Filed electronically with the Securities and Exchange
Commission on September 2, 1998
File No. 33-5724
File No. 811-4670
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
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Post-Effective Amendment No. 34
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 37
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Global/International Fund, Inc.
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(Exact name of Registrant as Specified in Charter)
345 Park Avenue, New York, NY 10154
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-2567
--------------
Thomas F. McDonough
Scudder Kemper Investments, Inc.
Two International Place, Boston, MA 02110
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b)
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on April 16, 1998 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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X on November 1, 1998 pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on pursuant to paragraph (a)(2) of Rule 485
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If appropriate, check the following:
----- this post-effective amendment designates a new effective date
or a previously filed post-effective amendment
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER GLOBAL FUND
CROSS-REFERENCE SHEET
Items Required by Form N-1A
---------------------------
PART A
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<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
<S> <C> <C>
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant RISKS OF GLOBAL INVESTING
WHY INVEST IN THE FUND?
ADDITIONAL INFORMATION ABOUT POLICIES AND
INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
INTERNATIONAL INVESTMENT EXPERIENCE
FUND ORGANIZATION--Investment adviser and Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other SHAREHOLDER BENEFITS--Dividend reinvestment plan
Securities DISTRIBUTION AND PERFORMANCE INFORMATION--
Dividends and capital gains distributions
FUND ORGANIZATION
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered TRANSACTION INFORMATION
INVESTMENT PRODUCTS AND SERVICES
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
FUND ORGANIZATION--Underwriter
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 1
<PAGE>
SCUDDER GLOBAL FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
Policies
14. Management of the Fund DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services ADDITIONAL INFORMATION--Experts and Other
Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions
and Portfolio Turnover
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities
19. Purchase, Redemption and PURCHASES AND EXCHANGES
Pricing of Securities Being REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUNDS--
Dividend and Capital Gain Distribution Options
SPECIAL PLAN ACCOUNTS
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
NET ASSET VALUE
20. Tax Status TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of Performance PERFORMANCE INFORMATION
Data
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 2
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER INTERNATIONAL BOND FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information
4. General Description of INVESTMENT OBJECTIVES AND POLICIES
Registrant INTERNATIONAL BOND INVESTING
WHY INVEST IN THE FUND?
SPECIAL RISK CONSIDERATIONS
INVESTMENTS
ADDITIONAL INFORMATION ABOUT POLICIES AND
INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
INTERNATIONAL INVESTMENT EXPERIENCE
FUND ORGANIZATION--Investment adviser and Transfer
agent
SHAREHOLDER BENEFITS--A team approach to investing
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other SHAREHOLDER BENEFITS--Dividend reinvestment plan
Securities DISTRIBUTION AND PERFORMANCE INFORMATION--
Dividends and capital gains distributions
FUND ORGANIZATION
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered TRANSACTION INFORMATION
INVESTMENT PRODUCTS AND SERVICES
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
FUND ORGANIZATION--Underwriter
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 3
<PAGE>
SCUDDER INTERNATIONAL BOND FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
Policies
14. Management of the Fund DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services ADDITIONAL INFORMATION--Experts and Other
Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions
and Portfolio Turnover
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUNDS--
Dividend and Capital Gain Distribution Options
SPECIAL PLAN ACCOUNTS
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
NET ASSET VALUE
20. Tax Status TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of Performance Data PERFORMANCE INFORMATION
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 4
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER GLOBAL BOND FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVES AND POLICIES
Registrant WHY INVEST IN THE FUND?
SPECIAL RISK CONSIDERATIONS
INVESTMENTS
ADDITIONAL INFORMATION ABOUT POLICIES AND
INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S CHAIRMAN
INTERNATIONAL INVESTMENT EXPERIENCE
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--
Securities Dividends and capital gains distributions
FUND ORGANIZATION
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated
Information Line, Dividend reinvestment plan, T.D.D.
service for the hearing impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share
price, Processing time, Minimum balances, Third party
transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax
identification number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 5
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER GLOBAL BOND FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Brokerage Commissions,
Portfolio Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation and Other PORTFOLIO TRANSACTIONS--Brokerage Commissions,
Practices Portfolio Turnover
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUNDS--
Dividend and Capital Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of Performance PERFORMANCE INFORMATION
Data
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 6
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER GLOBAL DISCOVERY FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVES AND POLICIES
Registrant WHY INVEST IN THE FUND?
SPECIAL RISK CONSIDERATIONS
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S CHAIRMAN
INTERNATIONAL INVESTMENT EXPERIENCE
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--
Securities Dividends and capital gains distributions
FUND ORGANIZATION
SHAREHOLDER BENEFITS--SAIL(TM)- Scudder Automated
Information Line, Dividend Reinvestment Plan, T.D.D.
service for the hearing impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share
price, Processing time, Minimum balances, Third party
transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax
identification number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 7
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER GLOBAL DISCOVERY FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Brokerage Commissions,
Portfolio Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation and Other PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
Practices
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUNDS--
Dividend and Capital Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of Performance Data PERFORMANCE INFORMATION
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 8
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER EMERGING MARKETS INCOME FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVES AND POLICIES
Registrant WHY INVEST IN THE FUND?
SPECIAL RISK CONSIDERATIONS
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S CHAIRMAN
INTERNATIONAL INVESTMENT EXPERIENCE
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion NOT APPLICABLE
of Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--
Securities Dividends and capital gains distributions
FUND ORGANIZATION
SHAREHOLDER BENEFITS--Toll-Free Telephone Service
and Information, Dividend reinvestment plan
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share
price, Processing time, Minimum balances, Third party
transactions
INVESTMENT PRODUCTS AND SERVICES
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares,
Tax identification number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 9
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER EMERGING MARKETS INCOME FUND
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Brokerage Commissions,
Portfolio Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--
Dividend and Capital Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of Performance Data PERFORMANCE INFORMATION
23. Financial Statements FINANCIAL STATEMENTS
</TABLE>
Cross Reference - Page 10
<PAGE>
This prospectus sets forth concisely the information about Scudder Global Fund,
a diversified series of Global/International Fund, Inc., an open-end management
investment company, that a prospective investor should know before investing.
Please retain it for future reference.
If you require more detailed information, a Statement of Additional Information
dated November 1, 1998, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statement, which is
incorporated by reference into this prospectus, has been filed with the
Securities and Exchange Commission and is available along with other related
materials on the SEC's Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Contents--see page 4.
- -------------------------------
NOT FDIC- / MAY LOSE VALUE
INSURED / NO BANK GUARANTEE
- -------------------------------
SCUDDER (logo)
Scudder
Global
Fund
Prospectus
November 1, 1998
A pure no-load(TM) (no sales charges) mutual fund series which seeks long-term
growth of capital from worldwide investing.
<PAGE>
Expense information
How to compare a Scudder Family of Funds pure no-load(TM) fund
This information is designed to help you understand the various costs and
expenses of investing in Scudder Global Fund (the "Fund"). By reviewing this
table and those in other mutual funds' prospectuses, you can compare the Fund's
fees and expenses with those of other funds. With Scudder's pure no-load(TM)
funds, you pay no commissions to purchase or redeem shares, or to exchange from
one fund to another. As a result, all of your investment goes to work for you.
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE
2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended June 30, 1998.
Investment management fee ____%
12b-1 fees NONE
Other expenses ____%
------
Total Fund operating expenses ____%
======
Example
Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its
net investment income to shareholders. (As noted above, the Fund has no
redemption fees of any kind.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$ $ $ $
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than
those shown.
* You may redeem by writing or calling the Fund. If you wish to receive your
redemption proceeds via wire, there is a $5 wire service fee. For
additional information, please refer to "Transaction information--Redeeming
shares."
2
<PAGE>
Financial highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the audited
financial statements.
If you would like more detailed information concerning the Fund's performance,
a complete portfolio listing and audited financial statements are available in
the Fund's Annual Report dated June 30, 1998, which may be obtained without
charge by writing or calling Scudder Investor Services, Inc.
TABLE TO BE UPDATED
<TABLE>
<CAPTION>
Years Ended June 30,
1997(a) 1996 1995 1994(a) 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning --------------------------------------------------------------------------------------------
of period .................. $28.73 $25.64 $23.93 $21.63 $19.56 $18.06 $20.36 $17.64 $14.47 $15.42
--------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income ........ .17 .24 .25 .23 .15 .19 .40 .19 .19 .18
Net realized and unrealized
gain (loss) on investments . 6.58 3.94 1.91 2.57 2.42 2.28 (1.50) 3.28 3.20 (.82)
Total from investment --------------------------------------------------------------------------------------------
operations ................. 6.75 4.18 2.16 2.80 2.57 2.47 (1.10) 3.47 3.39 (.64)
--------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ........ (.28) (.25) (.11) (.24) (.16) (.31) (.37) (.20) (.14) (.06)
Net realized gains from
investment transactions .... (1.53) (.84) (.34) (.26) (.34) (.66) (.83) (.55) (.08) (.25)
--------------------------------------------------------------------------------------------
Total distributions .......... (1.81) (1.09) (.45) (.50) (.50) (.97) (1.20) (.75) (.22) (.31)
--------------------------------------------------------------------------------------------
Net asset value, end of --------------------------------------------------------------------------------------------
period ..................... $33.67 $28.73 $25.64 $23.93 $21.63 $19.56 $18.06 $20.36 $17.64 $14.47
- ---------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............. 24.91 16.65 9.11 12.99 13.45 14.09 (5.20) 20.00 23.90 (4.45)
Ratios and Supplemental Data
Net assets, end of period
($ millions) ............... 1,604 1,368 1,168 1,096 577 371 268 257 91 81
Ratio of operating expenses
to average daily net
assets (%) ................. 1.37 1.34 1.38 1.45 1.48 1.59 1.70 1.81 1.98 1.71(c)
Ratio of net investment income
to average daily net
assets (%) ................. .59 .84 1.03 .97 .90 1.09 2.21 1.77 1.22 1.23
Portfolio turnover rate (%) .. 40.5 29.1 44.4 59.7 64.9 44.6 85.0(d) 38.3 30.7 53.8
Average commission rate
paid (b) ................... $.0007 $.0272 -- -- -- -- -- -- -- --
</TABLE>
(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.
3
<PAGE>
A message from the President
Scudder Kemper Investments, Inc., investment adviser to the Scudder Family of
Funds, is one of the largest and most experienced investment management
organizations worldwide, managing more than $200 billion in assets globally for
mutual fund investors, retirement and pension plans, institutional and corporate
clients, and private family and individual accounts. It is one of the ten
largest mutual fund companies in the U.S.
We offered America's first no-load mutual fund in 1928, and today the Scudder
Family of Funds includes over 50 no-load mutual fund portfolios or classes of
shares. We also manage the mutual funds in a special program for the American
Association of Retired Persons, as well as the fund options available through
Scudder Horizon Plan, a tax-advantaged variable annuity. We also advise The
Japan Fund, and numerous other open- and closed-end funds that invest in this
country and other countries around the world.
The Scudder Family of Funds is designed to make investing easy and less costly.
It includes money market, tax free, income and growth funds as well as IRAs,
401(k)s, Keoghs and other retirement plans.
Services available to shareholders include toll-free access to professional
representatives, easy exchange among the Scudder Family of Funds, shareholder
reports, informative newsletters and the walk-in convenience of Scudder Investor
Centers.
Funds or fund classes in the Scudder Family of Funds are offered without
commissions to purchase or redeem shares or to exchange from one fund to
another. There are no 12b-1 fees either, which many other funds now charge to
support their marketing efforts. All of your investment goes to work for you. We
look forward to welcoming you as a shareholder.
/s/Edmond D. Villani
Scudder Global Fund
Investment objective
o long-term growth of capital from global investment
Investment characteristics
o worldwide investing with international investment risk
o efficient vehicle for investors to participate in investments denominated
in U.S. and foreign currencies
Contents
Investment objective and policies..................... 5
Risks of global investing............................. 6
Why invest in the Fund?............................... 6
International investment experience................... 7
Additional information about policies
and investments.................................... 8
Distribution and performance information.............. 11
Fund organization..................................... 11
Transaction information............................... 13
Shareholder benefits.................................. 16
Purchases ............................................ 19
Exchanges and redemptions............................. 20
Investment products and service....................... 22
How to contact Scudder................................ 23
4
<PAGE>
Investment objective and policies
Scudder Global Fund (the "Fund"), a diversified series of Global/International
Fund, Inc. (the "Corporation"), seeks long-term growth of capital through a
diversified portfolio of marketable securities, primarily equity securities,
including common stocks, preferred stocks and debt securities convertible into
common stocks. The Fund invests on a worldwide basis in equity securities of
companies which are incorporated in the U.S. or in foreign countries. It also
may invest in the debt securities of U.S. and foreign issuers. Income is an
incidental consideration.
Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. If there is a
change in investment objective, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current financial
position and needs. There can be no assurance that the Fund's objective will be
met.
Investments
The Fund invests in companies that the Fund's investment adviser, Scudder Kemper
Investments, Inc. (the "Adviser"), believes will benefit from global economic
trends, promising technologies or products and specific country opportunities
resulting from changing geopolitical, currency or economic relationships. It is
expected that investments will be spread broadly around the world. The Fund will
be invested usually in securities of issuers located in at least three
countries, one of which may be the U.S. The Fund may be invested 100% in
non-U.S. issues, and for temporary defensive purposes may be invested 100% in
U.S. issues, although under normal circumstances it is expected that both
foreign and U.S. investments will be represented in the Fund's portfolio. It is
expected that investments will include companies of varying size as measured by
assets, sales or capitalization.
The Fund generally invests in equity securities of established companies listed
on U.S. or foreign securities exchanges, but also may invest in securities
traded over-the-counter. It also may invest in debt securities convertible into
common stock, and convertible and non-convertible preferred stock, and
fixed-income securities of governments, government agencies, supranational
agencies and companies when the Adviser believes the potential for appreciation
will equal or exceed that available from investments in equity securities. These
debt and fixed-income securities will be predominantly investment-grade
securities, that is, those rated Aaa, Aa, A or Baa by Moody's Investors Service,
Inc. ("Moody's") or AAA, AA, A or BBB by Standard & Poor's Corporation ("S&P")
or those of equivalent quality as determined by the Adviser. The Fund may not
invest more than 5% of its total assets in debt securities rated Baa or below by
Moody's, or BBB or below by S&P or deemed by the Adviser to be of comparable
quality (commonly referred to as "high yield" or "junk" bonds) (see "Additional
information about policies and investments --Risk factors").
The Fund may invest in zero coupon securities which pay no cash income and are
issued at substantial discounts from their value at maturity. When held to
maturity, their entire income, which consists of accretion of discount, comes
from the difference between the issue price and their value at maturity.
Fixed-income securities and cash equivalents (including foreign money market
instruments, such as bankers' acceptances, certificates of deposit, commercial
paper, short-term government and corporate obligations and repurchase
agreements) may be held for temporary investment purposes and for liquidity. In
addition, for temporary defensive purposes, the Fund may vary from its
investment policies during periods when the Adviser determines that it is
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advisable to do so because of conditions in the securities markets or other
economic or political conditions. During such periods, the Fund may hold without
limit cash and cash equivalents. It is impossible to accurately predict how long
such alternative strategies may be utilized. The Fund may invest in closed-end
investment companies holding foreign securities and may make loans of portfolio
securities. In addition, the Fund may engage in strategic transactions.
Risks of global investing
Global investing involves economic and political considerations not typically
found in U.S. markets. These considerations, which may favorably or unfavorably
affect the Fund's performance, include changes in exchange rates and exchange
rate controls (which may include suspension of the ability to transfer currency
from a given country), costs incurred in conversions between currencies,
non-negotiable brokerage commissions, less publicly available information,
different accounting standards, lower trading volume and greater market
volatility, the difficulty of enforcing obligations in other countries, less
securities regulation, different tax provisions (including withholding on
dividends and interest paid to the Fund), war, expropriation, political and
social instability, and diplomatic developments.
Further, the settlement period of securities transactions in foreign markets may
be longer than in domestic markets. These considerations generally are more of a
concern in developing countries. For example, the possibility of revolution and
the dependence on foreign economic assistance may be greater in these countries
than in developed countries. The management of the Fund seeks to mitigate the
risks associated with these considerations through diversification and active
professional management.
The Fund is designed for long-term investors who can accept international
investment risk. Since the Fund normally will be invested in both U.S. and
foreign securities markets, changes in the Fund's share price may have a low
correlation with movements in the U.S. markets. The Fund's share price will
reflect the movements of both the different stock and bond markets in which it
is invested and the currencies in which the investments are denominated; the
strength or weakness of the U.S. dollar against foreign currencies may account
for part of the Fund's investment performance. As with any long-term investment,
the value of shares when sold may be higher or lower than when purchased.
Because of the Fund's global investment policies and the investment
considerations discussed above, investment in shares of the Fund should not be
considered a complete investment program.
Why invest in the Fund?
The management of the Fund believes that there is substantial opportunity for
long-term capital growth from a professionally managed portfolio of securities
selected from the U.S. and foreign equity markets. This global investment
framework seeks to take advantage of the investment opportunities created by the
global economy. The world has become highly integrated in economic, industrial
and financial terms. Companies increasingly operate globally as they purchase
raw materials, produce and sell their products and raise capital. As a result,
international trends such as movements in currency and trading relationships are
becoming more important to many industries than purely domestic influences. To
understand a company's business, it is frequently more important to understand
how it is linked to the world economy than whether or not it is, for example, a
U.S., French or Swiss company. Just as a company takes a global perspective in
deciding where to operate, so too may an investor benefit from looking globally
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in deciding which industries are growing, which producers are efficient and
which companies' shares are undervalued. The Fund affords the investor access to
opportunities wherever they arise, without being constrained by the location of
a company's headquarters or the trading market for its shares.
The Fund is designed for investors seeking worldwide equity opportunities in
developed, newly industrialized and developing countries (some of these
developing countries are located in Latin America and Africa). Like consumers
who seek to buy a good product wherever it is made, the Fund seeks to find
investment opportunities regardless of location. Because the Fund's portfolio
invests globally, it provides the potential to augment returns available from
the U.S. stock market. In addition, since U.S. and foreign markets do not always
move in step with each other, a global portfolio will be more diversified than
one invested solely in U.S. securities.
Investing directly in foreign securities is usually impractical for most
investors because it presents complications and extra costs. Investors often
find it difficult to arrange purchases and sales, to obtain current information,
to hold securities in safekeeping and to convert the value of their investments
from foreign currencies into dollars. The Fund manages these problems for the
investor. The Adviser believes that with a single investment, the investor has a
diversified worldwide investment portfolio which is managed actively by
experienced professionals. The Adviser has had many years of experience
investing in foreign markets and dealing with trading, custody and currency
transactions around the world. The Adviser has the benefit of information it
receives from worldwide sources and believes the Fund affords investors an
efficient and cost-effective method of investing worldwide.
International investment
experience
The Adviser has been a leader in international investment management for over 40
years. Its investment company clients include Scudder International Fund, which
invests primarily in foreign securities and was initially incorporated in Canada
in 1953 as the first foreign investment company registered with the United
States Securities and Exchange Commission, Scudder International Bond Fund,
which invests internationally, Scudder International Growth and Income Fund,
which invests primarily in foreign securities, Scudder Global Bond Fund and
Scudder Global Discovery Fund which invest worldwide, Scudder Greater Europe
Growth Fund which invests primarily in the equity securities of European
companies, The Japan Fund, Inc., which invests primarily in securities of
Japanese companies, Scudder Latin America Fund, which invests in Latin American
issuers, Scudder Pacific Opportunities Fund, which invests in issuers located in
the Pacific Basin with the exception of Japan, Scudder Emerging Markets Income
Fund, which invests in debt securities issued in emerging markets and Scudder
Emerging Markets Growth Fund, which invests in equity securities issued in
emerging markets. The Adviser also manages the assets of seven closed-end
investment companies investing in foreign securities: The Argentina Fund, Inc.,
The Brazil Fund, Inc., The Korea Fund, Inc., Scudder Global High Income Fund,
Inc., Scudder New Asia Fund, Inc., Scudder New Europe Fund, Inc. and Scudder
Spain and Portugal Fund, Inc. As of December 31, 1997, the Adviser was
responsible for managing more than $200 billion in assets globally.
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Additional information about policies and investments
Investment restrictions
The Fund has certain investment restrictions which are designed to reduce the
Fund's investment risk. Fundamental investment restrictions may not be changed
without a vote of shareholders; non-fundamental investment restrictions may be
changed by a vote of the Corporation's Board of Directors. A complete listing of
investment restrictions is contained under "Investment Restrictions" in the
Fund's Statement of Additional Information.
As a matter of fundamental policy, the Fund may not borrow money, except as
permitted under Federal law. Further, as a matter of non-fundamental policy, the
Fund may not borrow money in an amount greater than 5% of total assets, except
for temporary or emergency purposes, although the Fund may engage up to 5% of
total assets in reverse repurchase agreements or dollar rolls.
As a matter of fundamental policy, the Fund may not make loans except through
the lending of portfolio securities, the purchase of debt securities, interests
in indebtedness or through repurchase agreements. The Fund has adopted a
non-fundamental policy restricting the lending of portfolio securities to no
more than 5% of total assets.
A complete description of these and other policies and restrictions is contained
under "Investment Restrictions" in the Fund's Statement of Additional
Information.
Common stocks
Under normal circumstances, the Fund invests primarily in common stocks. Common
stock is issued by companies to raise cash for business purposes and represents
a proportionate interest in the issuing companies. Therefore, the Fund
participates in the success or failure of any company in which it holds stock.
The market values of common stock can fluctuate significantly, reflecting the
business performance of the issuing company, investor perception and general
economic or financial market movements. Smaller companies are especially
sensitive to these factors and may even become valueless. Despite the risk of
price volatility, however, common stocks also offer the greatest potential for
gain on investment, compared to other classes of financial assets such as bonds
or cash equivalents.
Convertible securities
The Fund may invest in convertible securities which may offer higher income than
the common stocks into which they are convertible. The convertible securities in
which the Fund may invest include fixed-income or zero coupon debt securities,
which may be converted or exchanged at a stated or determinable exchange ratio
into underlying shares of common stock. Prior to their conversion, convertible
securities may have characteristics similar to both nonconvertible debt
securities and equity securities.
Repurchase agreements
As a means of earning income for periods as short as overnight, the Fund may
enter into repurchase agreements with selected banks and broker/dealers. Under a
repurchase agreement, the Fund acquires securities, subject to the seller's
agreement to repurchase at a specified time and price.
Illiquid securities
The Fund may invest in securities for which there is not an active trading
market, or which have resale restrictions. These types of securities generally
offer a higher return than more readily marketable securities, but carry the
risk that the Fund may not be able to dispose of them at an advantageous time or
price.
Investment company securities
Securities of other investment companies may be acquired by the Fund to the
extent permitted under the 1940 Act. Investment companies incur certain expenses
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such as management, custodian, and transfer agency fees, and, therefore, any
investment by the Fund in shares of other investment companies may be subject to
such duplicate expenses.
Strategic Transactions and derivatives
The Fund may, but is not required to, utilize various other investment
strategies as described below to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements), to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio or to enhance potential gain. These
strategies may be executed through the use of derivative contracts. Such
strategies are generally accepted as a part of modern portfolio management and
are regularly utilized by many mutual funds and other institutional investors.
Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur.
In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other financial instruments, purchase and
sell financial futures contracts and options thereon, enter into various
interest rate transactions such as swaps, caps, floors or collars, and enter
into various currency transactions such as currency forward contracts, currency
futures contracts, currency swaps or options on currencies or currency futures
(collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for the Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance
potential gain although no more than 5% of the Fund's assets will be committed
to Strategic Transactions entered into for non-hedging purposes. Any or all of
these investment techniques may be used at any time and in any combination, and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Fund to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Fund will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments.
Strategic Transactions involving financial futures and options thereon will be
purchased, sold or entered into only for bona fide hedging, risk management or
portfolio management purposes and not to create leveraged exposure in the Fund.
Please refer to "Risk factors--Strategic Transactions and derivatives" for more
information.
Risk factors
The Fund's risks are determined by the nature of the securities held and the
portfolio management strategies used by the Adviser. The following are
descriptions of certain risks related to the investments and techniques that the
Fund may use from time to time.
Convertible securities. While convertible securities generally offer lower
yields than nonconvertible debt securities of similar quality, their prices may
reflect changes in the value of the underlying common stock.
Repurchase agreements. If the seller under a repurchase agreement becomes
insolvent, the Fund's right to dispose of the securities may be restricted, or
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the value of the securities may decline before the Fund is able to dispose of
them. In the event of the commencement of bankruptcy or insolvency proceedings
with respect to sellers of the securities before repurchase under a repurchase
agreement, the Fund may encounter delay and incur costs including a decline in
the value of the securities, before being able to sell the securities.
Illiquid investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid or restricted investments. Disposing of
illiquid or restricted investments may involve time-consuming negotiation and
legal expenses, and it may be difficult or impossible for the Fund to sell them
promptly at an acceptable price.
Debt securities. The Fund will invest no more than 5% of its total assets in
debt securities rated BBB or Baa or below or in unrated securities. Securities
rated below BBB/Baa are commonly referred to as "junk bonds." The lower the
quality of such debt securities, the greater their risks render them like equity
securities. The Fund may invest in securities which are rated as low as C by
Moody's or D by S&P at the time of purchase. Such securities may be in default
with respect to payment of principal or interest.
Zero coupon securities. Zero coupon securities are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities which make current cash distributions of interest.
Strategic Transactions and derivatives. Strategic Transactions, including
derivative contracts, have risks associated with them including possible default
by the other party to the transaction, illiquidity and, to the extent the
Adviser's view as to certain market movements is incorrect, the risk that the
use of such Strategic Transactions could result in losses greater than if they
had not been used. Use of put and call options may result in losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or for
prices higher than (in the case of put options) or lower than (in the case of
call options) current market values, limit the amount of appreciation the Fund
can realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of currency transactions can result in the Fund
incurring losses as a result of a number of factors including the imposition of
exchange controls, suspension of settlements or the inability to deliver or
receive a specified currency. The use of options and futures transactions
entails certain other risks. In particular, the variable degree of correlation
between price movements of futures contracts and price movements in the related
portfolio position of the Fund creates the possibility that losses on the
hedging instrument may be greater than gains in the value of the Fund's
position. In addition, futures and options markets may not be liquid in all
circumstances and certain over-the-counter options may have no markets. As a
result, in certain markets, the Fund might not be able to close out a
transaction without incurring substantial losses, if at all. Although the use of
futures contracts and options transactions for hedging should tend to minimize
the risk of loss due to a decline in the value of the hedged position, at the
same time they tend to limit any potential gain which might result from an
increase in value of such position. Finally, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium. Losses resulting from the use of Strategic
Transactions would reduce net asset value, and possibly income, and such losses
can be greater than if the Strategic Transactions had not been utilized. The
Strategic Transactions that the Fund may use and some of their risks are
described more fully in the Fund's Statement of Additional Information.
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Distribution and performance information
Dividends and capital gains distributions
The Fund intends to distribute any dividends from net investment income and any
net realized capital gains after utilization of capital loss carryforwards, if
any, in November or December to prevent application of federal excise tax. An
additional distribution may be made if necessary. Any dividends or capital gains
distributions declared in October, November or December with a record date in
such a month and paid during the following January will be treated by
shareholders for federal income tax purposes as if received on December 31 of
the calendar year declared. According to preference, shareholders may receive
distributions in cash or have them reinvested in additional shares of the Fund.
If an investment is in the form of a retirement plan, all dividends and capital
gains distributions must be reinvested into the shareholder's account.
Generally, dividends from net investment income are taxable to shareholders as
ordinary income. Long-term capital gains distributions, if any, are taxable as
long-term capital gains, regardless of the length of time shareholders have
owned their shares. Short-term capital gains and any other taxable income
distributions are taxable as ordinary income. A portion of dividends from net
investment income may qualify for the dividends-received deduction for
corporations.
Shareholders may be able to claim a credit or deduction on their income tax
returns for their pro rata portions of qualified taxes paid by the Fund to
foreign countries.
The Fund sends detailed tax information about the amount and type of its
distributions to its shareholders by January 31 of the following year.
Performance information
From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance figures
are historical, show the performance of a hypothetical investment and are not
intended to indicate future performance. "Total return" is the change in value
of an investment in the Fund for a specified period. The "average annual total
return" of the Fund is the average annual compound rate of return of an
investment in the Fund assuming that the investment has been held for periods of
one year, five years and ten years. "Cumulative total return" represents the
cumulative change in value of an investment in the Fund for various periods. All
types of total return calculations assume that dividends and capital gains
distributions during the period were reinvested.
Fund organization
The Fund is a diversified series of Global/International Fund, Inc., an
open-end, management investment company registered under the Investment Company
Act of 1940 (the "1940 Act"). The Corporation, formerly known as Scudder Global
Fund, Inc., was organized as a Maryland corporation in May 1986.
The Fund's activities are supervised by the Corporation's Board of Directors.
Shareholders have one vote for each share held on matters on which they are
entitled to vote. The Fund is not required to and has no current intention of
holding annual shareholder meetings, although special meetings may be called for
purposes such as electing or removing Directors, changing fundamental investment
policies or approving an investment management contract. Shareholders will be
assisted in communicating with other shareholders in connection with removing a
Director as if Section 16(c) of the 1940 Act were applicable.
Investment adviser
The Fund retains the investment management firm of Scudder Kemper Investments,
Inc., a Delaware corporation formerly known as Scudder, Stevens & Clark, Inc.
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("Scudder"), to manage its daily investment and business affairs subject to the
policies established by the Board of Directors. The Directors have overall
responsibility for the management of the Fund under Maryland law.
Pursuant to the terms of an agreement, Scudder and Zurich Insurance Company
("Zurich"), an international insurance and financial services organization, have
formed a new global investment organization by combining Scudder with Zurich's
subsidiary, Zurich Kemper Investments, Inc. As a result of the transaction,
Zurich owns approximately 70% of the Adviser, with the balance owned by the
Adviser's officers and employees.
On September __, 1998, the businesses of Zurich (including Zurich's 70% interest
in Scudder Kemper) and the financial services businesses of B.A.T Industries
p.l.c. ("B.A.T") were combined to form a new global insurance and financial
services company known as Zurich Financial Services Group. By way of a dual
holding company structure, former Zurich shareholders initially owned
approximately 57% of Zurich Financial Services Group, with the balance initially
owned by former B.A.T shareholders.
Upon consummation of this transaction, the Fund's existing investment management
agreement with Scudder Kemper was deemed to have been assigned and, therefore,
terminated. The Board has approved a new investment management agreement with
Scudder Kemper, which is substantially identical to the current investment
management agreement, except for the date of execution and termination. This
agreement became effective upon the termination of the then current investment
management agreement and will be submitted for shareholder approval at special
meetings currently scheduled to conclude in December 1998.
For the fiscal year ended June 30, 1998, the Adviser received an investment
management fee of ____% of the Fund's average daily net assets.
The fee is graduated so that increases in the Fund's net assets may result in a
lower annual fee rate and decreases in the Fund's net assets may result in a
higher annual fee rate.
The fee is payable monthly, provided the Fund will make such interim payments as
may be requested by the Adviser not to exceed 75% of the amount of the fee then
accrued on the books of the Fund and unpaid. This fee is higher than that
charged many funds which invest primarily in U.S. securities, but not
necessarily higher than fees charged to funds with investment objectives similar
to those of the Fund.
All the Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment services.
Scudder Kemper Investments, Inc., is located at 345 Park Avenue, New York, New
York.
Like other mutual funds and financial and business organizations worldwide, the
Fund could be adversely affected if computer systems on which the Fund relies,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the Fund's business and
operations. The Adviser has commenced a review of the Year 2000 Issue as it may
affect the Fund and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the companies whose securities are
held by the Fund or on global markets or economies generally.
Transfer agent
Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
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subsidiary of the Adviser, is the transfer, shareholder servicing and
dividend-paying agent for the Fund.
Underwriter
Scudder Investor Services, Inc., a subsidiary of the Adviser, is the Fund's
principal underwriter. Scudder Investor Services, Inc. confirms, as agent, all
purchases of shares of the Fund. Scudder Investor Relations is a telephone
information service provided by Scudder Investor Services, Inc.
Fund accounting agent
Scudder Fund Accounting Corporation, a subsidiary of the Adviser, is responsible
for determining the daily net asset value per share and maintaining the general
accounting records of the Fund.
Custodian
Brown Brothers Harriman & Co. is the Fund's custodian.
Transaction information
Purchasing shares
Purchases are executed at the next calculated net asset value per share after
the Fund's transfer agent receives the purchase request in good order. Purchases
are made in full and fractional shares. (See "Share price.")
By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
the Fund may hold redemption proceeds until the purchase check has cleared. If
you purchase shares by federal funds wire, you may avoid this delay. Redemption
requests by telephone prior to the expiration of the seven-day period will not
be accepted.
By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent. Accounts cannot be opened
without a completed, signed application and a Scudder fund account number.
Contact your bank to arrange a wire transfer to:
The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552
Your wire instructions must also include:
- -- the name of the fund in which the money is to be invested,
- -- the account number of the fund, and
- -- the name(s) of the account holder(s).
The account will be established once the application and money order are
received in good order.
You may also make additional investments of $100 or more to your existing
account by wire.
By exchange. The Fund may be exchanged for shares of other funds in the Scudder
Family of Funds unless otherwise determined by the Board of Directors. Your new
account will have the same registration and address as your existing account.
The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call 1-800-225-5163 for more
information, including information about the transfer of special account
features.
You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.
By telephone order. Existing shareholders may purchase shares at a certain day's
price by calling 1-800-225-5163 before the close of regular trading on the New
York Stock Exchange (the "Exchange"), normally 4 p.m. eastern time, on that day.
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Orders must be for $10,000 or more and cannot be for an amount greater than four
times the value of your account at the time the order is placed. A confirmation
with complete purchase information is sent shortly after your order is received.
You must include with your payment the order number given at the time the order
is placed. If payment by check or wire is not received within three business
days, the order is subject to cancellation and the shareholder will be
responsible for any loss to the Fund resulting from this cancellation. Telephone
orders are not available for shares held in Scudder IRA accounts and most other
Scudder retirement plan accounts.
By "QuickBuy." If you elected "QuickBuy" for your account, you can call
toll-free to purchase shares. The money will be automatically transferred from
your predesignated bank checking account. Your bank must be a member of the
Automated Clearing House for you to use this service. If you did not elect
"QuickBuy," call 1-800-225-5163 for more information.
To purchase additional shares, call 1-800-225-5163. Purchases may not be for
more than $250,000. Proceeds in the amount of your purchase will be transferred
from your bank checking account in two or three business days following your
call. For requests received by the close of regular trading on the Exchange,
shares will be purchased at the net asset value per share calculated at the
close of trading on the day of your call. "QuickBuy" requests received after the
close of regular trading on the Exchange will begin their processing and be
purchased at the net asset value calculated the following business day.
If you purchase shares by "QuickBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven
business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any
losses or fees incurred in the transaction. "QuickBuy" transactions are not
available for most retirement plan accounts. However, "QuickBuy" transactions
are available for Scudder IRA accounts.
Redeeming shares
The Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.
By telephone. This is the quickest and easiest way to sell Fund shares. If you
provided your banking information on your application, you can call to request
that federal funds be sent to your authorized bank account. If you did not
include your banking information on your application, call 1-800-225-5163 for
more information.
Redemption proceeds will be wired to your bank unless otherwise requested. If
your bank cannot receive federal reserve wires, redemption proceeds will be
mailed to your bank. There will be a $5 charge for all wire redemptions.
You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.
If you open an account by wire, you cannot redeem shares by telephone until the
Fund's transfer agent has received your completed and signed application.
Telephone redemption is not available for shares held in Scudder IRA accounts
and most other Scudder retirement plan accounts.
In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.
By "QuickSell." If you elected "QuickSell" for your account, you can call
toll-free to redeem shares. The money will be automatically transferred to your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "QuickSell,"
call 1-800-225-5163 for more information.
To redeem shares, call 1-800-225-5163. Redemptions must be for at least $250.
Proceeds in the amount of your redemption will be transferred to your bank
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checking account in two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
redeemed at the net asset value per share calculated at the close of trading on
the day of your call. "QuickSell" requests received after the close of regular
trading on the Exchange will begin their processing and be redeemed at the net
asset value calculated the following business day.
"QuickSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.
Signature guarantees. For your protection and to prevent fraudulent redemptions,
on written redemption requests in excess of $100,000 we require an original
signature and an original signature guarantee for each person in whose name the
account is registered. (The Fund reserves the right, however, to require a
signature guarantee for all redemptions.) You can obtain a signature guarantee
from most banks, credit unions or savings associations, or from broker/dealers,
municipal securities broker/dealers, government securities broker/dealers,
national securities exchanges, registered securities associations or clearing
agencies deemed eligible by the Securities and Exchange Commission. Signature
guarantees by notaries public are not acceptable. Redemption requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
For more information, please call 1-800-225-5163.
Telephone transactions
Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $100,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. The Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If the Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Fund will not be liable for acting upon instructions
communicated by telephone that it reasonably believes to be genuine.
Share price
Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines net asset value per share as of
the close of regular trading on the Exchange, normally 4 p.m. eastern time, on
each day the Exchange is open for trading. Net asset value per share is
calculated by dividing the value of total Fund assets, less all liabilities, by
the total number of shares outstanding.
Processing time
All purchase and redemption requests must be received in good order by the
Fund's transfer agent. Those requests received by the close of regular trading
on the Exchange are executed at the net asset value per share calculated at the
close of regular trading that day.
Purchase and redemption requests received after the close of regular trading on
the Exchange will be executed the following business day.
If you wish to make a purchase of $500,000 or more, you should notify Scudder
Investor Relations by calling 1-800-225-5163.
The Fund will normally send your redemption proceeds within one business day
following the redemption request, but may take up to seven business days (or
longer in the case of shares recently purchased by check).
Purchase restrictions
Purchases and sales should be made for long-term investment purposes only. The
Fund and Scudder Investor Services, Inc. each reserves the right to reject
purchases of Fund shares (including exchanges) for any reason including when a
15
<PAGE>
pattern of frequent purchases and sales made in response to short-term
fluctuations in the Fund's share price appears evident.
Tax information
A redemption of shares, including an exchange into another Scudder fund, is a
sale of shares and may result in a gain or loss for income tax purposes.
Tax identification number
Be sure to complete the Tax Identification Number section of the Fund's
application when you open an account. Federal tax law requires the Fund to
withhold 31% of taxable dividends, capital gains distributions and redemption
and exchange proceeds from accounts (other than those of certain exempt payees)
without a correct certified Social Security or tax identification number and
certain other certified information or upon notification from the IRS or a
broker that withholding is required. The Fund reserves the right to reject new
account applications without a correct certified Social Security or tax
identification number. The Fund also reserves the right, following 30 days'
notice, to redeem all shares in accounts without a correct certified Social
Security or tax identification number. A shareholder may avoid involuntary
redemption by providing the Fund with a tax identification number during the
30-day notice period.
Minimum balances
Shareholders should maintain a share balance worth at least $2,500, which amount
may be changed by the Board of Directors. Scudder retirement plans and certain
other accounts have similar or lower minimum balance requirements. A shareholder
may open an account with at least $1,000, if an automatic investment plan of
$100/month is established.
Shareholders who maintain a non-fiduciary account balance of less than $2,500 in
the Fund, without establishing an automatic investment plan, will be assessed an
annual $10.00 per fund charge with the fee to be paid to the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder. Reductions in
value that result solely from market activity will not trigger an involuntary
redemption. Retirement accounts and certain other accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation. Please refer to
"Exchanges and Redemptions--Other information" in the Fund's Statement of
Additional Information for more information.
Third party transactions
If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
member may, at its discretion, charge a fee for that service.
Redemption-in-kind
The Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order by making
payment in whole or in part in readily marketable securities chosen by the Fund
and valued as they are for purposes of computing the Fund's net asset value (a
redemption-in-kind).
Shareholder benefits
Experienced professional management
Scudder Kemper Investments, Inc., one of the nation's most experienced
investment management firms, actively manages your fund investment. Professional
management is an important advantage for investors who do not have the time or
16
<PAGE>
expertise to invest directly in individual securities.
A team approach to investing
Scudder Global Fund is managed by a team of investment professionals, each of
whom plays an important role in the Fund's management process. Team members work
together to develop investment strategies and select securities for the Fund's
portfolio. They are supported by the Adviser's large staff of economists,
research analysts, traders and other investment specialists who work in the
Adviser's offices across the United States and abroad. We believe our team
approach benefits Fund investors by bringing together many disciplines and
leveraging our extensive resources.
Lead Portfolio Manager William E. Holzer has had day-to-day responsibility for
Scudder Global Fund's worldwide strategy and investment themes since its
inception in 1986. Mr. Holzer, who has over 20 years' experience in global
investing, joined the Adviser in 1980. Diego Espinosa, Portfolio Manager, joined
the team in 1997 and the Adviser in 1996. Mr. Espinosa is also responsible for
development of the Fund's strategy and management of the portfolio on a daily
basis. Mr. Espinosa has seven years of investment industry experience. Nicholas
Bratt, Portfolio Manager, directs the Adviser's overall global equity investment
strategies. Mr. Bratt joined the Adviser in 1976 and the team in 1993.
SAIL(TM)--Scudder Automated Information Line
For personalized account information including fund prices, yields and account
balances, to perform transactions in existing Scudder fund accounts, or to
obtain information on any Scudder fund, shareholders can call Scudder's
Automated Information Line (SAIL) at 1-800-343-2890, 24 hours a day. During
periods of extreme economic or market changes, or other conditions, it may be
difficult for you to effect telephone transactions in your account. In such an
event you should write to the Fund; please see "How to contact Scudder" for the
address.
Investment flexibility
Scudder offers toll-free telephone exchange between funds at current net asset
value. You can move your investments among money market, income, growth,
tax-free and growth and income funds with a simple toll-free call or, if you
prefer, by sending your instructions through the mail or by fax. (The exchange
privilege may not be available for certain Scudder funds or classes thereof. For
more information, please call 1-800-225-5163.) Telephone and fax redemptions and
exchanges are subject to termination and their terms are subject to change at
any time by the Fund or the transfer agent. In some cases, the transfer agent or
Scudder Investor Services, Inc. may impose additional conditions on telephone
transactions.
Personal Counsel(SM) -- A Managed Fund Portfolio Program
If you would like to receive direct guidance and management of your overall
mutual fund portfolio to help you pursue your investment goals, you may be
interested in Personal Counsel from Scudder. Personal Counsel, a program of
Scudder Investor Services, Inc., a registered investment adviser and a
subsidiary of Scudder Kemper Investments, Inc., combines the benefits of a
customized portfolio of no-load mutual funds with ongoing portfolio monitoring
and individualized service, for an annual fee of generally 1.25% or less of
assets. In addition, it draws upon the Adviser's more than 75-year heritage of
providing investment counsel to large corporate and private clients. If you have
$100,000 or more to invest initially and would like more information about
Personal Counsel, please call 1-800-700-0183.
Dividend reinvestment plan
You may have dividends and distributions automatically reinvested in additional
17
<PAGE>
Fund shares. Please call 1-800-225-5163 to request this feature.
Shareholder statements
You will receive a detailed statement summarizing account activity, including
dividend and capital gain reinvestment, purchases and redemptions. All of your
statements should be retained to help you keep track of account activity and the
cost of shares for tax purposes.
Shareholder reports
In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.
To reduce the volume of mail you receive, only one copy of most Fund reports,
such as the Fund's Annual Report, may be mailed to your household (same surname,
same address). Please call 1-800-225-5163 if you wish to receive additional
shareholder reports.
Newsletters
Four times a year, Scudder sends you Perspectives, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.
Scudder Investor Centers
As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Investor Centers in Boca Raton, Boston,
Chicago, New York and San Francisco.
T.D.D. service for the hearing impaired
Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D. (Telephone
Device for the Deaf) service. If you have access to a T.D.D., call
1-800-543-7916 for investment information or specific account questions and
transactions.
18
<PAGE>
<TABLE>
<CAPTION>
Purchases
<S> <C> <C> <C>
Opening Minimum initial investment: $2,500; IRAs $1,000
an account Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
Make checks o By Mail Send your completed and signed application and check
payable to "The
Scudder Funds." by regular mail or by express, registered,
to: or certified mail to:
The Scudder Funds The Scudder Funds
P.O. Box 2291 66 Brooks Drive
Boston, MA Braintree, MA 02184
02107-2291
o By Wire Please see Transaction information--Purchasing shares--
By wire for details, including the ABA wire transfer number.
Then call 1-800-225-5163 for instructions.
o In Person Visit one of our Investor Centers to complete your application
with the help of a Scudder representative. Investor Center
locations are listed under Shareholder benefits.
-----------------------------------------------------------------------------------------------------------------------
Purchasing Minimum additional investment: $100; IRAs $50
additional Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
shares See appropriate plan literature.
Make checks o By Mail Send a check with a Scudder investment slip, or with a letter of
payable to "The instruction including your account number and the complete
Scudder Funds." Fund name, to the appropriate address listed above.
o By Wire Please see Transaction information--Purchasing shares--
By wire for details, including the ABA wire transfer number.
o In Person Visit one of our Investor Centers to make an additional
investment in your Scudder fund account. Investor Center
locations are listed under Shareholder benefits.
o By Telephone Please see Transaction information--Purchasing shares--
By QuickBuy or By telephone order for more details.
o By Automatic You may arrange to make investments on a regular basis
Investment through automatic deductions from your bank checking
Plan account. Please call 1-800-225-5163 ($50 minimum) for more information and an
enrollment form.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Exchanges and redemptions
<S> <C> <C>
Exchanging Minimum investments: $2,500 to establish a new account;
shares $100 to exchange among existing accounts
o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).
o By Mail Print or type your instructions and include:
or Fax - the name of the Fund and the account number you are exchanging from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to exchange;
- the name of the Fund you are exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions
by regular mail to: or by express, registered, or by fax to:
or certified mail to:
The Scudder Funds The Scudder Funds 1-800-821-6234
P.O. Box 2291 66 Brooks Drive
Boston, MA 02107-2291 Braintree, MA 02184
-----------------------------------------------------------------------------------------------------------------------
Redeeming shares o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day). You may have
redemption proceeds sent to your predesignated bank account, or
redemption proceeds of up to $100,000 sent to your address of record.
o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:
- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
A signature guarantee is required for redemptions over $100,000.
See Transaction information--Redeeming shares.
o By Automatic You may arrange to receive automatic cash payments periodically.
Withdrawal Call 1-800-225-5163 for more information and an enrollment form.
Plan
</TABLE>
20
<PAGE>
Scudder tax-advantaged retirement plans
Scudder offers a variety of tax-advantaged retirement plans for individuals,
businesses and non-profit organizations. These flexible plans are designed for
use with the Scudder Family of Funds (except Scudder tax-free funds, which are
inappropriate for such plans). Scudder Funds offer a broad range of investment
objectives and can be used to seek almost any investment goal. Using Scudder's
retirement plans can help shareholders save on current taxes while building
their retirement savings.
o Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of up to $2,000 per person for anyone with earned income (up
to $2,000 per individual for married couples filing jointly, even if only
one spouse has earned income). Many people can deduct all or part of their
contributions from their taxable income, and all investment earnings accrue
on a tax-deferred basis. The Scudder No-Fee IRA charges you no annual
custodial fee.
o Scudder Roth No-Fee IRAs. Similar to the traditional IRA in many respects,
these retirement plans provide a unique opportunity for qualifying
individuals to accumulate investment earnings tax free. Unlike a
traditional IRA, with a Roth IRA, if you meet the distribution
requirements, you can withdraw your money without paying any taxes on the
earnings. No tax deduction is allowed for contributions to a Roth IRA. The
Scudder Roth IRA charges you no annual custodial fee.
o 401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee
communications and trustee services, as well as investment options.
o Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make annual,
tax-deductible contributions of up to $30,000 for each person covered by
the plans. Plans may be adopted individually or paired to maximize
contributions. These are sometimes known as Keogh plans.
o 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.
o SEP-IRAs. Easily administered retirement plans for small businesses and
self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation. The Scudder SEP-IRA charges
you no annual custodial fee.
o Scudder Horizon Plan. A no-load variable annuity that lets you build assets
by deferring taxes on your investment earnings. You can start with $2,500
or more.
Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA and most Profit
Sharing or Pension Plan accounts, call 1-800-225-5163.
The variable annuity contract is provided by Charter National Life Insurance
Company (in New York State, Intramerica Life Insurance Company [S 1802]). The
contract is offered by Scudder Insurance Agency, Inc. (in New York State, Nevada
and Montana, Scudder Insurance Agency of New York, Inc.). CNL, Inc. is the
Principal Underwriter. Scudder Horizon Plan is not available in all states.
Scudder Investor Relations is a service provided through Scudder Investor
Services, Inc., Distributor.
21
<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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company 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 or classes thereof may
not be available for purchase or exchange. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *A class of
shares of the Fund. **Not available in all states. ***Only the Scudder Shares of
the Fund are part of the Scudder Family of Funds. ++Only the International
Shares of the Fund are part of the Scudder Family of Funds. +++ +++A no-load
variable annuity contract provided by Charter National Life Insurance Company
and its affiliate, offered by Scudder's insurance agencies, 1-800-225-2470.
#These funds, advised by Scudder Kemper Investments, Inc., are traded on the New
York Stock Exchange and, in some cases, on various foreign stock exchanges.
22
<PAGE>
<TABLE>
<CAPTION>
How to contact Scudder
Account Service and Information:
<S> <C>
For existing account service and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges, and an
overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For personalized information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information:
For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services:
To receive information about this discount brokerage service and to obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
Personal Counsel(SM) -- A Managed Fund Portfolio Program:
To receive information about this mutual fund portfolio guidance and management program
Personal Counsel from Scudder -- 1-800-700-0183
Please address all correspondence to:
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Or Stop by a Scudder Investor Center:
Many shareholders enjoy the personal, one-on-one service of the Scudder
Investor Centers. Check for an Investor Center near you--they can be
found in the following cities:
Boca Raton Chicago San Francisco
Boston New York
Scudder Investor Relations and Scudder Investor Centers are services provided
through Scudder Investor Services, Inc., Distributor.
</TABLE>
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA
02061--Member NASD/SIPC.
23
<PAGE>
This prospectus sets forth concisely the information about Scudder International
Bond Fund, a non-diversified series of Global/International Fund, Inc., an
open-end management investment company, that a prospective investor should know
before investing. Please retain it for future reference.
If you require more detailed information, a Statement of Additional Information
dated November 1, 1998, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statement, which is
incorporated by reference into this prospectus, has been filed with the
Securities and Exchange Commission and is available along with other related
materials on the SEC's Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Contents--see page 4.
- ------------------------------
NOT FDIC- / MAY LOSE VALUE
INSURED / NO BANK GUARANTEE
- ------------------------------
SCUDDER (logo)
Scudder
International
Bond Fund
Prospectus
November 1, 1998
A pure no-load(TM) (no sales charges) mutual fund series which seeks income
primarily by investing in high-grade international bonds. As a secondary
objective, the Fund seeks protection and possible enhancement of principal value
by actively managing currency, bond market and maturity exposure and by security
selection.
<PAGE>
Expense information
TO BE UPDATED
How to compare a Scudder Family of Funds pure no-load(TM) fund
This information is designed to help you understand the various costs and
expenses of investing in Scudder International Bond Fund (the "Fund"). By
reviewing this table and those in other mutual funds' prospectuses, you can
compare the Fund's fees and expenses with those of other funds. With Scudder's
pure no-load(TM) funds, you pay no commissions to purchase or redeem shares, or
to exchange from one fund to another. As a result, all of your investment goes
to work for you.
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE
2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended June 30, 1998.
Investment management fee _____%
12b-1 fees NONE
Other expenses _____%
------
Total Fund operating expenses _____%
======
Example
Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its
net investment income to shareholders. (As noted above, the Fund has no
redemption fees of any kind.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$--- $--- $--- $---
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than
those shown.
* You may redeem by writing or calling the Fund. If you wish to receive your
redemption proceeds via wire, there is a $5 wire service fee. For additional
information, please refer to "Transaction information--Redeeming shares."
2
<PAGE>
Financial highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the audited
financial statements.
If you would like more detailed information concerning the Fund's performance,
a complete portfolio listing and audited financial statements are available in
the Fund's Annual Report dated June 30, 1998 which may be obtained without
charge by writing or calling Scudder Investor Services, Inc.
TABLE TO BE UPDATED
<TABLE>
<CAPTION>
For the Period
July 6, 1988
(commencement
Years Ended June 30, of operations)
to June 30,
1997 1996 1995 1994(a) 1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of ------------------------------------------------------------------------------------------------
period ..................... $10.98 $11.43 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27 $12.00
------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income ......... .58 .73 .98 .92 1.03 1.08 1.21 1.10 1.00
Net realized and unrealized
gain (loss) on investment
transactions (b) ........... (.46) (.45) (.54) (1.22) .52 2.15 .56 .80 (.73)
Total from investment ------------------------------------------------------------------------------------------------
operations ................. .12 .28 .44 (.30) 1.55 3.23 1.77 1.90 .27
------------------------------------------------------------------------------------------------
Less distributions:
From net investment income .... (.58) (.12) -- (.91) (1.04) (1.09) (1.21) (1.09) (1.00)
From net realized gains on
investment
transactions ............... -- -- -- -- (.62) (.81) (.29) -- --
In excess of net realized
gains on investment
transactions ............... -- -- -- (.39) -- -- -- -- --
Tax return of capital ......... -- (.61) (.98) -- -- -- -- -- --
------------------------------------------------------------------------------------------------
Total distributions ........... (.58) (.73) (.98) (1.30) (1.66) (1.90) (1.50) (1.09) (1.00)
------------------------------------------------------------------------------------------------
Net asset value, end of ------------------------------------------------------------------------------------------------
period ..................... $10.52 $10.98 $11.43 $11.97 $13.57 $13.68 $12.35 $12.08 $11.27
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (c) .......... 0.94 2.59 3.92 (2.83) 12.24 28.25 14.88 17.59 2.16**
Ratios and Supplemental Data
Net assets, end of period
($ millions) ............... 236 515 910 1,231 1,017 542 144 73 13
Ratio of operating expenses,
net to average daily net
assets (%) ................. 1.36 1.26 1.30 1.27 1.25 1.25 1.25 1.25 1.00*
Ratio of operating expenses
before expense reductions,
to average daily net
assets (%) ................. 1.36 1.26 1.30 1.29 1.37 1.57 1.75 2.51 5.59*
Ratio of net investment income
to average net assets (%) .. 5.28 6.50 8.52 6.86 7.69 8.31 9.48 9.57 8.58*
Portfolio turnover rate (%) ... 298.2 275.7 318.5 232.9 249.7 147.9 260.1 215.6 103.8*
</TABLE>
(a) Based on monthly average of shares outstanding during the period.
(b) Includes exchange gain (loss) of $.01, $.01 and ($.02) for the periods ended
June 30, 1991, 1990 and 1989, previously included in net investment income.
(c) Total returns for certain periods would have been lower had certain expenses
not been reduced.
* Annualized
** Not Annualized
3
<PAGE>
A message from the President
Scudder Kemper Investments, Inc., investment adviser to the Scudder Family of
Funds, is one of the largest and most experienced investment management
organizations worldwide, managing more than $200 billion in assets globally for
mutual fund investors, retirement and pension plans, institutional and corporate
clients, and private family and individual accounts. It is one of the ten
largest mutual fund companies in the U.S.
We offered America's first no-load mutual fund in 1928, and today the Scudder
Family of Funds includes over 50 no-load mutual fund portfolios or classes of
shares. We also manage the mutual funds in a special program for the American
Association of Retired Persons, as well as the fund options available through
Scudder Horizon Plan, a tax-advantaged variable annuity. We also advise The
Japan Fund, and numerous other open- and closed-end funds that invest in this
country and other countries around the world.
The Scudder Family of Funds is designed to make investing easy and less costly.
It includes money market, tax free, income and growth funds as well as IRAs,
401(k)s, Keoghs and other retirement plans.
Services available to shareholders include toll-free access to professional
representatives, easy exchange among the Scudder Family of Funds, shareholder
reports, informative newsletters and the walk-in convenience of Scudder Investor
Centers.
Funds or fund classes in the Scudder Family of Funds are offered without
commissions to purchase or redeem shares or to exchange from one fund to
another. There are no 12b-1 fees either, which many other funds now charge to
support their marketing efforts. All of your investment goes to work for you. We
look forward to welcoming you as a shareholder.
/s/Edmond D. Villani
Scudder International Bond Fund
Investment objectives
o income primarily by investing in high-grade international bonds
o protection and possible enhancement of principal value by actively managing
currency, bond market and maturity exposure and by security selection
Investment characteristics
o easy access to worldwide interest rate and currency cycles through a
portfolio of debt securities denominated in foreign currencies
o convenient vehicle for investors seeking income from non-U.S.
dollar-denominated bonds
Contents
Investment objectives and policies.................... 5
International bond investing.......................... 5
Why invest in the Fund?............................... 6
International investment experience................... 6
Special risk considerations........................... 6
Investments........................................... 7
Additional information about policies
and investments.................................... 8
Distribution and performance information.............. 12
Fund organization..................................... 13
Transaction information............................... 15
Shareholder benefits.................................. 18
Purchases............................................. 21
Exchanges and redemptions............................. 22
Investment products and services...................... 24
How to contact Scudder................................ 25
4
<PAGE>
Investment objectives and policies
Scudder International Bond Fund (the "Fund"), a non-diversified series of
Global/International Fund, Inc., is a pure no-load(TM), open-end management
investment company which offers investors a convenient way to invest in a
managed portfolio of debt securities denominated in foreign currencies. (In this
prospectus, such securities are called "international" securities.) The Fund's
objective is to provide income primarily by investing in a managed portfolio of
high-grade international bonds. As a secondary objective, the Fund seeks
protection and possible enhancement of principal value by actively managing
currency, bond market and maturity exposure and by security selection.
Except as otherwise indicated, the Fund's investment objectives and policies are
not fundamental and may be changed without a vote of shareholders. If there is a
change in investment objectives, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current financial
position and needs. There can be no assurance that the Fund's objectives will be
met.
International bond investing
Opening of foreign markets
In recent years, opportunities for investment in international bond markets have
become more significant. Foreign currency-denominated bond markets have grown
faster than the U.S. dollar-denominated bond market in terms of U.S. dollar
market value and now represent more than half of the value of the world's
developed bond markets. Participants in the markets have grown in number thereby
providing better liquidity. Finally, a number of international bond markets have
reduced barriers to entry to foreign investors by deregulation and by reducing
their withholding taxes.
Globalization of capital flows
Simultaneous with the opening of foreign markets, barriers to international
capital flows have been reduced or eliminated, freeing investment funds to seek
the highest expected returns. Thus, market conditions in one economy influence
market conditions elsewhere, through the channel of global capital flows. The
Fund provides a convenient vehicle to participate in international bond markets,
some of which may outperform U.S. dollar-denominated bond markets in U.S. dollar
terms during certain periods of time.
International participation
Although the Fund is non-diversified under the Investment Company Act of 1940
(the "1940 Act"), investing in the Fund can provide international diversity to
an investor's existing portfolio of U.S. dollar-denominated bonds ("U.S.
bonds"), thereby reducing volatility or risk over time. Historically, returns of
international bond markets have often diverged from returns generated by U.S.
bond markets. These divergences stem not only from fluctuating exchange rates,
but also from foreign interest rates not always moving in the same direction or
having the same magnitude as interest rates in the U.S.
Investment opportunity
International bonds may provide, at times, higher investment returns than U.S.
bonds. For example, international bonds may provide higher current income than
U.S. bonds and/or the local price of international bonds can appreciate more
than U.S. bonds. Fluctuations in foreign currencies relative to the U.S. dollar
can potentially benefit investment returns. Of course, in each case, at any time
the opposite may also be true.
5
<PAGE>
Why invest in the Fund?
The Fund provides an easy, efficient and relatively low cost way of investing in
international bonds. Direct investment in international securities is usually
impractical for most individual and smaller institutional investors. Investors
often find it difficult to purchase and sell international bonds, to obtain
current information about foreign entities, to hold securities in safekeeping
and to convert the value of their investment from foreign currencies into U.S.
dollars. The Fund manages these concerns for the investor. With a single
investment in the Fund, a shareholder can benefit from the income and potential
capital protection and appreciation associated with a professionally managed
portfolio of high-grade international bonds. The Fund's investment adviser,
Scudder Kemper Investments, Inc. (the "Adviser"), has had extensive experience
investing in international markets and dealing with trading, custody and
currency transactions around the world.
International investment
experience
The Adviser has been a leader in international investment management for over 40
years. Its investment company clients include Scudder International Fund, which
invests primarily in foreign securities and was initially incorporated in Canada
in 1953 as the first foreign investment company registered with the United
States Securities and Exchange Commission, Scudder International Growth and
Income Fund, which invests primarily in foreign securities, Scudder Global Fund,
Scudder Global Bond Fund and Scudder Global Discovery Fund, which invest
worldwide, Scudder Greater Europe Growth Fund, which invests primarily in the
equity securities of European companies, The Japan Fund, Inc., which invests
primarily in securities of Japanese companies, Scudder Latin America Fund, which
invests in Latin American issuers, Scudder Pacific Opportunities Fund, which
invests in issuers located in the Pacific Basin with the exception of Japan,
Scudder Emerging Markets Income Fund, which invests in debt securities issued in
emerging markets and Scudder Emerging Markets Growth Fund, which invests in
equity securities issued in emerging markets. The Adviser also manages the
assets of seven closed-end investment companies investing in foreign securities:
The Argentina Fund, Inc., The Brazil Fund, Inc., The Korea Fund, Inc., Scudder
Global High Income Fund, Inc., Scudder New Asia Fund, Inc., Scudder New Europe
Fund, Inc., and Scudder Spain and Portugal Fund, Inc. As of December 31, 1997,
the Adviser was responsible for managing more than $200 billion in assets
globally.
Special risk considerations
The Fund is intended for long-term investors who can accept the risks associated
with investing in international bonds. Total return from investment in the Fund
will consist of income after expenses, bond price gains (or losses) in terms of
the local currency and currency gains (or losses). For tax purposes, realized
gains and losses on currency are regarded as ordinary income and loss and could,
under certain circumstances, have an impact on distributions. The value of the
Fund's portfolio will fluctuate in response to various economic factors, the
most important of which are fluctuations in foreign currency exchange rates and
interest rates.
Since the Fund's investments are primarily denominated in foreign currencies,
exchange rates are likely to have a significant impact on total Fund
performance. For example, a fall in the U.S. dollar's value relative to the
Japanese yen will increase the U.S. dollar value of a Japanese bond held in the
portfolio, even though the price of that bond in yen terms remains unchanged.
6
<PAGE>
Conversely, if the U.S. dollar rises in value relative to the yen, the U.S.
dollar value of a Japanese bond will fall. Investors should be aware that
exchange rate movements can be significant and endure for long periods of time.
The Adviser attempts to control exchange rate and interest rate risks through
active portfolio management. The Adviser's techniques include management of
currency, bond market and maturity exposure and security selection which will
vary based on available yields and the Adviser's outlook for the interest rate
cycle in various countries and changes in foreign currency exchange rates. In
any of the markets in which the Fund invests, longer maturity bonds tend to
fluctuate more in price as interest rates change than shorter-term
instruments--again providing both opportunity and risk.
Because of the Fund's long-term investment objectives, investors should not rely
on an investment in the Fund for their short-term financial needs and should not
view the Fund as a vehicle for playing short-term swings in the international
bond and foreign exchange markets. Shares of the Fund alone should not be
regarded as a complete investment program. Also, investors should be aware that
investing in international bonds may involve a higher degree of risk than
investing in U.S. bonds.
Investments in foreign securities involve special considerations due to more
limited information, higher brokerage costs, different accounting standards,
thinner trading markets and the likely impact of foreign taxes on the yield from
debt securities. They may also entail certain risks, such as the possibility of
one or more of the following: imposition of dividend or interest withholding or
confiscatory taxes, currency blockages or transfer restrictions, expropriation,
nationalization or other adverse political or economic developments, less
government supervision and regulation of securities exchanges, brokers and
listed companies, and the difficulty of enforcing obligations in other
countries. Purchases of foreign securities are usually made in foreign
currencies and, as a result, the Fund may incur currency conversion costs and
may be affected favorably or unfavorably by changes in the value of foreign
currencies against the U.S. dollar. Further, it may be more difficult for the
Fund's agents to keep currently informed about corporate actions which may
affect the prices of portfolio securities. Communications between the U.S. and
foreign countries may be less reliable than within the U.S., thus increasing the
risk of delayed settlements of portfolio transactions or loss of certificates
for portfolio securities. The Fund's ability and decisions to purchase and sell
portfolio securities may be affected by laws or regulations relating to the
convertibility and repatriation of assets.
Investments
To achieve its objectives, the Fund will primarily invest in a managed portfolio
of high-grade international bonds that are denominated in foreign currencies,
including bonds denominated in the European Currency Unit (ECU). Portfolio
investments will be selected on the basis of, among other things, yields, credit
quality, and the fundamental outlooks for currency and interest rate trends in
different parts of the globe, taking into account the ability to hedge a degree
of currency or local bond price risk. The Fund will normally invest at least 65%
of its total assets in bonds denominated in foreign currencies.
The high-grade debt securities in which the Fund primarily invests will be rated
in one of the three highest rating categories of one of the major U.S. rating
services or, if not rated, considered to be of equivalent quality in local
currency terms by the Adviser. These securities are rated AAA, AA or A by
Standard & Poor's Corporation ("S&P") or Aaa, Aa, or A by Moody's Investors
Service, Inc. ("Moody's").
7
<PAGE>
The Fund may also purchase debt securities rated BBB, BB or B by S&P or Baa, Ba
or B by Moody's and unrated securities considered to be of equivalent quality by
the Adviser. The Fund will do so to avail itself of the higher yields available
with these securities, but only to the extent that up to 15% of the Fund's total
assets may be invested in securities rated below BBB by S&P or below Baa by
Moody's. Securities rated below investment-grade (commonly referred to as "high
yield" or "junk" bonds) (i.e., below BBB by S&P or below Baa by Moody's) entail
greater risks than investment-grade debt securities (see "Risk factors").
FOLLOWING PARAGRAPH TO BE UPDATED
During the fiscal year ended June 30, 1998, based upon the dollar-weighted
average ratings of the Fund's portfolio holdings at the end of each month during
that period, the Fund had the following percentages of its net assets invested
in debt securities rated (or, if unrated, considered by the Adviser to be
equivalent to rated securities) in the categories indicated: ____% Aaa, ____%
Aa, ____% A, ____% Baa and ____% Ba.
The Fund's investments may include:
o Debt securities issued or guaranteed by a foreign national government, its
agencies, instrumentalities or political subdivisions
o Debt securities issued or guaranteed by supranational organizations (e.g.,
European Investment Bank, Inter-American Development Bank or the World
Bank)
o Corporate debt securities
o Bank or bank holding company debt securities
o Other debt securities, including those convertible into common stock.
The Fund may invest in zero coupon securities which pay no cash income and are
issued at substantial discounts from their value at maturity. When held to
maturity, their entire income, which consists of accretion of discount, comes
from the difference between the issue price and their value at maturity.
The Fund may purchase securities which are not publicly offered. If such
securities are purchased, they may be subject to restrictions applicable to
restricted securities.
The Fund intends to select its investments from a number of country and market
sectors. It may substantially invest in the issuers of one or more countries and
intends to have investments in securities of issuers from a minimum of three
different countries; however, the Fund may invest substantially all of its
assets in securities of issuers located in one country. Under normal
circumstances, the Fund will invest no more than 35% of the value of its total
assets in U.S. debt securities.
In addition, for temporary defensive purposes, the Fund may vary from its
investment policies during periods when the Adviser determines that it is
advisable to do so because of conditions in the securities markets or other
economic or political conditions. During such periods, the Fund may hold without
limit U.S. debt securities, cash and cash equivalents. It is impossible to
accurately predict how long such alternative strategies may be utilized.
Also, the Fund may invest in indexed securities, may enter into repurchase
agreements and dollar roll transactions, may purchase securities on a
when-issued or forward delivery basis and may engage in strategic transactions.
Additional information about
policies and investments
Investment restrictions
The Fund has certain investment restrictions which are designed to reduce the
Fund's investment risk. Fundamental investment restrictions may not be changed
without a vote of shareholders; non-fundamental investment restrictions may be
changed by a vote of the Corporation's Board of Directors. A complete listing of
investment restrictions is contained under "Investment Restrictions" in the
Fund's Statement of Additional Information.
As a matter of fundamental policy, the Fund may not borrow money, except as
8
<PAGE>
permitted under Federal law. Further, as a matter of non-fundamental policy, the
Fund may not borrow money in an amount greater than 5% of total assets, except
for temporary or emergency purposes, and by engaging in reverse repurchase
agreements and dollar rolls.
As a matter of fundamental policy, the Fund may not make loans except through
the lending of portfolio securities, the purchase of debt securities, interests
in indebtedness or through repurchase agreements. The Fund has adopted a
non-fundamental policy restricting the lending of portfolio securities to no
more than 5% of total assets.
Short-term investments
To protect against adverse movements of interest rates and for liquidity, the
Fund may also purchase short-term obligations denominated in U.S. and foreign
currencies such as, but not limited to, bank deposits, bankers' acceptances,
certificates of deposit, commercial paper, short-term government, government
agency, supranational agency and corporate obligations, and repurchase
agreements.
Indexed securities
The Fund may invest in indexed securities, the value of which is linked to
currencies, interest rates, commodities, indices or other financial indicators
("reference instruments"). The interest rate or (unlike most fixed-income
securities) the principal amount payable at maturity of an indexed security may
be increased or decreased, depending on changes in the value of the reference
instrument. Indexed securities may be positively or negatively indexed, so that
appreciation of the reference instrument may produce an increase or a decrease
in the interest rate or value at maturity of the security. In addition, the
change in the interest rate or value at maturity of the security may be some
multiple of the change in the value of the reference instrument. Thus, in
addition to the credit risk of the security's issuer, the Fund will bear the
market risk of the reference instrument.
Convertible securities
The Fund may invest in convertible securities which may offer higher income than
the common stocks into which they are convertible. The convertible securities in
which the Fund may invest include fixed-income or zero coupon debt securities,
which may be converted or exchanged at a stated or determinable exchange ratio
into underlying shares of common stock. Prior to their conversion, convertible
securities may have characteristics similar to both nonconvertible debt
securities and equity securities.
Repurchase agreements
As a means of earning income for periods as short as overnight, the Fund may
enter into repurchase agreements with selected banks and broker/dealers. Under a
repurchase agreement, the Fund acquires securities, subject to the seller's
agreement to repurchase them at a specified time and price. The Fund may also
enter into repurchase commitments for investment purposes for periods of 30 days
or more. Such commitments involve investment risk similar to that of debt
securities in which the Fund invests.
Illiquid securities
The Fund may invest in securities for which there is not an active trading
market, or which have resale restrictions. These types of securities generally
offer a higher return than more readily marketable securities, but carry the
risk that the Fund may not be able to dispose of them at an advantageous time or
price.
Dollar roll transactions
The Fund may enter into dollar roll transactions with selected banks and
broker/dealers. Dollar roll transactions are treated as reverse repurchase
agreements for purposes of the Fund's borrowing restrictions and consist of the
sale by the Fund of mortgage-backed securities together with a commitment to
purchase similar, but not identical, securities at a future date, at the same
price. In addition, the Fund receives compensation as consideration for entering
9
<PAGE>
into the commitment to repurchase. The compensation is paid in the form of a
fee. Dollar rolls may be renewed after cash settlement and initially may involve
only a firm commitment agreement by the Fund to buy securities.
When-issued securities
The Fund may purchase securities on a when-issued or forward delivery basis, for
payment and delivery at a later date. The price and yield are generally fixed on
the date of commitment to purchase. During the period between purchase and
settlement, no interest accrues to the Fund. At the time of settlement, the
market value of the security may be more or less than the purchase price.
Strategic Transactions and derivatives
The Fund may, but is not required to, utilize various other investment
strategies as described below to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements), to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio or to enhance potential gain. These
strategies may be executed through the use of derivative contracts. Such
strategies are generally accepted as a part of modern portfolio management and
are regularly utilized by many mutual funds and other institutional investors.
Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur.
In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other financial instruments, purchase and
sell financial futures contracts and options thereon, enter into various
interest rate transactions such as swaps, caps, floors or collars, and enter
into various currency transactions such as currency forward contracts, currency
futures contracts, currency swaps or options on currencies or currency futures
(collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for the Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance
potential gain although no more than 5% of the Fund's assets will be committed
to Strategic Transactions entered into for non-hedging purposes. Any or all of
these investment techniques may be used at any time and in any combination, and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Fund to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Fund will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments.
Strategic Transactions involving financial futures and options thereon will be
purchased, sold or entered into only for bona fide hedging, risk management or
portfolio management purposes and not to create leveraged exposure in the Fund.
Please refer to "Risk factors--Strategic Transactions and derivatives" for more
information.
Risk factors
The Fund's risks are determined by the nature of the securities held and the
10
<PAGE>
portfolio management strategies used by the Adviser. The following are
descriptions of certain risks related to the investments and techniques that the
Fund may use from time to time.
Bonds. The Fund will invest no more than 15% of its total assets in debt
securities rated below BBB or Baa, but no lower than B by S&P or Moody's.
Securities rated below investment- grade are commonly referred to as "junk
bonds" and involve greater price volatility and higher degrees of speculation
with respect to the payment of principal and interest than higher quality
fixed-income securities. The market prices of such lower-rated debt securities
may decline significantly in periods of general economic difficulty. In
addition, the trading market for these securities is generally less liquid than
for higher rated securities and the Fund may have difficulty disposing of these
securities at the time it wishes to do so. The lack of a liquid secondary market
for certain securities may also make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing its portfolio and calculating
its net asset value.
Non-diversified investment company. As a non-diversified investment company, the
Fund may invest a greater proportion of its assets in the securities of a
smaller number of issuers and therefore may be subject to greater market and
credit risk than a more broadly diversified portfolio.
Convertible securities. While convertible securities generally offer lower
yields than nonconvertible debt securities of similar quality, their prices may
reflect changes in the value of the underlying common stock.
Repurchase agreements. If the seller under a repurchase agreement becomes
insolvent, the Fund's right to dispose of the securities may be restricted, or
the value of the securities may decline before the Fund is able to dispose of
them. In the event of the commencement of bankruptcy or insolvency proceedings
with respect to sellers of the securities before repurchase under a repurchase
agreement, the Fund may encounter delay and incur costs including a decline in
the value of the securities, before being able to sell the securities.
Dollar roll transactions. If the broker/dealer to whom the Fund sells the
securities underlying a dollar roll transaction becomes insolvent, the Fund's
right to purchase or repurchase the securities may be restricted; the value of
the securities may change adversely over the term of the dollar roll; the
securities that the Fund is required to repurchase may be worth less than the
securities that the Fund originally held, and the return earned by the Fund with
the proceeds of a dollar roll may not exceed transaction costs.
When-issued securities. Delivery of and payment for these securities may take
place as long as a month or more after the date of the purchase commitment. The
value of these securities is subject to market fluctuation during this period
and no income accrues to the Fund until settlement takes place. The Fund
segregates with the Custodian liquid securities in an amount at least equal to
these commitments. When entering into a when-issued or delayed delivery
transaction, the Fund will rely on the other party to consummate the
transaction; if the other party fails to do so, the Fund may be disadvantaged.
Zero coupon securities. Zero coupon securities are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities which make current cash distributions of interest.
Illiquid securities. The absence of a trading market can make it difficult to
ascertain a market value for these investments. Disposing of illiquid
investments may involve time-consuming negotiation and legal expenses, and it
may be difficult or impossible for the Fund to sell them promptly at an
acceptable price.
Strategic Transactions and derivatives. Strategic Transactions, including
derivative contracts, have risks associated with them including possible default
11
<PAGE>
by the other party to the transaction, illiquidity and, to the extent the
Adviser's view as to certain market movements is incorrect, the risk that the
use of such Strategic Transactions could result in losses greater than if they
had not been used. Use of put and call options may result in losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or for
prices higher than (in the case of put options) or lower than (in the case of
call options) current market values, limit the amount of appreciation the Fund
can realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of currency transactions can result in the Fund
incurring losses as a result of a number of factors including the imposition of
exchange controls, suspension of settlements or the inability to deliver or
receive a specified currency. The use of options and futures transactions
entails certain other risks. In particular, the variable degree of correlation
between price movements of futures contracts and price movements in the related
portfolio position of the Fund creates the possibility that losses on the
hedging instrument may be greater than gains in the value of the Fund's
position. In addition, futures and options markets may not be liquid in all
circumstances and certain over-the-counter options may have no markets. As a
result, in certain markets, the Fund might not be able to close out a
transaction without incurring substantial losses, if at all. Although the use of
futures contracts and options transactions for hedging should tend to minimize
the risk of loss due to a decline in the value of the hedged position, at the
same time they tend to limit any potential gain which might result from an
increase in value of such position. Finally, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium. Losses resulting from the use of Strategic
Transactions would reduce net asset value, and possibly income, and such losses
can be greater than if the Strategic Transactions had not been utilized. The
Strategic Transactions that the Fund may use and some of their risks are
described more fully in the Fund's Statement of Additional Information.
Distribution and performance information
Dividends and capital gains distributions
The Fund's dividends from net investment income are declared daily and
distributed monthly. The Fund intends to distribute net realized capital gains
after utilization of capital loss carryforwards, if any, in November or
December, to prevent application of federal excise tax. An additional
distribution may be made if necessary.
Any dividends or capital gains distributions declared in October, November or
December with a record date in such a month and paid during the following
January will be treated by shareholders for federal income tax purposes as if
received on December 31 of the calendar year declared. According to preference,
shareholders may receive distributions in cash or have them reinvested in
additional shares of the Fund. If an investment is in the form of a retirement
plan, all dividends and capital gains distributions must be reinvested into the
shareholder's account.
Generally, dividends from net investment income are taxable to shareholders as
ordinary income. Certain realized gains or losses on the sale or retirement of
international bonds held by the Fund, to the extent attributable to fluctuations
in currency exchange rates, as well as certain other gains or losses
attributable to exchange rate fluctuations, must be treated as ordinary income
or loss. Such income or loss may increase or decrease (or possibly eliminate)
the Fund's income available for distribution to shareholders. If, under the
rules governing the tax treatment of foreign currency gains and losses, the
Fund's income available for distribution is decreased or eliminated, all or a
12
<PAGE>
portion of the dividends declared by the Fund may be treated for federal income
tax purposes as a return of capital or, in some circumstances, as capital gain.
Generally, a shareholder's tax basis in their Fund shares will be reduced to the
extent that an amount distributed to the shareholder is treated as a return of
capital. The Fund may reduce its daily dividend to lessen the effect of these
rules. If the Fund's income is increased under the foreign currency taxation
rules, the Fund intends to declare additional distributions of such income in
December. The Fund may make an additional distribution, if necessary.
Long-term capital gains distributions, if any, are taxable as long-term capital
gains regardless of the length of time shareholders have owned their shares.
Short-term capital gains and any other taxable income distributions are taxable
as ordinary income.
The Fund sends detailed tax information about the amount and type of its
distributions to its shareholders by January 31 of the following year.
Performance information
From time to time quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance figures
are historical, show the performance of a hypothetical investment and are not
intended to indicate future performance. The "SEC yield" of the Fund is an
annualized expression of the net income generated by the Fund over a specified
30-day (one month) period, as a percentage of the Fund's share price on the last
day of that period. This yield is calculated according to methods required by
the Securities and Exchange Commission (the "SEC"), and therefore may not equate
to the level of income paid to shareholders. Yield is expressed as an annualized
percentage. "Total return" is the change in value of an investment in the Fund
for a specified period. The "average annual total return" of the Fund is the
average annual compound rate of return of an investment in the Fund assuming
that the investment has been held for one year, five years and the life of the
Fund. "Cumulative total return" represents the cumulative change in value of an
investment in the Fund for various periods. All types of total return
calculations assume that all dividends and capital gains distributions during
the period were reinvested.
Fund organization
The Fund is a non-diversified series of Global/International Fund, Inc. (the
"Corporation"), formerly known as Scudder Global Fund, Inc., an open-end,
management investment company registered under the 1940 Act. The Corporation was
organized as a Maryland corporation in May 1986.
The Fund's activities are supervised by the Corporation's Board of Directors.
Shareholders have one vote for each share held on matters on which they are
entitled to vote. The Fund is not required to and has no current intention of
holding annual shareholder meetings, although special meetings may be called for
purposes such as electing or removing Directors, changing fundamental investment
policies or approving an investment management contract. Shareholders will be
assisted in communicating with other shareholders in connection with removing a
Director as if Section 16(c) of the 1940 Act were applicable.
Investment adviser
The Fund retains the investment management firm of Scudder Kemper Investments,
Inc., a Delaware corporation formerly known as Scudder, Stevens & Clark, Inc.
("Scudder"), to manage its daily investment and business affairs subject to the
policies established by the Board of Directors. The Directors have overall
responsibility for the management of the Fund under Maryland law.
Pursuant to the terms of an agreement, Scudder and Zurich Insurance Company
("Zurich"), an international insurance and financial services organization, have
13
<PAGE>
formed a new global investment organization by combining Scudder with Zurich's
subsidiary, Zurich Kemper Investments, Inc. As a result of the transaction,
Zurich owns approximately 70% of the Adviser, with the balance owned by the
Adviser's officers and employees.
On September __, 1998, the businesses of Zurich (including Zurich's 70% interest
in Scudder Kemper) and the financial services businesses of B.A.T Industries
p.l.c. ("B.A.T") were combined to form a new global insurance and financial
services company known as Zurich Financial Services Group. By way of a dual
holding company structure, former Zurich shareholders initially owned
approximately 57% of Zurich Financial Services Group, with the balance initially
owned by former B.A.T shareholders.
Upon consummation of this transaction, the Fund's existing investment management
agreement with Scudder Kemper was deemed to have been assigned and, therefore,
terminated. The Board has approved a new investment management agreement with
Scudder Kemper, which is substantially identical to the current investment
management agreement, except for the date of execution and termination. This
agreement became effective upon the termination of the then current investment
management agreement and will be submitted for shareholder approval at special
meetings currently scheduled to conclude in December 1998.
For the fiscal year ended June 30, 1998, the Adviser received an investment
management fee of ____% of the Fund's average daily net assets. The fee is
graduated so that increases in the Fund's net assets may result in a lower fee
rate and decreases in the Fund's net assets may result in a higher fee rate.
The fee is payable monthly, provided that the Fund will make such interim
payments as may be requested by the Adviser not to exceed 75% of the amount of
the fee then accrued on the books of the Fund and unpaid.
This fee is higher than that charged many funds which invest primarily in U.S.
securities, though it is not necessarily higher than fees charged to funds with
similar investment objectives. Management of the Fund involves market, credit
and currency relationships in a number of economies throughout the world.
All the Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment services.
Because the Fund's annual portfolio turnover rate may continue to be over 100%,
the Fund may have higher transaction costs and shareholders may incur taxes on
any realized capital gains.
Scudder Kemper Investments, Inc., is located at 345 Park Avenue, New York, New
York.
Like other mutual funds and financial and business organizations worldwide, the
Fund could be adversely affected if computer systems on which the Fund relies,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the Fund's business and
operations. The Adviser has commenced a review of the Year 2000 Issue as it may
affect the Fund and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the companies whose securities are
held by the Fund or on global markets or economies generally.
Transfer agent
Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
subsidiary of the Adviser, is the transfer, shareholder servicing and
dividend-paying agent for the Fund.
14
<PAGE>
Underwriter
Scudder Investor Services, Inc., a subsidiary of the Adviser, is the Fund's
principal underwriter. Scudder Investor Services, Inc. confirms, as agent, all
purchases of shares of the Fund. Scudder Investor Relations is a telephone
information service provided by Scudder Investor Services, Inc.
Fund accounting agent
Scudder Fund Accounting Corporation, a subsidiary of the Adviser, is responsible
for determining the daily net asset value per share and maintaining the general
accounting records of the Fund.
Custodian
Brown Brothers Harriman & Co. is the Fund's custodian.
Transaction information
Purchasing shares
Purchases are executed at the next calculated net asset value per share after
the Fund's transfer agent receives the purchase request in good order. Purchases
are made in full and fractional shares. (See "Share price.")
By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
the Fund may hold redemption proceeds until the purchase check has cleared. If
you purchase shares by federal funds wire, you may avoid this delay.
Redemption requests by telephone prior to the expiration of the seven-day period
will not be accepted.
By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent. Accounts cannot be opened
without a completed, signed application and a Scudder fund account number.
Contact your bank to arrange a wire transfer to:
The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552
Your wire instructions must also include:
- -- the name of the fund in which the money is to be invested,
- -- the accountnumber of the fund, and
- -- the name(s) of the account holder(s).
The account will be established once the application and money order are
received in good order.
You may also make additional investments of $100 or more to your existing
account by wire.
By exchange. The Fund may be exchanged for shares of other funds in the Scudder
Family of Funds unless otherwise determined by the Board of Directors. Your new
account will have the same registration and address as your existing account.
The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call 1-800-225-5163 for more
information, including information about the transfer of special account
features.
You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.
By "QuickBuy." If you elected "QuickBuy" for your account, you can call
toll-free to purchase shares. The money will be automatically transferred from
your predesignated bank checking account. Your bank must be a member of the
Automated Clearing House for you to use this service. If you did not elect
"QuickBuy," call 1-800-225-5163 for more information.
15
<PAGE>
To purchase additional shares, call 1-800-225-5163. Purchases may not be for
more than $250,000. Proceeds in the amount of your purchase will be transferred
from your bank checking account in two or three business days following your
call. For requests received by the close of regular trading on the Exchange,
shares will be purchased at the net asset value per share calculated at the
close of trading on the day of your call. "QuickBuy" requests received after the
close of regular trading on the Exchange will begin their processing and be
purchased at the net asset value calculated the following business day.
If you purchase shares by "QuickBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven
business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any
losses or fees incurred in the transaction. "QuickBuy" transactions are not
available for most retirement plan accounts. However, "QuickBuy" transactions
are available for Scudder IRA accounts.
By telephone order. Certain financial institutions may call Scudder before the
close of regular trading on the Exchange, normally 4 p.m. eastern time, and
purchase shares at that day's price. Such purchased shares will begin to earn
dividends on the day on which the payment is received by the Fund. If payment by
check or wire is not received from the financial institution within three
business days, the order is subject to cancellation and the financial
institution will be responsible for any loss to the Fund resulting from this
cancellation. Please call 1-800-854-8525 for more information.
Redeeming shares
The Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.
By telephone. This is the quickest and easiest way to sell Fund shares. If you
provided your banking information on your application, you can call to request
that federal funds be sent to your authorized bank account. If you did not
include your banking information on your application, call 1-800-225-5163 for
more information.
Redemption proceeds will be wired to your bank unless otherwise requested. If
your bank cannot receive federal reserve wires, redemption proceeds will be
mailed to your bank. There will be a $5 charge for all wire redemptions.
You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.
If you open an account by wire, you cannot redeem shares by telephone until the
Fund's transfer agent has received your completed and signed application.
Telephone redemption is not available for shares held in Scudder IRA accounts
and most other Scudder retirement plan accounts.
In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.
By "QuickSell." If you elected "QuickSell" for your account, you can call
toll-free to redeem shares. The money will be automatically transferred to your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "QuickSell,"
call 1-800-225-5163 for more information.
To redeem shares, call 1-800-225-5163. Redemptions must be for at least $250.
Proceeds in the amount of your redemption will be transferred to your bank
checking account in two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
redeemed at the net asset value per share calculated at the close of trading on
the day of your call. "QuickSell" requests received after the close of regular
trading on the Exchange will begin their processing and be redeemed at the net
16
<PAGE>
asset value calculated the following business day.
"QuickSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.
Signature guarantees. For your protection and to prevent fraudulent redemptions,
on written redemption requests in excess of $100,000 we require an original
signature and an original signature guarantee for each person in whose name the
account is registered. (The Fund reserves the right, however, to require a
signature guarantee for all redemptions.) You can obtain a signature guarantee
from most banks, credit unions or savings associations, or from broker/dealers,
municipal securities broker/dealers, government securities broker/dealers,
national securities exchanges, registered securities associations or clearing
agencies deemed eligible by the Securities and Exchange Commission. Signature
guarantees by notaries public are not acceptable. Redemption requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
For more information, please call 1-800-225-5163.
Telephone transactions
Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $100,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. The Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If the Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Fund will not be liable for acting upon instructions
communicated by telephone that it reasonably believes to be genuine.
Share price
Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines net asset value per share as of
the close of regular trading on the Exchange, normally 4 p.m. eastern time, on
each day the Exchange is open for trading. Net asset value per share is
calculated by dividing the value of total Fund assets, less all liabilities, by
the total number of shares outstanding.
Processing time
All purchase and redemption requests must be received in good order by the
Fund's transfer agent. Those requests received by the close of regular trading
on the Exchange are executed at the net asset value per share calculated at the
close of regular trading that day.
Purchase and redemption requests received after the close of regular trading on
the Exchange will be executed the following business day.
If you wish to make a purchase of $500,000 or more, you should notify Scudder
Investor Relations by calling 1-800-225-5163.
The Fund will normally send your redemption proceeds within one business day
following the redemption request, but may take up to seven business days (or
longer in the case of shares recently purchased by check).
Purchase restrictions
Purchases and sales should be made for long-term investment purposes only. The
Fund and Scudder Investor Services, Inc. each reserves the right to reject
purchases of Fund shares (including exchanges) for any reason including when a
pattern of frequent purchases and sales made in response to short-term
fluctuations in the Fund's share price appears evident.
Tax information
A redemption of shares, including an exchange into another Scudder fund, is a
17
<PAGE>
sale of shares and may result in a gain or loss for income tax purposes.
Tax identification number
Be sure to complete the Tax Identification Number section of the Fund's
application when you open an account. Federal tax law requires the Fund to
withhold 31% of taxable dividends, capital gains distributions and redemption
and exchange proceeds from accounts (other than those of certain exempt payees)
without a correct certified Social Security or tax identification number and
certain other certified information or upon notification from the IRS or a
broker that withholding is required. The Fund reserves the right to reject new
account applications without a correct certified Social Security or tax
identification number. The Fund also reserves the right, following 30 days'
notice, to redeem all shares in accounts without a correct certified Social
Security or tax identification number. A shareholder may avoid involuntary
redemption by providing the Fund with a tax identification number during the
30-day notice period.
Minimum balances
Shareholders should maintain a share balance worth at least $2,500, which amount
may be changed by the Board of Directors. Scudder retirement plans and certain
other accounts have similar or lower minimum balance requirements. A shareholder
may open an account with at least $1,000, if an automatic investment plan of
$100/month is established.
Shareholders who maintain a non-fiduciary account balance of less than $2,500 in
the Fund, without establishing an automatic investment plan, will be assessed an
annual $10.00 per fund charge with the fee to be paid to the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder. Reductions in
value that result solely from market activity will not trigger an involuntary
redemption. Retirement accounts and certain other accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation. Please refer to
"Exchanges and Redemptions--Other information" in the Fund's Statement of
Additional Information for more information.
Third party transactions
If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
member may, at its discretion, charge a fee for that service.
Redemption-in-kind
The Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order by making
payment in whole or in part in readily marketable securities chosen by the Fund
and valued as they are for purposes of computing the Fund's net asset value (a
redemption-in-kind).
Shareholder benefits
Experienced professional management
Scudder Kemper Investments, Inc., one of the nation's most experienced
investment management firms, actively manages your fund investment. Professional
management is an important advantage for investors who do not have the time or
expertise to invest directly in individual securities.
A team approach to investing
Scudder International Bond Fund is managed by a team of professionals, who each
play an important role in the Fund's management process. Team members work
together to develop investment strategies and select securities for the Fund's
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<PAGE>
portfolio. They are supported by the Adviser's large staff of economists,
research analysts, traders, and other investment specialists who work in the
Adviser's offices across the United States and abroad. We believe our team
approach benefits Fund investors by bringing together many disciplines and
leveraging our extensive resources.
Lead Portfolio Manager Gary P. Johnson assumed responsibility for the Fund's
day-to-day management and investment strategies in February 1997. Mr. Johnson,
who has 17 years of investment industry experience, joined the Adviser in 1987.
Portfolio Manager Adam M. Greshin specializes in global and international bond
investments. Mr. Greshin was involved in the original design of Scudder
International Bond Fund and has been a portfolio manager of the Fund since its
inception in 1988.
SAIL(TM)--Scudder Automated Information Line
For personalized account information including fund prices, yields and account
balances, to perform transactions in existing Scudder fund accounts, or to
obtain information on any Scudder fund, shareholders can call Scudder's
Automated Information Line (SAIL) at 1-800-343-2890, 24 hours a day. During
periods of extreme economic or market changes, or other conditions, it may be
difficult for you to effect telephone transactions in your account. In such an
event you should write to the Fund; please see "How to contact Scudder" for the
address.
Investment flexibility
Scudder offers toll-free telephone exchange between funds at current net asset
value. You can move your investments among money market, income, growth,
tax-free and growth and income funds with a simple toll-free call or, if you
prefer, by sending your instructions through the mail or by fax. (The exchange
privilege may not be available for certain Scudder funds or classes thereof. For
more information, please call 1-800-225-5163.) Telephone and fax redemptions and
exchanges are subject to termination and their terms are subject to change at
any time by the Fund or the transfer agent. In some cases, the transfer agent or
Scudder Investor Services, Inc. may impose additional conditions on telephone
transactions.
Personal Counsel(SM) -- A Managed Fund Portfolio Program
If you would like to receive direct guidance and management of your overall
mutual fund portfolio to help you pursue your investment goals, you may be
interested in Personal Counsel from Scudder. Personal Counsel, a program of
Scudder Investor Services, Inc., a registered investment adviser and a
subsidiary of Scudder Kemper Investments, Inc., combines the benefits of a
customized portfolio of no-load mutual funds with ongoing portfolio monitoring
and individualized service, for an annual fee of generally 1.25% or less of
assets. In addition, it draws upon the Adviser's more than 75-year heritage of
providing investment counsel to large corporate and private clients. If you have
$100,000 or more to invest initially and would like more information about
Personal Counsel, please call 1-800-700-0183.
Dividend reinvestment plan
You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.
Shareholder statements
You will receive a detailed statement summarizing account activity, including
dividend and capital gain reinvestment, purchases and redemptions. All of your
statements should be retained to help you keep track of account activity and the
cost of shares for tax purposes.
Shareholder reports
In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.
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<PAGE>
To reduce the volume of mail you receive, only one copy of most Fund reports,
such as the Fund's Annual Report, may be mailed to your household (same surname,
same address). Please call 1-800-225-5163 if you wish to receive additional
shareholder reports.
Newsletters
Four times a year, Scudder sends you Perspectives, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.
Scudder Investor Centers
As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Investor Centers in Boca Raton, Boston,
Chicago, New York and San Francisco.
T.D.D. service for the hearing impaired
Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D. (Telephone
Device for the Deaf) service. If you have access to a T.D.D., call
1-800-543-7916 for investment information or specific account questions and
transactions.
20
<PAGE>
Purchases
<TABLE>
<CAPTION>
Opening Minimum initial investment: $2,500; IRAs $1,000
an account Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
<S> <C> <C> <C>
Make checks o By Mail Send your completed and signed application and check
payable to "The
Scudder Funds."
by regular mail to: or by express, registered,
or certified mail to:
The Scudder Funds The Scudder Funds
P.O. Box 2291 66 Brooks Drive
Boston, MA 02107-2291 Braintree, MA
02184
o By Wire Please see Transaction information--Purchasing shares--
By wire for details, including the ABA wire transfer number.
Then call 1-800-225-5163 for instructions.
o In Person Visit one of our Investor Centers to complete your application
with the help of a Scudder representative. Investor Center
locations are listed under Shareholder benefits.
-----------------------------------------------------------------------------------------------------------------------
Purchasing Minimum additional investment: $100; IRAs $50
additional Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
shares See appropriate plan literature.
Make checks o By Mail Send a check with a Scudder investment slip, or with a letter of
payable to "The instruction including your account number and the complete
Scudder Funds." Fund name, to the appropriate address listed above.
o By Wire Please see Transaction information--Purchasing shares--
By wire for details, including the ABA wire transfer number.
o In Person Visit one of our Investor Centers to make an additional
investment in your Scudder fund account. Investor Center
locations are listed under Shareholder benefits.
o By Telephone Please see Transaction information--Purchasing shares--
By QuickBuy or By telephone order for more details.
o By Automatic You may arrange to make investments on a regular basis
Investment through automatic deductions from your bank checking
Plan account. Please call 1-800-225-5163 for more information and an
($50 minimum) enrollment form.
</TABLE>
21
<PAGE>
Exchanges and redemptions
<TABLE>
<CAPTION>
Exchanging Minimum investments: $2,500 to establish a new account;
shares $100 to exchange among existing accounts
<S> <C> <C> <C> <C>
o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).
o By Mail Print or type your instructions and include:
or Fax - the name of the Fund and the account number you are exchanging from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to exchange;
- the name of the Fund you are exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions
by regular mail to: or by express, registered, or by fax to:
or certified mail to:
The Scudder Funds The Scudder Funds 1-800-821-6234
P.O. Box 2291 66 Brooks Drive
Boston, MA 02107-2291 Braintree, MA
02184
-----------------------------------------------------------------------------------------------------------------------
Redeeming
shares o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day). You may have
redemption proceeds sent to your predesignated bank account, or
redemption proceeds of up to $100,000 sent to your address of record.
o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:
- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
A signature guarantee is required for redemptions over $100,000.
See Transaction information--Redeeming shares.
o By Automatic You may arrange to receive automatic cash payments periodically. Call
Withdrawal 1-800-225-5163 for more information and an enrollment form.
Plan
</TABLE>
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<PAGE>
Scudder tax-advantaged retirement plans
Scudder offers a variety of tax-advantaged retirement plans for individuals,
businesses and non-profit organizations. These flexible plans are designed for
use with the Scudder Family of Funds (except Scudder tax-free funds, which are
inappropriate for such plans). Scudder Funds offer a broad range of investment
objectives and can be used to seek almost any investment goal. Using Scudder's
retirement plans can help shareholders save on current taxes while building
their retirement savings.
o Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of up to $2,000 per person for anyone with earned income (up
to $2,000 per individual for married couples filing jointly, even if only
one spouse has earned income). Many people can deduct all or part of their
contributions from their taxable income, and all investment earnings accrue
on a tax-deferred basis. The Scudder No-Fee IRA charges you no annual
custodial fee.
o Scudder Roth No-Fee IRAs. Similar to the traditional IRA in many respects,
these retirement plans provide a unique opportunity for qualifying
individuals to accumulate investment earnings tax free. Unlike a
traditional IRA, with a Roth IRA, if you meet the distribution
requirements, you can withdraw your money without paying any taxes on the
earnings. No tax deduction is allowed for contributions to a Roth IRA. The
Scudder Roth IRA charges you no annual custodial fee.
o 401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee
communications and trustee services, as well as investment options.
o Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make annual,
tax-deductible contributions of up to $30,000 for each person covered by
the plans. Plans may be adopted individually or paired to maximize
contributions. These are sometimes known as Keogh plans.
o 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.
o SEP-IRAs. Easily administered retirement plans for small businesses and
self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation. The Scudder SEP-IRA charges
you no annual custodial fee.
o Scudder Horizon Plan. A no-load variable annuity that lets you build assets
by deferring taxes on your investment earnings. You can start with $2,500
or more.
Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA and most Profit
Sharing or Pension Plan accounts, call 1-800-225-5163.
The variable annuity contract is provided by Charter National Life Insurance
Company (in New York State, Intramerica Life Insurance Company [S 1802]). The
contract is offered by Scudder Insurance Agency, Inc. (in New York State, Nevada
and Montana, Scudder Insurance Agency of New York, Inc.). CNL, Inc. is the
Principal Underwriter. Scudder Horizon Plan is not available in all states.
Scudder Investor Relations is a service provided through Scudder Investor
Services, Inc., Distributor.
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<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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company 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 or classes thereof may
not be available for purchase or exchange. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *A class of
shares of the Fund. **Not available in all states. ***Only the Scudder Shares of
the Fund are part of the Scudder Family of Funds. ++Only the International
Shares of the Fund are part of the Scudder Family of Funds. +++ +++A no-load
variable annuity contract provided by Charter National Life Insurance Company
and its affiliate, offered by Scudder's insurance agencies, 1-800-225-2470.
#These funds, advised by Scudder Kemper Investments, Inc., are traded on the New
York Stock Exchange and, in some cases, on various foreign stock exchanges.
24
<PAGE>
<TABLE>
<CAPTION>
How to contact Scudder
Account Service and Information:
<S> <C>
For existing account service and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges, and an
overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For personalized information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information:
For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services:
To receive information about this discount brokerage service and to obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
Personal Counsel(SM) -- A Managed Fund Portfolio Program:
To receive information about this mutual fund portfolio guidance and management program
Personal Counsel from Scudder -- 1-800-700-0183
Please address all correspondence to:
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Or Stop by a Scudder Investor Center:
Many shareholders enjoy the personal, one-on-one service of the Scudder
Investor Centers. Check for an Investor Center near you--they can be
found in the following cities:
Boca Raton Chicago San Francisco
Boston New York
Scudder Investor Relations and Scudder Investor Centers are services provided
through Scudder Investor Services, Inc., Distributor.
</TABLE>
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA
02061--Member NASD/SIPC.
<PAGE>
SCUDDER GLOBAL FUND
A Pure No-Load(TM) (No Sales Charges) Mutual Fund
Series Which Seeks Long-Term Growth of Capital
from Worldwide Investing
and
SCUDDER INTERNATIONAL BOND FUND
A Pure No-Load(TM) (No Sales Charges) Mutual Fund Series Which Seeks
Income Primarily by Investing in High-Grade Bonds Denominated
in Foreign Currencies. As a Secondary Objective, the Fund
Seeks Protection and Possible Enhancement of Principal
Value by Actively Managing Currency, Bond Market and
Maturity Exposure and by Security Selection.
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1998
- --------------------------------------------------------------------------------
This combined Statement of Additional Information is not a prospectus
and should be read in conjunction with the prospectus of Scudder Global Fund
dated November 1, 1998, and the prospectus of Scudder International Bond Fund
dated November 1, 1998, each as amended from time to time, copies of which may
be obtained without charge by writing to Scudder Investor Services, Inc., Two
International Place, Boston, Massachusetts 02110-4103.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES........................................................................1
General Investment Objective and Policies of Global Fund....................................................1
General Investment Objectives and Policies of International Bond Fund.......................................2
Master/feeder structure.....................................................................................2
Special Investment Considerations of the Funds..............................................................2
Investments and Investment Techniques...................................................................... 4
Investment Restrictions....................................................................................14
Other Investment Policies..................................................................................15
PURCHASES.......................................................................................................... 16
Additional Information About Opening an Account........................................................... 16
Additional Information About Making Subsequent Investments By Telephone Order............................. 16
Additional Information About Making Subsequent Investments by QuickBuy.................................... 17
Checks.................................................................................................... 17
Wire Transfer of Federal Funds............................................................................ 17
Share Price............................................................................................... 18
Share Certificates........................................................................................ 18
Other Information......................................................................................... 18
EXCHANGES AND REDEMPTIONS...........................................................................................19
Exchanges..................................................................................................19
Redemption by Telephone....................................................................................20
Redemption by QuickSell................................................................................... 20
Redemption by Mail or Fax..................................................................................21
Redemption-in-Kind........................................................................................ 21
Other Information......................................................................................... 21
FEATURES AND SERVICES OFFERED BY THE FUNDS......................................................................... 22
The Pure No-Load(TM) Concept.............................................................................. 22
Internet access........................................................................................... 23
Dividends and Capital Gains Distribution Options.........................................................24
Scudder Investor Centers.................................................................................. 24
Reports to Shareholders................................................................................... 24
Transaction Summaries......................................................................................25
THE SCUDDER FAMILY OF FUNDS........................................................................................ 25
SPECIAL PLAN ACCOUNTS...............................................................................................30
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension Plans for Corporations
and Self-Employed Individuals........................................................................ 30
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for Corporations and Self-Employed Individuals....... 30
Scudder IRA: Individual Retirement Account............................................................... 30
Scudder Roth IRA: Individual Retirement Account...........................................................31
Scudder 403(b) Plan........................................................................................32
Automatic Withdrawal Plan..................................................................................32
Group or Salary Deduction Plan............................................................................ 32
Automatic Investment Plan..................................................................................33
Uniform Transfers/Gifts to Minors Act......................................................................33
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS...........................................................................33
PERFORMANCE INFORMATION.............................................................................................34
Average Annual Total Return................................................................................34
Cumulative Total Return....................................................................................34
Total Return...............................................................................................35
Yield of International Bond Fund...........................................................................35
i
<PAGE>
TABLE OF CONTENTS (continued)
Page
Comparison of Fund Performance........................................................................... 35
Taking a Global Approach...................................................................................39
Scudder's 30% Solution.................................................................................... 39
ORGANIZATION OF THE FUNDS.......................................................................................... 39
INVESTMENT ADVISER................................................................................................. 40
Personal Investments by Employees of the Adviser.......................................................... 43
DIRECTORS AND OFFICERS..............................................................................................44
REMUNERATION........................................................................................................46
Responsibilities of the Board -- Board and Committee Meetings.............................................46
Compensation of Officers and Directors.....................................................................47
DISTRIBUTOR........................................................................................................ 48
TAXES.............................................................................................................. 49
PORTFOLIO TRANSACTIONS..............................................................................................52
Brokerage Commissions......................................................................................52
Portfolio Turnover........................................................................................ 54
NET ASSET VALUE.................................................................................................... 54
ADDITIONAL INFORMATION............................................................................................. 55
Experts................................................................................................... 55
Other Information......................................................................................... 55
FINANCIAL STATEMENTS............................................................................................... 56
Global Fund............................................................................................... 56
International Bond Fund....................................................................................56
APPENDIX
</TABLE>
ii
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
(See Scudder Global Fund -- "Investment objective and policies" and
"Additional information about policies and investments," Scudder
International Bond Fund -- "Investment objectives and policies"
and "Additional information about policies and investments"
in the Funds' prospectuses.)
On May 28, 1998, the name "Scudder Global Fund, Inc." was changed to
"Global/International Fund, Inc." Global/International Fund, Inc., a Maryland
corporation of which Scudder Global Fund ("Global Fund") and Scudder
International Bond Fund ("International Bond Fund") are series, is referred to
herein as the "Corporation." The Corporation is a no-load, open-end, management
investment company which continuously offers and redeems its shares. The
Corporation is a company of the type commonly known as a mutual fund. Global
Fund is a diversified series and International Bond Fund is a non-diversified
series of the Corporation. These series sometimes are jointly referred to herein
as the "Funds."
Except as otherwise indicated, the Funds' objectives and policies are
not fundamental and may be changed without a shareholder vote. There can be no
assurance that either Fund will achieve its objectives.
Changes in portfolio securities are made on the basis of investment
considerations, and it is against the policy of management to make changes for
trading purposes.
General Investment Objective and Policies of Global Fund
Global Fund seeks long-term growth of capital through a diversified
portfolio of marketable securities, primarily equity securities, including
common stocks, preferred stocks and debt securities convertible into common
stocks. The Fund invests on a worldwide basis in equity securities of companies
which are incorporated in the U.S. or in foreign countries. It may also invest
in the debt securities of U.S. and foreign issuers. Income is an incidental
consideration.
The management of the Fund believes that there is substantial
opportunity for long-term capital growth from a professionally managed portfolio
of securities selected from the U.S. and foreign equity markets. This global
investment framework takes advantage of the investment opportunities created by
the global economy. The world has become highly integrated in economic,
industrial and financial terms. Companies increasingly operate globally as they
purchase raw materials, produce and sell their products, and raise capital. As a
result, international trends such as movements in currency and trading
relationships are becoming more important to many industries than purely
domestic influences. To understand a company's business, it is frequently more
important to understand how it is linked to the world economy than whether or
not it is, for example, a U.S., French or Swiss company. Just as a company takes
a global perspective in deciding where to operate, so too may an investor
benefit from looking globally in deciding which industries are growing, which
producers are efficient and which companies' shares are undervalued. The Fund
affords the investor access to opportunities wherever they arise, without being
constrained by the location of a company's headquarters or the trading market
for its shares.
The Fund invests in companies that the Fund's investment adviser,
Scudder Kemper Investments, Inc. (the "Adviser"), believes will benefit from
global economic trends, promising technologies or products and specific country
opportunities resulting from changing geopolitical, currency, or economic
relationships. It is expected that investments will be spread broadly around the
world. The Fund will be invested usually in securities of issuers located in at
least three countries, one of which may be the U.S. The Fund may be invested
100% in non-U.S. issues, and for temporary defensive purposes may be invested
100% in U.S. issues, although under normal circumstances it is expected that
both foreign and U.S. investments will be represented in the Fund's portfolio.
It is expected that investments will include companies of varying size as
measured by assets, sales, or capitalization. In addition, for temporary
defensive purposes, the Fund may vary from its investment policies during
periods when the Adviser determines that it is advisable to do so because of
conditions in the securities markets or other economic or political conditions.
During such periods, the Fund may hold without limit cash and cash equivalents.
It is impossible to accurately predict for how long such alternative strategies
may be utilized. More information about these investment techniques is provided
under "Investments and Investment Techniques."
<PAGE>
General Investment Objectives and Policies of International Bond Fund
International Bond Fund offers investors a convenient way to invest in
a managed portfolio of debt securities denominated in foreign currencies
("international securities"). The Fund's objective is to provide income
primarily by investing in a managed portfolio of high-grade international bonds.
As a secondary objective, the Fund seeks protection and possible enhancement of
principal value by actively managing currency, bond market and maturity exposure
and by security selection. To achieve its objectives, the Fund will primarily
invest in international bonds that are denominated in foreign currencies,
including bonds denominated in the European Currency Unit (ECU). The Fund's
investments may include debt securities issued or guaranteed by a foreign
national government, its agencies, instrumentalities or political subdivisions,
debt securities issued or guaranteed by supranational organizations, corporate
debt securities, bank or bank holding company debt securities and other debt
securities including those convertible into common stock. In addition, for
temporary defensive purposes, the Fund may vary from its investment policies
during periods when the Adviser determines that it is advisable to do so because
of conditions in the securities markets or other economic or political
conditions. During such periods, the Fund may hold without limit cash and cash
equivalents. It is impossible to accurately predict for how long such
alternative strategies may be utilized. The Fund will invest no more than 15% of
its total assets in debt securities that are rated below BBB by Standard and
Poor's Corporation ("S&P") or below Baa by Moody's Investors Service, Inc.
("Moody's"), but rated no lower than B by S&P or Moody's, respectively. (See
"Risk factors" in the Fund's prospectus.)
Master/feeder structure
The Board of Directors has the discretion to retain the current
distribution arrangement for the Fund while investing in a master fund in a
master/feeder structure as described below.
A master/feeder fund structure is one in which a fund (a "feeder
fund"), instead of investing directly in a portfolio of securities, invests most
or all of its investment assets in a separate registered investment company (the
"master fund") with substantially the same investment objective and policies as
the feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets. An existing investment company is able to convert to a feeder fund
by selling all of its investments, which involves brokerage and other
transaction costs and realization of a taxable gain or loss, or by contributing
its assets to the master fund and avoiding transaction costs and, if proper
procedures are followed, the realization of taxable gain or loss.
Special Investment Considerations of the Funds
The Funds are intended to provide individual and institutional
investors with an opportunity to invest a portion of their assets in globally
and/or internationally oriented portfolios, according to the Funds' respective
objectives and policies, and are designed for long-term investors who can accept
international investment risk. Management of the Funds believes that allocation
of assets on a global or international basis decreases the degree to which
events in any one country, including the U.S., will affect an investor's entire
investment holdings. In the period since World War II, many leading foreign
economies have grown more rapidly than the U.S. economy, thus providing
investment opportunities; although there can be no assurance that this will be
true in the future. As with any long-term investment, the value of the Funds'
shares when sold may be higher or lower than when purchased.
Investors should recognize that investing in foreign securities
involves certain special considerations, including those set forth below, which
are not typically associated with investing in U.S. securities and which may
favorably or unfavorably affect the Funds' performance. As foreign companies are
not generally subject to uniform standards, practices and requirements, with
respect to accounting, auditing and financial reporting, as are domestic
companies, there may be less publicly available information about a foreign
company than about a domestic company. Many foreign securities markets, while
growing in volume of trading activity, have substantially less volume than the
U.S. market, and securities of some foreign issuers are less liquid and more
volatile than securities of domestic issuers. Similarly, volume and liquidity in
most foreign bond markets is less than in the U.S. and, at times, volatility of
price can be greater than in the U.S. Further, foreign markets have different
clearance and settlement procedures and in certain markets there have been times
when settlements have been unable to keep pace with the volume of securities
transactions making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when assets of a Fund are
2
<PAGE>
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems either could result in losses to a Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. Fixed commissions on some foreign securities
exchanges and bid to asked spreads in foreign bond markets are generally higher
than negotiated commissions on U.S. exchanges and bid to asked spreads in the
U.S. bond market, although the Funds will endeavor to achieve the most favorable
net results on their portfolio transactions. Further, the Funds may encounter
difficulties or be unable to pursue legal remedies and obtain judgments in
foreign courts. There is generally less government supervision and regulation of
business and industry practices, securities exchanges, brokers and listed
companies than in the U.S. It may be more difficult for the Funds' agents to
keep currently informed about corporate actions such as stock dividends or other
matters which may affect the prices of portfolio securities. Communications
between the U.S. and foreign countries may be less reliable than within the
U.S., thus increasing the risk of delayed settlements of portfolio transactions
or loss of certificates for portfolio securities. Payment for securities without
delivery may be required in certain foreign markets. In addition, with respect
to certain foreign countries, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect U.S. investments in those countries. Investments
in foreign securities may also entail certain risks, such as possible currency
blockages or transfer restrictions, and the difficulty of enforcing rights in
other countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. The management of the Funds seeks to mitigate the
risks associated with the foregoing considerations through continuous
professional management.
These considerations generally are more of a concern in developing
countries. For example, the possibility of revolution and the dependence on
foreign economic assistance may be greater in these countries than in developed
countries. Investments in companies domiciled in developing countries may be
subject to potentially greater risks than investments in developed countries.
Investments in foreign securities usually will involve currencies of
foreign countries. Because of the considerations discussed above, the value of
the assets of the Funds as measured in U.S. dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations, and the Funds may incur costs in connection with conversions
between various currencies. Although the Funds value their assets daily in terms
of U.S. dollars, they do not intend to convert their holdings of foreign
currencies into U.S. dollars on a daily basis. They will do so from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to a Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer. The
Funds will conduct their foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through entering into strategic transactions involving currencies
(see "Strategic Transactions and Derivatives").
Because the Funds may be invested in both U.S. and foreign securities
markets, changes in a Fund's share price may have a low correlation with
movements in the U.S. markets. Each Fund's share price will reflect the
movements of both the different stock and bond markets in which it is invested
and of the currencies in which the investments are denominated; the strength or
weakness of the U.S. dollar against foreign currencies may account for part of
each Fund's investment performance. Foreign securities such as those purchased
by a Fund may be subject to foreign government taxes which could reduce the
yield on such securities, although a shareholder of the Fund may, subject to
certain limitations, be entitled to claim a credit or deduction for U.S. federal
income tax purposes for his or her proportionate share of such foreign taxes
paid by the Fund (see "TAXES"). U.S. and foreign securities markets do not
always move in step with each other, and the total returns from different
markets may vary significantly. The Funds invest in many securities markets
around the world in an attempt to take advantage of opportunities wherever they
may arise.
Because of the Funds' investment considerations discussed above and the
investment policies, investment in shares of the Funds is not intended to
provide a complete investment program for an investor.
3
<PAGE>
Neither Fund can guarantee a gain or eliminate the risk of loss. The
net asset value of each Fund's shares will increase or decrease with changes in
the market price of the Fund's investments, and there is no assurance that each
Fund's objectives will be achieved.
Investments and Investment Techniques
Repurchase Agreements. Each Fund may enter into repurchase agreements
with member banks of the Federal Reserve System, any foreign bank or with any
domestic or foreign broker/dealer which is recognized as a reporting government
securities dealer, if the creditworthiness of the bank or broker/dealer has been
determined by the Adviser to be at least as high as that of other obligations a
Fund may purchase.
A repurchase agreement provides a means for a Fund to earn income on
funds for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., a Fund) acquires a debt security ("Obligation") and the seller
agrees, at the time of sale, to repurchase the Obligation at a specified time
and price. Securities subject to a repurchase agreement are held in a segregated
account and the value of such securities is kept at least equal to the
repurchase price on a daily basis. The repurchase price may be higher than the
purchase price, the difference being income to a Fund, or the purchase and
repurchase prices may be the same, with interest at a stated rate due to a Fund
together with the repurchase price on repurchase. In either case, the income to
a Fund is unrelated to the interest rate on the Obligation itself. Obligations
will be physically held by the Fund's custodian (Brown Brothers Harriman and Co.
for Global Fund and International Bond Fund) or in the Federal Reserve Book
Entry system.
For purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"), a repurchase agreement is deemed to be a loan from a Fund to the
seller of the Obligation subject to the repurchase agreement and is therefore
subject to that Fund's investment restrictions applicable to loans. It is not
clear whether a court would consider the Obligation purchased by a Fund subject
to a repurchase agreement as being owned by the Fund or as being collateral for
a loan by the Fund to the seller. In the event of the commencement of bankruptcy
or insolvency proceedings with respect to the seller of the Obligation before
repurchase of the Obligation under a repurchase agreement, a Fund may encounter
delay and incur costs before being able to sell the security. Delays may involve
loss of interest or decline in price of the Obligation. If the court
characterizes the transaction as a loan and a Fund has not perfected a security
interest in the Obligation, the Fund may be required to return the Obligation to
the seller's estate and be treated as an unsecured creditor of the seller. As an
unsecured creditor, a Fund would be at risk of losing some or all of the
principal and income involved in the transaction. As with any unsecured debt
instrument purchased for a Fund, the Adviser seeks to minimize the risk of loss
through repurchase agreements by analyzing the creditworthiness of the obligor,
in this case the seller of the Obligation. Apart from the risk of bankruptcy or
insolvency proceedings, there is also the risk that the seller may fail to
repurchase the security. However, if the market value of the Obligation subject
to the repurchase agreement becomes less than the repurchase price (including
interest), a Fund will direct the seller of the Obligation to deliver additional
securities so that the market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price. It is possible that a Fund
will be unsuccessful in seeking to enforce the seller's contractual obligation
to deliver additional securities. A repurchase agreement with foreign banks may
be available with respect to government securities of the particular foreign
jurisdiction, and such repurchase agreements involve risks similar to repurchase
agreements with U.S. entities.
The International Bond Fund may also enter into repurchase commitments
with any party deemed creditworthy by the Adviser, including foreign banks and
broker/dealers, if the transaction is entered into for investment purposes and
the counterparty's creditworthiness is at least equal to that of issuers of
securities which the Fund may purchase. Such transactions may not provide the
Fund with collateral which is marked-to-market during the term of the
commitment.
Debt Securities. Each Fund may purchase "investment-grade" bonds, which
are those rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P or, if
unrated, judged to be of equivalent quality as determined by the Adviser. Bonds
rated Baa or BBB may have speculative elements as well as investment-grade
characteristics. Global Fund may also invest up to 5% of its net assets in
securities rated Baa/BBB or lower and in unrated securities of equivalent
quality in the Adviser's judgment. International Bond Fund may invest up to 15%
of its total assets in securities rated below BBB or below Baa, but may not
invest in securities rated lower than B by Moody's and S&P or in equivalent
unrated securities. Global Fund may invest in debt securities which are rated as
low as C by Moody's or D by S&P. Such securities may be in default with respect
to payment of principal or interest. (See "Appendix").
4
<PAGE>
High Yield, High Risk Securities. Below investment grade securities
(rated below Baa by Moody's and below BBB by S&P and commonly referred to as
"high yield" or "junk" bonds) or unrated securities of equivalent quality in the
Adviser's judgment, carry a high degree of risk (including the possibility of
default or bankruptcy of the issuers of such securities), generally involve
greater volatility of price and risk of principal and income, and may be less
liquid, than securities in the higher rating categories and are considered
speculative. The lower the ratings of such debt securities, the greater their
risks render them like equity securities. See the Appendix to this Statement of
Additional Information for a more complete description of the ratings assigned
by ratings organizations and their respective characteristics.
An economic downturn could disrupt the high-yield market and impair the
ability of issuers to repay principal and interest. Also, an increase in
interest rates would likely have a greater adverse impact on the value of such
obligations than on higher quality debt securities. During an economic downturn
or period of rising interest rates, highly leveraged issues may experience
financial stress which could adversely affect their ability to service their
principal and interest payment obligations. Prices and yields of high-yield
securities will fluctuate over time and, during periods of economic uncertainty,
volatility of high-yield securities may adversely affect the Fund's net asset
value. In addition, investments in high-yield zero coupon or pay-in-kind bonds,
rather than income-bearing high-yield securities, may be more speculative and
may be subject to greater fluctuations in value due to changes in interest
rates.
The trading market for high-yield securities may be thin to the extent
that there is no established retail secondary market. A thin trading market may
limit the ability of the Fund to accurately value high-yield securities in its
portfolio and to dispose of those securities. Adverse publicity and investor
perceptions may decrease the values and liquidity of high-yield securities.
These securities may also involve special registration responsibilities,
liabilities and costs, and liquidity and valuation difficulties.
Credit quality in the high-yield securities market can change suddenly
and unexpectedly, and even recently issued credit ratings may not fully reflect
the actual risks posed by a particular high-yield security. For these reasons,
it is the policy of the Adviser not to rely exclusively on ratings issued by
established credit rating agencies, but to supplement such ratings with its own
independent and on-going review of credit quality. The achievement of a Fund's
investment objective by investment in such securities may be more dependent on
the Adviser's credit analysis than is the case for higher quality bonds. Should
the rating of a portfolio security be downgraded, the Adviser will determine
whether it is in the best interest of the Fund to retain or dispose of such
security.
Prices for below investment-grade securities may be affected by
legislative and regulatory developments. For example, new federal rules require
savings and loan institutions to gradually reduce their holdings of this type of
security. Also, recent legislation restricts the issuer's tax deduction for
interest payments on these securities. Such legislation may significantly
depress the prices of outstanding securities of this type. For more information
regarding tax issues related to high-yield securities (see "TAXES").
Illiquid or Restricted Investments. Each Fund may invest a portion of its assets
in securities for which there is not an active trading market including
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933 or which are otherwise not
readily marketable. The absence of a trading market can make it difficult to
ascertain a market value for illiquid or restricted investments. Disposing of
illiquid or restricted investments may involve time-consuming negotiation and
legal expenses, and it may be difficult or impossible for a Fund to sell them
promptly at an acceptable price. Each Fund may have to bear the extra expense of
registering such securities for resale and the risk of substantial delay in
effecting such registration. Also market quotations are less readily available.
The judgment of the Adviser may at times play a greater role in valuing these
securities than in the case of unrestricted securities.
Zero Coupon Securities. Each Fund may invest in zero coupon securities which pay
no cash income and are sold at substantial discounts from their value at
maturity. When held to maturity, their entire income, which consists of
accretion of discount, comes from the difference between the issue price and
their value at maturity. Zero coupon securities are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities which make current distributions of interest (cash). Zero
coupon securities which are convertible into common stock offer the opportunity
for capital appreciation as increases (or decreases) in market value of such
securities closely follows the movements in the market value of the underlying
common stock. Zero coupon convertible securities generally are expected to be
less volatile than the underlying common stocks, as they usually are issued with
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maturities of 15 years or less and are issued with options and/or redemption
features exercisable by the holder of the obligation entitling the holder to
redeem the obligation and receive a defined cash payment.
Zero coupon securities include securities issued directly by the U.S.
Treasury, and U.S. Treasury bonds or notes and their unmatured interest coupons
and receipts for their underlying principal ("coupons") which have been
separated by their holder, typically a custodian bank or investment brokerage
firm. A holder will separate the interest coupons from the underlying principal
(the "corpus") of the U.S. Treasury security. A number of securities firms and
banks have stripped the interest coupons and receipts and then resold them in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" (TIGRS(TM)) and Certificate of Accrual on Treasuries
(CATS(TM)). The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer securities
(i.e., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof. Counsel to the
underwriters of these certificates or other evidences of ownership of the U.S.
Treasury securities have stated that, for federal tax and securities purposes,
in their opinion purchasers of such certificates, such as the Fund, most likely
will be deemed the beneficial holder of the underlying U.S. Government
securities. The Fund understands that the staff of the Division of Investment
Management of the Securities and Exchange Commission (the "SEC") no longer
considers such privately stripped obligations to be U.S. Government securities,
as defined in the 1940 Act; therefore, the Fund intends to adhere to this staff
position and will not treat such privately stripped obligations to be U.S.
Government securities for the purpose of determining if the Global Fund is
"diversified" under the 1940 Act.
The U.S. Treasury has facilitated transfers of ownership of zero coupon
securities by accounting separately for the beneficial ownership of particular
interest coupon and corpus payments on Treasury securities through the Federal
Reserve book-entry record keeping system. The Federal Reserve program as
established by the Treasury Department is known as "STRIPS" or "Separate Trading
of Registered Interest and Principal of Securities." Under the STRIPS program,
the Fund will be able to have its beneficial ownership of zero coupon securities
recorded directly in the book-entry record-keeping system in lieu of having to
hold certificates or other evidences of ownership of the underlying U.S.
Treasury securities.
When U.S. Treasury obligations have been stripped of their unmatured
interest coupons by the holder, the principal or corpus is sold at a deep
discount because the buyer receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest
(cash) payments. Once stripped or separated, the corpus and coupons may be sold
separately. Typically, the coupons are sold separately or grouped with other
coupons with like maturity dates and sold bundled in such form. Purchasers of
stripped obligations acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury sells
itself (see "TAXES").
Convertible Securities. Each Fund may invest in convertible securities, that is,
bonds, notes, debentures, preferred stocks and other securities which are
convertible into common stock. Investments in convertible securities can provide
an opportunity for capital appreciation and/or income through interest and
dividend payments by virtue of their conversion or exchange features.
International Bond Fund will limit its purchases of convertible securities to
debt securities convertible into common stocks.
The convertible securities in which a Fund may invest are either fixed
income or zero coupon debt securities which may be converted or exchanged at a
stated or determinable exchange ratio into underlying shares of common stock.
The exchange ratio for any particular convertible security may be adjusted from
time to time due to stock splits, dividends, spin-offs, other corporate
distributions or scheduled changes in the exchange ratio. Convertible debt
securities and convertible preferred stocks, until converted, have general
characteristics similar to both debt and equity securities. Although to a lesser
extent than with debt securities generally, the market value of convertible
securities tends to decline as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of the conversion or
exchange feature, the market value of convertible securities typically changes
as the market value of the underlying common stocks changes, and, therefore,
also tends to follow movements in the general market for equity securities. A
unique feature of convertible securities is that as the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis, and so may not experience market value declines
to the same extent as the underlying common stock. When the market price of the
underlying common stock increases, the prices of the convertible securities tend
to rise as a reflection of the value of the underlying common stock, although
typically not as much as the underlying common stock. While no securities
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investments are without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same issuer.
As debt securities, convertible securities are investments which
provide for a stream of income (or in the case of zero coupon securities,
accretion of income) with generally higher yields than common stocks. Of course,
like all debt securities, there can be no assurance of income or principal
payments because the issuers of the convertible securities may default on their
obligations. Convertible securities generally offer lower yields than
non-convertible securities of similar quality because of their conversion or
exchange features.
Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).
Indexed Securities. Scudder International Bond Fund may invest in indexed
securities, the value of which is linked to currencies, interest rates,
commodities, indices or other financial indicators ("reference instruments").
Most indexed securities have maturities of three years or less.
Indexed securities differ from other types of debt securities in which
the Fund may invest in several respects. First, the interest rate or, unlike
other debt securities, the principal amount payable at maturity of an indexed
security may vary based on changes in one or more specified reference
instruments, such as an interest rate compared with a fixed interest rate or the
currency exchange rates between two currencies (neither of which need be the
currency in which the instrument is denominated). The reference instrument need
not be related to the terms of the indexed security. For example, the principal
amount of a U.S. dollar denominated indexed security may vary based on the
exchange rate of two foreign currencies. An indexed security may be positively
or negatively indexed; that is, its value may increase or decrease if the value
of the reference instrument increases. Further, the change in the principal
amount payable or the interest rate of an indexed security may be a multiple of
the percentage change (positive or negative) in the value of the underlying
reference instrument(s).
Investment in indexed securities involves certain risks. In addition to
the credit risk of the security's issuer and the normal risks of price changes
in response to changes in interest rates, the principal amount of indexed
securities may decrease as a result of changes in the value of reference
instruments. Further, in the case of certain indexed securities in which the
interest rate is linked to a reference instrument, the interest rate may be
reduced to zero, and any further declines in the value of the security may then
reduce the principal amount payable on maturity. Finally, indexed securities may
be more volatile than the reference instruments underlying indexed securities.
Dollar Rolls. International Bond Fund may enter into "dollar roll" transactions,
which consist of the sale by the Fund to a bank or broker/dealer (the
"counterparty") of GNMA certificates or other mortgage-backed securities
together with a commitment to purchase similar, but not identical, securities at
a future date, at the same price. The counterparty receives all principal and
interest payments, including prepayments, made on the security while the
counterparty is the holder. The Fund receives a fee from the counterparty as
consideration for entering into the commitment to purchase. Dollar rolls may be
renewed over a period of several months with a different repurchase price and a
cash settlement made at each renewal without physical delivery of securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which the Fund agrees to buy a security on a future date.
International Bond Fund will not use such transactions for leveraging
purposes and, accordingly, will segregate cash or liquid assets in an amount
sufficient to meet its purchase obligations under the transactions. The Fund
will also maintain asset coverage of at least 300% for all outstanding firm
commitments, dollar rolls and other borrowings. Notwithstanding such safeguards,
the Fund's overall investment exposure may be increased by such transactions to
the extent that the Fund bears a risk of loss on the securities it is committed
to purchase, as well as on the segregated assets.
Dollar rolls are treated for purposes of the 1940 Act as borrowings of
the Fund because they involve the sale of a security coupled with an agreement
to repurchase. Like all borrowings, a dollar roll involves costs to the Fund.
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For example, while the Fund receives a fee as consideration for agreeing to
repurchase the security, the Fund forgoes the right to receive all principal and
interest payments while the counterparty holds the security. These payments to
the counterparty may exceed the fee received by the Fund, thereby effectively
charging the Fund interest on its borrowing. Further, although the Fund can
estimate the amount of expected principal prepayment over the term of the dollar
roll, a variation in the actual amount of prepayment could increase or decrease
the cost of the Fund's borrowing.
The entry into dollar rolls involves potential risks of loss which are
different from those of the securities underlying the transactions. For example,
if the counterparty becomes insolvent, the Fund's right to purchase from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before the Fund is able to purchase them. Similarly, the Fund
may be required to purchase securities in connection with a dollar roll at a
higher price than may otherwise be available on the open market. Since, as noted
above, the counterparty is required to deliver a similar, but not identical
security to the Fund, the security which the Fund is required to buy under the
dollar roll may be worth less than an identical security. Finally, there can be
no assurance that the Fund's use of the cash that it receives from a dollar roll
will provide a return that exceeds borrowing costs.
The Directors of the Corporation on behalf of International Bond Fund
have adopted guidelines to ensure that those securities received are
substantially identical to those sold. To reduce the risk of default, the Fund
will engage in such transactions only with banks and broker-dealers selected
pursuant to such guidelines.
Lending of Portfolio Securities. Each Fund may seek to increase its income by
lending portfolio securities. Such loans may be made to registered
broker/dealers and are required to be secured continuously by collateral in
cash, U.S. Government Securities and liquid high grade debt obligations
maintained on a current basis at an amount at least equal to the market value
and accrued interest of the securities loaned. Each Fund has the right to call a
loan and obtain the securities loaned on no more than five days' notice. During
the existence of a loan, a Fund will continue to receive the equivalent of any
distributions paid by the issuer on the securities loaned and will also receive
compensation based on investment of the collateral. As with other extensions of
credit there are risks of delay in recovery or even loss of rights in the
collateral should the borrower of the securities fail financially. However, the
loans will be made only to firms deemed by the Adviser to be in good standing.
The value of the securities loaned will not exceed 5% of the value of a Fund's
total assets at the time any loan is made.
Strategic Transactions and Derivatives. Each Fund may, but is not required to,
utilize various other investment strategies as described below to hedge various
market risks (such as interest rates, currency exchange rates, and broad or
specific equity or fixed-income market movements), to manage the effective
maturity or duration of the fixed-income securities in a Fund's portfolio, or to
enhance potential gain. These strategies may be executed through the use of
derivative contracts. Such strategies are generally accepted as a part of modern
portfolio management and are regularly utilized by many mutual funds and other
institutional investors. Techniques and instruments may change over time as new
instruments and strategies are developed or regulatory changes occur.
In the course of pursuing these investment strategies, a Fund may
purchase and sell exchange-listed and over-the-counter put and call options on
securities, equity and fixed-income indices and other financial instruments,
purchase and sell financial futures contracts and options thereon, enter into
various interest rate transactions such as swaps, caps, floors or collars, and
enter into various currency transactions such as currency forward contracts,
currency futures contracts, currency swaps or options on currencies or currency
futures (collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for a Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect a Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of the fixed-income
securities in a Fund's portfolio, or to establish a position in the derivatives
markets as a temporary substitute for purchasing or selling particular
securities. Some Strategic Transactions may also be used to enhance potential
gain although no more than 5% of a Fund's assets will be committed to Strategic
Transactions entered into for non-hedging purposes. Any or all of these
investment techniques may be used at any time and in any combination and there
is no particular strategy that dictates the use of one technique rather than
another, as use of any Strategic Transaction is a function of numerous variables
including market conditions. The ability of a Fund to utilize these Strategic
Transactions successfully will depend on the Adviser's ability to predict
pertinent market movements, which cannot be assured. Each Fund will comply with
applicable regulatory requirements when implementing these strategies,
techniques and instruments. Strategic Transactions involving financial futures
and options thereon will be purchased, sold or entered into only for bona fide
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hedging, risk management or portfolio management purposes and not for
speculative purposes and not to create leveraged exposure in the Fund.
Strategic Transactions, including derivative contracts have risks
associated with them including possible default by the other party to the
transaction, illiquidity and, to the extent the Adviser's view as to certain
market movements is incorrect, the risk that the use of such Strategic
Transactions could result in losses greater than if they had not been used. Use
of put and call options may result in losses to a Fund, force the sale or
purchase of portfolio securities at inopportune times or for prices higher than
(in the case of put options) or lower than (in the case of call options) current
market values, limit the amount of appreciation a Fund can realize on its
investments or cause a Fund to hold a security it might otherwise sell. The use
of currency transactions can result in a Fund incurring losses as a result of a
number of factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of a Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
Fund might not be able to close out a transaction without incurring substantial
losses, if at all. Although the use of futures and options transactions for
hedging should tend to minimize the risk of loss due to a decline in the value
of the hedged position, at the same time they tend to limit any potential gain
which might result from an increase in value of such position. Finally, the
daily variation margin requirements for futures contracts would create a greater
ongoing potential financial risk than would purchases of options, where the
exposure is limited to the cost of the initial premium. Losses resulting from
the use of Strategic Transactions would reduce net asset value, and possibly
income, and such losses can be greater than if the Strategic Transactions had
not been utilized.
General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of Fund assets in special accounts, as described
below under "Use of Segregated and Other Special Accounts."
A put option gives the purchaser of the option, upon payment of a
premium, the right to sell, and the writer the obligation to buy, the underlying
security, commodity, index, currency or other instrument at the exercise price.
For instance, a Fund's purchase of a put option on a security might be designed
to protect its holdings in the underlying instrument (or, in some cases, a
similar instrument) against a substantial decline in the market value by giving
a Fund the right to sell such instrument at the option exercise price. A call
option, upon payment of a premium, gives the purchaser of the option the right
to buy, and the seller the obligation to sell, the underlying instrument at the
exercise price. A Fund's purchase of a call option on a security, financial
future, index, currency or other instrument might be intended to protect a Fund
against an increase in the price of the underlying instrument that it intends to
purchase in the future by fixing the price at which it may purchase such
instrument. An American style put or call option may be exercised at any time
during the option period while a European style put or call option may be
exercised only upon expiration or during a fixed period prior thereto. Each Fund
is authorized to purchase and sell exchange listed options and over-the-counter
options ("OTC options"). Exchange listed options are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"), which guarantees
the performance of the obligations of the parties to such options. The
discussion below uses the OCC as an example, but is also applicable to other
financial intermediaries.
With certain exceptions, OCC issued and exchange listed options
generally settle by physical delivery of the underlying security or currency,
although in the future cash settlement may become available. Index options and
Eurodollar instruments are cash settled for the net amount, if any, by which the
option is "in-the-money" (i.e., where the value of the underlying instrument
exceeds, in the case of a call option, or is less than, in the case of a put
option, the exercise price of the option) at the time the option is exercised.
Frequently, rather than taking or making delivery of the underlying instrument
through the process of exercising the option, listed options are closed by
entering into offsetting purchase or sale transactions that do not result in
ownership of the new option.
Each Fund's ability to close out its position as a purchaser or seller
of an OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the absence of a
liquid option market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
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trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities including
reaching daily price limits; (iv) interruption of the normal operations of the
OCC or an exchange; (v) inadequacy of the facilities of an exchange or OCC to
handle current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.
The hours of trading for listed options may not coincide with the hours
during which the underlying financial instruments are traded. To the extent that
the option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.
OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. A Fund
will only sell OTC options (other than OTC currency options) that are subject to
a buy-back provision permitting a Fund to require the Counterparty to sell the
option back to a Fund at a formula price within seven days. Each Fund expects
generally to enter into OTC options that have cash settlement provisions,
although it is not required to do so.
Unless the parties provide for it, there is no central clearing or
guaranty function in an OTC option. As a result, if the Counterparty fails to
make or take delivery of the security, currency or other instrument underlying
an OTC option it has entered into with a Fund or fails to make a cash settlement
payment due in accordance with the terms of that option, a Fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Adviser must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. Each Fund will engage in OTC option transactions only with U.S.
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers" or broker/dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-term credit rating of A-1 from S&P or P-1 from
Moody's or an equivalent rating from any nationally recognized statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions, are
determined to be of equivalent credit quality by the Adviser. The staff of the
SEC currently takes the position that OTC options purchased by a Fund, and
portfolio securities "covering" the amount of a Fund's obligation pursuant to an
OTC option sold by it (the cost of the sell-back plus the in-the-money amount,
if any) are illiquid, and are subject to a Fund's limitation on investing no
more than 10% of its total assets in illiquid securities.
If a Fund sells a call option, the premium that it receives may serve
as a partial hedge, to the extent of the option premium, against a decrease in
the value of the underlying securities or instruments in its portfolio or will
increase the Fund's income. The sale of put options can also provide income.
Each Fund may purchase and sell call options on securities including
U.S. Treasury and agency securities, mortgage-backed securities, corporate debt
securities, equity securities (including convertible securities) and Eurodollar
instruments that are traded on U.S. and foreign securities exchanges and in the
over-the-counter markets, and on securities indices, currencies and futures
contracts. All calls sold by a Fund must be "covered" (i.e., the Fund must own
the securities or futures contract subject to the call) or must meet the asset
segregation requirements described below as long as the call is outstanding.
Even though a Fund will receive the option premium to help protect it against
loss, a call sold by the Fund exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying security or instrument and may require the Fund to hold a security or
instrument which it might otherwise have sold.
Each Fund may purchase and sell put options on securities including
U.S. Treasury and agency securities, mortgage-backed securities, foreign
sovereign debt, corporate debt securities, equity securities (including
convertible securities) and Eurodollar instruments (whether or not it holds the
above securities in its portfolio), and on securities indices, currencies and
futures contracts other than futures on individual corporate debt and individual
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equity securities. Neither Fund will sell put options if, as a result, more than
50% of a Fund's assets would be required to be segregated to cover its potential
obligations under such put options other than those with respect to futures and
options thereon. In selling put options, there is a risk that a Fund may be
required to buy the underlying security at a disadvantageous price above the
market price.
General Characteristics of Futures. Each Fund may enter into financial futures
contracts or purchase or sell put and call options on such futures as a hedge
against anticipated interest rate, currency or equity market changes, for
duration management and for risk management purposes. Futures are generally
bought and sold on the commodities exchanges where they are listed with payment
of initial and variation margin as described below. The sale of a futures
contract creates a firm obligation by a Fund, as seller, to deliver to the buyer
the specific type of financial instrument called for in the contract at a
specific future time for a specified price (or, with respect to index futures
and Eurodollar instruments, the net cash amount). Options on futures contracts
are similar to options on securities except that an option on a futures contract
gives the purchaser the right in return for the premium paid to assume a
position in a futures contract and obligates the seller to deliver such
position.
Each Fund's use of financial futures and options thereon will in all
cases be consistent with applicable regulatory requirements and in particular
the rules and regulations of the Commodity Futures Trading Commission and will
be entered into only for bona fide hedging, risk management (including duration
management) or other portfolio management purposes. Typically, maintaining a
futures contract or selling an option thereon requires a Fund to deposit with a
financial intermediary as security for its obligations an amount of cash or
other specified assets (initial margin) which initially is typically 1% to 10%
of the face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of a Fund. If
a Fund exercises an option on a futures contract it will be obligated to post
initial margin (and potential subsequent variation margin) for the resulting
futures position just as it would for any position. Futures contracts and
options thereon are generally settled by entering into an offsetting transaction
but there can be no assurance that the position can be offset prior to
settlement at an advantageous price, nor that delivery will occur.
Neither Fund will enter into a futures contract or related option
(except for closing transactions) if, immediately thereafter, the sum of the
amount of its initial margin and premiums on open futures contracts and options
thereon would exceed 5% of a Fund's total assets (taken at current value);
however, in the case of an option that is in-the-money at the time of the
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation. The segregation requirements with respect to futures contracts and
options thereon are described below.
Options on Securities Indices and Other Financial Indices. Each Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.
Currency Transactions. Each Fund may engage in currency transactions with
Counterparties in order to hedge the value of portfolio holdings denominated in
particular currencies against fluctuations in relative value. Currency
transactions include forward currency contracts, exchange listed currency
futures, exchange listed and OTC options on currencies, and currency swaps. A
forward currency contract involves a privately negotiated obligation to purchase
or sell (with delivery generally required) a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. A currency swap is
an agreement to exchange cash flows based on the notional difference among two
or more currencies and operates similarly to an interest rate swap, which is
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described below. A Fund may enter into currency transactions with Counterparties
which have received (or the guarantors of the obligations which have received) a
credit rating of A-1 or P-1 by S&P or Moody's, respectively, or that have an
equivalent rating from a NRSRO or are determined to be of equivalent credit
quality by the Adviser.
Each Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio positions
except as described below. Transaction hedging is entering into a currency
transaction with respect to specific assets or liabilities of a Fund, which will
generally arise in connection with the purchase or sale of its portfolio
securities or the receipt of income therefrom. Position hedging is entering into
a currency transaction with respect to portfolio security positions denominated
or generally quoted in that currency.
No Fund will enter into a transaction to hedge currency exposure to an
extent greater, after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to forward currency contracts entered into for
non-hedging purposes, in the case of International Bond Fund, or to proxy
hedging or cross hedging as described below.
Each Fund may also cross-hedge currencies by entering into transactions
to purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which a Fund has or in which a Fund expects to
have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing
or anticipated holdings of portfolio securities, each Fund may also engage in
proxy hedging. Proxy hedging is often used when the currency to which a Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. For example, if the Adviser considers that
the Austrian schilling is correlated to the German deutschemark (the "D-mark"),
a Fund holds securities denominated in schillings and the Adviser believes that
the value of schillings will decline against the U.S. dollar, the Adviser may
enter into a commitment or option to sell D-marks and buy dollars. Currency
hedging involves some of the same risks and considerations as other transactions
with similar instruments. Currency transactions can result in losses to a Fund
if the currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived
correlation between various currencies may not be present or may not be present
during the particular time that the Fund is engaging in proxy hedging. If a Fund
enters into a currency hedging transaction, the Fund will comply with the asset
segregation requirements described below.
Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to a Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.
Combined Transactions. Each Fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Adviser, it is in the best interests of the Fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
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into based on the Adviser's judgment that the combined strategies will reduce
risk or otherwise more effectively achieve the desired portfolio management
goal, it is possible that the combination will instead increase such risks or
hinder achievement of the portfolio management objective.
Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which a
Fund may enter are interest rate, currency and index swaps and the purchase or
sale of related caps, floors and collars. Each Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio, to protect against currency fluctuations, as a
duration management technique or to protect against any increase in the price of
securities a Fund anticipates purchasing at a later date. Each Fund intends to
use these transactions as hedges and not as speculative investments and will not
sell interest rate caps or floors where it does not own securities or other
instruments providing the income stream a Fund may be obligated to pay. Interest
rate swaps involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments with respect to a notional amount of principal.
A currency swap is an agreement to exchange cash flows on a notional amount of
two or more currencies based on the relative value differential among them and
an index swap is an agreement to swap cash flows on a notional amount based on
changes in the values of the reference indices. The purchase of a cap entitles
the purchaser to receive payments on a notional principal amount from the party
selling such cap to the extent that a specified index exceeds a predetermined
interest rate or amount. The purchase of a floor entitles the purchaser to
receive payments on a notional principal amount from the party selling such
floor to the extent that a specified index falls below a predetermined interest
rate or amount. A collar is a combination of a cap and a floor that preserves a
certain return within a predetermined range of interest rates or values.
Each Fund will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with a Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, the Adviser
and the Funds believe such obligations do not constitute senior securities under
the 1940 Act and, accordingly, will not treat them as being subject to its
borrowing restrictions. Neither Fund will enter into any swap, cap, floor or
collar transaction unless, at the time of entering into such transaction, the
unsecured long-term debt of the Counterparty, combined with any credit
enhancements, is rated at least A by S&P or Moody's or has an equivalent rating
from a NRSRO or is determined to be of equivalent credit quality by the Adviser.
If there is a default by the Counterparty, a Fund may have contractual remedies
pursuant to the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps, floors and collars are more recent innovations for which standardized
documentation has not yet been fully developed and, accordingly, they are less
liquid than swaps.
Eurodollar Instruments. Each Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. Each Fund might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and fixed
income instruments are linked.
Risks of Strategic Transactions Outside the U.S. When conducted outside the
U.S., Strategic Transactions may not be regulated as rigorously as in the U.S.,
may not involve a clearing mechanism and related guarantees, and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the U.S. of data on which to
make trading decisions, (iii) delays in a Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the U.S., (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the U.S., and (v) lower trading volume and
liquidity.
Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that a Fund segregate cash or liquid
assets with its custodian to the extent Fund obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency. In general, either the full amount of any obligation by a Fund to pay
or deliver securities or assets must be covered at all times by the securities,
instruments or currency required to be delivered, or, subject to any regulatory
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restrictions, an amount of cash or liquid assets at least equal to the current
amount of the obligation must be segregated with the custodian. The segregated
assets cannot be sold or transferred unless equivalent assets are substituted in
their place or it is no longer necessary to segregate them. For example, a call
option written by a Fund will require the Fund to hold the securities subject to
the call (or securities convertible into the needed securities without
additional consideration) or to segregate cash or liquid assets sufficient to
purchase and deliver the securities if the call is exercised. A call option sold
by a Fund on an index will require the Fund to own portfolio securities which
correlate with the index or to segregate cash or liquid assets equal to the
excess of the index value over the exercise price on a current basis. A put
option written by a Fund requires the Fund to segregate cash or liquid assets
equal to the exercise price.
Except when a Fund enters into a forward contract for the purchase or
sale of a security denominated in a particular currency, which requires no
segregation, a currency contract which obligates a Fund to buy or sell currency
will generally require the Fund to hold an amount of that currency or liquid
securities denominated in that currency equal to the Fund's obligations or to
segregate cash or liquid assets equal to the amount of the Fund's obligation.
OTC options entered into by a Fund, including those on securities,
currency, financial instruments or indices and OCC issued and exchange listed
index options, will generally provide for cash settlement. As a result, when the
Fund sells these instruments it will only segregate an amount of assets equal to
its accrued net obligations, as there is no requirement for payment or delivery
of amounts in excess of the net amount. These amounts will equal 100% of the
exercise price in the case of a non cash-settled put, the same as an OCC
guaranteed listed option sold by the Fund, or the in-the-money amount plus any
sell-back formula amount in the case of a cash-settled put or call. In addition,
when a Fund sells a call option on an index at a time when the in-the-money
amount exceeds the exercise price, the Fund will segregate, until the option
expires or is closed out, cash or cash equivalents equal in value to such
excess. OCC issued and exchange listed options sold by the Fund other than those
above generally settle with physical delivery, or with an election of either
physical delivery or cash settlement and the Fund will segregate an amount of
assets equal to the full value of the option. OTC options settling with physical
delivery, or with an election of either physical delivery or cash settlement
will be treated the same as other options settling with physical delivery.
In the case of a futures contract or an option thereon, a Fund must
deposit initial margin and possible daily variation margin in addition to
segregating assets sufficient to meet its obligation to purchase or provide
securities or currencies, or to pay the amount owed at the expiration of an
index-based futures contract. Such assets may consist of cash, cash equivalents,
liquid debt or equity securities or other acceptable assets.
With respect to swaps, a Fund will accrue the net amount of the excess,
if any, of its obligations over its entitlements with respect to each swap on a
daily basis and will segregate an amount of cash or liquid assets having a value
equal to the accrued excess. Caps, floors and collars require segregation of
assets with a value equal to a Fund's net obligation, if any.
Strategic Transactions may be covered by other means when consistent
with applicable regulatory policies. Each Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, a Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover, instead of segregating assets if the Fund held a
futures or forward contract, it could purchase a put option on the same futures
or forward contract with a strike price as high or higher than the price of the
contract held. Other Strategic Transactions may also be offset in combinations.
If the offsetting transaction terminates at the time of or after the primary
transaction no segregation is required, but if it terminates prior to such time,
assets equal to any remaining obligation would need to be segregated.
Each Fund's activities involving Strategic Transactions may be limited
by the requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), for qualification as a regulated investment company.
(See "TAXES.")
Investment Restrictions
The policies set forth below are fundamental policies of each Fund and
may not be changed with respect to a Fund without approval of a majority of the
outstanding voting securities of that Fund. As used in this Statement of
Additional Information a "majority of the outstanding voting securities of a
Fund" means the lesser of (1) 67% or more of the voting securities present at
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such meeting, if the holders of more than 50% of the outstanding voting
securities of the Fund are present or represented by proxy; or (2) more than 50%
of the outstanding voting securities of the Fund.
As a matter of fundamental policy, each Fund may not:
1. borrow money, except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time;
2. issue senior securities, except as permitted under the Investment
Company Act of 1940, as amended, and as interpreted or modified
by regulatory authority having jurisdiction, from time to time;
3. purchase physical commodities or contracts relating to physical
commodities;
4. concentrate its investments in a particular industry, as that
term is used in the Investment Company Act of 1940, as amended,
and as interpreted or modified by regulatory authority having
jurisdiction, from time to time;
5. engage in the business of underwriting securities issued by
others, except to the extent that the Fund may be deemed to be an
underwriter in connection with the disposition of portfolio
securities;
6. purchase or sell real estate, which term does not include
securities or companies which deal in real estate or interests
therein, except that a Fund reserves freedom of action to hold
and to sell real estate acquired as a result of a Fund's
ownership of securities; or
7. make loans to other persons, except (i) loans of portfolio
securities, and (ii) to the extent that entry into repurchase
agreements and the purchase of debt instruments or interests in
indebtedness in accordance with the Funds' investment objective
and policies may be deemed to be loans.
In addition, as a matter of fundamental policy Global Fund may not,
with respect to 75% of its total assets taken at market value, purchase more
than 10% of the voting securities of any one issuer, or invest more than 5% of
the value of its total assets in the securities of any one issuer, except
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment companies.
Other Investment Policies
The Directors of the Corporation have voluntarily adopted certain
policies and restrictions which are observed in the conduct of the Funds'
affairs. These represent intentions of the Directors based upon current
circumstances. They differ from fundamental investment policies in that they may
be changed or amended by action of the Directors without requiring prior notice
to or approval of shareholders.
As a matter of nonfundamental policy, each Fund may not:
(a) borrow money in an amount greater than 5% of its total assets,
except (i) for temporary or emergency purposes and (ii) by
engaging in reverse repurchase agreements, dollar rolls, or other
investments or transactions described in the Fund's registration
statement which may be deemed to be borrowings;
(b) enter into either of reverse repurchase agreements or dollar
rolls in an amount greater than 5% of its total assets;
(c) purchase securities on margin or make short sales, except (i)
short sales against the box, (ii) in connection with arbitrage
transactions , (iii) for margin deposits in connection with
futures contracts, options or other permitted investments, (iv)
that transactions in futures contracts and options shall not be
deemed to constitute selling securities short, and (v) that the
Fund may obtain such short-term credits as may be necessary for
the clearance of securities transactions;
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(d) purchase options, unless the aggregate premiums paid on all such
options held by the Fund at any time do not exceed 20% of its
total assets; or sell put options , if as a result, the aggregate
value of the obligations underlying such put options would exceed
50% of its total assets;
(e) enter into futures contracts or purchase options thereon unless
immediately after the purchase, the value of the aggregate
initial margin with respect to such futures contracts entered
into on behalf of the Fund and the premiums paid for such options
on futures contracts do not exceed 5% of the fair market value of
the Fund's total assets; provided that in the case of an option
that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in computing the 5% limit;
(f) purchase warrants if as a result , such securities, taken at the
lower of cost or market value, would represent more than 5% of
the value of the Fund's total assets (for this purpose, warrants
acquired in units or attached to securities will be deemed to
have no value); and
(g) lend portfolio securities in an amount greater than 5% of its
total assets.
With respect to International Bond Fund, restrictions with respect to
repurchase agreements shall be construed to be for repurchase agreements entered
into for the investment of available cash consistent with the Fund's repurchase
agreement procedures, not repurchase commitments entered into for general
investment purposes.
If a percentage restriction on investment or utilization of assets as
set forth under "Investment Restrictions" and "Other Investment Policies" above
is adhered to at the time an investment is made, a later change in percentage
resulting from changes in the value or the total cost of a Fund's assets will
not be considered a violation of the restriction.
PURCHASES
(See "Purchases" and "Transaction information" in the Funds' prospectuses.)
Additional Information About Opening an Account
Clients having a regular investment counsel account with the Adviser or
its affiliates and members of their immediate families, officers and employees
of the Adviser or of any affiliated organization and their immediate families,
members of the National Association of Securities Dealers, Inc. ("NASD") and
banks may, if they prefer, subscribe initially for at least $2,500 of Fund
shares through Scudder Investor Services, Inc. (the "Distributor") by letter,
telegram, or telephone.
Shareholders of other Scudder funds who have submitted an account
application and have certified a tax identification number, clients having a
regular investment counsel account with the Adviser or its affiliates and
members of their immediate families, officers and employees of the Adviser or of
any affiliated organization and their immediate families, members of the NASD,
and banks may open an account by wire. These investors must call 1-800-225-5163
to get an account number. During the call, the investor will be asked to
indicate the Fund name, amount to be wired ($2,500 minimum), name of bank or
trust company from which the wire will be sent, the exact registration of the
new account, the tax identification or Social Security number, address and
telephone number. The investor must then call the bank to arrange a wire
transfer to The Scudder Funds, State Street Bank and Trust Company, Boston, MA
02110, ABA Number 011000028, DDA Account Number 9903-5552. The investor must
give the Scudder fund name, account name and the new account number. Finally,
the investor must send a completed and signed application form to the Fund
promptly.
The minimum initial purchase amount is less than $2,500 under certain
special plan accounts.
Additional Information About Making Subsequent Investments By Telephone Order
With respect to Global Fund, subsequent purchase orders for $10,000 or
more, and for an amount not greater than four times the value of the
shareholder's account, may be placed by telephone, telegram, etc., by
established shareholders (except by Scudder Individual Retirement Account (IRA),
Scudder Horizon Plan, Scudder Profit Sharing and Money Purchase Pension Plans,
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Scudder 401(k) and Scudder 403(b) Plan holders), members of the NASD and banks.
Orders placed in this manner may be directed to any office of the Distributor
listed in the Fund's prospectus. A confirmation of the purchase will be mailed
out promptly following receipt of a request to buy. Federal regulations require
that payment be received within three business days. If payment is not received
within that time, the order is subject to cancellation. In the event of such
cancellation or cancellation at the purchaser's request, the purchaser will be
responsible for any loss incurred by the Fund or the principal underwriter by
reason of such cancellation. If the purchaser is a shareholder, the Corporation
shall have the authority, as agent of the shareholder, to redeem shares in the
account to reimburse the Fund or the principal underwriter for the loss
incurred. Net losses on such transactions which are not recovered from the
purchaser will be absorbed by the principal underwriter. Any net profit on the
liquidation of unpaid shares will accrue to the Fund.
Additional Information About Making Subsequent Investments by QuickBuy
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the QuickBuy program, may purchase shares of a Fund by telephone. Through
this service shareholders may purchase up to $250,000. To purchase shares by
QuickBuy, shareholders should call before the close of regular trading on the
Exchange, normally 4 p.m. eastern time. Proceeds in the amount of your purchase
will be transferred from your bank checking account two or three business days
following your call. For requests received by the close of regular trading on
the Exchange, shares will be purchased at the net asset value per share
calculated at the close of trading on the day of your call. QuickBuy requests
received after the close of regular trading on the Exchange will begin their
processing and be purchased at the net asset value calculated the following
business day. If you purchase shares by QuickBuy and redeem them within seven
days of the purchase, a Fund may hold the redemption proceeds for a period of up
to seven business days. If you purchase shares and there are insufficient funds
in your bank account the purchase will be canceled and you will be subject to
any losses or fees incurred in the transaction. QuickBuy transactions are not
available for Scudder IRA accounts and most other retirement plan accounts.
In order to request purchases by QuickBuy, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account from which the purchase payment will be debited.
New investors wishing to establish QuickBuy may so indicate on the application.
Existing shareholders who wish to add QuickBuy to their account may do so by
completing a QuickBuy Enrollment Form. After sending in an enrollment form
shareholders should allow 15 days for this service to be available.
Each Fund employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine. and to discourage fraud. To the extent
that a Fund does not follow such procedures, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. A Fund will not be liable for
acting upon instructions communicated by telephone that it reasonably believes
to be genuine.
Checks
A certified check is not necessary, but checks are only accepted
subject to collection at full face value in U.S. funds and must be drawn on, or
payable through, a U.S. bank.
If shares are purchased by a check which proves to be uncollectible,
the Corporation reserves the right to cancel the purchase immediately and the
purchaser will be responsible for any loss incurred by a Fund or the principal
underwriter by reason of such cancellation. If the purchaser is a shareholder,
the Corporation shall have the authority, as agent of the shareholder, to redeem
shares in the account to reimburse a Fund or the principal underwriter for the
loss incurred. Investors whose orders have been canceled may be prohibited from
or restricted in placing future orders in any of the Scudder funds.
Wire Transfer of Federal Funds
To obtain the net asset value determined as of the close of regular
trading on the New York Stock Exchange (the "Exchange") (normally 4 p.m. eastern
time) on a selected day, your bank must forward federal funds by wire transfer
and provide the required account information so as to be available to a Fund
prior to 4 p.m.
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To purchase shares of International Bond Fund and obtain the same day
dividend you must have your bank forward federal funds by wire transfer and
provide the required account information so as to be available to International
Bond Fund prior to twelve o'clock noon eastern time on that day. If you wish to
make a purchase of $500,000 or more you should notify the Fund's transfer agent,
Scudder Service Corporation (the "Transfer Agent") of such a purchase by calling
1-800-225-5163. If either the federal funds or the account information is
received after twelve o'clock noon eastern time, but both the funds and the
information are made available before the close of regular trading on the
Exchange on any business day, shares will be purchased at net asset value
determined on that day but will not receive the dividend; in such cases,
dividends commence on the next business day.
The bank sending an investor's federal funds by bank wire may charge
for the service. Presently, the Distributor pays a fee for receipt by State
Street Bank and Trust Company of "wired funds," but the right to charge
investors for this service is reserved.
Boston banks are presently closed on certain local holidays although
the Exchange may be open. These holidays are Columbus Day (the 2nd Monday in
October) and Veterans Day (November 11). Investors are not able to purchase
shares by wiring federal funds on such holidays because State Street Bank and
Trust Company is not open to receive such federal funds on behalf of a Fund.
Share Price
Purchases will be filled without sales charge at the net asset value
next computed after receipt of the application in good order. Net asset value
normally will be computed as of the close of regular trading on the Exchange on
each day during which the Exchange is open for trading. Orders received after
the close of regular trading on the Exchange will receive the next day's net
asset value. If the order has been placed by a member of the NASD, other than
the Distributor, it is the responsibility of that member broker, rather than the
Funds, to forward the purchase order to the Transfer Agent in Boston by the
close of regular trading on the Exchange.
Share Certificates
Due to the desire of the Corporation's management to afford ease of
redemption, certificates will not be issued to indicate ownership in the Funds.
Share certificates now in a shareholder's possession may be sent to the Funds'
Transfer Agent for cancellation and credit to such shareholder's account.
Shareholders who prefer may hold the certificates in their possession until they
wish to exchange or redeem such shares.
Other Information
If purchases or redemptions of the Funds' shares are arranged and
settlement is made, at an investor's election, through a member of the NASD,
other than the Distributor, that member may, at its discretion, charge a fee for
that service. The Board of Directors and the Distributor, also the Funds'
principal underwriter, each has the right to limit the amount of purchases by,
and to refuse to sell to, any person. The Directors and the Distributor may
suspend or terminate the offering of shares of either Fund at any time for any
reason.
The "Tax Identification Number" section of the application must be
completed when opening an account. Applications and purchase orders without a
correct certified tax identification number and certain other certified
information (e.g., certification of exempt status from exempt organizations)
will be returned to the investor.
The Corporation may issue shares of either Fund at net asset value in
connection with any merger or consolidation with, or acquisition of the assets
of, any investment company or personal holding company, subject to the
requirements of the 1940 Act.
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EXCHANGES AND REDEMPTIONS
(See "Exchanges and redemptions" and "Transaction information" in
the Funds' prospectuses.)
Exchanges
Exchanges are comprised of a redemption from one Scudder fund and a
purchase into another Scudder fund. The purchase side of the exchange either may
be an additional investment into an existing account or may involve opening a
new account in the other fund. When an exchange involves a new account, the new
account will be established with the same registration, tax identification
number, address, telephone redemption option, "Scudder Automated Information
Line" (SAIL) transaction authorization and dividend option as the existing
account. Other features will not carry over automatically to the new account.
Exchanges to a new fund account must be for a minimum of $2,500. When an
exchange represents an additional investment into an existing account, the
account receiving the exchange proceeds must have identical registration, tax
identification number, address, and account options/features as the account of
origin. Exchanges into an existing account must be for $100 or more.
If the account receiving the exchange proceeds is to be different in
any respect, the exchange request must be in writing and must contain an
original signature guarantee as described under "Transaction information --
Redeeming shares -- Signature guarantees" in the Funds' prospectuses.
Exchange orders received before the close of regular trading on the
Exchange on any business day will ordinarily be executed at respective net asset
values determined on that day. Exchange orders received after the close of
trading will be executed on the following business day.
Investors may also request, at no extra charge, to have exchanges
automatically executed on a predetermined schedule from one Scudder fund to an
existing account in another Scudder fund, at current net asset value, through
Scudder's Automatic Exchange Program. Exchanges must be for a minimum of $50.
Shareholders may add this free feature over the telephone or in writing.
Automatic Exchanges will continue until the shareholder requests by telephone or
in writing to have the feature removed, or until the originating account is
depleted. The Corporation and the Transfer Agent each reserves the right to
suspend or terminate the privilege of the Automatic Exchange Program at any
time.
There is no charge to the shareholder for any exchange described above.
An exchange into another Scudder fund is a redemption of shares, and therefore
may result in tax consequences (gain or loss) to the shareholder, and the
proceeds of such an exchange may be subject to backup withholding (see "TAXES").
Investors currently receive the exchange privilege, including exchange
by telephone, automatically without having to elect it. The Funds employ
procedures, including recording telephone calls, testing a caller's identity,
and sending written confirmation of telephone transactions, designed to give
reasonable assurance that instructions communicated by telephone are genuine,
and to discourage fraud. To the extent that each Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Funds will not be liable for acting upon
instructions communicated by telephone that they reasonably believe to be
genuine. The Funds and the Transfer Agent each reserves the right to suspend or
terminate the privilege of exchanging by telephone or fax at any time.
The Scudder funds into which investors may make an exchange are listed
under "THE SCUDDER FAMILY OF FUNDS" herein. Before making an exchange,
shareholders should obtain from the Distributor a prospectus of the Scudder fund
into which the exchange is being contemplated. The exchange privilege may not be
available for certain Scudder funds. For more information, please call
1-800-225-5163.
Scudder retirement plans may have different exchange requirements.
Please refer to appropriate plan literature.
19
<PAGE>
Redemption by Telephone
Shareholders currently receive the right, automatically without having
to elect it, to redeem by telephone up to $50,000 and have the proceeds mailed
to their address of record. Shareholders may request to have the proceeds mailed
or wired to their predesignated bank account. In order to request redemptions by
telephone, shareholders must have completed and returned to the Transfer Agent
an application, including the designation of a bank account to which the
redemption proceeds are to be sent.
(a) NEW INVESTORS wishing to establish the telephone redemption
privilege must complete the appropriate section on the
application.
(b) EXISTING SHAREHOLDERS (except those who are Scudder IRA, Scudder
pension and profit-sharing, Scudder 401(k) and Scudder 403(b)
Planholders) who wish to establish telephone redemption to a
predesignated bank account or who want to change the bank account
previously designated to receive redemption proceeds should
either return a Telephone Redemption Option Form (available upon
request), or send a letter identifying the account and specifying
the exact information to be changed. The letter must be signed
exactly as the shareholder's name(s) appears on the account. An
original signature and an original signature guarantee are
required for each person in whose name the account is registered.
If a request for a redemption to a shareholder's bank account is made
by telephone or fax, payment will be made by Federal Reserve bank wire to the
bank account designated on the application, unless a request is made that the
redemption be mailed to the designated bank account. There will be a $5 charge
for all wire redemptions.
Note: Investors designating a savings bank to receive their
telephone redemption proceeds are advised that if the savings
bank is not a participant in the Federal Reserve System,
redemption proceeds must be wired through a commercial bank
which is a correspondent of the savings bank. As this may
delay receipt by the shareholder's account, it is suggested
that investors wishing to use a savings bank discuss wire
procedures with their bank and submit any special wire
transfer information with the telephone redemption
authorization. If appropriate wire information is not
supplied, redemption proceeds will be mailed to the designated
bank.
The Funds employ procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that each Fund does not follow such procedures, it may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Funds will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
Redemption by QuickSell
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the QuickSell program may sell shares of a Fund by telephone. Redemptions
must be for at least $250. Proceeds in the amount of your redemption will be
transferred to your bank checking account two or three business days following
your call. For requests received by the close of regular trading on the
Exchange, normally 4:00 p.m. eastern time, shares will be redeemed at the net
asset value per share calculated at the close of trading on the day of your
call. QuickSell requests received after the close of regular trading on the
Exchange will begin their processing and be redeemed at the net asset value
calculated the following business day. QuickSell transactions are not available
for Scudder IRA accounts and most other retirement plan accounts.
In order to request redemptions by QuickSell, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account to which redemption proceeds will be credited. New
investors wishing to establish QuickSell may so indicate on the application.
Existing shareholders who wish to add QuickSell to their account may do so by
completing a QuickSell Enrollment Form. After sending in an enrollment form,
shareholders should allow for 15 days for this service to be available.
20
<PAGE>
Each Fund employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that a Fund does not follow such procedures, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. A Fund will not be liable for
acting upon instructions communicated by telephone that it reasonably believes
to be genuine.
Redemption by Mail or Fax
Any existing share certificates representing shares being redeemed must
accompany a request for redemption and be duly endorsed or accompanied by a
proper stock assignment form with a signature guarantee as explained in the
Funds' prospectuses.
In order to ensure proper authorization before redeeming shares, the
Transfer Agent may request additional documents such as, but not restricted to,
stock powers, trust instruments, certificates of death, appointments as
executor, certificates of corporate authority and waivers of tax required in
some states when settling estates.
It is suggested that shareholders holding share certificates or shares
registered in other than individual names contact the Transfer Agent prior to
redemptions to ensure that all necessary documents accompany the request. When
shares are held in the name of a corporation, trust, fiduciary agent, attorney
or partnership, the Transfer Agent requires, in addition to the stock power,
certified evidence of authority to sign. These procedures are for the protection
of shareholders and should be followed to ensure prompt payment. Redemption
requests must not be conditional as to date or price of the redemption. Proceeds
of a redemption will be sent within seven business days after receipt by the
Transfer Agent of a request for redemption that complies with the above
requirements. Delays of more than seven days of payment for shares tendered for
redemption may result but only until the purchase check has cleared.
The requirements for IRA redemptions are different from those for
regular accounts. For more information, please call 1-800-225-5163.
Redemption-in-Kind
The Corporation reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase order by
making payment in whole or in part in readily marketable securities chosen by
the Corporation and valued as they are for purposes of computing a Fund's net
asset value (a redemption-in-kind). If payment is made in securities, a
shareholder may incur transaction expenses in converting these securities into
cash. The Corporation has elected, however, to be governed by Rule 18f-1 under
the 1940 Act as a result of which the Corporation is obligated to redeem shares,
with respect to any one shareholder during any 90-day period, solely in cash up
to the lesser of $250,000 or 1% of the net asset value of the relevant Fund at
the beginning of the period.
Other Information
Clients, officers or employees of the Adviser or of an affiliated
organization, and members of such clients', officers' or employees' immediate
families, banks and members of the NASD may direct repurchase requests to a Fund
through Scudder Investor Services, Inc. at Two International Place, Boston,
Massachusetts 02110-4103 by letter, fax, TWX, or telephone. A two-part
confirmation will be mailed out promptly after receipt of the repurchase
request. A written request in good order with a proper original signature
guarantee, as described in each Fund's prospectus under "Transaction information
- -- Signature guarantees," should be sent with a copy of the invoice to Scudder
Funds, c/o Scudder Confirmed Processing, Two International Place, Boston,
Massachusetts 02110-4103. Failure to deliver shares or required documents (see
above) by the settlement date may result in cancellation of the trade and the
shareholder will be responsible for any loss incurred by a Fund or the principal
underwriter by reason of such cancellation. Net losses on such transactions
which are not recovered from the shareholder will be absorbed by the principal
underwriter. Any net gains so resulting will accrue to a Fund. For this group,
repurchases will be carried out at the net asset value next computed after such
repurchase requests have been received. The arrangements described in this
paragraph for repurchasing shares are discretionary and may be discontinued at
any time.
If a shareholder redeems all shares in the account after the record
date of a dividend, the shareholder will receive in addition to the net asset
value thereof, all declared but unpaid dividends thereon. The value of shares
21
<PAGE>
redeemed or repurchased may be more or less than the shareholder's cost
depending on the net asset value at the time of redemption or repurchase. The
Corporation does not impose a redemption or repurchase charge. Redemption of
shares, including an exchange into another Scudder fund, may result in tax
consequences (gain or loss) to the shareholder and the proceeds of such
redemptions may be subject to backup withholding. (See "TAXES.")
Shareholders who wish to redeem shares from Special Plan Accounts
should contact the employer, trustee or custodian of the Plan for the
requirements.
The determination of net asset value may be suspended at times and a
shareholder's right to redeem shares and to receive payment may be suspended at
times during which (a) the Exchange is closed, other than customary weekend and
holiday closings, (b) trading on the Exchange is restricted for any reason, (c)
an emergency exists as a result of which disposal by a Fund of securities owned
by it is not reasonably practicable or it is not reasonably practicable for a
Fund fairly to determine the value of its net assets, or (d) the SEC may by
order permit such a suspension for the protection of the Corporation's
shareholders; provided that applicable rules and regulations of the SEC (or any
succeeding governmental authority) shall govern as to whether the conditions
prescribed in (b) or (c) exist.
Shareholders should maintain a share balance worth at least $2,500
($1,000 for IRAs, Uniform Gift to Minor Act, and Uniform Trust to Minor Act
accounts), which amount may be changed by the Board of Directors. Scudder
retirement plans have similar or lower minimum balance requirements. A
shareholder may open an account with at least $1,000 ($500 for an UGMA, UTMA,
IRA and other retirement accounts), if an automatic investment plan (AIP) of
$100/month ($50/month for an UGMA, UTMA, IRA and other retirement accounts) is
established.
Shareholders who maintain a non-fiduciary account balance of less than
$2,500 in a Fund, without establishing an AIP, will be assessed an annual $10.00
per fund charge with the fee to be reinvested in the Fund. The $10.00 charge
will not apply to shareholders with a combined household account balance in any
of the Scudder Funds of $25,000 or more. Each Fund reserves the right, following
60 days' written notice to shareholders, to redeem all shares in accounts below
$250, including accounts of new investors, where a reduction in value has
occurred due to a redemption or exchange out of the account. Each Fund will mail
the proceeds of the redeemed account to the shareholder at the address of
record. Reductions in value that result solely from market activity will not
trigger an involuntary redemption. UGMA, UTMA, IRA and other retirement accounts
will not be assessed the $10.00 charge or be subject to automatic liquidation.
FEATURES AND SERVICES OFFERED BY THE FUNDS
(See "Shareholder benefits" in the Funds' prospectuses.)
The Pure No-Load(TM) Concept
Investors are encouraged to be aware of the full ramifications of
mutual fund fee structures, and of how Scudder distinguishes its funds from the
vast majority of mutual funds available today. The primary distinction is
between load and no-load funds.
Load funds generally are defined as mutual funds that charge a fee for
the sale and distribution of fund shares. There are three types of loads:
front-end loads, back-end loads, and asset-based 12b-1 fees. 12b-1 fees are
distribution-related fees charged against fund assets and are distinct from
service fees, which are charged for personal services and/or maintenance of
shareholder accounts. Asset-based sales charges and service fees are typically
paid pursuant to distribution plans adopted under 12b-1 under the 1940 Act.
A front-end load is a sales charge, which can be as high as 8.50% of
the amount invested. A back-end load is a contingent deferred sales charge,
which can be as high as 8.50% of either the amount invested or redeemed. The
maximum front-end or back-end load varies, and depends upon whether or not a
fund also charges a 12b-1 fee and/or a service fee or offers investors various
sales-related services such as dividend reinvestment. The maximum charge for a
12b-1 fee is 0.75% of a fund's average annual net assets, and the maximum charge
for a service fee is 0.25% of a fund's average annual net assets.
22
<PAGE>
A no-load fund does not charge a front-end or back-end load, but can
charge a small 12b-1 fee and/or service fee against fund assets. Under the
National Association of Securities Dealers Rules of Fair Practice, a mutual fund
can call itself a "no-load" fund only if the 12b-1 fee and/or service fee do not
exceed 0.25% of a fund's average annual net assets.
Because Scudder funds do not pay any asset-based sales charges or
service fees, Scudder developed and trademarked the phrase pure no-load(TM) to
distinguish Scudder funds from other no-load mutual funds. Scudder pioneered the
no-load concept when it created the nation's first no-load fund in 1928, and
later developed the nation's first family of no-load mutual funds.
The following chart shows the potential long-term advantage of
investing $10,000 in a Scudder pure no-load fund over investing the same amount
in a load fund that collects an 8.50% front-end load, a load fund that collects
only a 0.75% 12b-1 and/or service fee, and a no-load fund charging only a 0.25%
12b-1 and/or service fee. The hypothetical figures in the chart show the value
of an account assuming a constant 10% rate of return over the time periods
indicated and reinvestment of dividends and distributions.
<TABLE>
<CAPTION>
ScudderPure No-Load Fund
No-Load(TM) Load Fund with with 0.25% 12b-1
YEARS Fund 8.50% Load Fund 0.75% 12b-1 Fee Fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 $ 25,937 $ 23,733 $ 24,222 $ 25,354
15 41,772 38,222 37,698 40,371
20 67,275 61,557 58,672 64,282
</TABLE>
Investors are encouraged to review the fee tables on page 2 of each
Fund's prospectus for more specific information about the rates at which
management fees and other expenses are assessed.
Internet access
World Wide Web Site -- The address of the Scudder Funds site is
http://funds.scudder.com. The site offers guidance on global investing and
developing strategies to help meet financial goals and provides access to the
Scudder investor relations department via e-mail. The site also enables users to
access or view fund prospectuses and profiles with links between summary
information in Profiles and details in the Prospectus. Users can fill out new
account forms on-line, order free software, and request literature on funds.
The site is designed for interactivity, simplicity and maneuverability.
A section entitled "Planning Resources" provides information on asset
allocation, tuition, and retirement planning to users who fill out interactive
"worksheets." Investors can easily establish a "Personal Page," that presents
price information, updated daily, on funds they're interested in following. The
"Personal Page" also offers easy navigation to other parts of the site. Fund
performance data from both Scudder and Lipper Analytical Services, Inc. are
available on the site. Also offered on the site is a news feature, which
provides timely and topical material on the Scudder Funds.
Scudder has communicated with shareholders and other interested parties
on Prodigy since 1988 and has participated since 1994 in GALT's Networth
"financial marketplace" site on the Internet. The firm made Scudder Funds
information available on America Online in early 1996.
Account Access -- Scudder is among the first mutual fund families to allow
shareholders to manage their fund accounts through the World Wide Web. Scudder
Fund shareholders can view a snapshot of current holdings, review account
activity and move assets between Scudder Fund accounts.
23
<PAGE>
Scudder's personal portfolio capabilities -- known as SEAS (Scudder
Electronic Account Services) -- are accessible only by current Scudder Fund
shareholders who have set up a Personal Page on Scudder's Web site. Using a
secure Web browser, shareholders sign on to their account with their Social
Security number and their SAIL password. As an additional security measure,
users can change their current password or disable access to their portfolio
through the World Wide Web.
An Account Activity option reveals a financial history of transactions
for an account, with trade dates, type and amount of transaction, share price
and number of shares traded. For users who wish to trade shares between Scudder
Funds, the Fund Exchange option provides a step-by-step procedure to exchange
shares among existing fund accounts or to new Scudder Fund accounts.
A Call Me(TM) feature enables users to speak with a Scudder Investor
Relations telephone representative while viewing their account on the Web site.
In order to use the Call Me(TM) feature, an individual must have two phone lines
and enter on the screen the phone number that is not being used to connect to
the Internet. They are connected to the next available Scudder Investor
Relations representative from 8 a.m. to 8 p.m. eastern time.
Dividends and Capital Gains Distribution Options
Investors have freedom to choose whether to receive cash or to reinvest
any dividends from net investment income or distributions from realized capital
gains in additional shares of a Fund. A change of instructions for the method of
payment must be received by the Transfer Agent at least five days prior to a
dividend record date. Shareholders also may change their dividend option either
by calling 1-800-225-5163 or by sending written instructions to the Transfer
Agent. Please include your account number with your written request. See "How to
contact Scudder" in the Funds' prospectuses for the address.
Reinvestment is usually made at the closing net asset value determined
on the business day following the record date. Investors may leave standing
instructions with the Transfer Agent designating their option for either
reinvestment or cash distribution of any income dividends or capital gains
distributions. If no election is made, dividends and distributions will be
invested in additional shares of a Fund.
Investors may also have dividends and distributions automatically
deposited in their predesignated bank account through Scudder's
DistributionsDirect Program. Shareholders who elect to participate in the
DistributionsDirect Program, and whose predesignated checking account of record
is with a member bank of the Automated Clearing House Network (ACH) can have
income and capital gain distributions automatically deposited to their personal
bank account usually within three business days after the Fund pays its
distribution. A DistributionsDirect request form can be obtained by calling
1-800-225-5163. Confirmation statements will be mailed to shareholders as
notification that distributions have been deposited.
Investors choosing to participate in Scudder's Automatic Withdrawal
Plan must reinvest any dividends or capital gains. For most retirement plan
accounts, the reinvestment of dividends and capital gains is also required.
Scudder Investor Centers
Investors may visit any of the Investor Centers maintained by the
Distributor listed in the Funds' prospectuses. The Centers are designed to
provide individuals with services during any business day. Investors may pick up
literature or obtain assistance with opening an account, adding monies or
special options to existing accounts, making exchanges within the Scudder Family
of Funds, redeeming shares or opening retirement plans. Checks should not be
mailed to the Centers but should be mailed to "The Scudder Funds" at the address
listed under "How to contact Scudder" in the prospectuses.
Reports to Shareholders
The Trust issues shareholders unaudited semiannual financial statements
and annual financial statements audited by independent accountants, including a
list of investments held and statements of assets and liabilities, operations,
changes in net assets and financial highlights. The Trust presently intends to
distribute to shareholders informal quarterly reports during the intervening
quarters, containing a statement of the investments of the Funds.
24
<PAGE>
Transaction Summaries
Annual summaries of all transactions in each Fund account are available
to shareholders. The summaries may be obtained by calling 1-800-225-5163.
THE SCUDDER FAMILY OF FUNDS
(See "Investment products and services" in the Funds' prospectuses.)
The Scudder Family of Funds is America's first family of mutual funds
and the nation's oldest family of no-load mutual funds. To assist investors in
choosing a Scudder fund, descriptions of the Scudder funds' objectives follow.
MONEY MARKET
Scudder U.S. Treasury Money Fund seeks to provide safety, liquidity and
stability of capital and, consistent therewith, to provide current
income. The Fund seeks to maintain a constant net asset value of $1.00
per share, although in certain circumstances this may not be possible,
and declares dividends daily.
Scudder Cash Investment Trust ("SCIT") seeks to maintain the stability
of capital and, consistent therewith, to maintain the liquidity of
capital and to provide current income. SCIT seeks to maintain a
constant net asset value of $1.00 per share, although in certain
circumstances this may not be possible, and declares dividends daily.
Scudder Money Market Series seeks to provide investors with as high a
level of current income as is consistent with its investment polices
and with preservation of capital and liquidity. The Fund seeks to
maintain a constant net asset value of $1.00 per share, but there is no
assurance that it will be able to do so. The institutional class of
shares of this Fund is not within the Scudder Family of Funds.
Scudder Government Money Market Series seeks to provide investors with
as high a level of current income as is consistent with its investment
polices and with preservation of capital and liquidity. The Fund seeks
to maintain a constant net asset value of $1.00 per share, but there is
no assurance that it will be able to do so. The institutional class of
shares of this Fund is not within the Scudder Family of Funds.
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund ("STFMF") seeks to provide income exempt
from regular federal income tax and stability of principal through
investments primarily in municipal securities. STFMF seeks to maintain
a constant net asset value of $1.00 per share, although in extreme
circumstances this may not be possible.
Scudder Tax Free Money Market Series seeks to provide investors with as
high a level of current income that cannot be subjected to federal
income tax by reason of federal law as is consistent with its
investment policies and with preservation of capital and liquidity. The
Fund seeks to maintain a constant net asset value of $1.00 per share,
but there is no assurance that it will be able to do so. The
institutional class of shares of this Fund is not within the Scudder
Family of Funds.
Scudder California Tax Free Money Fund* seeks stability of capital and
the maintenance of a constant net asset value of $1.00 per share while
providing California taxpayers income exempt from both California State
personal and regular federal income taxes. The Fund is a professionally
managed portfolio of high quality, short-term California municipal
securities. There can be no assurance that the stable net asset value
will be maintained.
- ----------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
25
<PAGE>
Scudder New York Tax Free Money Fund* seeks stability of capital and
the maintenance of a constant net asset value of $1.00 per share, while
providing New York taxpayers income exempt from New York State and New
York City personal income taxes and regular federal income tax. There
can be no assurance that the stable net asset value will be maintained.
TAX FREE
Scudder Limited Term Tax Free Fund seeks to provide as high a level of
income exempt from regular federal income tax as is consistent with a
high degree of principal stability.
Scudder Medium Term Tax Free Fund seeks to provide a high level of
income free from regular federal income taxes and to limit principal
fluctuation. The Fund will invest primarily in high-grade,
intermediate-term bonds.
Scudder Managed Municipal Bonds seeks to provide income exempt from
regular federal income tax primarily through investments in high-grade,
long-term municipal securities.
Scudder High Yield Tax Free Fund seeks to provide a high level of
interest income, exempt from regular federal income tax, from an
actively managed portfolio consisting primarily of investment-grade
municipal securities.
Scudder California Tax Free Fund* seeks to provide California taxpayers
with income exempt from both California State personal income and
regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of California municipal securities.
Scudder Massachusetts Limited Term Tax Free Fund* seeks to provide
Massachusetts taxpayers with as high a level of income exempt from
Massachusetts personal income tax and regular federal income tax, as is
consistent with a high degree of price stability, through a
professionally managed portfolio consisting primarily of
investment-grade municipal securities.
Scudder Massachusetts Tax Free Fund* seeks to provide Massachusetts
taxpayers with income exempt from both Massachusetts personal income
tax and regular federal income tax. The Fund is a professionally
managed portfolio consisting primarily of investment-grade municipal
securities.
Scudder New York Tax Free Fund* seeks to provide New York taxpayers
with income exempt from New York State and New York City personal
income taxes and regular federal income tax. The Fund is a
professionally managed portfolio consisting primarily of New York
municipal securities.
Scudder Ohio Tax Free Fund* seeks to provide Ohio taxpayers with income
exempt from both Ohio personal income tax and regular federal income
tax. The Fund is a professionally managed portfolio consisting
primarily of investment-grade municipal securities.
Scudder Pennsylvania Tax Free Fund* seeks to provide Pennsylvania
taxpayers with income exempt from both Pennsylvania personal income tax
and regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of investment-grade municipal
securities.
U.S. INCOME
Scudder Short Term Bond Fund seeks to provide a high level of income
consistent with a high degree of principal stability by investing
primarily in high quality short-term bonds.
Scudder Zero Coupon 2000 Fund seeks to provide as high an investment
return over a selected period as is consistent with investment in U.S.
Government securities and the minimization of reinvestment risk.
Scudder GNMA Fund seeks to provide high current income primarily from
U.S. Government guaranteed mortgage-backed (Ginnie Mae) securities.
26
<PAGE>
Scudder Income Fund seeks a high level of income, consistent with the
prudent investment of capital, through a flexible investment program
emphasizing high-grade bonds.
Scudder High Yield Bond Fund seeks a high level of current income and,
secondarily, capital appreciation through investment primarily in below
investment-grade domestic debt securities.
GLOBAL INCOME
Scudder Global Bond Fund seeks to provide total return with an emphasis
on current income by investing primarily in high-grade bonds
denominated in foreign currencies and the U.S. dollar. As a secondary
objective, the Fund will seek capital appreciation.
Scudder International Bond Fund seeks to provide income primarily by
investing in a managed portfolio of high-grade international bonds. As
a secondary objective, the Fund seeks protection and possible
enhancement of principal value by actively managing currency, bond
market and maturity exposure and by security selection.
Scudder Emerging Markets Income Fund seeks to provide high current
income and, secondarily, long-term capital appreciation through
investments primarily in high-yielding debt securities issued by
governments and corporations in emerging markets.
ASSET ALLOCATION
Scudder Pathway Series: Conservative Portfolio seeks primarily current
income and secondarily long-term growth of capital. In pursuing these
objectives, the Portfolio, under normal market conditions, will invest
substantially in a select mix of Scudder bond mutual funds, but will
have some exposure to Scudder equity mutual funds.
Scudder Pathway Series: Balanced Portfolio seeks to provide investors
with a balance of growth and income by investing in a select mix of
Scudder money market, bond and equity mutual funds.
Scudder Pathway Series: Growth Portfolio seeks to provide investors
with long-term growth of capital. In pursuing this objective, the
Portfolio will, under normal market conditions, invest predominantly in
a select mix of Scudder equity mutual funds designed to provide
long-term growth.
Scudder Pathway Series: International Portfolio seeks maximum total
return for investors. Total return consists of any capital appreciation
plus dividend income and interest. To achieve this objective, the
Portfolio invests in a select mix of established international and
global Scudder funds.
U.S. GROWTH AND INCOME
Scudder Balanced Fund seeks a balance of growth and income from a
diversified portfolio of equity and fixed-income securities. The Fund
also seeks long-term preservation of capital through a quality-oriented
approach that is designed to reduce risk.
Scudder Dividend & Growth Fund seeks high current income and long-term
growth of capital through investment in income paying equity
securities.
Scudder Growth and Income Fund seeks long-term growth of capital,
current income, and growth of income.
Scudder S&P 500 Index Fund seeks to provide investment results that,
before expenses, correspond to the total return of common stocks
publicly traded in the United States, as represented by the Standard &
Poor's 500 Composite Stock Price Index.
27
<PAGE>
Scudder Real Estate Investment Fund seeks long-term capital growth and
current income by investing primarily in equity securities of companies
in the real estate industry.
U.S. GROWTH
Value
Scudder Large Company Value Fund seeks to maximize long-term capital
appreciation through a value-driven investment program.
Scudder Value Fund** seeks long-term growth of capital through
investment in undervalued equity securities.
Scudder Small Company Value Fund invests for long-term growth of
capital by seeking out undervalued stocks of small U.S. companies.
Scudder Micro Cap Fund seeks long-term growth of capital by investing
primarily in a diversified portfolio of U.S. micro-capitalization
("micro-cap") common stocks.
Growth
Scudder Classic Growth Fund** seeks to provide long-term growth of
capital with reduced share price volatility compared to other growth
mutual funds.
Scudder Large Company Growth Fund seeks to provide long-term growth of
capital through investment primarily in the equity securities of
seasoned, financially strong U.S. growth companies.
Scudder Development Fund seeks long-term growth of capital by investing
primarily in securities of small and medium-size growth companies.
Scudder 21st Century Growth Fund seeks long-term growth of capital by
investing primarily in the securities of emerging growth companies
poised to be leaders in the 21st century.
SCUDDER CHOICE SERIES
Scudder Financial Services Fund seeks long-term growth of capital
primarily through investment in equity securities of financial services
companies.
Scudder Health Care Fund seeks long-term growth of capital primarily
through investment in securities of companies that are engaged in the
development, production or distribution of products or services related
to the treatment or prevention of diseases and other medical problems.
Scudder Technology Fund seeks long-term growth of capital primarily
through investment in securities of companies engaged in the
development, production or distribution of technology-related products
or services.
SCUDDER PREFERRED SERIES
Scudder Tax Managed Fund seeks long-term growth of capital on an
after-tax basis by investing primarily in established, medium- to
large-sized U.S. companies with leading competitive positions.
Scudder Tax Managed Small Company Fund seeks long-term growth of
capital on an after-tax basis through investment primarily in
undervalued stocks of small U.S. companies.
- ----------
** Only the Scudder Shares are part of the Scudder Family of Funds.
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GLOBAL EQUITY
Worldwide
Scudder Global Fund seeks long-term growth of capital through a
diversified portfolio of marketable securities, primarily equity
securities, including common stocks, preferred stocks and debt
securities convertible into common stocks.
Scudder International Value Fund seeks long-term capital appreciation
through investment primarily in undervalued foreign equity securities.
Scudder International Growth and Income Fund seeks long-term growth of
capital and current income primarily from foreign equity securities.
Scudder International Fund*** seeks long-term growth of capital
primarily through a diversified portfolio of marketable foreign equity
securities.
Scudder International Growth Fund seeks long-term capital appreciation
through investment primarily in the equity securities of foreign
companies with high growth potential.
Scudder Global Discovery Fund** seeks above-average capital
appreciation over the long term by investing primarily in the equity
securities of small companies located throughout the world.
Scudder Emerging Markets Growth Fund seeks long-term growth of capital
primarily through equity investment in emerging markets around the
globe.
Scudder Gold Fund seeks maximum return (principal change and income)
consistent with investing in a portfolio of gold-related equity
securities and gold.
Regional
Scudder Greater Europe Growth Fund seeks long-term growth of capital
through investments primarily in the equity securities of European
companies.
Scudder Pacific Opportunities Fund seeks long-term growth of capital
through investment primarily in the equity securities of Pacific Basin
companies, excluding Japan.
Scudder Latin America Fund seeks to provide long-term capital
appreciation through investment primarily in the securities of Latin
American issuers.
The Japan Fund, Inc. seeks long-term capital appreciation by investing
primarily in equity securities (including American Depository Receipts)
of Japanese companies.
The net asset values of most Scudder funds can be found daily in the
"Mutual Funds" section of The Wall Street Journal under "Scudder Funds," and in
other leading newspapers throughout the country. Investors will notice the net
asset value and offering price are the same, reflecting the fact that no sales
commission or "load" is charged on the sale of shares of the Scudder funds. The
latest seven-day yields for the money-market funds can be found every Monday and
Thursday in the "Money-Market Funds" section of The Wall Street Journal. This
information also may be obtained by calling the Scudder Automated Information
Line (SAIL) at 1-800-343-2890.
The Scudder Family of Funds offers many conveniences and services,
including: active professional investment management; broad and diversified
investment portfolios; pure no-load funds with no commissions to purchase or
redeem shares or Rule 12b-1 distribution fees; individual attention from a
- ----------
** Only the Scudder Shares are part of the Scudder Family of Funds.
*** Only the International Shares are part of the Scudder Family of Funds.
29
<PAGE>
service representative of Scudder Investor Relations; and easy telephone
exchanges into other Scudder funds. Certain Scudder funds or classes thereof may
not be available for purchase or exchange. For more information, please call
1-800-225-5163.
SPECIAL PLAN ACCOUNTS
(See "Scudder tax-advantaged retirement plans," "Purchases -- By
Automatic Investment Plan" and "Exchanges and redemptions -- By
Automatic Withdrawal Plan" in the Funds' prospectuses.)
Detailed information on any Scudder investment plan, including the
applicable charges, minimum investment requirements and disclosures made
pursuant to Internal Revenue Service (the "IRS") requirements, may be obtained
by contacting Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103 or by calling toll free, 1-800-225-2470. The
discussions of the plans below describe only certain aspects of the federal
income tax treatment of the plan. The state tax treatment may be different and
may vary from state to state. It is advisable for an investor considering the
funding of the investment plans described below to consult with an attorney or
other investment or tax adviser with respect to the suitability requirements and
tax aspects thereof.
Shares of each Fund may also be a permitted investment under profit
sharing and pension plans and IRA's other than those offered by the Fund's
distributor depending on the provisions of the relevant plan or IRA.
None of the plans assures a profit or guarantees protection against
depreciation, especially in declining markets.
Scudder Retirement Plans: Profit-Sharing and Money Purchase
Pension Plans for Corporations and Self-Employed Individuals
Shares of each Fund may be purchased as the investment medium under a
plan in the form of a Scudder Profit-Sharing Plan (including a version of the
Plan which includes a cash-or-deferred feature) or a Scudder Money Purchase
Pension Plan (jointly referred to as the Scudder Retirement Plans) adopted by a
corporation, a self-employed individual or a group of self-employed individuals
(including sole proprietorships and partnerships), or other qualifying
organization. Each of these forms was approved by the IRS as a prototype. The
IRS's approval of an employer's plan under Section 401(a) of the Internal
Revenue Code will be greatly facilitated if it is in such approved form. Under
certain circumstances, the IRS will assume that a plan, adopted in this form,
after special notice to any employees, meets the requirements of Section 401(a)
of the Internal Revenue Code as to form.
Scudder 401(k): Cash or Deferred Profit-Sharing Plan
for Corporations and Self-Employed Individuals
Shares of each Fund may be purchased as the investment medium under a
plan in the form of a Scudder 401(k) Plan adopted by a corporation, a
self-employed individual or a group of self-employed individuals (including sole
proprietors and partnerships), or other qualifying organization. This plan has
been approved as a prototype by the IRS.
Scudder IRA: Individual Retirement Account
Shares of each Fund may be purchased as the underlying investment for
an Individual Retirement Account which meets the requirements of Section 408(a)
of the Internal Revenue Code.
A single individual who is not an active participant in an
employer-maintained retirement plan, a simplified employee pension plan, or a
tax-deferred annuity program (a "qualified plan"), and a married individual who
is not an active participant in a qualified plan and whose spouse is also not an
active participant in a qualified plan, are eligible to make tax deductible
contributions of up to $2,000 to an IRA prior to the year such individual
attains age 70 1/2. In addition, certain individuals who are active participants
in qualified plans (or who have spouses who are active participants) are also
eligible to make tax-deductible contributions to an IRA; the annual amount, if
any, of the contribution which such an individual will be eligible to deduct
will be determined by the amount of his, her, or their adjusted gross income for
the year. Whenever the adjusted gross income limitation prohibits an individual
30
<PAGE>
from contributing what would otherwise be the maximum tax-deductible
contribution he or she could make, the individual will be eligible to contribute
the difference to an IRA in the form of nondeductible contributions.
An eligible individual may contribute as much as $2,000 of qualified
income (earned income or, under certain circumstances, alimony) to an IRA each
year (up to $2,000 per individual for married couples if only one spouse has
earned income). All income and capital gains derived from IRA investments are
reinvested and compound tax-deferred until distributed. Such tax-deferred
compounding can lead to substantial retirement savings.
The table below shows how much individuals would accumulate in a fully
tax-deductible IRA by age 65 (before any distributions) if they contribute
$2,000 at the beginning of each year, assuming average annual returns of 5, 10,
and 15%. (At withdrawal, accumulations in this table will be taxable.)
Value of IRA at Age 65
Assuming $2,000 Deductible Annual Contribution
- --------------------------------------------------------------------------------
Starting
Age of Annual Rate of Return
-----------------------------------------------------------
Contributions 5% 10% 15%
- --------------------------------------------------------------------------------
25 $253,680 $973,704 $4,091,908
35 139,522 361,887 999,914
45 69,439 126,005 235,620
55 26,414 35,062 46,699
This next table shows how much individuals would accumulate in non-IRA
accounts by age 65 if they start with $2,000 in pretax earned income at the
beginning of each year (which is $1,380 after taxes are paid), assuming average
annual returns of 5, 10 and 15%. (At withdrawal, a portion of the accumulation
in this table will be taxable.)
Value of a Non-IRA Account at
Age 65 Assuming $1,380 Annual Contributions
(post tax, $2,000 pretax) and a 31% Tax Bracket
- --------------------------------------------------------------------------------
Starting
Age of Annual Rate of Return
-----------------------------------------------------------
Contributions 5% 10% 15%
- --------------------------------------------------------------------------------
25 $119,318 $287,021 $741,431
35 73,094 136,868 267,697
45 40,166 59,821 90,764
55 16,709 20,286 24,681
Scudder Roth IRA: Individual Retirement Account
Shares of each Fund may be purchased as the underlying investment for a
Roth Individual Retirement Account which meets the requirements of Section 408A
of the Internal Revenue Code.
A single individual earning below $95,000 can contribute up to $2,000
per year to a Roth IRA. The maximum contribution amount diminishes and gradually
falls to zero for single filers with adjusted gross incomes ranging from $95,000
to $110,000. Married couples earning less than $150,000 combined, and filing
jointly, can contribute a full $4,000 per year ($2,000 per IRA). The maximum
contribution amount for married couples filing jointly phases out from $150,000
to $160,000.
An eligible individual can contribute money to a traditional IRA and a
Roth IRA as long as the total contribution to all IRAs does not exceed $2,000.
No tax deduction is allowed under Section 219 of the Internal Revenue Code for
contributions to a Roth IRA. Contributions to a Roth IRA may be made even after
the individual for whom the account is maintained has attained age 70 1/2.
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<PAGE>
All income and capital gains derived from Roth IRA investments are
reinvested and compounded tax-free. Such tax-free compounding can lead to
substantial retirement savings. No distributions are required to be taken prior
to the death of the original account holder. If a Roth IRA has been established
for a minimum of five years, distributions can be taken tax-free after reaching
age 59 1/2, for a first-time home purchase ($10,000 maximum, one-time use) or
upon death or disability. All other distributions of earnings from a Roth IRA
are taxable and subject to a 10% tax penalty unless an exception applies.
Exceptions to the 10% penalty include: disability, excess medical expenses, the
purchase of health insurance for an unemployed individual and education
expenses.
An individual with an income of less than $100,000 (who is not married
filing separately) can roll his or her existing IRA into a Roth IRA. However,
the individual must pay taxes on the taxable amount in his or her traditional
IRA. Individuals who complete the rollover in 1998 will be allowed to spread the
tax payments over a four-year period. After 1998, all taxes on such a rollover
will have to be paid in the tax year in which the rollover is made.
Scudder 403(b) Plan
Shares of each Fund may also be purchased as the underlying investment
for tax sheltered annuity plans under the provisions of Section 403(b)(7) of the
Internal Revenue Code. In general, employees of tax-exempt organizations
described in Section 501(c)(3) of the Internal Revenue Code (such as hospitals,
churches, religious, scientific, or literary organizations and educational
institutions) or a public school system are eligible to participate in a 403(b)
plan.
Automatic Withdrawal Plan
Non-retirement plan shareholders may establish an Automatic Withdrawal
Plan to receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Shareholders may designate
which day they want the automatic withdrawal to be processed. The check amounts
may be based on the redemption of a fixed dollar amount, fixed share amount,
percent of account value or declining balance. The Plan provides for income
dividends and capital gains distributions, if any, to be reinvested in
additional shares. Shares are then liquidated as necessary to provide for
withdrawal payments. Since the withdrawals are in amounts selected by the
investor and have no relationship to yield or income, payments received cannot
be considered as yield or income on the investment and the resulting
liquidations may deplete or possibly extinguish the initial investment and any
reinvested dividends and capital gains distributions. Requests for increases in
withdrawal amounts or to change the payee must be submitted in writing, signed
exactly as the account is registered, and contain signature guarantee(s) as
described under "Transaction information -- Redeeming shares -- Signature
guarantees" in the Fund's prospectus. Any such requests must be received by the
Fund's transfer agent ten days prior to the date of the first automatic
withdrawal. An Automatic Withdrawal Plan may be terminated at any time by the
shareholder, the Corporation or its agent on written notice, and will be
terminated when all shares of the Fund under the Plan have been liquidated or
upon receipt by the Corporation of notice of death of the shareholder.
An Automatic Withdrawal Plan request form can be obtained by calling
1-800-225-5163.
Group or Salary Deduction Plan
An investor may join a Group or Salary Deduction Plan where
satisfactory arrangements have been made with Scudder Investor Services, Inc.
for forwarding regular investments through a single source. The minimum annual
investment is $240 per investor which may be made in monthly, quarterly,
semiannual or annual payments. The minimum monthly deposit per investor is $20.
Except for trustees or custodian fees for certain retirement plans, at present
there is no separate charge for maintaining group or salary deduction plans;
however, the Corporation and its agents reserve the right to establish a
maintenance charge in the future depending on the services required by the
investor.
The Corporation reserves the right, after notice has been given to the
shareholder, to redeem and close a shareholder's account in the event that the
shareholder ceases participating in the group plan prior to investment of $1,000
per individual or in the event of a redemption which occurs prior to the
accumulation of that amount or which reduces the account value to less than
$1,000 and the account value is not increased to $1,000 within a reasonable time
after notification. An investor in a plan who has not purchased shares for six
months shall be presumed to have stopped making payments under the plan.
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<PAGE>
Automatic Investment Plan
Shareholders may arrange to make periodic investments through automatic
deductions from checking accounts by completing the appropriate form and
providing the necessary documentation to establish this service. The minimum
investment is $50.
The Automatic Investment Plan involves an investment strategy called
dollar cost averaging. Dollar cost averaging is a method of investing whereby a
specific dollar amount is invested at regular intervals. By investing the same
dollar amount each period, when shares are priced low the investor will purchase
more shares than when the share price is higher. Over a period of time this
investment approach may allow the investor to reduce the average price of the
shares purchased. However, this investment approach does not assure a profit or
protect against loss. This type of regular investment program may be suitable
for various investment goals such as, but not limited to, college planning or
saving for a home.
Uniform Transfers/Gifts to Minors Act
Grandparents, parents or other donors may set up custodian accounts for
minors. The minimum initial investment is $1,000 unless the donor agrees to
continue to make regular share purchases for the account through Scudder's
Automatic Investment Plan (AIP). In this case, the minimum initial investment is
$500.
The Corporation reserves the right, after notice has been given to the
shareholder and custodian, to redeem and close a shareholder's account in the
event that regular investments to the account cease before the $1,000 minimum is
reached.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
(See "Distribution and performance information -- Dividends and capital gains
distributions" in the Funds' prospectuses.)
Each Fund intends to follow the practice of distributing substantially
all and in no event less than 90% of its investment company taxable income
including any excess of net realized short-term capital gains over net realized
long-term capital losses. A Fund may follow the practice of distributing the
entire excess of net realized long-term capital gains over net realized
short-term capital losses. However, a Fund may retain all or part of such gain
for reinvestment, after paying the related federal income taxes for which the
shareholders may then claim a credit against their federal income tax liability.
If a Fund does not distribute an amount of capital gains and/or ordinary income
required to be distributed by an excise tax provision of the Code, it may be
subject to such tax. In certain circumstances, a Fund may determine that it is
in the interest of shareholders to distribute less than such an amount. (See
"TAXES.")
International Bond Fund intends to declare daily and distribute monthly
substantially all of its investment company taxable income resulting from Fund
investment activity. Distributions, if any, of net realized capital gains
normally will be distributed in November or December. An additional distribution
may be made, if necessary. Distributions of certain realized gains or losses on
the sale or retirement of securities denominated in foreign currencies held by
the Fund, to the extent attributable to fluctuations in currency exchange rates,
as well as certain other gains or losses attributable to exchange rate
fluctuations, are treated as ordinary income or loss and also normally will be
made in December and, if necessary, within three months after the Fund's fiscal
year end on June 30.
Global Fund intends to distribute in December substantially all of its
investment company taxable income and any net realized capital gains resulting
from Fund investment activity. An additional distribution may be made, if
necessary.
All distributions will be made in shares of a Fund and confirmations
will be mailed to each shareholder unless a shareholder has elected to receive
cash, in which case a check will be sent. Distributions are taxable, whether
made in shares or cash. (See "TAXES.")
33
<PAGE>
PERFORMANCE INFORMATION
(See "Distribution and performance information -- Performance
information" in the Funds' prospectuses.)
From time to time, quotations of the Funds' performance may be included
in advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures are calculated in the following manner:
Average Annual Total Return
Average annual total return is the average annual compound rate of
return for the periods of one year, five years and the life of a Fund, each
ended on the last day of a recent calendar quarter. Average annual total return
quotations reflect changes in the price of the Funds' shares and assume that all
dividends and capital gains distributions during the respective periods were
reinvested in Fund shares. Average annual total return is calculated by
computing the average annual compound rates of return of a hypothetical
investment over such periods, according to the following formula (average annual
total return is then expressed as a percentage):
T = (ERV/P)1/n - 1
Where:
P = a hypothetical initial investment of $1,000
T = Average Annual Total Return
n = number of years
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
[TO BE UPDATED]
Average Annual Total Return for periods ended June 30, 1998
-----------------------------------------------------------
One Year Five Year Ten Year Life of the
-------- --------- -------- -----------
Fund(1)
-------
Global Fund --% --% --%
International Bond Fund --% --% --%
(1) For the period beginning July 6, 1988.
Cumulative Total Return
Cumulative total return is the cumulative rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of the Funds' shares and
assume that all dividends and capital gains distributions during the period were
reinvested in Fund shares. Cumulative total return is calculated by computing
the cumulative rates of return of a hypothetical investment over such periods,
according to the following formula (cumulative total return is then expressed as
a percentage):
C = (ERV/P) -1
Where:
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
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<PAGE>
[TO BE UPDATED]
Cumulative Total Return for periods ended June 30, 1998
-------------------------------------------------------
One Year Five Year Ten Year Life of the
-------- --------- -------- -----------
Fund(1)
------
Global Fund --% --% --%
International Bond Fund --% --% --%
(1) For the period beginning July 6, 1988.
Total Return
Total return is the rate of return on an investment for a specified
period of time calculated in the same manner as cumulative total return.
Yield of International Bond Fund
Yield of International Bond Fund is the net annualized SEC yield of the
Fund based on a specified 30-day (or one month) period assuming semiannual
compounding of income. Yield is calculated by dividing the net investment income
per share earned during the period by the maximum offering price per share on
the last day of the period, according to the following formula:
YIELD = 2[(a-b/cd + 1)6-1]
Where:
a = dividends and interest earned during the period, including
amortization of market premium or accretion of market
discount
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of
the period
The SEC yield of International Bond Fund for the 30-day period ended
June 30, 1998 was %.
==== ------
Calculation of the Fund's yield does not take into account "Section 988
Transactions." (See "TAXES.")
From time to time International Bond Fund may advertise potential
advantages of investing in foreign markets and may use these figures in an
updated form. Past market results are no guarantee of future performance. Data
are based on bonds with maturities of at least one year. Source: Salomon
Brothers World Government Bond Index.
Quotations of each Fund's performance are historical, show the
performance of a hypothetical investment, and are not intended to indicate
future performance. An investor's shares when redeemed may be worth more or less
than their original cost. Performance of a Fund will vary based on changed in
market conditions and the level of the Fund's expenses.
Comparison of Fund Performance
A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effects of the methods used to calculate performance when comparing
performance of a Fund with performance quoted with respect to other investment
companies or types of investments.
In connection with communicating its performance to current or
prospective shareholders, a Fund also may compare these figures to the
performance of unmanaged indices which may assume reinvestment of dividends or
interest but generally do not reflect deductions for administrative and
management costs. Examples include, but are not limited to the Dow Jones
35
<PAGE>
Industrial Average, the Consumer Price Index, Standard & Poor's 500 Composite
Stock Price Index (S&P 500), the Nasdaq OTC Composite Index, the Nasdaq
Industrials Index, the Russell 2000 Index, the Wilshire Real Estate Securities
Index and statistics published by the Small Business Administration.
From time to time, in advertising and marketing literature, a Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as,
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc., Value
Line Mutual Fund Survey and other independent organizations. When these
organizations' tracking results are used, a Fund will be compared to the
appropriate fund category, that is, by fund objective and portfolio holdings, or
to the appropriate volatility grouping, where volatility is a measure of a
fund's risk. For instance, a Scudder growth fund will be compared to funds in
the growth fund category; a Scudder income fund will be compared to funds in the
income fund category; and so on. Scudder funds (except for money market funds)
may also be compared to funds with similar volatility, as measured statistically
by independent organizations.
From time to time, in marketing and other Fund literature,
(Trustees)(Directors) and officers of the Funds, the Funds' portfolio manager,
or members of the portfolio management team may be depicted and quoted to give
prospective and current shareholders a better sense of the outlook and approach
of those who manage the Funds. In addition, the amount of assets that the
Adviser has under management in various geographical areas may be quoted in
advertising and marketing materials.
The Funds may be advertised as an investment choice in Scudder's
college planning program. The description may contain illustrations of projected
future college costs based on assumed rates of inflation and examples of
hypothetical fund performance, calculated as described above.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in the Funds. The
description may include a "risk/return spectrum" which compares the Funds to
other Scudder funds or broad categories of funds, such as money market, bond or
equity funds, in terms of potential risks and returns. Money market funds are
designed to maintain a constant $1.00 share price and have a fluctuating yield.
Share price, yield and total return of a bond fund will fluctuate. The share
price and return of an equity fund also will fluctuate. The description may also
compare the Funds to bank products, such as certificates of deposit. Unlike
mutual funds, certificates of deposit are insured up to $100,000 by the U.S.
government and offer a fixed rate of return.
Because bank products guarantee the principal value of an investment
and money market funds seek stability of principal, these investments are
considered to be less risky than investments in either bond or equity funds,
which may involve the loss of principal. However, all long-term investments,
including investments in bank products, may be subject to inflation risk, which
is the risk of erosion of the value of an investment as prices increase over a
long time period. The risks/returns associated with an investment in bond or
equity funds depend upon many factors. For bond funds these factors include, but
are not limited to, a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.
A risk/return spectrum generally will position the various investment
categories in the following order: bank products, money market funds, bond funds
and equity funds. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term bond funds. The same is
true of domestic bond funds relative to international bond funds, and bond funds
that purchase higher quality securities relative to bond funds that purchase
lower quality securities. Growth and income equity funds are generally
considered to be less risky and offer the potential for less return than growth
funds. In addition, international equity funds usually are considered more risky
than domestic equity funds but generally offer the potential for greater return.
36
<PAGE>
Risk/return spectrums also may depict funds that invest in both
domestic and foreign securities or a combination of bond and equity securities.
Evaluation of Fund performance or other relevant statistical
information made by independent sources may also be used in advertisements
concerning the Funds, including reprints of, or selections from, editorials or
articles about these Funds. Sources for Fund performance information and
articles about the Funds include the following:
American Association of Individual Investors' Journal, a monthly publication of
the AAII that includes articles on investment analysis techniques.
Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.
Banxquote, an on-line source of national averages for leading money market and
bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.
Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
CDA Investment Technologies, Inc., an organization which provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate market
indices.
Consumer Digest, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
Financial Times, Europe's business newspaper, which features from time to time
articles on international or country-specific funds.
Financial World, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
Fortune, a national business publication that periodically rates the performance
of a variety of mutual funds.
The Frank Russell Company, a West-Coast investment management firm that
periodically evaluates international stock markets and compares foreign equity
market performance to U.S. stock market performance.
Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
IBC Money Fund Report, a weekly publication of IBC Financial Data, Inc.,
reporting on the performance of the nation's money market funds, summarizing
money market fund activity and including certain averages as performance
benchmarks, specifically "IBC's Money Fund Average," and "IBC's Government Money
Fund Average."
Ibbotson Associates, Inc., a company specializing in investment research and
data.
Investment Company Data, Inc., an independent organization which provides
performance ranking information for broad classes of mutual funds.
Investor's Business Daily, a daily newspaper that features financial, economic,
and business news.
37
<PAGE>
Kiplinger's Personal Finance Magazine, a monthly investment advisory publication
that periodically features the performance of a variety of securities.
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a weekly
publication of industry-wide mutual fund averages by type of fund.
Money, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
Morgan Stanley International, an integrated investment banking firm that
compiles statistical information.
Mutual Fund Values, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance, risk and portfolio
characteristics.
The New York Times, a nationally distributed newspaper which regularly covers
financial news.
The No-Load Fund Investor, a monthly newsletter, published by Sheldon Jacobs,
that includes mutual fund performance data and recommendations for the mutual
fund investor.
No-Load Fund*X, a monthly newsletter, published by DAL Investment Company, Inc.,
that reports on mutual fund performance, rates funds and discusses investment
strategies for the mutual fund investor.
Personal Investing News, a monthly news publication that often reports on
investment opportunities and market conditions.
Personal Investor, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
SmartMoney, a national personal finance magazine published monthly by Dow Jones
and Company, Inc. and The Hearst Corporation. Focus is placed on ideas for
investing, spending and saving.
Success, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.
United Mutual Fund Selector, a semi-monthly investment newsletter, published by
Babson United Investment Advisors, that includes mutual fund performance data
and reviews of mutual fund portfolios and investment strategies.
USA Today, a leading national daily newspaper.
U.S. News and World Report, a national news weekly that periodically reports
mutual fund performance data.
Value Line Mutual Fund Survey, an independent organization that provides
biweekly performance and other information on mutual funds.
The Wall Street Journal, a Dow Jones and Company, Inc. newspaper which regularly
covers financial news.
Wiesenberger Investment Companies Services, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records and price ranges.
Working Woman, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.
Worth, a national publication issued 10 times per year by Capital Publishing
Company, a subsidiary of Fidelity Investments. Focus is placed on personal
financial journalism.
38
<PAGE>
Taking a Global Approach
Many U.S. investors limit their holdings to U.S. securities because
they assume that international or global investing is too risky. While there are
risks connected with investing overseas, it's important to remember that no
investment -- even in blue-chip domestic securities -- is entirely risk free.
Looking outside U.S. borders, an investor today can find opportunities that
mirror domestic investments -- everything from large, stable multinational
companies to start-ups in emerging markets. To determine the level of risk with
which you are comfortable, and the potential for reward you're seeking over the
long term, you need to review the type of investment, the world markets, and
your time horizon.
The U.S. is unusual in that it has a very broad economy that is well
represented in the stock market. However, many countries around the world are
not only undergoing a revolution in how their economies operate, but also in
terms of the role their stock markets play in financing activities. There is
vibrant change throughout the global economy and all of this represents
potential investment opportunity.
Investing beyond the United States can open this world of opportunity,
due partly to the dramatic shift in the balance of world markets. In 1970, the
United States alone accounted for two-thirds of the value of the world's stock
markets. Now, the situation is reversed -- only 35% of global stock market
capitalization resides here. There are companies in Southeast Asia that are
starting to dominate regional activity; there are companies in Europe that are
expanding outside of their traditional markets and taking advantage of faster
growth in Asia and Latin America; other companies throughout the world are
getting out from under state control and restructuring; developing countries
continue to open their doors to foreign investment.
Stocks in many foreign markets can be attractively priced. The global
stock markets do not move in lock step. When the valuations in one market rise,
there are other markets that are less expensive. There is also volatility within
markets in that some sectors may be more expensive while others are depressed in
valuation. A wider set of opportunities can help make it possible to find the
best values available.
International or global investing offers diversification because the
investment is not limited to a single country or economy. In fact, many experts
agree that investment strategies that include both U.S. and non-U.S.
investments strike the best balance between risk and reward.
Scudder's 30% Solution
The 30 Percent Solution -- A Global Guide for Investors Seeking Better
Performance With Reduced Portfolio Risk is a booklet, created by Scudder, to
convey its vision about the new global investment dynamic. This dynamic is a
result of the profound and ongoing changes in the global economy and the
financial markets. The booklet explains how Scudder believes an equity
investment portfolio with up to 30% in international holdings and 70% in
domestic holdings can improve long-term performance while simultaneously helping
to reduce overall risk.
ORGANIZATION OF THE FUNDS
(See "Fund organization" in the Funds' prospectuses.)
The Funds are separate series of Global/International Fund, Inc., a
Maryland corporation organized on May 15, 1986. The name of the Corporation was
changed, effective May 28, 1998, from Scudder Global Fund, Inc. Scudder Global
Bond Fund, Scudder Global Discovery Fund and Scudder Emerging Markets Income
Fund are other series of the Corporation.
The authorized capital stock of the Corporation consists of 800 million
shares with $0.01 par value, 100 million shares of which are allocated to Global
Fund and 200 million shares of which are allocated to International Bond Fund.
Each share of each series of the Corporation has equal voting rights as to each
other share of that series as to voting for directors, redemption, dividends and
liquidation. Shareholders have one vote for each share held. The Directors have
the authority to issue additional series of shares and to designate the relative
rights and preferences as between the different series. If a series were unable
to meet its obligations, the remaining series should not have to assume the
unsatisfied obligation of that series. All shares issued and outstanding are
fully paid and non-assessable, transferable, and redeemable at net asset value
39
<PAGE>
at the option of the shareholder. Shares have no pre-emptive or conversion
rights.
Shares of the Corporation entitle their holders to one vote per share;
however, separate votes are taken by each series on matters affecting an
individual series. For example, a change in investment policy for a series would
be voted upon only by shareholders of the series involved. Additionally,
approval of the investment advisory agreement is a matter to be determined
separately by each series. Approval by the shareholders of one series is
effective as to that series whether or not enough votes are received from the
shareholders of the other series to approve such agreement as to the other
series.
The shares of the Corporation have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election of
Directors can elect 100% of the directors if they choose to do so, and, in such
event, the holders of the remaining less than 50% of the shares voting for the
election of Directors will not be able to elect any person or persons to the
Board of Directors.
The Directors, in their discretion, may authorize the division of
shares of the Funds (or shares of either series) into different classes
permitting shares of different classes to be distributed by different methods.
Although shareholders of different classes of a series would have an interest in
the same portfolio of assets, shareholders of different classes may bear
different expenses in connection with different methods of distribution. The
Directors have no current intention of taking the action necessary to effect the
division of shares into separate classes, nor of changing the method of
distribution of shares of a Fund.
Maryland corporate law provides that a Director of the Corporation
shall not be liable for actions taken in good faith, in a manner he or she
reasonably believes to be in the best interests of the Corporation and with the
care that an ordinarily prudent person in a like position would use under
similar circumstances. In so acting, a Director shall be fully protected in
relying in good faith upon the records of the Corporation and upon reports made
to the Corporation by persons selected in good faith by the Directors as
qualified to make such reports. The By-Laws provide that the Corporation will
indemnify Directors and officers of the Corporation against liabilities and
expenses reasonably incurred in connection with litigation in which they may be
involved because of their positions with the Corporation, to the fullest extent
permitted by Maryland corporate law as amended from time to time. However,
nothing in the Articles of Incorporation or the By-Laws protects or indemnifies
a Director or officer against any liability to which he or she would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
INVESTMENT ADVISER
(See "Fund organization -- Investment adviser" in the Funds' prospectuses.)
Scudder Kemper Investments, Inc. (the "Adviser"), an investment counsel
firm, acts as investment adviser to the Fund. This organization, the predecessor
of which is Scudder, Stevens & Clark, Inc., is one of the most experienced
investment counsel firms in the U. S. It was established as a partnership in
1919 and pioneered the practice of providing investment counsel to individual
clients on a fee basis. In 1928 it introduced the first no-load mutual fund to
the public. In 1953 the Adviser introduced Scudder International Fund, Inc., the
first mutual fund available in the U.S. investing internationally in securities
of issuers in several foreign countries. The predecessor firm reorganized from a
partnership to a corporation on June 28, 1985. On June 26, 1997, Scudder,
Stevens & Clark, Inc. ("Scudder") entered into an agreement with Zurich
Insurance Company ("Zurich") pursuant to which Scudder and Zurich agreed to form
an alliance. On December 31, 1997, Zurich acquired a majority interest in
Scudder, and Zurich Kemper Investments, Inc., a Zurich subsidiary, became part
of Scudder. Scudder's name has been changed to Scudder Kemper Investments, Inc.
Founded in 1872, Zurich is a multinational, public corporation
organized under the laws of Switzerland. Its home office is located at
Mythenquai 2, 8002 Zurich, Switzerland. Historically, Zurich's earnings have
resulted from its operations as an insurer as well as from its ownership of its
subsidiaries and affiliated companies (the "Zurich Insurance Group"). Zurich and
the Zurich Insurance Group provide an extensive range of insurance products and
services and have branch offices and subsidiaries in more than 40 countries
throughout the world.
40
<PAGE>
The principal source of the Adviser's income is professional fees
received from providing continuous investment advice, and the firm derives no
income from brokerage or underwriting of securities. Today, it provides
investment counsel for many individuals and institutions, including insurance
companies, colleges, industrial corporations, and financial and banking
organizations. In addition, it manages Montgomery Street Income Securities,
Inc., Scudder California Tax Free Trust, Scudder Cash Investment Trust, Value
Equity Trust, Scudder Fund, Inc., Scudder Funds Trust, Global/International
Fund, Inc., Scudder Global High Income Fund, Inc., Scudder GNMA Fund, Scudder
Portfolio Trust, Scudder Institutional Fund, Inc., Scudder International Fund,
Inc., Investment Trust, Scudder Municipal Trust, Scudder Mutual Funds, Inc.,
Scudder New Asia Fund, Inc., Scudder New Europe Fund, Inc., Scudder Pathway
Series, Scudder Securities Trust, Scudder State Tax Free Trust, Scudder Tax Free
Money Fund, Scudder Tax Free Trust, Scudder U.S. Treasury Money Fund, Scudder
Variable Life Investment Fund, The Argentina Fund, Inc., The Brazil Fund, Inc.,
The Korea Fund, Inc., The Japan Fund, Inc. and Scudder Spain and Portugal Fund,
Inc. Some of the foregoing companies or trusts have two or more series.
The Adviser also provides investment advisory services to the mutual
funds which comprise the AARP Investment Program from Scudder. The AARP
Investment Program from Scudder has assets over $13 billion and includes the
AARP Growth Trust, AARP Income Trust, AARP Tax Free Income Trust, AARP Managed
Investment Portfolios Trust and AARP Cash Investment Funds.
Pursuant to an Agreement between Scudder, Stevens & Clark, Inc. and AMA
Solutions, Inc., a subsidiary of the American Medical Association (the "AMA"),
dated May 9, 1997, the Adviser has agreed, subject to applicable state
regulations, to pay AMA Solutions, Inc. royalties in an amount equal to 5% of
the management fee received by the Adviser with respect to assets invested by
AMA members in Scudder funds in connection with the AMA InvestmentLinkSM
Program. The Adviser will also pay AMA Solutions, Inc. a general monthly fee,
currently in the amount of $833. The AMA and AMA Solutions, Inc. are not engaged
in the business of providing investment advice and neither is registered as an
investment adviser or broker/dealer under federal securities laws. Any person
who participates in the AMA InvestmentLinkSM Program will be a customer of the
Adviser (or of a subsidiary thereof) and not the AMA or AMA Solutions, Inc. AMA
InvestmentLinkSM is a service mark of AMA Solutions, Inc.
The Adviser maintains a large research department, which conducts
continual studies of the factors that affect the position of various industries,
companies and individual securities. In this work, the Adviser utilizes certain
reports and statistics from a wide variety of sources, including brokers and
dealers who may execute portfolio transactions for the Fund and for clients of
the Adviser, but conclusions are based primarily on investigations and critical
analyses by its own research specialists. The Adviser's international investment
management team travels the world, researching hundreds of companies.
Certain investments may be appropriate for a Fund and also for other
clients advised by the Adviser. Investment decisions for a Fund and other
clients are made with a view to achieving their respective investment objectives
and after consideration of such factors as their current holdings, availability
of cash for investment and the size of their investments generally. Frequently,
a particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients on the same day. In
such event, such transactions will be allocated among the clients in a manner
believed by the Adviser to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities purchased
or sold by a Fund. Purchase and sale orders for a Fund may be combined with
those of other clients of the Adviser in the interest of most favorable net
results to a Fund.
The continuance of the Investment Management Agreement dated September
8, 1994, between International Bond Fund , was last approved by the Directors on
September 11, 1997. The Investment Management Agreement between Global Fund and
the Adviser was approved by the Directors on September 11, 1997. Because the
transaction between Scudder and Zurich resulted in the assignment of the Funds'
investment management agreements with Scudder Kemper, the agreements were deemed
to be automatically terminated at the consummation of the transaction. In
anticipation of the transaction, however, new investment management agreements
between the Funds and the Adviser were approved by the Directors on August 6,
1997. At the special meeting of the Funds' shareholders held on October 27,
1997, the shareholders also approved the new investment management agreements.
The new investment management agreements (the "Agreements") became effective as
of December 31, 1997 and were in effect for an initial term ending on September
41
<PAGE>
30, 1998. The Agreements are in all material respects on the same terms as the
previous investment management agreements which they supersede. The Agreements
incorporate conforming changes which promote consistency among all of the funds
advised by the Adviser, and which permit ease of administration.
The Agreements dated December 31, 1997 were last approved by the
Directors of the Corporation on August 6, 1998. The Agreements will continue in
effect until September 30, 1999 and from year to year thereafter only if their
continuance is approved annually by the vote of a majority of those Directors
who are not parties to such Agreements or interested persons of the Adviser or
the Corporation, cast in person at a meeting called for the purpose of voting on
such approval, and either by a vote of the Corporation's Directors or of a
majority of the outstanding voting securities of the respective Fund. The
Agreements may be terminated at any time without payment of penalty by either
party on sixty days' written notice, and automatically terminate in the event of
their reassignment.
On September __, 1998, the businesses of Zurich (including Zurich's 70%
interest in Scudder Kemper) and the financial services businesses of B.A.T
Industries p.l.c. ("B.A.T") were combined to form a new global insurance and
financial services company known as Zurich Financial Services Group. By way of a
dual holding company structure, former Zurich shareholders initially owned
approximately 57% of Zurich Financial Services Group, with the balance initially
owned by former B.A.T shareholders.
Upon consummation of this transaction, the Funds' existing investment
management agreements with Scudder Kemper were deemed to have been assigned and,
therefore, terminated. The Board has approved new investment management
agreements with Scudder Kemper, which are substantially identical to the current
investment management agreements, except for the date of execution and
termination. These agreements became effective upon the termination of the then
current investment management agreements and will be submitted for shareholder
approval at special meetings currently scheduled to conclude in December 1998.
Under each Agreement, the Adviser regularly provides a Fund with
continuing investment management for the Fund's portfolio consistent with the
Fund's investment objectives, policies and restrictions and determines what
securities shall be purchased for the portfolio of the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the provisions of the
Corporation's Articles of Incorporation and By-Laws, of the 1940 Act and the
Code and to the Fund's investment objectives, policies and restrictions, and
subject, further, to such policies and instructions as the Directors of the
Corporation may from time to time establish. The Adviser also advises and
assists the officers of the Corporation in taking such steps as are necessary or
appropriate to carry out the decisions of its Directors and the appropriate
committees of the Directors regarding the conduct of the business of the
Corporation.
Under each Agreement, the Adviser also renders significant
administrative services (not otherwise provided by third parties) necessary for
a Fund's operations as an open-end investment company including, but not limited
to, preparing reports and notices to the Directors and shareholders,
supervising, negotiating contractual arrangements with, and monitoring various
third-party service providers to the Fund (such as the Fund's transfer agent,
pricing agents, custodians, accountants and others); preparing and making
filings with the SEC and other regulatory agencies; assisting in the preparation
and filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax returns; assisting with investor and public
relations matters; monitoring the valuation of securities and the calculation of
net asset value; monitoring the registration of shares of the Fund under
applicable federal and state securities laws; maintaining the Fund's books and
records to the extent not otherwise maintained by a third party; assisting in
establishing accounting policies of the Funds; assisting in the resolution of
accounting and legal issues; establishing and monitoring the Fund's operating
budget; processing the payment of the Fund's bills; assisting the Fund in, and
otherwise arranging for, the payment of distributions and dividends and
otherwise assisting the Fund in the conduct of its business, subject to the
direction and control of the Directors.
The Adviser pays the compensation and expenses (except those of
attending Board and committee meetings outside New York, New York and Boston,
Massachusetts) of all directors, officers and executive employees of the
Corporation affiliated with the Adviser and makes available, without expense to
the Funds, the services of such directors, officers and employees as may duly be
elected officers, subject to their individual consent to serve and to any
limitations imposed by law, and provides the Funds' office space and facilities.
42
<PAGE>
For the Adviser's services, effective September 11, 1997, Global Fund
pays the Adviser an annual fee equal to 1.00% on the first $500 million of
average daily net assets, 0.95% on such assets in excess of $500 million, 0.90%
on such assets in excess of $1 billion and 0.85% on such assets in excess of
$1.5 billion. The fee is payable monthly, provided the Fund will make such
interim payments as may be requested by the Adviser not to exceed 75% of the
amount of the fee then accrued on the books of the Fund and unpaid.
The investment advisory fees for the Global Fund for the fiscal years
ended June 30, 1998, 1997 and 1996, were $ , $13,450,790 and $12,360,809 ,
respectively.
For the Adviser's services effective September 8, 1994, International
Bond Fund pays the Adviser an annual fee equal to 0.85% of the first $1 billion
of average daily net assets and 0.80% of such assets in excess of $1 billion.
The fee is payable monthly, provided the Fund will make such interim payments as
may be requested by the Adviser not to exceed 75% of the amount of the fee then
accrued on the books of the Fund and unpaid.
For the fiscal years ended June 30, 1998, 1997 and 1996 , the fees
imposed for the International Bond Fund amounted to $ , $3,077,316 and
$6,133,574, respectively.
Under each Agreement, a Fund is responsible for all of its other
expenses including organization expenses; fees and expenses incurred in
connection with membership in investment company organizations; broker's
commissions; legal, auditing and accounting expenses; taxes and governmental
fees; the fees and expenses of the Transfer Agent; the cost of preparing share
certificates or any other expenses, including clerical expenses of issue,
redemption or repurchase of shares of capital stock; the expenses of and the
fees for registering or qualifying securities for sale; the fees and expenses of
the Directors, officers and employees who are not affiliated with the Adviser;
the cost of printing and distributing reports and notices to shareholders; and
the fees and disbursements of custodians. The Corporation may arrange to have
third parties assume all or part of the expenses of sale, underwriting and
distribution of shares of Funds. Each Fund is also responsible for its expenses
incurred in connection with litigation, proceedings and claims and the legal
obligation it may have to indemnify its officers and Directors with respect
thereto. The custodian agreements provide that the custodian shall compute each
Fund's net asset value. The Agreements expressly provide that the Adviser shall
not be required to pay a pricing agent of the Funds for portfolio pricing
services, if any.
The Agreement identifies the Adviser as the exclusive licensee of the
rights to use and sublicense the names "Scudder," "Scudder Kemper Investments,
Inc." and "Scudder, Stevens and Clark, Inc." (together, the "Scudder Marks").
Under this license, the Trust, with respect to the Fund, has the non-exclusive
right to use and sublicense the Scudder name and marks as part of its name, and
to use the Scudder Marks in the Trust's investment products and services.
Each Agreement provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the relevant
Fund in connection with matters to which the Agreements relate, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its duties or from reckless disregard by the
Adviser of its obligations and duties under the Agreements.
Officers and employees of the Adviser from time to time may have
transactions with various banks, including the Funds' custodian banks. It is the
Adviser's opinion that the terms and conditions of those transactions which have
occurred were not influenced by existing or potential custodial or other Fund
relationships.
The Adviser may serve as Adviser to other funds with investment
objectives and policies similar to those of the Funds that may have different
distribution arrangements or expenses, which may affect performance.
None of the officers or Directors may have dealings with the Funds as
principals in the purchase or sale of securities, except as individual
subscribers or holders of shares of the Funds.
Personal Investments by Employees of the Adviser
Employees of the Adviser are permitted to make personal securities
transactions, subject to requirements and restrictions set forth in the
Adviser's Code of Ethics. The Code of Ethics contains provisions and
requirements designed to identify and address certain conflicts of interest
between personal investment activities and the interests of investment advisory
43
<PAGE>
clients such as the Funds. Among other things, the Code of Ethics, which
generally complies with standards recommended by the Investment Company
Institute's Advisory Group on Personal Investing, prohibits certain types of
transactions absent prior approval, imposes time periods during which personal
transactions may not be made in certain securities, and requires the submission
of duplicate broker confirmations and monthly reporting of securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment advisory process.
Exceptions to these and other provisions of the Code of Ethics may be granted in
particular circumstances after review by appropriate personnel.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
Position with
Underwriter,
Name, Date of Birth Position Scudder Investor
and Address with Corporation Principal Occupation** Services, Inc.
- ----------- ---------------- ---------------------- --------------
<S> <C> <C> <C>
Daniel Pierce+ (3/18/34) Chairman of the Board, Chairman of the Board and Director, Vice
Director and Vice Managing Director of President and Assistant
President Scudder Kemper Treasurer
Investments, Inc.
Nicholas Bratt President, Scudder Managing Director of Scudder --
(6/6/48)++@ International Bond Fund Kemper Investments, Inc.
William E. Holzer++@ President, Scudder Global Managing Director of Scudder --
(7/27/49) Fund Kemper Investments, Inc.
Paul Bancroft III Director Venture Capitalist and --
(2/27/30) Consultant; Retired
79 Pine Lane President, Chief Executive
Box 6639 Officer and Director,
Snowmass Village, CO Bessemer Securities
81615 Corporation
Sheryle J. Bolton Director Chief Executive Officer, --
(7/4/46) Scientific Learning
5576 Glenbrook Drive Corporation
Oakland, CA 94618
William T. Burgin Director General Partner, Bessemer --
(9/2/43) Venture Partners
83 Walnut Street
Wellesley, MA
02181-2101
Thomas J. Devine Director Consultant --
(12/9/26)
149 East 73rd Street
New York, NY 10021
Keith R. Fox (4/11/54)10 Director President, Exeter Capital --
East 53rd Street Management Corporation
New York, NY 10022
44
<PAGE>
Position with
Underwriter,
Name, Date of Birth Position Scudder Investor
and Address with Corporation Principal Occupation** Services, Inc.
- ----------- ---------------- ---------------------- --------------
William H. Gleysteen, Jr. Director Consultant; President, The --
(5/8/26) Japan Society, Inc.(1989-
4937 Crescent Street December 1995); Vice
Bethesda, MD 20816 President of Studies, Council
on Foreign Relations (until
1989)
William H. Luers Director President, The Metropolitan --
(5/15/29) Museum of Art (1986 until
993 Fifth Avenue present)
NewYork, NY 10028
Kathryn L. Quirk++* Director, Vice President Managing Director of Scudder Director, Senior Vice
(12/3/52) and Assistant Secretary Kemper Investments, Inc. President, Chief Legal
Officer and Assistant
Clerk
Robert G. Stone, Jr. Honorary Director Chairman Emeritus and --
(3/21/23) Director, Kirby Corporation
405 Lexington Avenue (inland and offshore marine
New York, NY 10174 transportation and diesel
repairs)
Susan E. Dahl+ (5/13/65) Vice President Managing Director of --
Scudder Kemper
Investments, Inc.
Jerard K. Hartman++ (3/3/33) Vice President Advisory Managing Director --
of Scudder Kemper
Investments, Inc.
Gary P. Johnson+ (5/13/49) Vice President Managing Director of Scudder --
Kemper Investments, Inc.
Thomas W. Joseph+ (4/22/39) Vice President Senior Vice President of Director, Vice
Scudder Kemper President, Treasurer
Investments, Inc. and Assistant Clerk
Gerald J. Moran++ (5/10/39) Vice President Senior Vice President of --
Scudder Kemper
Investments, Inc.
Isabel M. Saltzman+ Vice President Managing Director of --
(12/22/54) Scudder Kemper
Investments, Inc.
Thomas F. McDonough+ Vice President, Secretary Senior Vice President of Clerk
(1/20/47) and Treasurer Scudder Kemper
Investments, Inc.
45
<PAGE>
Position with
Underwriter,
Name, Date of Birth Position Scudder Investor
and Address with Corporation Principal Occupation** Services, Inc.
- ----------- ---------------- ---------------------- --------------
John R. Hebble+ (6/27/58) Assistant Treasurer Senior Vice President of --
Scudder Kemper
Investments, Inc.
Caroline Pearson+ Assistant Secretary Senior Vice President of --
(4/1/62) Scudder Kemper
Investments, Inc. ; Associate,
Dechert Price & Rhoads (law
firm) 1989 - 1997
</TABLE>
* Mr. Pierce and Ms. Quirk, are considered by the Corporation and its counsel
to be persons who are "interested persons" of the Adviser or of the
Corporation (within the meaning of the 1940 Act).
** Unless otherwise stated, all the Directors and officers have been
associated with their respective companies for more than five years, but
not necessarily in the same capacity.
# Ms. Quirk is a member of the Executive Committee, which may exercise the
powers of the Directors when they are not in session.
+ Address: Two International Place, Boston, Massachusetts
++ Address: 345 Park Avenue, New York, New York
@ The President of a series shall have the status of Vice President of the
Corporation.
To the knowledge of the Corporation, as of September 30, 1998, all
Directors and Officers as a group owned beneficially (as that term is defined in
Section 13(d) of the Securities Exchange Act of 1934) _______ shares, or ____%
of the shares of the Global Fund outstanding on such date.
To the knowledge of the Corporation, as of September 30, 1998, all
Directors and Officers as a group owned beneficially (as the term is defined in
Section 13(d) under the Securities Exchange Act of 1934) less than 1% of the
shares of International Bond Fund outstanding on such date.
To the knowledge of the Corporation, as of September 30, 1998,
_________shares in the aggregate, ____% of the outstanding shares of Global
Fund, were held in the name of Charles Schwab & Co., Inc., 101 Montgomery
Street, San Francisco, CA 94104-4122, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
To the knowledge of the Corporation, as of September 30, 1998,
_________ shares in the aggregate, _____% of the outstanding shares of
International Bond Fund, were held in the name of Charles Schwab & Co., Inc.,
101 Montgomery Street, San Francisco, CA 94104-4122, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Except as stated above, to the knowledge of the Corporation, as of
September 30, 1998, no person owned beneficially more than 5% of a Fund's
outstanding shares.
The Directors and officers also serve in similar capacities with other
Scudder funds.
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<PAGE>
REMUNERATION
Responsibilities of the Board -- Board and Committee Meetings
The Board of Directors is responsible for the general oversight of each
Fund's business. A majority of the Board's members are not affiliated with
Scudder Kemper Investments, Inc. These "Independent Directors" have primary
responsibility for assuring that each Fund is managed in the best interests of
its shareholders.
The Board of Directors meets at least quarterly to review the
investment performance of each Fund and other operational matters, including
policies and procedures designed to ensure compliance with various regulatory
requirements. At least annually, the Independent Directors review the fees paid
to the Adviser and its affiliates for investment advisory services and other
administrative and shareholder services. In this regard, they evaluate, among
other things, each Fund's investment performance, the quality and efficiency of
the various other services provided, costs incurred by the Adviser and its
affiliates and comparative information regarding fees and expenses of
competitive funds. They are assisted in this process by each Fund's independent
public accountants and by independent legal counsel selected by the Independent
Directors.
All the Independent Directors serve on the Committee on Independent
Directors, which nominates Independent Directors and considers other related
matters, and the Audit Committee, which selects each Fund's independent public
accountants and reviews accounting policies and controls. In addition,
Independent Directors from time to time have established and served on task
forces and subcommittees focusing on particular matters such as investment,
accounting and shareholder service issues.
Compensation of Officers and Directors
The Independent Directors receive the following compensation from the
Funds of Global/International Fund, Inc.: an annual trustee's fee of $3,500; a
fee of $325 for attendance at each board meeting, audit committee meeting or
other meeting held for the purposes of considering arrangements between the
Trust on behalf of each Fund and the Adviser or any affiliate of the Adviser;
$100 for all other committee meetings; and reimbursement of expenses incurred
for travel to and from Board Meetings. No additional compensation is paid to any
Independent Director for travel time to meetings, attendance at directors'
educational seminars or conferences, service on industry or association
committees, participation as speakers at directors' conferences or service on
special trustee task forces or subcommittees . Independent Directors do not
receive any employee benefits such as pension or retirement benefits or health
insurance. Notwithstanding the schedule of fees, the Independent Directors have
in the past and may in the future waive a portion of their compensation.
The Independent Directors also serve in the same capacity for other
funds managed by the Adviser. These funds differ broadly in type and complexity
and in some cases have substantially different Director fee schedules. The
following table shows the aggregate compensation received by each Independent
Director during 1997 from the Trust and from all of the Scudder funds as a
group.
<TABLE>
<CAPTION>
Global/International Fund, Inc.* All Scudder Funds
Paid by Paid by Paid by Paid by
Name the Fund the Adviser the Funds the Adviser**
- ---- -------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Paul Bancroft III, $39,750 $6,750 $156,922 $25,950 (20 funds)
Trustee
Sheryle J. Bolton, $45,750 $6,750 $86,213 $10,800 (20 funds)
Trustee
William T. Burgin, $31,205 $6,750 $85,950 $17,550 (20 funds)
Director
Thomas J. Devine, $46,500 $6,750 $186,598 $27,150 (21 funds)
47
<PAGE>
Global/International Fund, Inc.* All Scudder Funds
Paid by Paid by Paid by Paid by
Name the Fund the Adviser the Funds the Adviser**
- ---- -------- ----------- --------- -------------
Trustee
Keith R. Fox,*** $8,485 $0 $134,390 $17,550 (18 funds)
Director
William H. Gleysteen, $45,000 $6,750 $136,150@ $19,850 (14 funds)
Jr., Director
William H. Luers, $45,750 $6,750 $117,729 $16,350 (20 funds)
Director
Robert G. Stone, Jr., $0 $0 $8,000+ $0 (1 fund)
Honorary Director
</TABLE>
* Global/International Fund, Inc. consists of five funds: Scudder Global
Fund, Scudder International Bond Fund, Scudder Global Bond Fund, Scudder
Global Discovery Fund and Scudder Emerging Markets Income Fund.
** Meetings associated with the Adviser's alliance with Zurich Insurance
Company. See "Insurance Adviser" for additional information.
*** Elected as Director on September 3, 1997.
@ This amount does not reflect $ in retirement benefits accrued as part of
Fund Complex expenses, and $ in estimated annual benefits payable upon
retirement. Retirement benefits accrued and proposed are to be paid to Mr.
Gleysteen as additional compensation for serving on the Board of The Japan
Fund, Inc.
+ This amount does not reflect $ in retirement benefits accrued as part of
Fund Complex expenses, and $ in estimated annual benefits payable upon
retirement. Retirement benefits accrued and proposed are to be paid to Mr.
Stone as additional compensation for serving on the Board of The Japan
Fund, Inc.
Members of the Board of Directors who are employees of the Adviser or
its affiliates receive no direct compensation from the Corporation, although
they are compensated as employees of the Adviser, or its affiliates, as a result
of which they may be deemed to participate in fees paid by each Fund.
DISTRIBUTOR
The Corporation has an underwriting agreement with Scudder Investor
Services, Inc., a Massachusetts corporation, which is a wholly-owned subsidiary
of the Adviser, a Delaware corporation. The Corporation's underwriting agreement
dated September ___, 1998 will remain in effect until September 30, 1999 and
from year to year thereafter only if its continuance is approved annually by a
majority of the Board of Directors who are not parties to such agreement or
interested persons of any such party and either by a vote of a majority of the
Directors or a majority of the outstanding voting securities of the Corporation.
The underwriting agreement was most recently approved by the Directors on August
6, 1998.
Under the principal underwriting agreement, the Corporation is
responsible for: the payment of all fees and expenses in connection with the
preparation and filing with the SEC of the Funds' registration statement and
prospectuses and any amendments and supplements thereto, the registration and
qualification of shares for sale in the various states, including registering
the Corporation as a broker/dealer in various states; the fees and expenses of
preparing, printing and mailing prospectuses annually to existing shareholders
(see below for expenses relating to prospectuses paid by the Distributor),
notices, proxy statements, reports or other communications to shareholders of a
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<PAGE>
Fund; the cost of printing and mailing confirmations of purchases of shares and
any prospectuses accompanying such confirmations; any issue taxes or any initial
transfer taxes; a portion of shareholder toll-free telephone charges and
expenses of shareholder service representatives, the cost of wiring funds for
share purchases and redemptions (unless paid by the shareholder who initiates
the transaction); the cost of printing and postage of business reply envelopes;
and a portion of the cost of computer terminals used by both the Corporation and
the Distributor.
The Distributor will pay for printing and distributing prospectuses or
reports prepared for its use in connection with the offering of the Funds'
shares to the public and preparing, printing and mailing any other literature or
advertising in connection with the offering of shares of a Fund to the public.
The Distributor will pay all fees and expenses in connection with its
qualification and registration as a broker or dealer under federal and state
laws, a portion of the cost of toll-free telephone service and expenses of
service representatives, a portion of the cost of computer terminals, and of any
activity which is primarily intended to result in the sale of shares issued by
the Corporation unless a Rule 12b-1 Plan is in effect which provides that a Fund
shall bear some or all of such expenses.
Note: Although neither Fund has a 12b-1 Plan and the Directors have
no current intention of adopting one, the Funds would also pay
those fees and expenses permitted to be paid or assumed by a
Fund pursuant to a 12b-1 Plan, if any, adopted by a Fund,
notwithstanding any other provision to the contrary in the
underwriting agreement.
As agent, the Distributor currently offers the Funds' shares on a
continuous basis to investors in all states. The underwriting agreement provides
that the Distributor accepts orders for shares at net asset value as no sales
commission or load is charged the investor. The Distributor has made no firm
commitment to acquire shares of the Corporation.
TAXES
(See "Distribution and performance information -- Dividends and
capital gains distributions" and "Transaction information -- Tax
information, Tax identification number" in the Funds' prospectuses.)
Each Fund has elected to be treated as a regulated investment company
under Subchapter M of the Internal Revenue Code, and each has qualified as such
since its inception. They intend to continue to qualify for such treatment. Such
qualification does not involve governmental supervision or management of
investment practices or policy.
A regulated investment company qualifying under Subchapter M of the
Code is required to distribute to its shareholders at least 90% of its
investment company taxable income (including net short-term capital gain) and
generally is not subject to federal income tax to the extent that it distributes
annually its investment company taxable income and net realized capital gains in
the manner required under the Code. The Funds intend to distribute at least
annually substantially all, and in no event less than 90%, of their investment
company taxable income and net realized capital gains.
If any net realized long-term capital gains in excess of net realized
short-term capital losses are retained by a Fund for reinvestment, requiring
federal income taxes to be paid thereon by a Fund, each Fund intends to elect to
treat such capital gains as having been distributed to shareholders. As a
result, each shareholder will report such capital gains as long-term capital
gains, will be able to claim his/her share of federal income taxes paid by a
Fund on such gains as a credit against his/her own federal income tax liability,
and will be entitled to increase the adjusted tax basis of his/her Fund shares
by the difference between his/her pro rata share of such gains and his/her tax
credit.
Net investment income is made up of dividends and interest, less
expenses. Net realized capital gains for a fiscal year are computed by taking
into account any capital loss carryforward or post-October loss of a Fund.
Global Fund and International Bond Fund intend to offset realized capital gains
by using their capital loss carryforwards, if any, before distributing any
capital gains. In addition, Global Fund and International Bond Fund intend to
offset realized capital gains by using their post-October losses, if any, before
distributing any capital gains. As of June 30, 1998, Global Fund had no capital
loss carryforward. At June 30, 1998, the International Bond Fund had a net tax
basis capital loss carryforward of approximately $ , which may be applied
against any realized net taxable capital gains of each succeeding year until
fully utilized or until June 30, 2003, ($77,681,000) and June 30, 2004
($6,093,000), the respective expiration dates, whichever occurs first.
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<PAGE>
Each Fund is subject to a 4% nondeductible excise tax on amounts
required to be but not distributed under a prescribed formula. The formula
requires payment to shareholders during a calendar year of distributions
representing at least 98% of the Fund's ordinary income for the calendar year,
at least 98% of the excess of its capital gains over capital losses (adjusted
for certain ordinary losses prescribed by the Code) realized during the one-year
period ending October 31 during such year, and all ordinary income and capital
gains for prior years that were not previously distributed.
Dividends from domestic corporations are expected to comprise some
portion of Global Fund's gross income. To the extent that such dividends
constitute a portion of the Fund's gross income, a portion of the income
distributions of the Fund may be eligible for the deduction for dividends
received by corporations. Shareholders will be informed of the portion of
dividends which so qualify. The dividends-received deduction is reduced to the
extent the Fund shares with respect to which the dividends are received are
treated as debt-financed under federal income tax law and is eliminated if the
shares are deemed to have been held for less than 46 days.
Properly designated distributions of the excess of net long-term
capital gain over net short-term capital loss, which a Fund designates as
capital gains dividends are taxable to shareholders as long-term capital gain,
regardless of the length of time the shares of a Fund have been held by such
shareholders. Such distributions are not eligible for the dividends-received
deduction discussed above. Any loss realized upon the redemption of shares held
at the time of redemption for six months or less from the date of their purchase
will be treated as a long-term capital loss to the extent of any amounts treated
as distributions of long-term capital gain during such six-month period.
Distributions of investment company taxable income are taxable to
shareholders as ordinary income. Investment company taxable income generally
includes dividends, interest, net short-term capital gains in excess of net
long-term capital losses, and net foreign currency gains, if any, less expenses.
Net realized capital gains for a fiscal year are computed by taking into account
any capital loss carryforward of a Fund.
Distributions of investment company taxable income and net realized
capital gains will be taxable as described above, whether received in shares or
in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share on the reinvestment
date.
All distributions of investment company taxable income and net realized
capital gain, whether received in shares or in cash, must be reported by each
shareholder on his or her federal income tax return. Dividends and capital gains
distributions declared in October, November or December and payable to
shareholders of record in such a month will be deemed to have been received by
shareholders on December 31 if paid during January of the following year.
Redemptions of shares, including exchanges for shares of another Scudder fund,
may result in tax consequences (gain or loss) to the shareholder and are also
subject to these reporting requirements.
A qualifying individual may make a deductible IRA contribution of up to
$2,000 or, if less, the amount of the individual's earned income for any taxable
year only if (i) neither the individual nor his or her spouse (unless filing
separate returns) is an active participant in an employer's retirement plan, or
(ii) the individual (and his or her spouse, if applicable) has an adjusted gross
income below a certain level ($40,050 for married individuals filing a joint
return, with a phase-out of the deduction for adjusted gross income between
$40,050 and $50,000; $25,050 for a single individual, with a phase-out for
adjusted gross income between $25,050 and $35,000). However, an individual not
permitted to make a deductible contribution to an IRA for any such taxable year
may nonetheless make nondeductible contributions up to $2,000 to an IRA (up to
$2,000 per individual for married couples if only one spouse has earned income
for that year). There are special rules for determining how withdrawals are to
be taxed if an IRA contains both deductible and nondeductible amounts. In
general, a proportionate amount of each withdrawal will be deemed to be made
from nondeductible contributions; amounts treated as a return of nondeductible
contributions will not be taxable. Also, annual contributions may be made to a
spousal IRA even if the spouse has earnings in a given year if the spouse elects
to be treated as having no earnings (for IRA contribution purposes) for the
year.
Distributions by a Fund result in a reduction in the net asset value of
such Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should consider the tax implications of buying shares just
50
<PAGE>
prior to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will then receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.
Each Fund intends to qualify for and may make the election permitted
under Section 853 of the Code so that shareholders may (subject to limitations)
be able to claim a credit or deduction on their federal income tax returns for,
and may be required to treat as part of the amounts distributed to them, their
pro rata portion of qualified taxes paid by the Fund to foreign countries (which
taxes relate primarily to investment income). Each Fund may make an election
under Section 853 of the Code, provided that more than 50% of the value of the
total assets of a Fund at the close of the taxable year consists of securities
in foreign corporations. The foreign tax credit available to shareholders is
subject to certain limitations imposed by the Code.
If a Fund invests in stock of certain foreign investment companies,
that Fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the Fund, other than the taxable
year of the excess distribution or disposition, would be taxed to the Fund at
the highest ordinary income rate in effect for such year, and the tax would be
further increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from the ownership of the foreign company's stock. Any
amount of distribution or gain allocated to the taxable year of the distribution
or disposition would be included in the Fund's investment company taxable income
and, accordingly, would not be taxable to the Fund to the extent distributed by
the Fund as a dividend to its shareholders.
Proposed regulations have been issued which may allow each Fund to make
an election to mark to market its shares of these foreign investment companies
in lieu of being subject to U.S. federal income taxation. At the end of each
taxable year to which the election applies, each Fund would report as ordinary
income the amount by which the fair market value of the foreign company's stock
exceeds the Funds' adjusted basis in these shares. No mark to market losses
would be recognized. The effect of the election would be to treat excess
distributions and gain on dispositions as ordinary income which is not subject
to a fund level tax when distributed to shareholders as a dividend.
Alternatively, the Funds may elect to include as income and gain their share of
the ordinary earnings and net capital gain of certain foreign investment
companies in lieu of being taxed in the manner described above.
Equity options (including options on stock and options on narrow-based
stock indices) and over-the-counter options on debt securities written or
purchased by a Fund will be subject to tax under Section 1234 of the Code. In
general, no loss is recognized by a Fund upon payment of a premium in connection
with the purchase of a put or call option. The character of any gain or loss
recognized (i.e., long-term or short-term) will generally depend in the case of
a lapse or sale of the option on the Fund's holding period for the option and in
the case of an exercise of the option on the Fund's holding period for the
underlying stock. The purchase of a put option may constitute a short sale for
federal income tax purposes, causing an adjustment in the holding period of the
underlying stock or substantially identical stock in the Fund's portfolio. If a
Fund writes a put or call option, no gain is recognized upon its receipt of a
premium. If the option lapses or is closed out, any gain or loss is treated as a
short-term capital gain or loss. If a call option is exercised the character of
the gain or loss depends on the holding period of the underlying stock.
Many futures and forward contracts entered into by a Fund, and all
listed nonequity options written or purchased by a Fund (including options on
debt securities, options on futures contracts, options on securities indices and
options on broad-based stock indices) will be governed by Section 1256 of the
Code. Absent a tax election to the contrary, gain or loss attributable to the
lapse, exercise or closing out of any such position generally will be treated as
60% long-term and 40% short-term, and on the last trading day of the Fund's
fiscal year, all outstanding Section 1256 positions will be marked to market
(i.e. treated as if such positions were closed out at their closing price on
such day), with any resulting gain or loss recognized. Under certain
circumstances, entry into a futures contract to sell a security may constitute a
short sale for federal income tax purposes, causing an adjustment in the holding
period of the underlying security or a substantially identical security in a
Fund's portfolio. Under Section 988 of the Code, discussed below, foreign
currency gains or loss from foreign currency related forward contracts, certain
futures and similar financial instruments entered into or acquired by a Fund
will be treated as ordinary income or loss.
Subchapter M of the Code requires that each Fund realize less than 30%
of its annual gross income from the sale or other disposition of stock,
securities and certain options, futures and forward contracts held for less than
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<PAGE>
three months. Each Fund's options, futures and forward transactions may increase
the amount of gains realized by the Fund that are subject to this 30%
limitation. Accordingly, the amount of such transactions that a Fund may
undertake may be limited.
Positions of a Fund which consist of at least one stock and at least
one stock option or other position with respect to a related security which
substantially diminishes a Fund's risk of loss with respect to such stock could
be treated as a "straddle" which is governed by Section 1092 of the Code, the
operation of which may cause deferral of losses, adjustments in the holding
periods of stock or securities and conversion of short-term capital losses into
long-term capital losses. An exception to these straddle rules exists for any
"qualified covered call options" on stock written by the Fund.
Positions of a Fund which consist of at least one position not governed
by Section 1256 and at least one futures contract or forward contract or
nonequity option governed by Section 1256 which substantially diminishes the
Fund's risk of loss with respect to such other position will be treated as a
"mixed straddle." Although mixed straddles are subject to the straddle rules of
Section 1092 of the Code, certain tax elections exist for them which reduce or
eliminate the operation of these rules. The Fund will monitor its transactions
in options and futures and may make certain tax elections in connection with
these investments.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues receivables or
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables, or pays such liabilities, generally are treated as
ordinary income or ordinary loss. Similarly, on disposition of debt securities
denominated in a foreign currency and on disposition of certain futures and
forward contracts, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or contract and
the date of disposition are also treated as ordinary gain or loss. These gains
or losses, referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of a Fund's investment company taxable income to
be distributed to its shareholders as ordinary income.
A portion of the difference between the issue price of zero coupon
securities and their face value ("original issue discount") is considered to be
income to a Fund each year, even though the Fund will not receive cash interest
payments from these securities. This original issue discount imputed income will
comprise a part of the investment company taxable income of the Funds which must
be distributed to shareholders in order to maintain the qualification of the
Funds as regulated investment companies and to avoid federal income tax at the
Fund's level. In addition, if a Fund invests in certain high yield original
issue discount obligations issued by corporations, a portion of the original
discount accruing on the obligation may be eligible for the deduction for
dividends received by corporations. In such an event, dividends of investment
company taxable income received from a Fund by its corporate shareholders, to
the extent attributable to such portion of accrued original issue discount, may
be eligible for this deduction for dividends received by corporations if so
designated by a Fund in a written notice to shareholders.
Each Fund will be required to report to the IRS all distributions of
investment company taxable income and capital gains as well as gross proceeds
from the redemption or exchange of Fund shares, except in the case of certain
exempt shareholders. Under the backup withholding provisions of Section 3406 of
the Code, distributions of investment company taxable income and capital gains
and proceeds from the redemption or exchange of the shares of a regulated
investment company may be subject to withholding of federal income tax at the
rate of 31% in the case of non-exempt shareholders who fail to furnish the
investment company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if a Fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.
Shareholders of each Fund may be subject to state and local taxes on
distributions received from the Fund and on redemptions of the Fund's shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year the Corporation issues to
each shareholder a statement of the federal income tax status of all
distributions.
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The foregoing discussion of U.S. federal income tax law relates solely
to the application of that law to U.S. persons, i.e., U.S. citizens and
residents and U.S. corporations, partnerships, trusts and estates. Each
shareholder who is not a U.S. person should consider the U.S. and foreign tax
consequences of ownership of shares of a Fund, including the possibility that
such a shareholder may be subject to a U.S. withholding tax at a rate of 30% (or
at a lower rate under an applicable income tax treaty) on amounts constituting
ordinary income received by him or her, where such amounts are treated as income
from U.S. sources under the Code.
Shareholders should consult their tax advisers about the application of
the provisions of tax law described in this Statement of Additional Information
in light of their particular tax situations.
PORTFOLIO TRANSACTIONS
Brokerage Commissions
Allocation of brokerage is supervised by the Adviser.
The primary objective of the Adviser in placing orders for the purchase
and sale of securities for a Fund is to obtain the most favorable net results,
taking into account such factors as price, commission where applicable, size of
order, difficulty of execution and skill required of the executing
broker/dealer. The Adviser seeks to evaluate the overall reasonableness of
brokerage commissions paid (to the extent applicable) through the familiarity of
the Distributor with commissions charged on comparable transactions, as well as
by comparing commissions paid by a Fund to reported commissions paid by others.
The Adviser reviews on a routine basis commission rates, execution and
settlement services performed, making internal and external comparisons.
The Funds' purchases and sales of fixed-income securities are generally
placed by the Adviser with primary market makers for these securities on a net
basis, without any brokerage commission being paid by a Fund. Trading does,
however, involve transaction costs. Transactions with dealers serving as primary
market makers reflect the spread between the bid and asked prices. Purchases of
underwritten issues may be made, which will include an underwriting fee paid to
the underwriter.
When it can be done consistently with the policy of obtaining the most
favorable net results, it is the Adviser's practice to place such orders with
broker/dealers who supply research, market and statistical information to a Fund
. The term "research, market and statistical information" includes advice as to
the value of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or purchasers or sellers of
securities; and analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts.
The Adviser is authorized when placing portfolio transactions for a Fund to pay
a brokerage commission in excess of that which another broker might charge for
executing the same transaction on account of execution services and the receipt
of research, market or statistical information. The Adviser will not place
orders with broker/dealers on the basis that the broker/dealer has or has not
sold shares of a Fund. In effecting transactions in over-the-counter securities,
orders are placed with the principal market makers for the security being traded
unless, after exercising care, it appears that more favorable results are
available elsewhere.
To the maximum extent feasible, it is expected that the Adviser will
place orders for portfolio transactions through the Distributor, which is a
corporation registered as a broker-dealer and a subsidiary of the Adviser; the
Distributor will place orders on behalf of the Funds with issuers, underwriters
or other brokers and dealers. The Distributor will not receive any commission,
fee or other remuneration from the Funds for this service.
Although certain research, market and statistical information from
broker/dealers may be useful to a Fund and to the Adviser, it is the opinion of
the Adviser that such information only supplements the Adviser's own research
effort since the information must still be analyzed, weighed, and reviewed by
the Adviser's staff. Such information may be useful to the Adviser in providing
services to clients other than a Fund, and not all such information is used by
the Adviser in connection with a Fund. Conversely, such information provided to
the Adviser by broker/dealers through whom other clients of the Adviser effect
securities transactions may be useful to the Adviser in providing services to a
Fund.
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The Directors review from time to time whether the recapture for the
benefit of a Fund of some portion of the brokerage commissions or similar fees
paid by a Fund on portfolio transactions is legally permissible and advisable.
In the fiscal years ended June 30, 1998, 1997 and 1996 , Global Fund
paid brokerage commissions of $ , $2,465,215 and $1,291,901 , respectively. For
the fiscal year ended June 30, 1998, $ , ( %) of the total brokerage commissions
paid by the Fund resulted from orders placed, consistent with the policy of
obtaining the most favorable net results, with brokers and dealers who provided
supplementary research, market and statistical information to the Fund or the
Adviser. The amount of such transactions aggregated $ , ( %) of all brokerage
transactions. Such brokerage was not allocated to any particular brokers or
dealers or with any regard to the provision of market quotations for purposes of
valuing the Fund's portfolio or to any other special factors.
In the fiscal years ended June 30, 1998, 1997 and 1996 , International
Bond Fund paid no brokerage commissions.
Portfolio Turnover
Average annual portfolio turnover rate is the ratio of the lesser of
sales or purchases to the monthly average value of the portfolio securities
owned during the year, excluding from both the numerator and the denominator all
securities with maturities at the time of acquisition of one year or less.
Global Fund's portfolio turnover rate for each of the fiscal years ended June
30, 1998 and 1997 was % and 40.5%, respectively. International Bond Fund's
portfolio turnover rate for each of the fiscal years ended June 30, 1998 and
1997 was % and 297.2%, respectively. Recent economic and market conditions
necessitated more active trading, resulting in the higher portfolio turnover
rates. A higher rate involves greater transaction expenses to a Fund and may
result in the realization of net capital gains, which would be taxable to
shareholders when distributed. Purchases and sales are made for a Fund's
portfolio whenever necessary, in management's opinion, to meet the Fund's
objectives.
NET ASSET VALUE
The net asset value of shares of the Fund is computed as of the close
of regular trading on the Exchange on each day the Exchange is open for trading.
The Exchange is scheduled to be closed on the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. Net asset value per
share is determined by dividing the value of the total assets of the Fund, less
all liabilities, by the total number of shares outstanding.
An exchange-traded equity security is valued at its most recent sale
price. Lacking any sales, the security is valued at the calculated mean between
the most recent bid quotation and the most recent asked quotation (the
"Calculated Mean"). Lacking a Calculated Mean, the security is valued at the
most recent bid quotation. An equity security which is traded on the Nasdaq
Stock Market will be valued at its most recent sale price. Lacking any sales,
the security will be valued at the high or "inside" bid quotation. The value of
an equity security not quoted on the Nasdaq System, but traded in another
over-the-counter market, is its most recent sale price. Lacking any sales, the
security is valued at the Calculated Mean. Lacking a Calculated Mean, the
security is valued at the most recent bid quotation.
Debt securities, other than short-term securities, are valued at prices
supplied by the Fund's pricing agent(s) which reflect broker/dealer supplied
valuations and electronic data processing techniques. Short-term securities with
remaining maturities of sixty days or less are valued by the amortized cost
method, which the Board believes approximates market value. If it is not
possible to value a particular debt security pursuant to these valuation
methods, the value of such security is the most recent bid quotation supplied by
a bona fide marketmaker. If it is not possible to value a particular debt
security pursuant to the above methods, the Adviser may calculate the price of
that debt security, subject to limitations established by the Board.
An exchange traded options contract on securities, currencies, futures
and other financial instruments is valued at its most recent sale price on such
exchange. Lacking any sales, the options contract is valued at the Calculated
Mean. Lacking any Calculated Mean, the options contract is valued at the most
recent bid quotation in the case of a purchased options contract, or the most
recent asked quotation in the case of a written options contract. An options
contract on securities, currencies and other financial instruments traded
over-the-counter is valued at the most recent bid quotation in the case of a
purchased options contract and at the most recent asked quotation in the case of
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a written options contract. Futures contracts are valued at the most recent
settlement price. Foreign currency exchange forward contracts are valued at the
value of the underlying currency at the prevailing exchange rate.
If a security is traded on more than one exchange, or upon one or more
exchanges and in the over-the-counter market, quotations are taken from the
market in which the security is traded most extensively.
If, in the opinion of the Fund's Valuation Committee, the value of a
portfolio asset as determined in accordance with these procedures does not
represent the fair market value of the portfolio asset, the value of the
portfolio asset is taken to be an amount which, in the opinion of the Valuation
Committee, represents fair market value on the basis of all available
information. The value of other portfolio holdings owned by the Fund is
determined in a manner which, in the discretion of the Valuation Committee most
fairly reflects fair market value of the property on the valuation date.
Following the valuations of securities or other portfolio assets in
terms of the currency in which the market quotation used is expressed ("Local
Currency"), the value of these portfolio assets in terms of U.S. dollars is
calculated by converting the Local Currency into U.S. dollars at the prevailing
currency exchange rate on the valuation date.
ADDITIONAL INFORMATION
Experts
For the Funds' most recent fiscal year, the Firm of Coopers & Lybrand
L.L.P. acted as each Fund's independent accountants. Effective July 1, 1998,
Coopers & Lybrand L.L.P. and Price Waterhouse LLP merged to become
PricewaterhouseCoopers LLP. The Financial highlights of each Fund included in
the Funds' prospectuses and the Financial Statements incorporated by reference
in this Statement of Additional Information have been so included or
incorporated by reference in reliance on the report of PricewaterhouseCoopers
LLP, One Post Office Square, Boston, Massachusetts 02109, independent
accountants, and given on the authority of that firm as experts in accounting
and auditing. PricewaterhouseCoopers LLP is responsible for performing annual
audits of the financial statements and financial highlights of the Funds in
accordance with generally accepted auditing standards, and the preparation of
federal tax returns.
Other Information
Many of the investment changes in a Fund will be made at prices
different from those prevailing at the time they may be reflected in a regular
report to shareholders of the Fund. These transactions will reflect investment
decisions made by the Adviser in the light of the objectives and policies of the
Fund, and such factors as its other portfolio holdings and tax considerations
and should not be construed as recommendations for similar action by other
investors.
The CUSIP number of Global Fund is 378947-20-4.
The CUSIP number of International Bond Fund is 378947-30-3.
Global Fund and International Bond Fund each have fiscal years ending
on June 30.
The law firm of Dechert Price & Rhoads is counsel for the Funds.
The Corporation employs Brown Brothers Harriman and Co., 40 Water
Street, Boston, Massachusetts 02109 as Custodian for each Fund. Brown Brothers
Harriman and Co. has entered into agreements with foreign subcustodians approved
by the Directors of the Corporation pursuant to Rule 17f-5 of the 1940 Act.
Scudder Fund Accounting Corporation ("SFAC"), Two International Place,
Boston, Massachusetts, 02210-4103, a subsidiary of the Adviser, computes net
asset value for the Funds. Global Fund pays Scudder Fund Accounting Corporation
an annual fee equal to 0.065% of the first $150 million of average daily net
assets, 0.040% of such assets in excess of $150 million, 0.020% of such assets
in excess of $1 billion, plus holding and transaction charges for this service.
International Bond Fund pays Scudder Fund Accounting Corporation an annual fee
equal to 0.08% of the first $150 million of average net assets, 0.06% of such
55
<PAGE>
assets in excess of $150 million and 0.04% of such assets in excess of $1
billion. For the fiscal years ended June 30, 1997 and 1998, SFAC charged Global
Fund aggregate fees of $552,664 and $ , respectively, of which $49,387 and $ ,
respectively are unpaid. For the fiscal year ended June 30, 1997 and 1998, SFAC
charged International Bond Fund aggregate fees of $285,933 and $ , respectively,
of which $ is unpaid at June 30, 1998.
Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts
02107-2291, a subsidiary of the Adviser, is the transfer, dividend-paying and
shareholder service agent for each Fund. Global Fund pays Scudder Service
Corporation an annual fee of $17.55 for each account maintained for a
participant. International Bond Fund pays Scudder Service Corporation an annual
fee of $25.00 for each account maintained for a participant. For the fiscal year
ended June 30, 1998 Scudder Service Corporation charged Global Fund aggregate
fees of $ , of which $ is unpaid at June 30, 1998. For the fiscal year ended
June 30, 1998, Scudder Service Corporation charged International Bond Fund
aggregate fees of $ , of which $ is unpaid at June 30, 1998.
Scudder Trust Company, an affiliate of the Adviser, provides
subaccounting and recordkeeping services for shareholder accounts in certain
retirement and employee benefit plans. Annual service fees are paid by the Fund
to Scudder Trust Company, Two International Place, Boston, Massachusetts
02110-4103 for such accounts. Each Fund pays Scudder Trust Company an annual fee
of $17.55 per shareholder account. Scudder Global Fund incurred fees of $ , of
which $ is unpaid at June 30, 1998. Scudder International Bond Fund incurred
fees of $ , of which $ is unpaid at June 30, 1998.
The Directors of the Corporation have considered the appropriateness of
using this combined Statement of Additional Information for the Funds. There is
a possibility that a Fund might become liable for any misstatement, inaccuracy,
or incomplete disclosure in this Statement of Additional Information concerning
the other Fund.
The Funds, or the Adviser (including any affiliate of the Adviser), or
both, may pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to accounts of participants in retirement
plans or other beneficial owners of Fund shares whose interests are held in an
omnibus account.
The Funds' prospectuses and this Statement of Additional Information
omit certain information contained in the Registration Statement which the
Corporation has filed with the SEC under the Securities Act of 1933 and
reference is hereby made to the Registration Statement for further information
with respect to the Fund and the securities offered hereby. This Registration
Statement is available for inspection by the public at the SEC in Washington,
D.C.
FINANCIAL STATEMENTS
Global Fund
The financial statements, including the Investment Portfolio of Global
Fund, together with the Report of Independent Accountants, Financial Highlights
and notes to financial statements, are incorporated by reference and attached
hereto in the Annual Report to Shareholders of the Fund dated June 30, 1998, and
are hereby deemed to be part of this Statement of Additional Information.
International Bond Fund
The financial statements, including the Investment Portfolio of
International Bond Fund, together with the Report of Independent Accountants,
Financial Highlights and notes to financial statements, are incorporated by
reference and attached hereto in the Annual Report to Shareholders of the Fund
dated June 30, 1998, and are hereby deemed to be part of this Statement of
Additional Information.
56
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's and S&P
to corporate and municipal bonds.
Ratings of Municipal and Corporate Bonds
S&P:
Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong. Debt rated AA
has a very strong capacity to pay interest and repay principal and differs from
the highest rated issues only in small degree. Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories. Debt rated BBB is regarded as
having an adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures to adverse conditions.
Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating. Debt rated B has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.
Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating. The rating CC typically is applied to debt subordinated
to senior debt that is assigned an actual or implied CCC rating. The rating C
typically is applied to debt subordinated to senior debt which is assigned an
actual or implied CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued. The rating C1 is reserved for income bonds on which no interest
is being paid. Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period had not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
Moody's:
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Bonds which are rated Aa are
judged to be of high quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long term risks appear
somewhat larger than in Aaa securities. Bonds which are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
<PAGE>
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated Ba are
judged to have speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during other good and bad times over
the future. Uncertainty of position characterizes bonds in this class. Bonds
which are rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest. Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
<S> <C> <C> <C>
a. Financial Statements
Included in Part A of this Registration Statement:
For Scudder Global Fund:
Financial Highlights for the ten fiscal years ended June 30, 1997.
(Incorporated by reference to Post-Effective Amendment No. 30 to the
Registration Statement.)
For Scudder International Bond Fund:
Financial Highlights for the period July 6, 1988 (commencement of operations)
to June 30, 1989 and for the eight fiscal years ended June 30, 1997.
(Incorporated by reference to Post-Effective Amendment No. 30 to the
Registration Statement.)
For Scudder Global Discovery Fund:
Financial Highlights for the period September 10, 1991 (commencement of
operations) to October 31, 1991 and for the six fiscal years ended
October 31, 1997.
(Incorporated by reference to Post-Effective Amendment No. 33 to the
Registration Statement.)
For Scudder Global Bond Fund:
Financial Highlights for the period March 1, 1991 (commencement of
operations) to October 31, 1991 and for the six fiscal years ended October 31,
1997.
(Incorporated by reference to Post-Effective Amendment No. 32 to the
Registration Statement.)
For Scudder Emerging Markets Income Fund:
Financial Highlights for the period December 31, 1993 (commencement of
operations) to October 31, 1994 and for the three fiscal years ended October 31,
1997.
(Incorporated by reference to Post-Effective Amendment No. 32 to the
Registration Statement.)
Included in Part B of this Registration Statement:
For Scudder Global Fund:
Investment Portfolio as of June 30, 1997
Statement of Assets and Liabilities as of June 30, 1997
Statement of Operations for the fiscal year ended June 30, 1997
Statements of Changes in Net Assets for the two fiscal years ended June 30, 1997
Financial Highlights for the ten fiscal years ended June 30, 1997 Notes to Financial
Statements Report of Independent Accountants
(Incorporated by reference to Post-Effective Amendment No. 30 to the
Registration Statement.)
Part C - Page 1
<PAGE>
For Scudder International Bond Fund:
Investment Portfolio as of June 30, 1997
Statement of Assets and Liabilities as of June 30, 1997
Statement of Operations for the fiscal year ended June 30, 1997
Statements of Changes in Net Assets for the two fiscal years ended
June 30, 1997
Financial Highlights for the period July 6, 1988 (commencement of operations)
to June 30, 1989 and for the eight fiscal years ended June 30, 1997
Notes to Financial Statements
Report of Independent Accountants
(Incorporated by reference to Post-Effective Amendment No. 30 to the
Registration Statement.)
For Scudder Global Discovery Fund:
Investment Portfolio as of October 31, 1997
Statement of Assets and Liabilities as of October 31, 1997
Statement of Operations for the fiscal year ended October 31, 1997
Statements of Changes in Net Assets for the two fiscal years ended
October 31, 1997
Financial Highlights for the period September 10, 1991 (commencement of
operations) to October 31, 1991 and for the six fiscal years ended
October 31, 1997
Notes to Financial Statements
Report of Independent Accountants
(Incorporated by reference to Post-Effective Amendment No. 33 to the
Registration Statement.)
For Scudder Global Bond Fund:
Investment Portfolio as of October 31, 1997
Statement of Assets and Liabilities as of October 31, 1997
Statement of Operations for the fiscal year ended October 31, 1997
Statements of Changes in Net Assets for the two fiscal years ended
October 31, 1997
Financial Highlights for the period March 1, 1991 (commencement of
operations) to October 31, 1991 and for the six fiscal years ended
October 31, 1997
Notes to Financial Statements
Report of Independent Accountants
(Incorporated by reference to Post-Effective No. 32 to the Registration
Statement.)
For Scudder Emerging Markets Income Fund:
Investment Portfolio as of October 31, 1997
Statement of Assets and Liabilities as of October 31, 1997
Statement of Operations for the fiscal year ended October 31, 1997
Statement of Changes in Net Assets for the period December 31, 1993
(commencement of operations) to October 31, 1994 and for the two fiscal
years ended October 31, 1997
Financial Highlights for the period December 31, 1993
(commencement of operations) to October 31, 1994 and for the three fiscal
years ended October 31, 1997
Notes to Financial Statements
Report of ndependent Accountants
(Incorporated by reference to Post-Effective No. 32 to the Registration
Statement.)
Part C - Page 2
<PAGE>
Statements, schedules and historical information other than those listed above have been
omitted since they are either not applicable or are not required.
b. Exhibits:
1. (a) Articles of Amendment and Restatement dated December 13, 1990.
(Incorporated by reference to Exhibit 1(a) to Post-Effective
Amendment No. 8 to the Registration Statement.)
(b) Articles of Amendment dated December 29, 1997 is filed herein.
(c) Articles of Amendment dated May 29, 1998 is filed herein.
(d) Articles Supplementary dated February 14, 1991.
(Incorporated by reference to Exhibit 1(b) to Post-Effective
Amendment No. 9 to the Registration Statement.)
(e) Articles Supplementary dated July 11, 1991.
(Incorporated by reference to Exhibit No. 1(c) to Post-Effective
Amendment No. 12 to the Registration Statement.)
(f) Articles Supplementary dated November 24, 1992.
(Incorporated by reference to Exhibit 1(d) to Post-Effective
Amendment No. 18 to the Registration Statement.)
(g) Articles Supplementary dated October 20, 1993.
(Incorporated by reference to Exhibit 1(e) to Post-Effective
Amendment No. 19 to the Registration Statement.)
(h) Articles Supplementary dated December 14, 1995.
(Incorporated by reference to Exhibit 1(f) to Post-Effective
Amendment No. 26 to the Registration Statement.)
(i) Articles Supplementary dated March 6, 1996.
(Incorporated by reference to Exhibit 1(g) to Post-Effective
Amendment No. 28 to the Registration Statement.)
(j) Articles Supplementary dated April 15, 1998 is filed herein.
2. (a) By-Laws dated May 15, 1986.
(Incorporated by reference to Exhibit 2 to original Registration
Statement.)
(b) Amendment dated May 4, 1987 to the By-Laws.
(Incorporated by reference to Exhibit 2(b) to Post-Effective
Amendment No. 2 to the Registration Statement.)
(c) Amendment dated September 14, 1987 to the By-Laws.
(Incorporated by reference to Exhibit 2(c) to Post-Effective
Amendment No. 5 to the Registration Statement.)
(d) Amendment dated July 27, 1988 to the By-Laws.
(Incorporated by reference to Exhibit 2(d) to Post-Effective
Amendment No. 5 to the Registration Statement.)
Part C - Page 3
<PAGE>
(e) Amendment dated September 15, 1989 to the By-Laws.
(Incorporated by reference to Exhibit 2(e) to Post-Effective
Amendment No. 7 to the Registration Statement.)
(f) Amended and Restated By-Laws dated March 4, 1991.
(Incorporated by reference to Exhibit 2(f) to Post-Effective
Amendment No. 12 to the Registration Statement.)
(g) Amendment dated September 20, 1991 to the By-Laws.
(Incorporated by reference to Exhibit No. 2(g) to Post-Effective
Amendment No. 15 to the Registration Statement.)
(h) Amendment dated December 12, 1991 to the By-Laws.
(Incorporated by reference to Exhibit No. 2(h) to Post-Effective
Amendment No. 23 to the Registration Statement.)
(i) Amendment dated October 1, 1996 to the By-Laws.
(Incorporated by reference to Exhibit No. 2(i) to Post-Effective
Amendment No. 27 to the Registration Statement.)
(j) Amendment dated December 3, 1997 to the By-Laws is filed herein.
3. Inapplicable.
4. (a) Specimen Share Certificate representing shares of capital stock of
$.01 par value of Scudder Global Fund.
(Incorporated by reference to Exhibit 4(a) to Post-Effective
Amendment No. 6 to the Registration Statement.)
(b) Specimen Share Certificate representing shares of capital stock of
$.01 par value of Scudder International Bond Fund.
(Incorporated by reference to Exhibit 4(b) to Post-Effective
Amendment No. 6 to the Registration Statement.)
5. (a) Investment Management Agreement between the Registrant (on
behalf of Scudder Global Fund) and Scudder, Stevens &
Clark, Inc. dated December 14, 1990.
(Incorporated by reference to Exhibit 5(a) to Post-Effective
Amendment No. 12 to the Registration Statement.)
(b) Investment Management Agreement between the Registrant (on
behalf of Scudder International Bond Fund) and Scudder,
Stevens & Clark, Inc. dated December 14, 1990.
(Incorporated by reference to Exhibit 5(b) to Post-Effective
Amendment No. 12 to the Registration Statement.)
(c) Investment Management Agreement between the Registrant (on
behalf of Scudder Short Term Global Income Fund) and Scudder,
Stevens & Clark, Inc. dated September 7, 1993.
(Incorporated by reference to Exhibit 5(c) to Post-Effective
Amendment No. 20 to the Registration Statement.)
Part C - Page 4
<PAGE>
(d) Investment Management Agreement between the Registrant (on
behalf of Scudder Global Small Company Fund) and Scudder,
Stevens & Clark, Inc. dated September 3, 1991.
(Incorporated by reference to Exhibit 5(d) to Post-Effective
Amendment No. 15 to the Registration Statement.)
(e) Investment Management Agreement between the Registrant (on
behalf of Scudder Emerging Markets Income Fund) and Scudder,
Stevens & Clark, Inc. dated December 29, 1993.
(Incorporated by reference to Post-Effective Amendment No. 21
to the Registration Statement.)
(f) Investment Management Agreement between the Registrant (on
behalf of Scudder International Bond Fund) and Scudder, Stevens &
Clark, Inc. dated September 8, 1994.
(Incorporated by reference to Post-Effective Amendment No. 22 to
the Registration Statement.)
(g) Investment Management Agreement between the Registrant (on
behalf of Scudder Global Fund) and Scudder, Stevens & Clark, Inc.
dated September 6, 1995.
(Incorporated by reference to Post-Effective Amendment No. 24 to
the Registration Statement.)
(h) Form of an Investment Management Agreement between the
Registrant (on behalf of Scudder Global Fund) and Scudder Kemper
Investments, Inc. dated December 31, 1997.
(Incorporated by reference to Post-Effective Amendment No. 33 to
the Registration Statement.)
(h)(1) Investment Management Agreement between the Registrant (on
behalf of Scudder International Bond Fund) and Scudder Kemper
Investments, Inc. dated December 31, 1997 is filed herein.
(h)(2) Investment Management Agreement between the Registrant (on
behalf of Scudder Global Bond Fund) and Scudder Kemper
Investments, Inc. dated December 31, 1997 is filed herein.
(h)(3) Investment Management Agreement between the Registrant (on
behalf of Scudder Global Discovery Fund) and Scudder Kemper
Investments, Inc. dated December 31, 1997 is filed herein.
(h)(4) Investment Management Agreement between the Registrant (on
behalf of Scudder Emerging Markets Income Fund) and Scudder
Kemper Investments, Inc. dated December 31, 1997 is filed herein.
(i) Investment Management Agreement between the Registrant (on
behalf of Scudder Global Fund) and Scudder Kemper Investments,
Inc. dated September ___, 1998 to be filed by amendment.
(i)(1) Investment Management Agreement between the Registrant (on
behalf of Scudder International Bond Fund) and Scudder Kemper
Investments, Inc. dated September ___, 1998 to be filed by
amendment.
Part C - Page 5
<PAGE>
(i)(2) Investment Management Agreement between the Registrant (on
behalf of Scudder Global Bond Fund) and Scudder Kemper
Investments, Inc. dated September ___, 1998 to be filed by
amendment.
(i)(3) Investment Management Agreement between the Registrant (on behalf of
Scudder Global Discovery Fund) and Scudder Kemper Investments, Inc.
dated September ____, 1998 to be filed by amendment.
(i)(4) Investment Management Agreement between the Registrant (on behalf of
Scudder Emerging Markets Income Fund) and Scudder Kemper
Investments, Inc. dated September ____, 1998 to be filed by
amendment.
6. (a) Underwriting Agreement between the Registrant and Scudder
Investor Services, Inc. dated July 24, 1986.
(Incorporated by reference to Exhibit 6 to Post-Effective
Amendment No. 1 to the Registration Statement.)
(b) Underwriting and Distribution Services Agreement between the
Registrant, on behalf of Global Discovery Fund, dated April 16,
1998.
(Incorporated by reference to Post-Effective Amendment No. 33 to
the Registration Statement.)
(c) Underwriting Agreement between the Registrant and Scudder
Investor Services, Inc. dated September ___, 1998 to be filed by
amendment.
(d) Underwriting and Distribution Services Agreement between the
Registrant, on behalf of Global Discovery Fund and Kemper
Distributors, Inc. dated August 10, 1998 to be filed by
amendment.
(e) Underwriting and Distribution Services Agreement between the
Registrant, on behalf of Global Discovery Fund and Kemper
Distributors, Inc. dated September ___, 1998to be filed by
amendment.
7. Inapplicable.
8. (a) Custodian Agreement between the Registrant and State Street Bank
and Trust Company dated July 24, 1986.
(Incorporated by reference to Exhibit 8(a) to Post-Effective
Amendment No. 1 to the Registration Statement.)
(b) Fee schedule for Exhibit 8(a).
(Incorporated by reference to Exhibit 8(b) to Post-Effective
Amendment No. 4 to the Registration Statement.)
(c) Custodian Agreement between the Registrant (on behalf of Scudder
International Bond Fund) and Brown Brothers Harriman & Co.
Dated July 1, 1988.
(Incorporated by reference to Exhibit 8(c) to Post-Effective
Amendment No. 5 to the Registration Statement.)
Part C - Page 6
<PAGE>
(d) Fee schedule for Exhibit 8(c).
(Incorporated by reference to Exhibit 8(d) to Post-Effective
Amendment No. 5 to the Registration Statement.)
(e) Amendment dated September 16, 1988 to the Custodian Contract
betweenthe Registrant and State Street Bank and Trust Company
dated July 24, 1986.
(Incorporated by reference to Exhibit 8(d) to Post-Effective
Amendment No. 6 to the Registration Statement.)
(f) Amendment dated December 7, 1988 to the Custodian Contract
between the Registrant and State Street Bank and Trust Company
dated July 24, 1986.
(Incorporated by reference to Exhibit 8(e) to Post-Effective
Amendment No. 6 to the Registration Statement.)
(g) Amendment dated November 30, 1990 to the Custodian Contract
between the Registrant and State Street Bank and Trust Company
dated July 24, 1986.
(Incorporated by reference to Post-Effective
Amendment No. 10 to the Registration Statement.)
(h) Custodian Agreement between the Registrant (on behalf of Scudder
Short Term Global Income Fund) and Brown Brothers Harriman &
Co. Dated February 28, 1991.
(Incorporated by reference to Post-Effective Amendment No. 15 to
the Registration Statement.)
(i) Custodian Agreement between the Registrant (on behalf of Scudder
Global Small Company Fund) and Brown Brothers Harriman & Co.
dated August 30, 1991.
(Incorporated by reference to Post-Effective Amendment No. 16 to
the Registration Statement.)
(j) Custodian Agreement between the Registrant (on behalf of Scudder
Emerging Markets Income Fund) and Brown Brothers Harriman &
Co. Dated December 31, 1993.
(Incorporated by reference to Post-Effective Amendment No. 23 to
the Registration Statement.)
(k) Amendment (on behalf of Scudder Global Fund) dated October 3,
1995 to the Custodian Agreement between the Registrant and
Brown Brothers Harriman & Co. dated March 7, 1995.
(Incorporated by reference to Post-Effective Amendment No. 24 to
the Registration Statement.)
(k)(1) Amendment dated September 29, 1997 to the Custodian Contract
between the Registrant and Brown Brothers Harriman & Co. dated
March 7, 1995.
(Incorporated by reference to Post-Effective Amendment No. 32 to
the Registration Statement.)
Part C - Page 7
<PAGE>
(k)(2) Amendment (on behalf of Scudder International Bond Fund) dated
April 16, 1998 to the Custodian Agreement between the Registrant
and Brown Brothers Harriman & Co. dated March 7, 1995 is filed
herein.
(k)(3) Amendment (on behalf of Scudder Global Discovery Fund) dated
April 16, 1998 to the Custodian Agreement between the Registrant
and Brown Brothers Harriman & Co. dated March 7, 1995 is filed
herein.
(k)(4) Amendment (on behalf of Scudder Emerging Markets Income
Fund) dated June 17, 1998 to the Custodian Agreement between the
Registrant and Brown Brothers Harriman & Co. dated
March 7, 1995 is filed herein.
9. (a)(1) Transfer Agency and Service Agreement between the Registrant
and Scudder Service Corporation dated October 2, 1989.
(Incorporated by reference to Exhibit 9(a)(1) to Post-Effective
Amendment No. 7 to the Registration Statement.)
(a)(2) Fee schedule for Exhibit 9(a)(1).
(Incorporated by reference to Exhibit 9(a)(2) to Post-Effective
Amendment No. 7 to the Registration Statement.)
(a)(3) Revised fee schedule dated October 1, 1995 for Exhibit 9(a)(1).
(Incorporated by reference to Exhibit 9(a)(3) to Post-Effective
Amendment No. 27 to the Registration Statement.)
(a)(4) Revised fee schedule dated October 1, 1996 for Exhibit 9(a)(1) is
filed herein.
(Incorporated by reference to Exhibit 9(a)(4) to Post-Effective
Amendment No. 28 to the Registration Statement.)
(a)(5) Agency agreement between the Registrant, on behalf of Global
Discovery Fund, and Kemper Service Company dated April 16,1998
is filed herein.
(b)(1) COMPASS Service Agreement with Scudder Trust Company dated
January 1, 1990.
(Incorporated by reference to Exhibit 9(b)(1) to Post-Effective
Amendment No. 7 to the Registration Statement.)
(b)(2) Fee schedule for Exhibit 9(b)(1).
(Incorporated by reference to Exhibit 9(b)(2) to Post-Effective
Amendment No. 7 to the Registration Statement.)
(b)(3) COMPASS Service Agreement between Scudder Trust Company
and the Registrant dated October 1, 1995.
(Incorporated by reference to Exhibit 9(b)(3) to Post-Effective
Amendment No. 26 to the Registration Statement.)
(b)(4) Revised fee schedule dated October 1, 1996 for Exhibit 9(b)(3) is
filed herein.
(Incorporated by reference to Exhibit 9(b)(4) to Post-Effective
Amendment No. 28 to the Registration Statement.)
Part C - Page 8
<PAGE>
(c)(1) Shareholder Services Agreement with Charles Schwab & Co., Inc.
dated June 1, 1990.
(Incorporated by reference to Exhibit 9(c) to Post-Effective
Amendment No. 7 to the Registration Statement.)
(c)(2) Service Agreement between Copeland Associates, Inc. and Scudder
Service Corporation (on behalf of Scudder Global Fund and
Scudder Global Small Company Fund) dated June 8, 1995.
(Incorporated by reference to Post-Effective Amendment No. 24 to
the Registration Statement.)
(c)(3) Administrative Services Agreement between McGladvey & Pullen,
Inc. and the Registrant dated September 30, 1995.
(Incorporated by reference to Exhibit 9(c)(3) to Post-Effective
Amendment No. 26 to the Registration Statement.)
(c)(4) Administrative Services Agreement between the Registrant, on
behalf of Global Discovery Fund, and Kemper Distributors, Inc.,
dated April 16, 1998, is filed herein.
(d)(1) Fund Accounting Services Agreement between the Registrant (on
behalf of Scudder Global Fund) and Scudder Fund Accounting
Corporation dated March 14, 1995.
(Incorporated by reference to Post-Effective Amendment No. 24 to
the Registration Statement.)
(d)(2) Fund Accounting Services Agreement between the Registrant (on
behalf of Scudder International Bond Fund) and Scudder Fund
Accounting Corporation dated August 3, 1995.
(Incorporated by reference to Post-Effective Amendment No. 25 to
the Registration Statement.)
(d)(3) Fund Accounting Services Agreement between the Registrant (on
behalf of Scudder Global Small Company Fund) and Scudder Fund
Accounting Corporation dated June 15, 1995.
(Incorporated by reference to Post-Effective Amendment No. 25 to
the Registration Statement.)
(d)(4) Fund Accounting Services Agreement between the Registrant (on
behalf of Scudder Global Bond Fund (formerly Scudder Short Term
Global Income Fund)) and Scudder Fund Accounting Corporation
dated November 29, 1995.
(Incorporated by reference to Exhibit 9(d)(4) to Post-Effective
Amendment No. 26 to the Registration Statement.)
(d)(5) Fund Accounting Services Agreement between the Registrant (on
behalf of Scudder Emerging Markets Income Fund) and Scudder
Fund Accounting Corporation dated February 1, 1996.
(Incorporated by reference to Exhibit 9(d)(5) to Post-Effective
Amendment No. 27 to the Registration Statement.)
10. Inapplicable.
11. Inapplicable.
12. Inapplicable.
Part C - Page 9
<PAGE>
13. (a) Letter of Investment Intent (on behalf of Scudder Global Fund)
(Incorporated by reference to Exhibit 13 to Pre-Effective
Amendment No. 2 to the Registration Statement.)
(b) Letter of Investment Intent (on behalf of Scudder International
Bond Fund)
(Incorporated by reference to Exhibit 13(b) to Post-Effective
Amendment No. 4 to the Registration Statement.)
(c) Letter of Investment Intent (on behalf of Scudder Short Term
Global Income Fund)
(Incorporated by reference to Exhibit 13(c) to Post-Effective
Amendment No. 9 to the Registration Statement.)
14. (a) Scudder Flexi-Plan for Corporations and Self-Employed
Individuals.
(Incorporated by reference to Exhibit 14(a) to Scudder Income Fund
Post-Effective Amendment No. 46 to its Registration Statement on
Form N-1A [File Nos. 2-13627 and 811-42].)
(b) Scudder Individual Retirement Plan.
(Incorporated by reference to Exhibit 14(b) to Scudder Income Fund
Post-Effective Amendment No. 46 to its Registration Statement on
Form N-1A [File Nos. 2-13627 and 811-42].)
(c) Scudder Funds 403(b) Plan.
(Incorporated by reference to Exhibit 14(c) to Scudder Income Fund
Post-Effective Amendment No. 46 to its Registration Statement on
Form N-1A [File Nos. 2-13627 and 811-42].)
(d) Scudder Employer-Select 403(b) Plan.
(Incorporated by reference to Exhibit 14(e)(2) to Scudder Income
Fund, Inc. Post-Effective Amendment No. 43 to its Registration
Statement on Form N-1A [File Nos. 2-13627 and 811-42].)
(e) Scudder Cash or Deferred Profit Sharing Plan under Section 401(k).
(Incorporated by reference to Exhibit 14(f) to Scudder Income Fund,
Inc. Post-Effective Amendment No. 43 to its Registration Statement
on Form N-1A [File Nos. 2-13627 and 811-42].)
(f) Individual Retirement Account Custodian Disclosure Statement and
Plan Agreement, dated January 30, 1998, is filed herein.
15. Inapplicable.
16. Schedule for Computation of Performance Quotation.
(Incorporated by reference to Exhibit 16 to Post-Effective
Amendment No. 6 to the Registration Statement.)
17. Article 6 Financial Data Schedules to be filed by amendment.
18. Mutual Funds Multi-Distribution System Plan pursuant to Rule
18f-3.
(Incorporated by reference to Post-Effective Amendment No. 33 to the
Registration Statement.)
</TABLE>
Part C - Page 10
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant
- -------- -------------------------------------------------------------
None
Item 26. Number of Holders of Securities (as of August 14, 1998).
- -------- --------------------------------------------------------
<TABLE>
<CAPTION>
(1) (2)
Title of Class Number of Shareholders
-------------- ----------------------
<S> <C>
Shares of capital stock
($.01 par value)
Scudder Global Fund 123,405
Scudder International Bond Fund 13,115
Scudder Global Bond Fund 7,470
Scudder Global Discovery Fund 28,983
Scudder Emerging Markets Income Fund 16,616
</TABLE>
Item 27. Indemnification.
- -------- ----------------
A policy of insurance covering Scudder, Stevens & Clark, Inc.,
its subsidiaries including Scudder Investor Services, Inc.,
and all of the registered investment companies advised by
Scudder, Stevens & Clark, Inc. insures the Registrant's
Directors and officers and others against liability arising by
reason of an alleged breach of duty caused by any negligent
error or accidental omission in the scope of their duties.
Article Tenth of Registrant's Articles of Incorporation state as
follows:
TENTH: Liability and Indemnification
- ------ -----------------------------
To the fullest extent permitted by the Maryland General Corporation Law
and the Investment Company Act of 1940, no director or officer of the
Corporation shall be liable to the Corporation or to its stockholders for
damages. This limitation on liability applies to events occurring at the time a
person serves as a director or officer of the Corporation, whether or not such
person is a director or officer at the time of any proceeding in which liability
is asserted. No amendment to these Articles of Amendment and Restatement or
repeal of any of its provisions shall limit or eliminate the benefits provided
to directors and officers under this provision with respect to any act or
omission which occurred prior to such amendment or repeal.
The Corporation, including its successors and assigns, shall indemnify
its directors and officers and make advance payment of related expenses to the
fullest extent permitted, and in accordance with the procedures required by
Maryland law, including Section 2-418 of the Maryland General Corporation Law,
as may be amended from time to time, and the Investment Company Act of 1940. The
By-laws may provide that the Corporation shall indemnify its employees and/or
agents in any manner and within such limits as permitted by applicable law. Such
indemnification shall be in addition to any other right or claim to which any
director, officer, employee or agent may otherwise be entitled.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or employee benefit plan
against any liability asserted against and incurred by such person in any such
capacity or arising out of such person's position, whether or not the
Corporation would have had the power to indemnify against such liability.
The rights provided to any person by this Article shall be enforceable
against the Corporation by such person who shall be presumed to have relied upon
such rights in serving or continuing to serve in the capacities indicated
Part C - Page 11
<PAGE>
herein. No amendment of these Articles of Amendment and Restatement shall impair
the rights of any person arising at any time with respect to events occurring
prior to such amendment.
Nothing in these Articles of Amendment and Restatement shall be deemed
to (i) require a waiver of compliance with any provision of the Securities Act
of 1933, as amended, or the Investment Company Act of 1940, as amended, or of
any valid rule, regulation or order of the Securities and Exchange Commission
under those Acts or (ii) protect any director or officer of the Corporation
against any liability to the Corporation or its stockholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of his or her duties or by reason of his or her
reckless disregard of his or her obligations and duties hereunder.
Item 28. Business or Other Connections of Investment Adviser
- -------- ---------------------------------------------------
Scudder Kemper Investments, Inc. has stockholders and
employees who are denominated officers but do not as such have
corporation-wide responsibilities. Such persons are not
considered officers for the purpose of this Item 28.
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ------------------------------------
<S> <C>
Stephen R. Beckwith Treasurer and Chief Financial Officer, Scudder Kemper Investments, Inc.**
Director, Vice President and Treasurer, Scudder Fund Accounting Corporation*
Director and Treasurer, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.**
Director and President, Scudder Capital Asset Corporation**
Director and President, Scudder Capital Stock Corporation**
Director and President, Scudder Capital Planning Corporation**
Director and President, SS&C Investment Corporation**
Director and President, SIS Investment Corporation**
Director and President, SRV Investment Corporation**
Lynn S. Birdsong Director and President, Scudder Kemper Investments, Inc.**
Director and President, Scudder, Stevens & Clark (Luxembourg) S.A.#
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, ZKI Holding Corporation xx
Steven Gluckstern Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Zurich Holding Company of America^o
Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Chairman of the Board, Zurich Holding Company of America^o
Director, ZKI Holding Corporation xx
Kathryn L. Quirk Director, Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Senior Vice President, Chief Legal Officer and Assistant Clerk, Scudder
Investor Services, Inc.*
Director, Vice President and Secretary, Scudder Fund Accounting Corporation*
Director, Vice President and Secretary, Scudder Realty Holdings Corporation*
Director and Assistant Clerk, Scudder Service Corporation*
Vice President, Director and Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens and Clark Japan, Inc.***
Part C - Page 12
<PAGE>
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation^oo
Director and Secretary, SFA, Inc.*
Director, Vice President and Secretary, Scudder
Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President, Chief Legal Officer and Secretary, Scudder Brokerage
Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Markus Rohrbasser Director, Scudder Kemper Investments, Inc.**
Member Corporate Executive Board, Zurich Insurance Company of Switzerland##
President, Director, Chairman of the Board, ZKI Holding Corporation xx
Cornelia M. Small Vice President, Scudder Kemper Investments, Inc.**
Edmond D. Villani Director, President and Chief Executive Officer, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark Japan, Inc.###
President and Director, Scudder, Stevens & Clark Overseas Corporation^oo
President and Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of Luxembourg
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C. Luxembourg B 34.564
*** Toronto, Ontario, Canada
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
xx 222 S. Riverside, Chicago, IL
o Zurich Towers, 1400 American Ln., Schaumburg, IL
+ P.O. Box 309, Upland House, S. Church St., Grand Cayman, British West Indies
## Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland
</TABLE>
Item 29. Principal Underwriters.
- -------- -----------------------
(a)
Scudder Investor Services, Inc. acts as principal underwriter of the
Registrant's shares and also acts as principal underwriter for other
funds managed by Scudder Kemper Investments, Inc.
Part C - Page 13
<PAGE>
(b)
The Underwriter has employees who are denominated officers of an
operational area. Such persons do not have corporation-wide
responsibilities and are not considered officers for the purpose of
this Item 29.
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
<S> <C> <C>
William S. Baughman Vice President None
Two International Place
Boston, MA 02110
Lynn S. Birdsong Senior Vice President None
345 Park Avenue
New York, NY 10154
Mary Elizabeth Beams Vice President None
Two International Place
Boston, MA 02110
Mark S. Casady Director, President and Assistant None
Two International Place Treasurer
Boston, MA 02110
Linda Coughlin Director and Senior Vice President None
Two International Place
Boston, MA 02110
Richard W. Desmond Vice President None
345 Park Avenue
New York, NY 10154
Paul J. Elmlinger Senior Vice President and Assistant None
345 Park Avenue Clerk
New York, NY 10154
Philip S. Fortuna Vice President None
101 California Street
San Francisco, CA 94111
William F. Glavin Vice President None
Two International Place
Boston, MA 02110
Margaret D. Hadzima Assistant Treasurer None
Two International Place
Boston, MA 02110
Thomas W. Joseph Director, Vice President, Treasurer and Vice President
Two International Place Assistant Clerk
Boston, MA 02110
Part C - Page 14
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
Thomas F. McDonough Clerk Vice President, Secretary
Two International Place and Treasurer
Boston, MA 02110
Daniel Pierce Director, Vice President Chairman of the Board,
Two International Place and Assistant Treasurer Director and Vice President
Boston, MA 02110
Kathryn L. Quirk Director, Senior Vice President, Chief Director, Vice President
345 Park Avenue Legal Officer and Assistant Clerk and Assistant Secretary
New York, NY 10154
Robert A. Rudell Director and Vice President None
Two International Place
Boston, MA 02110
William M. Thomas Vice President None
Two International Place
Boston, MA 02110
Benjamin Thorndike Vice President None
Two International Place
Boston, MA 02110
Sydney S. Tucker Vice President None
Two International Place
Boston, MA 02110
Linda J. Wondrack Vice President and Chief Compliance None
Two International Place Officer
Boston, MA 02110
</TABLE>
(c)
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Net Underwriting Compensation on
Name of Principal Discounts and Redemptions Brokerage Other
Underwriter Commissions and Repurchases Commissions Compensation
----------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Scudder Investor None None None None
Services, Inc.
</TABLE>
Part C - Page 15
<PAGE>
Item 30. Location of Accounts and Records.
- -------- ---------------------------------
Certain accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules
promulgated thereunder are maintained by Scudder, Stevens &
Clark, Inc., 345 Park Avenue, New York, NY 10154. Records
relating to the duties of the Registrant's custodian (on
behalf of Scudder Global Fund) are maintained by State Street
Bank and Trust Company, Heritage Drive, North Quincy,
Massachusetts. Records relating to the duties of the
Registrant's custodian (on behalf of Scudder International
Bond Fund, Scudder Short Term Global Income Fund, Scudder
Global Small Company Fund and Scudder Emerging Markets Income
Fund) are maintained by Brown Brothers Harriman & Co., 40
Water Street, Boston, Massachusetts.
Item 31. Management Services.
- -------- --------------------
Inapplicable.
Item 32. Undertakings.
- -------- -------------
None.
Part C - Page 16
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Boston and the Commonwealth of
Massachusetts on the 26th day of August, 1998.
GLOBAL/INTERNATIONAL FUND, INC.
By /s/Thomas F. McDonough
--------------------------
Thomas F. McDonough,
Vice President, Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
amendment to its Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Daniel Pierce
- --------------------------------------
Daniel Pierce* Chairman of the Board, Director and August 26, 1998
Vice President (Principal Executive
Officer)
/s/Paul Bancroft III
- --------------------------------------
Paul Bancroft III* Director August 26, 1998
/s/Sheryle J. Bolton
- --------------------------------------
Sheryle J. Bolton* Director August 26, 1998
/s/William T. Burgin
- --------------------------------------
William T. Burgin* Director August 26, 1998
/s/Thomas J. Devine
- --------------------------------------
Thomas J. Devine* Director August 26, 1998
1
<PAGE>
SIGNATURE TITLE DATE
- --------- ----- ----
/s/Keith R. Fox
- --------------------------------------
Keith R. Fox* Director August 26, 1998
/s/William H. Gleysteen, Jr.
- --------------------------------------
William H. Gleysteen, Jr.* Director August 26, 1998
/s/William H. Luers
- --------------------------------------
William H. Luers* Director August 26, 1998
/s/Kathryn L. Quirk
- --------------------------------------
Kathryn L. Quirk* Director August 26, 1998
/s/Thomas F. McDonough
- --------------------------------------
Thomas F. McDonough Vice President, Secretary and August 26, 1998
Treasurer (Principal Financial
Officer)
</TABLE>
*By: /s/Thomas F. McDonough
----------------------
Thomas F. McDonough,
Attorney-in-fact pursuant to powers of attorney
included with the signature pages of Post-Effective Amendment
No. 10 to the Registration Statement filed July 1, 1991,
Post-Effective Amendment No. 18 to the Registration
Statement filed September 2, 1993, Post-Effective
Amendment No. 19 to the Registration Statement filed
November 1, 1993, Post-Effective Amendment No. 26 to
the Registration Statement filed February 28, 1996,
Post-Effective Amendment No. 27 to the Registration
Statement filed October 29, 1996, Post-Effective
Amendment No. 29 to the Registration Statement filed
August 26, 1997 and Post-Effective Amendment No. 30
to the Registration Statement filed October 28, 1997.
2
<PAGE>
File No. 33-5724
File No. 811-4670
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 34
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 37
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
GLOBAL/INTERNATIONAL FUND, INC.
<PAGE>
GLOBAL/INTERNATIONAL FUND, INC.
Exhibit Index
Exhibit 1(b)
Exhibit 1(c)
Exhibit 1(j)
Exhibit 2(j)
Exhibit 5h(1)
Exhibit 5h(2)
Exhibit 5h(3)
Exhibit 5h(4)
Exhibit 8k(2)
Exhibit 8k(3)
Exhibit 8k(4)
Exhibit 9(a)5
Exhibit 9(c)4
Exhibit 14(f)
Exhibit 1(b)
ARTICLES OF AMENDMENT
of
SCUDDER GLOBAL FUND, INC.
SCUDDER GLOBAL FUND, INC., a Maryland corporation (the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The Charter of the Corporation is hereby amended to include
Article TWELFTH as follows:
"TWELFTH: Master Feeder Structure.
----------------------------------
The Corporation shall be empowered to transfer some or all of its
assets to any entity or entities of which all of the equity interests
are owned by the Corporation at the time of transfer for the purpose
of creating a master-feeder or similar structure in accordance with
the Investment Company Act of 1940, as amended, the precise structure
of such transfer of assets to be determined by action of the
Corporation's Board of Directors as constituted at the time such Board
of Directors deems any such transfer to be advisable"
SECOND: The Board of Directors of the Corporation on August 6, 1997,
unanimously adopted a resolution in which was set forth the foregoing amendment
to the Charter, declaring that such amendment as proposed was advisable and
directing that it be submitted for action thereon at the next Special Meeting of
stockholders of the Corporation.
THIRD: Said amendment was submitted for the approval of the
stockholders of the Corporation at the Special Meeting of stockholders of the
Corporation held on October 27, 1997. Item 3, relating to the Articles of
Amendment as outlined herein, was adjourned until November 10, 1997. The
November 10, 1997 adjourned meeting was further adjourned until December 2,
1997, at which time said amendment was approved by the holders of a majority of
the outstanding shares of the Corporation entitled to vote thereon.
FOURTH: The amendment of the charter of the Corporation as hereinabove
set forth has been duly advised by the Board of Directors and approved by the
stockholders of the Corporation.
IN WITNESS WHEREOF, The Corporation has caused these presents to be
signed in its name and on its behalf by its President and attested by its
Secretary, this 23 day of December, 1997.
<PAGE>
SCUDDER GLOBAL FUND, INC.
By /s/Nicholas Bratt
--------------------
Nicholas Bratt
President
Attest:
/s/Thomas F. McDonough
- ----------------------
Thomas F. McDonough
Secretary
The undersigned, President of Scudder Global Fund, Inc., who executed
on behalf of said Corporation the foregoing Articles of Amendment, of which this
certificate is made part, hereby acknowledges, in the name and on behalf of the
said Corporation, the foregoing Articles of Amendment to the corporate act of
said Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and fact set forth therein with respect to
the approval thereof are true in all material respects, under the penalty of
perjury.
/s/Nicholas Bratt
--------------------
Nicholas Bratt
President
2
Exhibit 1(c)
ARTICLES OF AMENDMENT
OF
SCUDDER GLOBAL FUND, INC.
SCUDDER GLOBAL FUND, INC., a Maryland corporation (which is hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland (which is hereinafter referred to as the
"SDAT") that:
FIRST: The Charter of the Corporation is hereby amended to change the
name of the Corporation from Scudder Global Fund, Inc. to Global/International
Fund, Inc., and from and after the date of acceptance of these Articles of
Amendment by the SDAT, Article Second of the Charter is hereby deleted in its
entirety and in lieu thereof the following is substituted:
"Second: Name. The name of the Corporation is
Global/International Fund, Inc."
SECOND: A majority of the entire Board of Directors of the Corporation,
pursuant to and in accordance with the Charter and Bylaws of the Corporation and
the Maryland General Corporation Law (the "MGCL"), duly approved the foregoing
amendment, and (i) the amendment is limited to changes expressly permitted by
Section 2-605 of the MGCL to be made without action by the stockholders of the
Corporation, and (ii) the Corporation is registered as an open-end company under
the Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, Scudder Global Fund, Inc. has caused these Articles
of Amendment to be signed in its name and on its behalf by its Vice President
and attested to by its Assistant Secretary on this 29th day of May 1998; and its
Vice President acknowledges that these Articles of Amendment are the act of
Scudder Global Fund, Inc., and he further acknowledges that, as to all matters
or facts set forth herein which are required to be verified under oath, such
matters and facts are true in all material respects to the best of his
knowledge, information and belief, and that this statement is made under the
penalties for perjury.
ATTEST: SCUDDER GLOBAL FUND, INC.
/s/Caroline Pearson By: /s/Thomas F. McDonough (SEAL)
- ------------------- ---------------------------------
Caroline Pearson, Assistant Secretary Thomas F. McDonough, Vice President
Exhibit 1(j)
SCUDDER GLOBAL FUND, INC.
ARTICLES SUPPLEMENTARY
Scudder Global Fund, Inc., a Maryland corporation (which is hereinafter called
the "Corporation), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to the authority expressly vested in the Board of Directors
of the Corporation by Article FIFTH of the Charter of the Corporation, the Board
of Directors (i) has duly designated and classified seventy million (70,000,000)
shares of the authorized but unissued shares of the "Global Discovery Fund"
series of the Corporation's capital stock into three separate classes of shares
of the "Global Discovery Fund" series, with forty million (40,000,000) of such
shares being designated and classified as "Class A" shares of the "Global
Discovery Fund" series, twenty million (20,000,000) of such shares being
designated and classified as "Class B" shares of the "Global Discovery Fund"
series, and ten million (10,000,000) of such shares being designated and
classified as "Class C" shares of the "Global Discovery Fund" series, (ii) has
duly designated the thirty million (30,000,000) shares of the issued and
unissued authorized shares of the "Global Discovery Fund" series of the
Corporation's capital stock not designated and classified pursuant to (i) above
as a separate class of the "Global Discovery Fund" series, such class being
designated as the "Class S" or the "Scudder Shares class" shares of the "Global
Discovery Fund" series and (iii) has duly redesignated the "Global Discovery
Fund" series as follows: (1) when referring to the "Class A", "Class B", "Class
C" and/or "Class S" (or "Scudder Shares class") shares of the "Global Discovery
Fund" series of the Corporation's capital stock, the "Global Discovery Fund"
series shall, subject to (2) and (3) below, be referred to as the "Global
Discovery Fund" series of the Corporation's capital stock; (2) when referring to
the "Class A", "Class B" and/or "Class C" shares of the "Global Discovery Fund"
series of the Corporation's capital stock, the "Global Discovery Fund" series
may sometimes be referred to as the "Kemper Global Discovery Fund" series of the
Corporation's capital stock and (3) when referring to the "Class S" (or "Scudder
Shares class") shares of the "Global Discovery Fund" series of the Corporation's
capital stock, the "Global Discovery Fund" series may sometimes be referred to
as the "Scudder Global Discovery Fund" series of the Corporation's capital
stock.
(a) Immediately prior to the filing of these Articles Supplementary, the
Corporation had authority to issue eight hundred million (800,000,000) shares of
capital stock, $0.01 par value per share, one hundred million (100,000,000) of
such shares being designated as the "Emerging Markets Income Fund" series; three
hundred million (300,000,000) of such shares being designated as the "Global
Bond Fund" series; two hundred million (200,000,000) of such shares being
designated as the "International Bond Fund" series; one hundred million
(100,000,000) of such shares being designated as the "Global Fund" series; and
one hundred million (100,000,000) of such shares being designated as the "Global
Discovery Fund" series.
<PAGE>
(b) Immediately after the filing of these Articles Supplementary, the
Corporation will have the authority to issue eight hundred million (800,000,000)
shares of capital stock, $0.01 par value per share, one hundred million
(100,000,000) of such shares being designated as the "Emerging Markets Income
Fund" series; three hundred million (300,000,000) of such shares being
designated as the "Global Bond Fund" series; two hundred million (200,000,000)
of such shares being designated as the "International Bond Fund" series; one
hundred million (100,000,000) of such shares being designated as the "Global
Fund" series; and one hundred million (100,000,000) of such shares being
designated as the "Global Discovery Fund" series. Of the one hundred million
(100,000,000) shares designated as the "Global Discovery Fund" series, forty
million (40,000,000) of such shares will be designated as "Class A" shares of
the "Global Discovery Fund" series; twenty million (20,000,000) of such shares
will be designated as "Class B" shares of the "Global Discovery Fund" series;
ten million (10,000,000) of such shares will be designated as "Class C" shares
of the "Global Discovery Fund" series; and thirty million (30,000,000) of such
shares will be designated as "Class S" or "Scudder Shares class" shares of the
"Global Discovery Fund" series.
SECOND: A description of the "Class A", "Class B" and "Class C" shares of
the "Global Discovery Fund" series, including the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and the terms or conditions of redemption of, such shares, as set
by the Board of Directors of the Corporation, is as follows:
(a) Except as provided in the Charter of the Corporation and except as
described in (b) and (c) below, the "Class A" "Class B" and "Class C" shares of
the "Global Discovery Fund" series each shall be identical in all respects, and
shall have the same preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption, as the "Class S" (or "Scudder Shares class") shares of
the "Global Discovery Fund" series.
(b) The "Class A", "Class B" and "Class C" shares of the "Global Discovery
Fund" series may be issued and sold subject to such sales loads or charges,
whether initial, deferred or contingent, or any combination thereof, and to
such, expenses and fees (including, without limitation, distribution expenses
under a Rule 12b-1 plan and administrative expenses under an administrative or
service agreement, plan or other arrangement, however designated), and to such
account size requirements, which may be different from one another, as well as
different from the sales loads, charges, expenses, fees or account size
requirements of the "Class S" (or "Scudder Shares class") shares of the "Global
Discovery Fund" series, all as the Board of Directors may from time to time
establish in accordance with the Investment Company Act of 1940, as amended, and
other applicable law.
-2-
<PAGE>
(c) The "Class B" shares of the "Global Discovery Fund" series shall be
convertible into "Class A shares of the "Global Discovery Fund" series on such
terms and subject to such provisions as the Board of Directors may from time to
time establish in accordance with the Investment Company Act of 1940, as
amended, and other applicable law.
THIRD: Except as otherwise provided by the express provisions of these
Articles Supplementary, nothing herein shall limit, by inference or otherwise,
the discretionary right of the Board of Directors of the Corporation to classify
and reclassify and issue any unissued shares of any series or class of the
Corporation's capital stock and to fix or alter all terms thereof to the full
extent provided by the Charter of the Corporation.
FOURTH: The Board of Directors of the Corporation, at a meeting duly called
and held, duly authorized and adopted resolutions designating, redesignating and
classifying the capital stock of the "Global Discovery Fund" series as set forth
in these Articles Supplementary.
-3-
<PAGE>
IN WITNESS WHEREOF, Scudder Global Fund, Inc. has caused these Articles
Supplementary to be signed and acknowledged in its name and on its behalf by its
Vice President and attested to by its Assistant Secretary on this 15th day of
April, 1998; and its Vice President acknowledges that these Articles
Supplementary are the act of Scudder Global Fund, Inc., and he further
acknowledges that, as to all matters or facts set forth herein which are
required to be verified under oath, such matters and facts are true in all
material respects to the best of his knowledge, information and belief, and that
this statement is made under the penalties for perjury.
ATTEST: SCUDDER GLOBAL FUND, INC.
/s/Caroline Pearson By: /s/Thomas F. McDonough
- ------------------- --------------------------
(SEAL)
Caroline Pearson Thomas F. McDonough,
Assistant Secretary Vice President
-4-
Exhibit 2(j)
SCUDDER GLOBAL FUND, INC.
On December 3, 1997, the Board of Directors of Scudder Global Fund, Inc.
adopted the following amending the By-Laws of the corporation to read as
follows:
RESOLVED, that the first sentence of Article I, Section 14 of the
Fund's By-Laws shall be amended to read as follows (additions are
underlined, and deletions are struckout):
By resolution adopted by the Board of Directors, the Board may
designate one or more committees, including an Executive
Committee, each composed of one two or more Directors.
Exhibit 5h(1)
Scudder Global Fund, Inc.
345 Park Avenue
New York, New York 10154
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder International Bond Fund
Ladies and Gentlemen:
Scudder Global Fund, Inc. (the "Corporation") has been established as a
Maryland corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation, as amended from
time-to-time (the "Articles"), the Board of Directors has divided the
Corporation's shares of capital stock, par value $0.01 per share, (the "Shares")
into separate series, or funds, including Scudder International Bond Fund (the
"Fund"). Series may be abolished and dissolved, and additional series
established, from time to time by action of the Directors.
The Corporation, on behalf of the Fund, has selected you to act as the
sole investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) The Articles dated December 27, 1990, as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders of the
Fund selecting you as investment manager and approving the form of this
Agreement.
<PAGE>
The Corporation will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of
the rights to use and sublicense the use of the "Scudder," "Scudder Kemper
Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks (together,
the "Scudder Marks"), you hereby grant the Corporation a nonexclusive right and
sublicense to use (i) the "Scudder" name and mark as part of the Corporation's
name (the "Fund Name"), and (ii) the Scudder Marks in connection with the
Corporation's investment products and services, in each case only for so long as
this Agreement, any other investment management agreement between you (or any
organization which shall have succeeded to your business as investment manager
("your Successor")) and the Corporation, or any extension, renewal or amendment
hereof or thereof remains in effect, and only for so long as you are a licensee
of the Scudder Marks, provided however, that you agree to use your best efforts
to maintain your license to use and sublicense the Scudder Marks. The
Corporation agrees that it shall have no right to sublicense or assign rights to
use the Scudder Marks, shall acquire no interest in the Scudder Marks other than
the rights granted herein, that all of the Corporation's uses of the Scudder
Marks shall inure to the benefit of Scudder Trust Company as owner and licensor
of the Scudder Marks (the "Trademark Owner"), and that the Corporation shall not
challenge the validity of the Scudder Marks or the Trademark Owner's ownership
thereof. The Corporation further agrees that all services and products it offers
in connection with the Scudder Marks shall meet commercially reasonable
standards of quality, as may be determined by you or the Trademark Owner from
time to time, provided that you acknowledge that the services and products the
Corporation rendered during the one-year period preceding the date of this
Agreement are acceptable. At your reasonable request, the Corporation shall
cooperate with you and the Trademark Owner and shall execute and deliver any and
all documents necessary to maintain and protect (including but not limited to in
connection with any trademark infringement action) the Scudder Marks and/or
enter the Corporation as a registered user thereof. At such time as this
Agreement or any other investment management agreement shall no longer be in
effect between you (or your Successor) and the Corporation, or you no longer are
a licensee of the Scudder Marks, the Corporation shall (to the extent that, and
as soon as, it lawfully can) cease to use the Fund Name or any other name
indicating that it is advised by, managed by or otherwise connected with you (or
your Successor) or the Trademark Owner. In no event shall the Corporation use
the Scudder Marks or any other name or mark confusingly similar thereto
(including, but not limited to, any name or mark that includes the name
"Scudder") if this Agreement or any other investment advisory agreement between
you (or your Successor) and the Fund is terminated.
3. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Corporation or
counsel to you. You shall also make available to the Corporation promptly upon
request all of the Fund's investment records and ledgers as are necessary to
assist the Corporation in complying with the
2
<PAGE>
requirements of the 1940 Act and other applicable laws. To the extent required
by law, you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the services provided
pursuant to this Agreement which may be requested in order to ascertain whether
the operations of the Corporation are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts relating
to investments to be purchased, sold or entered into by the Fund and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic
reports on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Corporation administrative
services on behalf of the Fund necessary for operating as an open-end investment
company and not provided by persons not parties to this Agreement including, but
not limited to, preparing reports to and meeting materials for the Corporation's
Board of Directors and reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Corporation as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of the
Corporation's
3
<PAGE>
Board of Directors. Nothing in this Agreement shall be deemed to shift to you or
to diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of the Fund's
Directors and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund: organization
expenses of the Fund (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other Fund advisors
or consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Corporation business) of Directors,
officers and employees of the Corporation who are not affiliated persons of you;
brokerage commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the 1940 Act providing that the Fund
(or some other party) shall assume some or all of such expenses. You shall be
required to pay such of the foregoing sales expenses as are not required to be
paid by the principal underwriter pursuant to the underwriting agreement or are
not permitted to be paid by the Fund (or some other party) pursuant to such a
plan.
4
<PAGE>
6. Management Fee. For all services to be rendered, payments to be made
and costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you in United States Dollars on the
last day of each month the unpaid balance of a fee equal to the excess of 1/12
of .85 of 1 percent of the average daily net assets as defined below of the Fund
for such month; provided that, for any calendar month during which the average
of such values exceeds $1 billion, the fee payable for that month based on the
portion of the average of such values in excess of $1 billion shall be 1/12 of
.80 of 1 percent of such portion over any compensation waived by you from time
to time (as more fully described below). You shall be entitled to receive during
any month such interim payments of your fee hereunder as you shall request,
provided that no such payment shall exceed 75 percent of the amount of your fee
then accrued on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Articles and the
Registration Statement. If the determination of net asset value does not take
place for any particular day, then for the purposes of this section 6, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of its net assets as of 4:00 p.m. (New York time), or as of such other time as
the value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Corporation. Whenever
the Fund and one or more other accounts or investment companies advised by the
Manager have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with procedures believed
by the Manager to be equitable to each entity. Similarly, opportunities to sell
securities shall be allocated in a manner believed by the Manager to be
equitable. The Fund recognizes that in some
5
<PAGE>
cases this procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Corporation
agrees that you shall not be liable under this Agreement for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Corporation, the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his or her employment by the Fund, to
be acting in such employment solely for the Fund and not as your employee or
agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1998, and continue in force from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
6
<PAGE>
This Agreement shall be construed in accordance with the laws of the
State of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Corporation on behalf of
the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
SCUDDER GLOBAL FUND, INC.
on behalf of
Scudder International Bond Fund
By: /s/Nicholas Bratt
-----------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Stephen R. Beckwith
----------------------
Managing Director
7
Exhibit 5h(2)
Scudder Global Fund, Inc.
345 Park Avenue
New York, New York 10154
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder Global Bond Fund
Ladies and Gentlemen:
Scudder Global Fund, Inc. (the "Corporation") has been established as a
Maryland corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation, as amended from
time-to-time (the "Articles"), the Board of Directors has divided the
Corporation's shares of capital stock, par value $0.01 per share, (the "Shares")
into separate series, or funds, including Scudder Global Bond Fund (the "Fund").
Series may be abolished and dissolved, and additional series established, from
time to time by action of the Directors.
The Corporation, on behalf of the Fund, has selected you to act as the
sole investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) The Articles dated December 27, 1990, as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders of the
Fund selecting you as investment manager and approving the form of this
Agreement.
<PAGE>
The Corporation will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of
the rights to use and sublicense the use of the "Scudder," "Scudder Kemper
Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks (together,
the "Scudder Marks"), you hereby grant the Corporation a nonexclusive right and
sublicense to use (i) the "Scudder" name and mark as part of the Corporation's
name (the "Fund Name"), and (ii) the Scudder Marks in connection with the
Corporation's investment products and services, in each case only for so long as
this Agreement, any other investment management agreement between you (or any
organization which shall have succeeded to your business as investment manager
("your Successor")) and the Corporation, or any extension, renewal or amendment
hereof or thereof remains in effect, and only for so long as you are a licensee
of the Scudder Marks, provided however, that you agree to use your best efforts
to maintain your license to use and sublicense the Scudder Marks. The
Corporation agrees that it shall have no right to sublicense or assign rights to
use the Scudder Marks, shall acquire no interest in the Scudder Marks other than
the rights granted herein, that all of the Corporation's uses of the Scudder
Marks shall inure to the benefit of Scudder Trust Company as owner and licensor
of the Scudder Marks (the "Trademark Owner"), and that the Corporation shall not
challenge the validity of the Scudder Marks or the Trademark Owner's ownership
thereof. The Corporation further agrees that all services and products it offers
in connection with the Scudder Marks shall meet commercially reasonable
standards of quality, as may be determined by you or the Trademark Owner from
time to time, provided that you acknowledge that the services and products the
Corporation rendered during the one-year period preceding the date of this
Agreement are acceptable. At your reasonable request, the Corporation shall
cooperate with you and the Trademark Owner and shall execute and deliver any and
all documents necessary to maintain and protect (including but not limited to in
connection with any trademark infringement action) the Scudder Marks and/or
enter the Corporation as a registered user thereof. At such time as this
Agreement or any other investment management agreement shall no longer be in
effect between you (or your Successor) and the Corporation, or you no longer are
a licensee of the Scudder Marks, the Corporation shall (to the extent that, and
as soon as, it lawfully can) cease to use the Fund Name or any other name
indicating that it is advised by, managed by or otherwise connected with you (or
your Successor) or the Trademark Owner. In no event shall the Corporation use
the Scudder Marks or any other name or mark confusingly similar thereto
(including, but not limited to, any name or mark that includes the name
"Scudder") if this Agreement or any other investment advisory agreement between
you (or your Successor) and the Fund is terminated.
3. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Corporation or
counsel to you. You shall also make available to the Corporation promptly upon
request all of the Fund's investment records and ledgers as are necessary to
assist the Corporation in complying with the
2
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requirements of the 1940 Act and other applicable laws. To the extent required
by law, you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the services provided
pursuant to this Agreement which may be requested in order to ascertain whether
the operations of the Corporation are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts relating
to investments to be purchased, sold or entered into by the Fund and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic
reports on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Corporation administrative
services on behalf of the Fund necessary for operating as an open-end investment
company and not provided by persons not parties to this Agreement including, but
not limited to, preparing reports to and meeting materials for the Corporation's
Board of Directors and reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Corporation as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of the
Corporation's
3
<PAGE>
Board of Directors. Nothing in this Agreement shall be deemed to shift to you or
to diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of the Fund's
Directors and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund: organization
expenses of the Fund (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other Fund advisors
or consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Corporation business) of Directors,
officers and employees of the Corporation who are not affiliated persons of you;
brokerage commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the 1940 Act providing that the Fund
(or some other party) shall assume some or all of such expenses. You shall be
required to pay such of the foregoing sales expenses as are not required to be
paid by the principal underwriter pursuant to the underwriting agreement or are
not permitted to be paid by the Fund (or some other party) pursuant to such a
plan.
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<PAGE>
6. Management Fee. For all services to be rendered, payments to be made
and costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you in United States Dollars on the
last day of each month the unpaid balance of a fee equal to the excess of 1/12
of .75 of 1 percent of the average daily net assets as defined below of the Fund
for such month; provided that, for any calendar month during which the average
of such values exceeds $1 billion, the fee payable for that month based on the
portion of the average of such values in excess of $1 billion shall be 1/12 of
.70 of 1 percent of such portion over any compensation waived by you from time
to time (as more fully described below). You shall be entitled to receive during
any month such interim payments of your fee hereunder as you shall request,
provided that no such payment shall exceed 75 percent of the amount of your fee
then accrued on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Articles and the
Registration Statement. If the determination of net asset value does not take
place for any particular day, then for the purposes of this section 6, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of its net assets as of 4:00 p.m. (New York time), or as of such other time as
the value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Corporation. Whenever
the Fund and one or more other accounts or investment companies advised by the
Manager have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with procedures believed
by the Manager to be equitable to each entity. Similarly, opportunities to sell
securities shall be allocated in a manner believed by the Manager to be
equitable. The Fund recognizes that in some
5
<PAGE>
cases this procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Corporation
agrees that you shall not be liable under this Agreement for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Corporation, the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his or her employment by the Fund, to
be acting in such employment solely for the Fund and not as your employee or
agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1998, and continue in force from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
6
<PAGE>
This Agreement shall be construed in accordance with the laws of the
State of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Corporation on behalf of
the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
SCUDDER GLOBAL FUND, INC.
on behalf of
Scudder Global Bond Fund
By: /s/Nicholas Bratt
---------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Stephen R. Beckwith
--------------------------
Managing Director
7
Exhibit 5(h)(3)
Scudder Global Fund, Inc.
345 Park Avenue
New York, New York 10154
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder Global Discovery Fund
Ladies and Gentlemen:
Scudder Global Fund, Inc. (the "Corporation") has been established as a
Maryland corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation, as amended from
time-to-time (the "Articles"), the Board of Directors has divided the
Corporation's shares of capital stock, par value $0.01 per share, (the "Shares")
into separate series, or funds, including Scudder Global Discovery Fund (the
"Fund"). Series may be abolished and dissolved, and additional series
established, from time to time by action of the Directors.
The Corporation, on behalf of the Fund, has selected you to act as the
sole investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) The Articles dated December 27, 1990, as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders of the
Fund selecting you as investment manager and approving the form of this
Agreement.
<PAGE>
The Corporation will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of
the rights to use and sublicense the use of the "Scudder," "Scudder Kemper
Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks (together,
the "Scudder Marks"), you hereby grant the Corporation a nonexclusive right and
sublicense to use (i) the "Scudder" name and mark as part of the Corporation's
name (the "Fund Name"), and (ii) the Scudder Marks in connection with the
Corporation's investment products and services, in each case only for so long as
this Agreement, any other investment management agreement between you (or any
organization which shall have succeeded to your business as investment manager
("your Successor")) and the Corporation, or any extension, renewal or amendment
hereof or thereof remains in effect, and only for so long as you are a licensee
of the Scudder Marks, provided however, that you agree to use your best efforts
to maintain your license to use and sublicense the Scudder Marks. The
Corporation agrees that it shall have no right to sublicense or assign rights to
use the Scudder Marks, shall acquire no interest in the Scudder Marks other than
the rights granted herein, that all of the Corporation's uses of the Scudder
Marks shall inure to the benefit of Scudder Trust Company as owner and licensor
of the Scudder Marks (the "Trademark Owner"), and that the Corporation shall not
challenge the validity of the Scudder Marks or the Trademark Owner's ownership
thereof. The Corporation further agrees that all services and products it offers
in connection with the Scudder Marks shall meet commercially reasonable
standards of quality, as may be determined by you or the Trademark Owner from
time to time, provided that you acknowledge that the services and products the
Corporation rendered during the one-year period preceding the date of this
Agreement are acceptable. At your reasonable request, the Corporation shall
cooperate with you and the Trademark Owner and shall execute and deliver any and
all documents necessary to maintain and protect (including but not limited to in
connection with any trademark infringement action) the Scudder Marks and/or
enter the Corporation as a registered user thereof. At such time as this
Agreement or any other investment management agreement shall no longer be in
effect between you (or your Successor) and the Corporation, or you no longer are
a licensee of the Scudder Marks, the Corporation shall (to the extent that, and
as soon as, it lawfully can) cease to use the Fund Name or any other name
indicating that it is advised by, managed by or otherwise connected with you (or
your Successor) or the Trademark Owner. In no event shall the Corporation use
the Scudder Marks or any other name or mark confusingly similar thereto
(including, but not limited to, any name or mark that includes the name
"Scudder") if this Agreement or any other investment advisory agreement between
you (or your Successor) and the Fund is terminated.
3. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Corporation or
counsel to you. You shall also make available to the Corporation promptly upon
request all of the Fund's investment records and ledgers as are necessary to
assist the Corporation in complying with the
2
<PAGE>
requirements of the 1940 Act and other applicable laws. To the extent required
by law, you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the services provided
pursuant to this Agreement which may be requested in order to ascertain whether
the operations of the Corporation are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts relating
to investments to be purchased, sold or entered into by the Fund and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic
reports on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Corporation administrative
services on behalf of the Fund necessary for operating as an open-end investment
company and not provided by persons not parties to this Agreement including, but
not limited to, preparing reports to and meeting materials for the Corporation's
Board of Directors and reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Corporation as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of the
Corporation's
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<PAGE>
Board of Directors. Nothing in this Agreement shall be deemed to shift to you or
to diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of the Fund's
Directors and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund: organization
expenses of the Fund (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other Fund advisors
or consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Corporation business) of Directors,
officers and employees of the Corporation who are not affiliated persons of you;
brokerage commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the 1940 Act providing that the Fund
(or some other party) shall assume some or all of such expenses. You shall be
required to pay such of the foregoing sales expenses as are not required to be
paid by the principal underwriter pursuant to the underwriting agreement or are
not permitted to be paid by the Fund (or some other party) pursuant to such a
plan.
4
<PAGE>
6. Management Fee. For all services to be rendered, payments to be made
and costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you in United States Dollars on the
last day of each month the unpaid balance of a fee equal to the excess of 1/12
of 1.1% percent of the average daily net assets as defined below of the Fund for
such month over any compensation waived by you from time to time (as more fully
described below). You shall be entitled to receive during any month such interim
payments of your fee hereunder as you shall request, provided that no such
payment shall exceed 75 percent of the amount of your fee then accrued on the
books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Articles and the
Registration Statement. If the determination of net asset value does not take
place for any particular day, then for the purposes of this section 6, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of its net assets as of 4:00 p.m. (New York time), or as of such other time as
the value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Corporation. Whenever
the Fund and one or more other accounts or investment companies advised by the
Manager have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with procedures believed
by the Manager to be equitable to each entity. Similarly, opportunities to sell
securities shall be allocated in a manner believed by the Manager to be
equitable. The Fund recognizes that in some cases this procedure may adversely
affect the size of the position that may be acquired or disposed of for the
Fund.
5
<PAGE>
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Corporation
agrees that you shall not be liable under this Agreement for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Corporation, the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his or her employment by the Fund, to
be acting in such employment solely for the Fund and not as your employee or
agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1998, and continue in force from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
This Agreement shall be construed in accordance with the laws of the
State of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
6
<PAGE>
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Corporation on behalf of
the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
SCUDDER GLOBAL FUND, INC.
on behalf of
Scudder Global Discovery Fund
By: /s/Nicholas Bratt
------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Stephen R. Beckwith
-----------------------
Managing Director
7
Exhibit 5h(4)
Scudder Global Fund, Inc.
345 Park Avenue
New York, New York 10154
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder Emerging Markets Income Fund
Ladies and Gentlemen:
Scudder Global Fund, Inc. (the "Corporation") has been established as a
Maryland corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation, as amended from
time-to-time (the "Articles"), the Board of Directors has divided the
Corporation's shares of capital stock, par value $0.01 per share, (the "Shares")
into separate series, or funds, including Scudder Emerging Markets Income Fund
(the "Fund"). Series may be abolished and dissolved, and additional series
established, from time to time by action of the Directors.
The Corporation, on behalf of the Fund, has selected you to act as the
sole investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) The Articles dated December 27, 1990, as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders of the
Fund selecting you as investment manager and approving the form of this
Agreement.
<PAGE>
The Corporation will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of
the rights to use and sublicense the use of the "Scudder," "Scudder Kemper
Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks (together,
the "Scudder Marks"), you hereby grant the Corporation a nonexclusive right and
sublicense to use (i) the "Scudder" name and mark as part of the Corporation's
name (the "Fund Name"), and (ii) the Scudder Marks in connection with the
Corporation's investment products and services, in each case only for so long as
this Agreement, any other investment management agreement between you (or any
organization which shall have succeeded to your business as investment manager
("your Successor")) and the Corporation, or any extension, renewal or amendment
hereof or thereof remains in effect, and only for so long as you are a licensee
of the Scudder Marks, provided however, that you agree to use your best efforts
to maintain your license to use and sublicense the Scudder Marks. The
Corporation agrees that it shall have no right to sublicense or assign rights to
use the Scudder Marks, shall acquire no interest in the Scudder Marks other than
the rights granted herein, that all of the Corporation's uses of the Scudder
Marks shall inure to the benefit of Scudder Trust Company as owner and licensor
of the Scudder Marks (the "Trademark Owner"), and that the Corporation shall not
challenge the validity of the Scudder Marks or the Trademark Owner's ownership
thereof. The Corporation further agrees that all services and products it offers
in connection with the Scudder Marks shall meet commercially reasonable
standards of quality, as may be determined by you or the Trademark Owner from
time to time, provided that you acknowledge that the services and products the
Corporation rendered during the one-year period preceding the date of this
Agreement are acceptable. At your reasonable request, the Corporation shall
cooperate with you and the Trademark Owner and shall execute and deliver any and
all documents necessary to maintain and protect (including but not limited to in
connection with any trademark infringement action) the Scudder Marks and/or
enter the Corporation as a registered user thereof. At such time as this
Agreement or any other investment management agreement shall no longer be in
effect between you (or your Successor) and the Corporation, or you no longer are
a licensee of the Scudder Marks, the Corporation shall (to the extent that, and
as soon as, it lawfully can) cease to use the Fund Name or any other name
indicating that it is advised by, managed by or otherwise connected with you (or
your Successor) or the Trademark Owner. In no event shall the Corporation use
the Scudder Marks or any other name or mark confusingly similar thereto
(including, but not limited to, any name or mark that includes the name
"Scudder") if this Agreement or any other investment advisory agreement between
you (or your Successor) and the Fund is terminated.
3. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Corporation or
counsel to you. You shall also make available to the Corporation promptly upon
request all of the Fund's investment records and ledgers as are necessary to
assist the Corporation in complying with the
2
<PAGE>
requirements of the 1940 Act and other applicable laws. To the extent required
by law, you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the services provided
pursuant to this Agreement which may be requested in order to ascertain whether
the operations of the Corporation are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts relating
to investments to be purchased, sold or entered into by the Fund and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic
reports on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Corporation administrative
services on behalf of the Fund necessary for operating as an open-end investment
company and not provided by persons not parties to this Agreement including, but
not limited to, preparing reports to and meeting materials for the Corporation's
Board of Directors and reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Corporation as it may reasonably request in the
conduct of the Fund's business, subject to the direction and control of the
Corporation's
3
<PAGE>
Board of Directors. Nothing in this Agreement shall be deemed to shift to you or
to diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of the Fund's
Directors and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund: organization
expenses of the Fund (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other Fund advisors
or consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Corporation business) of Directors,
officers and employees of the Corporation who are not affiliated persons of you;
brokerage commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the 1940 Act providing that the Fund
(or some other party) shall assume some or all of such expenses. You shall be
required to pay such of the foregoing sales expenses as are not required to be
paid by the principal underwriter pursuant to the underwriting agreement or are
not permitted to be paid by the Fund (or some other party) pursuant to such a
plan.
4
<PAGE>
6. Management Fee. For all services to be rendered, payments to be made
and costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you in United States Dollars on the
last day of each month the unpaid balance of a fee equal to the excess of 1/12
of 1 percent of the average daily net assets as defined below of the Fund for
such month over any compensation waived by you from time to time (as more fully
described below). You shall be entitled to receive during any month such interim
payments of your fee hereunder as you shall request, provided that no such
payment shall exceed 75 percent of the amount of your fee then accrued on the
books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Articles and the
Registration Statement. If the determination of net asset value does not take
place for any particular day, then for the purposes of this section 6, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of its net assets as of 4:00 p.m. (New York time), or as of such other time as
the value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Corporation. Whenever
the Fund and one or more other accounts or investment companies advised by the
Manager have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with procedures believed
by the Manager to be equitable to each entity. Similarly, opportunities to sell
securities shall be allocated in a manner believed by the Manager to be
equitable. The Fund recognizes that in some cases this procedure may adversely
affect the size of the position that may be acquired or disposed of for the
Fund.
5
<PAGE>
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Corporation
agrees that you shall not be liable under this Agreement for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Corporation, the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his or her employment by the Fund, to
be acting in such employment solely for the Fund and not as your employee or
agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1998, and continue in force from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
This Agreement shall be construed in accordance with the laws of the
State of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
6
<PAGE>
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Corporation on behalf of
the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
SCUDDER GLOBAL FUND, INC.
on behalf of
Scudder Emerging Markets Income Fund
By: /s/Nicholas Bratt
---------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Stephen R. Beckwith
--------------------------
Managing Director
7
Exhibit 8k(2)
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER INTERNATIONAL BOND FUND
APPENDIX B
<TABLE>
<S> <C> <C>
<CAPTION>
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
ARGENTINA BANKBOSTON, N.A., BUENOS AIRES Caja de Valores
The First National Bank of Boston Agreement 1/5/88 CRYL
Omnibus Amendment 2/22/94
Amendment 7/29/96
AUSTRALIA NATIONAL AUSTRALIA BANK LTD., MELBOURNE Austraclear Ltd.
National Australia Bank Agt. 5/l/85 Reserve Bank of Australia
Agreement Amendment 2/13/92
Omnibus Amendment 11/22/93
AUSTRIA CREDITANSTALT BANKVEREIN OeKB
Creditanstalt Bankverein Agreement 12/18/89
Omnibus Amendment 1/17/94
BANGLADESH STANDARD CHARTERED BANK, DHAKA None
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
BELGIUM BANQUE BRUXELLES LAMBERT CIK
Banque Bruxelles Lambert Agt. 11/15/90 Banque Nationale de Belgique
Omnibus Amendment 3/l/94
BERMUDA THE BANK OF N.T. BUTTERFIELD & SON LTD. None
The Bank of N.T. Butterfield & Son Ltd. Agreement 5/27/97
BOTSWANA BARCLAYS BANK OF BOTSWANA LIMITED for None
BARCLAYS BANK PLC
Barclays Bank Agreement 10/5/94
BOTSWANA STANBIC BANK BOTSWANA LIMITED None
for STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
BRAZIL BANKBOSTON, N.A., SAO PAULO BOVESPA
The First National Bank of Boston Agreement 1/5/88 CLC
Omnibus Amendment 2/22/94
Amendment 7/29/96
CANADA CANADIAN IMPERIAL BANK OF COMMERCE Bank of Canada
Canadian Imperial Bank of Commerce Agreement 9/9/88 CDS
Omnibus Amendment 12/1/93
CHILE CITIBANK, NA., SANTIAGO DCV
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
CHINA STANDARD CHARTERED BANK, SHANGHAI SSCCRC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
4/6/98 PAGE 1 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER INTERNATIONAL BOND FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
CHINA STANDARD CHARTERED BANK, SHENZHEN SSCC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
COLOMBIA CITITRUST COLOMBIA, S.A. SOCIEDAD FIDUCIARIA for Deceval
CITIBANK, N.A. DCV
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, N.A. Subsidiary Amendment 10/19/95
Citibank, N.A./Cititrust Colombia Agreement 12/2/91
CZECH REPUBLIC CESKOSLOVENSKA OBCHODNI BANKA, A.S., PRAGUE SCP
Ceskoslovenska Obchodni Banka Agreement 2/28/94 Czech National Bank
DENMARK DEN DANSKE BANK VP
Den Danske Bank Agreement 1/1/89
Omnibus Amendment 12/1/93
ECUADOR CITIBANK, N.A., QUITO None
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Quito Side Letter 7/3/95
EGYPT CITIBANK, N.A., CAIRO MCSD
Citibank, N.A., New York Agt. 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
FINLAND MERITA BANK CSD
Union Bank of Finland Agreement 2/27/89
Omnibus Amendment 4/6/94
FRANCE BANQUE PARIBAS SICOVAM
Morgan Guaranty Trust Company Agreement 4/2/93 Banque de France
Consent and Transfer Agreement 4/4/96
GERMANY DRESDNER BANK DKV
Dresdner Bank Agreement 10/6/95
GHANA BARCLAYS BANK OF GHANA LIMITED for None
BARCLAYS BANK PLC
Barclays Bank Agreement 10/5/94
GHANA MERCHANT BANK (GHANA) LIMITED for None
STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
GREECE CITIBANK, N,A., ATHENS Apothetirion Titlon A.E.
Citibank, N.A., New York Agreement 7/16/81 Bank of Greece
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
4/6/98 PAGE 2 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER INTERNATIONAL BOND FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
HONG KONG HONGKONG & SHANGHAI BANKING CORP. LTD, HONG KONG HKSCC
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93
Schedule 5/14/96
HUNGARY CITIBANK BUDAPEST RT. for CITIBANK, N.A. KELER Ltd.
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, N.A. Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Budapest Agreement 1/24/92
INDIA CITIBANK, N.A., MUMBAI NSDL
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Mumbai Amendment 11/17/93
INDONESIA CITIBANK, N.A., JAKARTA None
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
IRELAND ALLIED IRISH BANKS PLC CrestCo.
Allied Irish Banks Agreement 1/10/89 Gilt Settlement Office
Omnibus Amendment 4/8/94
ISRAEL BANK HAPOALIM B.M. TASE Clearinghouse Ltd.
Bank Hapoalim Agreement 8/27/92
ITALY BANCA COMMERCIALE ITALIANA Monte Titoli
Banca Commerciale Italiana Agreement 5/8/89 Banca D'Italia
Agreement Amendment 10/8/93
Omnibus Amendment 12/14/93
JAPAN THE BANK OF TOKYO - MITSUBISHI, LTD. JASDEC
Bank of Tokyo-Mitsubishi Agreement 6/17/96 Bank of Japan
JORDAN ARAB BANK PLC None
Arab Bank PLC Agreement 4/5/95
KENYA BARCLAYS BANK OF KENYA LIMITED for None
BARCLAYS BANK PLC
Barclays Bank Agreement 10/5/94
KENYA STANBIC BANK KENYA LIMITED None
for STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
KOREA CITIBANK N.A., SEOUL KSD
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Seoul Agreement Supplement 10/28/94
4/6/98 PAGE 3 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER INTERNATIONAL BOND FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
MALAYSIA HONGKONG BANK MALAYSIA BERHAD Bank Negara Malaysia
Hongkong & Shanghai Banking Corp. Agt. 4/19/91 MCD
Omnibus Supplement 12/29/93
Schedule 5/14/96
Malaysia Subsidiary Supplement 5/23/94
Side letter Agreement dated 7/28/97
MEXICO CITIBANK MEXICO, S.A. Indeval
Citibank, NA., New York Agreement 7/16/81 Banco de Mexico
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank Mexico, S.A. Amendment 2/7/95
MOROCCO BANQUE MAROCAINE DU COMMERCE EXTERIEUR
BMCE Agreement 7/6/94
NETHERLANDS ABN-AMRO BANK NECIGEF
ABN-AMRO Agreement 12/19/89 Ds Nederlandsche Bank
NEW ZEALAND NATIONAL AUSTRALIA BANK LTD., AUCKLAND Reserve Bank of New Zealand
National Australia Bank Agreement 5/1/85
Agreement Amendment 2/13/92
Omnibus Amendment 11/22/93
Now Zealand Addendum 3/7/89
NORWAY DEN NORSKE BANK VPS
Den norske Bank Agreement 11/16/94
PAKISTAN STANDARD CHARTERED BANK, KARACHI CDC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
PERU CITIBANK, N.A., LIMA CAVALI
Citibank, NA., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
PHILIPPINES CITIBANK, N.A., MANILA PCD
Citibank, N.A., New York Agreement 7/16/81 ROSS
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
POLAND CITIBANK (POLAND), S.A. for CITIBANK, N.A. NDS
Citibank, N.A., New York Agreement 7/16/81 National Bank of Poland
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Poland S.A. Agt. 11/6/92
PORTUGAL BANCO ESPIRITO SANTO E COMERCIAL Interbolsa
DE LISBOA, S.A.
BESCL Agreement 4/26/89
Omnibus Amendment 2/23/94
4/6/98 PAGE 4 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER INTERNATIONAL BOND FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------- ----------
SINGAPORE HONGKONG & SHANGHAI BANKING CORP. LTD, SINGAPORE CDP
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93
Schedule 5/14/96
SLOVAKIA CESKOSLOVENSKA OBCHODNA BANKA, A.S., SCP
BRATISLAVA National Bank of Slovakia
Ceskoslovenska Obchodna Banka Agreement 10/12/94
SOUTH AFRICA FIRST NATIONAL BANK OF SOUTHERN AFRICA CD
First National Bank of Southern Africa Agt. 8/7/91
SPAIN BANCO SANTANDER SCLV
Banco Santander Agreement 12/14/88 Banco de Espana
SRI LANKA HONGKONG & SHANGHAI BANKING CORP. LTD, COLOMBO CDS
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93
Schedule 5/14/96
SWAZILAND STANBIC BANK SWAZILAND LIMITED None
for STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
SWEDEN SKANDINAVISKA ENSKILDA BANKEN VPC
Skandinaviska Enskilda Banken Agreement 2/20/89
Omnibus Amendment 12/3/93
SWITZERLAND SWISS BANK CORPORATION SEGA
Swiss Bank Corporation Agreement 3/1/94
TAIWAN CENTRAL TRUST OF CHINA TSCD
Central Trust of China Agt. 8/22/94
THAILAND HONGKONG & SHANGHAI BANKING CORP. LTD, BANGKOK TSDC
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Amendment 12/29/93
Schedule 5/14/96
TRANSNATIONAL BROWN BROTHERS HARRIMAN & CO. Cedel
Euroclear
TURKEY CITIBANK, N.A., ISTANBUL Takasbank
Citibank, NA., New York Agreement 7/16/81 Central Bank of Turkey
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
UNITED KINGDOM LLOYDS BANK PLC CGO
Lloyds Bank plc Agreement 4/15/96 CM0
CrestCo.
4/6/98 PAGE 5 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER INTERNATIONAL BOND FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
URUGUAY BANKBOSTON, N.A., MONTEVIDEO None
The First National Bank of Boston Agreement 1/5/88
Omnibus Amendment 2/22/94
Amendment 7/29/96
VENEZUELA CITIBANK, N.A., CARACAS CVV
Citibank, NA., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
ZAMBIA STANBIC BANK ZAMBIA LTD. for Zambian Central Securities Depository
STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 10/3/96
ZIMBABWE STANBIC BANK ZIMBABWE LTD. for None
STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 10/3/96
</TABLE>
I HEREBY CERTIFY THAT THE BOARD APPROVED THE COUNTRIES, SUBCUSTODIANS,
AGREEMENTS, AND CENTRAL DEPOSITORIES LISTED ON THIS APPENDIX.
/s/Thomas F. McDonough April 16, 1998
- ----------- --------------
(SIGNATURE) (DATE)
SECRETARY
- ---------
(TITLE)
4/6/98 PAGE 6 OF 6
Exhibit 8k(3)
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER GLOBAL DISCOVERY FUND
APPENDIX B
<TABLE>
<S> <C> <C>
<CAPTION>
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
ARGENTINA BANKBOSTON, N.A., BUENOS AIRES Caja de Valores
The First National Bank of Boston Agreement 1/5/88 CRYL
Omnibus Amendment 2/22/94
Amendment 7/29/96
AUSTRALIA NATIONAL AUSTRALIA BANK LTD., MELBOURNE Austraclear Ltd.
National Australia Bank Agt. 5/l/85 Reserve Bank of Australia
Agreement Amendment 2/13/92
Omnibus Amendment 11/22/93
AUSTRIA CREDITANSTALT BANKVEREIN OeKB
Creditanstalt Bankverein Agreement 12/18/89
Omnibus Amendment 1/17/94
BANGLADESH STANDARD CHARTERED BANK, DHAKA None
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
BELGIUM BANQUE BRUXELLES LAMBERT CIK
Banque Bruxelles Lambert Agt. 11/15/90 Banque Nationale de Belgique
Omnibus Amendment 3/l/94
BERMUDA THE BANK OF N.T. BUTTERFIELD & SON LTD. None
The Bank of N.T. Butterfield & Son Ltd. Agreement 5/27/97
BOTSWANA BARCLAYS BANK OF BOTSWANA LIMITED for None
BARCLAYS BANK PLC
Barclays Bank Agreement 10/5/94
BOTSWANA STANBIC BANK BOTSWANA LIMITED None
for STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
BRAZIL BANKBOSTON, N.A., SAO PAULO BOVESPA
The First National Bank of Boston Agreement 1/5/88 CLC
Omnibus Amendment 2/22/94
Amendment 7/29/96
CANADA CANADIAN IMPERIAL BANK OF COMMERCE Bank of Canada
Canadian Imperial Bank of Commerce Agreement 9/9/88 CDS
Omnibus Amendment 12/1/93
CHILE CITIBANK, NA., SANTIAGO DCV
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
4/6/98 PAGE 1 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER GLOBAL DISCOVERY FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
CHINA STANDARD CHARTERED BANK, SHANGHAI SSCCRC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
CHINA STANDARD CHARTERED BANK, SHENZHEN SSCC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
COLOMBIA CITITRUST COLOMBIA, S.A. SOCIEDAD FIDUCIARIA for Deceval
CITIBANK, N.A. DCV
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, N.A. Subsidiary Amendment 10/19/95
Citibank, N.A./Cititrust Colombia Agreement 12/2/91
CZECH REPUBLIC CESKOSLOVENSKA OBCHODNI BANKA, A.S., PRAGUE SCP
Ceskoslovenska Obchodni Banka Agreement 2/28/94 Czech National Bank
DENMARK DEN DANSKE BANK VP
Den Danske Bank Agreement 1/1/89
Omnibus Amendment 12/1/93
ECUADOR CITIBANK, N.A., QUITO None
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Quito Side Letter 7/3/95
EGYPT CITIBANK, N.A., CAIRO MCSD
Citibank, N.A., New York Agt. 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
FINLAND MERITA BANK CSD
Union Bank of Finland Agreement 2/27/89
Omnibus Amendment 4/6/94
FRANCE BANQUE PARIBAS SICOVAM
Morgan Guaranty Trust Company Agreement 4/2/93 Banque de France
Consent and Transfer Agreement 4/4/96
GERMANY DRESDNER BANK DKV
Dresdner Bank Agreement 10/6/95
GHANA BARCLAYS BANK OF GHANA LIMITED for None
BARCLAYS BANK PLC
Barclays Bank Agreement 10/5/94
GHANA MERCHANT BANK (GHANA) LIMITED for None
STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
4/6/98 PAGE 2 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER GLOBAL DISCOVERY FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
GREECE CITIBANK, N,A., ATHENS Apothetirion Titlon A.E.
Citibank, N.A., New York Agreement 7/16/81 Bank of Greece
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
HONG KONG HONGKONG & SHANGHAI BANKING CORP. LTD, HONG KO HKSCC
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93
Schedule 5/14/96
HUNGARY CITIBANK BUDAPEST RT. for CITIBANK, N.A. KELER Ltd.
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, N.A. Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Budapest Agreement 1/24/92
INDIA CITIBANK, N.A., MUMBAI NSDL
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Mumbai Amendment 11/17/93
INDONESIA CITIBANK, N.A., JAKARTA None
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
IRELAND ALLIED IRISH BANKS PLC CrestCo.
Allied Irish Banks Agreement 1/10/89 Gilt Settlement Office
Omnibus Amendment 4/8/94
ISRAEL BANK HAPOALIM B.M. TASE Clearinghouse Ltd.
Bank Hapoalim Agreement 8/27/92
ITALY BANCA COMMERCIALE ITALIANA Monte Titoli
Banca Commerciale Italiana Agreement 5/8/89 Banca D'Italia
Agreement Amendment 10/8/93
Omnibus Amendment 12/14/93
JAPAN THE BANK OF TOKYO - MITSUBISHI, LTD. JASDEC
Bank of Tokyo-Mitsubishi Agreement 6/17/96 Bank of Japan
JORDAN ARAB BANK PLC None
Arab Bank PLC Agreement 4/5/95
KENYA BARCLAYS BANK OF KENYA LIMITED for None
BARCLAYS BANK PLC
Barclays Bank Agreement 10/5/94
KENYA STANBIC BANK KENYA LIMITED None
for STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
4/6/98 PAGE 3 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER GLOBAL DISCOVERY FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
KOREA CITIBANK N.A., SEOUL KSD
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Seoul Agreement Supplement 10/28/94
MALAYSIA HONGKONG BANK MALAYSIA BERHAD Bank Negara Malaysia
Hongkong & Shanghai Banking Corp. Agt. 4/19/91 MCD
Omnibus Supplement 12/29/93
Schedule 5/14/96
Malaysia Subsidiary Supplement 5/23/94
Side letter Agreement dated 7/28/97
MEXICO CITIBANK MEXICO, S.A. Indeval
Citibank, NA., New York Agreement 7/16/81 Banco de Mexico
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank Mexico, S.A. Amendment 2/7/95
MOROCCO BANQUE MAROCAINE DU COMMERCE EXTERIEUR
BMCE Agreement 7/6/94
NETHERLANDS ABN-AMRO BANK NECIGEF
ABN-AMRO Agreement 12/19/88 De Nederlandsche Bank
NEW ZEALAND NATIONAL AUSTRALIA BANK LTD., AUCKLAND Reserve Bank of New Zealand
National Australia Bank Agreement 5/1/85
Agreement Amendment 2/13/92
Omnibus Amendment 11/22/93
Now Zealand Addendum 3/7/89
NORWAY DEN NORSKE BANK VPS
Den norske Bank Agreement 11/16/94
PAKISTAN STANDARD CHARTERED BANK, KARACHI CDC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
PERU CITIBANK, N.A., LIMA CAVALI
Citibank, NA., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
PHILIPPINES CITIBANK, N.A., MANILA
Citibank, N.A., New York Agreement 7/16/81 ROSS
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
POLAND CITIBANK (POLAND), S.A. for CITIBANK, N.A. NDS
Citibank, N.A., New York Agreement 7/16/81 National Bank of Poland
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Poland S.A. Agt. 11/6/92
4/6/98 PAGE 4 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER GLOBAL DISCOVERY FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------- ----------
PORTUGAL BANCO ESPIRITO SANTO E COMERCIAL Interbolsa
DE LISBOA, S.A.
BESCL Agreement 4/26/89
Omnibus Amendment 2/23/94
SINGAPORE HONGKONG & SHANGHAI BANKING CORP. LTD, SINGAPO CDP
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93
Schedule 5/14/96
SLOVAKIA CESKOSLOVENSKA OBCHODNA BANKA, A.S., SCP
BRATISLAVA National Bank of Slovakia
Ceskoslovenska Obchodna Banka Agreement 10/12/94
SOUTH AFRICA FIRST NATIONAL BANK OF SOUTHERN AFRICA CD
First National Bank of Southern Africa Agt. 8/7/91
SPAIN BANCO SANTANDER SCLV
Banco Santander Agreement 12/14/88 Banco de Espana
SRI LANKA HONGKONG & SHANGHAI BANKING CORP. LTD, COLOMB CDS
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93
Schedule 5/14/96
SWAZILAND STANBIC BANK SWAZILAND LIMITED None
for STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
SWEDEN SKANDINAVISKA ENSKILDA BANKEN VPC
Skandinaviska Enskilda Banken Agreement 2/20/89
Omnibus Amendment 12/3/93
SWITZERLAND SWISS BANK CORPORATION SEGA
Swiss Bank Corporation Agreement 3/1/94
TAIWAN CENTRAL TRUST OF CHINA TSCD
Central Trust of China Agt. 8/22/94
THAILAND HONGKONG & SHANGHAI BANKING CORP. LTD, BANGKO TSDC
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Amendment 12/29/93
Schedule 5/14/96
TRANSNATIONAL BROWN BROTHERS HARRIMAN & CO. Cedel
Euroclear
TURKEY CITIBANK, N.A., ISTANBUL Takasbank
Citibank, NA., New York Agreement 7/16/81 Central Bank of Turkey
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
4/6/98 PAGE 5 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER GLOBAL DISCOVERY FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
UNITED KINGDOM LLOYDS BANK PLC CGO
Lloyds Bank plc Agreement 4/15/96 CM0
CrestCo.
URUGUAY BANKBOSTON, N.A., MONTEVIDEO None
The First National Bank of Boston Agreement 1/5/88
Omnibus Amendment 2/22/94
Amendment 7/29/96
VENEZUELA CITIBANK, N.A., CARACAS CVV
Citibank, NA., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
ZAMBIA STANBIC BANK ZAMBIA LTD. for Zambian Central Securities Depository
STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 10/3/96
ZIMBABWE STANBIC BANK ZIMBABWE LTD. for None
STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 10/3/96
</TABLE>
I HEREBY CERTIFY THAT THE BOARD APPROVED THE COUNTRIES, SUBCUSTODIANS,
AGREEMENTS, AND CENTRAL DEPOSITORIES LISTED ON THIS APPENDIX.
/s/Thomas F. McDonough April 16, 1998
- ------------ --------------
(SIGNATURE) (DATE)
SECRETARY
- ---------
(TITLE)
4/6/98 PAGE 6 OF 6
Exhibit 8k(4)
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER EMERGING MARKETS INCOME FUND
APPENDIX B
<TABLE>
<S> <C> <C>
<CAPTION>
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
ARGENTINA BANKBOSTON, N.A., BUENOS AIRES Caja de Valores
The First National Bank of Boston Agreement 1/5/88 CRYL
Omnibus Amendment 2/22/94
Amendment 7/29/96
AUSTRALIA NATIONAL AUSTRALIA BANK LTD., MELBOURNE Austraclear Ltd.
National Australia Bank Agt. 5/l/85 Reserve Bank of Australia
Agreement Amendment 2/13/92
Omnibus Amendment 11/22/93
AUSTRIA CREDITANSTALT BANKVEREIN OeKB
Creditanstalt Bankverein Agreement 12/18/89
Omnibus Amendment 1/17/94
BANGLADESH STANDARD CHARTERED BANK, DHAKA None
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
BELGIUM BANQUE BRUXELLES LAMBERT CIK
Banque Bruxelles Lambert Agt. 11/15/90 Banque Nationale de Belgique
Omnibus Amendment 3/l/94
BERMUDA THE BANK OF N.T. BUTTERFIELD & SON LTD. None
The Bank of N.T. Butterfield & Son Ltd. Agreement 5/27/97
BOTSWANA BARCLAYS BANK OF BOTSWANA LIMITED for None
BARCLAYS BANK PLC
Barclays Bank Agreement 10/5/94
BRAZIL BANKBOSTON, N.A., SAO PAULO BOVESPA
The First National Bank of Boston Agreement 1/5/88 CLC
Omnibus Amendment 2/22/94
Amendment 7/29/96
BULGARIA INTERNATIONALE NEDERLANDEN BANK N.V.
Internationale Nederlanden Bank N.V. Agreement 9/15/97 BNB
CANADA CANADIAN IMPERIAL BANK OF COMMERCE Bank of Canada
Canadian Imperial Bank of Commerce Agreement 9/9/88 CDS
Omnibus Amendment 12/1/93
CHILE CITIBANK, NA., SANTIAGO DCV
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
6/1/98 PAGE 1 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER EMERGING MARKETS INCOME FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
CHINA STANDARD CHARTERED BANK, SHANGHAI SSCCRC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
CHINA STANDARD CHARTERED BANK, SHENZHEN SSCC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
COLOMBIA CITITRUST COLOMBIA, S.A. SOCIEDAD FIDUCIARIA for Deceval
CITIBANK, N.A. DCV
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, N.A. Subsidiary Amendment 10/19/95
Citibank, N.A./Cititrust Colombia Agreement 12/2/91
CZECH REPUBLIC CESKOSLOVENSKA OBCHODNI BANKA, A.S., PRAGUE SCP
Ceskoslovenska Obchodni Banka Agreement 2/28/94 Czech National Bank
DENMARK DEN DANSKE BANK VP
Den Danske Bank Agreement 1/1/89
Omnibus Amendment 12/1/93
ECUADOR CITIBANK, N.A., QUITO None
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Quito Side Letter 7/3/95
EGYPT CITIBANK, N.A., CAIRO MCSD
Citibank, N.A., New York Agt. 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
FINLAND MERITA BANK CSD
Union Bank of Finland Agreement 2/27/89
Omnibus Amendment 4/6/94
FRANCE BANQUE PARIBAS SICOVAM
Morgan Guaranty Trust Company Agreement 4/2/93 Banque de France
Consent and Transfer Agreement 4/4/96
GERMANY DRESDNER BANK DKV
Dresdner Bank Agreement 10/6/95
GHANA MERCHANT BANK (GHANA) LIMITED for None
STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
6/1/98 PAGE 2 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER EMERGING MARKETS INCOME FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
GREECE CITIBANK, N,A., ATHENS Apothetirion Titlon A.E.
Citibank, N.A., New York Agreement 7/16/81 Bank of Greece
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
HONG KONG HONGKONG & SHANGHAI BANKING CORP. LTD, HONG KONG HKSCC
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93
Schedule 5/14/96
HUNGARY CITIBANK BUDAPEST RT. for CITIBANK, N.A. KELER Ltd.
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, N.A. Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Budapest Agreement 1/24/92
INDIA CITIBANK, N.A., MUMBAI NSDL
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Mumbai Amendment 11/17/93
INDONESIA CITIBANK, N.A., JAKARTA None
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
IRELAND ALLIED IRISH BANKS PLC CrestCo.
Allied Irish Banks Agreement 1/10/89 Gilt Settlement Office
Omnibus Amendment 4/8/94
ISRAEL BANK HAPOALIM B.M. TASE Clearinghouse Ltd.
Bank Hapoalim Agreement 8/27/92
ITALY BANCA COMMERCIALE ITALIANA Monte Titoli
Banca Commerciale Italiana Agreement 5/8/89 Banca D'Italia
Agreement Amendment 10/8/93
Omnibus Amendment 12/14/93
JAPAN THE BANK OF TOKYO - MITSUBISHI, LTD. JASDEC
Bank of Tokyo-Mitsubishi Agreement 6/17/96 Bank of Japan
JORDAN ARAB BANK PLC None
Arab Bank PLC Agreement 4/5/95
KENYA STANBIC BANK KENYA LIMITED None
for STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
6/1/98 PAGE 3 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER EMERGING MARKETS INCOME FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
KOREA CITIBANK N.A., SEOUL KSD
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Seoul Agreement Supplement 10/28/94
MALAYSIA HONGKONG BANK MALAYSIA BERHAD Bank Negara Malaysia
Hongkong & Shanghai Banking Corp. Agt. 4/19/91 MCD
Omnibus Supplement 12/29/93
Schedule 5/14/96
Malaysia Subsidiary Supplement 5/23/94
Side letter Agreement dated 7/28/97
MEXICO CITIBANK MEXICO, S.A. Indeval
Citibank, NA., New York Agreement 7/16/81 Banco de Mexico
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank Mexico, S.A. Amendment 2/7/95
MOROCCO BANQUE MAROCAINE DU COMMERCE EXTERIEUR
BMCE Agreement 7/6/94
NETHERLANDS ABN-AMRO BANK NECIGEF
ABN-AMRO Agreement 12/19/89 Ds Nederlandsche Bank
NEW ZEALAND NATIONAL AUSTRALIA BANK LTD., AUCKLAND Reserve Bank of New Zealand
National Australia Bank Agreement 5/1/85
Agreement Amendment 2/13/92
Omnibus Amendment 11/22/93
Now Zealand Addendum 3/7/89
NORWAY DEN NORSKE BANK VPS
Den norske Bank Agreement 11/16/94
PAKISTAN STANDARD CHARTERED BANK, KARACHI CDC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
PANAMA BANKBOSTON,N.A., PANAMA
The First National Bank of Boston Agreement 1/5/88 Latinclear
Omnibus Amendment 2/22/94
Amendment 7/29/96
Panama Amendment 10/17/96
PERU CITIBANK, N.A., LIMA CAVALI
Citibank, NA., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
PHILIPPINES CITIBANK, N.A., MANILA PCD
Citibank, N.A., New York Agreement 7/16/81 ROSS
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
6/1/98 PAGE 4 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER EMERGING MARKETS INCOME FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------- ----------
POLAND CITIBANK (POLAND), S.A. for CITIBANK, N.A. NDS
Citibank, N.A., New York Agreement 7/16/81 National Bank of Poland
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Poland S.A. Agt. 11/6/92
PORTUGAL BANCO ESPIRITO SANTO E COMERCIAL Interbolsa
DE LISBOA, S.A.
BESCL Agreement 4/26/89
Omnibus Amendment 2/23/94
ROMANIA INTERNATIONALE NEDERLANDEN BANK N.V. NBR
Internationale Nederlanden Bank N.V. Agreement 9/29/97
RUSSIA CITIBANK T/O FOR CITIBANK, N.A. VTB
Citibank, N.A., New York Agreement 7/16/81 MICEX
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, N.A. Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank T/O Agreement 6/16/97
A side letter agreement pending execution
Requires Board approval of Amendment to Custodian Agreement
SINGAPORE HONGKONG & SHANGHAI BANKING CORP. LTD, SINGAPORE CDP
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93
Schedule 5/14/96
SLOVAKIA CESKOSLOVENSKA OBCHODNA BANKA, A.S., SCP
BRATISLAVA National Bank of Slovakia
Ceskoslovenska Obchodna Banka Agreement 10/12/94
SOUTH AFRICA FIRST NATIONAL BANK OF SOUTHERN AFRICA CD
First National Bank of Southern Africa Agt. 8/7/91
SPAIN BANCO SANTANDER SCLV
Banco Santander Agreement 12/14/88 Banco de Espana
SRI LANKA HONGKONG & SHANGHAI BANKING CORP. LTD, COLOMBO CDS
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93
Schedule 5/14/96
SWAZILAND STANBIC BANK SWAZILAND LIMITED None
for STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 9/29/97
SWEDEN SKANDINAVISKA ENSKILDA BANKEN VPC
Skandinaviska Enskilda Banken Agreement 2/20/89
Omnibus Amendment 12/3/93
6/1/98 PAGE 5 OF 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
SCUDDER GLOBAL FUND, INC. for the SCUDDER EMERGING MARKETS INCOME FUND
APPENDIX B
COUNTRY SUBCUSTODIAN DEPOSITORY
------- ------------ ----------
SWITZERLAND SWISS BANK CORPORATION SEGA
Swiss Bank Corporation Agreement 3/1/94
TAIWAN CENTRAL TRUST OF CHINA TSCD
Central Trust of China Agt. 8/22/94
THAILAND HONGKONG & SHANGHAI BANKING CORP. LTD, BANGKOK TSDC
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Amendment 12/29/93
Schedule 5/14/96
TRANSNATIONAL BROWN BROTHERS HARRIMAN & CO. Cedel
Euroclear
TURKEY CITIBANK, N.A., ISTANBUL Takasbank
Citibank, NA., New York Agreement 7/16/81 Central Bank of Turkey
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
UNITED KINGDOM LLOYDS BANK PLC CGO
Lloyds Bank plc Agreement 4/15/96 CM0
CrestCo.
URUGUAY BANKBOSTON, N.A., MONTEVIDEO None
The First National Bank of Boston Agreement 1/5/88
Omnibus Amendment 2/22/94
Amendment 7/29/96
VENEZUELA CITIBANK, N.A., CARACAS CVV
Citibank, NA., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
ZAMBIA STANBIC BANK ZAMBIA LTD. for Zambian Central Securities Depository
STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 10/3/96
ZIMBABWE STANBIC BANK ZIMBABWE LTD. for None
STANDARD BANK OF SOUTH AFRICA
Standard Bank of South Africa Agreement 3/11/94
Subsidiary Amendment 10/3/96
</TABLE>
I HEREBY CERTIFY THAT THE BOARD APPROVED THE COUNTRIES, SUBCUSTODIANS,
AGREEMENTS, AND CENTRAL DEPOSITORIES LISTED ON THIS APPENDIX.
/s/Thomas F. McDonough June 17, 1998
- ------------ --------------
(SIGNATURE) (DATE)
SECRETARY
- ---------
(TITLE)
6/1/98 PAGE 6 OF 6
Exhibit 9(a)5
AGENCY AGREEMENT
(Corporate Form)
AGREEMENT dated the 16th day of April, 1998, by and between Scudder
Global Fund, Inc., a Maryland corporation (the "Company") on behalf of Global
Discovery Fund, a series of the Company (the "Fund"), and KEMPER SERVICE
COMPANY, a Delaware corporation ("Service Company").
WHEREAS, Company wants to appoint Service Company as Transfer Agent and
Dividend Disbursing Agent, on behalf of Class A shares, Class B shares and Class
C shares of the Fund, and Service Company wants to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Documents to be Filed with Appointment.
In connection with the appointment of Service Company as
Transfer Agent and Dividend Disbursing Agent for Fund, there
will be filed with Service Company the following documents:
A. A certified copy of the resolutions of the Board of
Directors of the Company appointing Service Company
as Transfer Agent and Dividend Disbursing Agent,
approving the form of this Agreement, and designating
certain persons to give written instructions and
requests on behalf of the Fund.
B. A certified copy of the Charter of the Company and
any amendments thereto.
C. A certified copy of the Bylaws of the Company.
D. Copies of Registration Statements filed with the
Securities and Exchange Commission.
E. Specimens of all forms of outstanding share
certificates for the Fund as approved by the Board of
Directors of the Company, with a certificate of the
Secretary of the Company as to such approval.
F. Specimens of the signatures of the officers of the
Company authorized to sign share certificates and
individuals authorized to sign written instructions
and requests on behalf of the Fund.
G. An opinion of counsel for the Company:
(1) With respect to Company's organization and
existence under the laws of the State of
Maryland.
<PAGE>
(2) With respect to the status of all shares of
Fund covered by this appointment under the
Securities Act of 1933, and any other
applicable federal or state statute.
(3) To the effect that all issued Fund shares of
the Fund are, and all unissued shares of the
Fund will be when issued, validly issued,
fully paid and non-assessable.
2. Certain Representations and Warranties of Service Company.
Service Company represents and warrants to the Company that:
A. It is a corporation duly organized and existing and
in good standing under the laws of the State of
Delaware.
B. It is duly qualified to carry on its business in the
State of Missouri.
C. It is empowered under applicable laws and by its
Certificate of Incorporation and Bylaws to enter into
and perform the services contemplated in this
Agreement.
D. All requisite corporate action has been taken to
authorize it to enter into and perform this
Agreement.
E. It has and will continue to have and maintain the
necessary facilities, equipment and personnel to
perform its duties and obligations under this
Agreement.
F. It is, and will continue to be, registered as a
transfer agent under the Securities Exchange Act of
1934, as amended.
3. Certain Representations and Warranties of the Company. The
Company represents and warrants to Service Company that:
A. It is a corporation duly organized and existing and
in good standing under the laws of the State of
Maryland.
B. It is an investment company registered under the
Investment Company Act of 1940, as amended.
C. A registration statement under the Securities Act of
1933 has been filed and will be effective with
2
<PAGE>
respect to all shares of the Fund being offered for
sale at any time and from time to time.
D. All requisite steps have been or will be taken to
register the Fund's shares for sale in all applicable
states, including the District of Columbia.
E. The Company and its Directors are empowered under
applicable laws and by the Company's Charter and
Bylaws to enter into and perform this Agreement.
4. Scope of Appointment.
A. Subject to the conditions set forth in this
Agreement, the Company, on behalf of the Fund, hereby
employs and appoints Service Company as Transfer
Agent and Dividend Disbursing Agent of the Fund
effective the date hereof.
B. Service Company hereby accepts such employment and
appointment and agrees that it will act as the Fund's
Transfer Agent and Dividend Disbursing Agent. Service
Company agrees that it will also act as agent in
connection with the Fund's periodic withdrawal
payment accounts and other open-account or similar
plans for stockholders, if any.
C. Service Company agrees to provide the necessary
facilities, equipment and personnel to perform its
duties and obligations hereunder in accordance with
industry practice.
D. The Company, on behalf of the Fund, agrees to use all
reasonable efforts to deliver to Service Company in
Kansas City, Missouri, as soon as they are available,
all its Fund stockholder account records.
E. Subject to the provisions of Sections 20 and 21
hereof, Service Company agrees that it will perform
all the usual and ordinary services of Transfer Agent
and Dividend Disbursing Agent and as agent for the
various stockholder accounts, including, without
limitation, the following: issuing, transferring and
canceling share certificates, maintaining all
stockholder accounts, preparing stockholder meeting
lists, mailing proxies, receiving and tabulating
proxies, mailing stockholder reports and
prospectuses, withholding federal income taxes,
preparing and mailing checks for disbursement of
income and capital gains dividends, preparing and
filing all
3
<PAGE>
required U.S. Treasury Department information returns
for all stockholders, preparing and mailing
confirmation forms to stockholders and dealers with
respect to all purchases and liquidations of the Fund
shares and other transactions in stockholder accounts
for which confirmations are required, recording
reinvestments of dividends and distributions in the
Fund shares, recording redemptions of the Fund shares
and preparing and mailing checks for payments upon
redemption and for disbursements to systematic
withdrawal plan stockholders.
5. Compensation and Expenses.
A. In consideration for the services provided hereunder
by Service Company as Transfer Agent and Dividend
Disbursing Agent, the Company, on behalf of the Fund,
will pay to Service Company from time to time
compensation as agreed upon in writing by the parties
for all services rendered as Agent, and also, all its
reasonable out-of-pocket expenses and other
disbursements incurred in connection with the agency,
as described in Section 5.B below. Such compensation
will be set forth in a separate schedule to be agreed
to by the Company and Service Company. The initial
agreement regarding compensation is attached as
Exhibit A.
B. The Company, on behalf of the Fund, agrees to
promptly reimburse Service Company for all reasonable
out-of-pocket expenses or advances incurred by
Service Company in connection with the performance of
services under this Agreement including, but not
limited to, postage (and first class mail insurance
in connection with mailing share certificates),
envelopes, check forms, continuous forms, forms for
reports and statements, stationery, and other similar
items, telephone and telegraph charges incurred in
answering inquiries from dealers or stockholders,
microfilm used each year to record the previous
year's transactions in stockholder accounts and
computer tapes used for permanent storage of records
and cost of insertion of materials in mailing
envelopes by outside firms. Service Company may, at
its option, arrange to have various service providers
submit invoices directly to the Fund for payment of
out-of-pocket expenses reimbursable hereunder.
4
<PAGE>
6. Efficient Operation of Service Company System.
A. In connection with the performance of its services
under this Agreement, Service Company is responsible
for the accurate and efficient functioning of its
system at all times, including without limitation:
(1) The accuracy of the entries in Service
Company's records reflecting purchase and
redemption orders and other instructions
received by Service Company from dealers,
stockholders, the Company or its principal
underwriter.
(2) The timely availability and the accuracy of
stockholder lists, stockholder account
verifications, confirmations and other
stockholder account information to be
produced from Service Company's records or
data.
(3) The accurate and timely issuance of dividend
and distribution checks in accordance with
instructions received from the Company.
(4) The accuracy of redemption transactions and
payments in accordance with redemption
instructions received from dealers,
stockholders or the Company or other
authorized persons.
(5) The deposit daily in the Company's
appropriate special bank account for the
Fund of all checks and payments received
from dealers or stockholders for investment
in shares.
(6) The requiring of proper forms of
instructions, signatures and signature
guarantees and any necessary documents
supporting the rightfulness of transfers,
redemptions and other stockholder account
transactions, all in conformance with
Service Company's present procedures with
such changes as may be deemed reasonably
appropriate by Service Company or as may be
reasonably approved by or on behalf of the
Company.
(7) The maintenance of a current duplicate set
of the Fund's essential or required records,
as agreed upon from time to time by the
Company
5
<PAGE>
and Service Company, at a secure distant
location, in form available and usable
forthwith in the event of any breakdown or
disaster disrupting its main operation.
7. Indemnification.
A. The Company, on behalf of the Fund, shall indemnify
and hold Service Company harmless from and against
any and all claims, actions, suits, losses, damages,
costs, charges, counsel fees, payments, expenses and
liabilities arising out of or attributable to any
action or omission by Service Company pursuant to
this Agreement or in connection with the agency
relationship created by this Agreement, provided that
Service Company has acted in good faith, without
negligence and without willful misconduct.
B. Service Company shall indemnify and hold the Company
harmless from and against any and all claims,
actions, suits, losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities
arising out of or attributable to any action or
omission by Service Company pursuant to this
Agreement or in connection with the agency
relationship created by this Agreement, provided that
Service Company has not acted in good faith, without
negligence and without willful misconduct.
C. In order that the indemnification provisions
contained in this Section 7 shall apply, upon the
assertion of a claim for which either party (the
"Indemnifying Party") may be required to provide
indemnification hereunder, the party seeking
indemnification (the "Indemnitee") shall promptly
notify the Indemnifying Party of such assertion, and
shall keep such party advised with respect to all
developments concerning such claim. The Indemnifying
Party shall be entitled to assume control of the
defense and the negotiations, if any, regarding
settlement of the claim. If the Indemnifying Party
assumes control, the Indemnitee shall have the option
to participate in the defense and negotiations of
such claim at its own expense. The Indemnitee shall
in no event confess, admit to, compromise, or settle
any claim for which the Indemnifying Party may be
required to indemnify it except with the prior
written consent of the Indemnifying Party, which
shall not be unreasonably withheld.
6
<PAGE>
8. Certain Covenants of Service Company and the Company.
A. All requisite steps will be taken by the Company, on
behalf of the Fund, from time to time when and as
necessary to register the Fund's shares for sale in
all states in which the Fund's shares shall at the
time be offered for sale and require registration. If
at any time Company receives notice of any stop order
or other proceeding in any such state affecting such
registration or the sale of the Fund's shares, or of
any stop order or other proceeding under the Federal
securities laws affecting the sale of the Fund's
shares, the Company will give prompt notice thereof
to Service Company.
B. Service Company hereby agrees to establish and
maintain facilities and procedures reasonably
acceptable to the Company for safekeeping of share
certificates, check forms, and facsimile signature
imprinting devices, if any; and for the preparation
or use, and for keeping account of, such
certificates, forms and devices. Further, Service
Company agrees to carry insurance, as specified in
Exhibit B hereto, with insurers reasonably acceptable
to the Company and in minimum amounts that are
reasonably acceptable to the Company, which will not
be changed without the consent of the Company, which
consent shall not be unreasonably withheld, and which
will be expanded in coverage or increased in amounts
from time to time if and when reasonably requested by
the Company. If Service Company determines that it is
unable to obtain any such insurance upon commercially
reasonable terms, it shall promptly so advise the
Company in writing. In such event, the Company shall
have the right to terminate this Agreement upon 30
days notice.
C. To the extent required by Section 31 of the
Investment Company Act of 1940 and Rules thereunder,
Service Company agrees that all records maintained by
Service Company relating to the services to be
performed by Service Company under this Agreement are
the property of the Company and will be preserved,
maintained and made available in accordance with such
section and rules, and will be surrendered promptly
to the Company on request.
D. Service Company agrees to furnish the Company
semi-annual reports of the Fund's financial
condition, consisting of a balance sheet, earnings
statement and any other reasonably available
7
<PAGE>
financial information reasonably requested by the
Company. The annual financial statements of the Fund
will be certified by Service Company's certified
public accountants.
E. Service Company represents and agrees that it will
use all reasonable efforts to keep current on the
trends of the investment company industry relating to
stockholder services and will use all reasonable
efforts to continue to modernize and improve its
system without additional cost to the Company, on
behalf of the Fund.
F. Service Company will permit the Company and its
authorized representatives to make periodic
inspections of its operations at reasonable times
during business hours.
G. If Service Company is prevented from complying,
either totally or in part, with any of the terms or
provisions of this Agreement, by reason of fire,
flood, storm, strike, lockout or other labor trouble,
riot, war, rebellion, accidents, acts of God,
equipment, utility or transmission failure or damage,
and/or any other cause or casualty beyond the
reasonable control of Service Company, whether
similar to the foregoing matters or not, then upon
written notice to the Company, the requirements of
this Agreement that are affected by such disability,
to the extent so affected, shall be suspended during
the period of such disability; provided, however,
that Service Company shall make reasonable effort to
remove such disability as soon as possible. During
such period, the Company may seek alternate sources
of service without liability hereunder; and Service
Company will use all reasonable efforts to assist the
Company to obtain alternate sources of service.
Service Company shall have no liability to the
Company for nonperformance because of the reasons set
forth in this Section 8.G; but if a disability that,
in the Company's reasonable belief, materially
affects Service Company's ability to perform its
obligations under this Agreement continues for a
period of 30 days, then the Company shall have the
right to terminate this Agreement upon 10 days
written notice to Service Company.
9. Adjustment.
In case of any recapitalization, readjustment or other change
in the structure of the Fund requiring a change in the form of
share certificates, Service Company will issue or register
certificates in the new form
8
<PAGE>
in exchange for, or in transfer of, the outstanding
certificates in the old form, upon receiving the following:
A. Written instructions from an officer of the Company.
B. Certified copy of any amendment to the Charter or
other document effecting the change.
C. Certified copy of any order or consent of each
governmental or regulatory authority required by law
for the issuance of the shares in the new form, and
an opinion of counsel that no order or consent of any
other government or regulatory authority is required.
D. Specimens of the new certificates in the form
approved by the Board of Directors of the Company,
with a certificate of the Secretary of the Company as
to such approval.
E. Opinion of counsel for the Company:
(1) With respect to the status of the shares of
the Fund in the new form under the
Securities Act of 1933, and any other
applicable federal or state laws.
(2) To the effect that the issued shares of the
Fund in the new form are, and all unissued
shares of the Fund will be when issued,
validly issued, fully paid and
non-assessable.
10. Share Certificates.
The Company, on behalf of the Fund will furnish Service
Company with a sufficient supply of blank share certificates
and from time to time will renew such supply upon the request
of Service Company. Such certificates will be signed manually
or by facsimile signatures of the officers of the Company
authorized by law and the Company's Bylaws to sign share
certificates and, if required, will bear the trust seal or
facsimile thereof.
11. Death, Resignation or Removal of Signing Officer.
The Company will file promptly with Service Company written
notice of any change in the officers authorized to sign share
certificates, written instructions or requests, together with
two signature cards bearing the specimen signature of each
newly authorized officer,
9
<PAGE>
all as certified by an appropriate officer of the Company. In
case any officer of the Company who will have signed manually
or whose facsimile signature will have been affixed to blank
share certificates will die, resign, or be removed prior to
the issuance of such certificates, Service Company may issue
or register such share certificates as the share certificates
of the Fund notwithstanding such death, resignation, or
removal, until specifically directed to the contrary by the
Company in writing. In the absence of such direction, the
Company will file promptly with Service Company such approval,
adoption, or ratification as may be required by law.
12. Future Amendments of Charter and Bylaws.
The Company will promptly file with Service Company copies of
all material amendments to its Charter and Bylaws and
Registration Statement made after the date of this Agreement.
13. Instructions, Opinion of Counsel and Signatures.
At any time Service Company may apply to any officer of the
Company for instructions, and may consult with legal counsel
for the Company at the expense of the Company, or with its own
legal counsel at its own expense, with respect to any matter
arising in connection with the agency; and it will not be
liable for any action taken or omitted by it in good faith in
reliance upon such instructions or upon the opinion of such
counsel. Service Company is authorized to act on the orders,
directions or instructions of such persons as the Board of
Directors of the Company shall from time to time designate by
resolution. Service Company will be protected in acting upon
any paper or document, including any orders, directions or
instructions, reasonably believed by it to be genuine and to
have been signed by the proper person or persons; and Service
Company will not be held to have notice of any change of
authority of any person so authorized by the Company until
receipt of written notice thereof from the Company. Service
Company will also be protected in recognizing share
certificates that it reasonably believes to bear the proper
manual or facsimile signatures of the officers of the Company,
and the proper countersignature of any former Transfer Agent
or Registrar, or of a Co-Transfer Agent or Co-Registrar.
14. Papers Subject to Approval of Counsel.
The acceptance by Service Company of its appointment as
Transfer Agent and Dividend Disbursing Agent, and all
documents filed in connection with such appointment and
10
<PAGE>
thereafter in connection with the agencies, will be subject to
the approval of legal counsel for Service Company, which
approval will not be unreasonably withheld.
15. Certification of Documents.
The required copy of the Charter of the Company and copies of
all amendments thereto will be certified by the appropriate
official of the State of Maryland; and if such Charter and
amendments are required by law to be also filed with a county,
city or other officer or official body, a certificate of such
filing will appear on the certified copy submitted to Service
Company. A copy of the order or consent of each governmental
or regulatory authority required by law for the issuance of
the Fund shares will be certified by the Secretary or Clerk of
such governmental or regulatory authority, under proper seal
of such authority. The copy of the Bylaws and copies of all
amendments thereto and copies of resolutions of the Board of
Directors of the Company will be certified by the Secretary or
an Assistant Secretary of the Fund.
16. Records.
Service Company will maintain customary records in connection
with its agency, and particularly will maintain those records
required to be maintained pursuant to sub-paragraph (2)(iv) of
paragraph (b) of Rule 31a-1 under the Investment Company Act
of 1940, if any.
17. Disposition of Books, Records and Canceled Certificates.
Service Company will send periodically to the Company, or to
where designated by the Secretary or an Assistant Secretary of
the Company, all books, documents, and all records no longer
deemed needed for current purposes and share certificates
which have been canceled in transfer or in exchange, upon the
understanding that such books, documents, records, and share
certificates will not be destroyed by the Company without the
consent of Service Company (which consent will not be
unreasonably withheld), but will be safely stored for possible
future reference.
18. Provisions Relating to Service Company as Transfer Agent.
A. Service Company will make original issues of share
certificates upon written request of an officer of
the Company and upon being furnished with a
11
<PAGE>
certified copy of a resolution of the Board of
Directors authorizing such original issue, an opinion
of counsel as outlined in Section 1.G or 9.E of this
Agreement, the certificates required by Section 10 of
this Agreement and any other documents required by
Section 1 or 9 of this Agreement.
B. Before making any original issue of certificates, the
Company, on behalf of the Fund, will furnish Service
Company with sufficient funds to pay any taxes
required on the original issue of the shares. Company
will furnish Service Company such evidence as may be
required by Service Company to show the actual value
of the shares. If no taxes are payable, Service
Company will upon request be furnished with an
opinion of outside counsel to that effect.
C. Shares will be transferred and new certificates
issued in transfer, or shares accepted for redemption
and funds remitted therefor, upon surrender of the
old certificates in form deemed by Service Company
properly endorsed for transfer or redemption
accompanied by such documents as Service Company may
deem necessary to evidence the authority of the
person making the transfer or redemption, and bearing
satisfactory evidence of the payment of any
applicable share transfer taxes. Service Company
reserves the right to refuse to transfer or redeem
shares until it is satisfied that the endorsement or
signature on the certificate or any other document is
valid and genuine, and for that purpose it may
require a guarantee of signature by such persons as
may from time to time be specified in the prospectus
related to such shares or otherwise authorized by the
Company. Service Company also reserves the right to
refuse to transfer or redeem shares until it is
satisfied that the requested transfer or redemption
is legally authorized, and it will incur no liability
for the refusal in good faith to make transfers or
redemptions which, in its judgment, are improper,
unauthorized, or otherwise not rightful. Service
Company may, in effecting transfers or redemptions,
rely upon Simplification Acts or other statutes which
protect it and the Company in not requiring complete
fiduciary documentation.
D. When mail is used for delivery of share certificates,
Service Company will forward share certificates in
"nonnegotiable" form as provided by the Company, on
behalf of the Fund, by first
12
<PAGE>
class mail, all such mail deliveries to be covered
while in transit to the addressee by insurance
arranged for by Service Company.
E. Service Company will issue and mail subscription
warrants and certificates provided by Company, on
behalf of the Fund, and representing share dividends,
exchanges or split-ups, or act as Conversion Agent
upon receiving written instructions from any officer
of the Company and such other documents as Service
Company deems necessary.
F. Service Company will issue, transfer, and split-up
certificates upon receiving written instructions from
an officer of the Company and such other documents as
Service Company may deem necessary.
G. Service Company may issue new certificates in place
of certificates represented to have been lost,
destroyed, stolen or otherwise wrongfully taken, upon
receiving indemnity satisfactory to Service Company,
and may issue new certificates in exchange for, and
upon surrender of, mutilated certificates. Any such
issuance shall be in accordance with the provisions
of law governing such matter and any procedures
adopted by the Board of Directors of the Company of
which Service Company has notice.
H. Service Company will supply a stockholder's list of
the Fund to the Company properly certified by an
officer of Service Company for any stockholder
meeting upon receiving a request from an officer of
the Company. It will also supply lists at such other
times as may be reasonably requested by an officer of
the Company.
I. Upon receipt of written instructions of an officer of
the Company, Service Company will address and mail
notices to stockholders of the Fund.
J. In case of any request or demand for the inspection
of the share books of the Company related to the Fund
or any other books of Company related to the Fund in
the possession of Service Company, Service Company
will endeavor to notify the Company and to secure
instructions as to permitting or refusing such
inspection. Service Company reserves the right,
however, to exhibit the share books or other books to
any person in case it is advised by its counsel that
it may be held responsible for the failure to exhibit
the share books or other books to such person.
13
<PAGE>
19. Provisions Relating to Dividend Disbursing Agency.
A. Service Company will, at the expense of the Company,
on behalf of the Fund, provide a special form of
check containing the imprint of any device or other
matter desired by the Company. Said checks must,
however, be of a form and size convenient for use by
Service Company.
B. If the Company wants to include additional printed
matter, financial statements, etc., with the dividend
checks, the same will be furnished to Service Company
within a reasonable time prior to the date of mailing
of the dividend checks, at the expense of the
Company, on behalf of the Fund.
C. If the Company wants the Fund's distributions mailed
in any special form of envelopes, sufficient supply
of the same will be furnished to Service Company but
the size and form of said envelopes will be subject
to the approval of Service Company. If stamped
envelopes are used, they must be furnished by the
Company, on behalf of the Fund; or, if postage stamps
are to be affixed to the envelopes, the stamps or the
cash necessary for such stamps must be furnished by
the Company, on behalf of the Fund.
D. Service Company will maintain one or more deposit
accounts as Agent for the Fund, into which the funds
for payment of dividends, distributions, redemptions
or other disbursements provided for hereunder will be
deposited, and against which checks will be drawn.
20. Termination of Agreement.
A. This Agreement may be terminated by either party upon
sixty (60) days prior written notice to the other
party.
B. The Company, in addition to any other rights and
remedies, shall have the right to terminate this
Agreement forthwith upon the occurrence at any time
of any of the following events:
(1) Any interruption or cessation of operations
by Service Company or its assigns which
materially interferes with the business
operation of the Fund.
14
<PAGE>
(2) The bankruptcy of Service Company or its
assigns or the appointment of a receiver for
Service Company or its assigns.
(3) Any merger, consolidation or sale of
substantially all the assets of Service
Company or its assigns.
(4) The acquisition of a controlling interest in
Service Company or its assigns, by any
broker, dealer, investment adviser or
investment company except as may presently
exist.
(5) Failure by Service Company or its assigns to
perform its duties in accordance with this
Agreement, which failure materially
adversely affects the business operations of
the Fund and which failure continues for
thirty (30) days after written notice from
the Company.
(6) The registration of Service Company or its
assigns as a transfer agent under the
Securities Exchange Act of 1934 is revoked,
terminated or suspended for any reason.
C. In the event of termination, the Company, on behalf
of the Fund, will promptly pay Service Company all
amounts due to Service Company hereunder. Upon
termination of this Agreement, Service Company shall
deliver all stockholder and account records and other
materials pertaining to the Fund either to the
Company or as directed in writing by the Company.
21. Assignment.
A. Neither this Agreement nor any rights or obligations
hereunder may be assigned by Service Company without
the written consent of the Company; provided,
however, no assignment will relieve Service Company
of any of its obligations hereunder.
B. This Agreement including, without limitation, the
provisions of Section 7 will inure to the benefit of
and be binding upon the parties and their respective
successors and assigns.
C. Service Company is authorized by the Company to use
the system services of DST Systems, Inc. and the
system and other services, including data entry, of
Administrative Management Group, Inc.
15
<PAGE>
22. Confidentiality.
A. Except as provided in the last sentence of Section
18.J hereof, or as otherwise required by law, Service
Company will keep confidential all records of and
information in its possession relating to the Fund or
its stockholders or stockholder accounts and will not
disclose the same to any person except at the request
or with the consent of the Company.
B. Except as otherwise required by law, the Company will
keep confidential all financial statements and other
financial records (other than statements and records
relating solely to the Company's business dealings
with Service Company) and all manuals, systems and
other technical information and data, not publicly
disclosed, relating to Service Company's operations
and programs furnished to it by Service Company
pursuant to this Agreement and will not disclose the
same to any person except at the request or with the
consent of Service Company. Notwithstanding anything
to the contrary in this Section 22.B, if an attempt
is made pursuant to subpoena or other legal process
to require the Company, on behalf of the Fund, to
disclose or produce any of the aforementioned
manuals, systems or other technical information and
data, the Company shall give Service Company prompt
notice thereof prior to disclosure or production so
that Service Company may, at its expense, resist such
attempt.
23. Survival of Representations and Warranties.
All representations and warranties by either party herein
contained will survive the execution and delivery of this
Agreement.
24. Miscellaneous.
A. This Agreement is executed and delivered in the State
of New York and shall be governed by the laws of said
state.
B. No provisions of this Agreement may be amended or
modified in any manner except by a written agreement
properly authorized and executed by both parties
hereto.
C. The captions in this Agreement are included for
convenience of reference only, and in no way define
or limit any of the provisions hereof or otherwise
affect their construction or effect.
16
<PAGE>
D. This Agreement shall become effective as of the date
hereof.
E. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed
an original but all of which together shall
constitute one and the same instrument.
F. If any part, term or provision of this Agreement is
held by the courts to be illegal, in conflict with
any law or otherwise invalid, the remaining portion
or portions shall be considered severable and not be
affected, and the rights and obligations of the
parties shall be construed and enforced as if the
Agreement did not contain the particular part, term
or provision held to be illegal or invalid.
G. With respect to any claim by Service Company for
recovery of that portion of the compensation and
expenses (or any other liability of the Company
arising hereunder) allocated to a particular class of
the Fund, whether in accordance with the express
terms hereof or otherwise, Service Company shall have
recourse solely against the assets of that class to
satisfy such claim and shall have no recourse against
the assets of any other series of the Company or
class of the Fund for such purpose.
H. This Agreement is the entire contract between the
parties relating to the subject matter hereof and
supersedes all prior agreements between the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officer as of the day and year first set forth
above.
SCUDDER GLOBAL FUND, INC.,
on behalf of Global Discovery Fund
By /s/Nicholas Bratt
--------------------
Title: President
ATTEST:
/s/Caroline Pearson
- -----------------------------
Title: Assistant Secretary
17
<PAGE>
KEMPER SERVICE COMPANY
By /s/Robert A. Rudell
----------------------
Title:
ATTEST:
/s/Kathryn L. Quirk
- -----------------------------
Title:
18
<PAGE>
EXHIBIT A
FEE SCHEDULE (MULTIPLE CLASSES OF SHARES)
<TABLE>
<S> <C> <C>
<CAPTION>
TRANSFER AGENCY FUNCTION FEE PAYABLE BY THE COMPANY, ON
BEHALF OF THE FUND
CLASS A and C CLASS B
1. Annual open shareholder account fee (per year per
account):
a. Non-daily dividend series. $6.00 $6.00
b. CDSC account fee. Not Applicable $2.25
c. Non-monetary transaction fee. $2.00 $2.00
2. Annual closed shareholder account fee (per year per $6.00 $6.00
account).
3. Establishment of new shareholder account (per new $4.00 $4.00
account).*
4. Transaction Based Fees
(per transaction):
a. Dividend transaction fee (per dividend per account). $ .40 $ .40
b. Automated transaction fee (per transaction).** $ .50 $ .50
c. Purchase or redemption of shares transaction fee. $1.25 $1.25
d. Audio Response fee. $0.15 $0.15
</TABLE>
The out-of-pocket expenses of Service Company will be reimbursed by the Company,
on behalf of the Fund, in accordance with the provisions of Section 5 of the
Agency Agreement.
- -----------------
* The new shareholder account fee is not applicable to Class A Share
accounts established in connection with a conversion from Class B
Shares.
** Automated transaction includes, without limitation, money market series
purchases and redemptions, ACH purchases, systematic exchanges and
conversions from Class B Shares to Class A Shares.
19
<PAGE>
EXHIBIT B
INSURANCE COVERAGE
DESCRIPTION OF POLICY:
Brokers Blanket Bond, Standard Form 14
Covering losses caused by dishonesty of employees, physical
loss of securities on or outside of premises while in
possession of authorized person, loss caused by forgery or
alteration of checks or similar instruments.
Errors and Omissions Insurance
Covering replacement of destroyed records and computer errors
and omissions.
Special Forgery Bond
Covering losses through forgery or alteration of checks or
drafts of customers processed by insured but drawn on or
against them.
Mail Insurance (applies to all full service operations)
Provides indemnity for the following types of securities lost
in the mails:
Non-negotiable securities mailed to domestic locations
via registered mail.
Non-negotiable securities mailed to domestic
locations via first-class or certified mail.
Non-negotiable securities mailed to foreign locations
via registered mail.
Negotiable securities mailed to all locations via
registered mail.
20
Exhibit 9(c)(4)
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT dated this 16th day of April, 1998 by and between Scudder Global Fund,
Inc., a Maryland corporation (the "Company") on behalf of Global Discovery Fund,
a series of the Company (the "Fund"), and KEMPER DISTRIBUTORS, INC., a Delaware
corporation ("KDI").
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Company hereby appoints KDI to provide information and administrative
services for the benefit of the Fund and its shareholders. In this regard, KDI
shall appoint various broker-dealer firms and other service or administrative
firms ("Firms") to provide related services and facilities for persons who are
investors in the Fund ("investors"). The Firms shall provide such office space
and equipment, telephone facilities, personnel or other services as may be
necessary or beneficial for providing information and services to investors in
the Fund. Such services and assistance may include, but are not limited to,
establishing and maintaining accounts and records, processing purchase and
redemption transactions, answering routine inquiries regarding the Fund and its
special features, assistance to investors in changing dividend and investment
options, account designations and addresses, and such other administrative
services as the Company or KDI may reasonably request. Firms may include
affiliates of KDI. KDI may also provide some of the above services for the Fund
directly.
KDI accepts such appointment and agrees during such period to render such
services and to assume the obligations herein set forth for the compensation
herein provided. KDI shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way or
otherwise be deemed an agent of the Company. KDI, by separate agreement with the
Company, may also serve the Company in other capacities. In carrying out its
duties and responsibilities hereunder, KDI will appoint various Firms to provide
administrative and other services described herein directly to or for the
benefit of investors in the Fund. Such Firms shall at all times be deemed to be
independent contractors retained by KDI and not the Company. KDI and not the
Company will be responsible for the payment of compensation to such Firms for
such services.
2. For the administrative services and facilities described in Section 1, the
Company, on behalf of the Fund, will pay to KDI at the end of each calendar
month an administrative service fee computed at an annual rate of up to 0.25 of
1% of the average
<PAGE>
daily net assets of the Fund (except assets attributable to Class S Shares). The
current fee schedule is set forth as Appendix I hereto. The administrative
service fee will be calculated separately for each class of each series of the
Fund as an expense of each such class; provided, however, no administrative
service fee shall be payable with respect to Class S Shares. For the month and
year in which this Agreement becomes effective or terminates, there shall be an
appropriate proration on the basis of the number of days that the Agreement is
in effect during such month and year, respectively. The services of KDI to the
Company under this Agreement are not to be deemed exclusive, and KDI shall be
free to render similar services or other services to others.
The net asset value for each share of the Fund shall be calculated in accordance
with the provisions of the Fund's current prospectus. On each day when net asset
value is not calculated, the net asset value of a share of the Fund shall be
deemed to be the net asset value of such a share as of the close of business on
the last day on which such calculation was made for the purpose of the foregoing
computations.
3. The Company, on behalf of the Fund, shall assume and pay all charges and
expenses of the Fund's operations not specifically assumed or otherwise to be
provided by KDI under this Agreement.
4. This Agreement may be terminated at any time without the payment of any
penalty by the Company, on behalf of the Fund, or by KDI on sixty (60) days
written notice to the other party. Termination of this Agreement shall not
affect the right of KDI to receive payments on any unpaid balance of the
compensation described in Section 2 hereof earned prior to such termination.
This Agreement may not be amended for any class of the Fund to increase the
amount to be paid to KDI for services hereunder above .25 of 1% of the average
daily net assets of such class without the vote of a majority of the outstanding
voting securities of such class. All material amendments to this Agreement must
in any event be approved by vote of the Board of Directors of the Company.
5. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
6. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.
7. All parties hereto are expressly put on notice of the Company's Charter and
all amendments thereto, all of which are on file with the State Department of
Assessments and Taxation of
2
<PAGE>
Maryland. With respect to any claim by KDI for recovery of any liability arising
hereunder allocated to a particular class, whether in accordance with the
express terms hereof or otherwise, KDI shall have recourse solely against the
assets of that class to satisfy such claim and shall have no recourse against
the assets of any other series of the Company or class of the Fund for such
purpose.
8. This Agreement shall be construed in accordance with applicable federal law
and the laws of the State of Illinois.
9. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the Company and KDI have caused this Agreement to be
executed as of the day and year first above written.
SCUDDER GLOBAL FUND, INC., KEMPER DISTRIBUTORS, INC.
on behalf of Global Discovery Fund
By: /s/Nicholas Bratt By: /s/Mark S. Casady
Title: President Title: Vice President
3
<PAGE>
APPENDIX I
GLOBAL DISCOVERY FUND
FEE SCHEDULE FOR ADMINISTRATIVE
SERVICES AGREEMENT
Pursuant to Section 2 of the Administrative Services Agreement to which this
Appendix is attached, the Company and KDI agree that the administrative service
fee will be computed at an annual rate of .25 of 1% (the "Fee Rate") based upon
assets with respect to which a Firm provides administrative services.
SCUDDER GLOBAL FUND, INC., KEMPER DISTRIBUTORS, INC.
on behalf of Global Discovery Fund
By: /s/Nicholas Bratt By: /s/Mark S. Casady
Title: President Title: Vice President
Dated: April 16, 1998
4
Exhibit 14(f)
IRA Custodian Disclosure Statement and Plan Agreement
<PAGE>
CUSTODIAN DISCLOSURE
STATEMENT
The following information is provided to you by the Custodian (as specified
on the Scudder IRA application or Scudder Brokerage IRA application) of the
Scudder Individual Retirement Account, as required by the Internal Revenue Code.
You should read this information along with the Individual Retirement Account
Custodial Agreement and the prospectus(es) and/or other information for the
investments you have selected for your IRA contributions. If there is any
inconsistency between the provisions of your plan or a prospectus and this
Statement, the plan and the prospectus provisions will control.
REVOCATION OF YOUR IRA
If you have not received this Disclosure Statement at least seven calendar
days before your IRA has been established, you have the right to revoke your IRA
during the seven calendar days after your IRA was established. To revoke your
IRA, you must request the revocation in writing and send or deliver it to:
Scudder Trust Company Trust Department Two International Place Boston, MA 02110
If you mail your revocation, the postmark must be within the seven-day
period during which you are permitted to revoke your IRA. If you revoke your IRA
within the proper time, the entire amount that you contributed, without any
adjustments for administrative fees, expenses, price fluctuation, or earnings,
will be returned to you. You may obtain further IRA information from any
district office of the Internal Revenue Service.
IRA TYPES
Within this Disclosure Statement, the IRA types which are addressed are as
follows:
Traditional IRA
A Traditional IRA is an IRA to which you make regular deductible or
non-deductible contributions or your employer makes Simplified Employee Pension
Plan (SEP) IRA contributions.
Roth IRA
A Roth IRA is an IRA to which you make regular non-deductible contributions
and from which distributions are tax and penalty free if certain conditions are
met.
Conversion Roth IRA
A Conversion Roth IRA is a Roth IRA to which you convert a Traditional IRA.
<PAGE>
CONTRIBUTIONS
Eligibility to Make Contributions
Traditional IRA Contributions
You are eligible to make a regular Traditional IRA contribution for any tax
year in which you have earned income. However, you cannot make a Traditional IRA
contribution for the calendar year you reach age 701/2 or for any later year.
You must make your regular Traditional IRA contributions for any tax year
during that tax year or by April 15th of the next year. You may make rollover
contributions or transfers to your Traditional IRA at any time even if you have
reached the age of 701/2 (see "Rollovers, Transfers and Conversions" below).
If you are an employee, "earned income" means the amount shown as wages on
the Form W-2 that you receive from your employer. If you are self-employed, your
"earned income" is your net profits, if any, as shown on the "Net profits or
loss" line on the Schedule C or C-EZ of your IRS Form 1040 less your
self-employment tax deduction and contributions to a qualified retirement plan
on your own behalf. If you are performing income-producing services as a partner
in a partnership, your "earned income" is your share of the net partnership
profits as shown on the Schedule K-1 of your partnership return (IRS Form 1065)
less your self-employment tax deduction and contributions to a qualified
retirement plan on your own behalf. In most cases, earned income will not
include passive income, such as investment income or rental income.
Roth IRA Contributions
You are eligible to make a regular Roth IRA contribution for any tax year
in which you have earned income (described above), and if your Adjusted Gross
Income (AGI) does not exceed the applicable tax year's maximum allowable AGI.
Your AGI for this purpose is, in general, your income from all sources before
any deductions. The instructions to your federal income tax return (i.e., Form
1040) will provide you with specific guidance on calculating your AGI for this
purpose.
For 1998, if you are single and your AGI is below $95,050, you may make a
full $2,000 (or 100% of your earned income, if less) Roth IRA contribution. If
your AGI is $110,000 or more, you cannot make any Roth IRA contribution. If your
AGI is more than $95,050 and less than $110,000, and you have earned income of
at least the amount of your Roth IRA contribution, your maximum Roth IRA
contribution will be an amount between $200 and $1,990. If your AGI falls in
this zone, you can calculate your maximum Roth IRA contribution with this
formula:
Maximum Maximum
$15,000 - (AGI - $95,000) X Allowable = Roth IRA
- ------------------------- Contribution Contribution
$15,000
(Your "Maximum Allowable Contribution" is the lesser of $2,000 or 100% of
your earned income.)
<PAGE>
You must round up your result to the next highest $10 level (the next
highest number which ends in zero). For example, if your result was $1,521, you
would round it up to $1,530. In addition, if your rounded result is greater than
$0, but less than $200, your maximum Roth IRA contribution would automatically
be $200.*
For 1998, if you are married and file a joint return and you and your
spouse's combined AGI is below $150,050, you may make a full $2,000 Roth IRA
contribution (or 100% of your combined earned income, if less). If your combined
AGI is $160,000 or more, you cannot make any Roth IRA contribution. If your
combined AGI is more than $150,050 and less than $160,000, and you have earned
income of at least the amount of your Roth IRA contribution, your maximum Roth
IRA contribution will be an amount between $200 and $1,990. If your combined AGI
falls in this zone, you can calculate your maximum Roth IRA contribution with
this formula:
$10,000 - Maximum Maximum
(combined AGI - $150,000) X Allowable = Roth IRA
- -------------------------- Contribution Contribution
$10,000
(Your "Maximum Allowable Contribution" is the lesser of $2,000 or 100% of
your earned income.)
You must round up your result to the next highest $10 level (the next
highest number which ends in zero). For example, if your result was $1,521, you
would round it up to $1,530. In addition, if your rounded result is greater than
$0, but less than $200, your maximum Roth IRA contribution would automatically
be $200.*
* This assumes that you have at least $200 in earned income. If you have
less, the maximum would be equal to the amount of the earned income.
Maximum Combined Traditional and Roth IRA Contributions
Your maximum combined regular Traditional and Roth IRA contributions for
each tax year is the lesser of $2,000 or 100% of your earned income. However, if
your earned income is less than your spouse's earned income and you and your
spouse file a joint federal income tax return for the year, you may contribute
up to the lesser of (a) $2,000 or (b) your combined earned income reduced by the
amount your spouse contributes to his or her IRA for the year. Thus, married
persons may often make total IRA contributions of up to $4,000, even if one
spouse does not work. You can split the contribution amount in any manner among
IRAs for you and your spouse as long as you do not contribute more than $2,000
to all IRAs belonging to one spouse. (Your ability to make a Roth IRA
contribution is subject to your AGI, as described above in this section. Also,
under certain circumstances to gain the maximum possible federal income tax
deduction for Traditional IRA contributions, you may be required to carefully
allocate your contributions among IRAs. See "Deductibility of Your Traditional
IRA Contributions" below.)
<PAGE>
Excess IRA Contributions
If you make contributions to one or more IRAs which exceed the amount you
are allowed to contribute for any tax year, the excess over the allowable amount
will be subject to a 6% IRS excess contribution tax unless you remove it (and
any attributable earnings) by the due date, including any extensions, for your
federal income tax return for the year for which you made the contributions.
If you make a contribution to a Roth IRA or a conversion of a Traditional
IRA (see "Conversion from a Traditional IRA to a Conversion Roth IRA" below) and
later determine that you do not qualify to make such contribution or conversion,
legislation is currently pending which may allow you to transfer the excess
amount (and earnings) to a Traditional IRA by the due date of your tax return
for the year of the contribution or conversion. This transfer will be included
as a part of your Maximum Allowable Contribution (see "Eligibility to Make
Contributions" above) for the year. If this legislation is not enacted, the 6%
penalty described above may apply for contributions or conversions which you are
not qualified to make.
Deductibility of Your Traditional IRA Contributions
Active Participant Status
If either you or your spouse is an "active participant" in an
employer-maintained retirement plan, your Traditional IRA contributions may be
fully or partially deductible or may be nondeductible. You are an "active
participant" if you make contributions to, or receive credit for an employer
contribution in, certain employer-maintained retirement plans. These plans
include pension plans, profit-sharing plans, 401(k) plans, 403(b) plans
(tax-sheltered annuities), Keogh plans, ESOPs (stock bonus plans), simplified
employee pension plans (SEP-IRAs), simple retirement accounts (simple IRAs) and
certain governmental plans.
You will be considered to be an active participant for the year even if you
are not yet vested in any contributions made on your behalf to an
employer-maintained retirement plan. Also, if you make required contributions or
voluntary employee contributions to an employer-maintained retirement plan, you
will be considered to be an active participant even if you only worked for the
employer for part of the year.
You will not be considered to be an active participant if you are covered
in a plan only because of your service as (1) an Armed Force Reservist, for less
than 90 days active service, or (2) a volunteer firefighter covered for
firefighting service by a governmental plan.
If you are an employee, the Form W-2 that you receive from your employer
should indicate whether you were an active participant for the year that the
Form W-2 covers. If you have any questions about your participation in your
employer's plan, you should check with your employer.
(NOTE: If a husband and wife live apart for an entire tax year, and file
separate federal income tax returns, they will not be treated as married for the
purposes of these IRA deduction limits.)
<PAGE>
Deductibility if Neither You nor Your Spouse Is an Active Participant
If neither you nor your spouse is an active participant in an
employer-maintained retirement plan, you can deduct 100% of your Traditional IRA
contributions up to the maximum amount: in general, the lesser of $2,000 or 100%
of earned income. (See "Eligibility to Make Contributions" above.)
Deductibility if You or Your Spouse Is an Active Participant
If you are an active participant in an employer-maintained retirement plan,
the amount of your Traditional IRA contributions that you can deduct will depend
on what your modified adjusted gross income ("AGI") is for the year for which
you want to make an IRA contribution. Your AGI for this purpose is, in general,
your income from all sources before any deductions. The instructions to your
federal income tax return (i.e., Form 1040) will provide you with specific
guidance on calculating your AGI for this purpose.
Remember, even if you can deduct only a portion of your maximum allowable
Traditional IRA contribution, you can still contribute the difference between
the maximum deductible portion of your contribution and your maximum IRA
contribution (see "Eligibility to Make Contributions" above) as a nondeductible
contribution to a Traditional IRA or a Roth IRA (if you meet the Roth IRA income
qualifications, as described above in "Eligibility to Make Contributions"). You
may also choose to treat as nondeductible a contribution which could be
deductible. Any contributions you make to an IRA, whether deductible or
nondeductible, will accumulate earnings tax deferred until you withdraw the
contributions at a later date. (Withdrawals of Roth IRA earnings may be
tax-free, as described below in "Taxability of IRA Distributions.")
Single Individuals
If you are single and your AGI is below $30,050, you can deduct 100% of
your Traditional IRA contribution up to your maximum allowable contribution (see
"Eligibility to Make Contributions" above). If your AGI is $40,000 or more, you
cannot deduct any of your Traditional IRA contribution. If your AGI is more than
$30,050 and less than $40,000, and you have earned income of at least the amount
of your Traditional IRA contribution, your maximum tax-deductible Traditional
IRA contribution will be an amount between $200 and $1,990. If your AGI falls in
this zone, you can calculate the maximum deductible portion of your Traditional
IRA contribution with this formula:
Maximum
$10,000 - Maximum Deductible
(combined AGI - $30,000) X Allowable = Portion of
- --------------------------- Contribution Traditional IRA
$10,000 Contribution
<PAGE>
(Your "Maximum Allowable Contribution" is the
lesser of $2,000 or 100% of your earned income.)
You must round up your result to the next highest $10 level (the next
highest number which ends in zero). For example, if your result was $1,521, you
would round it up to $1,530. In addition, if your rounded result is greater than
$0, but less than $200, the maximum deductible portion of your Traditional IRA
contribution would automatically be $200.*
Married Individuals
If you are married and file a joint return and you and your spouse's
combined AGI is below $50,050, you can deduct 100% of your Traditional IRA
contribution up to your Maximum Allowable Contribution (see "Eligibility to Make
Contributions" above). If your combined AGI is $60,000 or more, you cannot
deduct any of your Traditional IRA contribution. If your combined AGI is more
than $50,050 and less than $60,000, and you have earned income of at least the
amount of your IRA contribution, your maximum tax-deductible IRA contribution
will be an amount between $200 and $1,990. If your combined AGI falls in this
zone, you can calculate the maximum deductible portion of your Traditional IRA
contribution with this formula:
Maximum
$10,000 - Maximum Deductible
(combined AGI - $150,000) X Allowable = Portion of
- -------------------------- Contribution Traditional IRA
$10,000 Contribution
(Your "Maximum Allowable Contribution" is the lesser of $2,000 or 100% of
your earned income.)
You must round up your result to the next highest $10 level (the next
highest number which ends in zero). For example, if your result was $1,521, you
would round it up to $1,530. In addition, if your rounded result is greater than
$0, but less than $200, the maximum deductible portion of your Traditional IRA
contribution would automatically be $200.*
* This assumes that you have at least $200 in earned income. If you have
less, the deductible portion would be equal to the amount of the earned
income.
Deductibility if Your Spouse Is an Active Participant, and You Are Not
If you are married and file a joint return and your spouse is an active
participant in an employer-maintained retirement plan, but you are not, then you
can deduct 100% of your Traditional IRA contribution up to your Maximum
Allowable Contribution (see "Eligibility to Make Contributions" above) if your
combined AGI is below $150,050. If your combined AGI is $160,000 or more, you
cannot deduct any of your Traditional IRA contribution. If your combined AGI is
more than $150,050 and less than $160,000, and you and your spouse have earned
income of at least the amount of your IRA contribution, your maximum
tax-deductible Traditional IRA contribution will be
<PAGE>
an amount between $200 and $1,990. If your combined AGI falls in this zone, you
can calculate the maximum deductible portion of your Traditional IRA
contribution with this formula:
Maximum
$10,000 Maximum Deductible
(combined AGI - $150,000) X Allowable = Portion of
- ---------------------------- Contribution Traditional IRA
$10,000 Contribution
(Your "Maximum Allowable Contribution" is the lesser of $2,000 or 100% of
your earned income.)
You must round up your result to the next highest $10 level (the next
highest number which ends in zero). For example, if your result was $1,521, you
would round up to $1,530. In addition, if your rounded result is greater than
$0, but less than $200, the maximum deductible portion of your Traditional IRA
contribution would automatically be $200.*
* This assumes that you and your spouse have at least $200 in earned income.
If you and your spouse have less, the deductible portion would be equal to
the amount of earned income.
Nondeductibility of your Roth IRA Contributions
Contributions to a Roth IRA are not deductible, regardless of your earned
income.
Other Eligibility, Contribution and Deductibility Provisions
Reporting of Nondeductible Contributions to IRAs
If you make a nondeductible contribution to a Traditional IRA, you must
report the amount of the nondeductible contribution to the IRS on Form 8606 as a
part of your annual federal income tax return. It has not yet been established
whether your nondeductible Roth IRA contributions must be reported on Form 8606.
You may make contributions to your Traditional IRA at any time during the
year until the total of your contributions to your Traditional IRA equals your
maximum (see "Eligibility to Make Contributions" above), without having to know
how much will be a Traditional IRA deductible contribution. When you fill out
your tax return, you may then figure out how much of your Traditional IRA
contribution is deductible. You should be aware that there is a $100 IRS penalty
tax for overstating on your federal income tax return the amount you can deduct.
Form of Contribution
Unless you are making a rollover contribution, your contribution must be
made in cash. Rollover contributions may be made in a form other than cash if
permitted by Scudder Investor Services, Inc. You cannot make any contributions
to this IRA for investment in life insurance contracts.
All contributions you make to this IRA are nonforfeitable (100% vested).
<PAGE>
SEP Contributions
If your employer makes contributions to your Traditional IRA as part of a
Simplified Employee Pension Plan (SEP-IRA), those employer contributions are not
subject to the eligibility and deduction limits discussed above. Your employer
may contribute up to the lesser of $24,000 (for 1997 and 1998) or 15% of your
compensation to your IRA and deduct that amount on the employer's federal income
tax return. The employer contribution amount is excluded from your income for
federal income tax purposes. You may also make your own contributions, subject
to the eligibility and deduction limits above, to the same Traditional IRA to
which your employer makes contributions.
ROLLOVERS, TRANSFERS, and CONVERSIONS
Rollovers and Transfers to Traditional IRAs
You are allowed to transfer or roll over all or a part of your Traditional
IRA investment to another Traditional IRA without any tax liability. However,
you are only allowed to make one rollover from a particular Traditional IRA
during any 12-month period. In addition, if you are to receive a distribution of
all or any part of your interest in an employer-maintained retirement plan, then
you may roll over all or a portion of the distribution into a Traditional IRA
either directly from the employer-maintained plan or within 60 days of the day
you receive it, unless the distribution is a required minimum distribution or
part of a series of substantially equal payments made over a period of 10 years
or more or over your life expectancy or the joint life expectancy of you and
your beneficiary. Please note that distributions paid to you directly will be
subject to a 20% withholding requirement unless they are required minimum
distributions, or payments made over a period longer than 10 years of your life
expectancy or the joint life expectancy of you and your beneficiary.
Distributions directly rolled over to a Traditional IRA are not subject to 20%
withholding.
Rollovers and Transfers to Roth IRAs
You are allowed to transfer or roll over all or part of your Roth IRA
investment to another Roth IRA without any tax liability. However, you are only
allowed to make one rollover from a particular Roth IRA during any 12-month
rollover period. In addition, if you are to receive a distribution of all or any
part of your interest in an employer-maintained retirement plan, you may not
directly roll over such amount to a Roth IRA. You must roll it over into a
Traditional IRA first, and you may then be able to convert all or part of your
Traditional IRA to a Conversion Roth IRA, depending on your AGI, or you and your
spouse's combined AGI (see "Conversion from a Traditional IRA to a Conversion
Roth IRA" below).
Conversion from a Traditional IRA to a Conversion Roth IRA
If you are single and your AGI does not exceed $100,000, or if you are
married and you and your spouse's combined AGI does not exceed $100,000 (and you
are not married filing a separate return), you may convert all or part of your
Traditional IRA to a Conversion Roth IRA. (Note, a conversion from a Traditional
IRA to a Conversion Roth IRA must be made as a rollover and not a transfer.) If
you are married and file a separate return, you may not make a conversion.The
entire amount of the taxable portion of the conversion (i.e., all amounts other
than nondeductible contributions) is taxable to you for the tax year during
which the conversion is made. However, if you make the conversion before January
1, 1999, the tax will be spread over four years. If you die during the four year
period, it has not been determined whether any remaining taxable amounts must be
included on your final tax return, or if you are married and your spouse is your
beneficiary, if your spouse can continue to include the appropriate amounts in
his or her income for the remainder of the four year period.
TAXABILITY OF IRA DISTRIBUTIONS
Traditional IRAs
If you have made only deductible contributions to your Traditional IRA, all of
your distributions will be taxed as ordinary income for the year you receive the
distributions. If, however, you made any nondeductible contributions, the
portion of the IRA distributions consisting of nondeductible contributions will
not be taxed again when you receive it. If you made any nondeductible
Traditional IRA contributions, each distribution from your Traditional IRA (or
IRAs) will consist of a nontaxable portion (return of nondeductible
contributions) and a taxable portion (return of deductible contributions, if
any, and account earnings). You may use the following formula to determine the
nontaxable portion of your distributions for a tax year:
Nondeductible
Contributions Total Non-taxable
Not Yet Distributed x Distribution = Distribution
------------------- (for the year) (for the year)
Year-End Total Traditional
IRA Account Balances Plus
Distributions Taken During
Year (Currently, there is
no clarification as to whether
you must also include your Roth
and Conversion Roth IRA
account balances in this amount.)
To figure the year-end total Traditional IRA account balances, you treat
all of your Traditional IRAs as a single IRA. This includes all regular
Traditional IRAs, as well as SEP-IRAs, and Traditional IRAs to which you have
made rollover contributions.
If you take a distribution from a Traditional IRA to which you have made
nondeductible contributions, you must file Form 8606 as part of your annual
federal income tax return for the year of the distribution.
Roth IRAs
Distributions of earnings from your Roth IRA (or Conversion Roth IRA) will
be taxed as ordinary income for the year you receive the distribution, unless 1)
the distribution is made after five taxable years from your first Roth IRA
contribution (or after five taxable years from each conversion of a Traditional
IRA to a Conversion Roth IRA) and if 2) the distribution is made for one of the
following reasons:
1) It is paid to you after you attain age 59 1/2.
2) It is paid to you because you are disabled.
3) It is paid to your beneficiary or estate because of your death.
4) It is paid for the first-time home purchase for you, your spouse, or any
child, grandchild or ancestor of you or your spouse. (Please see your tax
advisor to determine if your distribution qualifies as made for the
first-time purchase of a home.) A maximum lifetime amount of $10,000 from
all IRAs can qualify for this tax exception.
The five-taxable-year period indicated above begins on the January 1
of the calendar year during which you make a contribution or conversion.
Distributions from a Roth IRA are made first from non-taxable principal and
then from earnings. Roth IRAs to which you make regular contributions are
aggregated for purposes of determining non-taxable principal and earnings for
distributions from Roth IRAs. Conversion Roth IRAs with the same five year
holding period are aggregated for purposes of determining non-taxable principal
and earnings for distributions from Conversion Roth IRAs. The five year holding
period for a Conversion Roth IRA begins with the tax year of the most recent
conversion to the Conversion Roth IRA. Because of this rule, you may wish to
establish a separate Conversion Roth IRA account for each conversion you make.
Special rules may apply if a distribution is made from a Conversion Roth
IRA within the five-taxable-year period beginning with the January 1 of the year
in which the most recent conversion was made to that particular Conversion Roth
IRA. In this case, certain penalties may apply on the amounts which were
previously subject to tax at the time of the conversion (see "Special Penalty
for Certain Conversion Roth IRA Distributions" below).
It is currently not yet established whether you must file Form 8606 as part
of your annual federal income tax return for the year of the distribution of
Roth IRA contributions and/or earnings.
<PAGE>
PENALTIES ON IRA DISTRIBUTIONS
Traditional IRAs
Since the purpose of your IRA is to accumulate funds for your retirement, if you
take a distribution from your Traditional IRA before you reach the age of 591/2,
the taxable portion of the distribution will be subject to a 10% IRS early
withdrawal penalty tax unless the distribution meets one of these exceptions:
1) It is made to your beneficiary or your estate because of your death.
2) It is part of a series of installment payments paid over your life
expectancy or the joint life and last survivor expectancy of you and your
beneficiary, and the payments continue until the later of five years or
your reaching age 59 1/2.
3) It is rolled over into another IRA or a qualified plan (if allowed) within
60 days of the day you receive the distribution.
4) It is paid to you because you are disabled.
5) It is paid to you to pay medical expenses in excess of 7 1/2% of your
adjusted gross income.
6) It is paid to you to pay for medical insurance premiums if you are
unemployed (or within 60 days after your re-employment) and you have
received unemployment compensation for at least 12 consecutive weeks during
the current or preceding taxable year. (Self-employed individuals may only
be eligible for this exception in certain circumstances.)
7) It is paid to you, your spouse, or any child or grandchild of you or your
spouse for qualified higher education expenses. (Please see your tax
advisor to determine if your distribution qualifies as made for qualified
higher education expenses.)
8) It is paid for the first-time purchase of a home for you, your spouse, or
any child, grandchild or ancestor of you or your spouse. (See your tax
advisor to determine if your distribution qualifies as made for the
first-time purchase of a home.) A maximum lifetime amount of $10,000 from
all IRAs can qualify for this penalty exception.
Roth IRAs
The taxable portion (the earnings portion) of distributions from Roth IRAs
or Conversion Roth IRAs will be subject to a 10% penalty tax, unless one of the
exceptions listed in items 1-8 above applies. (A special penalty may apply for
distribution from a Conversion Roth IRA within five taxable years of a
conversion. See "Special Penalty for Certain Conversion Roth IRA Distributions"
below).
<PAGE>
SPECIAL PENALTY
FOR CERTAIN CONVERSION
ROTH IRA DISTRIBUTIONS
Legislation is currently pending which will provide that amounts which are
distributed from a Conversion Roth IRA within five taxable years of a conversion
would be subject to i) a 10% penalty and ii) for conversions made in 1998, an
additional 10% penalty. These penalties would be based on the amount that was
taxable at the time of conversion. Any such withdrawal from a Conversion Roth
IRA may also be deemed to come first from amounts which were taxable at the time
of the conversion.
In addition, separate Roth IRAs and Conversion Roth IRAs must be
maintained. The proposed legislation would provide that the five year holding
period described above may be deemed to begin with the most recent taxable year
for which a conversion is made. All Roth IRAs with the same five year holding
period would be aggregated to determine the amount of the withdrawal which is
considered attributable to the taxable amounts at the time of the conversion.
You must establish a separate Conversion Roth IRA for conversions of Traditional
IRAs that you make in different calendar years. One Conversion Roth IRA can be
established for all conversions made within the same calendar year.
REQUIRED DISTRIBUTIONS
Traditional IRAs
You must begin taking distributions from your Traditional IRA by the April
1 following the year in which you reach age 701/2. The minimum amount that you
are required to take for the year you reach 701/2 and each following year is the
amount that you would take as a distribution if you were taking distributions
over the joint life and last survivor expectancy of you and your beneficiary.
For more information on the minimum distribution requirements of your IRA, see
Articles IV and VIII of the Form 5305-A (1-98) Individual Retirement Custodial
Account Agreement.
Roth IRAs
You are not required to begin taking distributions from a Roth IRA (or
Conversion Roth IRA) at any time. If you die prior to a distribution of all
amounts held in a Roth IRA (or Conversion Roth IRA), certain distribution rules
apply to your beneficiary. For more information on the distribution requirements
of your Roth IRA (or Conversion Roth IRA) after your death, see Articles V and
IX of the Form 5303-RA(1-98) Individual Retirement Custodial Account Agreement.
EXCESS ACCUMULATION
PENALTY TAX
If you do not meet the minimum distribution requirements as discussed in
Articles IV and VIII of the Form 5305-A (1-98) Individual Retirement Custodial
<PAGE>
Account Agreement for any year, you will be subject to an IRS penalty tax of 50%
of the amount that you were required to take as a distribution but did not take
as a distribution.
ESTATE TAX
After your death, the balance in your IRA may be subject to an estate tax.
You should contact your attorney or accountant for more details.
PROHIBITED TRANSACTIONS
If you or your Beneficiary engage in any prohibited transactions, including
selling, exchanging, or leasing any property between you and the custodial
account, the account would lose its tax-exempt status and all assets of the
account will be treated as if they were distributed to you. You would then be
required to pay taxes on the appropriate portion of your IRA assets. (See
"Taxability of IRA Distributions" above.) In addition, if you are under age 59
1/2 and are not disabled, the distribution will also be subject to the 10% IRS
early withdrawal penalty tax unless it meets any of the exceptions listed above
under "Penalties on IRA Distributions" and is not subject to the penalty
described in "Special Penalty for Certain Conversion Roth IRA Distributions"
described above.
You also cannot use your IRA assets as collateral for a loan. If you do
this, the amount used as collateral will be treated as if it were distributed to
you and will be subject to tax and penalty tax as provided in the paragraph
above for prohibited transactions.
SCUDDER MUTUAL FUND
INFORMATION
Information about the Scudder mutual funds available for investment in this
IRA is available from Scudder Investor Services, Inc. You are required to
receive this information (given in the form of a prospectus governed by the
rules of the Securities and Exchange Commission) before you invest in the Funds.
Growth in the value of your custodial account cannot be guaranteed or
projected. The Funds' prospectuses and reports provide information regarding
current income and expenses.
BROKERAGE INFORMATION
Information about the brokerage services available for this IRA is available
from Scudder Brokerage Services, Inc. Growth in the value of your custodial
account cannot be guaranteed or projected.
CUSTODIAL PROVISIONS
These provisions supplement paragraphs 5-7 of Article IX of the Form 5305-RA
(1-98), Individual Retirement Custodial Account Agreement and paragraphs 5-7 of
Article VIII of the Form 5305-A (1-98), Individual Retirement Custodial Account
Agreement and should be read in conjunction with them.
<PAGE>
1. Your contributions must be made to a trust or custodial account for which
the trustee or custodian is either a bank or a person who has been approved
by the Secretary of the Treasury.
2. The Custodian may charge your custodial account for any fees or other
expenses of maintaining your account. The Custodian's fee schedule is also
referred to in Article IX of the Form 5305-RA (1-98), IRA Custodial Account
Agreement and Article VIII of the Form 5305-A (1-98) IRA Custodial Account
Agreement and notice of such fee schedule will be provided to you in an
appropriate manner.
REPORTING EXCESS
CONTRIBUTIONS,
EXCESS ACCUMULATIONS,
and EARLY WITHDRAWALS
TO THE IRS
For any year for which you have an excess contribution, an excess
accumulation, or an early withdrawal (unless the 1099-R you receive correctly
reflects that the distributions meet an exception to the penalty tax), you are
required to report it on Form 5329 with your annual federal income tax return to
the Internal Revenue Service.
The form of this Individual Retirement Account Plan has been approved by
the Internal Revenue Service. The approval, however, is only for the form of the
Plan and does not represent an approval of the merits of the Plan.
For Traditional IRAs:
IRA Form 5305-A (1-98)
SCUDDER INDIVIDUAL RETIREMENT CUSTODIAL
ACCOUNT AGREEMENT
(Under Section 408(a) of the Internal Revenue Code)
The Depositor whose name appears on the Scudder IRA Application is
establishing an individual retirement account under section 408(a) to provide
for his or her retirement and for the support of his or her beneficiaries after
death.
The Custodian named on the Application has given the Depositor the
disclosure statement required under Regulations section 1.408-6.
The Depositor has deposited with the Custodian the amount indicated on the
Application in cash. The Depositor and the Custodian make the following
agreement:
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
<PAGE>
contribution described in section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or an
employer contribution to a simplified employee pension plan as described in
section 408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5).
2. No part of the custodial funds may be invested in collectables (within
the meaning of section 408(m)), except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins issued under the laws of any state, and certain bullion.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and to the surviving spouse and shall apply to all subsequent years. The life
expectancy of a non-spouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
<PAGE>
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will at the election of the
Depositor or, if the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the
year of the Depositor's death. If, however, the beneficiary is
the Depositor's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the
Depositor would have reached age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on
the Depositor's required beginning date, even though payments may
actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
5. In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the Custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"Alternative Method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear on the Application.
ARTICLE VIII
1. Please refer to the Scudder IRA Application or Scudder Brokerage IRA
Application which is incorporated into this Agreement as this paragraph of
Article VIII.
2. Depositor's Selection of Investments.
Investment Options
The Depositor may only direct the Custodian to invest custodial funds in
investment shares of the Mutual Funds (regulated investment companies for which
Scudder, Stevens & Clark, Inc., its successor or any affiliates, acts as the
investment adviser and which Scudder Investor Services, Inc., (the
"Distributor") has designated as appropriate for investments in the custodial
account), or in other investments which the Distributor or its successors has
designated as eligible investments for the custodial account.
Investments
As soon as practicable after the Custodian receives the Application, the
Custodian will invest the initial contribution or transfer as the Depositor
directed on the Application in shares of the Mutual Fund(s) or other investments
designated by the Distributor as eligible investments for the custodial account.
With regard to the Mutual Funds listed on the Application and any other Mutual
<PAGE>
Fund, the Depositor understands that neither the Custodian nor the Distributor
endorses the Mutual Funds as suitable investments for the custodial account. In
addition, neither the Custodian nor the Distributor will provide investment
advice to the Depositor. The Depositor assumes all responsibility for the choice
of his or her investments in the custodial account.
The Custodian will invest each subsequent contribution or transfer to the
custodial account as soon as practicable after the Custodian receives the
contribution or transfer, according to the Depositor's instructions for that
subsequent contribution or transfer, in the Mutual Funds or other investment
designated by the Distributor as eligible investments for the custodial account.
If the Depositor's custodial account assets are invested in any Mutual Fund
which terminates or is eliminated, the Custodian will transfer the custodial
account assets in that Mutual Fund to another Mutual Fund designated by the
Distributor unless the Depositor instructs the Custodian otherwise in the manner
required by the Custodian.
If the Custodian receives any investment instructions from the Depositor
which in the opinion of the Custodian are not in good order or are unclear, or
if the Custodian receives any monies from the Depositor which would exceed the
amount that the Depositor may contribute to the custodial account, the Custodian
may hold all or a portion of the monies uninvested pending receipt of written
(or in any other manner permitted by the Distributor) instructions or
clarification. During any such delay the Custodian will not be liable for any
loss of income or appreciation, loss of interest, or for any other loss. The
Custodian may also return all or a portion of the monies to the Depositor.
Again, in such situations, the Custodian will not be liable for any loss.
Unless the Custodian permits otherwise, all dividend and capital gains
distributions received on shares of a Mutual Fund in the custodial account
(unless made in the form of additional shares) will be reinvested in shares of
the same Mutual Fund which paid the distribution, and credited to the custodial
account. All accumulations from other investments will be reinvested in the
Depositor's custodial account according to the Depositor's instructions to the
Custodian which must be in a form acceptable to the Custodian.
The Depositor may change any portion of his or her investment in an
eligible investment to another eligible investment by requesting the change in
the manner the Custodian requires. However, the Distributor reserves the right
to refuse to sell shares of any Mutual Fund when it determines in its own
judgment that the Depositor has made frequent trading in the custodial account.
3. Contributions
All contributions by the Depositor to the custodial account must be in
cash, except for initial contributions of rollovers which may be made in a form
other than cash if permitted by the Distributor.
<PAGE>
The Custodian will designate contributions (other than rollover
contributions) as being made for particular years as requested by the Depositor.
If the Depositor does not designate a year for any contribution, the Custodian
will designate the contribution as being made for a particular year according to
a policy established by the Distributor.
If permitted by the Distributor, the Depositor may make rollover
contributions to the custodial account of deductible employee contributions
which were made to qualified employer or government retirement plans as provided
in Internal Revenue Code Section 72(o).
The Depositor warrants that all contributions to the custodial account,
including any rollover contributions, will be made in accordance with the
provisions of the Internal Revenue Code.
Excess Contributions
If the Depositor exceeds the amount that may be contributed to his or her
custodial account for any year, the Custodian will, upon a proper written
request from the Depositor, either 1) return the excess and any attributable
earnings to the Depositor, or 2) treat the contribution as if it were made for a
later year.
4. Transfers
The Custodian will accept transfers of a cash amount to the custodial
account from another custodian or a trustee of an individual retirement account
or individual retirement annuity upon the Depositor's written direction. The
Custodian will also transfer a cash amount in the custodial account upon the
written request of the Depositor to another custodian or trustee of an
individual retirement account or individual retirement annuity. For such a
transfer, the Custodian may require the written acceptance of the successor
custodian. The Depositor warrants that all transfers to and from the custodial
account will be made in accordance with the rules and regulations issued by the
Internal Revenue Service.
5. Custodian's Fees
The Custodian is entitled to receive reasonable fees for establishing and
maintaining the custodial account. These fees will be set by the Custodian from
time to time.
The Custodian may change its fee schedule upon thirty (30) days' written
notice to the Distributor.
The Custodian has the right to charge the custodial account, including the
right to liquidate Mutual Fund shares or other investments, or to charge the
Depositor for the Custodian's fees, as well as for any income, gift, estate and
inheritances taxes (including any transfer taxes incurred in connection with the
investment or reinvestment of the assets of the custodial account), which are
levied or assessed against the custodial account assets, and for all other
administrative expenses of the Custodian for performing its duties, including
any fees for legal services provided to the Custodian.
<PAGE>
6. Custodial Account
Once the Custodian mails an acknowledgement of its receipt of the
Application to the Depositor, this Agreement will be effective as of the date
the Depositor signed the Application. As soon as practicable after the Custodian
receives the Application, the Custodian will open and maintain a separate
custodial account for the Depositor.
All Mutual Fund shares or other investments in the custodial account will
be registered in the name of the Custodian (with or without identifying the
Depositor) or in the name of the Custodian's nominee. The Custodian will
deliver, or cause to be executed and delivered, to the Depositor all notices,
prospectuses, financial statements, proxies and proxy solicitating materials
relating to the Mutual Funds or other investments in the custodial account.
The Custodian will vote shares only according to the Depositor's
instructions on an executed proxy; provided that the Custodian may without
written direction from the Depositor vote shares "present" solely for the
purposes of establishing a quorum.
7. Additional Provisions Regarding the Custodian
According to this Agreement, the Custodian will be an agent for the
Depositor for the custodial account to receive and to invest contributions, and
to hold and to distribute these investments as authorized by the Depositor, and
to keep adequate records and provide reports as required by the Agreement. None
of the parties to this Agreement intend to confer any fiduciary duties on the
Custodian, and no such duties shall be implied.
The Custodian may perform any of its administrative duties through other
persons designated by the Custodian from time to time. However, the custodial
account must be registered in the name of the Custodian or its nominee as
provided in paragraph 6 above.
The Custodian assumes no responsibility or liability for collecting
contributions, for the deductibility or propriety of any contribution made to
the custodial account, or for the purpose or propriety of any distributions made
from the custodial account. Those matters are the sole responsibility of the
Depositor.
The Custodian will keep adequate records of transactions it is required to
perform for the custodial account. The Custodian will provide to the Depositor a
written report or reports reflecting the transactions in the custodial account
over each calendar year and the assets in the custodial account as of the end of
the calendar year.
If the Custodian resigns or is removed, as provided in paragraph 10 below,
the Custodian must provide a written report or reports reflecting the
transactions in the custodial account from the last report through the date of
the Custodian's resignation or removal, and the assets in the custodial account
as of the date of the Custodian's resignation or removal.
After providing the end-of-the-year report or the reports from the
Custodian's resignation or removal, the Custodian will be forever released from
all liability and accountability to anyone for its acts or transactions
reflected in the report(s), except those acts or transactions to which the
Depositor (or recipient, if different) has filed a written objection with the
Custodian within 60 days of the date the report was provided to the Depositor or
other recipient.
The Depositor always fully indemnifies the Custodian and will hold it
harmless from any and all liability which may arise from this Agreement, except
that which arises from the Custodian's negligence or willful misconduct. The
Custodian will not be obligated or expected to commence or defend any legal
action or proceeding about this Agreement unless both the Custodian and
Depositor agree and the Custodian will be fully indemnified to its satisfaction.
The Custodian may conclusively rely upon and will be protected from acting
on any written order from or authorized by the Depositor, or any other notice,
request, consent, certificate or other instrument, paper, or other communication
which the Custodian believes to be genuine and issued in proper form with proper
authority, as long as the Custodian acts in good faith in taking or omitting to
take any action in reliance upon the communication.
Before the Beneficiary has notified the Custodian (in the manner required
by the Custodian) of the Depositor's death, the Custodian will not be
responsible for treating the Beneficiary as if he or she has rights and
obligations under this Agreement.
8. Distributions
This paragraph supplements the information found in Article IV above, and
must be read in conjunction with it.
The Depositor has the responsibility to ensure that he or she will begin to
receive distributions from the custodial account on or before the Required
Beginning Date (i.e., the April 1 following the year in which the Depositor
reaches age 70 1/2). The Depositor also has sole responsibility to initiate
distributions from the custodial account and sole responsibility to ensure that
all distributions are made in accordance with the applicable provisions of the
Internal Revenue Code.
Distribution Requests
The Depositor is responsible for making the distribution requests to the
Custodian sufficiently in advance of any requested or required distribution time
to ensure that the distribution will be made before that requested or required
distribution time.
The Custodian will make distributions from the custodial account only after
receiving a written request from the Depositor (or any other party entitled to
receive the assets of the custodial account) or any other party entitled to
receive the assets of the custodial account. The Custodian will make the
distribution as soon as practicable after it receives the written request.
The Depositor must make the distribution request in the form required by
the Custodian. The distribution
<PAGE>
request must include the form of distribution requested (e.g., lump-sum
distribution or installment payments). The Depositor must provide to the
Custodian any applications, certificates, tax waivers, signature guarantees, and
any other documents (including proof of legal representative's authority) that
the Custodian requires. The Custodian will not be liable for complying with a
distribution request that appears on its face to be genuine, nor will the
Custodian be liable for refusing to comply with a distribution request which the
Custodian is not satisfied is genuine.
If the distribution request is not made in the correct form, the Custodian
is not responsible and will not be liable to the Depositor for any losses while
the Custodian waits for the distribution request to be made in the proper form.
The Depositor also agrees to fully indemnify the Custodian for any losses which
may result from the Custodian's failing to act upon an improperly made
distribution request.
The Depositor may request a distribution of any portion of the custodial
account at any time. However, the Depositor must meet the minimum distribution
requirements of the Internal Revenue Code at all times.
The Custodian does not assume any responsibility for the tax treatment of
any distributions from the custodial account.
Notwithstanding anything to the contrary in 3.(b.) and (c.) of Article IV
above, the Depositor may not receive distributions from the custodial account in
the form of an annuity.
Designation of Beneficiary
The Depositor may designate a beneficiary or beneficiaries (the
"Beneficiary") to receive the assets of the custodial account upon the
Depositor's death. The Depositor must designate his or her Beneficiary to the
Custodian in the manner required by the Custodian.
If the Depositor's Beneficiary is not living at the Depositor's death, the
Depositor's estate is entitled to receive the assets of the custodial account.
In addition, to the extent the Depositor has not effectively disposed of the
assets in the custodial account by his or her designation of Beneficiary, the
Depositor's estate will be entitled to receive the assets of the custodial
account.
If the Depositor's Beneficiary dies after the Depositor, the Beneficiary's
estate will be entitled to receive the assets of the custodial account.
The Depositor may change his or her choice of a Beneficiary at any time by
notifying the Custodian in the manner required by the Custodian. However, if the
Depositor changes his or her Beneficiary after the Required Beginning Date, that
new Beneficiary may decrease the joint life and last survivor expectancy of the
Depositor and his or her Beneficiary for purposes of installment payments paid
over the joint life and last survivor expectancy of the Depositor and his or her
Beneficiary.
Before the Depositor's death, the Depositor's Beneficiary has no right or
power to anticipate any part of the custodial account, or to sell, assign,
<PAGE>
transfer, pledge, or hypothecate any part of the account. In addition, the
Custodial account will not be liable for any debts of the Depositor's
Beneficiary or, except as required by law, subject to attachment, execution, or
any other legal process.
Election to Have Life Expectancy Recalculated
For installment payments to be made over the Depositor's life expectancy,
the Depositor may make an election to have the Custodian annually recalculate
his or her life expectancy, and the life expectancy of the Depositor's spouse,
if applicable.
The Depositor must make the election to have the Custodian recalculate no
later than his or her Required Beginning Date. The Depositor must make this
election in the manner required by the Custodian.
If the depositor does not elect to have the Custodian recalculate life
expectancy, the Custodian will not recalculate the life expectancy.
9. Amendment
This paragraph supplements the information found in Article VII above, and
must be read in conjunction with it.
If the Distributor amends this Agreement, it must provide a written notice
of the amendment to both the Depositor and the Custodian. The Depositor will be
considered to have consented to the Distributor's amendment 30 days after the
Distributor has mailed the notice to the Depositor unless within that 30-day
period the Depositor gives the Custodian a proper written order for a lump-sum
distribution. The Custodian will be considered to have consented to the
Distributor's amendment unless it notifies the Distributor otherwise within 30
days after the Distributor has mailed (or otherwise delivered) the notice to the
Custodian.
The Custodian may change its fee schedule, as provided in paragraph 5
above, without having to amend this Agreement.
10. Resignation or Removal of Custodian
The Custodian may resign at any time by giving at least 30 days' written
notice to the Distributor. The Distributor may remove the Custodian at any time
by giving at least 30 days' written notice to the Custodian.
If the Custodian resigns or is removed, the Distributor must either appoint
a successor custodian to serve under this Agreement or notify the Depositor that
he or she must appoint a successor custodian. The successor custodian must
provide a written acceptance of its appointment as successor custodian to the
Custodian. Upon receiving this written acceptance, the Custodian must transfer
to the successor custodian all of the assets and records of the custodial
account.
The Custodian may reserve a portion of the custodial account assets to pay
for any fees, compensation, costs, expenses, or for any liabilities constituting
a charge on or against the Custodian. If any assets remain after paying these
<PAGE>
items, the Custodian will pay the remainder to the successor custodian.
If the Custodian resigns or is removed, and the Distributor or the
Depositor has not appointed a successor custodian within 30 days after the
Custodian's resignation or removal (or a longer period, if the Custodian
agrees), the Custodian will terminate this Agreement as provided in paragraph
11, below.
After the Custodian has transferred the custodial account assets to the
successor custodian, the Custodian is relieved of any further liability for this
Agreement, the custodial account, and the custodial account assets.
The Custodian or any successor custodian appointed to serve under this
Agreement, must be either 1) a bank as defined in Internal Revenue Code Section
408(n), or 2) such other person who qualifies to serve as prescribed by Internal
Revenue Code Section 408(a)(2) and satisfies the Distributor and the Custodian
that he or she qualifies.
11. Termination of Agreement
As provided in paragraph 10, above, the Custodian will terminate the
Agreement if the Distributor or the Depositor has not appointed a successor
custodian within the specified time after the Custodian resigns or is removed.
If this Agreement is terminated, the Custodian will distribute the custodial
account assets in kind or cash to the Depositor. The Custodian may reserve a
portion of the assets as provided in paragraph 10.
The Depositor may terminate this Agreement at any time by taking a lump-sum
distribution of his or her investment in the custodial account.
After this Agreement has been terminated, it will have no further force and
effect, and the Custodian is relieved of any further liability for this
Agreement, the custodial account, and the custodial account assets.
12. Liquidation of Custodial Account
The Distributor has the right to direct the Custodian by a written order to
liquidate the custodial account if the value of the account is below a minimum
level established from time to time by the Distributor on a nondiscriminatory
basis. Once the Custodian receives a written liquidation order from the
Distributor, the Custodian will liquidate the assets in the custodial account as
soon as practicable and distribute the proceeds to the Depositor in a lump sum
in cash or in kind. The Custodian may reserve a portion of the account to pay
for any fees, compensation, costs or expenses, or for any liabilities
constituting a charge on or against the Custodian. If any assets remain after
paying these items, the Custodian will pay the remainder to the Depositor.
If the custodial account is liquidated as provided above, neither the
Distributor nor the Custodian will be responsible or liable for any penalty or
loss incurred by anyone because of the liquidation. In addition, after the
account is liquidated, both the Distributor and the Custodian will be relieved
from any further liability for this Agreement, the custodial account, and the
custodial account assets.
13. Miscellaneous
Any reference in this Agreement to Internal Revenue Code means the Internal
Revenue Code of 1986, as amended, and any future successors.
Except as provided in the next sentence, any references to "Depositor" in
this Agreement will apply to the Depositor's Beneficiary if the Depositor is
deceased. The references to the "Depositor" in paragraphs 3, 4, and 8 of this
Article VIII will apply to the Depositor's Beneficiary only if the Depositor is
deceased, the Depositor's Beneficiary is the Depositor's surviving spouse, and
the surviving spouse elects to treat the custodial account as his or her own. If
the spouse does elect to treat the custodial account as his or her own, as
discussed in the preceding sentence, references to "Depositor" in Articles I
through VII will apply to the spouse as the Depositor's Beneficiary.
Unless specifically designated otherwise in this Agreement, any notice or
report that the Custodian must provide to any person by reason of this Agreement
will be considered to have been provided by the Custodian as of the date it is
sent by first-class mail to the person at his or her most recent address on the
Custodian's records.
To the extent permitted by law, the Custodian may, at its election and upon
the written instructions of the Depositor, pay investment adviser fees from the
Depositor's custodial accounts.
This Agreement is accepted by the Custodian in the Commonwealth of
Massachusetts and will be constructed and administered in accordance with the
laws of the Commonwealth of Massachusetts.
This Agreement is intended to qualify under Section 408 of the Internal
Revenue Code as an Individual Retirement Account, and under Section 219 of the
Internal Revenue Code for any tax-deductibility and limitations of contributions
made to the IRA. If any language or provision of this Agreement can be
interpreted in more than one way, the interpretation of the language or
provision that is consistent with the intention of this Agreement will control.
However, the Custodian and the Mutual Funds (or any company associated with
them) will not be responsible for guaranteeing that the intentions of this
Agreement are met through the use of this Agreement. The Depositor should
consult his or her own attorney for any assurances that the intentions of the
Agreement will be met through the use of this Agreement.
For Roth IRAs: Form 5305-RA (1-98)
SCUDDER ROTH INDIVIDUAL RETIREMENT
CUSTODIAL ACCOUNT AGREEMENT
(Under section 408A of the Internal Revenue Code)
The Depositor whose name appears on the Scudder IRA application or Scudder
Brokerage IRA application is establishing a Roth individual retirement account
(Roth IRA) under Section 408A to provide for his or her retirement and for the
<PAGE>
support of his or her beneficiaries after death. The Custodian named on the
Application has given the Depositor the disclosure statement required under
Regulations Section 1.408-6. The Depositor has deposited with the Custodian the
amount indicated on the Application in cash. The Depositor and the Custodian
make the following agreement:
ARTICLE I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in Section 408A(e), the
custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
ARTICLE II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married depositor who files jointly, between AGI $150,000 and $160,000;
and for a married depositor who files separately, between $0 and $10,000. In the
case of a conversion, the custodian will not accept IRA Conversion Contributions
in a tax year if the depositor's AGI for that tax year exceeds $100,000 or if
the depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
ARTICLE III
The depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE IV
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)), except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver and platinum
coins, coins issued under the laws of any state, and certain bullion.
ARTICLE V
1. If the depositor dies before his or her entire interest is distributed
to him or her and the grantor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the depositor or, if the
depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the depositor's death, or
(b) Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the year following the year of
the depositor's death. If distributions do not begin by the date
described in (b), distribution method (a) will apply.
2. In the case of distribution method 1.(b) above, to determine the minimum
annual payment for each year, divide the grantor's entire interest in the trust
as of the close of business on December 31 of the preceding year by the life
expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the depositor's spouse is the sole beneficiary on the depositor's
date of death, such spouse will then be treated as the depositor.
ARTICLE VI
1.The depositor agrees to provide the custodian with information necessary
for the custodian to prepare any reports required under sections 408(i) and
408A(d)(3)(E), Regulations sections 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2.The Custodian agrees to submit reports to the Internal Revenue Service
and the depositor prescribed by the Internal Revenue Service.
ARTICLE VII
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with Section 408A, the related
regulations, and other published guidance will be invalid.
ARTICLE VIII
This agreement will be amended from time to time to comply with the
provisions of the code, related regulations, and other published guidance. Other
Amendments may be made with the consent of the persons whose signatures appear
on the application.
ARTICLE IX
1. Please refer to the Scudder IRA Application or Scudder Brokerage IRA
Application, which is incorporated into this Agreement as this paragraph of
Article IX.
2. Depositor's Selection of Investments
<PAGE>
Investment Options
The Depositor may only direct the Custodian to invest custodial funds in
investment shares of the Mutual Funds (regulated investment companies for which
Scudder, Stevens & Clark, Inc., its successor or any affiliates, acts as the
investment adviser and which Scudder Investor Services, Inc., (the
"Distributor") has designated as appropriate for investments in the custodial
account), or in other investments which the Distributor or its successors has
designated as eligible investments for the custodial account.
Investments
As soon as practicable after the Custodian receives the Application, the
Custodian will invest the initial contribution or transfer as the Depositor
directed on the Application in shares of the Mutual Fund(s) or other investments
designated by the Distributor as eligible investments for the custodial account.
With regard to the Mutual Funds listed on the Application and any other Mutual
Fund, the Depositor understands that neither the Custodian nor the Distributor
endorses the Mutual Funds as suitable investments for the custodial account. In
addition, the Custodian (and the Distributor, unless the Distributor otherwise
agrees) will not provide investment advice to the Depositor. The Depositor
assumes all responsibility for the choice of his or her investments in the
custodial account.
The Custodian will invest each subsequent contribution or transfer to the
custodial account as soon as practicable after the Custodian receives the
contribution or transfer, according to the Depositor's instructions for that
subsequent contribution or transfer, in the Mutual Funds or other investment
designated by the Distributor as eligible investments for the custodial account.
If the Depositor's custodial account assets are invested in any Mutual Fund
which terminates or is eliminated, the Custodian will transfer the custodial
account assets in that Mutual Fund to another Mutual Fund designated by the
Distributor unless the Depositor instructs the Custodian otherwise in the manner
required by the Custodian.
If the Custodian receives any investment instructions from the Depositor
which in the opinion of the Custodian are not in good order or are unclear, or
if the Custodian receives any monies from the Depositor which would exceed the
amount that the Depositor may contribute to the custodial account, the Custodian
may hold all or a portion of the monies uninvested pending receipt of written
(or in any other manner permitted by the Distributor) instructions or
clarification. During any such delay the Custodian will not be liable for any
loss of income or appreciation, loss of interest, or for any other loss. The
Custodian may also return all or a portion of the monies to the Depositor.
Again, in such situations, the Custodian will not be liable for any loss.
Unless the Custodian permits otherwise, all dividend and capital gains
distributions received on shares of a Mutual Fund in the custodial account
(unless made in the form of additional shares) will be reinvested in shares of
the same Mutual Fund which paid the distribution, and credited to the custodial
account. All accumulations from other investments will be reinvested in the
Depositor's custodial account according to the Depositor's instructions to the
Custodian which must be in a form acceptable to the Custodian.
The Depositor may change any portion of his or her investment in an
eligible investment to another eligible investment by requesting the change in
the manner the Custodian requires. However, the Distributor reserves the right
to refuse to sell shares of any Mutual Fund when it determines in its own
judgment that the Depositor has made frequent trading in the custodial account.
3. Contributions
All contributions by the Depositor to the custodial account must be in
cash, except for initial contributions of rollovers which may be made in a form
other than cash if permitted by the Distributor.
The Custodian will designate contributions (other than rollover
contributions) as being made for particular years as requested by the Depositor.
If the Depositor does not designate a year for any contribution, the Custodian
will designate the contribution as being made for a particular year according to
a policy established by the Distributor.
If permitted by the Distributor, the Depositor may make rollover
contributions to the custodial account of deductible employee contributions
which were made to qualified employer or government retirement plans as provided
in Internal Revenue Code Section 72(o).
The Depositor warrants that all contributions to the custodial account,
including any rollover contributions, will be made in accordance with the
provisions of the Internal Revenue Code.
Excess Contributions
If the Depositor exceeds the amount that may be contributed to his or her
custodial account for any year, the Custodian will apply such amount as is
allowed by law.
4. Transfers
The Custodian will accept transfers to the custodial account of investments
which the Distributor or its successors have designated as eligible investments
for the custodial account from another custodian or trustee of an individual
retirement account or individual retirement annuity upon the Depositor's
direction. The Custodian will also transfer amounts in the custodial account
upon the request in writing, or in such other manner as agreed upon by the
Custodian, of the Depositor to another custodian or trustee of an individual
retirement account or individual retirement annuity. For such a transfer, the
Custodian may require the written acceptance of the successor custodian. The
Depositor warrants that all transfers to and from the custodial account will be
<PAGE>
made in accordance with the rules and regulations issued by the Internal Revenue
Service.
5. Custodian's Fees
The Custodian is entitled to receive reasonable fees for establishing and
maintaining the custodial account. These fees will be set by the Custodian from
time to time.
The Custodian may change its fee schedule upon thirty (30) days' written
notice to the Distributor.
The Custodian has the right to charge the custodial account, including the
right to liquidate Mutual Fund shares or other investments, or to charge the
Depositor for the Custodian's fees, as well as for any income, gift, estate, and
inheritance taxes (including any transfer taxes incurred in connection with the
investment or reinvestment of the assets of the custodial account), which are
levied or assessed against the custodial account assets, and for all other
administrative expenses of the Custodian for performing its duties, including
any fees for legal services provided to the Custodian.
6. Custodial Account
Once the Custodian mails an acknowledgment of its receipt of the
Application to the Depositor, this Agreement will be effective as of the date
the Depositor signed the Application. As soon as practicable after the Custodian
receives the Application, the Custodian will open and maintain a separate
custodial account for the Depositor.
All Mutual Fund shares or other investments in the custodial account will
be registered in the name of the Custodian (with or without identifying the
Depositor) or in the name of the Custodian's nominee. The Custodian or its agent
will deliver, or cause to be executed and delivered, to the Depositor all
notices, prospectuses, financial statements, proxies, and proxy soliciting
materials which the Custodian or its agent receives which relate to the Mutual
Funds or other investments in the custodial account. The Custodian or its agent
will vote shares only according to the Depositor's instructions on an executed
proxy, provided that the Custodian may without written direction from the
Depositor vote shares "present" solely for purposes of establishing a quorum.
7. Additional Provisions Regarding the Custodian
According to this Agreement, the Custodian will be an agent for the
Depositor for the custodial account to receive and to invest contributions, and
to hold and to distribute these investments as authorized by the Depositor, and
to keep adequate records and provide reports as required by the Agreement. None
of the parties to this Agreement intend to confer any fiduciary duties on the
Custodian, and no such duties shall be implied.
The Custodian may perform any of its administrative duties through other
persons designated by the Custodian from time to time. However, the custodial
account must be registered in the name of the Custodian or its nominee as
provided in paragraph 6 above.
The Custodian assumes no responsibility or liability for collecting
contributions, for the deductibility or propriety of any contribution made to
the custodial account, or for the purpose or propriety of any distributions made
from the custodial account. Those matters are the sole responsibility of the
Depositor.
The Custodian will keep adequate records of transactions it is required to
perform for the custodial account. The Custodian will provide to the Depositor a
written report or reports reflecting the transactions in the custodial account
over each calendar year and the assets in the custodial account as of the end of
the calendar year.
If the Custodian resigns or is removed, as provided in paragraph 10 below,
the Custodian must provide a written report or reports reflecting the
transactions in the custodial account from the last report through the date of
the Custodian's resignation or removal, and the assets in the custodial account
as of the date of the Custodian's resignation or removal.
After providing the end-of-the-year report or the reports from the
Custodian's resignation or removal, the Custodian will be forever released from
all liability and accountability to anyone for its acts or transactions
reflected in the report(s), except those acts or transactions to which the
Depositor (or recipient, if different) has filed a written objection with the
Custodian within 60 days of the date the report was provided to the Depositor or
other recipient.
The Depositor always fully indemnifies the Custodian and will hold it
harmless from any and all liability which may arise from this Agreement, except
that which arises from the Custodian's negligence or willful misconduct. The
Custodian will not be obligated or expected to commence or defend any legal
action or proceeding about this Agreement unless both the Custodian and
Depositor agree and the Custodian will be fully indemnified to its satisfaction.
The Custodian may conclusively rely upon and will be protected from acting
on any written order from or authorized by the Depositor, or any other notice,
request, consent, certificate or other instrument, paper, or other communication
which the Custodian believes to be genuine and issued in proper form with proper
authority, as long as the Custodian acts in good faith in taking or omitting to
take any action in reliance upon the communication.
Before the Beneficiary has notified the Custodian (in the manner required
by the Custodian) of the Depositor's death, the Custodian will not be
responsible for treating the Beneficiary as if he or she has rights and
obligations under this Agreement.
8. Distributions
This paragraph supplements the information found in Article V above, and
must be read in conjunction with it.
The Depositor has sole responsibility to initiate distributions from the
custodial account and sole responsibility to ensure that all distributions are
made in accordance with the applicable provisions of the Internal Revenue Code.
<PAGE>
Distribution Requests
The Depositor* is responsible for making the distribution requests to the
Custodian sufficiently in advance of any requested or required distribution time
to ensure that the distribution will be made before that requested or required
distribution time.
The Custodian will make distributions from the custodial account only after
receiving a request in writing, or in such other manner as agreed upon by the
Custodian, from the Depositor*. The Custodian will make the distribution as soon
as practicable after it receives the request in writing, or in such other manner
as agreed upon by the Custodian.
The Depositor* must make the distribution request in the form required by
the Custodian. The distribution request must include the form of distribution
requested (e.g., lump-sum distribution or installment payments). The Depositor*
must provide to the Custodian any applications, certificates, tax waivers,
signature guarantees and any other documents (including proof of legal
representative's authority) that the Custodian requires. The Custodian will not
be liable for complying with a distribution request that appears on its face to
be genuine, nor will the Custodian be liable for refusing to comply with a
distribution request which the Custodian is not satisfied is genuine.
If the distribution request is not made in the correct form, the Custodian
is not responsible and will not be liable to the Depositor* for any losses while
the Custodian waits for the distribution request to be made in the proper form.
The Depositor* also agrees to fully indemnify the Custodian for any losses which
may result from the Custodian's failing to act upon an improperly made
distribution request.
The Depositor* may request a distribution of any portion of the custodial
account at any time.
The Custodian does not assume any responsibility for the tax treatment of
any distributions from the custodial account.
* or any other party entitled to receive the assets of the custodial
account
Designation of Beneficiary
The Depositor may designate a beneficiary or beneficiaries (the
"Beneficiary") to receive the assets of the custodial account upon the
Depositor's death. The Depositor must designate his or her Beneficiary to the
Custodian in the manner required by the Custodian.
If the Depositor's Beneficiary is not living at the Depositor's death, the
Depositor's estate is entitled to receive the assets of the custodial account.
In addition, to the extent the Depositor has not effectively disposed of the
assets in the custodial account by his or her designation of beneficiary, the
Depositor's estate will be entitled to receive the assets of the custodial
account.
If the Depositor's Beneficiary dies after the Depositor, the Beneficiary's
estate will be entitled to receive the assets of the custodial account.
The Depositor may change his or her choice of a Beneficiary at any time by
notifying the Custodian in the manner required by the Custodian.
Before the Depositor's death, the Depositor's Beneficiary has no right or
power to anticipate any part of the custodial account, or to sell, assign,
transfer, pledge, or hypothecate any part of the account. In addition, the
Custodial account will not be liable for any debts of the Depositor's
Beneficiary or, except as required by law, subject to attachment, execution, or
any other legal process.
Election to Have Life Expectancy Recalculated
For installment payments to be made over the Depositor's life expectancy,
the Depositor may make an election to have the Custodian annually recalculate
his or her life expectancy, and the life expectancy of the Depositor's spouse,
if applicable. The Depositor must make this election in the manner required by
the Custodian.
If the Depositor does not elect to have the Custodian recalculate life
expectancy, the Custodian will not recalculate the life expectancy of any other
party entitled to receive the assets of the custodial account.
9. Amendment
This paragraph supplements the information found in Article VIII above, and
must be read in conjunction with it.
If the Distributor amends this Agreement, it must provide a written notice
of the amendment to both the Depositor and the Custodian. The Depositor will be
considered to have consented to the Distributor's amendment 30 days after the
Distributor has mailed the notice to the Depositor unless within that 30-day
period the Depositor gives the Custodian a proper request in writing, or in such
other manner as agreed upon by the Custodian, for a lump-sum distribution. The
Custodian will be considered to have consented to the Distributor's amendment
unless it notifies the Distributor otherwise within 30 days after the
Distributor has mailed (or otherwise delivered) the notice to the Custodian.
The Custodian may change its fee schedule, as provided in paragraph 5
above, without having to amend this Agreement.
10. Resignation or Removal of Custodian
The Custodian may resign at any time by giving at least 30 days' written
notice to the Distributor. The Distributor may remove the Custodian at any time
by giving at least 30 days' written notice to the Custodian.
If the Custodian resigns or is removed, the Distributor must either appoint
a successor custodian to serve under this Agreement or notify the Depositor that
he or she must appoint a successor custodian. The successor custodian must
provide a written acceptance of its appointment as successor custodian to the
<PAGE>
Custodian. Upon receiving this written acceptance, the Custodian must transfer
to the successor custodian all of the assets and records of the custodial
account.
The Custodian may reserve a portion of the custodial account assets to pay
for any fees, compensation, costs, expenses, or for any liabilities constituting
a charge on or against the Custodian. If any assets remain after paying these
items, the Custodian will pay the remainder to the successor custodian.
If the Custodian resigns or is removed, and the Distributor or the
Depositor has not appointed a successor custodian within 30 days after the
Custodian's resignation or removal (or a longer period, if the Custodian
agrees), the Custodian will terminate this Agreement as provided in paragraph
11, below.
After the Custodian has transferred the custodial account assets to the
successor custodian, the Custodian is relieved of any further liability for this
Agreement, the custodial account, and the custodial account assets.
The Custodian or any successor custodian appointed to serve under this
Agreement must be either 1) a bank as defined in Internal Revenue Code Section
408(n), or 2) such other person who qualifies to serve as prescribed by Internal
Revenue Code Section 408(a)(2) and satisfies the Distributor and the Custodian
that he or she qualifies.
11. Termination of Agreement
As provided in paragraph 10, above, the Custodian will terminate the
Agreement if the Distributor or the Depositor has not appointed a successor
custodian within the specified time after the Custodian resigns or is removed.
If this Agreement is terminated, the Custodian will distribute the custodial
account assets in kind or cash to the Depositor. The Custodian may reserve a
portion of the assets as provided in paragraph 10.
The Depositor may terminate this Agreement at any time by taking a lump-sum
distribution of his or her investment in the custodial account.
After this Agreement has been terminated, it will have no further force and
effect, and the Custodian is relieved of any further liability for this
Agreement, the custodial account, and the custodial account assets.
12. Liquidation of Custodial Account
The Distributor has the right to direct the Custodian by a request in
writing, or in such other manner as agreed upon by the Custodian, to liquidate
the custodial account if the value of the account is below a minimum level
established from time to time by the Distributor on a nondiscriminatory basis.
Once the Custodian receives a request in writing, or in such other manner as
agreed upon by the Custodian, from the Distributor, the Custodian will liquidate
the assets in the custodial account as soon as practicable and distribute the
proceeds to the Depositor in a lump sum in cash or in kind. The Custodian may
reserve a portion of the account to pay for any fees, compensation, costs or
expenses, or for any liabilities constituting a charge on or against the
Custodian. If any assets remain after paying these items, the Custodian will pay
the remainder to the Depositor.
If the custodial account is liquidated as provided above, neither the
Distributor nor the Custodian will be responsible or liable for any penalty or
loss incurred by anyone because of the liquidation. In addition, after the
account is liquidated, both the Distributor and the Custodian will be relieved
from any further liability for this Agreement, the custodial account, and the
custodial account assets.
13. Miscellaneous
Any references in this Agreement to Internal Revenue Code mean the Internal
Revenue Code of 1986, as amended, and any future successors.
Except as provided in the next sentence, any references to "Depositor" in
this Agreement will apply to the Depositor's Beneficiary if the Depositor is
deceased. The references to the "Depositor" in paragraphs 3, 4, and 8 of this
Article IX will apply to the Depositor's Beneficiary only if the Depositor is
deceased, the Depositor's Beneficiary is the Depositor's surviving spouse, and
the surviving spouse elects to treat the custodial account as his or her own. If
the spouse does elect to treat the custodial account as his or her own, as
discussed in the preceding sentence, references to "Depositor" in Articles I
through VIII will apply to the spouse as the Depositor's Beneficiary. (Note,
this highlighted information overrides otherwise conflicting information found
in Article V.3 of this Agreement.)
Unless specifically designated otherwise in this Agreement, any notice or
report that the Custodian must provide to any person by reason of this Agreement
will be considered to have been provided by the Custodian as of the date it is
sent by first-class mail to the person at his or her most recent address on the
Custodian's records.
To the extent permitted by law, the Custodian may, at its election and upon
the written instructions of the Depositor, pay investment adviser fees from the
Depositor's custodial accounts.
This Agreement is accepted by the Custodian in the Commonwealth of
Massachusetts and will be constructed and administered in accordance with the
laws of the Commonwealth of Massachusetts.
This Agreement is intended to qualify under Section 408 of the Internal
Revenue Code as an Individual Retirement Account, and under Section 219 of the
Internal Revenue Code for any tax-deductibility and limitations of contributions
made to the IRA. If any language or provision of this Agreement can be
interpreted in more than one way, the interpretation of the language or
provision that is consistent with the intention of this Agreement will control.
However, the Custodian and the Mutual Funds (or any company associated with
them) will not be responsible for guaranteeing that the intentions of this
Agreement are met through the use of this Agreement. The Depositor should
consult his or her own attorney for any assurances that the intentions of the
Agreement will be met through the use of this Agreement.
Scudder Kemper Investments, Inc.
Two International Place
Boston, MA 02110
September 2, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: Scudder Global Fund and Scudder International Bond Fund, each a series
of Global/International Fund, Inc. (Reg. No. 33-5724) (811-4670) (the
"Fund") Post-Effective Amendment No. 34 to Registration Statement on
Form N-1A
Ladies and Gentlemen:
We are filing today through the EDGAR system on behalf of the Funds,
Post-Effective Amendment No. 34 to the above-referenced Corporation's
Registration Statement on Form N-1A (the "Amendment"). The Amendment has been
electronically coded to show changes from the Prospectus and Statement of
Additional Information dated November 1, 1997, filed with Securities and
Exchange Commission (the "Commission") on October 28, 1997.
The Amendment is filed pursuant to Rule 485(a) under the Securities Act
of 1933 and Rule 8b-16 under the Investment Company Act of 1940 for review and
comment by the staff of the Commission. The Amendment is expected to become
effective on November 1, 1998.
The Amendment is being filed to include disclosure with regard to new
investment management agreements between the Funds and Scudder Kemper
Investments, Inc., newly standardized fundamental and non-fundamental investment
restrictions and the addition of disclosure reserving the Funds' right to
convert to a master-feeder fund structure.
Please direct any comments or questions on this filing to the
undersigned at (617) 295-2592.
Very truly yours,
/s/Jeanne Carrol
Jeanne Carroll
cc: Allison First, Dechert Price & Rhoads
