Scudder
Global
Discovery Fund
Semiannual Report
April 30, 1999
For investors seeking above-average capital appreciation over the long term by
investing primarily in the equity securities of small companies located
throughout the world.
Scudder Global Discovery Fund is properly known as Global Discovery Fund.
The Fund is a diversified series of Global/International Fund, Inc.
SCUDDER
<PAGE>
Scudder Global Discovery Fund
- --------------------------------------------------------------------------------
Total Net Assets of
Date of Inception: 9/10/91 Scudder Shares as of Ticker Symbol: SGSCX
4/30/99: $353.8 million
- --------------------------------------------------------------------------------
o Scudder shares of Global Discovery fund provided a total return of 22.41% for
the six-month period ended April 30, 1999, versus 16.48% for the Lipper Global
Small Cap category average and 13.75% for the Salomon Brothers World Equity
Market Index.*
o The portfolio is very concentrated with the top 10 holdings accounting for
roughly 40% of the portfolio while the top 50 stocks constitute nearly 90% of
the fund. To reduce risk, holdings are diversified by country, industry, and
market sector.
o As we neared the end of the first quarter of 1999, the portfolio was
repositioned in view of a shift in market sentiment away from growth and towards
value-style investing.
Table of Contents
3 Letter from the Fund's Chairman 19 Financial Highlights
4 Performance Update 23 Notes to Financial Statements
5 Portfolio Summary 29 Report of Independent Accountants
6 Portfolio Management Discussion 30 Shareholder Meeting Results
10 Glossary of Investment Terms 32 Officers and Directors
11 Investment Portfolio 33 Investment Products and Services
16 Financial Statements 34 Scudder Solutions
* The Salomon Brothers World Equity Market Index (EMI) is an unmanaged, small
capitalization stock universe derived from 22 countries. The index is
comprised of the smallest 20 percent of global small-cap stocks.
2 - Scudder Global Discovery Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to report on the results of Scudder Global Discovery Fund's
most recent semiannual period ended April 30, 1999. In a market that did not
provide a tailwind for small-cap investors, Scudder Global Discovery Fund not
only outpaced its peer group and benchmark but also the U.S. stock market as
gauged by both small-cap and large-cap averages. In the following discussion,
Lead Portfolio Manager Gerald Moran discusses how the Fund's management team was
able to accomplish this feat.
For those interested in new Scudder products, we are pleased to introduce
Scudder Select 500 Fund and Scudder Select 1000 Growth Fund. Both funds are
managed with the goal of pursuing long-term outperformance compared to their
benchmark indices, the S&P 500 Index and the Russell 1000 Growth Index,
respectively. For more information on either Select fund, please call us at the
number below.
As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your Fund. Or visit Scudder's Web
site at www.scudder.com. PageNO TAG provides more information on how to contact
Scudder. Thank you for choosing Scudder Global Discovery Fund to help meet your
investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Global Discovery Fund
3 - Scudder Global Discovery Fund
<PAGE>
Performance Update as of April 30, 1999
- -----------------------------------------------------
Fund Index Comparisons
- -----------------------------------------------------
Total Return
--------------------------------------------------
Period Growth of Average
Ended 4/30/1999 $ 10,000 Cumulative Annual
--------------------------------------------------
Global Discovery Fund -- Scudder Shares
--------------------------------------------------
1 Year $ 10,297 2.97% 2.97%
5 Year $ 18,494 84.94% 13.09%
Life of $ 25,376 153.76% 12.96%
Fund*
--------------------------------------------------
Salomon Brothers World Equity EMI
--------------------------------------------------
1 Year $ 9,690 -3.10% -3.10%
5 Year $ 15,415 54.15% 9.04%
Life of $ 20,399 103.99% 9.86%
Fund*
--------------------------------------------------
* The Fund commenced operation on September 10, 1991.
Index comparisons begin September 30, 1991.
- ----------------------------------
Growth of a $10,000 Investment
- ----------------------------------
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
Yearly periods ended April 30
Global Discovery Fund -- Salomon Brothers World
Scudder Shares Equity EMI
9/91* 10000 10000
92 10107 9862
93 11558 11555
94 13496 13234
95 13090 13688
96 17502 16731
97 17581 16516
98 24240 21047
99 24960 20395
The Salomon Brothers World Equity Extended Market Index is an unmanaged small
capitalization stock universe of 22 countries. Index returns assume dividends
reinvested net of withholding tax and, unlike Fund returns, do not reflect any
fees or expenses.
- ----------------------------------
Returns and Per Share Information
- ----------------------------------
Yearly periods ended April 30
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
<TABLE>
<CAPTION>
1992* 1993 1994 1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value $ 12.31 $ 13.86 $ 15.87 $ 15.31 $ 19.74 $ 18.88 $ 23.55 $ 24.25
- ------------------------------------------------------------------------------------------------------------------------------
Income Dividends $ .02 $ .07 $ .18 $ -- $ .20 $ .13 $ .64 $ --
- ------------------------------------------------------------------------------------------------------------------------------
Capital Gains Distributions $ -- $ .12 $ .15 $ .08 $ .44 $ .86 $ 1.41 $ --
- ------------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 2.76 14.35 16.77 -3.01 33.71 .45 37.88 2.97
- ------------------------------------------------------------------------------------------------------------------------------
Index Total Return (%)** -3.04 15.66 11.86 9.74 18.71 -1.29 27.45 -3.10
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective April 16, 1998, the Fund changed its name from Scudder Global
Discovery Fund to Global Discovery Fund and an additional three classes of
shares were offered. Existing shares of Global Discovery Fund outstanding on
that date were redesignated Scudder Shares of the Fund. The total return
information provided is for the Fund's Scudder Share class. Prior to March 6,
1996, the Fund was known as the Scudder Global Small Company Fund. Performance
is historical, assumes reinvestment of all dividends and capital gains, and is
not indicative of future results. Total return and principal value will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than when purchased. If the Adviser had not maintained expenses, the total
returns for the one year, five year, and life of Fund periods would have been
lower.
** Prior to April 30, 1997, the Morgan Stanley Capital International World
Index was used as a comparative index.
4 - Scudder Global Discovery Fund
<PAGE>
Portfolio Summary as of April 30, 1999
- ------------------------------
Geographical
(Excludes 4% Cash Equivalents)
- ------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
U.S.& Canada 51%
Europe 45%
Japan 2%
Pacific Basin 1%
Middle East 1%
--------------------------------------
100%
--------------------------------------
U.S. and European holdings are overweighted at the expense of Japan.
- -----------------------------
Sectors
(Excludes 4% Cash Equivalents)
- -----------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Service Industries 20%
Technology 20%
Health 16%
Consumer Discretionary 10%
Financial 9%
Communications 5%
Depository Receipts 5%
Transportation 5%
Manufacturing 3%
Other 7%
--------------------------------------
100%
--------------------------------------
Portfolio assets are diversified across sectors that respond differently
to changing economy conditions.
- ---------------------------
Ten Largest Equity Holdings
(38% of Portfolio)
- ---------------------------
1. VISX Inc.
Developer of laser technologies and systems for
vision correction in the United States
2. S&P Mid-Cap 400 Depository Receipts
Security that represents ownership in the
Mid-Cap SPDR Trust in the United States
3. Serco Group PLC
Facilities management company in the United
Kingdom
4. Network Appliance, Inc.
Designer and manufacturer of network data
storage devices in the United States
5. Tiffany & Co.
Retailer of jewelry and gift items in the United
States
6. Vitesse Semiconductor Corp.
Manufacturer of digital integrated circuits in the
United States
7. Fiserv Inc.
Provider of data processing services in the
United States
8. Sterling Commerce, Inc.
Producer of electronic data interchange products
and services in the United States
9. Altran Technologies, S.A.
Provider of engineering and consulting services in
France
10. IHC Caland NV
Dredging and offshore services in the Netherlands
The ten largest holdings account for roughly 40% of Fund assets.
For more complete details about the Fund's investment portfolio, see page 11.
A quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Global Discovery Fund
<PAGE>
Portfolio Management Discussion
We asked lead portfolio manager Gerald Moran to discuss Global Discovery Fund's
performance, strategy and market conditions over the six months ended April 30,
1999.
Q: Six months ago, the world markets looked very different. Japan's market was
languishing, emerging markets were collapsing and Europe's market was stable.
Today, Japan and the emerging markets show signs of rebounding while Europe is
stagnating. What happened?
A: It has been a most interesting period. Three times last fall, the U.S.
Federal Reserve cut interest rates in an effort to stem tightening credit
conditions. As credit spreads narrowed, liquidity spilled into the U.S. equity
market, particularly large capitalization technology and retail stocks. In
December, Europe cut rates to stimulate slowing gross domestic product (GDP)
growth.
In early 1999, the U.S. market remained strong, a large rate cut supported the
United Kingdom's market, and continental Europe was troubled by economic growth
concerns. A changing political climate brought center-left or social democrat
governments into power in many major European countries. This meant that much
needed reforms that could help business interests were in jeopardy, and this led
to a weakness in business confidence. Meanwhile, the euro steadily weakened
because of concerns the U.S. would raise interest rates while Europe might see
further rate cuts. This economic uncertainty drove European markets down.
Negative news coming from key technology firms caused investors to briefly turn
their backs on the technology sector in February, causing a 10 percent slide in
the NASDAQ 100 and similarly impacting many world markets. Japan cut interest
rates in late February in an effort to stimulate domestic growth. Investors
showed their approval of the cut and their optimism for potential corporate
restructuring by sending Japanese stocks up almost 14% in March. Low interest
rates worldwide created a flood of global liquidity that provided a big support
to emerging markets. Despite Brazil's currency devaluation in January, the Latin
American and Asian emerging markets staged a remarkable recovery over the next
few months.
In March, strong economic numbers helped push the Dow Jones industrial average
over 10,000 for the first time. The one dark spot was Europe, where concerns
about slowing growth continued to weigh on the equity markets. A long-awaited
European interest rate cut on April 9 finally triggered a rise in most major
European markets and gave hope to the thought that growth might be returning to
the area.
By the end of the period, investors were growing increasingly nervous about the
valuations of large-capitalization U.S. technology stocks. We witnessed major
U.S. companies beating profit forecasts, but suffering punishment to their share
prices in this environment. Overseas markets were very sensitive to swings in
these stocks because of the perceived link between these stocks and the overall
health of the U.S. equity market.
Q: How did Scudder Global Discovery Fund perform against this backdrop?
A: While this wasn't a period in the markets that favored small-caps, we are
pleased to report that we did quite well. Scudder shares of the fund were up
22.41% for the period versus the Lipper Global Small Cap category average, which
6 - Scudder Global Discovery Fund
<PAGE>
returned 16.48%, and the Salomon Brothers World Equity Market Index,* up 13.75%.
As in the past, our ability to outperform both our peers and the index during
this period of very narrow market performance was mainly due to the outstanding
performance of some of our larger positions.
VISX, a U.S.-based company that manufactures the lasers used in vision
correction surgery, was a real standout. Americans are increasingly making the
decision to throw out their glasses and contact lenses by opting to have this
surgery and the company continues to grow as a result. Not only does VISX
dominate the market for laser corrective surgery, it holds a patent that allows
it to collect $250 per eyeball corrected. As the largest holding and most
profitable stock in the portfolio, VISX seems to still have a great deal of
growth potential ahead.
Our top holdings also include some more familiar names. Tiffany & Co., the
high-end retailer known for its distinctive blue box, is the fifth largest
holding in the fund. The strong U.S. economy and increased disposable income
resulting from it are driving sales, and performance, for this holding.
Moving into 1999, we saw the technology sector correct and European stock
returns were weakened by a substantial decline in the euro. But again, certain
holdings helped bolster the fund during rough periods in the markets. U.K.
holdings performed well led by long-time portfolio stalwart Serco Group, a
British outsourcing company.
Q: How does this performance compare to domestic small-caps?
A: The Lipper domestic small-cap category was up 14.68% so we outperformed U.S.
small caps by 7.73%. This outperformance clearly illustrates the benefits of
global reach; we are able to select small-cap stocks we feel are the best the
world has to offer. While it was a close finish, we also edged past the 22.31%
return of the Standard & Poor's 500, a strictly U.S. market index dominated by
larger company names. Stock selection was again the key. Small-cap stocks did
not do as well as large-cap companies over the period. It was the strength of
some of our well-selected names that helped this fund rise to the top.
Q: And what is your process for finding these top-notch companies?
A: To arrive at the roughly 100 names that make up the portfolio, our management
team and analysts filter the global small-cap universe by reviewing seven key
business attributes such as competitive position, prospects for repeat revenues
and the quality of company management.
Following this initial review, 93% of the researched companies are eliminated.
The remaining seven percent are then subjected to further detailed analysis
including a review of the industry they operate in and the markets in which they
invest.
The portfolio is very concentrated with the top 10 holdings accounting for
roughly 40% of the portfolio while the top 50 stocks constitute nearly
- ----------
* The Salomon Brothers World Equity Market Index (EMI) is an unmanaged, small
capitalization stock universe derived from 22 countries. The index is
comprised of the smallest 20 percent of global small-cap stocks.
7 - Scudder Global Discovery Fund
<PAGE>
90% of the fund. To attempt to minimize risk, we then diversify among these
names by country, industry and market sector.
During this period, we stayed with the high-quality, high-growth stocks during
the down period in the fall. As we moved into the new year we trimmed the
high-growth, long duration exposure by trimming some of last year's big
technology winners such as Network Appliance (U.S.) and Vitesse Semiconductor
(U.S.). As we neared the end of the first quarter of this year, we saw a shift
in the market from growth to value-style investing so we thought it was an
opportune time to take profits and position the portfolio more conservatively.
We brought our position in energy stocks up to more significant levels as oil
prices dipped to valuations that seem certain to bounce back later in the year.
We also maintained a high level of our holdings in Europe, shifting slightly
toward stocks in the U.K. by buying several information technology companies in
that market.
Q: What approach are you taking to an apparently rebounding Japan?
A: As small-cap investors, the opportunities in Japan are not as plentiful as
they are for investors with a larger company focus so, while we did increase our
exposure to this market, we still ended the period at roughly a two percent
weight. We are impressed with what we are seeing in Japan but there are reasons
to remain cautious. Up 25.3%* over the period, this market is enjoying quite a
change from the mediocre and negative performance numbers that had been coming
out of that country for the past four years. Despite record unemployment and a
shrinking gross domestic product (GDP), investors poured money into the Japanese
stock market in 1999. They are optimistic about a corporate restructuring trend
and the Bank of Japan's loose monetary policy.
Q: With performance that even outpaced the S&P 500, it is hard to imagine that
there were disappointments during the period. But, in hindsight, are there
things that you would have done differently?
A: Sterling Communications was a major disappointment. Despite posting strong
earnings, performance was less than stellar. As one of our top 10 positions, it
detracted significantly from performance. We also found it necessary to sell our
position in MobilComm, a German telecommunications company, as competition in
that market proved stronger than expected and diminished the long-term prospects
for the company.
Q: What is your outlook for smaller cap stocks and global markets in general?
A: The market consensus seems to be that the crisis period we endured as
recently as last fall has passed. We are seeing strong economic signals that are
slightly more tenuous in Latin America and a little less so in Asia. Economies
are slowly recovering and beginning to address the structural issues that must
be resolved. This has buoyed markets.
- ----------
* Source: Datastream and FT/S&P World Indices. The index provides a general
representation of the performance of the Japanese stock market.
8 - Scudder Global Discovery Fund
<PAGE>
Speaking just of small caps, the gap between large- and small-cap companies
continues to be quite big despite the fact smaller company valuations are at the
lowest levels (relative to large-cap stocks) they've been in 30 years in the US.
Similar disparities exist abroad. The key is really with the investors and
whether they decide to turn their attention away from larger names and toward
more aggressive, smaller companies. That will swing the balance. The favor still
seems to be with very few, large-cap companies that are at unprecedented
price/earnings ratios. Clearly, there is better value in small caps and, we
believe, far greater growth potential.
Q: What are the risks to this outlook?
A: One risk is that strong economic growth will eventually result in a decision
to raise interest rates, which would have a negative impact on all equity
securities. At the writing of this report, Federal Reserve Board Chairman Alan
Greenspan has insinuated that such an increase is possible. In the U.S., signs
of "irrational exuberance" were first spotted by Chairman Greenspan when the
market was 3,000 points lower than it is now!
A second risk to this portfolio is a continuation of the trend toward value and
cyclical stocks. We have gotten our performance by picking core growth stocks
that have, over time, performed quite well from an earnings standpoint. In
addition, these stocks tended to sell at a higher multiple of earnings as more
and more investors became interested in them. This new environment could prove
challenging for the fund. We expect the companies we hold to continue to crank
out strong earnings numbers but a shift in investor sentiment could move them to
the back burner. We are a diversified fund and, as I mentioned, we have taken
steps to pull back the degree of high-growth stocks but growth will continue to
be the driving force in the portfolio.
9 - Scudder Global Discovery Fund
<PAGE>
Glossary of Investment Terms
CURRENCY DEVALUATION A significant decline of a currency's value relative
to other currencies, such as the U.S. dollar.
Trading or central bank intervention (or the lack of
intervention) may prompt this in the currency
markets. For U.S. investors who are investing
overseas, a devaluation of a foreign currency can
have the effect of reducing the total return of
their investment.
FUNDAMENTAL RESEARCH Analysis of companies based on the projected
impact of management, products, sales, and earnings
on balance sheets and income statements. Distinct
from technical analysis, which evaluates the
attractiveness of a stock, based on historical price
and trading volume movements, rather than the
financial results of the underlying company.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into cash
within a reasonably short period of time.
MARKET CAPITALIZATION The value of a company's outstanding shares of
common stock, determined by multiplying the
number of shares outstanding by the share price
(shares x price = market capitalization). The
universe of publicly traded companies is frequently
divided into large-, mid-, and small-capitalizations.
PRICE-EARNINGS RATIO A widely used gauge of a stock's valuation that
(P/E) (also "earnings indicates what investors are paying for a company's
multiple") earnings on a per share basis. Typically based on a
company's projected earnings for the next 12 months,
a higher "earnings multiple" indicates a higher
expected growth rate and the potential for greater
price fluctuations.
TRANSPARENCY The degree to which investors can evaluate if a
company is managed in the interests of shareholders.
Transparency is often not as good in developing
markets where disclosure requirements may be less
stringent, and protectionism, subsidies, and cronyism
may distort the business environment.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
10 - Scudder Global Discovery Fund
<PAGE>
Investment Portfolio as of April 30, 1999
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 4.2%
- -----------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/1999 at 4.87%, to
be repurchased at $16,223,581 on 5/3/1999, collateralized by a $16,254,000 U.S. -----------------
Treasury Inflationary Index Note, 3.375%, 1/15/2007 (Cost $16,217,000) ................ 16,217,000 16,217,000
-----------------
Shares
- -----------------------------------------------------------------------------------------------------------------------------
Common Stocks 95.8%
- -----------------------------------------------------------------------------------------------------------------------------
Australia 0.2%
CI Technologies Group, Ltd. (Developer of process monitoring and industrial
automation software) .................................................................. 219,700 763,279
-----------------
Austria 0.7%
Eybl International AG* (Producer of textiles for automobiles sold worldwide) ............ 13,700 412,530
Schoeller Bleckmann Oilfield Equipment AG (Manufacturer of components for oil and
gas drilling equipment) ............................................................... 17,000 932,194
Topcall International AG (Developer, marketer, and supporter of high-end unified
messaging systems) .................................................................... 40,600 1,417,710
-----------------
2,762,434
-----------------
Bermuda 0.3%
Central European Media Enterprises Ltd. "A"* (Owner and operator of national and
regional
private commercial television stations in Central and Eastern Europe) ................. 146,100 1,196,194
-----------------
Canada 0.4%
QLT Phototherapeutics Inc.* (Developer of pharmaceutical products) ...................... 36,400 1,651,481
StressGen Biotechnologies Corp. "A"* (Developer of products for treatment of cancer
and certain infectious diseases) ...................................................... 112,500 104,167
-----------------
1,755,648
-----------------
Croatia 0.6%
Pliva D.D. (GDR) (Pharmaceutical company) ............................................... 159,800 2,532,830
-----------------
Finland 0.9%
JOT Automation Group Oyj (Developer of production automation systems) ................... 79,200 2,610,777
KCI Konecranes International PLC "B" (Manufacturer of elevators) ........................ 21,920 810,585
-----------------
3,421,362
-----------------
France 3.1%
Altran Technologies, S.A. (Provider of engineering and consulting services) ............. 37,993 9,031,836
Dassault Systemes S.A. (Computer aided design, manufacturing and engineering
software) ............................................................................. 42,691 1,571,013
Leon de Bruxelles S.A. (Operator of low cost family restaurants) ........................ 25,605 1,271,489
Penauille Polyservices S.A. (Industrial cleaning and security services) ................. 1,460 383,481
-----------------
12,257,819
-----------------
The accompanying notes are an integral part of the financial statements.
11 - Scudder Global Discovery Fund
<PAGE>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
Germany 3.1%
ADVA AG Optical Networking* (Manufacturer of optical networking products) ............... 2,720 206,627
Hawesko Holding AG (Marketer of wines and liqueurs and related products) ................ 43,424 1,789,305
Kamps AG (Producer and distributor of baked goods) ...................................... 13,539 464,900
Marschollek Lautenschlaeger und Partner AG (pfd) (Independent life insurance
company) .............................................................................. 9,400 5,263,731
Medion AG* (Marketer and distributor of multimedia products and various consumer
apliances) ............................................................................ 2,218 455,797
Pfeiffer Vacuum Technology AG (ADR)* (Manufacturer of various pumps and vacuum
systems) .............................................................................. 44,000 1,661,000
PrimaCom AG* (Developer, manager and operator of broadband cable networks) .............. 11,971 518,566
Telegate AG* (Provider of directory assistance services) ................................ 20,417 916,792
W.E.T. Automotive Systems AG* (Manufacturer of heating, wiring, and cable
components) ........................................................................... 17,945 881,630
-----------------
12,158,348
-----------------
Greece 0.5%
Panafon Hellenic Telecom S.A*. (Provider of mobile telephone services) .................. 13,452 358,412
STET Hellas Telecommunications S.A. (ADR)* (Mobile telecommunication services) .......... 58,221 1,571,967
-----------------
1,930,379
-----------------
Hungary 0.3%
OTP Bank Rt (GDR) (Savings and commercial bank) ......................................... 23,300 992,580
-----------------
Indonesia 0.0%
PT Steady Safe Transportation Service Tbk* (Operator of taxis and buses in Jakarta) ..... 444 3
-----------------
Ireland 9.2%
Anglo Irish Bank Corp. PLC (Provider of financial services for business and private
sectors) .............................................................................. 2,726,230 7,921,093
ESAT Telecom Group PLC (ADR)* (Provider of telecommunication services) .................. 111,800 5,464,225
Elan Corp. "A" (Warrants) expires 12/31/2001 (Developer of controlled-absorption
drug delivery systems) ................................................................ 133,000 3,790,500
Green Property PLC (Conducts operations in property development, investment and
trading) .............................................................................. 354,880 2,240,624
Irish Continental Group PLC (Transporter of passengers, freight and containers
between Ireland the U.K. and the continent) ........................................... 211,555 2,849,859
Irish Life & Permanent PLC (Retail financial services group) ............................ 448,255 6,488,370
Jury's Hotel Group PLC (Hotel operator) ................................................. 583,745 5,489,125
Ryan Hotels PLC (Owner and operator of hotel chain) ..................................... 1,434,460 1,485,267
-----------------
35,729,063
-----------------
Israel 0.9%
Check Point Software Technologies Ltd.* (Developer, marketer and supporter of
management
solutions for active networks) ........................................................ 96,300 3,394,575
-----------------
Italy 1.8%
Aeroporti di Roma SpA (Management of Fiumicino and Ciampino airports) ................... 211,000 1,580,588
Bulgari SpA (Manufacturer and retailer of fine jewelry, luxury watches and perfumes) .... 444,800 2,678,734
The accompanying notes are an integral part of the financial statements.
12 - Scudder Global Discovery Fund
<PAGE>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
Safilo SpA (Manufacturer of frames for glasses) ......................................... 518,000 2,577,749
-----------------
6,837,071
-----------------
Japan 2.3%
Fujitsu Support and Service Inc. (Provider of information services) ..................... 59,000 7,211,386
Jafco Co., Ltd. (Venture capital company) ............................................... 37,000 1,852,323
-----------------
9,063,709
-----------------
Luxembourg 1.1%
Millicom International Cellular S.A.* (Developer and operator of cellular telephone
networks) ............................................................................. 127,400 4,395,300
-----------------
Netherlands 3.0%
Telegraaf Holding NV (Leading publisher of newspapers, magazines and books) ............. 69,600 1,514,839
IHC Caland NV (Dredging and offshore services) .......................................... 178,580 8,094,314
Tas Groep NV (Software developer) ....................................................... 346,000 1,096,699
United Pan-Europe Communications NV* (Provider of television and telecommunication
services) ............................................................................. 15,564 804,941
-----------------
11,510,793
-----------------
Philippines 0.4%
International Container Terminal Services, Inc.* (Containerized cargo handling firm) .... 15,415,650 1,540,551
-----------------
Poland 0.3%
Pioneer Poland Fund (Closed-end investment company) (b) ................................. 3 (Units) 1,199,104
-----------------
Portugal 2.9%
Jeronimo Martins, SGPS, S.A. (Food producer and retailer) ............................... 150,925 4,967,172
Telecel-Comunicacoes Pessoais, S.A. (Cellular communication services) ................... 46,966 6,277,172
-----------------
11,244,344
-----------------
Spain 1.1%
Aldeasa S.A. (Operator of airport duty-free shops) ...................................... 49,500 1,511,447
TelePizza, S.A.* (Operator of fast food restaurants) .................................... 447,274 2,835,403
-----------------
4,346,850
-----------------
Sweden 0.3%
Kinnevik AB "B" (Diversified holding company) ........................................... 53,200 1,166,528
-----------------
Switzerland 1.2%
Kuoni Reisen AG (Registered) (Travel agency) ............................................ 867 3,068,624
Lindt & Spruengli AG (Manufacturer of chocolate and confectionary products) ............. 37 94,095
Phoenix Mecano AG (Bearer) (Manufacturer of housings and components for computers) ...... 3,537 1,622,796
-----------------
4,785,515
-----------------
United Kingdom 13.3%
ARM Holdings PLC* (Designer of RISC microprocessors and related technology) ............. 340,800 3,662,046
Aegis Group PLC (Independent media services group) ...................................... 532,187 1,151,421
The accompanying notes are an integral part of the financial statements.
13 - Scudder Global Discovery Fund
<PAGE>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
Bodycote International PLC (Holding company) ............................................ 125,742 1,951,891
Expro International Group PLC (Provider of oilfield services) ........................... 438,900 2,118,042
Games Workshop Group PLC (Manufacturer of table top war game systems and miniatures) .... 163,000 1,035,696
Guardian IT PLC (Provider of business continuity and disaster recovery services) ........ 84,016 837,918
ICON PLC (ADR)* (Pharmaceutical and biotechnological research and development
services) ............................................................................. 45,000 708,750
ITNET PLC (Supplier of business process management services) ............................ 104,122 592,917
Matalan PLC (Clothing retailer) ......................................................... 256,786 3,188,867
New Look Group PLC (Retailer of womenswear) ............................................. 720,909 2,574,431
PizzaExpress PLC (Operator of pizza restaurants) ........................................ 133,213 1,960,720
Provident Financial PLC (Personal finance group) ........................................ 420,642 7,016,801
RM PLC (Information technology solutions to educational markets) ........................ 677,500 5,885,059
Regent Inns PLC (Owner and operator of hotels and restaurants) .......................... 617,262 1,856,773
Serco Group PLC (Facilities management company) ......................................... 703,700 15,621,201
Synstar PLC* (Provider of IT services) .................................................. 378,178 815,171
Taylor Nelson Sofres PLC (Market research company) ...................................... 300,062 757,807
-----------------
51,735,511
-----------------
United States 47.9%
Advent Software, Inc.* (Provider of stand-alone and client/server software products) .... 39,400 2,428,025
America West Holdings Corp. "B"* (Passenger airline) .................................... 203,200 4,241,800
Anadarko Petroleum Corp. (Oil and gas exploration and production) ....................... 56,100 2,128,294
Aptargroup, Inc. (Manufacturer of packaging equipment components) ....................... 118,200 3,309,600
Axogen Ltd.* (Developer of therapeutic products for neurological disorders) ............. 106,100 3,236,050
Barrett Resources Corp.* (Oil and gas exploration and production) ....................... 67,100 2,038,163
Billing Concepts* (Billing and information management services) ......................... 538,300 6,661,463
Black Box Corp.* (Manufacturer of wide area networking products, direct marketer of
computer products) .................................................................... 39,000 1,335,750
CNF Transportation, Inc. (Trucking, air freight) ........................................ 95,700 4,180,894
Concentra Managed Care, Inc.* (Provider of integrated nonrisk-bearing workers'
compensation managed care) ............................................................ 148,100 2,008,606
Concord EFS, Inc.* (Electronic transaction authorization, processing, settlement
and transfer services) ................................................................ 126,000 4,205,250
Dallas Semiconductor Corp. (Manufacturer of silicon integrated circuits and
subsystems) ........................................................................... 40,000 1,700,000
Diamond Offshore Drilling, Inc. (Offshore oil and gas well drilling) .................... 106,100 3,507,931
Eagle USA Airfreight, Inc.* (Provider of airfreight forwarding services) ................ 14,500 529,250
Fiserv Inc.* (Provider of data processing services) ..................................... 187,162 10,960,675
FortuneCity.com, Inc.* (Provider of native language communities located on the
internet) ............................................................................. 25,981 730,176
G & K Services, Inc. "A" (Uniform rentals) .............................................. 52,100 2,435,675
The accompanying notes are an integral part of the financial statements.
14 - Scudder Global Discovery Fund
<PAGE>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
Healthcare Recoveries, Inc.* (Provider of recovery services for private healthcare
payors) ............................................................................... 17,300 79,472
IDX Systems Corp.* (Provider of health care information systems to physician groups
and academic medical centers) ......................................................... 109,500 1,779,375
MEDE AMERICA Corp.* (Provider of electronic interchange products and services to
the healthcare industry) .............................................................. 65,200 1,695,200
MIH Ltd.* (Provider of pay-TV services) ................................................. 66,400 1,303,100
Mercury Computer Systems, Inc.* (Manufacturer of digital signal processing computer
systems) .............................................................................. 78,900 1,725,938
Network Appliance, Inc.* (Designer and manufacturer of network data storage devices) .... 308,200 15,506,313
North Fork Bancorporation, Inc. (Commercial and savings bank holding company) ........... 15,900 357,750
S & P Mid-Cap 400 Depository Receipts (Security that represents ownership in the
Mid-Cap SPDR Trust) ................................................................... 243,200 18,110,800
Sola International, Inc.* (Manufacturer of plastic eyeglass lenses) 210,200 3,126,725
Sterling Commerce, Inc.* (Producer of electronic data interchange products and
services) ............................................................................. 307,934 9,642,183
Symbol Technologies Inc. (Manufacturer of bar code laser scanners) ...................... 111,600 5,328,900
Tiffany & Co. (Retailer of jewelry and gift items) ...................................... 153,000 12,852,000
Total Renal Care Holdings, Inc.* (Dialysis services for treatment of chronic kidney
failure) .............................................................................. 340,399 4,723,036
VISX Inc.* (Developer of laser technologies and systems for vision correction) .......... 270,600 34,839,746
Vitesse Semiconductor Corp.* (Manufacturer of digital integrated circuits) .............. 267,700 12,397,856
Wackenhut Corrections Corp.* (Manager of privatized correctional and detention
facilities) ........................................................................... 42,100 781,481
Wesley Jessen VisionCare, Inc.* (Manufacturer of soft contact lenses) ................... 85,100 2,606,188
Wisconsin Central Transportation Co.* (Operator of regional freight railroad) ........... 201,700 3,725,147
-----------------
186,218,812
- -----------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $235,495,023) 372,938,602
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $251,712,023) (a) 389,155,602
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $255,938,412. At April 30,
1999, net unrealized appreciation for all securities based on tax cost was
$133,217,190. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $151,559,807 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$18,342,617.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $1,199,104 (0.31% of net assets). Their
values have been estimated by the Valuation Committee in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of these
securities at April 30, 1999 aggregated $1,477,500.
The accompanying notes are an integral part of the financial statements.
15 - Scudder Global Discovery Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1999
<TABLE>
<CAPTION>
Assets
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $251,712,023) .............................. $ 389,155,602
Receivable for investments sold .................................................... 9,346,066
Receivable for Fund shares sold .................................................... 313,183
Dividends and interest receivable .................................................. 341,993
Foreign taxes recoverable .......................................................... 28,234
Other assets ....................................................................... 6,856
----------------
Total assets ....................................................................... 399,191,934
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------
Due to custodian bank .............................................................. 1,515,330
Payable for investments purchased .................................................. 7,206,213
Payable for fund shares redeemed ................................................... 276,839
Accrued management fee ............................................................. 313,319
Other payables and accrued expenses ................................................ 224,279
----------------
Total liabilities .................................................................. 9,535,980
-----------------------------------------------------------------------------------------------------------
Net assets, at market value $ 389,655,954
-----------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income ....................... (5,415,863)
Unrealized appreciation (depreciation) on investments .............................. 137,443,579
Unrealized appreciation (depreciation) on foreign currency related transactions .... (12,391)
Accumulated net realized gain (loss) ............................................... 22,116,995
Paid-in capital .................................................................... 235,523,634
-----------------------------------------------------------------------------------------------------------
Net assets, at market value $ 389,655,954
-----------------------------------------------------------------------------------------------------------
Net Asset Value
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Shares
Net asset value, offering and redemption price per share ($353,753,886
/ 14,589,054 outstanding shares of beneficial interest, $.01 par value, ----------------
unlimited number of shares authorized) ............................................. $24.25
----------------
Class A Shares
Net asset value and redemption price per share ($20,064,054 / 829,821 outstanding shares ----------------
of beneficial interest, $.01 par value, unlimited number of shares authorized) ..... $24.18
----------------
----------------
Maximum offering price per share (100 / 94.25 of $24.18) ........................... $25.66
----------------
Class B Shares
Net asset value, offering and redemption price (subject to contingent deferred sales
charge) per share ($11,167,881 / 465,492 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) ................... $23.99
----------------
Class C Shares
Net asset value, offering and redemption price (subject to contingent deferred sales
charge) per share ($4,670,133 / 194,680 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) ................... $23.99
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Global Discovery Fund
<PAGE>
Statement of Operations
six months ended April 30, 1999
<TABLE>
<CAPTION>
Investment Income (loss)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $80,823) ............. $ 1,343,162
Interest ......................................................... 649,595
----------------
1,992,757
Expenses:
Management fee ................................................... 2,048,916
Services to shareholders ......................................... 619,478
Custodian and accounting fees .................................... 287,351
Distribution fees ................................................ 44,814
Administrative service fees ...................................... 35,173
Directors' fees and expenses ..................................... 29,013
Reports to shareholders .......................................... 38,588
Auditing ......................................................... 39,216
Legal ............................................................ 12,052
Amortization of organization expenses ............................ 1,486
Registration fees ................................................ 30,634
Other ............................................................ 20,873
----------------
Total expenses before reductions ................................. 3,207,594
Expense reductions ............................................... (18,123)
----------------
Expenses, net .................................................... 3,189,471
-------------------------------------------------------------------------------------------
Net investment income (loss) (1,196,714)
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ...................................................... 27,417,892
Foreign currency related transactions ............................ 10,046
----------------
27,427,938
Net unrealized appreciation (depreciation) during the period
on:
Investments ...................................................... 47,019,367
Foreign currency related transactions ............................ (16,287)
----------------
47,003,080
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 74,431,018
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 73,234,304
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Global Discovery Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets Six Months Year Ended
Ended October 31,
April 30, 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ........................... $ (1,196,714) $ (1,674,161)
Net realized gain (loss) from investment transactions .. 27,427,938 2,110,032
Net unrealized appreciation (depreciation) on
investment transactions during the period ........... 47,003,080 2,940,060
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations .......................................... 73,234,304 3,375,931
---------------- ----------------
Distributions to shareholders from:
Net investment income-- Scudder Shares .............. -- (9,815,437)
---------------- ----------------
Net realized gains-- Scudder Shares ................. -- (21,794,909)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .............................. 191,468,063 203,840,754
Net asset value of shares issued to shareholders in
reinvestment of distributions .......................... -- 29,399,080
Cost of shares redeemed ................................ (203,775,354) (225,398,432)
---------------- ----------------
Net increase (decrease) in net assets from Fund share .. (12,307,291) 7,841,402
transactions ---------------- ----------------
Increase (decrease) in net assets ...................... 60,927,013 (20,393,013)
Net assets at beginning of period ...................... 328,728,941 349,121,954
Net assets at end of period (including accumulated
distributions in excess of net investment income of ---------------- ----------------
$5,415,863 and $4,219,149, respectively) ............... $ 389,655,954 $ 328,728,941
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder Global Discovery Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Scudder Shares (b)
Six Months Ended Years Ended October 31,
April 30, 1999(a) 1998(a) 1997(a) 1996(a) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------
Net asset value, beginning of period ............ $19.81 $ 21.64 $ 20.45 $ 17.54 $ 16.27 $ 16.14
Income from investment operations: ---------------------------------------------------------------------------
Net investment income (loss) .................... (.07) (.10) (.12) (.04) (.03) (.02)
Net realized and unrealized gain (loss) on
investment transactions ...................... 4.51 .32 2.30 3.59 1.38 .48
---------------------------------------------------------------------------
Total from investment operations ................ 4.44 .22 2.18 3.55 1.35 .46
---------------------------------------------------------------------------
Less distributions:
From net investment income ...................... -- (.64) (.13) (.20) -- --
In excess of net investment income .............. -- -- -- -- -- (.18)
From net realized gains on investment
transactions .................................. -- (1.41) (.86) (.44) (.08) (.15)
---------------------------------------------------------------------------
Total distributions ............................. -- (2.05) (.99) (.64) (.08) (.33)
---------------------------------------------------------------------------
Net asset value, end of period .................. $24.25 $ 19.81 $ 21.64 $ 20.45 $ 17.54 $ 16.27
---------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ................................ 22.41** 1.19 11.14 20.97 8.32 2.80(c)
Ratios and Supplemental Data
Net assets, end of period ($ millions) .......... 354 310 349 351 255 256
Ratio of operating expenses, net to average
daily net assets (%) .......................... 1.67* 1.65 1.63 1.60 1.69 1.70
Ratio of operating expenses before expense ...... 1.67* 1.65 1.63 1.60 1.69 1.76
reductions, to average daily net assets (%)
Ratio of net investment income (loss) to average
daily net assets (%) .......................... (.60)* (.45) (.58) (.20) (.12) (.28)
Portfolio turnover rate (%) ..................... 49.5* 40.6 60.5 63.0 43.7 45.8
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) On April 16, 1998 existing shares of the Fund were designated as Scudder
Shares and are generally not available to new investors.
(c) Total return would have been lower had certain expenses not been reduced. *
Annualized
** Not annualized
19 - Scudder Global Discovery Fund
<PAGE>
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Class A
For the Period
April 16, 1998
(commencement of
sale of Class A
Six Months Ended shares) to
April 30, 1999 October 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
-------------------------------------
Net asset value, beginning of period ........................................... $19.78 $23.98
-------------------------------------
Income from investment operations:
Net investment income (loss) ................................................... (.10) (.09)
Net realized and unrealized gain (loss) on investment transactions ............. 4.50 (4.11)
-------------------------------------
Total from investment operations ............................................... 4.40 (4.20)
-------------------------------------
-------------------------------------
Net asset value, end of period ................................................. $24.18 $19.78
-------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) (c) ....................................................... 22.24** (17.51)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ......................................... 20 11
Ratio of operating expenses, net to average daily net assets (%) ............... 1.95* 1.95*
Ratio of operating expenses before expense reductions, to average daily net assets (%) 2.18* 2.20*
Ratio of net investment income (loss) to average daily net assets (%) .......... (.84)* (1.00)*
Portfolio turnover rate (%) .................................................... 49.5* 40.6
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of any sales charges.
(c) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
20 - Scudder Global Discovery Fund
<PAGE>
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Class B
For the Period
April 16, 1998
(commencement of
sale of Class B
Six Months Ended shares) to
April 30, 1999 October 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
............................................................................... -------------------------------------
Net asset value, beginning of period ........................................... $19.70 $23.98
-------------------------------------
Income from investment operations:
Net investment income (loss) ................................................... (.18) (.18)
Net realized and unrealized gain (loss) on investment transactions ............. 4.47 (4.10)
-------------------------------------
Total from investment operations ............................................... 4.29 (4.28)
-------------------------------------
-------------------------------------
Net asset value, end of period ................................................. $23.99 $19.70
-------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ........................................................... 21.78** (17.85)(c)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ......................................... 11 6
Ratio of operating expenses, net to average daily net assets (%) ............... 2.67* 2.83*
Ratio of operating expenses before expense reductions, to average daily net assets (%) 2.67* 3.13*
Ratio of net investment income (loss) to average daily net assets (%) .......... (1.58)* (1.87)*
Portfolio turnover rate (%) .................................................... 49.5* 40.6
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of any sales charges.
(c) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
21 - Scudder Global Discovery Fund
<PAGE>
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Class C
For the Period
April 16, 1998
(commencement of
sale of Class C
Six Months Ended shares) to
April 30, 1999 October 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
-------------------------------------
Net asset value, beginning of period ........................................... $19.70 $23.98
-------------------------------------
Income from investment operations:
Net investment income (loss) ................................................... (.19) (.17)
Net realized and unrealized gain (loss) on investment transactions ............. 4.48 (4.11)
-------------------------------------
Total from investment operations ............................................... 4.29 (4.28)
-------------------------------------
-------------------------------------
Net asset value, end of period ................................................. $23.99 $19.70
-------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ........................................................... 21.78** (17.85)(c)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ......................................... 5 2
Ratio of operating expenses, net to average daily net assets (%) ............... 2.73* 2.80*
Ratio of operating expenses before expense reductions, to average daily net assets (%) 2.73* 3.23*
Ratio of net investment income (loss) to average daily net assets (%) .......... (1.65)* (1.88)*
Portfolio turnover rate (%) .................................................... 49.5* 40.6
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of any sales charges.
(c) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
22 - Scudder Global Discovery Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Global Discovery Fund (the "Fund") is a diversified series of
Global/International Fund, Inc. (formerly known as Scudder Global Fund, Inc.), a
Maryland corporation registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
Effective April 16, 1998, the Fund changed its name from Scudder Global
Discovery Fund to Global Discovery Fund and an additional three classes of
shares were offered, namely Classes A, B and C. Existing shares of Global
Discovery Fund outstanding on that date were redesignated Scudder Shares. Class
A shares are sold to investors subject to an initial sales charge. Class B
shares are sold without an initial sales charge but are subject to higher
ongoing expenses than Class A and Scudder Shares and a contingent deferred sales
charge payable upon certain redemptions. Class B shares automatically convert to
Class A shares six years after issuance. Class C shares are sold without an
initial sales charge but are subject to higher ongoing expenses than Class A and
Scudder Shares and a contingent deferred sales charge payable upon certain
redemptions within one year of purchase. Class C shares do not convert into
another class. Scudder Shares are generally not available to new investors and
are not subject to initial or contingent deferred sales charges.
Investment income, realized and unrealized capital gains and losses, and certain
fund-level expenses and expense reductions, if any, are borne pro rata on the
basis of relative net assets by the holders of all classes of shares except that
each class bears expenses unique to that class. Each class of shares differs in
its respective distribution, shareholder services, administrative services and
certain other class-specific expenses and expense reductions. All shares of the
Fund have equal rights with respect to voting.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on such system. If there are no such sales, the value is the most
recent bid quotation. Securities which are not quoted on the Nasdaq System but
are traded in another over-the-counter market are valued at the most recent sale
price on such market. If no sale occurred, the security is then valued at the
calculated mean between the most recent bid and asked quotations. If there are
no such bid and asked quotations, the most recent bid quotation shall be used.
Portfolio debt securities other than money market instruments with an original
maturity over sixty days are valued by pricing agents approved by the officers
of the Fund, which quotations reflect broker/dealer-supplied valuations and
electronic data processing techniques. If the pricing agents are unable to
provide such quotations, the most recent bid quotation supplied by a bona fide
market maker shall be used. Money market instruments purchased with an original
maturity of sixty days or less are valued at amortized cost. All other
securities are valued at their fair value as determined in good faith by the
Valuation Committee of the Board of Directors.
23 - Scudder Global Discovery Fund
<PAGE>
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least the repurchase price.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at the
daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest income
and certain expenses at the rates of exchange prevailing on the respective
dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract (forward contract) is a commitment to purchase or sell a
foreign currency at the settlement date at a negotiated rate. During the period,
the Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no federal
income tax provision was required.
At October 31, 1998, the Fund had a net tax basis capital loss carryforward of
approximately $5,304,000, which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2006, the expiration date, whichever occurs first.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not
24 - Scudder Global Discovery Fund
<PAGE>
distributed and, therefore, will be distributed to shareholders annually. An
additional distribution may be made to the extent necessary to avoid the payment
of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in forward contracts, passive
foreign investment companies, and certain securities sold at a loss. As a
result, net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Organization Costs. Costs incurred by the Fund in connection with its
organization have been deferred and are being amortized on a straight-line basis
over a five-year period.
Other. Investment security transactions are accounted for on a trade-date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. Purchases and Sales of Securities
During the six months ended April 30, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $85,897,070 and
$87,361,033, respectively.
C. Related Parties
Management Agreement. Under the Management Agreement (the "Agreement") with
Scudder Kemper Investments, Inc. ("Scudder Kemper" or the "Adviser"), the Fund
pays the Adviser a fee equal to an annual rate of 1.10% of the Fund's average
daily net assets, computed and accrued daily and payable monthly. As manager of
the assets of the Fund, the Adviser directs the investments of the Fund in
accordance with its investment objectives, policies, and restrictions. The
Adviser determines the securities, instruments, and other contracts relating to
investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Agreement. For the six months ended April 30,
1999, the fee pursuant to the Agreement amounted to $2,048,916, of which
$313,319 was unpaid at April 30, 1999.
Distribution Service Agreement. In accordance with Rule 12b-1 under the
Investment Company Act of 1940, Kemper Distributors, Inc. ("KDI"), a subsidiary
of the Adviser, receives a fee of .75% of average daily net assets of Classes B
and C.
25 - Scudder Global Discovery Fund
<PAGE>
Pursuant to the agreement, KDI enters into related selling group agreements with
various firms at various rates for sales of Class B and C shares. For the six
months ended April 30, 1999, the Distribution Fee was as follows:
Distribution Fee Total Aggregated Unpaid at
April 30, 1999
------------------------------------ ------------------ ------------------
Class B ............................ $ 31,876 $ 6,677
Class C ............................ 12,938 2,769
------------ --------------
$ 44,814 $ 9,446
========= =========
Underwriting Agreement and Contingent Deferred Sales Charge. KDI is the
principal underwriter for Classes A, B and C. Underwriting commissions paid in
connection with the distribution of Class A shares for the six months ended
April 30, 1999 aggregated $145,372, of which $136,883 was paid to other firms.
In addition, KDI receives any contingent deferred sales charge (CDSC) from Class
B share redemptions occurring within six years of purchase and Class C share
redemptions occurring within one year of purchase. There is no such charge upon
redemption of any share appreciation or reinvested dividends. Contingent
deferred sales charges are based on declining rates ranging from 4% to 1% for
Class B and 1% for Class C, of the value of the shares redeemed. For the six
months ended April 30, 1999, the CDSC for Classes B and C aggregated $8,353 and
$1,142, respectively.
Administrative Service Fees. KDI provides information and administrative
services to Classes A, B and C shareholders at an annual rate of up to .25% of
average daily net assets for each such class. KDI in turn has various agreements
with financial services firms that provide these services and pays these firms
based upon the assets of shareholder accounts the firms service. For the six
months ended April 30, 1999, the Administrative Service Fee was as follows:
<TABLE>
<CAPTION>
Administrative Total Fees Waived by Unpaid at
Service Fee Aggregate KDI April 30, 1999
------------------------------------ ------------------ --------------------- ---------------------
<S> <C> <C> <C>
Class A $ 20,235 $ 18,123 $ 2,112
Class B 10,625 -- 2,042
Class C 4,313 -- 1,153
------------ -------------- --------------
$ 35,173 $ 18,123 $ 5,307
========= ========= =========
</TABLE>
Shareholder Services Fees. Kemper Service Company ("KSC"), an affiliate of the
Adviser, is the transfer, dividend-paying and shareholder service agent for the
Fund's Classes A, B and C Shares. For the six months ended April 30, 1999, the
amount charged to Classes A, B and C by KSC aggregated $33,058, $16,416 and
$6,016, respectively, of which $16,899 is unpaid at April 30, 1999. Scudder
Service Corporation ("SSC"), a subsidiary of the Adviser, is the transfer,
dividend-paying and shareholder service agent for the Scudder Shares. For the
six months ended April 30, 1999, the amount charged to the Scudder Shares by SSC
for shareholder services aggregated $339,168, of which $54,413 is unpaid at
April 30, 1999.
26 - Scudder Global Discovery Fund
<PAGE>
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Scudder Shares of the Fund. For the six
months ended April 30, 1999, the amount charged to the Scudder Shares by STC
aggregated $105,802, of which $17,917 is unpaid at April 30, 1999.
Fund Accounting Fees. Scudder Fund Accounting Corporation ("SFAC"), a subsidiary
of the Adviser, is responsible for determining the daily net asset value per
share and maintaining the portfolio and general accounting records of the Fund.
For the six months ended April 30, 1999, the amount charged to the Fund by SFAC
aggregated $196,274, of which $66,826 is unpaid at April 30, 1999.
Directors Fees. The Fund pays each of its Directors not affiliated with the
Adviser an annual retainer plus specified amounts for attended board and
committee meetings. For the six months ended April 30, 1999, the Directors fees
and expenses aggregated $29,013.
D. Line of Credit
The Fund and several affiliated Funds (the "Participants") share in a $850
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 1/3 percent of its net assets under the agreement.
27 - Scudder Global Discovery Fund
<PAGE>
E. Capital Share Transactions
The following table summarizes capital share and dollar activity in the Fund:
<TABLE>
<CAPTION>
Six months ended Year ended
April 30, 1999 October 31, 1998
---------------------------------- ---------------------------------
Shares Dollars Shares Dollars
<S> <C> <C> <C> <C>
Shares sold
Scudder Shares .................................. 3,671,356 $ 83,546,911 6,972,104 $ 148,104,107
Class A ......................................... 4,370,045 100,284,812 2,260,575 46,546,836
Class B ......................................... 228,900 5,170,753 309,368 6,651,125
Class C ......................................... 109,765 2,465,587 117,930 2,538,686
-------------- -------------- -------------- -------------
8,380,066 191,468,063 9,659,977 203,840,754
-------------- -------------- -------------- -------------
Shares issued to shareholders in reinvestment of
distributions
Scudder Shares .................................. -- -- 1,514,636 $ 29,399,080
Class A ......................................... -- -- -- --
Class B ......................................... -- -- -- --
Class C ......................................... -- -- -- --
-------------- -------------- -------------- -------------
-- -- 1,514,636 29,399,080
-------------- -------------- -------------- -------------
Shares redeemed
Scudder Shares .................................. (4,704,836) $(107,380,989) (8,999,114) $(190,396,588)
Class A ......................................... (4,112,452) (94,596,464) (1,688,347) (34,483,052)
Class B ......................................... (53,567) (1,212,172) (19,209) (386,029)
Class C ......................................... (26,365) (585,729) (6,650) (132,763)
-------------- -------------- -------------- -------------
(8,897,220) (203,775,354) (10,713,320) (225,398,432)
-------------- -------------- -------------- -------------
Net increase (decrease)
Scudder Shares .................................. (1,033,480) $ (23,834,078) (512,374) $ (12,893,401)
Class A ......................................... 257,593 5,688,348 572,228 12,063,784
Class B ......................................... 175,333 3,958,581 290,159 6,265,096
Class C ......................................... 83,400 1,879,858 111,280 2,405,923
-------------- -------------- -------------- -------------
(517,154) $ (12,307,291) 461,293 $ 7,841,402
-------------- -------------- -------------- -------------
</TABLE>
28 - Scudder Global Discovery Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Global/International Fund, Inc. and to the
Shareholders of Global Discovery Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Global Discovery Fund (the "Fund")
at April 30, 1999, the results of its operations for the six months then ended,
and the changes in its net assets and the financial highlights for each of the
periods indicated therein, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at April 30, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
Boston, Massachusetts PricewaterhouseCoopers LLP
June 11, 1999
29 - Scudder Global Discovery Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Global Discovery
Fund (the "Fund") was held on December 17, 1998, at the office of Scudder Kemper
Investments, Inc., Two International Place, Boston, Massachusetts 02110. At the
Meeting the following matters were voted upon by the shareholders (the resulting
votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
9,209,440 253,378 330,107 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
7,622,161 402,257 476,189 1,292,318
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
30 - Scudder Global Discovery Fund
<PAGE>
This Page
intentionally
left blank.
31 - Scudder Global Discovery Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board,
Vice President and Director
Nicholas Bratt*
President and Director
Paul Bancroft III
Director; Consultant and
Venture Capitalist
Sheryle J. Bolton
Director; Chief Executive
Officer, Scientific Learning
Corporation
William T. Burgin
Director; General Partner,
Bessemer Venture Partners
Keith R. Fox
Director; Private Equity
Investor
William H. Luers
Director; Chairman and
President, U.N. Association of
the U.S.A.
Kathryn L. Quirk*
Director, Vice President and
Assistant Secretary
Joan E. Spero
Director; President, Doris Duke
Charitable Foundation
Thomas J. Devine
Honorary Director; Consultant
William H. Gleysteen, Jr.
Honorary Director; Consultant;
Guest Scholar, Brookings
Institute
Robert G. Stone, Jr.
Honorary Director; Chairman
Emeritus of the Board and
Director, Kirby Corporation
Susan E. Dahl*
Vice President
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
Gerald J. Moran*
Vice President
M. Isabel Saltzman*
Vice President
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
32 - Scudder Global Discovery Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Prime Reserve Shares*
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 GNMA Fund
Scudder Income Fund
Scudder Corporate Bond 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 Select 500 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 Select 1000 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
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
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.
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. +++
+++ +++A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold by Scudder's
insurance agencies, 1-800-225-2470. #These funds, advised by Scudder Kemper
Investments, Inc., are traded on the New York Stock Exchange and, in some cases,
on various other stock exchanges.
33 - Scudder Global Discovery Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
34 - Scudder Global Discovery Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
800 no-load funds from well-known companies--with no
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder
Brokerage account already reserved for them, with
no minimum investment. For information about
Scudder Brokerage Services, call 1-800-700-0820.
Fund Folio funds held less than six months will be charged a transaction fee. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
35 - Scudder Global Discovery Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $280 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services Group. As a result, Zurich's subsidiary, Zurich
Kemper Investments, Inc., with 50 years of mutual fund and investment management
experience, was combined with Scudder. Headquartered in New York, Scudder Kemper
Investments offers a full range of investment counsel and asset management
capabilities, based on a combination of proprietary research and disciplined,
long-term investment strategies. With its global investment resources and
perspective, the firm seeks opportunities in markets throughout the world to
meet the needs of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Financial Services Group. The Zurich Financial Services Group is
an internationally recognized leader in financial services, including
property/casualty and life insurance, reinsurance, and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
<PAGE>
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED APRIL 30, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
KEMPER GLOBAL DISCOVERY FUND SEEKS ABOVE-AVERAGE CAPITAL
APPRECIATION OVER THE LONG-TERM BY INVESTING PRIMARILY IN EQUITY
SECURITIES OF SMALL COMPANIES LOCATED THROUGHOUT THE WORLD.
KEMPER GLOBAL DISCOVERY FUND IS PROPERLY KNOWN AS
GLOBAL DISCOVERY FUND.
KEMPER
GLOBAL
DISCOVERY FUND
"... our ability to outperform both our peers and the
index during this period of very narrow market
performance was mainly due to the outstanding
performance of some of our larger positions. ..."
[KEMPER FUNDS LOGO]
<PAGE>
CONTENTS
3
Economic Overview
5
Performance Update
8
Country Concentrations
9
Largest Holdings
10
Report Of Independent Auditors
11
Portfolio Of Investments
18
Financial Statements
21
Financial Highlights
25
Notes to Financial Statements
31
Shareholders' Meeting
- --------------------------------------------------------------------------------
KEMPER GLOBAL DISCOVERY FUND
TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1999 (UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
KEMPER GLOBAL DISCOVERY FUND CLASS A 22.24%
KEMPER GLOBAL DISCOVERY FUND CLASS B 21.78%
KEMPER GLOBAL DISCOVERY FUND CLASS C 16.48%
LIPPER GLOBAL SMALL CAP FUNDS CATEGORY AVERAGE* 21.78%
- --------------------------------------------------------------------------------
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. KEMPER GLOBAL DISCOVERY
FUND CLASS A, B AND C SHARES WERE INITIALLY OFFERED APRIL 16, 1998.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
4/30/99 10/31/98
- ----------------------------------------------------------------------------------------
<S> <C> <C>
KEMPER GLOBAL DISCOVERY FUND CLASS A $24.18 $19.78
- ----------------------------------------------------------------------------------------
KEMPER GLOBAL DISCOVERY FUND CLASS B $23.99 $19.70
- ----------------------------------------------------------------------------------------
KEMPER GLOBAL DISCOVERY FUND CLASS C $23.99 $19.70
- ----------------------------------------------------------------------------------------
</TABLE>
KEMPER GLOBAL DISCOVERY FUND
LIPPER RANKINGS AS OF 4/30/99*
COMPARED TO ALL OTHER FUNDS IN THE LIPPER GLOBAL SMALL CAP FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #2 of 43 FUNDS #4 of 43 FUNDS #3 of 43 FUNDS
- -----------------------------------------------------------------------------------------------------------
</TABLE>
*LIPPER ANALYTICAL SERVICES, INC. RETURNS AND RANKINGS ARE BASED UPON CHANGES IN
NET ASSET VALUE WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF
SALES CHARGES AND, IF THEY HAD, RESULTS MAY HAVE BEEN LESS FAVORABLE.
TERMS TO KNOW
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
[MORNINGSTAR EQUITY STYLE BOX]
- --------------------------------------------------------------------------------
Source: Morningstar, Inc. Chicago, IL. (312)696-6000. The Morningstar Style Box
placement is based on two variables: a fund's market capitalization relative to
the movements of the market and a fund's valuation, which is calculated by
comparing the stocks in the fund's portfolio with the most relevant of the three
market-cap groups.
THE STYLEBOX REPRESENTS A SNAPSHOT OF THE FUND'S PORTFOLIO ON A SINGLE DAY. IT
IS NOT AN EXACT ASSESSMENT OF RISK AND DOES NOT REPRESENT FUTURE PERFORMANCE.
THE FUND'S PORTFOLIO CHANGES FROM DAY-TO-DAY. A LONGER- TERM VIEW IS REPRESENTED
BY THE FUND'S MORNINGSTAR CATEGORY, WHICH IS BASED ON ITS ACTUAL INVESTMENT
STYLE AS MEASURED BY ITS UNDERLYING PORTFOLIO HOLDINGS. CATEGORY PLACEMENTS OF
NEW FUNDS ARE ESTIMATED. MORNINGSTAR HAS PLACED KEMPER GLOBAL DISCOVERY FUND IN
THE WORLD STOCK CATEGORY. PLEASE CONSULT THE PROSPECTUS FOR A DESCRIPTION OF
INVESTMENT POLICIES.
CURRENCY DEVALUATION. A significant decline of a currency's value relative to
other currencies, such as the U.S. dollar. This may be prompted by trading or
central bank intervention (or the lack of intervention) in the currency markets.
For U.S. investors who are investing overseas, a devaluation of a foreign
currency can have the effect of reducing an investment's total return, because
when investments are converted back into U.S. dollars it takes more of the
foreign currency to purchase U.S. dollars.
FUNDAMENTAL RESEARCH. Analysis of a company's financial statements to project
future stock price changes. Considers past records of sales and earnings as well
as the future impact of products, consumer markets, and management in weighting
a company's prospects. This is distinct from TECHNICAL ANALYSIS, which evaluates
the attractiveness of a stock based on historical price and trading volume
movements.
PRICE/EARNINGS RATIO (also "P/E" or "earnings multiple"). A widely used gauge of
a stock's valuation that indicates what investors are paying for a company's
earnings on a per share basis. A high earnings multiple indicates a high
expected growth rate and generally greater risk; a lower multiple is associated
with mature or out-of-favor companies, and typically lower stock price
volatility.
SOURCE: SCUDDER KEMPER INVESTMENTS, INC. AND BARRON'S DICTIONARY OF FINANCE AND
INVESTMENT TERMS
<PAGE>
PERFORMANCE UPDATE
[MORAN PHOTO]
GERALD J. MORAN IS A SENIOR VICE PRESIDENT OF SCUDDER KEMPER INVESTMENTS, INC.
AND IS THE LEAD PORTFOLIO MANAGER FOR KEMPER GLOBAL DISCOVERY FUND. HE HAS
MANAGED THE FUND SINCE ITS INCEPTION IN 1991. MORAN HAS MORE THAN 30 YEARS OF
INDUSTRY EXPERIENCE AND HAS WORKED EXCLUSIVELY WITH SMALL COMPANY STOCKS FOR THE
LAST DECADE.
VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1999, KEMPER GLOBAL DISCOVERY FUND'S
RETURNS NOT ONLY OUTPACED ITS PEERS AND ITS BENCHMARK BUT ALSO TOPPED THE SOLELY
U.S. SMALL-CAP AVERAGE AND EDGED PAST THE STANDARD & POOR'S 500. IN A MARKET
THAT WAS FAR FROM PLUM FOR SMALL-CAP INVESTORS, LEAD PORTFOLIO MANAGER GERALD
MORAN DISCUSSES HOW HE AND HIS TEAM WERE ABLE TO ACCOMPLISH SUCH A FEAT.
Q SIX MONTHS AGO, THE WORLD MARKETS LOOKED VERY DIFFERENT. JAPAN'S MARKET
WAS LANGUISHING, EMERGING MARKETS WERE COLLAPSING AND EUROPE'S MARKET WAS
STABLE. TODAY, WE FIND JAPAN AND EMERGING MARKETS HAVE LED AND EUROPE IS
STAGNATING. WHAT HAPPENED?
A It has been a most interesting period. Three times last fall, the U.S.
Federal Reserve cut interest rates in an effort to stem tightening credit
conditions. As credit spreads narrowed, liquidity spilled into the U.S. equity
market, particularly large capitalization technology and retail stocks. In
December, Europe cut rates to stimulate slowing gross domestic product (GDP)
growth.
In early 1999, the U.S. market remained strong, a large rate cut supported
the United Kingdom's market and continental Europe was troubled by economic
growth concerns. A changing political climate brought center-left or social
democrat governments into power in many major European countries. This meant
that much needed reforms that could help business interests were in jeopardy,
and this led to a weakness in business confidence. Meanwhile, the euro steadily
weakened because of concerns the U.S. would raise interest rates while Europe
might see further rate cuts. This economic uncertainty drove European markets
down.
Negative news coming from key technology firms caused investors to briefly
turn their backs on the technology sector in February, causing a 10 percent
slide in the NASDAQ 100 and similarly impacting many world markets. Japan cut
interest rates in late February in an effort to stimulate domestic growth.
Investors showed their approval of the cut and their optimism for potential
corporate restructuring by sending Japanese stocks up almost 14 percent in
March. Low interest rates worldwide created a flood of global liquidity that
provided a big support to emerging markets. Despite Brazil's currency
devaluation in January, the Latin American and Asian emerging markets staged a
remarkable recovery over the next few months.
In March, strong economic numbers helped push the Dow Jones industrial
average over 10,000 for the first time. The one dark spot was Europe, where
concerns about slowing growth continued to weigh on the equity markets. A
long-awaited European interest rate cut on April 9 finally triggered a rise in
most major European markets and gave hope to the thought that growth might be
returning to the area.
By the end of the period, investors were growing increasingly nervous
about the valuations of large-capitalization U.S. technology stocks. We
witnessed major U.S. companies beating profit forecasts, but suffering
punishment to their share prices in this environment. Overseas markets were very
sensitive to swings in these
5
<PAGE>
PERFORMANCE UPDATE
stocks because of the perceived link between these stocks and the overall health
of the U.S. equity market.
Q HOW DID KEMPER GLOBAL DISCOVERY FUND PERFORM AGAINST THIS BACKDROP?
A While this period wasn't particularly favorable for small-caps, we are
pleased to report that we did quite well. The fund was up 22.24 percent (Class A
shares, unadjusted for any sales charge) for the period vs. the Lipper Global
Small Cap category average, which returned 16.48 percent, and the Salomon
Brothers World Equity Market Index,* up 13.75 percent. As in the past, our
ability to outperform both our peers and the index during this period of very
narrow market performance was mainly due to the outstanding performance of some
of our larger positions.
VISX, a U.S.-based company that manufactures the lasers used in vision
correction surgery, was a real standout. Americans are increasingly making the
decision to throw out their glasses and contact lenses by opting to have this
surgery and the company continues to grow as a result. Not only does VISX
dominate the market for laser corrective surgery, it holds a patent that allows
it to collect $250 per eyeball corrected. As the largest holding and most
profitable stock in the portfolio, VISX seems to still have a great deal of
growth potential ahead.
Our top holdings also include some more familiar names. Tiffany & Co., the
high-end retailer known for its distinctive blue box, is the fifth largest
holding in the fund. The strong U.S. economy and increased disposable income
resulting from it, are driving sales, and performance, for this holding.
Moving into 1999, we saw the technology sector correct and European stock
returns were weakened by a substantial decline in the euro. But again, certain
holdings helped bolster the fund during rough periods in the markets. UK
holdings performed well led by long-time portfolio stalwart Serco Group, a
British outsourcing company.
* THE SALOMON BROTHERS WORLD EQUITY EXTENDED MARKET INDEX (EMI) IS AN UNMANAGED,
SMALL CAPITALIZATION STOCK UNIVERSE DERIVED FROM 22 COUNTRIES. THE INDEX IS
COMPRISED OF THE SMALLEST 20 PERCENT OF GLOBAL SMALL-CAP STOCKS.
Q HOW DOES THIS PERFORMANCE COMPARE TO DOMESTIC SMALL-CAPS?
A The Lipper domestic small cap category was up 14.68 percent so we
outperformed U.S. small caps by 7.56 percent. This outperformance clearly
illustrates the benefits of global reach; we are able to select small-cap stocks
we feel are the best the WORLD has to offer. While it was a close finish, we
slightly trailed the 22.31 percent return of the Standard & Poor's 500, a
strictly U.S. market index dominated by larger company names. Stock selection
was again the key. Small-cap stocks did not do as well as large-cap companies
over the period. It was the strength of some of our well-selected names that
helped this fund outpace its Lipper benchmark.
Q AND WHAT IS YOUR PROCESS FOR FINDING THESE TOP-NOTCH COMPANIES?
A To arrive at the roughly 100 names that make-up the portfolio, our
management team and analysts filter the global small cap universe by reviewing
seven key business attributes such as competitive position, prospects for repeat
revenues and the quality of company management.
Following this initial review, 93 percent of the researched companies are
eliminated. The remaining seven percent are then subjected to further detailed
analysis including a review of the industry they operate in and the markets in
which they invest.
The portfolio is very concentrated with the top 10 holdings accounting for
roughly 40 percent of the portfolio while the top 50 stocks constitute nearly 90
percent of the fund. To attempt to minimize risk, we then diversify among these
names by country, industry and market sector.
During this period, we stayed with the high-quality, high growth stocks
during the down period in the fall. As we moved into the new year we trimmed the
high-growth, long duration exposure by trimming some of last years big
technology winners such as Network Appliance (U.S.) and Vitesse Semiconductor
(U.S.). As we neared the end of the first quarter of this year, we saw a shift
in the market from growth to value-style investing so we thought it was an
opportune time to take profits and position the portfolio more conservatively.
We brought our position in energy stocks up to more significant levels as oil
prices dipped to valuations that seem certain to bounce back later in the year.
We also maintained a high level of our holdings in Europe, shifting slightly
toward stocks in the UK by buying several information technology companies in
that market.
Q WHAT APPROACH ARE YOU TAKING TO AN APPARENTLY REBOUNDING JAPAN?
A As small-cap investors, the opportunities in Japan are not as plentiful as
they are for investors with a larger company focus so, while we did increase our
exposure to this market, we still ended the period at roughly a 2 percent
6
<PAGE>
PERFORMANCE UPDATE
weight. We are impressed with what we are seeing in Japan but there are reasons
to remain cautious. Up 25.3 percent* over the period, this market is enjoying
quite a change from the mediocre and negative performance numbers that had been
coming out of that country for the past four years. Despite record unemployment
and a shrinking gross domestic product (GDP), investors poured money into the
Japanese stock market in 1999. They are optimistic about a corporate
restructuring trend and the Bank of Japan's loose monetary policy.
* SOURCE: DATASTREAM AND FT/S&P WORLD INDICES. THE INDEX PROVIDES A GENERAL
REPRESENTATION OF THE PERFORMANCE OF THE JAPANESE STOCK MARKET.
Q WITH PERFORMANCE THAT EVEN OUTPACED THE S&P 500, IT IS HARD TO IMAGINE
THAT THERE WERE DISAPPOINTMENTS DURING THE PERIOD. BUT, IN HINDSIGHT, ARE THERE
THINGS THAT YOU WOULD HAVE DONE DIFFERENTLY?
A Sterling Commerce was a major disappointment. Despite posting a strong
earnings price, performance was less than stellar. As one of our top-ten
positions, it detracted significantly from performance. We also found it
necessary to sell our position in MobilComm, a German telecommunications
company, as competition in that market proved stronger than expected and
diminished the long-term prospects for the company.
Q WHAT IS YOUR OUTLOOK FOR SMALLER CAP STOCKS AND GLOBAL MARKETS IN GENERAL?
A The market consensus seems to be that the crisis period we endured as
recently as last fall has passed. We are seeing strong economic signals that are
slightly more tenuous in Latin America and a little less so in Asia. Economies
are slowly recovering and beginning to address the structural issues that must
be resolved. This has buoyed markets.
Speaking just of small caps, the gap between large- and small-cap
companies continues to be quite big despite the fact smaller company valuations
are at the lowest levels (relative to large cap stocks) they've been in 30 years
in the U.S. Similar disparities exist abroad. The key is really with the
investors and whether they decide to turn their attention away from larger names
and toward more aggressive, smaller companies. That will swing the balance. The
favor still seems to be with very few, large-cap companies that are at
unprecedented price/ earnings ratios. Clearly, there is better value in small
caps and, we believe, far greater growth potential.
Q WHAT ARE THE RISKS TO THIS OUTLOOK?
A One risk is that strong economic growth will eventually result in a
decision to raise interest rates, which would have a negative impact on all
equity securities. At the writing of this report, Federal Reserve Board Chairman
Alan Greenspan has insinuated that such an increase is possible. In the U.S.,
signs of "irrational exuberance" were first spotted by Chairman Greenspan when
the market was 3,000 points lower than it is now!
A second risk to this portfolio is a continuation of the trend toward
value and cyclical stocks. We have gotten our performance by picking core growth
stocks that have, over time, performed quite well from an earnings standpoint.
These stocks also tended to increase in multiples of earnings as more and more
investors became interested in them. This new environment could prove
challenging for the fund. We expect the companies we hold to continue to crank
out strong earnings numbers but a shift in investor sentiment could move them to
the back burner. We are a diversified fund and, as I mentioned, we have taken
steps to pull back the degree of high-growth stocks but growth will continue to
be the driving force in the portfolio.
7
<PAGE>
COUNTRY CONCENTRATIONS
GEOGRAPHIC COMPOSITION OF KEMPER GLOBAL DISCOVERY FUND
BASED ON TOTAL COMMON STOCKS AS OF APRIL 30, 1999
[BAR GRAPH]
<TABLE>
<S> <C>
United States 50.00
United Kingdom 14.00
Ireland 10.00
Portugal 3.00
Germany 3.00
Netherlands 3.00
France 3.00
Italy 2.00
Japan 2.00
Switzerland 1.00
Spain 1.00
Austria 1.00
Finland 1.00
Israel 1.00
Luxemborg 1.00
Other 4.00
</TABLE>
8
<PAGE>
LARGEST HOLDINGS
GLOBAL DISCOVERY TOP 20 HOLDINGS*
Representing 54.3 percent of the fund's equity holdings on April 30,
1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
HOLDINGS COUNTRY PERCENT
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1. VISX INC. United States 9.0%
- ---------------------------------------------------------------------------
2. S & P MID-CAP 400 DEPOSITORY United States 4.7%
RECEIPTS
- ---------------------------------------------------------------------------
3. SERCO GROUP PLC United Kingdom 4.0%
- ---------------------------------------------------------------------------
4. NETWORK APPLIANCE, INC. United States 4.0%
- ---------------------------------------------------------------------------
5. TIFFANY & CO. United States 3.3%
- ---------------------------------------------------------------------------
6. VITESSE SEMICONDUCTOR CORP. United States 3.2%
- ---------------------------------------------------------------------------
7. FISERV INC. United States 2.8%
- ---------------------------------------------------------------------------
8. STERLING COMMERCE, INC. United States 2.5%
- ---------------------------------------------------------------------------
9. ALTRAN TECHNOLOGIES S.A. France 2.3%
- ---------------------------------------------------------------------------
10. IHC CALAND NV Netherlands 2.1%
- ---------------------------------------------------------------------------
11. ANGLO IRISH BANK CORP. PLC Ireland 2.0%
- ---------------------------------------------------------------------------
12. FUJITSU SUPPORT AND SERVICE Japan 1.9%
INC.
- ---------------------------------------------------------------------------
13. PROVIDENT FINANCIAL PLC United Kingdom 1.8%
- ---------------------------------------------------------------------------
14. BILLING CONCEPTS United States 1.7%
- ---------------------------------------------------------------------------
15. IRISH PERMANENT PLC Ireland 1.7%
- ---------------------------------------------------------------------------
16. TELECEL-COMUNICACOES Portugal 1.6%
PESSOAIS, S.A.
- ---------------------------------------------------------------------------
17. RM PLC United Kingdom 1.5%
- ---------------------------------------------------------------------------
18. JURY'S HOTEL GROUP PLC Ireland 1.4%
- ---------------------------------------------------------------------------
19. ESAT TELECOM GROUP PLC Ireland 1.4%
- ---------------------------------------------------------------------------
20. SYMBOL TECHNOLOGIES INC. United States 1.4%
- ---------------------------------------------------------------------------
</TABLE>
*PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
TO THE BOARD OF DIRECTORS OF GLOBAL/INTERNATIONAL FUND, INC.
AND TO THE SHAREHOLDERS OF GLOBAL DISCOVERY FUND:
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Global Discovery Fund (the "Fund")
at April 30, 1999, the results of its operations for the six months then ended,
and the changes in its net assets and the financial highlights for each of the
periods indicated therein, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at April 30, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
June 11, 1999
10
<PAGE>
PORTFOLIO OF INVESTMENTS
KEMPER GLOBAL DISCOVERY FUND
PORTFOLIO OF INVESTMENTS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
REPURCHASE AGREEMENTS--4.2% AMOUNT ($) VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreement with Donaldson, Lufkin &
Jenrette dated 4/30/1999 at 4.87%, to be
repurchased at $16,223,581 on 5/3/1999,
collateralized by a $16,254,000 U.S.
Treasury Inflationary Index Note, 3.375%,
1/15/2007 (Cost $16,217,000) 16,217,000 16,217,000
---------------------------------------------------------------------------
COMMON STOCKS--95.8% SHARES
AUSTRALIA--0.2%
CI Technologies Group, Ltd.
(DEVELOPER OF PROCESS MONITORING AND
INDUSTRIAL AUTOMATION SOFTWARE) 219,700 763,279
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
AUSTRIA--0.7%
Eybl International AG*
(PRODUCER OF TEXTILES FOR AUTOMOBILES SOLD
WORLDWIDE) 13,700 412,530
Schoeller Bleckmann Oilfield Equipment AG
(MANUFACTURER OF COMPONENTS FOR OIL AND GAS
DRILLING EQUIPMENT) 17,000 932,194
Topcall International AG
(DEVELOPER, MARKETER, AND SUPPORTER OF
HIGH-END UNIFIED MESSAGING SYSTEMS) 40,600 1,417,710
---------------------------------------------------------------------------
2,762,434
- -------------------------------------------------------------------------------------------------------------------------
BERMUDA--0.3%
Central European Media Enterprises Ltd. "A"*
(OWNER AND OPERATOR OF NATIONAL AND
REGIONAL PRIVATE COMMERCIAL TELEVISION
STATIONS IN CENTRAL AND EASTERN EUROPE) 146,100 1,196,194
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
CANADA--0.4%
QLT Phototherapeutics Inc.*
(DEVELOPER OF PHARMACEUTICAL PRODUCTS) 36,400 1,651,481
StressGen Biotechnologies Corp. "A"*
(DEVELOPER OF PRODUCTS FOR TREATMENT OF
CANCER AND CERTAIN INFECTIOUS DISEASES) 112,500 104,167
---------------------------------------------------------------------------
1,755,648
- -------------------------------------------------------------------------------------------------------------------------
CROATIA--0.6%
Pliva D.D. (GDR)
(PHARMACEUTICAL COMPANY) 159,800 2,532,830
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
FINLAND--0.9%
JOT Automation Group Oyj
(DEVELOPER OF PRODUCTION AUTOMATION
SYSTEMS) 79,200 2,610,777
KCI Konecranes International PLC "B"
(MANUFACTURER OF ELEVATORS) 21,920 810,585
---------------------------------------------------------------------------
3,421,362
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANCE--3.1%
Altran Technologies, S.A.
(PROVIDER OF ENGINEERING AND CONSULTING
SERVICES) 37,993 9,031,836
Dassault Systemes S.A.
(COMPUTER AIDED DESIGN, MANUFACTURING AND
ENGINEERING SOFTWARE) 42,691 1,571,013
Leon de Bruxelles S.A.
(OPERATOR OF LOW COST FAMILY RESTAURANTS) 25,605 1,271,489
Penauille Polyservices S.A.
(INDUSTRIAL CLEANING AND SECURITY SERVICES) 1,460 383,481
---------------------------------------------------------------------------
12,257,819
- -------------------------------------------------------------------------------------------------------------------------
GERMANY--3.1%
ADVA AG Optical Networking*
(MANUFACTURER OF OPTICAL NETWORKING
PRODUCTS) 2,720 206,627
Hawesko Holding AG
(MARKETER OF WINES AND LIQUEURS AND RELATED
PRODUCTS) 43,424 1,789,305
Kamps AG
(PRODUCER AND DISTRIBUTOR OF BAKED GOODS) 13,539 464,900
Marschollek Lautenschlaeger und Partner AG
(pfd)
(INDEPENDENT LIFE INSURANCE COMPANY) 9,400 5,263,731
Medion AG*
(MARKETER AND DISTRIBUTOR OF MULTIMEDIA
PRODUCTS AND VARIOUS CONSUMER APPLIANCES) 2,218 455,797
Pfeiffer Vacuum Technology AG (ADR)*
(MANUFACTURER OF VARIOUS PUMPS AND VACUUM
SYSTEMS) 44,000 1,661,000
PrimaCom AG*
(DEVELOPER, MANAGER AND OPERATOR OF
BROADBAND CABLE NETWORKS) 11,971 518,566
Telegate AG*
(PROVIDER OF DIRECTORY ASSISTANCE SERVICES) 20,417 916,792
W.E.T. Automotive Systems AG*
(MANUFACTURER OF HEATING, WIRING, AND CABLE
COMPONENTS) 17,945 881,630
---------------------------------------------------------------------------
12,158,348
- -------------------------------------------------------------------------------------------------------------------------
GREECE--0.5%
Panafon Hellenic Telecom S.A*.
(PROVIDER OF MOBILE TELEPHONE SERVICES) 13,452 358,412
STET Hellas Telecommunications S.A. (ADR)*
(MOBILE TELECOMMUNICATION SERVICES) 58,221 1,571,967
---------------------------------------------------------------------------
1,930,379
- -------------------------------------------------------------------------------------------------------------------------
HUNGARY--0.3%
OTP Bank Rt (GDR)
(SAVINGS AND COMMERCIAL BANK) 23,300 992,580
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
INDONESIA--0.0%
PT Steady Safe Transportation Service Tbk*
(OPERATOR OF TAXIS AND BUSES IN JAKARTA) 444 3
---------------------------------------------------------------------------
</TABLE>
12
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
IRELAND--9.2%
Anglo Irish Bank Corp. PLC
(PROVIDER OF FINANCIAL SERVICES FOR
BUSINESS AND PRIVATE SECTORS) 2,726,230 7,921,093
ESAT Telecom Group PLC (ADR)*
(PROVIDER OF TELECOMMUNICATION SERVICES) 111,800 5,464,225
Elan Corp. "A" (Warrants) expires 12/31/2001
(DEVELOPER OF CONTROLLED-ABSORPTION DRUG
DELIVERY SYSTEMS) 133,000 3,790,500
Green Property PLC
(CONDUCTS OPERATIONS IN PROPERTY
DEVELOPMENT, INVESTMENT AND TRADING) 354,880 2,240,624
Irish Continental Group PLC
(TRANSPORTER OF PASSENGERS, FREIGHT AND
CONTAINERS BETWEEN IRELAND THE U.K. AND THE
CONTINENT) 211,555 2,849,859
Irish Life & Permanent PLC
(RETAIL FINANCIAL SERVICES GROUP) 448,255 6,488,370
Jury's Hotel Group PLC
(HOTEL OPERATOR) 583,745 5,489,125
Ryan Hotels PLC
(OWNER AND OPERATOR OF HOTEL CHAIN) 1,434,460 1,485,267
---------------------------------------------------------------------------
35,729,063
- -------------------------------------------------------------------------------------------------------------------------
ISRAEL--0.9%
Check Point Software Technologies Ltd.*
(DEVELOPER, MARKETER AND SUPPORTER OF
MANAGEMENT SOLUTIONS FOR ACTIVE NETWORKS) 96,300 3,394,575
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
ITALY--1.8%
Aeroporti di Roma SpA
(MANAGEMENT OF FIUMICINO AND CIAMPINO
AIRPORTS) 211,000 1,580,588
Bulgari SpA
(MANUFACTURER AND RETAILER OF FINE JEWELRY,
LUXURY WATCHES AND PERFUMES) 444,800 2,678,734
Safilo SpA
(MANUFACTURER OF FRAMES FOR GLASSES) 518,000 2,577,749
---------------------------------------------------------------------------
6,837,071
- -------------------------------------------------------------------------------------------------------------------------
JAPAN--2.3%
Fujitsu Support and Service Inc.
(PROVIDER OF INFORMATION SERVICES) 59,000 7,211,386
Jafco Co., Ltd.
(VENTURE CAPITAL COMPANY) 37,000 1,852,323
---------------------------------------------------------------------------
9,063,709
- -------------------------------------------------------------------------------------------------------------------------
LUXEMBOURG--1.1%
Millicom International Cellular S.A.*
(DEVELOPER AND OPERATOR OF CELLULAR
TELEPHONE NETWORKS) 127,400 4,395,300
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
NETHERLANDS--3.0%
Telegraaf Holding NV
(LEADING PUBLISHER OF NEWSPAPERS, MAGAZINES
AND BOOKS) 69,600 1,514,839
IHC Caland NV
(DREDGING AND OFFSHORE SERVICES) 178,580 8,094,314
Tas Groep NV
(SOFTWARE DEVELOPER) 346,000 1,096,699
United Pan-Europe Communications NV*
(PROVIDER OF TELEVISION AND
TELECOMMUNICATION SERVICES) 15,564 804,941
---------------------------------------------------------------------------
11,510,793
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PHILIPPINES--0.4%
International Container Terminal Services,
Inc.*
(CONTAINERIZED CARGO HANDLING FIRM) 15,415,650 1,540,551
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
POLAND--0.3%
Pioneer Poland Fund
(b) (CLOSED-END INVESTMENT COMPANY) 3 units 1,199,104
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
PORTUGAL--2.9%
Jeronimo Martins, SGPS, S.A.
(FOOD PRODUCER AND RETAILER) 150,925 4,967,172
Telecel-Comunicacoes Pessoais, S.A.
(CELLULAR COMMUNICATION SERVICES) 46,966 6,277,172
---------------------------------------------------------------------------
11,244,344
- -------------------------------------------------------------------------------------------------------------------------
SPAIN--1.1%
Aldeasa S.A.
(OPERATOR OF AIRPORT DUTY-FREE SHOPS) 49,500 1,511,447
TelePizza, S.A.*
(OPERATOR OF FAST FOOD RESTAURANTS) 447,274 2,835,403
---------------------------------------------------------------------------
4,346,850
- -------------------------------------------------------------------------------------------------------------------------
SWEDEN--0.3%
Kinnevik AB "B"
(DIVERSIFIED HOLDING COMPANY) 53,200 1,166,528
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
SWITZERLAND--1.2%
Kuoni Reisen AG (Registered)
(TRAVEL AGENCY) 867 3,068,624
Lindt & Spruengli AG
(MANUFACTURER OF CHOCOLATE AND
CONFECTIONARY PRODUCTS) 37 94,095
Phoenix Mecano AG (Bearer)
(MANUFACTURER OF HOUSINGS AND COMPONENTS
FOR COMPUTERS) 3,537 1,622,796
---------------------------------------------------------------------------
4,785,515
- -------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--13.3%
ARM Holdings PLC*
(DESIGNER OF RISC MICROPROCESSORS AND
RELATED TECHNOLOGY) 340,800 3,662,046
Aegis Group PLC
(INDEPENDENT MEDIA SERVICES GROUP) 532,187 1,151,421
Bodycote International PLC
(HOLDING COMPANY) 125,742 1,951,891
Expro International Group PLC
(PROVIDER OF OILFIELD SERVICES) 438,900 2,118,042
Games Workshop Group PLC
(MANUFACTURER OF TABLE TOP WAR GAME SYSTEMS
AND MINIATURES) 163,000 1,035,696
Guardian IT PLC
(PROVIDER OF BUSINESS CONTINUITY AND
DISASTER RECOVERY SERVICES) 84,016 837,918
ICON PLC (ADR)*
(PHARMACEUTICAL AND BIOTECHNOLOGICAL
RESEARCH AND DEVELOPMENT SERVICES) 45,000 708,750
ITNET PLC
(SUPPLIER OF BUSINESS PROCESS MANAGEMENT
SERVICES) 104,122 592,917
Matalan PLC
(CLOTHING RETAILER) 256,786 3,188,867
New Look Group PLC
(RETAILER OF WOMENSWEAR) 720,909 2,574,431
PizzaExpress PLC
(OPERATOR OF PIZZA RESTAURANTS) 133,213 1,960,720
</TABLE>
14
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Provident Financial PLC
(PERSONAL FINANCE GROUP) 420,642 7,016,801
RM PLC
(INFORMATION TECHNOLOGY SOLUTIONS TO
EDUCATIONAL MARKETS) 677,500 5,885,059
Regent Inns PLC
(OWNER AND OPERATOR OF HOTELS AND
RESTAURANTS) 617,262 1,856,773
Serco Group PLC
(FACILITIES MANAGEMENT COMPANY) 703,700 15,621,201
Synstar PLC*
(PROVIDER OF IT SERVICES) 378,178 815,171
Taylor Nelson Sofres PLC
(MARKET RESEARCH COMPANY) 300,062 757,807
---------------------------------------------------------------------------
51,735,511
- -------------------------------------------------------------------------------------------------------------------------
UNITED STATES--47.9%
Advent Software, Inc.*
(PROVIDER OF STAND-ALONE AND CLIENT/SERVER
SOFTWARE PRODUCTS) 39,400 2,428,025
America West Holdings Corp. "B"*
(PASSENGER AIRLINE) 203,200 4,241,800
Anadarko Petroleum Corp.
(OIL AND GAS EXPLORATION AND PRODUCTION) 56,100 2,128,294
Aptargroup, Inc.
(MANUFACTURER OF PACKAGING EQUIPMENT
COMPONENTS) 118,200 3,309,600
Axogen Ltd.*
(DEVELOPER OF THERAPEUTIC PRODUCTS FOR
NEUROLOGICAL DISORDERS) 106,100 3,236,050
Barrett Resources Corp.*
(OIL AND GAS EXPLORATION AND PRODUCTION) 67,100 2,038,163
Billing Concepts*
(BILLING AND INFORMATION MANAGEMENT
SERVICES) 538,300 6,661,463
Black Box Corp.*
(MANUFACTURER OF WIDE AREA NETWORKING
PRODUCTS, DIRECT MARKETER OF COMPUTER
PRODUCTS) 39,000 1,335,750
CNF Transportation, Inc.
(TRUCKING, AIR FREIGHT) 95,700 4,180,894
Concentra Managed Care, Inc.*
(PROVIDER OF INTEGRATED NONRISK-BEARING
WORKERS' COMPENSATION MANAGED CARE) 148,100 2,008,606
Concord EFS, Inc.*
(ELECTRONIC TRANSACTION AUTHORIZATION,
PROCESSING, SETTLEMENT AND TRANSFER
SERVICES) 126,000 4,205,250
Dallas Semiconductor Corp.
(MANUFACTURER OF SILICON INTEGRATED
CIRCUITS AND SUBSYSTEMS) 40,000 1,700,000
Diamond Offshore Drilling, Inc.
(OFFSHORE OIL AND GAS WELL DRILLING) 106,100 3,507,931
Eagle USA Airfreight, Inc.*
(PROVIDER OF AIRFREIGHT FORWARDING
SERVICES) 14,500 529,250
Fiserv Inc.*
(PROVIDER OF DATA PROCESSING SERVICES) 187,162 10,960,675
FortuneCity.com, Inc.*
(PROVIDER OF NATIVE LANGUAGE COMMUNITIES
LOCATED ON THE INTERNET) 25,981 730,176
G & K Services, Inc. "A"
(UNIFORM RENTALS) 52,100 2,435,675
Healthcare Recoveries, Inc.*
(PROVIDER OF RECOVERY SERVICES FOR PRIVATE
HEALTHCARE PAYORS) 17,300 79,472
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARKET
SHARES VALUE ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
IDX Systems Corp.*
(PROVIDER OF HEALTH CARE INFORMATION
SYSTEMS TO PHYSICIAN GROUPS AND ACADEMIC
MEDICAL CENTERS) 109,500 1,779,375
MEDE AMERICA Corp.*
(PROVIDER OF ELECTRONIC INTERCHANGE
PRODUCTS AND SERVICES TO THE HEALTHCARE
INDUSTRY) 65,200 1,695,200
MIH Ltd.*
(PROVIDER OF PAY-TV SERVICES) 66,400 1,303,100
Mercury Computer Systems, Inc.*
(MANUFACTURER OF DIGITAL SIGNAL PROCESSING
COMPUTER SYSTEMS) 78,900 1,725,938
Network Appliance, Inc.*
(DESIGNER AND MANUFACTURER OF NETWORK DATA
STORAGE DEVICES) 308,200 15,506,313
North Fork Bancorporation, Inc.
(COMMERCIAL AND SAVINGS BANK HOLDING
COMPANY) 15,900 357,750
S & P Mid-Cap 400 Depository Receipts
(SECURITY THAT REPRESENTS OWNERSHIP IN THE
MID-CAP SPDR TRUST) 243,200 18,110,800
Sola International, Inc.*
(MANUFACTURER OF PLASTIC EYEGLASS LENSES) 210,200 3,126,725
Sterling Commerce, Inc.*
(PRODUCER OF ELECTRONIC DATA INTERCHANGE
PRODUCTS AND SERVICES) 307,934 9,642,183
Symbol Technologies Inc.
(MANUFACTURER OF BAR CODE LASER SCANNERS) 111,600 5,328,900
Tiffany & Co.
(RETAILER OF JEWELRY AND GIFT ITEMS) 153,000 12,852,000
Total Renal Care Holdings, Inc.*
(DIALYSIS SERVICES FOR TREATMENT OF CHRONIC
KIDNEY FAILURE) 340,399 4,723,036
VISX Inc.*
(DEVELOPER OF LASER TECHNOLOGIES AND
SYSTEMS FOR VISION CORRECTION) 270,600 34,839,746
Vitesse Semiconductor Corp.*
(MANUFACTURER OF DIGITAL INTEGRATED
CIRCUITS) 267,700 12,397,856
Wackenhut Corrections Corp.*
(MANAGER OF PRIVATIZED CORRECTIONAL AND
DETENTION FACILITIES) 42,100 781,481
Wesley Jessen VisionCare, Inc.*
(MANUFACTURER OF SOFT CONTACT LENSES) 85,100 2,606,188
Wisconsin Central Transportation Co.*
(OPERATOR OF REGIONAL FREIGHT RAILROAD) 201,700 3,725,147
---------------------------------------------------------------------------
186,218,812
---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $235,495,023) 372,938,602
---------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100.0%
(a) (Cost $251,712,023) 389,155,602
---------------------------------------------------------------------------
</TABLE>
16
<PAGE>
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $255,938,412. At April 30,
1999, net unrealized appreciation for all securities based on tax cost was
$133,217,190. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of
$151,559,807 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $18,342,617.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $1,199,104 (0.31% of net assets). Their
values have been estimated by the Valuation Committee in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of these
securities at April 30, 1999 aggregated $1,477,500.
* Non-income producing security.
17
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AS OF APRIL 30, 1999
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------
ASSET
- ----------------------------------------------------------------------------
Investments, at market (identified cost $251,712,023) $389,155,602
- ----------------------------------------------------------------------------
Receivable for investments sold 9,346,066
- ----------------------------------------------------------------------------
Receivable for Fund shares sold 313,183
- ----------------------------------------------------------------------------
Dividends and interest receivable 341,993
- ----------------------------------------------------------------------------
Foreign taxes recoverable 28,234
- ----------------------------------------------------------------------------
Other assets 6,856
- ----------------------------------------------------------------------------
TOTAL ASSETS 399,191,934
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------
Due to custodian bank 1,515,330
- ----------------------------------------------------------------------------
Payable for investments purchased 7,206,213
- ----------------------------------------------------------------------------
Payable for fund shares redeemed 276,839
- ----------------------------------------------------------------------------
Accrued management fee 313,319
- ----------------------------------------------------------------------------
Other payables and accrued expenses 224,279
- ----------------------------------------------------------------------------
TOTAL LIABILITIES 9,535,980
- ----------------------------------------------------------------------------
NET ASSETS, AT MARKET VALUE $389,655,954
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income (5,415,863)
- ----------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investments 137,443,579
- ----------------------------------------------------------------------------
Unrealized appreciation (depreciation) on foreign currency
related transactions (12,391)
- ----------------------------------------------------------------------------
Accumulated net realized gain (loss) 22,116,995
- ----------------------------------------------------------------------------
Paid-in capital 235,523,634
- ----------------------------------------------------------------------------
NET ASSETS, AT MARKET VALUE $389,655,954
- ----------------------------------------------------------------------------
NET ASSET VALUE
SCUDDER SHARES
Net asset value, offering and redemption price per share
($353,753,886/14,589,054 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares
authorized) $24.25
- ----------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($20,064,054/829,821 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares
authorized) $24.18
- ----------------------------------------------------------------------------
Maximum offering price per share (100/94.25 of $24.18) $25.66
- ----------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share
($11,167,881/465,492 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares
authorized) $23.99
- ----------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share
($4,670,133/194,680 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares
authorized) $23.99
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are in integral part of the financial statements.
18
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------
INVESTMENT INCOME (LOSS)
- ---------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $80,823) $ 1,343,162
- ---------------------------------------------------------------------------
Interest 649,595
- ---------------------------------------------------------------------------
1,992,757
- ---------------------------------------------------------------------------
Expenses:
Management fee 2,048,916
- ---------------------------------------------------------------------------
Services to shareholders 619,478
- ---------------------------------------------------------------------------
Custodian and accounting fees 287,351
- ---------------------------------------------------------------------------
Distribution fees 44,814
- ---------------------------------------------------------------------------
Administrative service fees 35,173
- ---------------------------------------------------------------------------
Directors' fees and expenses 29,013
- ---------------------------------------------------------------------------
Reports to shareholders 38,588
- ---------------------------------------------------------------------------
Auditing 39,216
- ---------------------------------------------------------------------------
Legal 12,052
- ---------------------------------------------------------------------------
Amortization of organization expenses 1,486
- ---------------------------------------------------------------------------
Registration fees 30,634
- ---------------------------------------------------------------------------
Other 20,873
- ---------------------------------------------------------------------------
Total expenses before reductions 3,207,594
- ---------------------------------------------------------------------------
Expense reductions (18,123)
- ---------------------------------------------------------------------------
Expenses, net 3,189,471
- ---------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (1,196,714)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
- ---------------------------------------------------------------------------
Net realized gain (loss) from:
Investments 27,417,892
- ---------------------------------------------------------------------------
Foreign currency related transactions 10,046
- ---------------------------------------------------------------------------
27,427,938
- ---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on:
Investments 47,019,367
- ---------------------------------------------------------------------------
Foreign currency related transactions (16,287)
- ---------------------------------------------------------------------------
47,003,080
- ---------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENT TRANSACTIONS 74,431,018
- ---------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $73,234,304
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- ----------------------------------------------------------------------------------------------
Operations:
Net investment income (loss) $ (1,196,714) $ (1,674,161)
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment transactions 27,427,938 2,110,032
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions during the period 47,003,080 2,940,060
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 73,234,304 3,375,931
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income -- Scudder Shares -- (9,815,437)
- ----------------------------------------------------------------------------------------------
Net realized gains -- Scudder Shares -- (21,794,909)
- ----------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from shares sold 191,468,063 203,840,754
- ----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
reinvestment of distributions -- 29,399,080
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (203,775,354) (225,398,432)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions (12,307,291) 7,841,402
- ----------------------------------------------------------------------------------------------
Increase (decrease) in net assets 60,927,013 (20,393,013)
- ----------------------------------------------------------------------------------------------
Net assets at beginning of period 328,728,941 349,121,954
- ----------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including accumulated
distributions in excess of net investment income of
$5,415,863 and $4,219,149, respectively) $ 389,655,954 $ 328,728,941
- ----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
------------------------------------------------
SCUDDER SHARES (B)
------------------------------------------------
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30, ------------------------------------------------
1999(A) 1998(A) 1997(A) 1996(A) 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $19.81 $21.64 $20.45 $17.54 $16.27 $16.14
- -------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.07) (.10) (.12) (.04) (.03) (.02)
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions 4.51 .32 2.30 3.59 1.38 .48
- -------------------------------------------------------------------------------------------------------------
Total from investment operations 4.44 .22 2.18 3.55 1.35 .46
- -------------------------------------------------------------------------------------------------------------
Less distributions:
From net investment income -- (.64) (.13) (.20) -- --
- -------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- -- -- (.18)
- -------------------------------------------------------------------------------------------------------------
From net realized gains on investment
transactions -- (1.41) (.86) (.44) (.08) (.15)
- -------------------------------------------------------------------------------------------------------------
Total distributions -- (2.05) (.99) (.64) (.08) (.33)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.25 $19.81 $21.64 $20.45 $17.54 $16.27
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 22.41** 1.19 11.14 20.97 8.32 2.80(C)
- -------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 354 310 349 351 255 256
- -------------------------------------------------------------------------------------------------------------
Ratio of operating expenses, net to
average daily net assets (%) 1.67* 1.65 1.63 1.60 1.69 1.70
- -------------------------------------------------------------------------------------------------------------
Ratio of operating expenses before
expense reductions, to average daily net
assets (%) 1.67* 1.65 1.63 1.60 1.69 1.76
- -------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average daily net assets (%) (.60)* (.45) (.58) (.20) (.12) (.28)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 49.5* 40.6 60.5 63.0 43.7 45.8
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) On April 16, 1998 existing shares of the Fund were designated as Scudder
Shares and are generally not available to new investors.
(c) Total return would have been lower had certain expenses not been reduced.
The accompanying notes are an integral part of the financial statements.
* Annualized
** Not annualized
21
<PAGE>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
---------------------------------
CLASS A
---------------------------------
FOR THE PERIOD
APRIL 16, 1998
(COMMENCEMENT OF
SIX MONTHS SALE OF CLASS A
ENDED SHARES) TO
APRIL 30, 1999 OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------
Net asset value, beginning of period $19.78 $ 23.98
- ----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.10) (.09)
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions 4.50 (4.11)
- ----------------------------------------------------------------------------
Total from investment operations 4.40 (4.20)
- ----------------------------------------------------------------------------
Net asset value, end of period $24.18 $ 19.78
- ----------------------------------------------------------------------------
TOTAL RETURN (%) (B) (C) 22.24** (17.51)**
- ----------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period ($ millions) 20 11
- ----------------------------------------------------------------------------
Ratio of operating expenses, net to
average daily net assets (%) 1.95* 1.95*
- ----------------------------------------------------------------------------
Ratio of operating expenses before
expense reductions, to average daily net
assets (%) 2.18* 2.20*
- ----------------------------------------------------------------------------
Ratio of net investment income (loss) to
average daily net assets (%) (.84)* (1.00)*
- ----------------------------------------------------------------------------
Portfolio turnover rate (%) 49.5* 40.6
- ----------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of any sales charges.
(c) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
22
<PAGE>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
-----------------------------------
CLASS B
-----------------------------------
FOR THE PERIOD
APRIL 16, 1998
(COMMENCEMENT OF
SALE OF CLASS B
SIX MONTHS ENDED SHARES) TO
APRIL 30, 1999 OCTOBER 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------
Net asset value, beginning of period $19.70 $ 23.98
- ------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.18) (.18)
- ------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions 4.47 (4.10)
- ------------------------------------------------------------------------------
Total from investment operations 4.29 (4.28)
- ------------------------------------------------------------------------------
Net asset value, end of period $23.99 $ 19.70
- ------------------------------------------------------------------------------
TOTAL RETURN (%) (B) 21.78** (17.85)(C)**
- ------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------
Net assets, end of period ($ millions) 11 6
- ------------------------------------------------------------------------------
Ratio of operating expenses, net to
average daily net assets (%) 2.67* 2.83*
- ------------------------------------------------------------------------------
Ratio of operating expenses before
expense reductions, to average daily net
assets (%) 2.67* 3.13*
- ------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average daily net assets (%) (1.58)* (1.87)*
- ------------------------------------------------------------------------------
Portfolio turnover rate (%) 49.5* 40.6
- ------------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of any sales charges.
(c) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
23
<PAGE>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
---------------------------------
CLASS C
---------------------------------
FOR THE PERIOD
APRIL 16, 1998
(COMMENCEMENT OF
SIX MONTHS SALE OF CLASS B
ENDED SHARES) TO
APRIL 30, 1999 OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------
Net asset value, beginning of period $19.70 $ 23.98
- ----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.19) (.17)
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions 4.48 (4.11)
- ----------------------------------------------------------------------------
Total from investment operations 4.29 (4.28)
- ----------------------------------------------------------------------------
Net asset value, end of period $23.99 $ 19.70
- ----------------------------------------------------------------------------
TOTAL RETURN (%) (B) 21.78** (17.85)(C)**
- ----------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period ($ millions) 5 2
- ----------------------------------------------------------------------------
Ratio of operating expenses, net to
average daily net assets (%) 2.73* 2.80*
- ----------------------------------------------------------------------------
Ratio of operating expenses before
expense reductions, to average daily net
assets (%) 2.73* 3.23*
- ----------------------------------------------------------------------------
Ratio of net investment income (loss) to
average daily net assets (%) (1.65)* (1.88)*
- ----------------------------------------------------------------------------
Portfolio turnover rate (%) 49.5* 40.6
- ----------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of any sales charges.
(c) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES Global Discovery Fund (the "Fund") is a diversified
series of Global/International Fund, Inc. (formerly
known as Scudder Global Fund, Inc.), a Maryland
corporation registered under the Investment Company
Act of 1940, as amended, as an open-end management
investment company.
Effective April 16, 1998, the Fund changed its name
from Scudder Global Discovery Fund to Global
Discovery Fund and an additional three classes of
shares were offered, namely Classes A, B and C.
Existing shares of Global Discovery Fund
outstanding on that date were redesignated Scudder
Shares. Class A shares are sold to investors
subject to an initial sales charge. Class B shares
are sold without an initial sales charge but are
subject to higher ongoing expenses than Class A and
Scudder Shares and a contingent deferred sales
charge payable upon certain redemptions. Class B
shares automatically convert to Class A shares six
years after issuance. Class C shares are sold
without an initial sales charge but are subject to
higher ongoing expenses than Class A and Scudder
Shares and a contingent deferred sales charge
payable upon certain redemptions within one year of
purchase. Class C shares do not convert into
another class. Scudder Shares are generally not
available to new investors and are not subject to
initial or contingent deferred sales charges.
Investment income, realized and unrealized capital
gains and losses, and certain fund-level expenses
and expense reductions, if any, are borne pro rata
on the basis of relative net assets by the holders
of all classes of shares except that each class
bears expenses unique to that class. Each class of
shares differs in its respective distribution,
shareholder services, administrative services and
certain other class-specific expenses and expense
reductions. All shares of the Fund have equal
rights with respect to voting.
The Fund's financial statements are prepared in
accordance with generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Portfolio securities which are
traded on U.S. or foreign stock exchanges are
valued at the most recent sale price reported on
the exchange on which the security is traded most
extensively. If no sale occurred, the security is
then valued at the calculated mean between the most
recent bid and asked quotations. If there are no
such bid and asked quotations, the most recent bid
quotation is used. Securities quoted on the Nasdaq
Stock Market, Inc. ("Nasdaq"), for which there have
been sales, are valued at the most recent sale
price reported on such system. If there are no such
sales, the value is the most recent bid quotation.
Securities which are not quoted on the Nasdaq
System but are traded in another over-the-counter
market are valued at the most recent sale price on
such market. If no sale occurred, the security is
then valued at the calculated mean between the most
recent bid and asked quotations. If there are no
such bid and asked quotations, the most recent bid
quotation shall be used.
Portfolio debt securities other than money market
instruments with an original maturity over sixty
days are valued by pricing agents approved by the
officers of the Fund, which quotations reflect
broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents
are unable to provide
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
such quotations, the most recent bid quotation
supplied by a bona fide market maker shall be used.
Money market instruments purchased with an original
maturity of sixty days or less are valued at
amortized cost. All other securities are valued at
their fair value as determined in good faith by the
Valuation Committee of the Board of Directors.
REPURCHASE AGREEMENTS. The Fund may enter into
repurchase agreements with certain banks and
broker/dealers whereby the Fund, through its
custodian, receives delivery of the underlying
securities, the amount of which at the time of
purchase and each subsequent business day is
required to be maintained at such a level that the
market value, depending on the maturity of the
repurchase agreement, is equal to at least the
repurchase price.
FOREIGN CURRENCY TRANSLATIONS. The books and
records of the Fund are maintained in U.S. dollars.
Foreign currency transactions are translated into
U.S. dollars on the following basis:
(i) market value of investment securities, other
assets and liabilities at the daily rates of
exchange, and
(ii) purchases and sales of investment securities,
dividend and interest income and certain expenses
at the rates of exchange prevailing on the
respective dates of such transactions.
The Fund does not isolate that portion of gains and
losses on investments which is due to changes in
foreign exchange rates from that which is due to
changes in market prices of the investments. Such
fluctuations are included with the net realized and
unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from
foreign currency related transactions includes
gains and losses between trade and settlement dates
on securities transactions, gains and losses
arising from the sales of foreign currency, and
gains and losses between the ex and payment dates
on dividends, interest, and foreign withholding
taxes.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A
forward foreign currency exchange contract (forward
contract) is a commitment to purchase or sell a
foreign currency at the settlement date at a
negotiated rate. During the period, the Fund
utilized forward contracts as a hedge in connection
with portfolio purchases and sales of securities
denominated in foreign currencies.
Forward contracts are valued at the prevailing
forward exchange rate of the underlying currencies
and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and
broker are offset and any gain (loss) is realized
on the date of offset; otherwise, gain (loss) is
realized on settlement date. Realized and
unrealized gains and losses which represent the
difference between the value of the forward
contract to buy and the forward contract to sell
are included in net realized unrealized gain (loss)
from foreign currency related transactions.
Certain risks may arise upon entering into forward
contracts from the potential inability of
counterparties to meet the terms of their
contracts. Additionally, when utilizing forward
contracts to hedge, the Fund gives up the
opportunity to profit from favorable exchange rate
movements during the term of the contract.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEDERAL INCOME TAXES. The Fund's policy is to
comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to
regulated investment companies and to distribute
all of its taxable income to its shareholders.
Accordingly, the Fund paid no federal income taxes
and no federal income tax provision was required.
At October 31, 1998, the Fund had a net tax basis
capital loss carryforward of approximately
$5,304,000, which may be applied against any
realized net taxable capital gains of each
succeeding year until fully utilized or until
October 31, 2006, the expiration date, whichever
occurs first.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income are made annually. During any
particular year net realized gains from investment
transactions, in excess of available capital loss
carryforwards, would be taxable to the Fund if not
distributed and, therefore, will be distributed to
shareholders annually. An additional distribution
may be made to the extent necessary to avoid the
payment of a four percent federal excise tax.
The timing and characterization of certain income
and capital gains distributions are determined
annually in accordance with federal tax regulations
which may differ from generally accepted accounting
principles. These differences primarily relate to
investments in forward contracts, passive foreign
investment companies, and certain securities sold
at a loss. As a result, net investment income
(loss) and net realized gain (loss) on investment
transactions for a reporting period may differ
significantly from distributions during such
period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital
accounts without impacting the net asset value of
the Fund.
The Fund uses the identified cost method for
determining realized gain or loss on investments
for both financial and federal income tax reporting
purposes.
ORGANIZATION COSTS. Costs incurred by the Fund in
connection with its organization have been deferred
and are being amortized on a straight-line basis
over a five-year period.
OTHER. Investment security transactions are
accounted for on a trade-date basis. Dividend
income and distributions to shareholders are
recorded on the ex-dividend date. Interest income
is recorded on the accrual basis.
- --------------------------------------------------------------------------------
2 PURCHASES AND
SALES OF SECURITIES During the six months ended April 30, 1999,
purchases and sales of investment securities
(excluding short-term investments) aggregated
$85,897,070 and $87,361,033, respectively.
- --------------------------------------------------------------------------------
3 RELATED PARTIES MANAGEMENT AGREEMENT. Under the Management
Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the
"Adviser"), the Fund pays the Adviser a fee equal
to an annual rate of 1.10% of the Fund's average
daily net assets, computed and accrued daily and
payable monthly. As manager of the assets of the
Fund, the Adviser directs the investments of the
Fund in accordance with its investment objectives,
policies, and restrictions. The Adviser determines
the securities, instruments, and other contracts
relating to investments to be purchased, sold or
entered into by the Fund. In addition to portfolio
management services, the Adviser provides certain
administrative services in accordance with the
Agreement. For the six months
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ended April 30, 1999, the fee pursuant to the
Agreement amounted to $2,048,916, of which $313,319
was unpaid at April 30, 1999.
DISTRIBUTION SERVICE AGREEMENT. In accordance with
Rule 12b-1 under the Investment Company Act of
1940, Kemper Distributors, Inc. ("KDI"), a
subsidiary of the Adviser, receives a fee of .75%
of average daily net assets of Classes B and C.
Pursuant to the agreement, KDI enters into related
selling group agreements with various firms at
various rates for sales of Class B and C shares.
For the six months ended April 30, 1999, the
Distribution Fee was as follows:
<TABLE>
<CAPTION>
TOTAL UNPAID AT
DISTRIBUTION FEE AGGREGATED APRIL 30, 1999
---------------- ---------- --------------
<S> <C> <C>
Class B $31,876 $6,677
Class C 12,938 2,769
------- ------
$44,814 $9,446
======= ======
</TABLE>
UNDERWRITING AGREEMENT AND CONTINGENT DEFERRED
SALES CHARGE. KDI is the principal underwriter for
Classes A, B and C. Underwriting commissions paid
in connection with the distribution of Class A
shares for the six months ended April 30, 1999
aggregated $145,372, of which $136,883 was paid to
other firms.
In addition, KDI receives any contingent deferred
sales charge (CDSC) from Class B share redemptions
occurring within six years of purchase and Class C
share redemptions occurring within one year of
purchase. There is no such charge upon redemption
of any share appreciation or reinvested dividends.
Contingent deferred sales charges are based on
declining rates ranging from 4% to 1% for Class B
and 1% for Class C, of the value of the shares
redeemed. For the six months ended April 30, 1999,
the CDSC for Classes B and C aggregated $8,353 and
$1,142, respectively.
ADMINISTRATIVE SERVICE FEES. KDI provides
information and administrative services to Classes
A, B and C shareholders at an annual rate of up to
.25% of average daily net assets for each such
class. KDI in turn has various agreements with
financial services firms that provide these
services and pays these firms based upon the assets
of shareholder accounts the firms service. For the
six months ended April 30, 1999, the Administrative
Service Fee was as follows:
<TABLE>
<CAPTION>
ADMINISTRATIVE TOTAL FEES WAIVED UNPAID AT
SERVICE FEE AGGREGATED BY KDI APRIL 30, 1999
-------------- ---------- ----------- --------------
<S> <C> <C> <C>
Class A $20,235 $18,123 $2,112
Class B 10,625 -- 2,042
Class C 4,313 -- 1,153
------- ------- ------
$35,173 $18,123 $5,307
======= ======= ======
</TABLE>
SHAREHOLDER SERVICES FEES. Kemper Service Company
("KSC"), an affiliate of the Adviser, is the
transfer, dividend-paying and shareholder service
agent for the Fund's Classes A, B and C Shares. For
the six months ended April 30, 1999, the amount
charged to Classes A, B and C by KSC aggregated
$33,058, $16,416 and $6,016, respectively, of which
$16,899 is unpaid at April 30, 1999. Scudder
Service Corporation ("SSC"), a subsidiary of the
Adviser, is the transfer, dividend-paying and
shareholder service agent for the Scudder Shares.
For the six months ended April 30, 1999, the amount
charged to the Scudder Shares by SSC for
shareholder services aggregated $339,168, of which
$54,413 is unpaid at April 30, 1999.
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Scudder Trust Company ("STC"), a subsidiary of the
Adviser, provides recordkeeping and other services
in connection with certain retirement and employee
benefit plans invested in the Scudder Shares of the
Fund. For the six months ended April 30, 1999, the
amount charged to the Scudder Shares by STC
aggregated $105,802, of which $17,917 is unpaid at
April 30, 1999.
FUND ACCOUNTING FEES. Scudder Fund Accounting
Corporation ("SFAC"), a subsidiary of the Adviser,
is responsible for determining the daily net asset
value per share and maintaining the portfolio and
general accounting records of the Fund. For the six
months ended April 30, 1999, the amount charged to
the Fund by SFAC aggregated $196,274, of which
$66,826 is unpaid at April 30, 1999.
DIRECTORS FEES. The Fund pays each of its Directors
not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and
committee meetings. For the six months ended April
30, 1999, the Directors fees and expenses
aggregated $29,013.
- --------------------------------------------------------------------------------
4 LINE OF CREDIT The Fund and several affiliated Funds (the
"Participants") share in a $850 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemption
requests that otherwise might require the untimely
disposition of securities. The Participants are
charged an annual commitment fee which is allocated
among each of the Participants. Interest is
calculated based on the market rates at the time of
the borrowing. The Fund may borrow up to a maximum
of 33 1/3 percent of its net assets under the
agreement.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes capital share and
dollar activity in the Fund:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
--------------------------- ----------------------------
SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHARES SOLD
------------------------------------------------------------------------------------
Scudder Shares 3,671,356 $ 83,546,911 6,972,104 $ 148,104,107
------------------------------------------------------------------------------------
Class A 4,370,045 100,284,812 2,260,575 46,546,836
------------------------------------------------------------------------------------
Class B 228,900 5,170,753 309,368 6,651,125
------------------------------------------------------------------------------------
Class C 109,765 2,465,587 117,930 2,538,686
------------------------------------------------------------------------------------
8,380,066 191,468,063 9,659,977 203,840,754
------------------------------------------------------------------------------------
SHARES ISSUED TO SHAREHOLDERS IN REINVESTMENT OF DISTRIBUTIONS
------------------------------------------------------------------------------------
Scudder Shares -- -- 1,514,636 $ 29,399,080
------------------------------------------------------------------------------------
Class A -- -- -- --
------------------------------------------------------------------------------------
Class B -- -- -- --
------------------------------------------------------------------------------------
Class C -- -- -- --
------------------------------------------------------------------------------------
-- -- 1,514,636 29,399,080
------------------------------------------------------------------------------------
SHARES REDEEMED
------------------------------------------------------------------------------------
Scudder Shares (4,704,836) $(107,380,989) (8,999,114) $(190,396,588)
------------------------------------------------------------------------------------
Class A (4,112,452) (94,596,464) (1,688,347) (34,483,052)
------------------------------------------------------------------------------------
Class B (53,567) (1,212,172) (19,209) (386,029)
------------------------------------------------------------------------------------
Class C (26,365) (585,729) (6,650) (132,763)
------------------------------------------------------------------------------------
(8,897,220) (203,775,354) (10,713,320) (225,398,432)
------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
------------------------------------------------------------------------------------
Scudder Shares (1,033,480) $ (23,834,078) (512,374) $ (12,893,401)
------------------------------------------------------------------------------------
Class A 257,593 5,688,348 572,228 12,063,784
------------------------------------------------------------------------------------
Class B 175,333 3,958,581 290,159 6,265,096
------------------------------------------------------------------------------------
Class C 83,400 1,879,858 111,280 2,405,923
------------------------------------------------------------------------------------
(517,154) $ (12,307,291) 461,293 $ 7,841,402
------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
SHAREHOLDERS' MEETING
SPECIAL SHAREHOLDERS' MEETING
On December 17, 1998, a special shareholders' meeting was held. Kemper Global
Discovery Fund shareholders were asked to vote on two separate issues: approval
of the new Investment Management Agreement between the fund and Scudder Kemper
Investments, Inc., and the approval of the revision of the fund's fundamental
lending policy. The following are the results.
1) Approval of the new Investment Management Agreement between the fund and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes*
<S> <C> <C> <C>
9,209,440 253,378 330,107 0
</TABLE>
2) Approval of the revision of the fund's fundamental lending policy. This item
was approved.
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes*
<S> <C> <C> <C>
7,622,162 402,257 476,189 1,292,318
</TABLE>
*Broker non-votes are proxies received by the Fund from brokers or nominees when
neither the broker nor nominee has received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter.
31
<PAGE>
DIRECTORS & OFFICERS
DIRECTORS OFFICERS
DANIEL PIERCE SUSAN E. DAHL
Director and Vice President Vice President
NICHOLAS BRATT THOMAS W. JOSEPH
President Vice President
PAUL BANCROFT III ANN M. MCCREARY
Director Vice President
SHERYLE J. BOLTON JOHN MILLETTE
Director Vice President and Secretary
WILLIAM T. BURGIN GERALD J. MORAN
Director Vice President
THOMAS J. DEVINE M. ISABEL SALTZMAN
Honorary Director Vice President
KEITH R. FOX JOHN R. HEBBLE
Director Treasurer
WILLIAM H. GLEYSTEEN, JR. CAROLINE PEARSON
Honorary Director Assistant Secretary
WILLIAM H. LUERS
Director
KATHRYN L. QUIRK
Director, Vice President
and Assistant Secretary
JOAN E. SPERO
Director
ROBERT G. STONE, JR.
Honorary Director
- --------------------------------------------------------------------------------
LEGAL COUNSEL DECHERT, PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN STATE STREET BANK AND TRUST
225 Franklin Street
Boston, MA 02110
- --------------------------------------------------------------------------------
INDEPENDENT PRICEWATERHOUSECOOPERS LLP
AUDITORS One Post Office Square
Boston, MA 02109
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606-5808
www.kemper.com
Printed on recycled paper in the U.S.A.
This report is not to be distributed unless preceded
or accompanied by a Kemper Global Discovery
Fund prospectus.
KGDF - 3 (6/25/99) 1076940 [KEMPER FUNDS LOGO]
Long-term investing in a short-term world(SM)
