Scudder
Global
Fund
Semiannual Report
December 31, 1998
Pure No-Load(TM) Funds
For investors seeking long-term growth of capital from a professionally managed
portfolio consisting primarily of global equity securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder Global Fund
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Date of Inception: 7/23/86 Total Net Assets as of Ticker Symbol: SCOBX
12/31/98: $1.61 billion
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o Scudder Global Fund returned -1.76% for the six-month period ending December
31, 1998, trailing the 6.59% return of its unmanaged benchmark, the Morgan
Stanley Capital International World Index, for the same period. Underperformance
can be attributed to an emphasis on reasonable valuations and risk management in
a period when a select number of richly valued large-cap stocks led the market
higher. Over the past ten years, the Fund has posted an average annual return of
13.58%.
o While stock markets in the United States and Europe posted another year of
strong performance, Asia and the emerging markets continued to lag.
o The Fund's theme-based approach emphasized stocks that we believe stand to
benefit from the myriad changes taking place in the global economy.
Table of Contents
3 Letter from the Fund's Chairman 19 Financial Highlights
4 Performance Update 20 Notes to Financial Statements
5 Portfolio Summary 24 Report of Independent Accountants
6 Portfolio Management Discussion 25 Shareholder Meeting Results
9 Glossary of Investment Terms 28 Officers and Directors
10 Investment Portfolio 29 Investment Products and Services
16 Financial Statements 30 Scudder Solutions
2 - Scudder Global Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
The past year has been a nerve-wracking period for many investors. Although
the stock markets of most developed nations posted strong returns in 1998,
extreme volatility and dramatic news events left market participants on edge for
much of the year. When stock prices are falling and pundits are proclaiming that
the best days for the markets are behind us, it is easy to lose sight of your
long-term investment goals. Similarly, powerful rallies can often lead investors
to allocate their funds to asset classes that may not be suitable from a risk
standpoint. The temptation to "time the market" or otherwise change your
investment strategy can be exceptionally strong in periods of high volatility,
all the more so in an era of above-average stock market returns.
As the rebound in global equities last autumn demonstrated, however, a
long-term approach that stresses the importance of patience and diversification
continues to be a key to sound investing. We encourage you to regularly review
your asset allocations to ensure that they are consistent with your long-term
objectives. If you would like to discuss your situation, please do not hesitate
to call us at 1-800-225-2470.
For those of you who are interested in new Scudder products, we recently
introduced the Scudder Tax Managed Growth Fund, which invests in medium- to
large-sized U.S. companies, and Scudder Tax Managed Small Company Fund, which
focuses on stocks of small U.S. companies. Using a combination of quantitative
and fundamental research, the funds emphasize companies with strong earnings
growth, reasonable valuations, and favorable risk profiles. Both funds strive to
maximize after tax returns by systematically taking into account the tax
implications of portfolio transactions and seeking to offset capital gains by
realizing losses when appropriate.
Thank you for your continued investment in Scudder Global Fund. If you have
any questions about your investment, please call Scudder Investor Information at
the number listed above, or visit our Web site at www.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Global Fund
3 - Scudder Global Fund
<PAGE>
Performance Update as of December 31, 1998
Fund Index Comparisons
--------------------------------------------
Total Return
--------------------------------------------
Period
Ended Growth of Average
12/31/98 $10,000 Cumulative Annual
--------------------------------------------
Scudder Global Fund
--------------------------------------------
1 Year $ 11,259 12.59% 12.59%
5 Year $ 17,321 73.21% 11.61%
10 Year $ 35,744 257.44% 13.58%
--------------------------------------------
MSCI World Index
--------------------------------------------
1 Year $ 12,433 24.33% 24.33%
5 Year $ 20,712 107.12% 15.67%
10 Year $ 27,529 175.29% 10.65%
--------------------------------------------
Growth of a $10,000 Investment
- ------------------------------
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
Yearly periods ended December 31
Scudder Global Fund
Year Amount
- --------------------
'88 10000
'89 13741
'90 12861
'91 15056
'92 15741
'93 20637
'94 19770
'95 23827
'96 27079
'97 31748
'98 35744
MSCI World Index
Year Amount
- --------------------
'88 10000
'89 11662
'90 10028
'91 11447
'92 10849
'93 13291
'94 13965
'95 16856
'96 19129
'97 22142
'98 27529
The Morgan Stanley Capital International (MSCI) World Index is an unmanaged
capitalization- weighted measure of global stock markets including the U.S.,
Canada, Europe, Australia, and the Far East. Index returns assume dividends
reinvested net of withholding tax and, unlike Fund returns, do not reflect
any fees or expenses.
Returns and Per Share Information
- ---------------------------------
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
Yearly periods ended December 31
CHART DATA:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value $19.48 $17.06 $18.96 $19.32 $24.80 $23.33 $27.01 $28.80 $28.28 $28.68
- -----------------------------------------------------------------------------------------------------------------------------
Income Distributions $ .20 $ .37 $ .31 $ .16 $ .24 $ .11 $ .25 $ .28 $ .88 $ .55
- -----------------------------------------------------------------------------------------------------------------------------
Capital Gains Distributions $ .55 $ .83 $ .66 $ .34 $ .26 $ .34 $ .84 $ 1.53 $ 4.58 $ 2.61
- -----------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 37.41 -6.40 17.07 4.54 31.10 -4.20 20.53 13.65 17.24 12.59
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Index Total Return (%) 16.61 -17.02 18.28 -5.23 22.50 5.08 20.72 13.48 15.75 24.33
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</TABLE>
All performance is historical, assumes reinvestment of all dividends and capital
gains, and is not indicative of future results. Investment return and principal
value will fluctuate, so an investor's shares, when redeemed, may be worth more
or less than when purchased.
4 - Scudder Global Fund
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Portfolio Summary as of December 31, 1998
Geographical
(Excludes Cash Equivalents and Bonds)
- -------------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Europe 47%
United States & Canada 40%
Japan 5%
Pacific Basin 5%
Latin America 2%
Africa 1%
--------------------------------------
100%
======================================
We continue to find the most attractive opportunities in the United States and
Europe.
Sectors
(Excludes Cash Equivalents and Bonds
- ------------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Financial 19%
Manufacturing 17%
Energy 10%
Technology 8%
Metals and Minerals 8%
Utilities 8%
Consumer Staples 6%
Health 6%
Service Industries 5%
Other 13%
--------------------------------------
100%
======================================
The Fund decreased its weighting in financial stocks, and increased its
concentration in the utilities, energy, and natural resources sectors.
Ten Largest Equity Holdings
(18% of Portfolio)
- ---------------------------
1. International Business Machines Corp.
Principal manufacturer and servicer of business and computing machines
in the United States
2. Muenchener Rueckversicherungs- Gesellschaft AG Insurance company in
Germany
3. RWE AG
Producer and marketer of petroleum and chemical products in Germany
4. Novartis AG
Pharmaceutical company in Switzerland
5. Electronic Data Systems Corp.
Provider of information technology services in the United States
6. USEC Inc.
Provider of enriched uranium products and services in the United States
7. UNUM Corp.
Provider of disability, health and life insurance and group pension
products in the United States
8. Allianz AG
Multi-line insurance company in Germany
9. Unilever PLC
Manufacturer of branded and packaged consumer goods, foods, detergents
and personal care products in the United Kingdom
10. VEBA AG
Generator and distributor of electricity in Germany
We emphasized companies that are restructuring and demonstrating an
increased focus on shareholder value.
For more complete details about the Fund's investment portfolio, see page 10. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Global Fund
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Portfolio Management Discussion
In the following interview, Lead Portfolio Manager William Holzer discusses
Scudder Global Fund's strategy and the market environment in the six-month
period ended December 31, 1998.
Q: Please review the key market events of the past six months.
A: From the beginning to the end of 1998, the stock markets of the world's
industrialized nations rose substantially, but the path that they took to reach
their new heights was far from straight. In the first half of the year, the
combination of low interest rates, strong economic growth in the U.S. and
Europe, and restructuring in all regions combined to create a highly favorable
environment for equities. These factors were rapidly overwhelmed in July,
however, when the news about the Russian debt default and the U.S. hedge fund
crisis hit the markets. Suddenly, investors became much more focused on risk,
and concerns about a possible global recession were rampant. As quickly as the
markets fell in the summer, they subsequently rebounded in the fall following a
series of interest rate cuts by major central banks.
Rarely have the markets exhibited the rapid transitions between panic and
euphoria that they did in 1998. An outgrowth of this development is that a
narrowing proportion of stocks have benefited from outsized returns, making the
task of active fund managers more difficult. In the United States, for example,
the fifteen largest stocks in the S&P 500 (by capitalization) accounted for over
50% of the gain in the broader average during the year. Large company stocks
were awarded significantly higher valuations, causing the price-to-earnings
ratios of large-cap stocks to expand while the P/E ratios of smaller stocks
contracted. The period was also characterized by a skewed dispersion of returns
among industry sectors. In the S&P 500, only five of fifteen sectors
(technology, communications, consumer, health, and media) produced better
returns than the market as a whole. These factors, which were present for the
entire year, were particularly acute in the fourth quarter. The gap between the
few large-cap stocks that outperformed and the multitude of small- to mid-cap
stocks that were flat to down was also present in European markets, creating a
challenging environment for global investors.
Q: How did the Fund perform in this environment?
A: The Fund provided a total return of -1.76%, which trailed the 6.59% return of
its unmanaged benchmark, the Morgan Stanley Capital International (MSCI) World
Index. In a market where returns were so narrowly concentrated, the Fund would
have had to invest an extraordinarily large proportion of assets into a very
limited number of highly valued stocks in order to beat the index. Only an
abandonment of our risk management philosophy would have permitted this, and our
commitment to the belief that active management will add value over the
long-term precludes such a decision.
Q: The direction of Japan's economy continues to be a primary focus of
investors. Do you detect any signs of meaningful restructuring?
A: Yes, but the structural imbalances in the Japanese economy are perhaps one of
the most significant factors for the global financial markets in the near
6 - Scudder Global Fund
<PAGE>
future. In its quest to repair the economy, the Japanese government is faced
with a litany of challenges: rising bond yields, a strengthening yen, and a
banking system that remains under water, just to name a few. Thus far, its
responses have been woefully inadequate. For example, authorities have
maintained a policy of tight money when the debt logjam, in our opinion, can
only be repaired with a dose of inflation. Fiscal policy has been similarly
inadequate, as the ruling Liberal Democratic Party (LDP) has directed the bulk
of public works spending to its support base in the countryside, and has ignored
the areas that need it the most -- the cities and the industrial base -- in the
process. Slight change is evident in the private sector, where some companies
are beginning to unravel their crossholdings, implement meaningful restructuring
initiatives, and establish joint ventures with foreign firms. Although we will
intently monitor the process of reform to determine the appropriate point to
establish a position, we feel that it is still too early to do so. Too many
questions remain unanswered, and too many issues continue to plague Japan's
struggling economy.
Q: You have been developing several important investment themes within the
portfolio. Please tell us what they are, and how they have affected Fund
performance.
A: Our top-down strategy uses a theme-based approach to uncover undervalued
companies with catalysts for stock price appreciation. Specifically, we seek to
invest in companies that we believe stand to benefit from developments in the
global economy and changes taking place within specific industries. In 1998,
three themes stand out as key contributors to Fund performance.
The most important theme we employed was called "Secure Streams of Income," and
reflected our belief in the importance of tangible valuations and predictable
cash flows in the current market environment. We anticipate that the same
generation that purchased houses in the 1980s and stocks in the 1990s will
choose to lock in their gains and opt for security as they approach retirement.
While the demand for companies that can generate reliable income will be rising,
the amount that can actually do so is falling because of the disinflationary
environment. The imbalance that has resulted stands to benefit the stocks of
companies that fit in this category, such as Duke Energy. The number one
producer of gas and electric energy in the United States, Duke stands to be one
of the long-term winners of the deregulation process in the industry. Going
forward, the company is likely to produce stable earnings growth while paying a
relatively high yield to investors. Another holding under this theme is
Railtrack, which manages the railway infrastructure in the United Kingdom.
Believing that they are capable of generating steady revenues through the
benefit of government regulation and their dominant market position, we added to
our holdings as the year progressed.
We continue to find attractive opportunities in companies and industries that
stand to benefit from restructuring. Although this theme has already received a
great deal of attention, many opportunities still exist to invest in companies
as they recognize the importance of shareholder value. This trend continues to
evolve in Europe, where a number of our holdings have performed well. In our
7 - Scudder Global Fund
<PAGE>
opinion, the region still has far to go before this process is completed, and
valuations are generally more reasonable than those in the U.S. As a result, the
Fund is likely to maintain its overweight position in Europe.
A newer theme that we have begun to take advantage of is the growing empowerment
of the consumer. In the last five years, the combination of global competition,
disinflation, and the various tools that have streamlined the process of price
shopping -- such as the Internet -- have given consumers the ability to easily
obtain lower prices and better service. We believe that the firms providing the
technology to facilitate this process stand to profit from the ongoing shift in
the balance of power. A prime example of such a company is Sun Microsystems,
which manufactures the products that make Internet access possible. In addition
to producing servers, which are the hardware of the `Net, Sun sells Java
software, which is the common language for Internet-related devices. We feel
that by virtue of this powerful combination, Sun is well positioned to benefit
from the enormous opportunities in its consumer oriented businesses.
Q: What is your outlook for the global equity markets?
A: Although the global equity markets performed extremely well in the fourth
quarter, several risks remain in place. In the United States, strong consumer
spending and the low savings rate have been brought about by the "wealth effect"
of a rising stock market. Given the importance of the stock market to the
performance of the U.S. economy, it is likely that a drop in stock prices will
lead to a rapid decrease in consumer spending and gross domestic product growth.
In Latin America, there is the risk that Brazil will not be able to get its
fiscal house in order in time to stave off a larger economic collapse than the
region has already experienced. And in Asia, the continued inability of the
Japanese government to pull the country out of its economic doldrums is keeping
the entire Pacific Rim from getting back on track. In this uncertain
environment, our commitment to managing risk through a theme-based strategy
remains firmly in place. Although this approach may lead to underperformance
against the benchmark in the near term, our long-term goal is to remain
positioned to benefit from the many changes taking place in the global economy.
8 - Scudder Global Fund
<PAGE>
Glossary of Investment Terms
DISINFLATION The slowing down of the rate at which prices
increase. This phenomenon is generally associated
with a slowing economy, and is distinct from
deflation, which is an outright decline in prices.
FISCAL POLICY Decisions concerning government spending
typically designed to level out the business cycle,
promote price stability, and achieve sustained growth
within the economy.
MARKET CAPITALIZATION The market 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-capitalization.
MONETARY POLICY The decision of a central bank to control the level
of economic activity by either supplying credit
through lower interest rates or open market
purchases, or by restricting credit through higher
rates or open market sales. Looser credit tends to
stimulate the economy, while tighter credit tends to
calm inflationary forces.
PRICE/EARNINGS RATIO A widely used gauge of a stock's valuation that
(also "P/E" or "earnings indicates what investors are paying for a company's
multiple") earning power at the current stock price. A P/E
ratio may be based on a company's projected earnings
for the coming 12 months. A higher "earnings
multiple" indicates higher expected earnings growth,
along with greater risk of earnings disappointment.
WEIGHTING (over/under) Refers to the allocation of assets --
usually in terms of sectors, industries, or countries
-- within a portfolio relative to the portfolio's
benchmark index or investment universe.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of
Finance and Investment Terms)
9 - Scudder Global Fund
<PAGE>
Investment Portfolio as of December 31, 1998
<TABLE>
<CAPTION>
Principal Market
Amount (c) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreements 4.9%
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Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 12/31/1998 at 5% to
be repurchased at $79,848,336 on 1/4/1999, collateralized by a $79,198,000 -------------
U.S. Treasury Bond, 3.625%, 1/15/2008 (Cost $79,804,000) ........................... 79,804,000 79,804,000
-------------
Bonds 5.0%
- ------------------------------------------------------------------------------------------------------------------------------
United Kingdom 2.7%
United Kingdom Treasury Bond, 8.5%, 7/16/2007 ........................................ GBP 17,233,000 36,748,762
United Kingdom Treasury Bond, 3.5%, 12/29/2049 ....................................... GBP 6,014,200 7,751,250
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44,500,012
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United States 2.3%
U.S. Treasury Bond, 6.375%, 8/15/2027 ................................................ 31,995,000 36,774,093
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Total Bonds (Cost $73,191,365) 81,274,105
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<CAPTION>
Shares
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<S> <C> <C>
Common Stocks 90.1%
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Argentina 0.7%
YPF S.A. "D" (ADR) (Petroleum company) ............................................... 422,300 11,798,006
-------------
Australia 2.0%
Foster's Brewing Group, Ltd. (Leading brewery) ....................................... 3,682,700 9,974,872
Normandy Mining, Ltd. (Mining and oil enterprises) ................................... 6,306,000 5,835,118
WMC, Ltd. (Mineral exploration and production) ....................................... 1,553,351 4,683,315
Woodside Petroleum, Ltd. (Major oil and gas producer) ................................ 2,763,700 12,363,245
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32,856,550
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Austria 0.5%
Flughafen Wien AG (Operator of terminals and facilities at Vienna International
Airport) ........................................................................... 146,900 7,208,732
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Brazil 1.2%
Aracruz Celulose S.A. (ADR) (Producer of eucalyptus kraft pulp) ...................... 605,400 4,843,200
Companhia Cervejaria Brahma (pfd.) (Leading beer producer and distributor) ........... 14,986,000 6,548,817
Companhia Vale do Rio Doce (pfd.) "A" (Diverse mining and industrial complex) ........ 621,200 7,866,220
-------------
19,258,237
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Canada 3.5%
BCE, Inc. (Telecommunication services) ............................................... 235,000 8,875,016
Barrick Gold Corp. (Gold exploration and production in North and South America) ...... 718,000 14,001,000
Canadian Hunter Exploration, Ltd. (Explorer and producer of oil and natural gas
in Western Canada) ................................................................. 67,250 439,026
Canadian National Railway Co. (Railroad operator) .................................... 261,400 13,609,251
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
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<S> <C> <C>
Canadian Pacific Ltd. (Ord.) (Transportation and natural resource conglomerate) ...... 492,656 9,230,466
Molson Cos., Ltd. "A" (Brewery) ...................................................... 484,000 6,951,299
Nexfor Inc. (Manufacturer and marketer of forest products) ........................... 117,284 463,225
Noranda, Inc. (Operator in mining and metals, forest products, and oil and gas
industries) ........................................................................ 269,000 2,678,058
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56,247,341
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China 0.6%
American Standard China "B"* (Plumbing products) (b) ................................. 526 5,260,000
Huaneng Power International, Inc. Series "N" (ADR)* (Developer and operator of
large coal-fired power plants) ..................................................... 319,300 4,629,850
-------------
9,889,850
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France 3.1%
AXA S.A. (Insurance group providing insurance, finance and real estate services) ..... 150,929 21,865,943
Assurances Generales de France (Health, life, and liability insurance) ............... 206,577 12,333,286
Canal Plus (Leading pay television network) .......................................... 56,602 15,438,750
Michelin "B" (Leading tire manufacturer) ............................................. 2,430 97,139
-------------
49,735,118
-------------
Germany 16.8%
Allianz AG (Multi-line insurance company) ............................................ 73,784 27,048,673
BASF AG (Leading international chemical producer) .................................... 424,799 16,210,006
Bayer AG (Leading chemical producer) ................................................. 551,474 23,012,550
Bayerische Vereinsbank AG (Commercial bank) .......................................... 225,514 17,657,393
Deutsche Telekom AG (Telecommunication services) ..................................... 329,341 10,828,516
Deutsche Telekom AG (ADR) ............................................................ 241,700 7,915,675
Heidelberger Druckmaschinen AG (Manufacturer of commercial printing presses) ......... 63,043 4,671,393
Hoechst AG (Chemical producer) ....................................................... 483,993 20,065,948
Muenchener Rueckversicherungs-Gesellschaft AG (Insurance company) .................... 20,234 6,652,806
Muenchener Rueckversicherungs-Gesellschaft AG (Registered)* .......................... 52,343 25,343,974
Muenchener Rueckversicherungs-Gesellschaft AG (Warrants), expire 6/3/2002* ........... 2,902 134,940
RWE AG (Producer and marketer of petroleum and chemical products) .................... 534,216 29,247,741
SAP AG (pfd.) (Computer software manufacturer) ....................................... 39,915 19,043,864
Schering AG (Pharmaceutical and chemical producer) ................................... 145,918 18,319,639
VEBA AG (Generator and distributor of electricity) ................................... 430,095 25,727,768
VIAG AG (Provider of electrical power and natural gas services, aluminum
products, chemicals, ceramics and glass) ........................................... 34,476 20,209,427
-------------
272,090,313
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hong Kong 2.0%
Cheung Kong Holdings Ltd. (Real estate company) ...................................... 648,000 4,662,863
Citic Pacific Ltd. (Diversified holding company) ..................................... 5,083,000 10,956,438
Hutchison Whampoa, Ltd. (Investment holding company) ................................. 1,795,000 12,684,735
New World Development Co., Ltd. (Property investment and development,
construction and engineering, hotels and restaurants, telecommunications) .......... 1,693,751 4,263,016
-------------
32,567,052
-------------
Hungary 0.2%
The First Hungary Fund Limited "A"* (Investment company) ............................. 3,619 2,985,675
-------------
India 0.0%
Housing Development Finance Corp., Ltd. (Housing finance provider to
individuals, corporations and developers) (b) ...................................... 340 17,440
-------------
Italy 0.8%
Istituto Nazionale delle Assicurazione (Insurance company) ........................... 5,032,900 13,286,125
-------------
Japan 4.7%
Daiwa Securities Co., Ltd. (Brokerage and other financial services) .................. 1,192,000 4,074,312
Minebea Co., Ltd. (Manufacturer of bearings, electronic equipment and machinery
parts) ............................................................................. 1,024,000 11,733,428
Nichiei Co., Ltd. (Finance company for small- and medium-sized firms) ................ 115,500 9,204,817
Ono Pharmaceutical Co., Ltd. (Producer of medicines for human and veterinary
uses) .............................................................................. 141,000 4,407,421
Sharp Corp. (Manufacturer of consumer and industrial electronics) .................... 1,480,000 13,354,467
Shohkoh Fund & Co., Ltd. (Finance company for small- and medium-sized firms) ......... 23,900 7,703,533
Sumitomo Metal Mining Co., Ltd. (Leading gold, nickel and copper mining company) ..... 1,427,000 4,637,466
TDK Corp. (Manufacturer of magnetic tapes and floppy discs) .......................... 100,000 9,147,259
The Nichido Fire & Marine Insurance Co., Ltd. (Property and casualty insurance
company) ........................................................................... 135,000 663,464
Yamanouchi Pharmaceutical Co., Ltd. (Leading manufacturer of ethical drugs) .......... 342,000 11,023,466
-------------
75,949,633
-------------
Netherlands 0.9%
AEGON Insurance Group NV (Insurance company) ......................................... 117,284 14,398,259
-------------
South Africa 0.9%
Anglo American Platinum Corp., Ltd. (Leading platinum producer) ...................... 60,000 822,036
Anglo American Platinum Corp., Ltd. (ADR) ............................................ 462,586 6,198,652
Impala Platinum Holdings Ltd. (ADR) (Miner and marketer of platinum) ................. 468,500 6,184,200
Sasol Ltd. (Coal mining and processing, crude oil exploration and refining,
petrochemical production) .......................................................... 555,836 2,099,631
-------------
15,304,519
-------------
Sweden 0.4%
AGA AB "B" (Producer and distributor of industrial and medical gases) ................ 509,700 6,702,811
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Switzerland 6.4%
Ciba Specialty Chemicals AG (Registered) (Manufacturer of chemical products for
plastics, coatings, fibers and fabrics) ............................................ 108,209 9,068,014
Clariant AG (Registered) (Manufacturer of color chemicals) ........................... 14,410 6,741,398
Nestle SA (Registered) (Food manufacturer) ........................................... 9,609 20,936,319
Novartis AG (Registered) (Pharmaceutical company) .................................... 14,812 29,142,607
Swiss Reinsurance (Registered) (Life, accident and health insurance company) ......... 7,095 18,514,315
Swisscom AG (Registered)* (Operator of telecommunication networks and network
application services) .............................................................. 47,412 19,865,846
-------------
104,268,499
-------------
United Kingdom 12.5%
BOC Group PLC (Producer of industrial gases) ......................................... 1,056,541 15,163,147
Carlton Communications PLC (Television post production products and services) ........ 1,783,415 16,430,636
Enterprise Oil PLC (Oil and gas exploration and production) .......................... 1,166,447 5,722,413
General Electric Co., PLC (Manufacturer of power, communications and defense
equipment and other various electrical components) ................................. 2,501,693 22,673,716
Lasmo PLC (Oil production and exploration) ........................................... 3,852,035 6,405,933
National Grid Group PLC (Owner and operator of electric transmission systems) ........ 2,613,920 20,865,352
Railtrack Group PLC (Operator of railway infrastructure) ............................. 542,500 14,164,185
Reuters Group PLC (International news agency) ........................................ 2,232,546 23,575,794
Rio Tinto PLC (Mining and finance company) ........................................... 1,351,548 15,733,368
Shell Transport & Trading PLC (Part owner of Royal Dutch Shell Co.) (Petroleum
producer) .......................................................................... 2,800,363 17,230,911
SmithKline Beecham PLC (Manufacturer of ethical drugs and healthcare products) ....... 1,323,035 18,353,906
Unilever PLC (Manufacturer of branded and packaged consumer goods, food,
detergents and personal care products) ............................................. 2,312,625 26,036,708
-------------
202,356,069
-------------
United States 32.9%
American Greetings Corp., "A" (Designer of greeting cards) ........................... 259,900 10,672,144
Atlantic Richfield Co. (Petroleum company) ........................................... 213,500 13,930,875
Biogen Inc.* (Biotechnology research and development) ................................ 97,020 8,052,660
CINergy Corp. (Holding company of electrical utilities in Ohio, Indiana and
Kentucky) .......................................................................... 476,600 16,383,125
Conoco Inc. "A"* (Explorer of crude oil, natural gas, and natural gas liquids) ....... 442,800 9,243,450
Duke Energy Corp. (Electric utility in the Carolinas) ................................ 258,300 16,547,344
EXEL Ltd. "A" (Provider of liability insurance) ...................................... 236,933 17,769,975
Electronic Data Systems Corp.* (Provider of information technology services) ......... 561,000 28,190,250
Enron Corp. (Major natural gas pipeline system) ...................................... 354,700 20,240,069
Equity Residential Properties Trust (REIT) (Owner of apartment properties) ........... 363,300 14,690,944
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Global Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Homestake Mining Co. (Major international gold producer) ............................. 1,377,800 12,658,538
Immunex Corp.* (Biopharmaceutical company) ........................................... 107,000 13,461,938
International Business Machines Corp. (Principal manufacturer and servicer of
business and computing machines) ................................................... 199,240 36,809,584
Lockheed Martin Corp. (Manufacturer of aircraft, missiles and space equipment) ....... 159,700 13,534,575
MBIA, Inc. (Insurer of municipal bonds) .............................................. 272,200 17,846,113
Motorola Inc. (Manufacturer of semiconductors and communication products) ............ 276,300 16,871,569
Newmont Mining Corp. (International gold exploration and mining company) ............. 554,800 10,021,075
Northrop Grumman Corp. (Manufacturer of aircraft, aircraft assemblies and
electronic systems for military and commercial use) ................................ 200,900 14,690,813
Parametric Technology Corp.* (Mechanical design software producer) ................... 529,400 8,668,925
Peco Energy Co. (Electric and gas utility) ........................................... 591,400 24,617,025
PennzEnergy Co. (Worldwide exploration and production company) ....................... 218,700 3,567,544
Pennzoil-Quaker State Co. (Worldwide automotive consumer products company) ........... 218,700 3,239,494
Phillips Petroleum Co. (Petroleum exploration, production and refining) .............. 156,900 6,687,863
Praxair, Inc. (Producer of industrial gases and specialized coatings) ................ 325,900 11,487,975
ProLogis Trust (REIT) (Global owner of corporate distribution facilities) ............ 219,800 4,560,850
Sabre Group Holdings Inc. "A"* (Travel reservation system provider) .................. 346,200 15,405,900
Sterling Commerce, Inc.* (Producer of electronic data interchange products and
services) .......................................................................... 332,100 14,944,500
Stillwater Mining Co.* (Exploration and development of mines in Montana
producing platinum, palladium and associated metals) ............................... 472,900 19,388,900
Sun Microsystems, Inc.* (Producer of high-performance workstations, servers and
networking software) ............................................................... 149,200 12,775,250
Tele-Comm Liberty Media Group "A"* (Operator of cable television systems) ............ 177,538 8,177,844
Tele-Communications Inc. "A" (New)* (Cable TV systems and microwave services) ........ 429,800 23,773,313
UNUM Corp. (Provider of disability, health and life insurance and group pension
products) .......................................................................... 463,800 27,074,325
US Airways Group, Inc.* (Major airline) .............................................. 265,100 13,785,200
USEC Inc. (Provider of enriched uranium products and services) ....................... 1,978,200 27,447,525
Williams Cos., Inc. (Gas pipeline operator, petroleum producer) ...................... 487,600 15,207,025
532,424,499
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $1,115,786,792) 1,459,344,728
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $1,268,782,157) (a) 1,620,422,833
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Global Fund
<PAGE>
- --------------------------------------------------------------------------------
* Non-income producing security.
(a) The cost for federal income tax purposes was $1,276,724,748. At December
31, 1998, net unrealized appreciation for all securities based on tax cost
was $343,698,085. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $438,050,335 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost
over market value of $94,352,250.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $5,277,440 (0.33% of net assets).
Their values have been estimated by the Board of Directors in the absence
of readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of
these securities at December 31, 1998 aggregated $5,288,981. These
securities may also have certain restrictions as to resale.
(c) Principal amount is stated in U.S. dollars unless otherwise noted.
Currency Abbreviation:
GBP British Pound
The accompanying notes are an integral part of the financial statements.
15 - Scudder Global Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1998
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $1,268,782,157) .............. $1,620,422,833
Receivable for investments sold ...................................... 893,883
Receivable for Fund shares sold ...................................... 2,575,419
Dividends and interest receivable .................................... 2,829,323
Foreign taxes recoverable ............................................ 904,458
Other assets ......................................................... 1,242
-----------------
Total assets ......................................................... 1,627,627,158
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Due to Custodian Bank ................................................ 857,726
Payable for investments purchased .................................... 157,026
Payable for Fund shares redeemed ..................................... 8,430,226
Unrealized depreciation on forward currency exchange contracts ....... 8,560,034
Accrued management fee ............................................... 1,299,365
Other payables and accrued expenses .................................. 511,741
-----------------
Total liabilities .................................................... 19,816,118
-------------------------------------------------------------------------------------------
Net assets, at market value $1,607,811,040
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income ......... (2,748,437)
Net unrealized appreciation (depreciation) on:
Investments ....................................................... 351,640,676
Foreign currency related transactions ............................. (8,566,164)
Accumulated net realized gain ........................................ 44,859,363
Paid-in capital ...................................................... 1,222,625,602
-------------------------------------------------------------------------------------------
Net assets, at market value $1,607,811,040
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($1,607,811,040 / 56,051,577 shares of capital stock
outstanding, $.01 par value, 100,000,000 shares -----------------
authorized) ....................................................... $28.68
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Global Fund
<PAGE>
Statement of Operations
six months ended December 31, 1998
<TABLE>
<S> <C> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of withholding taxes of $781,079) ..................... $ 10,334,506
Interest ............................................................. 5,935,144
----------------
16,269,650
----------------
Expenses:
Management fee ....................................................... 7,595,559
Services to shareholders ............................................. 2,193,987
Custodian and accounting fees ........................................ 561,446
Directors' fees ...................................................... 24,544
Reports to shareholders .............................................. 126,597
Legal ................................................................ 11,696
Auditing ............................................................. 56,181
Registration fees .................................................... 22,534
Other ................................................................ 48,907
----------------
10,641,451
-------------------------------------------------------------------------------------------
Net investment income 5,628,199
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .......................................................... 90,583,025
Foreign currency related transactions ................................ (4,822,391)
----------------
85,760,634
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments .......................................................... (119,677,078)
Foreign currency related transactions ................................ (8,007,992)
----------------
(127,685,070)
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions (41,924,436)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(36,296,237)
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Global Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended
Increase (Decrease) in Net Assets 1998 June 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ......................................... $ 5,628,199 $ 19,606,752
Net realized gain (loss) from investment transactions ......... 85,760,634 212,859,587
Net unrealized appreciation (depreciation) on
investment transactions during the period .................. (127,685,070) (2,170,185)
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations ................................................. (36,296,237) 230,296,154
----------------- -----------------
Distributions to shareholders from:
Net investment income ......................................... (27,774,293) (41,122,886)
----------------- -----------------
Net realized gains from investment transactions ............... (132,754,958) (214,025,939)
----------------- -----------------
Fund share transactions:
Proceeds from shares sold ..................................... 324,667,526 528,099,294
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 152,978,322 242,394,548
Cost of shares redeemed ....................................... (439,217,062) (583,899,199)
----------------- -----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................... 38,428,786 186,594,643
----------------- -----------------
Increase (decrease) in net assets ............................. (158,396,702) 161,741,972
Net assets at beginning of period ............................. 1,766,207,742 1,604,465,770
Net assets at end of period (including accumulated
distributions in excess of net investment income of
$2,748,437 and undistributed net investment income of ----------------- -----------------
$19,397,657, respectively) ................................. $1,607,811,040 $1,766,207,742
----------------- -----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Shares outstanding at beginning of period ..................... 54,499,264 47,646,208
----------------- -----------------
Shares sold ................................................... 10,775,107 16,505,655
Shares issued to shareholders in reinvestment of
distributions .............................................. 5,350,695 8,610,819
Shares redeemed ............................................... (14,573,489) (18,263,418)
----------------- -----------------
Net increase (decrease) in Fund shares ........................ 1,552,313 6,853,056
----------------- -----------------
Shares outstanding at end of period ........................... 56,051,577 54,499,264
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder Global Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Years Ended June 30,
1998(a) 1998(a) 1997(a) 1996 1995 1994(a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------
Net asset value, beginning of period .................. $ 32.41 $ 33.67 $ 28.73 $ 25.64 $ 23.93 $ 21.63
--------------------------------------------------------------------------
Income from investment operations:
Net investment income ................................. .11 .38 .17 .24 .25 .23
Net realized and unrealized gain (loss) on --------------------------------------------------------------------------
investments ......................................... (.68) 3.82 6.58 3.94 1.91 2.57
--------------------------------------------------------------------------
Total from investment operations ...................... (.57) 4.20 6.75 4.18 2.16 2.80
Less distributions from:
Net investment income ................................. (.55) (.88) (.28) (.25) (.11) (.24)
Net realized gains from investment transactions ....... (2.61) (4.58) (1.53) (.84) (.34) (.26)
Total distributions ................................... (3.16) (5.46) (1.81) (1.09) (.45) (.50)
--------------------------------------------------------------------------
Net asset value, end of period ........................ $ 28.68 $ 32.41 $ 33.67 $ 28.73 $ 25.64 $ 23.93
--------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ...................................... -1.76** 14.93 24.91 16.65 9.11 12.99
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................ 1,608 1,766 1,604 1,368 1,168 1,096
Ratio of operating expenses to average daily
net assets (%) ...................................... 1.32* 1.34 1.37 1.34 1.38 1.45
Ratio of net investment income to average daily
net assets (%) ...................................... .70* 1.19 .59 .84 1.03 .97
Portfolio turnover rate (%) ........................... 73.6* 51.3 40.5 29.1 44.4 59.7
</TABLE>
(a) Per share amounts have been calculated using weighted average shares
outstanding.
* Annualized
** Not annualized
19 - Scudder Global Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Global Fund (the "Fund") is a diversified series of Global/International
Fund, Inc. (formerly Scudder Global Fund, Inc.), a Maryland corporation (the
"Corporation") registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on Nasdaq. If there are no such sales, the value is the most
recent bid quotation. Securities which are not quoted on Nasdaq 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, 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
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 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.
20 - Scudder Global Fund
<PAGE>
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies and as a
hedge against changes in exchange rates relating to foreign currency denominated
assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended, which are applicable to regulated
investment companies, and to distribute all of its taxable income to its
shareholders. The Fund paid no federal income taxes and no federal income tax
provision was required.
Distribution of Income and Gains. Distribution of net investment income is 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 foreign denominated investments,
forward contracts, passive foreign investment companies, and certain securities
sold at a loss. As a result, net investment income (loss) and net realized gain
(loss) on investment transactions for a reporting period may differ
significantly from distributions during such period. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting the net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Original
issue discounts are accreted for both tax and financial reporting purposes.
21 - Scudder Global Fund
<PAGE>
B. Purchases and Sales of Securities
For the six months ended December 31, 1998, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $336,276,765 and $410,396,745, respectively. Purchases and sales of
U.S. Government obligations aggregated $236,908,195 and $303,584,885,
respectively.
C. Related Parties
Under the 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 objective, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. The management fee
payable under the Agreement is equal to an annual rate of 1% of the first
$500,000,000 of average daily net assets, .95% of the next $500,000,000 of such
assets, 0.90% of the next $500,000,000 of such assets and .85% on such net
assets in excess of $1,500,000,000 computed and accrued daily and payable
monthly. For the six months ended December 31, 1998, the fee pursuant to the
Agreement amounted to $7,595,559, which was equivalent to an annualized
effective rate of .95% of the Fund's average daily net assets.
Effective September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner
of the Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998, the Board of
Directors and the shareholders of the Fund approved a new investment management
agreement with Scudder Kemper, which is substantially identical to the former
Management Agreement, except for the dates of execution and termination.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. Included
in services to shareholders is $1,261,491 charged to the Fund by SSC during the
six months ended December 31, 1998, of which $203,590 is unpaid at December 31,
1998.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the six months ended December
31, 1998, the amount charged to the Fund by STC aggregated $736,014, of which
$124,413 is unpaid at December 31, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended December 31, 1998, the amount charged to the Fund by SFAC aggregated
$294,291, of which $47,989 is unpaid at December 31, 1998.
The Fund pays each Director not affiliated with the Adviser an annual retainer,
divided equally among the series of the Corporation, plus specified amounts for
attended board and committee meetings. For the six months ended December 31,
1998, Directors' fees and expenses aggregated $24,544.
22 - Scudder Global Fund
<PAGE>
D. Commitments
As of December 31, 1998, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$8,560,034.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
---------------------------------- --------------------------------- -------------- --------------------
<S> <C> <C> <C> <C> <C>
Japanese Yen 6,262,963,580 U.S. Dollars 47,518,692 3/29/1999 (8,560,034)
-----------
(8,560,034)
===========
</TABLE>
E. Line of Credit
The Fund and several Scudder 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 percent of its net assets under the agreement.
23 - Scudder Global Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Global/International Fund, Inc. and to the
Shareholders of Scudder Global 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 Fund, Inc. (the
"Fund") at December 31, 1998, the results of its operations, 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
December 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
February 10, 1999
24 - Scudder Global Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Global 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.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
26,197,642 746,859 1,180,953 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
23,962,578 1,299,926 1,545,290 1,317,660
- --------------------------------------------------------------------------------
* 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.
25 - Scudder Global Fund
<PAGE>
This Page
intentionally
left blank.
26 - Scudder Global Fund
<PAGE>
This Page
intentionally
left blank.
27 - Scudder Global Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board, Director
and Vice President
William E. Holzer*
President
Paul Bancroft III
Director; Venture Capitalist and
Consultant
Sheryle J. Bolton
Director; Chief Executive Officer
and Director, Scientific Learning
Center
Nicholas Bratt*
Director
William T. Burgin*
Director; General Partner,
Bessemer Venture Partners
Keith R. Fox
Director; Private Equity Investor
William H. Luers
Director; President, The
Metropolitan Museum of Art
Kathryn L. Quirk*
Director, Vice President and
Assistant Secretary
Joan Spero
Director; President, Doris Duke
Charitable Foundation
Thomas J. Devine
Honorary Director; Consultant
William H. Gleysteen, Jr.
Honorary Director; Consultant
Robert G. Stone, Jr.
Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
Susan E. Dahl*
Vice President
Gary P. Johnson*
Vice President
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
Gerald J. Moran*
Vice President
M. Isabel Saltzman*
Vice President
Thomas F. McDonough*
Vice President and Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
28 - Scudder Global Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
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 Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Corporate Bond Fund
Scudder High Yield Bond Fund
Global Income
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Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
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Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
29 - Scudder Global Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- 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 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 Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
31 - Scudder Global Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $230 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 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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