SCUDDER
INVESTMENTS(SM)
[LOGO]
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EQUITY/GLOBAL
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Scudder Global Fund
Fund #007
Annual Report
August 31, 2000
A fund seeking long-term growth of capital by investing at least 65% of its
total assets in U.S. and foreign equities.
A no-load fund with no commissions to buy, sell, or exchange shares.
<PAGE>
Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
10 Portfolio Management Discussion
16 Investment Portfolio
22 Financial Statements
25 Financial Highlights
26 Notes to Financial Statements
32 Report of Independent Accountants
33 Tax Information
34 Shareholder Meeting Results
35 Officers and Directors
36 Investment Products and Services
38 Account Management Resources
2
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Scudder Global Fund
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ticker symbol SCOBX fund number 007
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Date of o During the past twelve months, the global market
Inception: environment has been characterized by volatility in
7/23/86 technology stocks, rapid sector rotations, and
frequent shifts in investor sentiment.
Total Net o In this climate, we continue to focus on companies
Assets as that we believe stand to benefit from important
of 8/31/00: long-term themes in the global economy.
$1.6 billion
o This approach, along with an emphasis on
diversification, enabled the fund to beat its
unmanaged benchmark -- the MSCI World Index -- with
lower levels of absolute risk.
3
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Letter from the Fund's President
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Dear Shareholders,
We are pleased to present the annual report for Scudder Global Fund. The global
equity markets have provided a bumpy ride for investors during the past twelve
months, as volatility in the U.S. has contributed to unusually large swings in
developed stock markets worldwide. This environment has been unsettling even for
experienced investors, but, as always, we encourage shareholders to remain
focused on the long-term trends that are unfolding in the global markets.
Consumers are continuing to adopt technology at a rapid pace, and technology-led
productivity increases are serving to keep inflation in check and put more power
in the hands of consumers. Consolidation activity continues to accelerate as
companies seek to position themselves for the increasingly competitive
environment of the global marketplace. As a result, several "old economy"
companies stand to benefit from an environment of increased pricing power.
Although these positive underlying trends do not guarantee that stock prices
will rise in the short term, we believe that they provide the foundation for
strong market performance over time.
Combining a theme-driven approach with sound fundamental research, the
management team of Scudder Global Fund seeks to invest in companies that are
poised to capitalize on important developments such as these. This strategy has
led us to diversify
4
<PAGE>
the portfolio among a wide variety of companies and industries, helping the fund
beat its benchmark during the twelve-month reporting period. We believe that our
approach will continue to benefit shareholders in what promises to be an
uncertain environment in the year ahead.
Thank you for your continued investment in Scudder Global Fund. For current
information on the fund or your account, visit our Web site at www.scudder.com.
There you'll find a wealth of information, including fund performance, the most
recent news on Scudder products and services, and the opportunity to perform
account transactions. You can also speak with one of our representatives by
calling 1-800-SCUDDER (1-800-728-3337).
Sincerely,
/s/Lin Coughlin
Linda C. Coughlin
President
Scudder Global Fund
5
<PAGE>
Performance Update
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August 31, 2000
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Growth of a $10,000 Investment
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Scudder Global Fund MSCI World Index*
------------------- -----------------
'90 10000 10000
'91 10687 10855
'92 11572 11128
'93 14076 13508
'94 15745 14645
'95 16927 15849
'96 18834 17843
'97 23229 21823
'98 23380 22639
'99 29105 30123
'00 33129 34074
Yearly periods ended August 31
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Fund Index Comparison
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Total Return
Growth of Average
Period ended 8/31/2000 $10,000 Cumulative Annual
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Scudder Global Fund
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1 year $ 11,383 13.83% 13.83%
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5 year $ 19,572 95.72% 14.37%
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10 year $ 33,129 231.29% 12.73%
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MSCI World Index*
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1 year $ 11,312 13.12% 13.12%
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5 year $ 21,499 114.99% 16.52%
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10 year $ 34,074 240.74% 13.03%
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* 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.
6
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Returns and Per Share Information
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Yearly periods ended August 31
Total Return
------------
Scudder Global Fund MSCI World Index*
------------------- -----------------
1991 6.87 8.54
1992 8.28 2.52
1993 21.64 21.39
1994 11.85 8.41
1995 7.51 8.22
1996 11.27 12.58
1997 23.33 22.30
1998 0.65 3.74
1999 24.48 33.06
2000 13.83 13.12
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund Total
Return (%) 6.87 8.28 21.64 11.85 7.51 11.27 23.33 .65 24.48 13.83
----------------------------------------------------------------------------------------
Index Total
Return (%) 8.54 2.52 21.39 8.41 8.22 12.58 22.30 3.74 33.06 13.12
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Net Asset
Value ($) 18.97 19.50 23.12 25.32 26.73 28.57 33.06 27.87 31.25 31.36
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Income
Dividends ($) .43 .31 .16 .24 .11 .25 .28 .88 .55 .20
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Capital Gains -- .66 .34 .26 .34 .84 1.53 4.58 2.61 3.91
Distributions ($)
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</TABLE>
* 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.
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.
7
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Portfolio Summary
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August 31, 2000
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Geographical
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(Excludes 3% Cash Equivalents) The fund's weighting in
Japan has decreased
from 21% of net assets
on February 29, 2000.
THE ORIGINAL DOCUMENT CONTAINS A PIE CHART REFLECTING THE BELOW LISTED DATA.
United States and Canada 39%
Europe 36%
Japan 16%
Pacific Basin 5%
Africa 3%
Latin America 1%
------------------------------------
100%
------------------------------------
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Sectors
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(Excludes 3% Cash Equivalents) Management continues
to seek a balance
between
"old economy" and
"new economy"
stocks.
THE ORIGINAL DOCUMENT CONTAINS A PIE CHART REFLECTING THE BELOW LISTED DATA.
Energy 13%
Manufacturing 12%
Financial 12%
Metals and Minerals 12%
Technology 10%
Communications 8%
Utilities 7%
Health 6%
Media 5%
Other 15%
------------------------------------
100%
------------------------------------
8
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Ten Largest Equity Holdings
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(16% of Portfolio) The fund's top holdings
illustrate its extensive
diversification.
1. Enron Corp.
Producer of natural gas and electricity
2. Aventis S.A.
Manufacturer of life science products
3. Siemens AG
Electrical engineering and electronics company
4. Reuters Group plc
International news and information agency
5. International Business Machines Corp.
Manufacturer of computers and servicer of information
processing units
6. AT&T Corp. -- Liberty Media Group
Holding company of entertainment networks
7. Anglo American Platinum Corp., Ltd.
Platinum producer
8. Nortel Networks Corp.
Provider of telephone, data and wireless products for
the Internet
9. Woodside Petroleum, Ltd.
Producer of oil and gas
10. Stillwater Mining Co.
Mining company
For more complete details about the Fund's investment portfolio, see page 16. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
9
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Portfolio Management Discussion
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August 31, 2000
In the following interview, lead portfolio manager William E. Holzer discusses
Scudder Global Fund's strategy and the market environment in the twelve-month
period ended August 31, 2000.
Q: How would you characterize the global market environment of the past year?
A: The last twelve months have been notable in the sense that the markets have
been extremely volatile, and investors' perception of the so-called "old" and
"new" economies has changed considerably. The latter part of 1999 and the first
two months of this year were characterized by a very strong run-up in large-cap
technology stocks worldwide, as central banks injected substantial liquidity
into the global economy in order to preempt any Y2K problems. This rally was
especially marked in Europe and Asia, as the narrow universe of non-U.S.
technology stocks caught up -- and in some cases overtook -- their U.S.
counterparts in terms of valuation. The dominance of this small universe of
large-cap stocks ensured that index performance was strong through the early
months of 2000.
Once Y2K proved to be a non-issue, central banks (especially in the U.S.) began
to rein in liquidity. A climate of higher rates globally prompted investors to
question the valuation of so-called "new economy" stocks, and to be highly
sensitive to any shortfalls in their earnings results. The period from
March-June 2000 saw a dramatic sell-off in the technology, media, and
telecommunications (TMT) sectors, and the apparent resurgence of large-cap "old
economy" stocks with attractive valuations. By mid-summer, growing investor
confidence regarding the prospects of a soft landing in the U.S. economy -- and
an end to the long series of U.S. rate hikes -- halted these declines. (The term
"soft landing" refers to a slowing of growth -- brought about by Fed rate hikes
-- that allows the economy to continue growing at a more reasonable pace, but
without the threat of inflation that could arise during a period of rapid
growth.) But confidence nevertheless remained bruised, as evidenced by the
reaction
10
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to slowing momentum amongst industry titans like Nokia, and a reflection on the
potential for lower long-term returns among telecom companies, suggested by the
very high prices obtained by the European nations for wireless bandwidth. In
addition, investors were rattled by soaring energy prices and the persistent
weakness in the euro, continental Europe's common currency.
Q: How was the fund positioned for this environment?
A: Our strategic view since late 1998 has emphasized the compelling nature of
consumers' adoption of technology, the emergence of the "virtual corporation"
(as companies' boundaries become more transparent due to technology and
technology-driven relationships with suppliers and customers), and rapid
consolidation among producers of raw materials and commodity manufactured goods
as they seek to generate the returns on capital demanded by investors. This view
also directs us away from companies caught between price-advantaged virtual
companies and the higher input prices charged by consolidating suppliers. We
have therefore sought to pursue a "barbell" strategy, which is designed to
provide appropriate exposure to technology opportunities, balanced by different,
non-correlated risks.
This approach has led us to maintain an emphasis on the four key themes that we
outlined in the February report. "The Empowered Consumer" focuses on companies
that are enabling consumers to take advantage of the Internet. Included in this
category are makers of consumer devices, providers of Internet access, and
content providers. Since late 1999, we have been trimming exposure to our
investments in this area, as well as upgrading their overall quality.
"Virtuality," which also focuses on technology, is a theme that includes
companies whose business strategies are moving to Internet-based models, as well
as existing companies that are taking advantage of the Internet to expand their
regular lines of business. Overall, our holdings under these two themes produced
a strong performance over the full period, but we will be keeping a
11
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watchful eye on the fund's technology exposure, since the market has been
judging any hiccups in company performance swiftly and harshly.
On the old economy side are the "Ultimate Subcontractor," through which we
invest in commodity producing companies that are poised to benefit from
increasing price advantages and faster global growth, and "Secure Streams of
Income," which provides defensive exposure through its positions in power and
infrastructure utilities. In combination, these two themes represent the bulk of
our exposure to companies outside of the technology area.
Q: How did the fund perform in this climate?
A: Although the fund's performance lagged against its benchmark when tech stocks
were rallying during the early part of 2000, its extensive diversification
proved beneficial to performance over the full year. During the twelve-month
period ended August 31, 2000, the fund produced a total return of 13.83%, versus
a gain of 13.12% for its unmanaged benchmark, the MSCI World Index. In a period
notable for its high volatility and rapid sector rotations, our focus on
maintaining exposure to stocks in a wide range of industries proved beneficial
to the fund's risk-adjusted returns. Specifically, it allowed us to take
advantage of the run-up in technology stocks in the November-February period,
and to prosper from the stronger performance of old economy stocks -- such as
those in the energy and utilities sectors -- during the summer months.
Q: What are some stocks that illustrate the fund's investment themes?
A: The Ultimate Subcontractor theme is illustrated by Anadarko Petroleum, one of
the world's largest independent exploration and production companies. Our
investment rationale for this stock is similar to the thesis behind other stocks
we hold under this theme; namely, our belief that it is one of the better
companies in a raw
12
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materials industry that is emerging from years of low prices and consolidation
as a leaner, cheaper producer at a time when pricing power is returning. The
stock, which has benefited from higher oil prices, new discoveries, and the
acquisition of new properties, has been a consistent performer for the fund.
Nextel, a telecom company that we hold under the Empowered Consumer theme,
provides both digital and analog communications services, and is building the
infrastructure that supports the Internet. Just this past year, Nextel
introduced the new mobile phones that will allow users access to the Internet.
Although this technology is still in its infancy, we believe it will lead to a
myriad of handheld devices that will allow users to access the Internet without
a hard wire connection. As the operator of a national cellular network in the
U.S., Nextel should be positioned to capitalize on the growth in popularity of
these devices.
Under the Virtuality theme, we hold Enron, an electric and gas concern that has
successfully broken into e-business. The company's Web site allows buyers and
sellers to conduct transactions on over 800 products in a matter of seconds.
Enron has pioneered the idea of making a market in electricity and gas, and
helped create the infrastructure to allow the trading of these commodities.
Recently, it has also turned its attention to bandwidth trading. In this way,
the company has embraced the use of the Internet to grow earnings by expanding
on its traditional lines of business.
Q: What is your outlook for the remainder of 2000 and beyond?
A: Our view of the global economy remains mixed as we approach year-end. We
believe that it may be too early to assume that the U.S. has experienced a "soft
landing." Worldwide production overcapacity, stretched further by the
efficiencies achieved by the adoption of technology in the form of productivity
gains and networked supplier relationships, is keeping some prices well in
check. Nevertheless, we must seek to understand what will take
13
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place when excess capacity is exhausted. In the meantime, there must be a
resolution to the conflicting trends of a slowing economy and continued
increases in corporate earnings. Buffeted by these inconsistencies in the short
term, markets should remain volatile. Over the longer term, however, the
investment picture remains far from clear.
We will therefore maintain our current investment strategy, using our thematic
approach and extensive diversification to strive to produce attractive returns
and mitigate risks. This approach has worked well during the volatile
environment of the past year, and we believe it will also be well suited for the
months ahead.
14
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Scudder Global Fund:
A Team Approach to Investing
Scudder Global Fund is managed by a team of Scudder Kemper Investments, Inc.
(the "Adviser") professionals, each of whom plays an important role in the
fund's management process. Team members work together to develop investment
strategies and select securities for the fund's portfolio. They are supported by
the Adviser's large staff of economists, research analysts, traders, and other
investment specialists who work in offices across the United States and abroad.
The Adviser believes that a team approach benefits fund investors by bringing
together many disciplines and leveraging the firm's extensive resources.
Lead portfolio manager William E. Holzer has had day-to-day responsibility for
the fund's worldwide strategy and investment themes since its inception in 1986.
Mr. Holzer, who has over 23 years of experience in global investing, joined the
Adviser in 1980.
Portfolio manager Nicholas Bratt joined the Adviser in 1976 and the team in
1993. Mr. Bratt is the director of the Adviser's Global Equity Group.
15
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<TABLE>
<CAPTION>
Investment Portfolio as of August 31, 2000
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Principal
Amount (c) Value ($)
----------------------------------------------------------------------------------------------
<S> <C> <C>
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Repurchase Agreements 2.6%
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Donaldson, Lufkin & Jenrette, 6.6%, to be repurchased
at $39,265,197 on 9/1/2000** (Cost $39,258,000) ............. 39,258,000 39,258,000
----------------------------------------------------------------------------------------------
Bonds 3.2%
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Germany
Federal Republic of Germany, 9%, 10/20/2000
(Cost $53,059,768) ........................................EUR 55,400,000 49,402,677
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Participating Loan Notes 0.3%
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Luxembourg
Eurotunnel Finance Ltd., Step-up Coupon, 1% to
12/31/2005, 1% plus 26.45% of net available cash flows
to 4/30/2040 (Cost $6,183,494) .............................. 4,617(d) 5,320,168
Shares
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Common Stocks 93.9%
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Australia 3.5%
Broken Hill Proprietary Co., Ltd. (Petroleum, mineral and
steel exploration and production) ........................... 1,333,800 14,603,374
WMC Ltd. (Mineral exploration and production) .................. 3,748,851 17,656,270
Woodside Petroleum, Ltd.* (Producer of oil and gas) ............ 2,673,124 22,065,766
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54,325,410
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Brazil 1.5%
Aracruz Celulose SA (ADR) (pfd.)"B"(Producer of
eucalyptus kraft pulp) ...................................... 605,400 11,729,625
Companhia Vale do Rio Doce (pfd.) "A"* (Diverse mining
and industrial complex) ..................................... 398,600 10,766,467
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22,496,092
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Canada 5.0%
Alberta Energy Co., Ltd. (Major oil and gas producer) .......... 73,500 2,707,238
BCE, Inc. (Provider of telecommunication services) ............. 368,727 8,269,116
Barrick Gold Corp. (Explorer and producer of gold in
North and South America) .................................... 1,004,700 16,012,406
Canadian National Railway Co. (Railroad operator) .............. 338,600 9,837,003
Manulife Financial Corp. (Provider of financial services) ...... 570,600 12,331,009
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
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<TABLE>
<CAPTION>
Shares Value ($)
-----------------------------------------------------------------------------------------
<S> <C> <C>
Nortel Networks Corp. (Provider of telephone, data and
wireless products for the Internet) ................... 270,852 22,091,400
Teleglobe, Inc. (Provider of telecommunication services) . 289,600 5,805,776
------------
77,053,948
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China 0.2%
American Standard China "B"* (Plumbing products) (b) ..... 526 3,102,080
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France 4.6%
Aventis SA (Manufacturer of life science products) ....... 367,921 27,599,554
Canal Plus SA (Provider of television programs) .......... 21,444 3,500,889
Eurotunnel SA* (Designer, financer and constructor of a
tunnel that runs under the English Channel and
connects England to France) ........................... 9,042,631 8,107,873
STMicroelectronics N.V. (Manufacturer of semiconductor
integrated circuits) .................................. 266,316 16,313,124
Suez Lyonnaise des Eaux SA (Water and electric utility) .. 97,455 14,439,470
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69,960,910
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Germany 7.0%
Allianz AG (Multi-line insurance company) ................ 18,057 6,091,440
BASF AG (International chemical producer) ................ 424,799 15,914,270
Bayer AG (Chemical producer) ............................. 362,562 15,336,843
Metro AG (Operator of building, clothing, department,
electronic and food stores) ........................... 352,100 13,378,289
Muenchener Rueckversicherungs-Gesellschaft AG
(Registered) (Insurance company) ...................... 41,231 11,310,274
Schering AG (Pharmaceutical and chemical producer) ....... 355,995 18,993,681
Siemens AG (Electrical engineering and
electronics company) .................................. 166,768 26,870,771
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107,895,568
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Italy 0.5%
Mediobanca SpA (Provider of loans and credit to
manufacturing and service firms) ...................... 746,200 8,042,012
------------
Japan 15.7%
Asahi Chemical Industry Co., Ltd. (Producer of synthetic
fibers, industrial chemicals, petrochemicals, plastics,
rubber and food products) ............................. 1,009,000 6,306,250
Chugai Pharmaceutical Co., Ltd. (Pharmaceutical
company) .............................................. 773,000 13,762,181
Daiei, Inc.* (Producer of foods, clothing, household
items, furniture and toiletries) ...................... 1,692,000 4,851,499
Daiwa Securities Group, Inc. (Provider of brokerage
and other financial services) ......................... 581,000 7,240,723
The accompanying notes are an integral part of the financial statements.
17
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Shares Value ($)
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Fujitsu, Ltd. (Manufacturer of computers) ............... 425,000 12,305,566
Matsushita Electric Industrial Co., Ltd. (Manufacturer
of consumer electronic products) ..................... 303,000 8,290,480
Mitsubishi Estate Co., Ltd. (Real estate company) ....... 1,132,000 11,137,556
Mitsui & Co., Ltd. (Trading company handling steel
products, gas, metals, textiles and chemicals) ....... 500,000 3,359,258
Mitsui Fudosan Co., Ltd. (Real estate company) .......... 1,209,000 13,084,661
NEC Corp. (Manufacturer of telecommunication
and computer equipment) .............................. 511,000 14,604,104
NTT DoCoMo, Inc. (Provider of various telecommunication
services and equipment) .............................. 462 12,208,021
Nichii Gakkan Co. (Provider of hospital administrative
services) ............................................ 25,500 1,108,696
Nikko Securities Co., Ltd. (Securities broker and dealer) 352,000
3,394,003
Nippon Telegraph & Telephone Corp. (Provider of
telecommunication services) .......................... 919 10,936,376
Nomura Securities Co., Ltd. (Financial adviser,
securities broker and underwriter) ................... 459,000 10,730,931
Sakura Bank, Ltd. (Provider of banking services) ........ 2,469,000 18,369,434
Sankyo Co., Ltd. (Leading ethical drug producer) ........ 471,200 10,905,772
Sony Corp. (Manufacturer of consumer and industrial
electronic equipment) ................................ 153,300 17,093,984
TDK Corp. (Manufacturer of magnetic tapes
and floppy discs) .................................... 86,000 12,700,150
Teijin, Ltd. (Manufacturer of polyester products) ....... 3,380,000 12,541,979
Toshiba Corp. (Manufacturer of electric machinery) ...... 1,759,000 17,290,021
Yamanouchi Pharmaceutical Co., Ltd. (Manufacturer
and marketer of a wide variety of pharmaceuticals) ... 376,000 18,602,699
------------
240,824,344
------------
Korea 1.0%
Korea Electric Power Corp. (Electric utility) ........... 501,240 14,737,699
----------
South Africa 2.7%
Anglo American Platinum Corp., Ltd. (ADR)
(Platinum producer) .................................. 568,986 22,258,732
Impala Platinum Holdings Ltd. (ADR) (Mines and
markets platinum group metals) ....................... 420,900 19,933,824
----------
42,192,556
----------
Switzerland 1.3%
Roche Holding AG (Developer and manufacturer of
pharmaceutical and chemical products) ................ 856 7,670,075
Serono SA "B" (Developer and marketer of biotechnology
products and network application services) ........... 4,800 5,635,382
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
--------------------------------------------------------------------------------------
Shares Value ($)
--------------------------------------------------------------------------------------
Swisscom AG (Operator of telecommunication networks
and network application services) ................... 25,991 7,374,816
----------
20,680,273
----------
United Kingdom 18.1%
ARM Holdings plc* (Designer of RISC microprocessors
and related technology) ............................. 432,400 5,771,397
BOC Group plc (Diversified chemical company) ........... 1,238,084 17,980,082
Cable & Wireless plc (International telecommunication
services in the United Kingdom and Hong Kong) ....... 914,060 16,881,482
Carlton Communications plc (Television post-production
products and services) .............................. 1,991,600 21,670,596
Enterprise Oil plc (Oil and gas exploration and
production) ......................................... 1,166,447 9,282,161
Granada Media plc* (Producer of TV programs, feature
films and made-for-TV movies) ....................... 1,486,145 14,014,642
Great Universal Stores plc "A" (Catalog home shopping,
retailing, finance and property investment) ......... 2,328,007 16,482,063
National Grid Group plc (Owner and operator of electric
transmission systems) ............................... 1,960,468 16,041,550
National Power plc (Electricity generation company) .... 2,837,222 19,387,495
Prudential plc (Provider of a broad range of financial
services) ........................................... 665,608 8,710,289
Railtrack Group plc (Operator of railway infrastructure) 800,938 11,434,086
Reuters Group plc (International news and information
agency) ............................................. 1,169,649 23,417,585
Rio Tinto plc (Mining company) ......................... 1,351,548 21,549,472
Royal & Sun Alliance Insurance Group, Inc. (Insurance
company) ............................................ 2,370,733 16,509,402
Scottish Power plc (Electric utility) .................. 2,110,035 16,071,501
Shell Transport & Trading plc (Petroleum company) ...... 2,373,735 20,249,627
SmithKline Beecham plc (Manufacturer of ethical
drugs and health care products) ..................... 1,212,226 15,784,307
Standard Chartered plc (International banking group) ... 5,122 70,892
Vodafone Group plc (Provider of mobile
telecommunication services) ......................... 1,749,921 7,064,169
-----------
278,372,798
-----------
United States 32.8%
AT&T Corp. (Provider of telecommunications services) ... 321,801 10,136,732
AT&T Corp.-- Liberty Media Group "A"* (Holding
company of entertainment networks) .................. 1,046,952 22,378,599
Air Products & Chemicals, Inc. (Producer of
industrial gases) ................................... 488,400 17,735,025
Amerada Hess Corp. (Exploration, production and
transmission of crude oil and natural gas) .......... 229,400 15,699,563
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
---------------------------------------------------------------------------------------
Shares Value ($)
---------------------------------------------------------------------------------------
America Online, Inc.* (Provider of online
computer services) .................................... 152,200 8,922,725
American Home Products Corp. (Diversified
pharmaceutical company) ............................... 344,600 18,673,013
Anadarko Petroleum Corp. (Explorer and producer of
crude oil and natural gas) ............................ 281,700 18,527,409
Burlington Resources, Inc. (Explorer and producer of
crude oil and natural gas) ............................ 280,700 11,035,019
CINergy Corp. (Holding company of electrical utilities
in Ohio, Indiana and Kentucky) ........................ 154,300 4,532,563
Chubb Corp. (Property and casualty insurance company) .... 158,843 12,161,417
Cisco Systems, Inc.* (Manufacturer of computer
network products) ..................................... 78,400 5,370,400
Conoco, Inc. "A" (Explorer of crude oil, natural gas
and natural gas liquids) .............................. 704,800 17,752,150
EMC Corp.* (Provider of enterprise storage systems,
software, networks and services) ...................... 81,800 8,016,400
Electronic Arts, Inc.* (Developer and marketer of
entertainment software) ............................... 40,700 4,393,056
Electronic Data Systems Corp. (Provider of information
technology systems) ................................... 334,000 16,637,375
Enron Corp. (Producer of natural gas and electricity) .... 377,800 32,065,773
Equity Residential Properties Trust (REIT) (Owner of
apartment properties) ................................. 324,700 15,585,600
Exxon Mobil Corp. (International oil company) ............ 194,300 15,859,738
International Business Machines Corp. (Manufacturer of
computers and servicer of information processing units) 175,180 23,123,760
Intuit, Inc.* (Provider of financial software for
households and small businesses) ...................... 121,600 7,280,800
Lockheed Martin Corp. (Manufacturer of aircraft, missiles
and space equipment) .................................. 490,900 13,929,288
Newmont Mining Corp. (International gold exploration
and mining company) ................................... 617,000 11,453,063
Nextel Communications, Inc. "A"* (Provider of
telecommunication services) ........................... 235,000 13,027,813
Northrop Grumman Corp. (Manufacturer of aircraft,
aircraft assemblies and electronic systems for military
and commercial use) ................................... 255,900 19,912,219
Oracle Corp.* (Provider of database management
software) ............................................. 121,500 11,048,906
Parametric Technology Corp.* (Producer of mechanical
design software) ...................................... 529,400 7,080,725
Peco Energy Co. (Provider of electric and gas utility) ... 416,900 20,089,369
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
---------------------------------------------------------------------------------------------
Shares Value ($)
---------------------------------------------------------------------------------------------
Phillips Petroleum Co. (Petroleum exploration, production
and refining) ........................................... 247,700 15,326,438
QUALCOMM, Inc.* (Developer and manufacturer of
communication systems) .................................. 119,100 7,131,113
Sabre Group Holdings, Inc. "A" (Provider of online travel
reservation capabilities) ............................... 247,800 6,907,425
St. Paul Companies, Inc. (Provider of insurance products
and services) ........................................... 187,800 8,943,975
Stillwater Mining Co.* (Mining company) .................... 647,050 21,999,700
Sun Microsystems, Inc.* (Manufacturer of high-performance
workstations, servers and software) ..................... 57,000 7,235,438
USEC, Inc. (Provider of enriched uranium products
and services) ........................................... 1,978,200 8,654,625
USX-US Steel Group, Inc. (Integrated steel producer) ....... 471,700 8,195,788
Unocal Corp. (Explorer and producer of oil and gas) ........ 295,400 9,858,975
UnumProvident Corp. (Provider of group disability and
special risk insurance) ................................. 566,100 12,277,294
Viacom, Inc. "B"* (Provider of a wide range of
entertainment and communication services) ............... 230,900 15,542,456
-----------
504,501,727
---------------------------------------------------------------------------------------------
Total Common Stocks (Cost $1,167,002,675) 1,444,185,417
---------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $1,265,503,937) (a) 1,538,166,262
---------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
** Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities.
(a) The cost for federal income tax purposes was $1,265,595,092. At August
31, 2000, net unrealized appreciation for all securities based on tax
cost was $272,571,170. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of value
over tax cost of $374,566,991 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax
cost over value of $101,995,821.
(b) Securities valued in good faith by the Valuation Committee of the Board
of Directors at fair value amounted to $3,102,080 (0.20% of net
assets). Their values have been estimated by the Board of Directors in
the absence of readily ascertainable 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 August 31, 2000 aggregated
$5,260,000. These securities may also have certain restrictions as to
resale.
(c) Principal amount stated in U.S. dollars unless otherwise noted.
(d) Represents number of contracts. Each contract equals a nominal value of
EUR 2,931.
Currency Abbreviation
---------------------------
EUR Euro
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
Financial Statements
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities as of August 31, 2000
------------------------------------------------------------------------------------------------
Assets
------------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value (cost $1,265,503,937) .................... $ 1,538,166,262
Cash ......................................................................... 438
Foreign currency, at value (cost $11,694,253) ................................ 11,252,740
Receivable for investments sold .............................................. 14,122,756
Dividends receivable ......................................................... 3,239,171
Interest receivable .......................................................... 3,840,959
Receivable for Fund shares sold .............................................. 10,001,600
Foreign taxes recoverable .................................................... 951,056
Due from Adviser ............................................................. 28,697
---------------
Total assets ................................................................. 1,581,603,679
Liabilities
------------------------------------------------------------------------------------------------
Payable for investments purchased ............................................ 24,476,040
Payable for Fund shares redeemed ............................................. 881,486
Unrealized depreciation on forward currency exchange contracts ............... 2,002,496
Accrued management fee ....................................................... 1,267,439
Accrued reorganization costs ................................................. 68,196
Accrued Directors' fees and expenses ......................................... 66,400
Other accrued expenses and payables .......................................... 957,429
---------------
Total liabilities ............................................................ 29,719,486
Net assets, at value ......................................................... $ 1,551,884,193
Net Assets
------------------------------------------------------------------------------------------------
Net assets consists of:
Undistributed net investment income........................................... 11,590,829
Net unrealized appreciation
(depreciation) on:
Investments ................................................................ 272,662,325
Foreign currency related transactions ...................................... (2,808,001)
Accumulated net realized gain (loss) ......................................... 160,763,152
Paid-in capital .............................................................. 1,109,675,888
------------------------------------------------------------------------------------------------
Net assets, at value $ 1,551,884,193
------------------------------------------------------------------------------------------------
Net Asset Value
------------------------------------------------------------------------------------------------
NetAsset Value, offering and redemption price per share ($1,551,884,193 /
49,483,429 shares of capital stock outstanding, $.01 par value, 100,000,000
shares authorized) ........................................................ $ 31.36
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Statement of Operations for the year ended August 31, 2000
------------------------------------------------------------------------------------
Investment Income
------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $1,809,197) ........ $ 41,405,647
Interest ....................................................... 6,075,524
--------------
Total Income ................................................... 47,481,171
--------------
Expenses:
Management fee ................................................. 14,778,270
Services to shareholders ....................................... 4,264,480
Custodian and accounting fees .................................. 1,043,838
Auditing ....................................................... 60,726
Legal .......................................................... 65,749
Directors' fees and expenses ................................... 106,294
Reports to shareholders ........................................ 223,301
Registration fees .............................................. 47,732
Interest expense ............................................... 45,779
Reorganization ................................................. 92,472
Other .......................................................... 9,337
--------------
Total expenses, before expense reductions ...................... 20,737,978
Expense reductions ............................................. (28,697
--------------
Total expenses, after expense reductions ....................... 20,709,281
--------------------------------------------------------------------------------
Net investment income (loss) $ 26,771,890
--------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
--------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .................................................... 259,710,144
Foreign currency related transactions (includes CPMF tax of
$20,470) .................................................... (8,574,192
--------------
251,135,952
--------------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................... (72,934,695
Foreign currency related transactions .......................... 5,010,909
--------------
(67,923,786
--------------------------------------------------------------------------------
Net gain (loss) on investment transactions 183,212,166
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 209,984,056
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
----------------------------------------------------------------------------------------------
Two Months
Year Ended Ended Year Ended
August 31, August 31, June 30,
Increase (Decrease) in Net Assets 2000 1999 1999
----------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C>
Net investment income (loss) ......... $ 26,771,890 $ 1,183,151 $ 12,502,448
Net realized gain (loss) on
investment transactions............ 251,135,952 40,116,804 177,875,882
Net unrealized appreciation
(depreciation) on investment
transactions during the period..... (67,923,786) (42,965,272) (90,016,200)
---------------- ------------------ --------------
Net increase (decrease) in net
assets resulting from operations .. 209,984,056 (1,665,317) 100,362,130
---------------- ------------------ ---------------
Distributions to shareholders
from:
Net investment income ................ (9,511,923) -- (27,785,964)
---------------- ------------------ ---------------
Net realized gains on investment
transactions ...................... (190,452,234) -- (132,754,958)
---------------- ------------------ ---------------
Fund share transactions:
Proceeds from shares sold ............ 962,348,630 80,900,406 713,598,163
Reinvestment of distributions ........ 189,689,074 -- 153,008,888
Cost of shares redeemed .............. (1,162,690,488) (137,216,950) (962,137,062)
---------------- ------------------ ---------------
Net increase (decrease) in net
assets from Fund share
transactions...................... (10,652,784) (56,316,544) (95,530,011)
---------------- ------------------ ---------------
Increase (decrease) in net assets .... (632,885) (57,981,861) (155,708,803)
Net assets at beginning of period .... 1,552,517,078 1,610,498,939 1,766,207,742
Net assets at end of period
(including undistributed net
investment income of $11,590,829
and $8,435,573 for the periods
ended August 31, 2000 and 1999,
respectively, and accumulated
distributions in excess of net
investment income of $3,209,389 for
the year ended June 30, 1999)...... $ 1,551,884,193 $ 1,552,517,078 $ 1,610,498,939
Other Information
----------------------------------------------------------------------------------------------
Shares outstanding at beginning
of period ......................... 49,687,211 51,461,588 54,499,264
---------------- ------------------ ---------------
Shares sold .......................... 31,217,458 2,573,566 23,857,882
Shares issued to shareholders in ..... 6,205,069 -- 5,351,753
reinvestment of distributions
Shares redeemed ...................... (37,626,309) (4,347,943) (32,247,311)
---------------- ------------------ ---------------
Net increase (decrease) in Fund
shares ............................ (203,782) (1,774,377) (3,037,676)
Shares outstanding at end of
period............................. 49,483,429 49,687,211 51,461,588
</TABLE>
The accompanying notes are an integral part of the financial statements
24
<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>
-------------------------------------------------------------------------------------
2000(b) 1999(c) 1999(d) 1998(d) 1997(d) 1996(d)
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $31.25 $31.30 $32.41 $33.67 $28.73 $25.64
---------------------------------------------------------
Income (loss) from
investment operations:
-------------------------------------------------------------------------------------
Net investment income
(loss) .53(a)(f) .02(a) .23(a) .38(a) .17(a) .24
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss) on
investment transactions 3.69 (.07) 1.82 3.82 6.58 3.94
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Total from investment
operations 4.22 (.05) 2.05 4.20 6.75 4.18
-------------------------------------------------------------------------------------
Less distributions from:
-------------------------------------------------------------------------------------
Net investment income (.20) -- (.55) (.88) (.28) (.25)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Net realized gains on
investment transactions (3.91) -- (2.61) (4.58) (1.53) (.84)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Total distributions (4.11) -- (3.16) (5.46) (1.81) (1.09)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Net asset value, end
of period $31.36 $31.25 $31.30 $32.41 $33.67 $28.73
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Total Return (%) 13.83 (.16)** 7.18 14.93 24.91 16.65
--------------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
--------------------------------------------------------------------------------------
Net assets, end of period
($ millions) 1,552 1,553 1,610 1,766 1,604 1,368
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Ratio of expenses (%) 1.33(e) 1.36* 1.35 1.34 1.37 1.34
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Ratio of net investment 1.71(f) .44* .79 1.19 .59 .84
income (loss) (%)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Portfolio turnover rate (%) 60 29* 70 51 41 29
--------------------------------------------------------------------------------------
</TABLE>
(a) Per share amounts have been calculated using average shares
outstanding.
(b) For the year ended August 31, 2000.
(c) For the two months ended August 31, 1999. On June 7, 1999, the Fund
changed its fiscal year end from June 30 to August 31.
(d) For the years ended June 30.
(e) The ratio of operating expenses excluding costs incurred in connection
with the reorganization was 1.32% (see Notes to Financial Statements).
(f) Net investment income per share includes non-recurring dividend income
amounting to $0.29 per share; the ratio of net investment income
excluding the non-recurring dividend is 0.77%.
* Annualized
** Not annualized
25
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
A. Significant Accounting Policies
Scudder Global Fund (the "Fund") is a diversified series of Global/
International Fund, Inc., (the "Corporation") which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a Maryland Corporation.
On June 7, 1999, the Fund changed its fiscal year end for financial reporting
and federal income tax purposes from June 30 to August 31, which became
effective subsequent to June 30, 1999.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America 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. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. 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 ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. 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, or if no sale occurred, at the calculated mean between the most recent
bid and asked quotations on such market. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities purchased with an original maturity greater than 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.
26
<PAGE>
--------------------------------------------------------------------------------
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, 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
principal amount of the repurchase price plus accrued interest.
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 against changes in the 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. Sales and
purchases of 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 the settlement date. Realized and unrealized gains and
losses which represent the difference between the value of a forward contract to
buy and a 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
27
<PAGE>
--------------------------------------------------------------------------------
opportunity to profit from favorable exchange rate movements during the term of
the contract.
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.
The Fund was subject to a 0.38% Contribuicao Provisoria sobre
Movimentacao Financiera (CPMF) tax which is applied to foreign exchange
transactions representing capital inflows or outflows to the Brazilian market
until June 17, 2000. Effective June 18, 2000 the CPMF tax is 0.30%.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. 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 at least
annually. Earnings and profits distributed to shareholders on redemption of Fund
shares ("tax equalization") may be utilized by the Fund, to the extent
permissible, as part of the Fund's dividends paid deduction on its federal
income tax return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from accounting principles generally accepted in the United
States of America. These differences primarily relate to investments in foreign
denominated investments, forward contracts 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. Investment Transactions and Investment Income.
Investment transactions are accounted for on the trade date.
Interest income is recorded on the accrual basis. Dividend income is recorded on
the ex-dividend date. Certain dividends from foreign securities may be recorded
subsequent to the ex-dividend date as soon as the Fund is informed of such
dividends. Realized gains and losses from investment transactions are recorded
on an identified cost basis. All discounts are accreted for both tax and
financial reporting purposes.
28
<PAGE>
--------------------------------------------------------------------------------
B. Purchases and Sales of Securities
During the year ended August 31, 2000, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $804,286,404 and $971,199,131, respectively. Purchases and sales of
U.S. Government obligations for the year ended August 31, 2000 aggregated
$79,144,866 and $82,658,828, respectively.
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 1% of the first
$500,000,000 of average daily net assets, 0.95% of the next $500,000,000 of such
net assets, 0.90% of the next $500,000,000 of such net assets and 0.85% on such
net assets in excess of $1,500,000,000, computed and accrued daily and payable
monthly. For the year ended August 31, 2000, the fee pursuant to such Agreement
amounted to $14,778,270, which was equivalent to an annual effective rate of
0.95% of the Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Fund. For the
year ended August 31, 2000, the amount charged to the Fund by SSC aggregated
$2,110,505, of which $336,686 is unpaid at August 31, 2000.
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 year ended August 31, 2000,
the amount charged to the Fund by STC aggregated $1,352,418, of which $203,820
is unpaid at August 31, 2000.
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 year ended
August 31, 2000, the amount charged to the Fund by SFAC aggregated $577,424, of
which $95,002 is unpaid at August 31, 2000.
29
<PAGE>
--------------------------------------------------------------------------------
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 year ended August 31, 2000,
Directors' fees and expenses aggregated $48,900. In addition, a one-time fee of
$57,394 was accrued for payment to those Directors not affiliated with the
Adviser who did not stand for re-election, under the reorganization discussed in
Note F. Inasmuch as the Adviser will also benefit from administrative
efficiencies of a consolidated Board, the Adviser has agreed to bear $28,697 of
such costs.
D. Commitments
As of August 31, 2000, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$2,002,496.
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
--------------------------------------------------------------------------------
Japanese Yen 12,062,177,705 U.S. Dollars 111,979,221 10/23/00 (2,002,496)
E. Line of Credit
The Fund and several Scudder Funds (the "Participants") share in a $1 billion
revolving credit facility with Chase Manhattan Bank 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 upon 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 percent of
its net assets under the agreement.
F. Reorganization
In early 2000, Scudder Kemper initiated a restructuring program for most of its
Scudder no-load open-end funds in response to changing industry conditions and
investor needs. The program proposes to streamline the management and operations
of most of the no-load open-end funds Scudder Kemper advises principally through
the liquidation of several small funds, mergers of certain funds with similar
investment objectives, the creation of one Board of Directors/Trustees and the
adoption of an administrative fee
30
<PAGE>
--------------------------------------------------------------------------------
covering the provision of most of the services currently paid for by the
affected funds. Costs incurred in connection with this restructuring initiative
are being borne jointly by Scudder Kemper and certain of the affected funds.
These costs, including printing, shareholder meeting expenses and professional
fees, are presented as reorganization expenses in the Statement of Operations of
the Fund.
31
<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 (the "Fund") at August 31, 2000, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated therein, in conformity with accounting principles generally
accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America 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 August
31, 2000 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
Boston, Massachusetts PricewaterhouseCoopers LLP
October 13, 2000
32
<PAGE>
Tax Information
--------------------------------------------------------------------------------
The Fund paid distributions of $3.80 per share from net long-term capital gains
during its year ended August 31, 2000, of which 100% represents 20% rate gains.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$226,230,000 as capital gain dividends for its year ended August 31, 2000, of
which 100% represents 20% rate gains.
For corporate shareholders, 86% of the income dividends paid during the Fund's
fiscal year ended August 31, 2000 qualified for the dividends received
deduction.
The Fund paid foreign taxes of $1,809,197 and earned $16,336,000 of foreign
source income during the year ended August 31, 2000. Pursuant to Section 853 of
the Internal Revenue Code, the Fund designates $0.04 per share as foreign taxes
paid and $0.34 per share as income earned from foreign sources for the year
ended August 31, 2000.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your account, please call 1-800-SCUDDER.
33
<PAGE>
Shareholder Meeting Results (Unaudited)
--------------------------------------------------------------------------------
A Special Meeting of Shareholders (the "Meeting") of Scudder Global Fund (the
"fund") was held on July 13, 2000, 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 elect Directors of Scudder Global/International Fund, Inc.
Number of Votes:
Director For Withheld
--------------------------------------------------------------------------------
Henry P. Becton, Jr. 24,153,222 613,998
Linda C. Coughlin 24,123,840 643,380
Dawn-Marie Driscoll 24,152,424 614,796
Edgar R. Fiedler 24,095,339 671,881
Keith R. Fox 24,158,515 608,705
Joan E. Spero 24,124,491 642,729
Jean Gleason Stromberg 24,115,697 651,524
Jean C. Tempel 24,129,880 637,341
Steven Zaleznick 24,098,452 668,768
--------------------------------------------------------------------------------
2. To ratify the selection of PricewaterhouseCoopers LLP as the independent
accountants for the fund for the fiscal year ending August 31, 2000.
Number of Votes:
For Against Abstain Broker
Non-Votes*
--------------------------------------------------------------------------------
24,062,265 265,836 439,119 0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
* 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.
34
<PAGE>
Officers and Directors
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Linda C. Coughlin* Jan C. Faller*
o President and Director o Vice President
Henry P. Becton, Jr. William F. Glavin*
o Director; President, WGBH o Vice President
Educational Foundation
William E. Holzer*
Dawn-Marie Driscoll o Vice President
o Director; President, Driscoll
Associates; Executive Fellow, James E. Masur*
Center for Business Ethics, o Vice President
Bentley College
Ann M. McCreary*
Edgar R. Fiedler o Vice President
o Director; Senior Fellow and
Economic Counsellor, Gerald J. Moran*
The Conference Board, Inc. o Vice President
Keith R. Fox M. Isabel Saltzman*
o Director; General Partner, o Vice President
The Exeter Group of Funds
Howard S. Schneider*
Joan E. Spero o Vice President
o Director; President,
The Doris Duke Charitable John Millette*
Foundation o Vice President and
Secretary
Jean Gleason Stromberg
o Director; Consultant Kathryn L. Quirk*
o Vice President and
Jean C. Tempel Assistant Secretary
o Director; Managing Director,
First Light Capital, LLC John R. Hebble*
o Treasurer
Steven Zaleznick
o Director; President and Chief Brenda Lyons*
Executive Officer, o Assistant Treasurer
AARP Services, Inc.
Caroline Pearson*
Thomas V. Bruns* o Assistant Secretary
o Vice President
*Scudder Kemper Investments, Inc.
Susan Dahl*
o Vice President
35
<PAGE>
Investment Products and Services
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Scudder Funds
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Money Market U.S. Growth
Scudder U.S. Treasury Money Fund Value
Scudder Cash Investment Trust Scudder Large Company Value Fund
Scudder Money Market Series -- Scudder Value Fund
Prime Reserve Shares Scudder Small Company Value Fund
Premium Shares
Managed Shares Growth
Scudder Tax Free Money Fund Scudder Classic Growth Fund
Scudder Capital Growth Fund
Tax Free Scudder Large Company Growth Fund
Scudder Medium Term Tax Free Fund Scudder Select 1000 Growth Fund
Scudder Managed Municipal Bonds Scudder Development Fund
Scudder High Yield Tax Free Fund Scudder Small Company Stock Fund
Scudder California Tax Free Fund Scudder 21st Century Growth Fund
Scudder Massachusetts Tax Free Fund
Scudder New York Tax Free Fund Global Equity
Worldwide
U.S. Income Scudder Global Fund
Scudder Short Term Bond Fund Scudder International Fund
Scudder GNMA Fund Scudder Global Discovery Fund
Scudder Income Fund Scudder Emerging Markets Growth Fund
Scudder Corporate Bond Fund Scudder Gold Fund
Scudder High Yield Bond Fund
Regional
Global Income Scudder Greater Europe Growth Fund
Scudder Global Bond Fund Scudder Pacific Opportunities Fund
Scudder Emerging Markets Income Fund Scudder Latin America Fund
The Japan Fund, Inc.
Asset Allocation
Scudder Pathway Conservative Portfolio Industry Sector Funds
Scudder Pathway Balanced Portfolio Scudder Health Care Fund
Scudder Pathway Growth Portfolio Scudder Technology Fund
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
36
<PAGE>
--------------------------------------------------------------------------------
Retirement Programs and Education Accounts
--------------------------------------------------------------------------------
Retirement Programs Education Accounts
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA IRA for Minors
Inherited IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
--------------------------------------------------------------------------------
Closed-End Funds
--------------------------------------------------------------------------------
The Argentina Fund, Inc. Montgomery Street Income Securities, Inc.
The Brazil Fund, Inc. Scudder Global High Income Fund, Inc.
The Korea Fund, Inc. Scudder New Asia Fund, Inc.
</TABLE>
Scudder funds are offered by prospectus only. For more complete information on
any fund or variable annuity registered in your state, including information
about a fund's objectives, strategies, risks, advisory fees, distribution
charges, and other expenses, please order a free prospectus. Read the prospectus
before investing in any fund to ensure the fund is appropriate for your goals
and risk tolerance. There is no assurance that the objective of any fund will be
achieved, and fund returns and net asset values fluctuate. Shares are redeemable
at current net asset value, which may be more or less than their original cost.
A money market mutual fund investment is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although a
money market mutual fund seeks to preserve the value of your investment at $1
per share, it is possible to lose money by investing in such a fund.
The services and products described should not be considered a solicitation to
buy or an offer to sell a security to any person in any jurisdiction where such
offer, solicitation, purchase, or sale would be unlawful under the securities
laws of such jurisdiction.
Scudder Investor Services, Inc.
37
<PAGE>
Account Management Resources
--------------------------------------------------------------------------------
For shareholders of Scudder funds including those in the AARP Investment Program
Convenient Automatic Investment Plan
ways to invest,
quickly and A convenient investment program in which money is
reliably electronically debited from your bank account monthly
to regularly purchase fund shares and "dollar cost
average" -- buy more shares when the fund's price is
lower and fewer when it's higher, which can reduce
your average purchase price over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to
purchase shares -- use distributions from one Scudder
fund to purchase shares in another, automatically
(accounts with identical registrations or the same
social security or tax identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically,
avoiding potential mailing delays; money for each of
your transactions is electronically debited from a
previously designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government
checks -- invested in up to four Scudder funds at one
time.
* 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- Automated Information Lines
clock electronic
account Scudder Class S Shareholders:
service and Call SAIL(TM) -- 1-800-343-2890
information,
including some AARP Investment Program Shareholders:
transactions Call Easy-Access Line -- 1-800-631-4636
Personalized account information, the ability to
exchange or redeem shares, and information on other
Scudder funds and services via touchtone telephone.
Web Site
Scudder Class S Shareholders --
www.scudder.com
AARP Investment Program Shareholders --
aarp.scudder.com
Personal Investment Organizer: Offering account
information and transactions, interactive worksheets,
prospectuses and applications for all 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.
38
<PAGE>
--------------------------------------------------------------------------------
Those who Automatic Withdrawal Plan
depend on
investment You designate the bank account, determine the
proceeds for schedule (as frequently as once a month) and amount
living expenses of the redemptions, and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into
automated the bank account you designate within three business
withdrawal days after each distribution is paid.
programs
QuickSell
Provides speedy access to your money by
electronically crediting your redemption proceeds to
the bank account you previously designated.
For more Scudder Class S Shareholders:
information
about these Call a Scudder representative at
services 1-800-SCUDDER
AARP Investment Program Shareholders:
Call an AARP Investment Program representative at
1-800-253-2277
Please address For Scudder Class S Shareholders:
all written
correspondence The Scudder Funds
to PO Box 2291
Boston, Massachusetts
02107-2291
For AARP Investment Program Shareholders:
AARP Investment Program from Scudder
PO Box 2540
Boston, Massachusetts
02208-2540
39
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $290 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 over 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
INVESTMENTS(SM)
[LOGO]
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
