the financial highlights for the
six months ended December 31, 1997, and for each of the ten years in the period
ended June 30, 1997, in conformity with generally accepted accounting
principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
February 6, 1998
24 - Scudder Global Fund
<PAGE>
Tax Information
By now shareholders for whom year-end tax reporting is required by the IRS
should have received their Form 1099-DIV and tax information letter from the
Fund.
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.
25 - Scudder Global Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Global Fund (the
"Fund") was held on October 27, 1997, at the office of Scudder Kemper
Investments, Inc. (formerly Scudder, Stevens & Clark, Inc.), 25th Floor, 345
Park Avenue (at 51st Street), New York, New York 10154. At the Meeting, as
adjourned and reconvened, the following matters were voted upon by the
shareholders (the resulting votes for each matter are presented below). With
regard to certain proposals, it was recommended that the Meeting be reconvened
in order to provide shareholders with an additional opportunity to return their
proxies. The date of the reconvened meeting at which the matters were decided is
noted after the proposed matter.
1. To elect Directors.
Number of Votes:
----------------
Director For Withheld
-------- --- --------
Paul Bancroft III 24,274,604 1,184,578
Sheryle J. Bolton 24,246,437 1,212,745
William T. Burgin 24,274,496 1,184,686
Thomas J. Devine 24,253,549 1,205,633
Keith R. Fox 24,260,331 1,198,851
William H. Gleysteen, Jr. 24,258,609 1,200,573
William H. Luers 24,273,712 1,185,470
Daniel Pierce 24,246,891 1,212,291
Kathryn L. Quirk 24,254,376 1,204,806
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
23,598,848 961,207 899,127 851,295
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise. (Approved on December 2, 1997).
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
24,535,366 2,430,015 1,666,199 857,733
26 - Scudder Global Fund
<PAGE>
4. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Broker
Fundamental Policies For Against Abstain Non-Votes*
-------------------- --- ------- ------- ----------
<S> <C> <C> <C> <C>
4.1 Diversification 21,401,748 1,580,946 1,625,193 851,295
4.2 Borrowing 21,206,836 1,778,067 1,622,984 851,295
4.3 Senior securities 21,363,910 1,619,461 1,624,516 851,295
4.4 Purchase of physical commodities
21,316,910 1,664,369 1,626,608 851,295
4.5 Concentration 21,342,422 1,632,999 1,632,466 851,295
4.6 Underwriting of securities 21,370,905 1,603,350 1,633,632 851,295
4.7 Investment in real estate 21,362,833 1,438,745 1,806,309 851,295
4.8 Lending 21,321,846 1,465,905 1,820,136 851,295
</TABLE>
5. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
23,887,783 384,499 1,186,900
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; Consultant
Nicholas Bratt*
Director
William T. Burgin*
Director; General Partner,
Bessemer Venture Partners
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; President, Exeter
Capital Management
Corporation
William H. Gleysteen, Jr.
Director; Consultant
William H. Luers
Director; President, The
Metropolitan Museum of Art
Kathryn L. Quirk*
Director, Vice President and
Assistant Secretary
Robert W. Lear
Honorary Director;
Executive-in-Residence, Visiting
Professor, Columbia University
Graduate School of Business
Robert G. Stone, Jr.
Honorary Director; Chairman
of the Board 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 Saltzman*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Edward J. O'Connell*
Vice President and 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
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
- -------------------
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#
- --------------------------------------------------------------------------------
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. +++ +++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:
- ------------------------------------------------------------------------------------------------------------------------------
<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:
- ------------------------------------------------------------------------------------------------------------------------------
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.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
30 - Scudder Global Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
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
U.S.
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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