Scudder
Global Bond
Fund
Semiannual Report
April 30, 1999
No-Load Funds
A fund which seeks total return with an emphasis on current income by
investing primarily in high-quality bonds denominated in foreign
currencies and the U.S. dollar. Capital appreciation is a secondary
objective.
A no-load fund with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Scudder Global Bond Fund
Date of Inception: 3/1/91 Total Net Assets as of 4/30/99: $99.9 million
Ticker Symbol: SSTGX
o Scudder Global Bond Fund provided a positive total return of 1.35% for the
six-month period ended April 30, 1999, significantly ahead of the -3.35% return
of the Salomon Brothers World Government Bond Index.
o The global bond markets over the past six months have been characterized by a
gradually increasing appetite for risk, as subsiding volatility has led
investors to move out of "flight-to-quality" positions assumed in the wake of
last summer's turmoil.
o We decreased our exposure to U.S. bonds from 36% to 25% over the period as
potential domestic inflationary pressure increased market nervousness. In
Europe, Fund holdings in "peripheral" countries such as Norway and Sweden are
overweighted. The portfolio's weighting in Japan remains light.
Table of Contents
3 Letter from the Fund's Chairman 18 Financial Highlights
4 Performance Update 19 Notes to Financial Statements
5 Portfolio Summary 25 Report of Independent Accountants
6 Portfolio Management Discussion 26 Shareholder Meeting Results
10 Glossary of Investment Terms 28 Officers and Directors
12 Investment Portfolio 29 Investment Products and Services
15 Financial Statements 30 Scudder Solutions
2 - Scudder Global Bond Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to report the results of Scudder Global Bond Fund's most
recent semiannual period. The Fund returned 1.35% for the six-month period ended
April 30, 1999, outpacing the -3.35% return of the Salomon Brothers World
Government Bond Index.
Global bonds have staged a gradual recovery since the Russian currency
devaluation sparked intense global market volatility last summer. With
first-hand knowledge of the inherent risks, investors are once again displaying
optimism concerning the global fixed-income markets. As Portfolio Managers M.
Isabel Saltzman and Jan Faller discuss in the interview that begins on page 6,
this was evidenced over the past several months by the gradual unwinding of
"flight-to-quality" trades, especially following Brazil's devaluation of the
real.
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. Page 30 provides more information on how to contact
Scudder. Thank you for choosing Scudder Global Bond Fund to help meet your
investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman
Scudder Global Bond Fund
3 - Scudder Global Bond Fund
<PAGE>
Performance Update as of April 30, 1999
- --------------------------------------------
Fund Index Comparisons
- --------------------------------------------
Total Return
- --------------------------------------------
Period
Ended Growth of Average
4/30/1999 $10,000 Cumulative Annual
- --------------------------------------------
Scudder Global Bond Fund
- --------------------------------------------
1 Year $ 10,774 7.74% 7.74%
5 Year $ 12,287 22.87% 4.21%
Life of
Fund* $ 14,968 49.68% 5.06%
- --------------------------------------------
Salomon Brothers World Government Bond Index
- --------------------------------------------
1 Year $ 10,821 8.21% 8.21%
5 Year $ 14,004 40.04% 6.96%
Life of
Fund* $ 19,645 96.45% 8.71%
- --------------------------------------------
* The Fund commenced operation on March 1, 1991.
Index comparisons begin March 31, 1991.
- --------------------------------------------
Growth of a $10,000 Investment
- --------------------------------------------
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART TITLE:
Growth of a $10,000 Investment
CHART DATA:
<TABLE>
<CAPTION>
Salomon Brothers Salomon Brothers Currency -
World Government Scudder Global Hedged World Government
Year Bond Index Bond Fund Bond Index (1-3 years)**
- ---- ---------- --------- ------------------------
<S> <C> <C> <C>
3/91* 10000 10000 10000
'91 10154 10072 10075
'92 11408 11087 10896
'93 13304 11859 11702
'94 14028 12169 12058
'95 16202 12282 12748
'96 16682 12725 13625
'97 16808 12733 00
'98 18156 13878 00
'99 19645 14952 00
</TABLE>
Yearly periods ended April 30
The unmanaged Salomon Brothers World Govenment Bond Index consists of
worldwide fixed-rate government bonds with remaining maturities greater
than one year. Index returns assume reinvestment of dividends and, unlike
Fund returns, do not reflect any fees or expenses.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART TITLE:
- --------------------------------------------
Returns and Per Share Information
- --------------------------------------------
CHART DATA:
<TABLE>
<CAPTION>
Yearly Periods Ended April 30
1991* 1992 1993 1994 1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value $ 11.93 $ 11.95 $ 11.72 $ 11.12 $ 10.39 $ 10.00 $ 9.51 $ 9.62 $ 9.80
- ------------------------------------------------------------------------------------------------------------------------------
Income Dividends $ .17 $ 1.14 $ 1.01 $ .91 $ .84 $ .76 $ .60 $ .63 $ .55
- ------------------------------------------------------------------------------------------------------------------------------
Capital Gains Distributions $ -- $ -- $ .02 $ -- $ -- $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) .83 10.08 6.97 2.61 .93 3.67 .97 7.95 7.74
- ------------------------------------------------------------------------------------------------------------------------------
Index Total Return (%) .75 8.15 7.40 3.04 5.72 2.97 .75 8.02 8.21
- ------------------------------------------------------------------------------------------------------------------------------
On December 27, 1995, the Fund adopted its current name and objectives. Prior to that date, the Fund was known
as the Scudder Short Term Global Income Fund and its investment objective was to provide high current income
through short-term instruments. Since adopting its current objectives, the cumulative return is 13.84.
**Prior to December 27, 1995, the Salomon Brothers Currency-Hedged World Government Bond Index (1-3 years) was
used as a comparative index.
All performance is historical, assumes reinvestment of all dividends and capital gains, and is not indicative of
future results. Investment return and principal value will fluctuate, so an investor's shares, when redeemed,
may be worth more or less than when purchased. If the Adviser had not maintained expenses, the total returns for
the Fund for the one year, five year, and life of Fund periods would have been lower.
</TABLE>
4 - Scudder Global Bond Fund
<PAGE>
Portfolio Summary as of April 30, 1999
- -----------------------------------
Geographical Exposure
- -----------------------------------
U.S. 25.2%
U.K. 13.4%
Norway 11.3%
Canada 10.8%
Sweden 7.0%
France 6.4%
Netherlands 5.6%
Australia 5.3%
Ireland 2.3%
Philippines 2.1%
Italy 2.0%
Germany 1.9%
Argentina 1.6%
Mexico 1.5%
Brazil 1.3%
Panama 1.3%
Other 1.0%
- -----------------------------------
100.0%
- -----------------------------------
Exposure to U.S. bonds was decreased from 36% to 25%
over the period.
- -----------------------------------
Interest Rate Exposure
- -----------------------------------
U.S. 34.2%
Euro 16.2%
U.K. 15.1%
Norway 11.3%
Canada 7.4%
Sweden 7.0%
New Zealand 3.3%
Australia 3.0%
Japan 2.0%
Other 0.5%
- -----------------------------------
100.0%
- -----------------------------------
Inflation and interest rates have remained
generally benign.
- -----------------------------------
Currency Exposure (a)
- -----------------------------------
U.S. 58.3%
Euro 18.7%
Japan 6.6%
Norway 5.2%
U.K. 3.1%
Sweden 2.9%
Canada 1.8%
Australia 1.5%
Other 1.9%
- -----------------------------------
100.0%
- -----------------------------------
Hedging the Fund's exposure to Japanese and European
currencies helped fund performance.
(a) Currency exposure after taking into account the effects of foreign currency
options, futures, and forward contracts.
For more complete details about the Fund's investment portfolio, see page 12. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Global Bond Fund
<PAGE>
Portfolio Management Discussion
In the following interview, Lead Portfolio Manager M. Isabel Saltzman and
Portfolio Manager Jan Faller discuss Scudder Global Bond Fund's strategy and the
market environment for the six-month period ended April 30, 1999.
Q: How did the Fund perform in the six-month period ended April 30,1999?
A: The Scudder Global Bond Fund had a total return of 1.35%, outperforming the
- -3.35% return realized by the Salomon Brothers World Government Bond Index. The
index is an unmanaged and unhedged benchmark containing the government bonds of
eighteen high credit quality countries. The most significant contributor to the
negative return of the index was the drop in value of the euro relative to the
dollar, which fell by more than 9% since its introduction in January. This has a
large effect on the performance of the benchmark, as euro denominated bonds
represent over 35% of the index.
In this market environment the Fund's results benefited from Scudder's
philosophy of active management, emphasis on relative value, and use of hedging.
These factors are responsible for the Fund's outperformance relative to the
Salomon Brothers' Index.
Q: How would you describe the market environment during the past six months?
A: The global bond markets over the past six months have been characterized by a
gradually increasing appetite for credit products. Reduced volatility led
investors to unwind "flight-to-quality" trades, trades in which riskier credit
assets are sold in favor of securities with little or no credit risk. Instead,
particularly once Brazil demonstrated a commitment to financial reform after the
devaluation of the real, investors began moving out of lower risk assets in
favor of securities with more credit risk and more yield.
Inflation remained tame throughout the developed markets over the past six
months. Indeed, the Fed was able to lower rates by 25 additional basis points in
November after its cuts in September and October. These cuts created no concerns
about inflation, even with U.S. GDP growth at 3.5%, but simply served to calm a
market that had become extremely risk averse. Every other developed market
central bank had either a neutral or easing bias over the past six months, and
just before the end of April, the European Central Bank cut its rates by 50
basis points to 2.5%. As liquidity and stability returned to developing markets,
however, concerns about inflation in the U.S. began to arise.
A significant contributor to the benign global inflation environment has been
falling commodity prices. Oil reached historical lows in December, and the CRB
index was at its lowest level for all of the 1990s in February. However, a sharp
turnaround in oil prices over the past two months may be seen as a harbinger of
increasing inflation. We are watching this trend in commodity prices closely,
increasing our exposure to currencies or bonds that benefit from commodity price
gains.
Q: What were the key factors affecting the Fund's performance?
A: Our philosophy of actively managing the portfolio, identifying relative
value, and hedging
6 - Scudder Global Bond Fund
<PAGE>
currency exposure all contributed to the Fund's strong performance relative to
its peers and the index.
The most significant factor in our management of the Fund was country
allocation. The Fund's country allocation differed significantly from the index.
Certainly, we were overweighted in those countries we thought represented
relative value and underweighted in those countries we thought were overpriced.
Japan was our most notable divergence from the index. In the beginning of the
period it accounted for a very small percentage of our portfolio versus 20% for
the index. As the period progressed we felt that yen denominated bonds became
more reasonably priced. In addition, initial indications are that Japan is
taking the need for corporate restructuring and bank reform seriously. As a
result, we anticipate increasing the portfolios weighting of these bonds
substantially.
The portfolio's composition also looked significantly different from the index
in our European weightings. In the "core-Europe" countries such as Germany,
France, and Italy we were underweighted versus the index. Conversely, in the
"periphery-Europe" countries such as Norway and Sweden we were overweighted
versus the index. As the likelihood of certain peripheral countries entering the
EMU increased, these countries became more attractive on a relative value basis.
Our pursuit of relative value also led us to be overweighted versus the index in
Australian and New Zealand dollar denominated bonds. This overweighting allowed
us to take advantage of the correlation we noted previously between improving
commodity prices and these bonds. In addition to significant divergences from
the index in our country weightings, we also realized significant benefit from
hedging the euro. As we noted above, the euro lost over 9% of its value in this
period. By hedging a significant amount of our euro position we diminished the
effects of this volatility on the portfolio.
Q: You mentioned the benefits of hedging the euro. Could you discuss your
hedging activity in more detail?
A: Hedges generally worked to our benefit over the past six months. The euro
represents the largest single currency exposure in the Fund's benchmark,
comprising 36.5% of the index against which the Fund is measured. As mentioned
earlier, we were underweight Euro-bloc countries in favor of Sweden and Norway.
Similarly, we reduced our euro currency holdings relative to the benchmark
because the combination of structural rigidities in the labor market and falling
interest rates gave us a negative outlook for the euro.
High yen volatility combined with a very weak Japanese economy led us to
increase our hedge out of yen into dollar in order to reduce the currency risk
of the Fund. The yen is the third largest currency in the index with a weight of
20% of the total. The yen hedge benefited the Fund in two ways: First, the yen
weakened slightly, so the hedge enhanced returns. More importantly, with
interest rates lower in Japan than in the U.S., we gained from the interest rate
differential or "carry trade."
Conversely, our currency exposures to the Australian Dollar and the Canadian
Dollar were largely unhedged, because of the favorable effects of
7 - Scudder Global Bond Fund
<PAGE>
the commodity trend we cited above. Both of these currencies rallied
significantly against the U.S. dollar over the past six months contributing
positively to the performance of the Fund.
Q: What has been the effect of the European Monetary Union on European Bonds?
A: So far, EMU has had very little effect. Market participants, however,
anticipate that a liquid Euro-bloc corporate market will develop over time. If
this occurs, the country of issue will matter far less than the industry and
rating of the issuer. We are monitoring the growth of this market, as these
corporate issues will offer additional opportunities for the Fund to add yield
by owning debt of high quality corporate issuers.
Q: In our discussion so far there has been no mention of the emerging markets.
What percentage of the Fund's portfolio consists of these bonds?
A: Prior to the devaluation of the Brazilian real we had virtually no exposure
to the emerging markets. After Brazil devalued the real and finally gave
credible indications of serious fiscal reform, we reconsidered those markets on
a very selective basis. At that time we felt there were some bonds, most notably
those of Mexico, Panama, and the Philippines, that had relative value, and we
added them to the portfolio. We like to think of these as "high-quality"
emerging market debt. It is important to note that all emerging market debt we
hold is sovereign debt.
Q: How significant was U.S. exposure in the portfolio?
A: We decreased our exposure to the U.S. from 36% to 25% over the period as
potential inflationary pressure in the U.S. increased market nervousness. The
index weight for the U.S. is 30%; thus we moved from overweight to underweight.
Concerns about inflationary pressure from robust GDP growth (4.1% annualized in
the first quarter) and low unemployment (4.3%) prompted us to move to an
underweight position. Currently, the U.S. is the highest yielding country in the
index, so investors are being compensated for inflation risk with higher yields.
Because of the high yields, we are not more underweight the U.S. market.
If you look at the "dollar-block" in our portfolio, we have been overweighted in
the Canadian, Australian, and New Zealand dollar denominated positions. There
are two particular reasons for this. First, the correlation we noticed between
commodity prices and those bonds made the countries attractive. Commodity prices
have been improving, which has been helping the economic fundamentals in Canada,
Australia, and New Zealand. This overweighting proved to be beneficial as these
countries outperformed the U.S. over the past six months. Second, yields are
higher for all the "dollar-bloc" countries relative to other countries in the
index. Thus, these overweight positions enhance the overall yield of the Fund.
Q: What do you expect from the markets looking forward?
A: With volatility dropping around the globe, and liquidity returning to
markets, the Fed can change
8 - Scudder Global Bond Fund
<PAGE>
its focus from being a liquidity provider to being more vigilant about
inflation. First quarter growth in the United States continued to be very
strong, which may lead the Fed to raise rates if any sign of inflationary
pressure begins to appear. While an increase in short rates should help the U.S.
dollar, it may limit the growth of the domestic equity market.
Growth remains restrained in the Euro-bloc countries. Unemployment remains over
10% in Germany and France, and with current structural rigidities, the level
looks unlikely to change. The structural constraints cannot change quickly,
which should prevent growth from picking up anytime soon. This should keep
yields in the Euro-bloc within their current trading range. By contrast,
Japanese yields could be quite volatile over the next several months. If fiscal
stimulus is limited, yields will most likely remain low as negative GDP growth
would continue. If, on the other hand, the government spends money in an effort
to stimulate the economy, it will have to issue more debt to finance the
spending. With yields on government bonds so low, they are difficult to sell.
Yields may have to rise significantly for the Japanese to finance their
spending.
As long as economic growth remains constrained in the Euro-bloc, we expect that
the euro will remain at its current level or weaken further. Also, the Kosovo
crisis has exerted negative pressure on the value of the euro, and on Euro-bloc
growth. We would, however, expect intervention on the part of the European
Central Bank to defend the level of the euro, which could cushion the downside.
Domestic weakness has also put downward pressure on the Japanese yen, while the
balance of trade with the U.S. has supported its level. We expect that the yen
will remain in its current range over the short-term, but are watching the
competing pressures on the currency to ensure that they do not move out of
balance, prompting a significant move.
We are constructive on emerging markets fundamentals, but view the Fund's
position as tactical. Given the high correlation of emerging markets with U.S.
equity markets, if domestic equities respond negatively to a move by the Fed, we
will consider whether or not the emerging markets' exposure should be reduced.
9 - Scudder Global Bond Fund
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CURRENCY EXCHANGE RATE The price at which one country's currency can be exchanged into another
currency. From the perspective of a U.S. investor in overseas securities, a
weakening U.S. dollar adds to total returns, as assets denominated in foreign
currencies then translate into more in dollar terms; a strengthening dollar
relative to foreign currencies reduces returns to U.S. investors.
FUNDAMENTAL RESEARCH Analysis of a security based on the projected economic health of the issuer.
To determine whether a government bond is attractively priced, information
such as inflation, gross domestic product, and money flows into and out of
the country will be analyzed. Distinct from technical analysis, which
evaluates the attractiveness of a security based on historical price and
trading volume movements, rather than the financial results of the underlying
issuer.
HEDGING A strategy used to offset investment risk. Investment managers frequently
hedge their exposure to currency changes by buying or selling futures or
options contracts. For example, an investor who wishes to buy British bonds
but feels that the value of the pound will fall versus the U.S. dollar may
buy futures or options on the pound to offset the projected decline in the
currency.
INVERTED YIELD CURVE An unusual situation where short-term interest rates are higher than
long-term interest rates. An inverted curve results when a surge in demand
for short-term credit drives up short-term rates, while long-term rates move
up more slowly since borrowers are not willing to commit themselves to pay
high rates for many years. This scenario is often indicative of negative
sentiment concerning a country's economic health.
30-DAY SEC YIELD The standard yield reference for bond funds, based on a formula prescribed by
the SEC. This annualized yield calculation reflects the 30-day average of the
income earnings capability of every holding in a given fund's portfolio, net
of expenses, assuming each is held to maturity.
10 - Scudder Global Bond Fund
<PAGE>
TOTAL RETURN The most common yardstick to measure the performance of a fund or investment.
Total return -- annualized or compounded -- is based on a combination of share
price changes plus income and capital gain distributions, if any, expressed
as a percentage gain or loss in value.
YIELD CURVE A graph plotting the yields of all bonds of the same quality with maturities
ranging from the shortest to the longest available. The resulting curve shows
the relationship between short-, intermediate-, and long-term interest rates.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and Investment Terms)
</TABLE>
11 - Scudder Global Bond Fund
<PAGE>
Investment Portfolio as of April 30, 1999
<TABLE>
<CAPTION>
Principal Market
Amount Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 2.7%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/1999 at 4.87%, to be
repurchased at $2,693,093 on 5/3/1999, collateralized by a $2,722,000 U.S. Inflationary Index
-------------
Treasury Bond, 3.875%, 4/15/2029 (Cost $2,692,000) ................................ 2,692,000 2,692,000
-------------
Foreign Denominated Debt Obligations 65.9%
- ----------------------------------------------------------------------------------------------------------------------------------
Australian Dollars 3.0%
New South Wales Treasury Corp., 7%, 4/1/2004 ........................................ 4,200,000 2,955,366
-------------
British Pounds 15.1%
Federal National Mortgage Association Global Issue, 7.125%, 8/10/1999 ............... 2,000,000 3,236,061
United Kingdom Treasury Bond, 6%, 8/10/1999 ......................................... 3,442,000 5,553,748
United Kingdom Treasury Bond, 8%, 6/10/2003 ......................................... 3,385,000 6,066,523
-------------
14,856,332
-------------
Canadian Dollars 7.5%
Newcourt Credit Group, Inc., 6.2%, 9/1/2004 ......................................... 1,170,000 803,768
PanCanadian Petroleum Ltd., 8.75%, 11/9/2005 ........................................ 1,500,000 1,185,850
Province of Nova Scotia, 7.25%, 10/11/2006 .......................................... 2,650,000 2,018,447
TransCanada Pipelines, 5.84%, 6/27/2008 ............................................. 4,063,000 2,772,823
TransCanada Pipelines, Series Q, 10.625%, 10/20/2009 ................................ 590,000 549,921
-------------
7,330,809
-------------
Costa Rican Colon 0.1%
Citibank Time Deposit, 20.5%, 5/26/1999 ............................................. 24,453,261 87,131
-------------
El Salvadoran Colon 0.1%
Citibank Time Deposit, 10%, 8/23/1999 ............................................... 427,541 48,834
-------------
Euro 16.2%
Federal Republic of Germany, 5%, 5/21/2001 .......................................... 1,700,000 1,879,530
Government of France, 4.5%, 7/12/2002 ............................................... 2,780,000 3,075,937
Government of France, 5.5%, 4/25/2007 ............................................... 2,750,000 3,254,324
Government of Ireland, 6%, 8/18/2008 ................................................ 1,809,377 2,222,581
Government of the Netherlands, Principal Only, Zero Coupon, 1/15/2023 ............... 17,773,033 5,509,213
-------------
15,941,585
-------------
Japanese Yen 2.0%
Republic of Italy, 3.5%, 6/20/2001 .................................................. 220,000,000 1,970,749
-------------
Mexican Pesos 0.2%
Citibank Time Deposit, 22.7%, 10/29/1999 ............................................ 1,302,880 140,529
Mexico Cetes, Zero Coupon, 7/9/1999 ................................................. 1,355,830 140,406
-------------
280,935
-------------
The accompanying notes are an integral part of the financial statements.
12 - Scudder Global Bond Fund
<PAGE>
Principal Market
Amount Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
New Zealand Dollars 3.3%
Government of Canada, 6.625%, 10/3/2007 ............................................. 5,789,000 3,292,094
-------------
Norwegian Kroner 11.3%
Kingdom of Norway, 7%, 5/31/2001 .................................................... 58,500,000 7,824,244
Kingdom of Norway, 5.75%, 11/30/2004 ................................................ 12,500,000 1,688,670
Kingdom of Norway, 5.5%, 5/15/2009 .................................................. 11,500,000 1,564,631
-------------
11,077,545
-------------
Swedish Kronor 7.0%
Kingdom Of Sweden, 5%, 1/15/2004 .................................................... 9,400,000 1,188,480
Kingdom Of Sweden, 5%, 1/28/2009 .................................................... 45,000,000 5,676,967
-------------
6,865,447
-------------
Turkish Lire 0.1%
J.P. Morgan Time Deposit, 71%, 5/3/1999 ............................................. 13,527,720,000 34,505
J.P. Morgan Time Deposit, 69%, 5/17/1999 ............................................ 14,381,469,440 36,683
-------------
71,188
- ----------------------------------------------------------------------------------------------------------------------------------
Total Foreign Denominated Debt Obligations (Cost $66,177,979) 64,778,015
- ----------------------------------------------------------------------------------------------------------------------------------
Principal
Amount ($)
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Dollar Denominated Debt Obligations 31.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Argentine Republic, Bonos de Consolidacion de Deudas Previsionales Pre 2 (BOCON),
Variable Interest Rate Bond, 4.93%, 4/1/2001 ...................................... 831,452 804,158
Argentine Republic, 11.375%, 1/30/2017 .............................................. 750,000 748,125
Federal National Mortgage Association, 5.125%, 2/13/2004 ............................ 2,593,000 2,534,655
Federative Republic of Brazil, IDU Floating Rate Bond, LIBOR plus .8125% (6.063%), 1/1/2001 799,500 760,025
Federative Republic of Brazil, Eligible Interest, Floating Rate Bond, LIBOR plus .8125%
(5.875%), 4/15/2006 ............................................................... 237,500 189,555
Federative Republic of Brazil C Bond, Step-up Coupon, 5% with 3% Interest
Capitalization until 4/15/2000, 8%, 4/15/2014 ..................................... 514,784 357,260
General Motors Acceptance Corp., MTN, 5.33%, 10/20/2000 ............................. 1,500,000 1,494,090
Government National Mortgage Association Pass-thru, 7% with various maturities to 3/15/2029 4,744,405 4,814,089
Government of Jamaica, 10.875%, 6/10/2005 ........................................... 540,000 486,000
Midland Bank PLC, 7.625%, 6/15/2006 ................................................. 1,500,000 1,611,975
PacifiCorp Australia LLC, 6.15%, 1/15/2008 .......................................... 2,300,000 2,255,012
Puget Sound Energy, Inc., 7.02%, 12/1/2027 .......................................... 2,000,000 1,997,320
Republic of Bulgaria, Interest Arrears Bond, LIBOR plus .8125% (5.875%), 7/28/2011 .. 500,000 338,125
Republic of Panama, Interest Reduction Bond, Step-up Coupon, 4% to 7/17/1999, increasing
rates to 7/17/2014................................................................. 500,000 392,500
The accompanying notes are an integral part of the financial statements.
13 - Scudder Global Bond Fund
<PAGE>
Principal Market
Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Republic of Panama, Past Due Interest Bond, LIBOR plus .8125%, 4% with 1.938%
Interest Capitalization (5.938%), 7/17/2016 ......................................... 1,075,294 844,106
Republic of the Philippines, 8.875%, 4/15/2008 ...................................... 2,050,000 2,085,875
Time Warner Inc., 9.125%, 1/15/2013 ................................................. 1,000,000 1,217,660
U.S. Treasury Bond, 7.25%, 5/15/2016 ................................................ 1,480,000 1,693,209
U.S. Treasury Note, 6.5%, 10/15/2006 ................................................ 3,600,000 3,837,384
U.S. Treasury Note, 5.5%, 2/15/2008 ................................................. 1,275,000 1,284,563
United Mexican States, 11.5%, 5/15/2026 ............................................. 1,000,000 1,189,500
- ----------------------------------------------------------------------------------------------------------------------------------
Total U.S. Dollar Denominated Debt Obligations (Cost $31,135,549) 30,935,186
- ----------------------------------------------------------------------------------------------------------------------------------
Purchased Options 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Put on Canadian Dollar, strike price 1.5373, expires 6/1/1999 (Cost $12,600) 3,500,000 0
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $100,018,128) (a) 98,405,201
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $100,018,128. At April 30,
1999, net unrealized depreciation for all securities based on tax cost
was $1,612,927. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $813,248 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$2,426,175.
At April 30, 1999, open futures contracts purchased were as follows:
<TABLE>
<CAPTION>
Aggregate
Futures Expiration Date Contracts Face Value ($) MarketValue($)
------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Japanese 10 Year Bond TSE 6/11/1999 1 1,107,907 1,148,290
--------- ---------
Total net unrealized appreciation on open futures contracts purchased 40,383
=========
At April 30, 1999, outstanding written options were as follows:
Principal Expiration Strike Premium Market
Call Options Amount (000's) Date Price ($) Received ($) Value
- ------------ ----------------------------------------------------------------------------------------
CAD ............. 3,500 6/1/1999 1.491 12,600 54,600
</TABLE>
Currency Abbreviations
- --------------------------------------
ARA Argentine Peso JPY Japanese Yen
AUD Australian Dollar MXP Mexican Peso
CAD Canadian Dollar NZD New Zealand Dollar
CLP Chilean Peso NOK Norwegian Kroner
CNR Chinese Renminbi PHP Philippine Peso
EGP Egyptian Pound PLZ Polish Zloty
EUR Euro ZAR South African Rand
GBP British Pound KRW South Korean Won
HUF Hungarian Forint SEK Swedish Kroner
IND Indonesian Rupiah THB Thai Bahts
ILS Israeli Shekel USD U.S. Dollar
The accompanying notes are an integral part of the financial statements.
14 - Scudder Global Bond Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1999
<TABLE>
<CAPTION>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $100,018,128) ............. $ 98,405,201
Foreign currency holdings, at market (identified cost $2,116) ..... 2,149
Interest receivable ............................................... 1,850,739
Receivable for investments sold ................................... 525,338
Receivable for Fund shares sold ................................... 6,090
Unrealized appreciation on forward currency exchange contracts .... 708,323
Other assets ...................................................... 1,606
----------------
Total assets ...................................................... 101,499,446
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................. 397,884
Dividends payable ................................................. 105,642
Payable for Fund shares redeemed .................................. 27,855
Payable for daily variation margin on open futures contracts ...... 2,420
Unrealized depreciation on forward currency exchange contracts .... 711,764
Written options, at market (premiums received $12,600) ............ 54,600
Accrued management fee ............................................ 42,009
Other payables and accrued expenses ............................... 227,665
----------------
Total liabilities ................................................. 1,569,839
-------------------------------------------------------------------------------------------
Net assets, at market value ....................................... $ 99,929,607
-------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation (depreciation) on:
Investments .................................................... (1,612,927)
Written options ................................................ (42,000)
Futures contracts .............................................. 40,383
Foreign currency related transactions .......................... (32,622)
Accumulated net realized gain (loss) .............................. (4,215,528)
Paid-in capital ................................................... 105,792,301
-------------------------------------------------------------------------------------------
Net assets, at market value ....................................... $ 99,929,607
-------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($99,929,607 /
10,193,372 shares of capital stock outstanding, $.01 par value, ----------------
300,000,000 shares authorized) .................................. $9.80
----------------
The accompanying notes are an integral part of the financial statements.
15 - Scudder Global Bond Fund
<PAGE>
Statement of Operations
six months ended April 30, 1999
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
Income:
Interest (net of foreign taxes withheld of $16,996) $ 3,228,384
----------------
Expenses:
Management fee 388,064
Services to shareholders 124,406
Custodian and accounting fees 98,408
Directors' fees and expenses 24,958
Reports to shareholders 13,187
Auditing 44,959
Legal 6,719
Registration fees 12,533
Other 6,637
----------------
Total expenses before reductions 719,871
Expense reductions (160,202)
----------------
Expenses, net 559,669
-------------------------------------------------------------------------------------------
Net investment income 2,668,715
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments 977,722
Written options 343,968
Futures contracts 349,586
Foreign currency related transactions 1,890,394
----------------
3,561,670
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments (3,539,807)
Written options (638,509)
Futures contracts (44,881)
Foreign currency related transactions (550,020)
----------------
(4,773,217)
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions (1,211,547)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 1,457,168
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
16 - Scudder Global Bond Fund
<PAGE>
Statements of Changes in Net Assets
Six Months Year Ended
Ended October 31,
Increase (Decrease) in Net Assets April 30, 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income ............................... $ 2,668,715 $ 7,454,010
Net realized gain (loss) from investment transactions 3,561,670 (2,383,402)
Net unrealized appreciation (depreciation) on
investment transactions during the period ........... (4,773,217) 4,397,493
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations .......................................... 1,457,168 9,468,101
Distributions to shareholders from: ---------------- ----------------
Net investment income ............................... (2,668,715) (7,192,075)
---------------- ----------------
Tax return of capital ............................... -- (261,935)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ........................... 9,721,532 18,630,293
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................... 1,922,580 5,303,498
Cost of shares redeemed ............................. (18,227,353) (53,336,952)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ........................................ (6,583,241) (29,403,161)
---------------- ----------------
Increase (decrease) in net assets ................... (7,794,788) (27,389,070)
Net assets at beginning of period ................... 107,724,395 135,113,465
---------------- ----------------
Net assets at end of period ......................... $ 99,929,607 $ 107,724,395
---------------- ----------------
Other Information
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period 10,857,540 13,913,602
---------------- ----------------
Shares sold 977,655 1,923,075
Shares issued to shareholders in reinvestment of 193,739 551,892
distributions
Shares redeemed (1,835,562) (5,531,029)
---------------- ----------------
Net increase (decrease) in Fund shares (664,168) (3,056,062)
---------------- ----------------
Shares outstanding at end of period 10,193,372 10,857,540
---------------- ----------------
The accompanying notes are an integral part of the financial statements.
17 - Scudder Global Bond Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
Six Months Ended
April 30, Years Ended October 31,
1999 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
Net asset value, beginning of period ...... $ 9.92 $ 9.71 $ 10.25 $ 10.53 $ 10.78 $ 11.68
------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .............. .25 .62 .59 .67 .80 .87
Net realized and unrealized gain (loss)
on investment transactions .............. (.12) .21 (.54) (.28) (.25) (.90)
------------------------------------------------------------------------
Total from investment operations .......... .13 .83 .05 .39 .55 (.03)
------------------------------------------------------------------------
Less distributions from:
Net investment income ..................... (.25) (.60) (.14) (.42) (.36) (.02)
Tax return of capital ..................... -- (.02) (.45) (.25) (.44) (.85)
------------------------------------------------------------------------
Total distributions ....................... (.25) (.62) (.59) (.67) (.80) (.87)
------------------------------------------------------------------------
------------------------------------------------------------------------
Net asset value, end of period ............ $ 9.80 $ 9.92 $ 9.71 $ 10.25 $ 10.53 $ 10.78
- ---------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ...................... 1.35** 8.91 0.66 3.97 5.43 (.25)
Ratios and Supplemental Data
Net assets, end of period ($ millions) .... 100 108 135 217 357 560
Ratio of operating expenses, net to
average daily net assets (%) ............ 1.08* 1.00 1.00 1.00 1.00 1.00
Ratio of operating expenses before
expense reductions, to average daily
net assets (%) .......................... 1.39* 1.48 1.39 1.28 1.20 1.15
Ratio of net investment income to
average daily net assets (%) ............ 5.16* 6.43 6.00 6.67 7.73 7.76
Portfolio turnover rate (%) ............... 160.3* 218.3 256.5 335.7 182.8 272.4
</TABLE>
(a) Total returns would have been lower had certain expenses not been
reduced.
* Annualized
** Not annualized
On December 27, 1995, the Fund adopted its current name and objectives.
Prior to that date, the Fund was known as the Scudder Short Term Global
Income Fund and its investment objective was to provide high current
income through short-term instruments. Financial information prior to
December 27, 1995 should not be considered representative of the
present Fund.
18 - Scudder Global Bond Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Global Bond Fund (the "Fund") is a non-diversified series of
Global/International Fund, Inc., a Maryland corporation registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio debt securities other than money market
instruments with an original maturity over sixty days are valued by pricing
agents approved by the officers of the Fund, whose quotations reflect
broker/dealer-supplied valuations and electronic data processing techniques. If
the pricing agents are unable to provide such quotations, the most recent bid
quotation supplied by a bona fide market maker shall be used. Money market
instruments purchased with an original maturity of sixty days or less are valued
at amortized cost. All other debt securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least the repurchase price.
Options. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the
period, the Fund purchased put options and wrote call options on currencies as a
hedge against potential adverse price movements in the value of portfolio
assets. In addition, during the period, the Fund purchased call options on
currencies to lock in the purchase price of a security or currency which it
expects to purchase in the near future and to enhance potential gain.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium paid. If the Fund elects to close out the option it
would recognize a gain or loss equal to the difference between the cost of
acquiring the option and the amount realized upon the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised, the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked prices are available. Over-the-counter written or purchased options
are valued using dealer supplied quotations.
19 - Scudder Global Bond Fund
<PAGE>
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased interest rate futures to manage the duration of the portfolio,
and as a temporary substitute for purchasing selected investments and the Fund
sold interest rate futures to hedge against declines in the value of portfolio
securities.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and
liabilities at the daily rates of exchange, and
(ii) purchases and sales of investment securities, interest income
and certain expenses at the daily rates of exchange prevailing
on the respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the accrual and payment dates on interest
and foreign withholding taxes.
20 - Scudder Global Bond Fund
<PAGE>
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies and as a
hedge against changes in exchange rates relating to foreign currency denominated
assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies, and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes, and no federal
income tax provision was required. At October 31, 1998, the Fund had a net tax
basis capital loss carryforward of approximately $6,433,000, which may be
applied against any realized net taxable capital gains of each succeeding year
until fully utilized or until October 31, 2002 ($686,000), October 31, 2003
($5,010,000) and October 31, 2004 ($737,000), the respective expiration dates,
whichever occurs first.
Distribution of Income and Gains. Distribution of net investment income is
declared as a dividend to shareholders of record as of the close of business
each day and is distributed to shareholders monthly. During any particular year
net realized gains and certain unrealized gains (which for federal income tax
reporting purposes may be considered realized) from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed and, therefore, will be distributed to shareholders. An
additional distribution may be made to the extent necessary to avoid the payment
of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences relate primarily to investments in options, futures, forward
currency contracts and foreign currency denominated investments. As a result,
net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade date basis.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. All
discounts are accreted for both tax and financial reporting purposes.
21 - Scudder Global Bond Fund
<PAGE>
B. Purchases and Sales of Securities
During the six months ended April 30, 1999, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $66,808,037 and $65,924,640, respectively. Purchases and sales of
U.S. Government obligations aggregated $5,102,047 and $8,346,781, respectively.
The aggregate face value of futures contracts opened and closed during the six
months ended April 30, 1999 was $3,641,809 and $12,454,643, respectively.
Transactions in written options for the six months ended April 30, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Over-the-Counter Options
Exchange Traded Options on Currencies (000 omitted)
----------------------- ---------------------------
Number of
Contracts Premiums NZD CAD Premiums
---------------------------- ---------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Beginning
of Period ...... 95 $ 82,403 11,900 6,890 $ 115,022
Written ........ -- -- 29,600 11,300 222,415
Closed ......... (95) (82,403) (6,200) -- (37,386)
Exercised ...... -- -- (23,800) (7,800) (191,769)
Expired ........ -- -- (11,500) (6,890) (95,682)
-------- --------- -------- -------- -----------
End of
Period ......... -- $ -- -- 3,500 $ 12,600
======== ========= ========= ========= ===========
-----------------------------------------------------------------------------
</TABLE>
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), 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. The management fee
payable under the Agreement is equal to an annual rate of 0.75% of the first
$1,000,000,000 of average daily net assets and 0.70% of such assets in excess of
$1,000,000,000, computed and accrued daily and payable monthly. Until February
28, 1999, the Adviser agreed not to impose all or a portion of its management
fee in order to maintain the annualized expenses of the Fund at not more than
1.00% of average daily net assets. Effective March 1, 1999, the Adviser agreed
not to impose all or a portion of its management fee until February 29, 2000 in
order to maintain the annualized expenses of the Fund at not more than 1.25% of
average daily net assets. For the six months ended April 30, 1999, the Adviser
did not impose a portion of its management fee aggregating $160,202 and the
amount imposed aggregated $227,862, of which $42,009 is unpaid at April 30,
1999. This was equivalent to an annual effective rate of 0.44% of the Fund's
average daily net assets.
22 - Scudder Global Bond Fund
<PAGE>
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended April 30, 1999, the amount charged to the Fund by SSC
aggregated $104,827, of which $17,701 is unpaid at April 30, 1999.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the six months ended April 30,
1999, the amount charged to the Fund by STC aggregated $5,771, of which $955 is
unpaid at April 30, 1999.
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 $47,534,
of which $15,573 is unpaid at April 30, 1999.
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, Directors' fees and expenses aggregated
$24,958.
D. Commitments
As of April 30, 1999, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of $3,441.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
(Depreciation)
Contracts to Deliver In Exchange For Settlement Date (U.S.$)
<S> <C> <C> <C> <C> <C>
USD 99,000 PLZ 394,931 5/12/1999 668
USD 48,373 PHP 1,861,406 5/17/1999 477
USD 2,475,285 EUR 2,291,549 5/17/1999 (48,054)
USD 2,356,884 JPY 279,762,140 5/18/1999 (8,904)
JPY 236,423,753 USD 2,094,099 5/18/1999 109,848
USD 36,077 THB 1,353,242 5/19/1999 502
USD 58,663 KRW 71,480,658 5/19/1999 1,455
USD 157,320 THB 5,846,011 5/19/1999 702
USD 26,764 PHP 1,021,029 5/24/1999 2
USD 49,990 ILS 203,108 5/24/1999 (1,345)
SEK 34,032,016 JPY 495,335,993 5/25/1999 113,472
USD 41,424 KRW 49,522,033 5/26/1999 218
USD 36,191 CNR 299,991 5/28/1999 9
USD 75,000 IND 647,625,000 5/28/1999 4,741
USD 100,000 CLP 48,720,000 5/28/1999 (132)
USD 1,538,609 EUR 1,423,412 5/28/1999 (29,820)
USD 4,413,347 EUR 4,075,000 5/28/1999 (93,928)
EUR 4,846,489 USD 5,210,072 5/28/1999 72,890
EUR 10,915,675 USD 11,933,780 5/28/1999 363,380
USD 11,098,298 EUR 10,263,752 5/28/1999 (218,923)
USD 50,953 ZAR 311,117 6/3/1999 (104)
NOK 15,200,000 USD 1,948,493 6/7/1999 4,158
23 - Scudder Global Bond Fund
<PAGE>
Net Unrealized
Appreciation
(Depreciation)
Contracts to Deliver In Exchange For Settlement Date (U.S.$)
NOK 31,005,501 USD 3,993,599 6/7/1999 27,474
GBP 1,482,434 USD 2,380,492 6/9/1999 (4,532)
USD 2,000,000 GBP 1,237,700 6/9/1999 (8,717)
AUD 2,300,000 USD 1,447,931 6/9/1999 (74,094)
GBP 7,106,739 USD 11,384,995 6/9/1999 (48,732)
USD 114,939 EGP 395,402 6/15/1999 (753)
USD 50,000 MXP 550,400 7/6/1999 7,473
NZD 100,000 USD 54,836 7/6/1999 (1,150)
CAD 2,097,215 USD 1,412,076 7/6/1999 (26,190)
CAD 3,201,650 USD 2,136,712 7/6/1999 (58,973)
NZD 5,800,000 USD 3,180,488 7/6/1999 (66,672)
USD 40,242 ARA 40,564 7/12/1999 266
USD 75,000 ZAR 464,663 7/29/1999 (57)
USD 48,373 PHP 1,905,909 10/15/1999 587
USD 26,764 PHP 1,041,101 10/22/1999 (44)
USD 98,199 HUF 23,039,393 1/25/2000 (7,061)
USD 201,981 HUF 47,649,430 1/27/2000 (13,578)
----------
(3,441)
==========
</TABLE>
E. 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, pro rata based on net assets, 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.
24 - Scudder Global Bond Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Global/International Fund, Inc. and to the
Shareholders of Scudder Global Bond 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 Scudder Global Bond Fund (the
"Fund") at April 30, 1999, the results of its operations, the changes in its net
assets, and the financial highlights for 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 23, 1999
25 - Scudder Global Bond Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Global Bond Fund
(the "Fund") was held on December 15, 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.
<TABLE>
<CAPTION>
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
<S> <C> <C> <C>
6,241,187 233,819 263,038 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
5,851,419 340,302 366,336 179,986
</TABLE>
- --------------------------------------------------------------------------------
* 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.
26 - Scudder Global Bond Fund
<PAGE>
This Page
intentionally
left blank.
27 - Scudder Global Bond 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.
28 - Scudder Global Bond Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
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.
29 - Scudder Global Bond Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- 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
- ------------------------------------------------------------------------------------------------------------------------------
30 - Scudder Global Bond Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
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>
31 - Scudder Global Bond Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $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