Scudder
Global Bond
Fund
Semiannual Report
April 30, 1998
Pure No-Load(TM) Funds
A fund which seeks total return with an emphasis on current income by investing
primarily in high-grade bonds denominated in foreign currencies and the U.S.
dollar. Capital appreciation is a secondary objective.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER [logo]
<PAGE>
Scudder Global Bond Fund
- --------------------------------------------------------------------------------
Total Net Assets as of
Date of Inception: 3/1/91 4/30/98: $113.2 million Ticker Symbol: SSTGX
- --------------------------------------------------------------------------------
o Scudder Global Bond Fund provided a 2.45% total return for the six-month
period ended April 30, 1998, versus 0.52% for the unmanaged Salomon Brothers
World Government Bond Index.
o A rising U.S. dollar and continued volatility in Southeast Asian markets
characterized much of the period, creating a challenging environment for
fixed-income investors with holdings outside the United States.
o The Fund took advantage of opportunities in select emerging markets and Europe
while reducing its exposure to Japan.
Table of Contents
3 Letter from the Fund's Chairman 14 Financial Statements
4 Performance Update 17 Financial Highlights
5 Portfolio Summary 18 Notes to Financial Statements
6 Portfolio Management Discussion 24 Report of Independent Accountants
9 Glossary of Investment Terms 25 Investment Products and Services
10 Investment Portfolio 26 Scudder Solutions
2-Scudder Global Bond Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to report to you concerning Scudder Global Bond Fund's
performance over its most recent semiannual period ended April 30, 1998. While a
rising U.S. dollar hindered the performance of non-U.S. bonds during the
six-month time frame, the Fund outperformed its benchmark index over the six
months ended April 30. The Fund also posted a 5.97% 30-day net annualized yield
at the close of the period. Please read the portfolio management discussion
beginning on page for more information about the Fund's performance.
For those of you interested in new Scudder products, we recently introduced
an addition to Scudder's series of growth and income offerings, and we plan to
debut another soon. Scudder Real Estate Investment Fund, launched on April 6,
invests primarily in Real Estate Investment Trusts (REITs), and is designed to
allow investors to participate in the impressive long-term growth potential of
the U.S. real estate industry. Scudder Dividend & Growth Fund is scheduled to
commence operations on July 17. Designed to be conservatively managed, Dividend
& Growth Fund will seek high current income and growth of capital by investing
primarily in income-paying U.S. stocks and other equity-based securities. Please
see page 25 for more information on Scudder products and services.
Lastly, at the start of 1998 the Fund's investment adviser changed its name
to Scudder Kemper Investments, Inc., from Scudder, Stevens & Clark, Inc.,
pursuant to 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.
As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your Fund. Page 26 provides more
information on how to contact Scudder. Thank you for choosing Scudder Global
Bond Fund to help meet your investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman
Scudder Global Bond Fund
3-Scudder Global Bond Fund
<PAGE>
PERFORMANCE UPDATE as of April 30, 1998
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
- --------------------------------------------
Period Ended Growth of Average
4/30/98 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER GLOBAL BOND FUND
- --------------------------------------------
1 Year $ 10,795 7.95% 7.95%
5 Year $ 11,702 17.02% 3.19%
Life of Fund* $ 13,893 38.93% 4.69%
- --------------------------------------------
SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX
- --------------------------------------------
1 Year $ 10,802 8.02% 8.02%
5 Year $ 13,647 36.47% 6.41%
Life of Fund* $ 18,156 81.56% 8.78%
- --------------------------------------------
*The Fund commenced operations on March 1, 1991.
Index comparisons begin March 31, 1991.
- ----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- ----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
YEARLY PERIODS ENDED APRIL 30
SALOMON BROTHERS WORLD
GOVERNMENT BOND INDEX
Year Amount
- ----------------------
3/91* $10,000
'91 $10,154
'92 $11,408
'93 $13,304
'94 $14,028
'95 $16,202
'96 $16,682
'97 $16,808
'98 $18,156
SCUDDER GLOBAL BOND FUND
Year Amount
- ----------------------
3/91* $10,000
'91 $10,072
'92 $11,087
'93 $11,859
'94 $12,169
'95 $12,282
'96 $12,733
'97 $12,856
'98 $13,878
SALOMON BROTHERS CURRENCY-
HEDGED WORLD GOVERNMENT
BOND INDEX (1-3 YEARS)**
Year Amount
- ----------------------
3/91* $10,000
'91 $10,075
'92 $10,896
'93 $11,702
'94 $12,058
'95 $12,748
12/95 $13,625
The unmanaged Salomon Brothers World Government Bond Index consists of
worldwide fixed-rate government bonds with remaining maturities greater than
one year. Index returns assume reinvestment of dividends and, unlike Fund
returns, do not reflect any fees or expenses.
- ----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- ----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
<TABLE>
<CAPTION>
1991* 1992 1993 1994 1995 || 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE........... $11.93 $11.95 $11.72 $11.12 $10.39 || $10.00 $ 9.51 $ 9.62
INCOME DIVIDENDS.......... $ .17 $ 1.14 $ 1.01 $ .91 $ .84 || $ .76 $ .60 $ .63
CAPITAL GAINS ||
DIVIDENDS................. $ -- $ -- $ .02 $ -- $ -- || $ -- $ -- $ --
FUND TOTAL RETURN (%)..... .83 10.08 6.97 2.61 .93 || 3.67 .97 7.95
INDEX TOTAL RETURN (%)**.. .75 8.15 7.40 3.04 5.72 || 2.97 .75 8.02
</TABLE>
On December 27, 1995, the Fund adopted its current name and objectives.
Prior to that date, the Fund was known as the Scudder Short Term Global Income
Fund and its investment objective was to provide high current income through
short-term instruments. Since adopting its current objectives, the cumulative
return is 5.66.
** Prior to December 27, 1995, the Salomon Brothers Currency-Hedged World
Government Bond Index (1-3 years) was used as a comparative index.
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
expenses, the total returns for the Fund for the one year, five year, and
life of Fund periods would have been lower.
4-Scudder Global Bond Fund
<PAGE>
PORTFOLIO SUMMARY as of April 30, 1998
- ---------------------------------------------------------------------------
GEOGRAPHICAL EXPOSURE
- ---------------------------------------------------------------------------
U.S. 19.1%
U.K. 12.8%
Canada 11.2%
France 9.8%
Sweden 8.5%
Italy 6.8%
Denmark 6.1%
New Zealand 4.4%
Japan 3.2%
Korea 3.2%
Australia 2.7%
Peru 2.3%
Panama 1.7%
Ireland 1.7%
Argentina 1.1%
Other 5.4%
- -----------------------------------
100%
- ------------------------------------
Over the six-month period, we
sought to emphasize markets
included in the Fund's
benchmark, the Salomon Brothers
World Government Bond Index,
that we believed had the greatest
potential for appreciation; one of
the best markets to be in was the
United Kingdom.
- --------------------------------------------------------------------------
INTEREST RATE EXPOSURE
- --------------------------------------------------------------------------
U.S. 27.8%
U.K. 11.3%
New Zealand 10.0%
Sweden 8.5%
Italy 6.8%
Denmark 6.1%
European Currency Units 5.7%
Canada 5.5%
France 4.2%
Japan 3.2%
Australia 2.7%
Ireland 1.7%
Korea 1.1%
Other 5.4%
- ------------------------------------
100%
- ------------------------------------
Until the U.S. Federal Reserve
gives a clear indication of its
intention to either ease or
restrain the flow of capital, the
Fund is maintaining a
conservative strategy with respect
to interest rate exposure.
- --------------------------------------------------------------------------
CURRENCY EXPOSURE (a)
- --------------------------------------------------------------------------
U.S. 54.2%
Sweden 8.3%
U.K. 7.9%
Italy 6.8%
Japan 6.3%
Denmark 6.0%
France 4.2%
European Currency Units 2.8%
Canada 1.9%
New Zealand 1.7%
Korea 1.1%
Australia .9%
Philippines .9%
Poland .9%
Hungary .8%
Brazil .7%
Thailand .5%
Czech Republic .4%
Mexico .4%
South Africa .4%
Spain .4%
Turkey .4%
Greece .3%
Switzerland -8.2%
- -----------------------------------
100%
- -----------------------------------
Part of the Fund's strategy was to
hedge currency risk, which
boosted performance relative to
its benchmark index.
(a) Currency exposure after taking into account the effects of foreign currency
options, futures, and forward contracts.
For more complete details about the Fund's investment portfolio, see page 10.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5-Scudder Global Bond Fund
<PAGE>
Portfolio Management Discussion
For a look at the market environment and Fund strategy during the six-month
period ended April 30, 1998, here is an interview with Gary P. Johnson, Lead
Portfolio Manager of Scudder Global Bond Fund.
Q: How did Scudder Global Bond Fund perform during the period?
A: The Fund returned 2.45% for the six-month period ended April 30, 1998, thanks
to positive overall returns in Europe and the United States, as well as modest
exposure to select emerging markets. The Fund's yield at the close of the period
was 5.97%.
Q: How does the Fund's performance compare with that of its benchmark index?
A: The Fund outperformed its unmanaged benchmark, the Salomon Brothers World
Government Bond Index, which returned 0.52% for the period. Contributing to this
outperformance were three factors central to the Fund's overall investment
strategy. First, we sought to emphasize markets included in the index that we
believed had the greatest potential for appreciation. One of the best markets to
be in was the United Kingdom. After a period of monetary tightening last year,
Britain's yield curve was actually inverted -- in other words, government bonds
maturing in two years provided higher yields than those maturing in 20 years.
When it appeared that the U.K. economy was slowing and that its central bank
might begin to ease monetary policy, we shifted the Fund's holdings of
long-maturity bonds to two-year notes and boosted our overall U.K. position to
11% of the portfolio. In the months following, the price of those two-year
securities rose as the average yield fell almost one percentage point. In the
current, low-interest-rate global environment, that's a significant move.
The second aspect of our strategy involved hedging currency risk. As a standing
policy, we begin each calendar quarter with 50% of the Fund's foreign currency
exposure hedged to U.S. dollars. We then increase or decrease exposure based on
our outlook for the U.S. dollar. In the first few months of the period, the
dollar was strong relative to most currencies (reducing returns to U.S.
investors holding overseas securities), so our hedging strategy boosted
performance relative to the Salomon index, which is unhedged.
As a third component of our strategy, we sought to increase yield by holding
securities that are not included in the benchmark index. During the period, this
included exposure to select emerging markets, corporate bonds, and
mortgage-related issues. These bonds helped boost yield at a time when
government yields in most developed markets around the world were low and
getting lower.
Q: What makes such bonds an attractive complement to traditional government
securities?
A: The government sector is shrinking around the world, which translates into
fewer investment opportunities. In the United States, for example, the federal
budget is expected to be in surplus this year for the first time in more than 20
years. That means the government doesn't need to borrow as much and will issue
fewer bonds in the future. We see the same trend in Europe, particularly in
light of the coming single currency.
6-Scudder Global Bond Fund
<PAGE>
In general, debt issuance is shifting from the government to the growing private
sector as corporations borrow to finance growth. Unlike governments,
corporations cannot pay creditors with tax revenue. As a result, their bonds are
usually considered more speculative investments and offer higher yields as
incentive to investors. Examples of corporate bonds purchased during the period
include Molson Breweries and Newcourt Credit Group in Canada, and Puget Sound
Energy and Royal Caribbean International in the United States.
In Denmark, we chose mortgage-backed securities over government issues and
boosted the Fund's overall position in that country to just under 6% of the
portfolio. Similar to the United States, Danish mortgage-backed securities offer
higher yields -- roughly one percentage point higher -- than government
securities of comparable maturity to compensate for the risk of prepayment. When
interest rates fall, many homeowners refinance their mortgages, returning
principal to mortgage investors. In addition to disrupting an investor's income
stream, this prepayment of principal forces the investor to reinvest at lower
prevailing rates. In Denmark, we selected mortgage securities that yielded more
than comparable government bonds, but not so much more as to encourage
refinancing, in our view.
Careful exposure to emerging markets has helped the Fund both in terms of yield
and price appreciation. Emerging market bonds typically yield more than bonds
from developed markets because developing countries generally have less
political and economic stability and therefore are viewed as more likely to
default on payments of interest and principal. In the fall of 1997, with the
Asian financial crisis in full bloom, the disparity of yields between developed
and developing markets was wider than usual. So we were able to purchase
three-month bank issues linked to the Korean won with coupons as high as 38%,
for example, or 16% for an issue linked to the Thai baht. Outside of Asia, the
Fund benefited from coupons of 75% on an issue linked to the Turkish lire, 24%
on an issue linked to the Polish zloty, and 16% on a security linked to the
Hungarian forint. To protect the portfolio from unexpected price volatility, we
avoided markets such as Indonesia, where we believed capital flows were
unpredictable. And we diversified the Fund's currency exposure among 10 emerging
markets, with a total allocation of less than 6% of portfolio assets as of
April 30.
Q: In Europe, the Fund's Italian and Spanish holdings were reduced in favor of
Sweden. What prompted the shift?
A: Italy and Spain are slated to become part of the economically unified Europe
next year. In preparation, the central banks of all participating countries are
working to align currencies and short-term interest rates. In the case of Italy
and Spain, this meant that short-term rates had declined and were not likely to
change much in the coming months. Sweden has chosen to not participate in the
first round of European union. As a result, its short-term securities offer
roughly half a percentage point more in yield. At the end of April, the Fund's
position in Sweden was 8.5% of the portfolio, versus 6.8% in Italy and less than
1% in Spain.
We also reduced our Japanese holdings -- from 8.4% to 3.2% of assets at the end
7-Scudder Global Bond Fund
<PAGE>
of April -- to take advantage of higher yields elsewhere. Although Japan boasts
one of the largest and most liquid bond markets, years of economic malaise have
reduced its government bond yields to the lowest in the world.
Q: What is the Fund's strategy going forward?
A: We intend to maintain a conservative strategy with respect to interest rate
exposure until the U.S. Federal Reserve gives a clear indication of its
intention to either ease or restrain the flow of capital. This wait-and-see
stance held back overall performance during the period when the U.S. market
rallied, but it has also added a measure of stability in an increasingly
volatile global market. We expect to continue our three-pronged investment
approach of emphasizing the markets in our benchmark index with the strongest
outlooks, maintaining a partial hedge on foreign currency exposure, and
selecting higher-yielding investments from non-index countries and securities.
With carefully constructed exposure to the world's developed and developing
markets and a cautious stance toward the future direction of interest rates, we
believe Scudder Global Bond Fund will continue to provide valuable exposure to
fixed-income opportunities around the world.
8-Scudder Global Bond Fund
<PAGE>
Glossary of Investment Terms
BOND An interest-bearing or discounted government
or corporate security that typically requires
the issuer to pay a fixed amount of interest
for a specified time, usually a number of
years, then repay the bondholder the face
amount (principal) of the bond. Bondholders
have an IOU from an issuer but no ownership
privileges, as with stockholders.
CURRENCY RISK The risk of loss to a portfolio because of
changes in the value of different currencies.
For a U.S. investor in overseas markets, the
risk that a rising dollar relative to foreign
currencies will reduce returns.
EMERGING MARKETS The rapidly growing stock and bond markets of
newly industrialized countries, such as
Brazil or Indonesia.
HEDGING Attempting to minimize investment risk by
taking certain steps to offset that risk. For
a U.S. investor, currency risk can be reduced
by hedging holdings denominated in foreign
currencies back into U.S. dollars.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into
cash within a reasonably short period of
time. For example, a security is said to be
"liquid" if it has enough outstanding units
to allow large transactions without a
substantial change in price.
VOLATILITY The tendency of a security, commodity, or
market to rise and fall in price over time.
Volatility is inherent in almost all
investments but differs in degree from
investment to investment and from market to
market. For example, in the United States,
money-market mutual funds strive to maintain
a fixed price and thus experience very little
volatility, if any. By comparison, bonds from
the emerging markets can be extremely
volatile.
YIELD The dividends or interest paid on a security,
expressed as a percentage of the security's
current price.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
9-Scudder Global Bond Fund
<PAGE>
Investment Portfolio as of April 30, 1998
<TABLE>
<CAPTION>
Principal Market
Amount Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 2.6%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/98 at 5.5%,
to be repurchased at $2,857,437 on 5/1/98, collateralized by a $2,896,000 U.S. --------------
Treasury Note, 4.75%, 10/31/98 (Cost $2,857,000) ..................................... 2,857,000 2,857,000
--------------
Foreign Denominated Debt Obligations 71.8%
- ------------------------------------------------------------------------------------------------------------------------------
Australian Dollars 2.6%
Commonwealth of Australia, 9.5%, 8/15/03 ............................................... 2,310,000 1,773,422
Commonwealth of Australia, 10%, 10/15/07 ............................................... 1,340,000 1,134,562
--------------
2,907,984
--------------
British Pounds 11.0%
United Kingdom Treasury Bond, 9%, 3/3/00 ............................................... 5,710,000 9,952,870
United Kingdom Treasury Bond, 8%, 12/7/00 .............................................. 1,380,000 2,398,931
--------------
12,351,801
--------------
Canadian Dollars 5.4%
Government of Canada, 6%, 6/1/08 ....................................................... 3,850,000 2,817,252
Molson Breweries Co., Ltd., 6%, 6/2/08 ................................................. 841,000 584,195
Newcourt Credit Group, Inc., 6.2%, 9/1/04 .............................................. 1,170,000 821,784
PanCanadian Petroleum Ltd., 8.75%, 11/9/05 ............................................. 1,500,000 1,241,744
TransCanada PipeLines, 10.625%, 10/20/09 ............................................... 590,000 567,247
--------------
6,032,222
--------------
Czech Koruna 0.4%
Chase Manhattan Bank Time Deposit linked to Czech Koruna, 14.743%, 5/6/98 .............. 13,654,080 415,008
--------------
Danish Kroner 5.9%
Nykredit A/S, 7%, 10/1/26 .............................................................. 9,702,000 1,436,793
Nykredit A/S, 7%, 10/1/29 .............................................................. 35,199,000 5,173,142
--------------
6,609,935
--------------
European Currency Units 5.5%
Government of France, 4.5%, 7/12/02 .................................................... 2,780,000 3,043,459
Government of France, 5.5%, 4/25/07 .................................................... 2,750,000 3,122,704
--------------
6,166,163
--------------
French Francs 6.5%
Government of France, Principal Only, 10/25/19 ......................................... 143,000,000 7,286,762
--------------
Greek Drachmas 0.4%
Deutsche Bank Time Deposit linked to Greek Drachma, 14.75%, 5/5/98 ..................... 54,892,800 174,673
Deutsche Bank Time Deposit linked to Greek Drachma, 11.75%, 7/6/98 ..................... 40,979,900 130,401
J.P. Morgan & Co. Time Deposit linked to Greek Drachma, 11.5%, 5/18/98 ................. 55,731,951 177,343
--------------
482,417
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10-Scudder Global Bond Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hungarian Forints 0.8%
Chase Manhattan Bank Time Deposit linked to Hungarian Forint, 18.128%, 6/16/98 ......... 37,009,278 175,280
Chase Manhattan Bank Time Deposit linked to Hungarian Forint, 16.11%, 6/16/98 .......... 60,083,420 283,951
Chase Manhattan Bank Time Deposit linked to Hungarian Forint, 16.8%, 7/7/98 ............ 83,460,000 394,407
--------------
853,638
--------------
Irish Pounds 1.7%
Republic of Ireland, DIBOR less .04% (6.5%), 4/19/00 ................................... 1,334,000 1,867,569
--------------
Italian Lire 6.6%
Republic of Italy, 5.5%, 9/15/00 ....................................................... 3,395,000,000 1,954,018
Republic of Italy, 8.5%, 1/1/04 ........................................................ 8,240,000,000 5,445,889
--------------
7,399,907
--------------
Japanese Yen 3.1%
Japan Development Bank, 2.875%, 12/20/06 ............................................... 430,000,000 3,542,490
--------------
Korean Won 1.1%
Chase Manhattan Bank Time Deposit linked to Korean Won, 21.5%, 5/13/98 ................. 793,634,040 588,658
Chase Manhattan Bank Time Deposit linked to Korean Won, 38.45%, 5/26/98 ................ 807,254,300 600,690
--------------
1,189,348
--------------
Mexican Pesos 0.4%
Certificados de la Tesoreria, Zero Coupon, 6/4/98 ...................................... 3,480,100 403,168
--------------
New Zealand Dollars 9.6%
Government of Canada, 6.625%, 10/3/07 .................................................. 11,789,000 6,187,578
Government of New Zealand, 8%, 4/15/04 ................................................. 7,953,000 4,577,681
--------------
10,765,259
--------------
Polish Zlotys 0.9%
Morgan Guaranty Trust Co. Time Deposit linked to Polish Zloty, 23.72%, 5/26/98 ......... 3,390,706 1,001,113
--------------
South African Rands 0.4%
Bankers Trust Co. Time Deposit linked to South African Rand, 13.1%, 5/14/98 ............ 2,306,730 456,281
--------------
Spanish Pesetas 0.4%
Kingdom of Spain, 10%, 2/28/05 ......................................................... 50,000,000 421,265
--------------
Swedish Kronor 8.3%
Kingdom of Sweden, 10.25%, 5/5/00 ...................................................... 65,500,000 9,311,663
--------------
Thai Bahts 0.5%
Chase Manhattan Bank Time Deposit linked to Thai Baht, 16.29%, 5/18/98 ................. 23,336,583 594,208
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11-Scudder Global Bond Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Turkish Lire 0.3%
J.P. Morgan & Co. Time Deposit linked to Turkish Lira, 75%, 7/13/98 .................... 96,622,500,000 386,490
- ------------------------------------------------------------------------------------------------------------------------------
Total Foreign Denominated Debt Obligations (Cost $81,540,172) 80,444,691
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Dollar Denominated Debt Obligations 25.3%
- ------------------------------------------------------------------------------------------------------------------------------
Cedulas Hipotecarias, LIBOR plus .29% (8.939%), 9/1/00 ................................. 1,300,000 1,253,132
Imperial Credit Industries, Inc., 9.875%, 1/15/07 ...................................... 460,000 453,100
ING Note linked to Philippine Treasury Bill, Zero Coupon, 2/11/99 ...................... 900,000 938,250
Midland Bank PLC, 7.625%, 6/15/06 ...................................................... 1,500,000 1,601,850
Puget Sound Energy, Inc., 7.02%, 12/1/27 ............................................... 2,000,000 2,028,580
Republic of Korea, 8.875%, 4/15/08 ..................................................... 2,300,000 2,267,570
Republic of Panama, 8.875%, 9/30/27 .................................................... 1,000,000 980,000
Republic of Panama, Past Due Interest Bond, LIBOR plus .8125%, 4% with 2.563%
Interest Capitalization (6.563%), 7/17/16 ............................................ 1,048,956 870,634
Republic of Peru, Past Due Interest Bond, 4%, Multi Step through 3/7/17 ................ 3,750,000 2,552,363
Royal Caribbean International, 7.5%, 10/15/27 .......................................... 3,200,000 3,282,168
Tenet Healthcare Corp., 8%, 1/15/05 .................................................... 550,000 562,375
Time Warner Inc., 9.125%, 1/15/13 ...................................................... 1,000,000 1,197,550
U.S. Treasury Note, 6%, 8/15/99 (b) .................................................... 4,000,000 4,020,640
U.S. Treasury Note, 5.875%, 11/15/99 ................................................... 3,850,000 3,865,631
U.S. Treasury Note, 5.5%, 2/15/08 ...................................................... 2,000,000 1,973,120
Webster Financial Corp., 9.36%, 1/29/27 ................................................ 500,000 549,310
- ------------------------------------------------------------------------------------------------------------------------------
Total U.S. Dollar Denominated Debt Obligations (Cost $28,018,819) 28,396,273
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost $112,415,991) 111,697,964
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Purchased Options 0.3%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Put on Australian Dollars, strike price .6493, expire 7/10/98 ................... AUD 1,720,000 18,782
Put on Australian Dollars, strike price .66, expire 6/17/98 ..................... AUD 2,761,000 42,299
Put on British Pounds, strike price 2.9176, expire 5/4/98 ....................... GBP 7,100,000 449
Put on Canadian Dollars, strike price 1.436, expire 7/2/98 ...................... CAD 9,000,000 33,744
Put on Deutsche Marks, strike price 1.824, expire 7/17/98 ....................... DEM 18,240,000 85,285
Put on New Zealand Dollars, strike price .541, expire 5/7/98 .................... NZD 7,014,000 3,647
Put on New Zealand Dollars, strike price .5671, expire 5/11/98 .................. NZD 13,120,000 199,424
- ------------------------------------------------------------------------------------------------------------------------------
Purchased Options (Cost $420,207) 383,630
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $112,836,198) (a) 112,081,594
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12-Scudder Global Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $112,836,198. At April 30,
1998, net unrealized depreciation for all securities based on tax cost
was $754,604. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $1,054,226 and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market
value of $1,808,830.
(b) At April 30, 1998, this security, in part, has been pledged to cover
initial margin requirements for open futures contracts.
At April 30, 1998, open futures contracts sold short were as follows:
<TABLE>
<CAPTION>
Aggregate Market
Futures Expiration Contracts Face Value ($) Value
--------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MATIF French Francs 10 year June 15, 1998 32 2,722,552 2,710,673
--------- ---------
Total net unrealized appreciation on open futures contracts sold short ................. 11,879
=========
</TABLE>
At April 30, 1998, outstanding written options were as follows:
<TABLE>
<CAPTION>
Principal
Amount Expiration Strike Market
Call Options (000's) Date Price Value
------------ ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUD 761 6/17/98 AUD .683 1,294
AUD 1,548 7/10/98 AUD .6704 7,276
CAD 8,000 7/2/98 CAD 1.41 13,169
GBP/DEM 7,100 5/4/98 GBP 3.01 27,324
NZD 6,300 5/7/98 NZD .551 28,539
---------
Total outstanding written options (Premiums received $216,027) ........................ 77,602
=========
</TABLE>
Currency Abbreviations
----------------------------------------------------------------------
AUD Australian Dollar ITL Italian Lira
BRC Brazilian Real JPY Japanese Yen
CAD Canadian Dollar MXP Mexican Peso
CHF Swiss Franc NZD New Zealand Dollar
DEM Deutsche Mark SEK Swedish Krona
GBP British Pound THB Thai Baht
HUF Hungarian Forint USD U.S. Dollar
IEP Irish Pound XEU European Currency Unit
IND Indonesian Rupiah
The accompanying notes are an integral part of the financial statements.
13-Scudder Global Bond Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1998
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $112,415,991) ................ $ 111,697,964
Purchased options, at value (identified cost $420,207) ............... 383,630
Foreign currency, at market (identified cost $59,306) ................ 59,185
Interest receivable .................................................. 1,485,468
Receivable for investments sold ...................................... 7,043,985
Receivable for Fund shares sold ...................................... 28,646
Unrealized appreciation on forward currency exchange contracts ....... 265,562
Other assets ......................................................... 2,339
----------------
Total assets ......................................................... 120,966,779
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased .................................... 7,225,055
Dividends payable .................................................... 167,692
Payable for Fund shares redeemed ..................................... 51,782
Payable for daily variation margin on open futures contracts ......... 4,959
Written options, at market (premiums received $216,027) .............. 77,602
Unrealized depreciation on forward currency exchange contracts ....... 74,090
Accrued management fee ............................................... 23,855
Other payables and accrued expenses .................................. 130,835
----------------
Total liabilities .................................................... 7,755,870
-------------------------------------------------------------------------------------------
Net assets, at market value $ 113,210,909
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on:
Investments ....................................................... (718,027)
Options ........................................................... 101,848
Futures ........................................................... 11,879
Foreign currency related transactions ............................. 195,990
Accumulated net realized loss ........................................ (10,362,396)
Paid-in capital ...................................................... 123,981,615
-------------------------------------------------------------------------------------------
Net assets, at market value $ 113,210,909
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($113,210,909 / 11,764,774 shares of capital stock ----------------
outstanding, $.01 par value, 300,000,000 shares authorized) ........ $9.62
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14-Scudder Global Bond Fund
<PAGE>
Statement of Operations
six months ended April 30, 1998
<TABLE>
<S> <C> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Interest ............................................................. $ 4,745,209
----------------
Expenses:
Management fee ....................................................... 458,427
Services to shareholders ............................................. 210,282
Custodian and accounting fees ........................................ 104,141
Directors' fees and expenses ......................................... 24,835
Reports to shareholders .............................................. 27,619
Auditing ............................................................. 45,099
Legal ................................................................ 7,492
Registration fees .................................................... 13,393
Other ................................................................ 12,732
----------------
Total expenses before reductions ..................................... 904,020
Expense reductions ................................................... (292,806)
----------------
Expenses, net ........................................................ 611,214
-------------------------------------------------------------------------------------------
Net investment income 4,133,995
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .......................................................... (2,076,920)
Options .............................................................. 22,324
Futures contracts .................................................... (359,358)
Foreign currency related transactions ................................ 334,890
----------------
(2,079,064)
Net unrealized appreciation (depreciation) during the period on:
Investments .......................................................... (118,723)
Options .............................................................. 327,388
Futures contracts .................................................... 11,879
Foreign currency related transactions ................................ 642,588
----------------
863,132
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions (1,215,932)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 2,918,063
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15-Scudder Global Bond Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ........................................ $ 4,133,995 $ 10,145,927
Net realized gain (loss) from investment transactions ........ (2,079,064) (6,797,404)
Net unrealized appreciation (depreciation) on ................
investment transactions during the period .................. 863,132 (3,581,203)
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ................................................. 2,918,063 (232,680)
---------------- ----------------
Distributions to shareholders from:
Net investment income ........................................ (4,133,995) (2,459,944)
---------------- ----------------
Tax return of capital ........................................ -- (7,685,983)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .................................... 9,927,804 26,565,023
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 2,938,823 7,206,681
Cost of shares redeemed ...................................... (33,553,251) (105,683,539)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................... (20,686,624) (71,911,835)
---------------- ----------------
Increase (decrease) in net assets ............................ (21,902,556) (82,290,442)
Net assets at beginning of period ............................ 135,113,465 217,403,907
---------------- ----------------
Net assets at end of period .................................. $ 113,210,909 $ 135,113,465
---------------- ----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................... 13,913,602 21,216,085
---------------- ----------------
Shares sold .................................................. 1,029,157 2,733,367
Shares issued to shareholders in reinvestment of
distributions .............................................. 305,944 736,022
Shares redeemed .............................................. (3,483,929) (10,771,872)
---------------- ----------------
Net increase (decrease) in Fund shares ....................... (2,148,828) (7,302,483)
---------------- ----------------
Shares outstanding at end of period .......................... 11,764,774 13,913,602
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16-Scudder Global Bond Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
March 1, 1991
Six Months (commencement of
Ended Years Ended October 31, operations) to
April 30, October 31,
1998 1997 1996 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------
Net asset value, beginning of period ....... $9.71 $10.25 $10.53 $10.78 $11.68 $11.84 $12.01 $12.00
Income (loss) from investment operations: ------------------------------------------------------------------------------
Net investment income (loss) ............... .32 .59 .67 .80 .87 .95 1.08 .76
Net realized and unrealized gain (loss)
on investment transactions .............. (.09) (.54) (.28) (.25) (.90) (.14) (.17) .01
------------------------------------------------------------------------------
Total from investment operations ........... .23 .05 .39 .55 (.03) .81 .91 .77
Less distributions from: ------------------------------------------------------------------------------
Net investment income ...................... (.32) (.14) (.42) (.36) (.02) (.95) (1.08) (.76)
Net realized gains on investment
transactions ............................ -- -- -- -- -- (.02) -- --
Tax return of capital ...................... -- (.45) (.25) (.44) (.85) -- -- --
------------------------------------------------------------------------------
Total distributions ........................ (.32) (.59) (.67) (.80) (.87) (.97) (1.08) (.76)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net asset value, end of period ............. $9.62 $9.71 $10.25 $10.53 $10.78 $11.68 $11.84 $12.01
------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ....................... 2.45** 0.66 3.97 5.43 (.25) 7.14 7.83 6.65**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ..... 113 135 217 357 560 1,041 1,369 205
Ratio of operating expenses, net to
average daily net assets (%) ............ 1.00* 1.00 1.00 1.00 1.00 1.00 1.00 1.00*
Ratio of operating expenses before
expense reductions, to average
daily net assets (%) .................... 1.48* 1.39 1.28 1.20 1.15 1.11 1.23 1.89*
Ratio of net investment income to
average daily net assets (%) ............ 6.76* 6.00 6.67 7.73 7.76 8.10 8.94 9.97*
Portfolio turnover rate (%) ................ 206.8* 256.5 335.7 182.8 272.4 259.8 274.2 26.1*
</TABLE>
* Annualized
** Not annualized
(a) Total returns would have been lower had certain expenses not been reduced.
On December 27, 1995, the Fund adopted its current name and objectives.
Prior to that date, the Fund was known as the Scudder Short Term Global
Income Fund and its investment objective was to provide high current
income through short-term instruments. Financial information prior to
December 27, 1995 should not be considered representative of the present
Fund.
17-Scudder Global Bond Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Global Bond Fund (the "Fund") is a non-diversified series of
Global/International Fund, Inc. (formerly Scudder Global Fund, Inc.), a Maryland
corporation registered under the Investment Company Act of 1940, as amended, as
an open-end management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio debt securities other than money market
instruments with an original maturity over sixty days are valued by pricing
agents approved by the officers of the Fund, whose 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 debt 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.
Options. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the
period, the Fund purchased put options and wrote call options on currencies as a
hedge against potential adverse price movements in the value of portfolio
assets. In addition, during the period, the Fund purchased call options on
currencies to lock in the purchase price of a security or currency which it
expects to purchase in the near future and to enhance potential gain.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium paid. If the Fund elects to close out the option it
would recognize a gain or loss equal to the difference between the cost of
acquiring the option and the amount realized upon the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised, the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked prices are available. Over-the-counter written or purchased options
are valued using dealer supplied quotations.
18-Scudder Global Bond Fund
<PAGE>
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased interest rate futures to manage the duration of the portfolio,
and as a temporary substitute for purchasing selected investments and the Fund
sold interest rate futures to hedge against declines in the value of portfolio
securities.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at
the daily rates of exchange, and
(ii) purchases and sales of investment securities, interest income and
certain expenses at the daily rates of exchange prevailing on the
respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the accrual and payment dates on interest
and foreign withholding taxes.
19-Scudder Global Bond Fund
<PAGE>
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies and as a
hedge against changes in exchange rates relating to foreign currency denominated
assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies, and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes, and no federal
income tax provision was required. At October 31, 1997, the Fund had a net tax
basis capital loss carryforward of approximately $8,121,000 which may be applied
against any realized net taxable capital gains of each succeeding year until
fully utilized or until October 31, 2002 ($2,376,000), October 31, 2003
($5,009,000) and October 31, 2004 ($736,000), the respective expiration dates,
whichever occurs first.
Distribution of Income and Gains. Distribution of net investment income is
declared as a dividend to shareholders of record as of the close of business
each day and is distributed to shareholders monthly. During any particular year
net realized gains and certain unrealized gains (which for federal income tax
reporting purposes may be considered realized) from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed and, therefore, will be distributed to shareholders. An
additional distribution may be made to the extent necessary to avoid the payment
of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences relate primarily to investments in options, futures, forward
currency contracts and foreign currency denominated investments. 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. It appears likely that a portion of the Fund's
income distributions for the fiscal year ending October 31, 1998 will be treated
as a non-taxable return of capital.
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.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. All
discounts are accreted for both tax and financial reporting purposes.
20-Scudder Global Bond Fund
<PAGE>
B. Purchases and Sales of Securities
For the six months ended April 30, 1998, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $101,946,906 and $111,483,910, respectively. Purchases and sales of
U.S. Government obligations aggregated $11,936,773 and $16,484,438,
respectively.
The aggregate face value of futures contracts opened and closed during the six
months ended April 30, 1998 was $78,163,577 and $75,441,025, respectively.
Transactions in written options for the six months ended April 30, 1998 are
summarized as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Exchange Traded Options Over-the-Counter Options on Currencies (000 omitted)
---------------------------- -----------------------------------------------------
Number of
Contracts Premiums AUD GBP ITL Premiums
---------------------------- ------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Beginning
of Period ... 84 $ 38,460 3,500 -- -- $ 26,425
Written ...... 200 111,998 5,857 24,450 50,451,375 714,670
Closed ....... (160) (90,074) (5,500) (19,900) (50,451,375) (655,783)
Exercised .... (124) (60,384) -- -- -- --
Expired ...... -- -- (1,548) (4,550) -- (63,719)
-------- --------- -------- --------- ----------- -----------
End of
Period ...... -- $ -- 2,309 -- -- $ 21,593
======== ========= ========= ========= =========== ===========
----------------------------------------------------------------------------------------
</TABLE>
Transactions in written options for the six months ended April 30, 1998 are
summarized as follows (continued):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Over-the-Counter Options on Currencies (000 omitted)
---------------------------------------------------------
NZD IEP CAD GBP/DEM Premiums
-------------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C>
Beginning
of Period ... 14,777 -- -- -- $ 86,101
Written ...... 58,643 2,350 8,000 7,100 567,498
Closed ....... (20,408) (2,350) -- -- (179,853)
Exercised .... (9,713) -- -- -- (51,479)
Expired ...... (36,999) -- -- -- (227,833)
--------- --------- --------- --------- -----------
End of
Period ...... 6,300 -- 8,000 7,100 $ 194,434
========= ========= ========= ========= ===========
-----------------------------------------------------------------------
</TABLE>
21-Scudder Global Bond Fund
<PAGE>
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 was 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 Fund has agreed to pay
to the Adviser a fee equal to an annual rate of 0.75% of the first
$1,000,000,000 of average daily net assets and 0.70% of such assets in excess of
$1,000,000,000, computed and accrued daily and payable monthly. The Adviser
directs the investments of the Fund in accordance with its investment
objectives, policies, and restrictions. The Adviser determines the securities,
instruments, and other contracts relating to investments to be purchased, sold
or entered into by the Fund. In addition to portfolio management services, the
Adviser provides certain administrative services in accordance with the
Management Agreement. The Adviser has agreed not to impose all or a portion of
its management fee until February 28, 1999, and during such period to maintain
the annualized expenses of the Fund at not more than 1.00% of average daily net
assets. For the six months ended April 30, 1998, the Adviser did not impose a
portion of its management fee aggregating $292,806 and the amount imposed
aggregated $165,621 which was equivalent to an annual effective rate of .27% of
the Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended April 30, 1998, the amount charged to the Fund by SSC
aggregated $134,406, of which $21,390 is unpaid at April 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 six months ended April 30,
1998, the amount charged to the Fund by STC aggregated $7,825, of which $1,287
is unpaid at April 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 six months
ended April 30, 1998, the amount charged to the Fund by SFAC aggregated $55,907,
of which $8,789 is unpaid at April 30, 1998.
The Fund pays each Director not affiliated with the Adviser an annual retainer,
plus specified amounts for attended board and committee meetings. For the six
months ended April 30, 1998, Directors' fees and expenses aggregated $24,835.
22-Scudder Global Bond Fund
<PAGE>
D. Commitments
As of April 30, 1998, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized appreciation of
$191,472.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
(Depreciation)
Contracts to Deliver In Exchange For Settlement Date (U.S.$)
<S> <C> <C> <C> <C> <C>
USD 4,705,587 JPY 626,313,577 5/11/98 11,648
USD 200,163 IND 1,715,400,000 5/13/98 9,383
JPY 184,600,459 USD 1,514,608 5/21/98 122,098
XEU 2,800,000 USD 3,084,312 6/16/98 (5,368)
IEP 1,600,000 USD 2,240,000 6/16/98 (2,121)
USD 400,000 BRC 466,040 6/18/98 7,574
USD 400,000 BRC 466,340 6/24/98 7,836
USD 1,080,000 CHF 1,638,144 6/24/98 18,074
USD 4,756,016 CHF 7,000,000 6/24/98 (63,805)
CHF 22,026,015 USD 14,853,338 6/24/98 88,949
SEK 1,429,636 USD 182,119 7/14/98 (2,796)
---------
191,472
=========
</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 1/3 percent of its net assets under the agreement. In addition,
the Fund also maintains an uncommitted line of credit.
23-Scudder Global Bond Fund
<PAGE>
Report of Independent Accountants
Tax Information
To the Board of Directors of Global/International Fund, Inc. and to the
Shareholders of Scudder Global Bond Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Global Bond Fund including the investment portfolio, as of April 30, 1998, and
the related statement of operations for the six months then ended, the
statements of changes in net assets for the six months then ended and for the
year ended October 31, 1997, and the financial highlights for the six months
ended April 30, 1998, for each of the six years in the period ended October 31,
1997 and for the period March 1, 1991 (commencement of operations) to October
31, 1991. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1998, 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 Bond Fund as of April 30, 1998, the results of its operations for
the six months then ended, the changes in its net assets for the six months then
ended and for the year ended October 31, 1997, and the financial highlights for
the six months ended April 30, 1998, for each of the six years in the period
ended October 31, 1997 and for the period March 1, 1991 (commencement of
operations) to October 31, 1991 in conformity with generally accepted accounting
principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
June 15, 1998
24-Scudder Global Bond 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
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 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.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
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. ***Only the Scudder 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.
25-Scudder Global Bond 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.
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
- ------------------------------------------------------------------------------------------------------------------------------
26-Scudder Global Bond 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 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>
27-Scudder Global Bond 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
[LOGO]
