SCUDDER
INVESTMENTS(SM)
[LOGO]
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EQUITY/GLOBAL
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Scudder Global
Discovery Fund
Fund #010
Semiannual Report
April 30, 2000
The fund seeks to provide above-average capital appreciation over the long term.
Scudder Global Discovery Fund is properly known as Global Discovery Fund.
<PAGE>
Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
10 Portfolio Management Discussion
15 Glossary of Investment Terms
16 Investment Portfolio
23 Financial Statements
26 Financial Highlights
27 Notes to Financial Statements
34 Report of Independent Accountants
35 Officers and Directors
36 Investment Products and Services
38 Scudder Solutions
2
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Scudder Global Discovery Fund
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ticker symbol SGSCX fund number 010
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Date of o Scudder Global Discovery Fund -- Scudder Shares' 35.65%
Inception: six-month return surpassed by a wide margin the 10.11%
9/10/91 return of the unmanaged Salomon Brothers World Equity
Extended Market Index for the period ended April 30,
2000.
Total Net
Assets of o The fund's emphasis on selecting a few stocks from its
Scudder global universe of small- and mid-cap growth stocks,
Shares as of especially those in the technology area, was an
4/30/00: important contributor to its outperformance.
$596 million
o The fund maintained its overall 5-star Morningstar
Rating(TM) for its risk-adjusted performance among
1,138 international equity funds as of April 30,
2000.^1
^1 Morningstar proprietary ratings reflect historical risk-adjusted
performance as of April 30, 2000. Ratings are subject to change monthly and
are calculated from a fund's three-, five-, and ten-year average annual
returns in excess of 90-day Treasury bill returns with appropriate fee
adjustments, and a risk factor that reflects fund performance below 90-day
T-bill returns. In its broad asset class, the top 10% of funds receive 5
stars and the next 22.5% receive 4 stars. In the international equity
category, the fund's Scudder Shares received a 5-star rating for the three-
and five-year periods among 1,138 and 687 funds, respectively. The fund's
Scudder Shares were not rated for the ten-year period because it commenced
operations on September 10, 1991. Past performance is no guarantee of
future results.
3
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Letter from the Fund's President
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Dear Shareholders,
The six-month period has been a tumultuous one for many global investors. U.S.
interest rates have been rising and the phenomenal gains of technology, media,
and telecommunications stocks came to an abrupt end in March. Despite the
market's shifting currents, Scudder Global Discovery Fund managed to outperform
its benchmark by a wide margin.
This strong short-term performance added to the fund's impressive long-term
track record. According to Lipper Analytical Services, Inc., an independent
analyst of investment performance, the fund's Scudder Shares outpaced the
average global small-cap fund over the one-, three-, and five-year periods. For
these periods, Scudder Shares ranked in the top 32% of 47 funds for the one-year
period, in the top 6% of 33 funds for the three-year period, and in the top 5%
of 21 funds for the five-year period. While past performance is not a guarantee
of future performance, in our view, this consistently above-average performance
provides evidence of the fund's solid approach to investing in global small- and
mid-cap stocks.
For further insight into the fund's performance, we have included a discussion
with portfolio managers Gerry Moran, Sewall Hodges, and Steven Stokes who
describe the market environment and their investment process that has
contributed to the fund's impressive results. I encourage you to read their
discussion, which begins on page 10.
4
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For current information on your fund and your account, visit our Internet Web
site at www.scudder.com. There you'll find a wealth of information, including
the most recent fund performance, the latest 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).
Thank you for your continued investment in Scudder Global Discovery Fund.
Sincerely,
/s/Nicholas Bratt
Nicholas Bratt
President,
Scudder Global Discovery Fund
5
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Performance Update
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April 30, 2000
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Growth of a $10,000 Investment
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
Global Discovery Salomon Brothers
Fund -- Scudder Shares World Equity EMI*
9/91** 10000 10000
'92 10107 9862
'93 11558 11555
'94 13496 13234
'95 13090 13688
'96 17502 16731
'97 17581 16516
'98 24240 21047
'99 24960 20395
'00 39262 24241
Yearly periods ended April 30
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Fund Index Comparison
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Total Return
Growth of Average
Period ended 4/30/2000 $10,000 Cumulative Annual
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Global Discovery Fund -- Scudder Shares
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1 year $ 15,730 57.30% 57.30%
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5 year $ 29,995 199.95% 24.57%
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Life of Class** $ 39,916 299.16% 17.38%
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Salomon Brothers World Equity EMI*
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1 year $ 11,886 18.86% 18.86%
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5 year $ 17,711 77.11% 10.38%
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Life of Class** $ 23,540 135.40% 12.11%
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* The Salomon Brothers World Equity Extended Market Index is an unmanaged
small capitalization stock universe of 22 countries. Index returns assume
dividends reinvested net of withholding tax and, unlike Fund returns, do
not reflect any fees or expenses.
** The Fund commenced operations on September 10, 1991. Index comparisons
begin September 30, 1991.
6
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Returns and Per Share Information
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THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
Yearly periods ended April 30
Global Discovery Salomon Brothers
Fund -- Scudder Shares World Equity EMI*
1992** 2.76 -3.04
1993 14.35 15.66
1994 16.77 11.86
1995 -3.01 9.74
1996 33.71 18.71
1997 0.45 -1.29
1998 37.88 27.45
1999 2.97 -3.10
2000 57.30 18.86
1992** 1993 1994 1995 1996 1997 1998 1999 2000
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Class Total
Return (%) 2.76 14.35 16.77 -3.01 33.71 .45 37.88 2.97 57.30
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Index Total
Return (%)*** -3.04 15.66 11.86 9.74 18.71 -1.29 27.45 -3.10 18.86
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Net Asset
Value ($) 12.31 13.86 15.87 15.31 19.74 18.88 23.55 24.25 35.64
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Income
Dividends ($) .02 .07 .18 -- .20 .13 .64 -- --
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Capital Gains
Distributions ($) -- .12 .15 .08 .44 .86 1.41 -- 2.38
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* The Salomon Brothers World Equity Extended Market Index is an unmanaged
small capitalization stock universe of 22 countries. Index returns assume
dividends reinvested net of withholding tax and, unlike Fund returns, do
not reflect any fees or expenses.
** The Fund commenced operations on September 10, 1991. Index comparisons
begin September 30, 1991.
Effective April 16, 1998, the Fund changed its name from Scudder Global
Discovery Fund to Global Discovery Fund and an additional three classes of
shares were offered. Existing shares of Global Discovery Fund outstanding
on that date were redesignated Scudder Shares of the Fund. The total return
information provided is for the Fund's Scudder Share class. Prior to March
6,1996, the Fund was known as the Scudder Global Small Company Fund.
Performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results. Total return and
principal value will fluctuate, so an investor's shares, when redeemed, may
be worth more or less than when purchased. If the Adviser had not
maintained expenses, the total returns for the one year, five year, and
life of Class periods would have been lower.
*** Prior to April 30, 1997, the Morgan Stanley Capital International World
Index was used as a comparative index.
7
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Portfolio Summary
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April 30, 2000
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Geographical
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(Excludes 13% Cash Equivalents)
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
U.S. & Canada 48%
Europe 39%
Japan 9%
Pacific Basin 4%
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100%
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Management seeks to invest in stocks primarily based on their individual merits
rather than attempting to allocate assets to specific geographic regions.
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Sectors
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(Excludes 13% Cash Equivalents)
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Technology 24%
Service Industries 19%
Health 15%
Financial 13%
Consumer Discretionary 7%
Energy 6%
Media 5%
Communications 4%
Manufacturing 4%
Other 3%
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100%
------------------------------------
Management's individual stock selection approach resulted in a significant
weighting in technology, by far one of the most important contributors to fund
performance over the six months.
8
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Ten Largest Equity Holdings
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(28% of Portfolio)
1. Symbol Technologies Inc.
Manufacturer of bar code laser scanners in the United States
2. Serco Group plc
Facilities management company in the United Kingdom
3. Marschollek, Lautenschlaeger und Partner AG
Independent life insurance company in Germany
4. Altran Technologies SA
Provider of engineering and consulting services in France
5. Tiffany & Co.
Retailer of jewelry and gift items in the United States
6. Shinko Securities Co., Ltd.
Provider of financial services in Japan
7. QLT Photo Therapeutics, Inc.
Developer of pharmaceutical products in Canada
8. JOT Automation Group Oyj
Manufacturer of high technology production automation
systems and equipment in Finland
9. Fiserv Inc.
Provider of data processing services in the United States
10. Mercator Software Inc.
Provider of e-business software in the United States
While the portfolio tends to have significant individual positions, management
pursues a diversified approach and emphasizes companies that have a low
correlation to each other.
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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April 30, 2000
In the following interview, portfolio managers Gerald J. Moran, Sewall Hodges,
and Steven T. Stokes discuss the market environment and their approach to
managing the fund.
Q: Throughout the six-month period, the developed world markets struggled with
the weakness of the yen and the euro, extreme volatility, fluctuating liquidity,
and dramatic movement among a small group of stocks. Yet, the fund continued to
deliver impressive returns. Please tell us more about this performance.
A: Despite considerable challenges, the fund's Scudder Shares provided
exceptional performance. For the six months that ended on April 30, 2000, the
fund's Scudder Shares returned 35.65%, more than double the 10.11% return of its
unmanaged benchmark, the Salomon Brothers World Extended Market Index ("EMI").
The EMI is an unmanaged universe of small-capitalization stocks domiciled in 22
countries. It comprises the smallest 20 percent of global small-cap stocks. The
fund's Scudder Shares also maintained their overall 5-star Morningstar
Rating(TM) for their risk-adjusted performance among 1,138 international equity
funds as of April 30, 2000.^1
Q: What was responsible for this good performance?
A: Overall performance was propelled by the fund's individual stock holdings
around the world, and by some profit taking in several of our long-term winners.
Some of these holdings had doubled or even tripled in price since our original
purchase. Gains in the portfolio's tech holdings accounted for roughly half of
the fund's total return during the six-month period.
^1 Morningstar proprietary ratings reflect historical risk-adjusted
performance as of April 30, 2000. Ratings are subject to change monthly and
are calculated from a fund's three-, five-, and ten-year average annual
returns in excess of 90-day Treasury bill returns with appropriate fee
adjustments, and a risk factor that reflects fund performance below 90-day
T-bill returns. In its broad asset class, the top 10% of funds receive 5
stars and the next 22.5% receive 4 stars. In the international equity
category, the fund's Scudder Shares received a 5-star rating for the three-
and five-year period among 1,138 and 687 funds, respectively. The fund's
Scudder Shares were not rated for the ten-year period because they
commenced operations on September 10, 1991. Past performance is no
guarantee of future results.
10
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Q: How did you manage the fund during this period?
A: During the first three months of the period, "dot-com" mania drove technology
stocks sky high. Because we were skeptical of the extreme enthusiasm apparent in
the U.S. stock market, and feared increasing volatility in the tech sector, we
moved to position the fund defensively. Around the beginning of 2000 we took
profits in tech names that had served the fund well; we trimmed financial stocks
that we believed could be hurt by a continuing rise in interest rates; and we
reduced the fund's relative U.S. position. We sought diversification by
broadening the portfolio's exposure to Europe and directing new money into
sectors other than technology, including energy, where we were expecting modest
price increases. Additionally, we redirected some assets into health care
stocks. While the fund lagged slightly in January, it bounced back in February
as tech stocks again surged to new heights. The sharp downturn in U.S.
technology that began on March 10 extended into Europe. This contributed to the
fund's underperformance versus its benchmark in March and April.
Q: Were there economic trends or political events that presented particular
challenges or benefits to fund performance?
A: The big stories, of course, have been rising U.S. interest rates and the
sharp decline of the Nasdaq in early March. Clearly, the inflated valuations of
Internet and other highly valued technology stocks (which comprise a significant
proportion of the Nasdaq) were a product of investor perception rather than a
measure of companies' internal success. We believe it will take some time for
investor confidence to return to these stocks, and we doubt that many of these
companies will see those highs again soon. In our view, there's no doubt that
these conditions have had a ripple effect on markets throughout the world.
11
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The overwhelmingly positive investment environment in Europe turned around
abruptly in the second half of the period when interest rates rose in response
to concern that economic growth was overblown. In addition, recent political
turmoil in Austria prompted concern over the continued smooth integration of the
European Monetary Union, and those worries apparently hampered stock market
performance and weakened the euro.
Our investments in Japanese pharmaceutical companies were among the few glimmers
of light following the March downturn. In addition, we believe that Japanese
economic indicators are moving in the right direction, and we are more
optimistic about Japan's progress on economic reform. Over time, we think that
investors will return to Japan's stock market.
Q: What are your expectations for continued U.S. stock market volatility and
rising interest rates? How will these factors affect fund management with
respect to the portfolio's U.S. holdings?
A: We fully expect a continuation of the rising interest rate environment in the
United States. As such, we are making a major effort to pare down our U.S.
holdings. In addition, we are seeking to cut back on high-risk/ high-reward
technology stocks in favor of growth stocks that we believe are selling at
attractive prices. We're looking to lighten our holdings in tech even more and
to add health care, energy, and financial stocks with strong fundamentals that
we believe can withstand the pressure from rising rates.
Q: Tell us about your individual stock selection strategy. What were the notable
successes and disappointments?
A: We try to diversify the portfolio's largest holdings by choosing stocks that
are not correlated to one another. By that we mean stocks that we believe are
driven by different economic and political forces. Our strategy paid off with
the strong performance of top holdings in different industry sectors.
12
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Our biggest winner was one of the fund's longtime holdings -- Network Appliance,
a U.S. designer and manufacturer of network data storage devices. This company
is a classic example of finding a diamond in the rough. We purchased the stock
at a time when it was relatively small and unappreciated. Our initial investment
was just $383,000. As the need for ever-faster data transmission escalated, so
too did earnings and investor enthusiasm for the stock. When its market
capitalization grew too large for the fund's investment discipline, we began to
parcel the stock out, taking profits along the way. We sold off the last of the
fund's stake during the six-month period, reaping profits of more than $7
million.
Another strong play was Marschollek, Lautenschlaeger und Partner, a German
financial services company that was propelled by a combination of strong
earnings, a limited selection of value stocks, and enthusiastic response from
investors on both sides of the Atlantic. Taking advantage of outstanding capital
appreciation, we sold some of the stock at the end of 1999 for 16 times our
initial investment.
Both stories underscore the prudence of our investment strategy, which seeks to
hold companies for the long term -- as long as their fundamentals remain strong,
and to sell fund holdings when they become too large or too expensive.
Our disappointments have been few. VISX, a U.S. developer of laser technologies
and systems for vision correction, is one notable exception. The stock lost
ground due to a combination of uncertainty regarding patent issues, slowing
growth, and extreme price pressures. However, we had whittled the fund's stake
down by the time this happened, which helped to minimize our losses.
Q: What is your near-term outlook for the global markets?
A: In the markets of the recent past, a rising tide carried all boats. The gains
of a single stock could benefit an entire sector. By the end of the period,
however, we were seeing
13
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downside momentum that exceeded the upside momentum that preceded it. This sharp
turn of events had little to do with the strength of individual companies, but
more with a return to focusing on companies with solid fundamentals. In the near
future, we believe it's likely that competitiveness will return to the markets
and that there will be clear winners and losers as investors become more
selective.
The excessive valuations of technology stocks in 1999 are likely to normalize
somewhat. Consequently, a repeat of the robust returns of the last five years
seems more and more unlikely. While we will continue to look for opportunities
in the technology sector, we are also focused on finding opportunities among
more dependable sectors, including health care and energy. We'll also seek
special situations in less glamorous sectors -- companies going through
restructurings or those with new management or manufacturing processes.
Q: In which countries and industry sectors do you expect to find opportunities?
A: We intend to maintain our positions in Europe. We will keep our eyes open for
opportunities in Ireland, however, which today has the fastest growing economy
on the continent and seems to be impervious to the downturns of other European
markets. Recently, we've branched out to the Pacific Rim, adding to or
establishing positions in Hong Kong and Taiwan. We will continue to look for
opportunities in these countries.
From a broader perspective, we believe there are enormous opportunities for new
winners to emerge from today's volatile global markets. This is a time for us to
identify these possibilities and to establish positions when fear has replaced
greed. However, we will pursue this path with caution, as we believe there will
be more negative news for many Internet companies. This could cast a false gloom
on the global communications revolution in the near term.
14
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Glossary of Investment Terms
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Currency A significant decline of a currency's value relative to
Devaluation other currencies, such as the U.S. dollar. Trading or
central bank intervention (or the lack of intervention) may
prompt this in the currency markets. For U.S. investors who
are investing overseas, a devaluation of a foreign currency
can have the effect of reducing the total return of their
investment.
Fundamental Analysis of companies based on the projected impact of
Research management, products, sales, and earnings on balance sheets
and income statements. Distinct from technical analysis,
which evaluates the attractiveness of a stock, based on
historical price and trading volume movements, rather than
the financial results of the underlying company.
Growth Stock Stock of a company that has displayed above average earnings
growth and is expected to continue to increase profits
rapidly going forward. Stocks of such companies usually
trade at higher price earnings multiples (see price/earnings
ratio) and experience more price volatility than the market
as a whole. Distinct from value stock.
Liquidity A characteristic of an investment or an asset referring to
the ease of convertibility into cash within a reasonably
short period of time.
Market The value of a company's outstanding shares of common stock,
Capitalization determined by multiplying the number of shares outstanding
by the share price (shares x price = market capitalization).
The universe of publicly traded companies is frequently
divided into large-, mid-, and small-capitalizations.
Price/Earnings A widely used gauge of a stock's valuation that indicates
Ratio (P/E) what investors are paying for a company's earnings on a per
(also "earnings share basis. Typically based on a company's projected
multiple") earnings for the next 12 months, a higher "earnings
multiple" indicates a higher expected growth rate and the
potential for greater price fluctuations.
(Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms) Additional glossary terms are located at our Internet Web site
-- www.scudder.com.
15
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<TABLE>
<CAPTION>
Investment Portfolio as of April 30, 2000
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Principal
Amount ($) Value ($)
-----------------------------------------------------------------------------------------------------------
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Repurchase Agreements 1.9%
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<S> <C> <C>
Donaldson, Lufkin & Jenrette, 5.68%, to be repurchased ------------
at $15,794,473 on 5/1/2000** (Cost $15,787,000) ............................ 15,787,000 15,787,000
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Short-Term Investments 11.3%
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Deutsche Bank Financial, Inc., 5.97%, 5/12/2000 ............................... 25,000,000 24,954,396
Deutsche Bank Financial, Inc., 6.01%, 5/26/2000 ............................... 30,000,000 29,874,792
Federal Home Loan Bank, 5.88%, 5/1/2000 ....................................... 42,000,000 42,000,000
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Total Short-Term Investments (Cost $96,829,188) 96,829,188
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Shares
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Common Stocks 86.8%
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Austria 0.1%
Schoeller-Bleckmann Oilfield Equipment AG
(Manufacturer of parts for drilling technology) ............................ 136,000 1,106,800
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Canada 5.5%
724 Solutions Inc. (Provider of Internet software to
financial institutions) .................................................... 81,300 4,105,650
Berkley Petroleum Corp. (Oil and gas producer) ................................ 656,300 4,540,412
Creo Products Inc. (Manufacturer of printing related
products) .................................................................. 33,300 1,207,125
Mosaic Group Inc. (Provider of sales, marketing and
corporate communications services) ......................................... 504,000 5,680,886
QLT PhotoTherapeutics, Inc. (Developer of
pharmaceutical products) ................................................... 361,600 20,061,771
Talisman Energy Inc.* (Explorer and producer of
oil and gas) ............................................................... 394,500 11,755,653
------------
47,351,497
------------
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Shares Value ($)
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Finland 2.2%
JOT Automation Group Oyj (Manufacturer of high
technology production automation systems and
equipment) .................................................. 2,323,100 16,793,540
Perlos Oyj (Manufacturer of injection moulds,
electromechanical connectors and assembly equipment) ........ 42,900 1,589,616
---------------
18,383,156
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France 6.2%
Altran Technologies SA (Provider of engineering and
consulting services) ........................................ 126,574 25,873,074
Dassault Systemes SA (Computer aided design,
manufacturing and engineering software) ..................... 80,451 6,188,837
GFI Informatique SA (Provider of computer consulting
and systems integration services) ........................... 8,857 1,296,641
Publicis SA (International advertising company) ................ 17,420 8,458,564
Self Trade SA (Provider of online securities brokerage
services) ................................................... 40,759 328,000
Trader.com NV "A" (Publisher of classified advertising
newspapers and seller of merchandise through its
Internet Web site) .......................................... 98,900 1,681,300
Transiciel SA (Developer of computer software) ................. 64,884 8,661,057
---------------
52,487,473
---------------
Germany 5.3%
Articon Information Systems AG (Provider of network
security products for Internet applications) ................ 6,688 510,837
Epcos AG (Producer of electronic components and
integrated circuits) ........................................ 86,431 12,221,011
Hawesko Holding AG (Marketer of wines and liqueurs
and related products) ....................................... 43,424 1,062,158
Marschollek, Lautenschlaeger und Partner AG (pfd.)
(Independent life insurance company) ........................ 52,000 27,519,057
Pfeiffer Vacuum Technology AG (ADR) (Manufacturer of
various pumps and vacuum systems) ........................... 64,300 2,539,850
Telesens AG (Producer of billing systems) ...................... 40,410 1,727,006
---------------
45,579,919
---------------
Greece 0.2%
STET Hellas Telecommunications SA (ADR) (Mobile
telecommunication services) ................................. 58,221 1,331,805
Hong Kong 2.0%
Legend Holdings Ltd. (Manufacturer and distributor of
personal computers) ......................................... 8,138,400 9,455,845
Li & Fung Ltd. (Exporter of consumer products) ................. 1,604,000 6,260,235
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Shares Value ($)
-----------------------------------------------------------------------------------------
Sunevision Holdings Ltd. (Provider of Internet
infrastructure and services) ............................ 1,050,500 1,368,910
---------------
17,084,990
---------------
Indonesia 0.0%
PT Steady Safe Transportation Service Tbk (Operator of
taxis and buses in Jakarta) ............................. 444 11
---------------
Ireland 4.7%
Anglo Irish Bank Corp. plc (Provider of financial services
for business and private sectors) ....................... 6,398,917 14,139,041
Elan Corp. "A" (Warrants) expire 12/31/2001
(Developer of controlled-absorption drug delivery
systems) ................................................ 194,200 9,977,025
Irish Continental Group plc (Transporter of passengers,
freight and containers between Ireland, the U.K. and
the continent) .......................................... 211,555 2,000,617
Irish Life & Permanent plc (Retail financial services group) 1,000,473 8,278,544
Jurys Doyle Hotel Group plc (Hotel operator) ............... 616,435 3,643,408
Riverdeep Group plc (ADR) (Provider of children's
educational software) ................................... 33,300 761,738
Ryan Hotels plc (Owner and operator of hotel chain) ........ 1,926,080 1,593,760
---------------
40,394,133
---------------
Italy 1.1%
Bulgari SpA (Manufacturer and retailer of fine jewelry,
luxury watches and perfumes) ............................ 865,400 9,442,899
---------------
Japan 8.2%
Benesse Corp. (Provider of educational services) ........... 128,000 11,151,515
Chugai Pharmaceutical Co., Ltd. (Pharmaceutical
company) ................................................ 507,000 9,742,794
Internet Initiative Japan Inc. (ADR) (Provider of Internet
services) ............................................... 34,700 2,082,000
Japan Securities Finance Co., Ltd. (Provider of securities
related financing services) ............................. 415,000 2,262,103
KYORIN Pharmaceutical Co., Ltd. (Retailer of prescription
medicines) .............................................. 217,000 10,625,462
Shinko Securities Co., Ltd. (Provider of financial
services) ............................................... 5,078,000 22,190,447
Toys "R" Us-Japan (Operater of retail toy stores
throughout Japan) ....................................... 3,000 454,545
Uni-Charm Co. (Manufacturer of sanitary napkins,
diapers, and body care goods) ........................... 174,000 11,767,184
---------------
70,276,050
---------------
Luxembourg 1.3%
Carrier 1 International SA (Provider of voice, Internet
and related telecommunications services) ................ 26,170 2,153,573
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Shares Value ($)
-------------------------------------------------------------------------------------
Millicom International Cellular SA (Developer and
operator of cellular telephone networks) ............. 127,400 6,815,900
Thiel Logistik AG (Producer of decision support software) 30,638 1,908,351
--------------
10,877,824
--------------
Netherlands 0.9%
Versatel Telecom International NV (Telecommunication
services) ............................................ 188,110 7,543,236
--------------
Norway 0.2%
Stepstone ASA (Provider of job listings on the Internet) 499,700 1,676,630
--------------
Poland 0.1%
Pioneer Poland Fund (Closed-end investment
company) (b) ......................................... 3 1,219,234
--------------
Portugal 1.0%
Jeronimo Martins SGPS, SA (Food producer and
retailer) ............................................ 180,925 3,227,786
PT Multimedia Servicos (Provider of cable television,
Internet and e-commerce services) .................... 75,400 5,262,074
--------------
8,489,860
--------------
Singapore 0.2%
St Assembly Test Services Limited (ADR) (Provider of
semiconductor tests) ................................. 40,797 1,700,725
--------------
Spain 0.4%
Sogecable SA (Provider of cable television) ............. 41,793 1,725,308
Telefonica Publicidad e Informacion, SA (Publisher of
telephone directories) ............................... 38,717 1,531,434
--------------
3,256,742
--------------
Sweden 1.4%
Enlight Interactive AB "B" (Developer of educational
software) ............................................ 171,500 2,745,505
Framtidsfabriken AB (Internet consulting company) ....... 87,200 1,435,013
Modern Times Group MTG AB "B" (Group of media
companies) ........................................... 87,600 4,324,788
SwitchCore AB (Developer of high-speed switches for
the telecommunications industry) ..................... 16,700 1,205,864
Telelogic AB (Developer of software for the
telecommunications industry) ......................... 321,000 2,443,633
--------------
12,154,803
--------------
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
Shares Value ($)
---------------------------------------------------------------------------------------------
Switzerland 0.6%
Fantastic Corp. (Provider of multimedia related
software solutions) ......................................... 269,570 4,951,424
--------------
Taiwan 0.8%
GigaMedia Ltd. (Provider of broadband Internet access
services and content) ....................................... 289,472 6,947,328
--------------
United Kingdom 8.6%
Bodycote International plc (Diversified holding
company) .................................................... 1,100,570 4,228,598
Bookham Technology plc (ADR) (Manufacturer and marketer
of optical components) ...................................... 40,300 2,095,600
Guardian IT plc (Provider of business continuity and
disaster recovery services) ................................. 84,016 1,691,631
Interactive Investor International plc (Provider of on-line
financial services) ......................................... 336,714 574,986
Matalan plc (Clothing retailer) ................................ 1,521,930 10,891,787
NDS Group plc (ADR) (Provider of open solutions that
enable data to be transferred digitally) .................... 68,500 3,870,250
NSB Retail Systems plc (Provider of decision support
software) ................................................... 47,500 1,585,388
PizzaExpress plc (Operator of pizza restaurants) ............... 385,092 4,328,193
RM plc (Information technology solutions to educational
markets) .................................................... 677,500 7,388,549
Serco Group plc (Facilities management company) ................ 4,439,580 32,047,812
Shire Pharmaceuticals Group plc (Pharmaceutical
company) .................................................... 146,200 2,065,344
Taylor Nelson Sofres plc (Market research company) ............. 676,213 2,601,288
--------------
73,369,426
--------------
United States 35.8%
Adelphia Business Solutions, Inc.* (Provider of
communication services) ..................................... 266,200 9,317,000
Alexion Pharmaceuticals, Inc. (Developer of
immunoregulatory compounds) ................................. 161,400 7,202,475
Alkermes, Inc. (Neuropharmaceutical company developing
products to aid treatment of central nervous system) ........ 102,700
5,468,775
Alpharma Inc. "A"* (Manufacturer and marketer of human
pharmaceutical and animal health products) .................. 233,000 8,999,625
Anadarko Petroleum Corp. (Explorer and producer of
crude oil and natural gas) .................................. 167,000 7,254,063
AnswerThink Consulting Group, Inc.* (Provider of
consulting and technology enabled solutions focused
on the Internet and Web-enabled commerce) ................... 231,600 4,458,300
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
Shares Value ($)
---------------------------------------------------------------------------------------
Barrett Resources Corp. (Explorer and producer of oil
and gas) ............................................... 178,900 5,680,075
Biomet, Inc. (Manufacturer of surgical implant devices) ... 181,700 6,484,419
CTS Corp. (Manufacturer of electronic and
electromechanical components) .......................... 56,000 3,531,500
Citadel Communications Corp. (Radio broadcaster) .......... 73,900 2,886,719
Concord EFS, Inc.* (Provider of electronic transaction
authorization, processing, settlement and
transfer services) ..................................... 474,050 10,606,869
Cumulus Media, Inc. "A" (Radio broadcasting company) ...... 200,400 2,630,250
Diamond Offshore Drilling, Inc. (Offshore oil and gas
well drilling) ......................................... 106,100 4,277,156
Elcor Corp. (Manufacturer of roofing and other
industrial products) ................................... 221,800 7,056,013
Fiserv Inc. (Provider of data processing services) ........ 353,843 16,254,663
H & R Block, Inc. (Tax consulting and preparation) ........ 186,500 7,798,031
ISS Group, Inc. (Provider of network security monitoring,
detection, and response software) ...................... 112,100 10,138,044
ITXC Corp. (Provider of Internet-based voice and
fax services) .......................................... 27,600 740,025
Invitrogen Corp. (Developer of research kits) ............. 20,900 1,303,638
Legg Mason, Inc. (Provider of various financial services) . 382,800 14,474,625
MIH Ltd. (Provider of pay-TV services) .................... 134,100 6,302,700
Maxim Pharmaceuticals, Inc.* (Pharmaceutical company) ..... 175,300 6,792,875
Mercator Software Inc. (Provider of e-business software) .. 405,300 14,920,106
Nabors Industries, Inc. (Land drilling contractor) ........ 340,100 13,412,694
OpenTV Corp. "A" (Developer of interactive television
software) .............................................. 23,300 1,907,688
Proxim, Inc. (Manufacturer of wireless local area
networking products) ................................... 40,600 3,123,663
RADVision Ltd. (Designer and developer of real-time
voice, video, and data communications over packet
networks) .............................................. 33,600 1,285,200
Radio Unica Corp. (Operator of a Spanish-language
national radio network) ................................ 80,900 778,663
Rational Software Corp. (Software products and services
for development of software applications) .............. 138,800 11,815,350
Shared Medical Systems Corp. (Computer based
information processing systems for health care industry) 171,900 7,123,106
St. Jude Medical, Inc. (Manufacturer of heart valves) ..... 87,300 2,722,669
Symbol Technologies, Inc. (Manufacturer of bar code
laser scanners) ........................................ 757,050 42,205,534
Tiffany & Co. (Retailer of jewelry and gift items) ........ 306,000 22,242,375
USinternetworking, Inc.* (Developer of management
software used on the Internet) ......................... 222,600 5,537,175
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
Shares Value ($)
-----------------------------------------------------------------------------------------------
VIA NET.WORKS, Inc. (Provider of Internet access to
businesses) ................................................. 91,900 1,832,256
Vitesse Semiconductor Corp. (Manufacturer of digital
integrated circuits) ........................................ 137,200 9,338,175
Watchguard Technologies, Inc.* (Provider of Internet
security products) .......................................... 80,300 3,869,456
Waters Corp. (Provider of high-performance liquid
chromatography products and services) ....................... 104,400 9,891,900
Wesley Jessen VisionCare, Inc. (Manufacturer of soft
contact lenses) ............................................. 85,100 3,350,813
---------------
305,014,663
---------------
-----------------------------------------------------------------------------------------------
Total Common Stocks (Cost $534,349,236) 740,640,628
-----------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $646,965,424) (a) 853,256,816
-----------------------------------------------------------------------------------------------
</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 $646,965,424. At April 30,
2000, net unrealized appreciation for all securities based on tax cost was
$206,291,392. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of value over tax cost of
$250,951,399 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over value of $44,660,007.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $1,219,234 (0.14% of net assets). Their
values have been estimated by the Valuation Committee in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of these
securities at April 30, 2000 aggregated $1,477,500.
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities as of April 30, 2000
------------------------------------------------------------------------------------------------
Assets
------------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value (cost $646,965,424) ....................... $ 853,256,816
Cash .......................................................................... 381,266
Receivable for investments sold ............................................... 6,988,386
Dividends receivable .......................................................... 404,360
Interest receivable ........................................................... 7,473
Receivable for Fund shares sold ............................................... 2,690,229
Foreign taxes recoverable ..................................................... 65,289
-------------
Total assets .................................................................. 863,793,819
Liabilities
------------------------------------------------------------------------------------------------
Payable for investments purchased ............................................. 11,960,003
Payable for Fund shares redeemed .............................................. 5,510,502
Accrued management fee ........................................................ 943,747
Accrued Directors' fees and expenses .......................................... 87,037
Other accrued expenses and payables ........................................... 304,066
-------------
Total liabilities ............................................................. 18,805,355
------------------------------------------------------------------------------------------------
Net assets, at value $ 844,988,464
------------------------------------------------------------------------------------------------
Net Assets
------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income (5,100,422) Net
unrealized appreciation (depreciation) on:
Investments ................................................................. 206,291,392
Foreign currency related transactions ....................................... (35,247)
Accumulated net realized gain (loss) .......................................... 128,506,937
Paid-in capital ............................................................... 515,325,804
------------------------------------------------------------------------------------------------
Net assets, at value $ 844,988,464
------------------------------------------------------------------------------------------------
Net Asset Value
------------------------------------------------------------------------------------------------
Scudder Shares
NetAsset Value, offering and redemption price per share ($596,186,018 /
16,730,216 shares of capital stock outstanding, $.01 par value, 100,000,000 -------------
shares authorized) ......................................................... $ 35.64
-------------
Class A Shares
NetAsset Value, and redemption price per share ($129,429,288 / 3,657,036 shares -------------
of capital stock outstanding, $.01 par value, 40,000,000 shares authorized) $ 35.39
-------------
Maximum offering price per share (100 / 94.25 of $35.39) ...................... $ 37.55
-------------
Class B Shares
NetAsset Value, offering and redemption price (subject to contingent deferred
sales charge) per share ($93,656,194 / 2,694,899 shares of capital stock -------------
outstanding, $.01 par value, 20,000,000 shares authorized) ................. $ 34.75
-------------
Class C Shares
NetAsset Value, offering and redemption price (subject to contingent deferred
sales charge) per share ($25,716,964 / 738,978 shares of capital stock -------------
outstanding, $.01 par value, 10,000,000 shares authorized) ................. $ 34.80
-------------
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
---------------------------------------------------------------------------------
Statement of Operations for the six months ended April 30, 2000
---------------------------------------------------------------------------------
Investment Income
---------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $67,789) ........... $ 1,830,283
Interest ....................................................... 1,771,540
--------------
Total income ................................................... 3,601,823
--------------
Expenses:
Management fee ................................................. 4,265,923
Services to shareholders ....................................... 1,063,563
Custodian and accounting fees .................................. 512,339
Distribution services fees ..................................... 314,529
Administrative services fees ................................... 231,300
Auditing ....................................................... 33,712
Legal .......................................................... 3,510
Directors' fees and expenses ................................... 81,640
Reports to shareholders ........................................ 41,867
Registration fees .............................................. 16,172
Other .......................................................... 11,315
--------------
Total expenses, before expense reductions ...................... 6,575,870
Expense reductions ............................................. (54,318)
--------------
Total expenses, after expense reductions ....................... 6,521,552
---------------------------------------------------------------------------------
Net investment income (loss) (2,919,729)
---------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
---------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .................................................... 128,919,569
Foreign currency related transactions .......................... (237,368)
--------------
128,682,201
--------------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................... 41,889,458
Foreign currency related transactions .......................... (25,590)
--------------
41,863,868
---------------------------------------------------------------------------------
Net gain (loss) on investment transactions 170,546,069
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 167,626,340
---------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Six Months Year Ended
Ended October 31,
Increase (Decrease) in Net Assets April 30, 2000 1999
--------------------------------------------------------------------------------------
Operations:
<S> <C> <C>
Net investment income (loss) ...................... $ (2,919,729) $ (2,930,722)
Net realized gain (loss) on investment transactions 128,682,201 66,821,323
Net unrealized appreciation (depreciation) on
investment transactions during the period ...... 41,863,868 73,964,169
------------- -------------
Net increase (decrease) in net assets resulting
from operations ................................ 167,626,340 137,854,770
------------- -------------
Distributions to shareholders from:
Net realized gains -- Scudder Shares .............. (35,829,434) --
Net realized gains -- Class A ..................... (5,099,084) --
Net realized gains -- Class B ..................... (2,965,052) --
Net realized gains -- Class C ..................... (854,669) --
------------- -------------
Fund share transactions:
Proceeds from shares sold ......................... 753,189,003 467,347,036
Reinvestment of distributions ..................... 42,542,492 --
Cost of shares redeemed ........................... (567,122,053) (440,429,826)
------------- -------------
Net increase (decrease) in net assets from Fund
share transactions ............................. 228,609,442 26,917,210
------------- -------------
Increase (decrease) in net assets ................. 351,487,543 164,771,980
Net assets at beginning of period ................. 493,500,921 328,728,941
Net assets at end of period (including accumulated
distributions in excess of net investment income ------------- -------------
of $5,100,422 and $2,180,693, respectively) .... $ 844,988,464 $ 493,500,921
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
---------------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
Scudder Shares (a)
---------------------------------------------------------------------------------------
Years Ended October 31, 2000(b)(c) 1999(c) 1998(c) 1997(c) 1996(c) 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
Net asset value, beginning of
period $28.17 $19.81 $21.64 $20.45 $17.54 $16.27
---------------------------------------------------------
---------------------------------------------------------------------------------------
Income (loss) from investment operations:
---------------------------------------------------------------------------------------
Net investment income (loss) (.10) (.13) (.10) (.12) (.04) (.03)
---------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investment
transactions 9.95 8.49 .32 2.30 3.59 1.38
------------------------------------------------------
---------------------------------------------------------------------------------------
Total from investment
operations 9.85 8.36 .22 2.18 3.55 1.35
---------------------------------------------------------------------------------------
Less distributions from:
---------------------------------------------------------------------------------------
Net investment income -- -- (.64) (.13) (.20) --
---------------------------------------------------------------------------------------
Net realized gains on
investment transactions (2.38) -- (1.41) (.86) (.44) (.08)
------------------------------------------------------
---------------------------------------------------------------------------------------
Total distributions (2.38) -- (2.05) (.99) (.64) (.08)
---------------------------------------------------------------------------------------
Net asset value, end of period $35.64 $28.17 $19.81 $21.64 $20.45 $17.54
------------------------------------------------------
---------------------------------------------------------------------------------------
Total Return (%) 35.65(d)** 41.95 1.19 11.14 20.97 8.32
---------------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
---------------------------------------------------------------------------------------
Net assets, end of period
($ millions) 596 404 310 349 351 255
---------------------------------------------------------------------------------------
Ratio of expenses before
expense reductions (%) 1.47(e)* 1.68 1.65 1.63 1.60 1.69
---------------------------------------------------------------------------------------
Ratio of expenses after
expense reductions (%) 1.47(e)* 1.68 1.65 1.63 1.60 1.69
---------------------------------------------------------------------------------------
Ratio of net investment
income (loss) (%) (.54)(e)* (.66) (.45) (.58) (.20) (.12)
---------------------------------------------------------------------------------------
Portfolio turnover rate (%) 126* 64 41 61 63 44
---------------------------------------------------------------------------------------
</TABLE>
(a) On April 16, 1998 existing shares of the Fund were designated as Scudder
Shares and are generally not available to new investors.
(b) For the six months ended April 30, 2000.
(c) Based on monthly average shares outstanding during the period.
(d) Total return would have been lower had certain expenses not been reduced.
(e) The ratios of operating expenses excluding costs incurred in connection
with the reorganization before and after expense reductions were 1.46% and
1.46%, respectively.
* Annualized
** Not annualized
26
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
A. Significant Accounting Policies
Global Discovery 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.
The Fund offers multiple classes of shares. Class A shares are offered to
investors subject to an initial sales charge. Class B shares are offered without
an initial sales charge but are subject to higher ongoing expenses than Class A
shares and a contingent deferred sales charge payable upon certain redemptions.
Class B shares automatically convert to Class A shares six years after issuance.
Class C shares are offered without an initial sales charge but are subject to
higher ongoing expenses than Class A shares and a contingent deferred sales
charge payable upon certain redemptions within one year of purchase. Class C
shares do not convert into another class. Scudder Shares, generally not
available to new investors, are not subject to initial or contingent deferred
sales charges. Certain detailed financial information for the Class A, B, and C
shares is provided separately and is available upon request.
Investment income, realized and unrealized gains and losses, and certain
fund-level expenses and expense reductions, if any, are borne pro rata on the
basis of relative net assets by the holders of all classes of shares except that
each class bears certain expenses unique to that class such as distribution
services, shareholder services, administrative services and certain other class
specific expenses. Differences in class expenses may result in payment of
different per share dividends by class. All shares of the Fund have equal rights
with respect to voting subject to class specific arrangements.
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. 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
27
<PAGE>
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.
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.
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.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
28
<PAGE>
shareholders. Accordingly, the Fund paid no federal income taxes and no federal
income tax provision was required.
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.
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 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.
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.
B. Purchases and Sales of Securities
During the six months ended April 30, 2000, purchases and sales of investment
securities (excluding short-term investments) aggregated $566,116,395 and
$437,591,425, respectively.
C. Transactions with Affiliates
Management Agreement. Under the Investment Management Agreement (the
"Agreement") with Scudder Kemper Investments, Inc. ("Scudder Kemper" or the
"Adviser"), the Fund pays the Adviser a fee equal to an annual rate of 1.10% of
the Fund's average daily net assets, computed and accrued daily and payable
monthly. As manager of the assets of the Fund, the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
29
<PAGE>
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. For the six months
ended April 30, 2000, the fee pursuant to the Agreement amounted to $4,265,923,
of which $943,747 was unpaid at April 30, 2000.
Distribution Service Agreement. In accordance with Rule 12b-1 under the 1940
Act, Kemper Distributors, Inc. ("KDI"), a subsidiary of the Adviser, receives a
fee of 0.75% of average daily net assets of Classes B and C. Pursuant to the
agreement, KDI enters into related selling group agreements with various firms
at various rates for sales of Class B and C shares. For the six months ended
April 30, 2000, the Distribution Fee was as follows:
Total Unpaid at
Distribution Fee Aggregated April 30, 2000
--------------------------------------------- --------------- ---------------
Class B .................................... $ 242,929 $ 68,504
Class C .................................... 71,600 20,985
--------------- ---------------
$ 314,529 $ 89,489
--------------- ---------------
Underwriting Agreement and Contingent Deferred Sales Charge. KDI is the
principal underwriter for Classes A, B and C. Underwriting commissions paid in
connection with the distribution of Class A shares for the six months ended
April 30, 2000 aggregated $258,333, of which $154,765 was paid to other firms.
In addition, KDI receives any contingent deferred sales charge (CDSC) from Class
B share redemptions occurring within six years of purchase and Class C share
redemptions occurring within one year of purchase. There is no such charge upon
redemption of any share appreciation or reinvested dividends. Contingent
deferred sales charges are based on declining rates ranging from 4% to 1% for
Class B and 1% for Class C, of the value of the shares redeemed. For the six
months ended April 30, 2000, the CDSC for Classes B and C aggregated $87,695 and
$287, respectively.
Administrative Service Fees. KDI provides information and administrative
services to Classes A, B and C shareholders at an annual rate of up to 0.25% of
average daily net assets for each such class. KDI in turn has various agreements
with financial services firms that provide these services and pays these firms
based upon the assets of shareholder accounts the firms service.
30
<PAGE>
For the six months ended April 30, 2000, the Administrative Service Fee was as
follows:
Total Fees Waived Unpaid at
Administrative Service Fee Aggregated by KDI April 30, 2000
------------------------------- ---------------- --------------- --------------
Class A ....................... $ 126,597 $ -- $ 116,156
Class B ....................... 80,836 25,540 30,320
Class C ....................... 23,867 -- 17,179
---------------- --------------- --------------
$ 231,300 $ 25,540 $ 163,655
---------------- --------------- --------------
Shareholder Services Fees. Kemper Service Company ("KSC"), an affiliate of the
Adviser, is the transfer, dividend-paying and shareholder service agent for the
Fund's Classes A, B and C Shares. For the six months ended April 30, 2000, the
amount charged to Classes A, B and C by KSC aggregated $219,379, $185,053, and
$37,995, respectively, of which $237,427 is unpaid at April 30, 2000. Scudder
Service Corporation ("SSC"), a subsidiary of the Adviser, is the transfer,
dividend-paying and shareholder service agent for the Scudder Shares. For the
six months ended April 30, 2000, the amount charged to the Scudder Shares by SSC
for shareholder services aggregated $354,698, of which $114,847 is unpaid at
April 30, 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 Scudder Shares of the Fund. For the six
months ended April 30, 2000, the amount charged to the Scudder Shares by STC
aggregated $135,232, of which $25,780 is unpaid at April 30, 2000.
Fund Accounting Fees. Scudder Fund Accounting Corporation ("SFAC"), a subsidiary
of the Adviser, is responsible for determining the daily net asset value per
share and maintaining the portfolio and general accounting records of the Fund.
For the six months ended April 30, 2000, the amount charged to the Fund by SFAC
aggregated $371,191, of which $21,630 is unpaid at April 30, 2000.
Directors' Fees. The Fund pays each of its Directors not affiliated with the
Adviser an annual retainer plus specified amounts for attended board and
committee meetings. For the six months ended April 30, 2000, the Directors fees
and expenses aggregated $24,246. In addition, a one-time fee of $57,394 was
accrued for payment to those Directors not affiliated with the Adviser who are
not standing for re-election, under the reorganization discussed in Note G.
Inasmuch as the Adviser will also benefit from administrative
31
<PAGE>
efficiencies of a consolidated board, the Adviser has agreed to bear $28,697 of
such costs.
D. Capital Share Transactions
The following tables summarizes capital share and dollar activity in the Fund:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 2000 October 31, 1999
----------------------------------- -----------------------------
Shares Dollars Shares Dollars
Shares sold
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Scudder Shares 5,211,388 $ 198,564,867 5,590,925 $ 133,793,434
Class A 12,314,153 458,188,611 12,149,520 303,252,844
Class B 1,858,315 69,172,688 892,185 22,521,387
Class C 744,688 27,262,837 314,217 7,779,371
----------- -------------- ----------- ---------------
20,128,544 $ 753,189,003 18,946,847 $ 467,347,036
----------- -------------- ----------- ---------------
Shares issued to shareholders in reinvestment of distributions
------------------------------------------------------------------------------------
Scudder Shares 1,005,920 $ 34,070,530 -- --
Class A 144,715 4,876,911 -- --
Class B 84,436 2,802,430 -- --
Class C 23,860 792,621 -- --
----------- -------------- ----------- ---------------
1,258,931 $ 42,542,492 -- --
----------- -------------- ----------- ---------------
Shares redeemed
------------------------------------------------------------------------------------
Scudder Shares (3,820,348) $(144,907,164) (6,880,203) $(163,612,997)
Class A (10,755,180) (402,559,897) (10,768,400) (268,241,904)
Class B (240,725) (8,853,223) (189,471) (4,631,255)
Class C (299,778) (10,801,769) (155,289) (3,943,670)
----------- -------------- ----------- ---------------
(15,116,031) $(567,122,053) (17,993,363) $(440,429,826)
----------- -------------- ----------- ---------------
Net increase (decrease)
------------------------------------------------------------------------------------
Scudder Shares 2,396,960 $ 87,728,233 (1,289,278) $ (29,819,563)
Class A 1,703,688 60,505,625 1,381,120 35,010,940
Class B 1,702,026 63,121,895 702,714 17,890,132
Class C 468,770 17,253,689 158,928 3,835,701
----------- -------------- ----------- ---------------
6,271,444 $ 228,609,442 953,484 $ 26,917,210
----------- -------------- ----------- ---------------
</TABLE>
E. Expense Off-Set Arrangements
The Fund has entered into arrangements with its transfer agent whereby credits
realized as a result of uninvested cash balances were used to reduce a
32
<PAGE>
portion of the Fund's expenses. During the six months ended April 30, 2000, the
Fund's transfer agent fees were reduced by $80 under these arrangements.
F. Line of Credit
The Fund and several affiliated Funds (the "Participants") share in a $1 billion
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated, pro rata based 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.
G. 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 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.
33
<PAGE>
Report of Independent Accountants
--------------------------------------------------------------------------------
To the Board of Directors of Global/International Fund, Inc.
and to the Scudder Shares' Shareholders of Global Discovery
Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the Scudder Shares' financial highlights present
fairly, in all material respects, the financial position of Global Discovery
Fund (the "Fund") at April 30, 2000 the results of its operations, the changes
in its net assets, and the Scudder Shares' financial highlights for the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States. These financial statements and Scudder Shares' 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 which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at April 30,
2000 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
June 21, 2000
34
<PAGE>
Officers and Directors
--------------------------------------------------------------------------------
Nicholas Bratt* Robert G. Stone, Jr.
o President o Honorary Director; Chairman
Emeritus of the Board and
Sheryle J. Bolton Director, Kirby Corporation
o Director; Chief Executive Officer,
Scientific Learning Corporation Susan E. Dahl*
o Vice President
William T. Burgin
o Director; General Partner, Jan C. Faller*
Bessemer Venture Partners o Vice President
Keith R. Fox Ann M. McCreary*
o Director; General Partner, o Vice President
The Exeter Group of Funds
Gerald J. Moran*
William H. Luers o Vice President
o Director; Chairman and President,
U.N. Association of America M. Isabel Saltzman*
o Vice President
Kathryn L. Quirk*
o Director, Vice President and John R. Hebble*
Assistant Secretary o Treasurer
Joan E. Spero John Millette*
o Director; President, Doris Duke o Vice President and Secretary
Charitable Foundation
Caroline Pearson*
Paul Bancroft III o Assistant Secretary
o Honorary Director; Consultant
*Scudder Kemper Investments, Inc.
Thomas J. Devine
o Honorary Director; Consultant
William H. Gleysteen, Jr.
o Honorary Director; Consultant;
Guest Scholar, Brookings Institution
35
<PAGE>
Investment Products and Services
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
The Scudder Family of Funds+++
--------------------------------------------------------------------------------
<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* Scudder Micro Cap Fund
Managed Shares*
Growth
Tax Free Money Market+ Scudder Classic Growth Fund***
Scudder Tax Free Money Fund Scudder Large Company Growth Fund***
Scudder California Tax Free Money Fund** Scudder Select 1000 Growth Fund
Scudder New York Tax Free Money Fund** Scudder Development Fund
Scudder 21st Century Growth Fund
Tax Free+
Scudder Limited Term Tax Free Fund Global Equity
Scudder Medium Term Tax Free Fund Worldwide
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder High Yield Tax Free Fund Scudder International Value Fund
Scudder California Tax Free Fund** Scudder International Growth and
Scudder Massachusetts Limited Term Income Fund
Tax Free Fund** Scudder International Fund++
Scudder Massachusetts Tax Free Fund** Scudder International Growth Fund
Scudder New York Tax Free Fund** Scudder Global Discovery Fund***
Scudder Ohio Tax Free Fund** Scudder Emerging Markets Growth Fund
Scudder Gold Fund
U.S. Income
Scudder Short Term Bond Fund Regional
Scudder GNMA Fund Scudder Greater Europe Growth Fund
Scudder Income Fund Scudder Pacific Opportunities Fund
Scudder Corporate Bond Fund Scudder Latin America Fund
Scudder High Yield Bond Fund The Japan Fund, Inc.
Global Income Industry Sector Funds
Scudder Global Bond Fund Choice Series
Scudder International Bond Fund Scudder Financial Services Fund
Scudder Emerging Markets Income Fund Scudder Health Care Fund
Scudder Technology Fund
Asset Allocation
Scudder Pathway Conservative Portfolio Preferred Series
Scudder Pathway Balanced Portfolio Scudder Tax Managed Growth Fund
Scudder Pathway Growth Portfolio Scudder Tax Managed Small Company 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
Scudder Real Estate Investment Fund
</TABLE>
36
<PAGE>
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
--------------------------------------------------------------------------------
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
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Closed-End Funds#
-----------------------------------------------------------------------------------------
<S> <C>
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>
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money.
+++ Funds within categories are listed in order from expected least
risk to most risk. Certain Scudder funds or classes thereof may
not be available for purchase or exchange.
+ A portion of the income from the tax-free funds may be subject to
federal, state, and local taxes.
* A class of shares of the fund.
** Not available in all states.
*** Only the Scudder Shares of the fund are part of the Scudder Family
of Funds.
++ Only the International Shares of the fund are part of the Scudder
Family of Funds.
+++ +++ A no-load variable annuity contract provided by Charter National
Life Insurance Company and its affiliate, offered by Scudder
Kemper Investment's insurance agencies, 1-800-225-2470.
+++ +++ +++ A no-load variable annuity contract issued by Glenbrook Life and
Annuity Company and underwritten by Allstate Financial Services,
Inc., sold by Scudder Kemper Investment'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.
37
<PAGE>
Scudder Solutions
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
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- Scudder Automated Information Line: SAIL(TM) --
clock electronic 1-800-343-2890
account
service and Personalized account information, the ability to exchange
information, or redeem shares, and information on other Scudder funds
including some and services via touchtone telephone.
transactions
Scudder's Web Site -- www.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 your need them. Scudder's site also
provides news about Scudder funds, retirement planning
information, and more.
38
<PAGE>
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Retirees and Automatic Withdrawal Plan
those who depend
on investment You designate the bank account, determine the schedule (as
proceeds for frequently as once a month) and amount of the redemptions,
living expenses and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into the
automated bank account you designate within three business days after
withdrawal 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 Call a Scudder representative at
information about 1-800-SCUDDER
these services
Or visit our Web site at
www.scudder.com
Please address The Scudder Funds
all written PO Box 2291
correspondence Boston, Massachusetts
to 02107-2291
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.
RT010400
10-6-40
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
