Scudder
International
Fund
Annual Report
March 31, 1995
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
o A fund offering opportunities for long-term growth of capital primarily from
foreign equity securities.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
<PAGE>
SCUDDER INTERNATIONAL FUND
CONTENTS
2 Highlights
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
18 Financial Statements
21 Financial Highlights
22 Notes to Financial Statements
28 Report of Independent Accountants
29 Tax Information
29 Officers and Directors
30 Investment Products and Services
31 How to Contact Scudder
HIGHLIGHTS
o The Fund produced a -2.02% total return for the 12 months ended March 31,
1995, in an environment of periodic but significant market volatility.
o During the year, the Fund increased exposure to economically sensitive
companies in several countries in light of continued global growth.
o The Fund added to investments in energy stocks in anticipation of increased
worldwide demand for oil and other energy sources.
o Holdings of gold and other metals-related stocks were also increased during
the year.
2
<PAGE>
LETTER FROM THE FUND'S CHAIRMAN
Dear Shareholders,
Investors' concerns over the prospect of inflationary economic growth
abated in recent months, after creating so much turmoil in the world's
investment markets in 1994. However, most international markets have been
sluggish or declining in local currency terms for much of 1995 due to a variety
of economic and political disruptions. On the positive side, the continued
weakness of the U.S. dollar improved dollar-based returns in Japan and Europe,
where currencies generally grew stronger.
As of this writing, financial markets cannot seem to make up their
collective minds whether the current slowing pace of expansion is anything more
than a temporary disruption in the world growth cycle or the beginning of a
full-fledged recession. At this point, however, 1995 is on its way to becoming
the second full year of global economic expansion. Although interest rates
through the first quarter of 1995 are significantly higher than at this time
last year, the corporate sector continues to generate profits, thanks to
improved efficiencies and months of debt reduction.
As events in the world's economic and capital markets unfold, the
portfolio managers of Scudder International Fund will continue to seek long-term
capital appreciation through a diversified portfolio of foreign stocks believed
to offer attractive growth potential. If you have questions about your Fund or
your investments, please call a Scudder Investor Relations representative at
1-800-225-2470. Page 31 provides more information on how to contact Scudder.
Thank you for choosing Scudder International Fund to help meet your investment
needs.
Sincerely,
/s/Edmond D. Villani
Edmond D. Villani
Chairman,
Scudder International Fund
3
<PAGE>
Scudder International Fund
Performance Update as of March 31, 1995
-----------------------------------------------------------------
Growth of a $10,000 Investment
-----------------------------------------------------------------
Scudder International Fund
----------------------------------------
Total Return
Period Growth -------------
Ended of Average
3/31/95 $10,000 Cumulative Annual
--------- ------- ---------- -------
1 Year $ 9,798 -2.02% -2.02%
5 Year $13,333 33.33% 5.92%
10 Year $40,879 308.79% 15.12%
MSCI EAFE & Canada Index
--------------------------------------
Total Return
Period Growth -------------
Ended of Average
3/31/95 $10,000 Cumulative Annual
--------- ------- ---------- -------
1 Year $10,602 6.02% 6.02%
5 Year $13,559 35.59% 6.28%
10 Year $44,569 345.69% 16.11%
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Yearly periods ended March 31
Scudder International Fund
Year Amount
----------------------
85 10000
86 16417
87 23014
88 22905
89 26188
90 30660
91 31108
92 31164
93 34005
94 41722
95 40879
MSCI EAFE & Canada Index
Year Amount
----------------------
85 10000
86 17905
87 28574
88 33028
89 36876
90 32869
91 33671
92 31073
93 34491
94 42038
95 44569
The Morgan Stanley Capital International (MSCI) Europe, Australia,
the Far East (EAFE) & Canada Index is an unmanaged capitalization-
weighted measure of stock markets in Europe, Australia, the Far
East and Canada. Index return assume dividends reinvested net of
withholding tax and, unlike Fund returns, do not reflect any fees
or expenses.
-----------------------------------------------------------------
Returns and Per Share Information
-----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended March 31
-----------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
-------------------------------------------------------------------------------
Net Asset Value... $36.93 $44.05 $33.43 $34.79 $37.00 $34.69 $34.36 $35.69 $42.96 $39.72
Income Dividends.. $ .41 $ .49 $ .82 $ .13 $ .43 $ .74 $ -- $ .83 $ .69 $ --
Capital Gains
Distributions..... $ .13 $ 5.93 $ 9.39 $ 3.06 $ 3.15 $ 1.98 $ .40 $ .86 $ .09 $ 2.42
Fund Total
Return (%)........ 64.17 40.18 -.47 14.34 17.08 1.46 .18 9.12 22.69 -2.02
Index Total
Return (%)........ 79.06 59.59 15.60 1.64 -10.87 2.44 -7.73 10.99 21.87 6.02
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
4
<PAGE>
Portfolio Summary as of March 31, 1995
---------------------------------------------------------------------------
Geographical (Excludes 9% Cash Equivalents)
---------------------------------------------------------------------------
Europe 54% We increased the Fund's European
Japan 24% holdings with investments in
Pacific Basin 15% Germany and France, where economic
Latin America 4% growth has been robust.
Canada 3%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
--------------------------------------------------------------------------
Sectors (Excludes 9% Cash Equivalents)
--------------------------------------------------------------------------
Manufacturing 20%
Metals & Minerals 11%
Energy 10% The Fund's metals and minerals
Financial 10% holdings have increased in recent
Service Industries 7% months, given an environment of
Utilities 7% fluctuating currencies and the
Durables 6% perception of heightened investment
Consumer Staples 6% risk in capital markets.
Technology 6%
Other 17%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
--------------------------------------------------------------------------
Ten Largest Equity Holdings
--------------------------------------------------------------------------
1. SAP AG
German computer software manufacturer
2. Canon Inc.
Leading producer of visual image and information equipment in Japan
3. VEBA AG
Electric utility, distributor of oil and chemicals in Germany
4. Hitachi Ltd.
General electronics manufacturer in Japan
5. Brown, Boveri & Cie. AG
Manufacturer of electrical equipment in Switzerland
6. Outokumpu Oy
Metals and minerals in Finland
7. Lasmo PLC
Oil production and exploration in the United Kingdom
8. DDI Corp.
Long distance telephone and cellular operator in Japan
9. Carrefour
French hypermarket and food retailing
10. Saga Petroleum AS
Norwegian oil and gas exploration and production
The Fund's largest holdings, now predominantly European, reflect a
year-long shift away from Japanese investments.
For more complete details about the Fund's Investment Portfolio,
see page 10.
A monthly Investment Portfolio Summary is available upon request.
5
<PAGE>
SCUDDER INTERNATIONAL FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
The world economy grew during Scudder International Fund's fiscal year
ended March 31, 1995, but investment markets remained unsettled due to high and
rising interest rates, currency volatility, and other factors. The U.S. dollar
continued to decline against key currencies during the period, however,
providing positive dollar-based returns for several European and Asian markets.
In Switzerland, for example, a negative 3.8% local return translated into a
positive 11.8% for U.S. investors in the first quarter of 1995.
In this challenging 12-month period, Scudder International Fund's net asset
value (NAV) declined $3.24 to $39.72 as of March 31, 1995. During the year, the
Fund also distributed to shareholders $2.42 per share in capital gains, which,
combined with the change in NAV, resulted in a -2.02% total return. By
comparison, the 173 international funds tracked by Lipper Analytical Services
returned -1.70% for the 12 months through March 31, 1995. For more information
about Fund performance, including a comparison with the unmanaged Morgan Stanley
Capital International (MSCI) Europe, Australia, Far East (EAFE) and Canada
Index, please turn to page 4.
Investment Opportunities in European Markets
Despite a confluence of events that affected the financial markets to
varying degrees during the period, the Fund's overall investment strategy was
little changed. Our stance reflects a continued focus on longer-term
fundamentals and as such strives to avoid overreaction to short-term price
volatility. In our search for long-term capital growth, we emphasized
established global leaders in mature industries as well as companies benefiting
from improved economic activity around the world. Also, we continued to seek
investment opportunities in companies that have restructured to meet the
challenges of increased global competition.
Strong growth in the United States and some emerging economies has
translated into earnings improvements for many European export companies. These
cyclical companies have benefited from strong economic activity in other parts
of the world, even though demand for goods and services in Europe remained soft
for much of the year. Throughout the year, we added to the Fund's European
holdings to take advantage of the region's robust export-led recovery. As
indicated in the accompanying chart, the Fund's holdings in Germany, Sweden, the
Netherlands, and the United Kingdom were increased.
6
<PAGE>
Recent noteworthy European investments include Louis Vuitton
Moet-Hennessy, a well-known purveyor of French luxury goods. In our view, the
rising demand for luxury goods and champagne coupled with the positive effects
of global economic growth suggest strong earnings prospects for this company. In
Germany, our investment focus has shifted from basic chemical and automotive
stocks toward utilities stocks. Presently, utilities feature a secure earnings
base and solid long-term growth prospects as they expand into the attractive
German telecommunications market. Recent purchases in Germany include electric
utility Rheinisch-Westfaelisches Elektrizitaetswerk AG and Viag AG, a provider
of electrical power, natural gas services, and other products. Elsewhere in
Europe, we added Swiss pharmaceutical company Sandoz Ltd. and Swedish
telecommunications company L.M. Ericsson, a global leader in cellular
communications.
Geographic Distribution of Portfolio Holdings
Japan 33.8% 22.0%
United Kingdom 8.1% 10.6%
Switzerland 6.8% 5.6%
France 6.5% 6.4%
Hong Kong 4.9% 3.5%
Germany 3.3% 5.5%
Netherlands 2.7% 5.0%
Sweden 1.4% 3.4%
3/31/94
3/31/95
Represents investments in common stock as a percentage of the total portfolio.
7
<PAGE>
Fuel for the World Economy
During the year, we emphasized oil producers and other energy-related
companies. We expect demand for energy in coming months to mirror the gains in
worldwide economic activity, resulting in higher prices and higher profits for
oil producers. As we explained in our mid-year report to shareholders, some of
the energy demand has come from emerging economies, many of which are
experiencing sustained economic growth for the first time due to extensive
market reforms. Economic prosperity in Asia, Eastern Europe, and South America
will place new demands on the world's energy supplies and oil in particular.
Additions to the portfolio include Britain's British Petroleum and Enterprise
Oil, Canada's Imperial Oil, and France's Elf Aquitaine.
Strong Yen, Kobe Earthquake Dim Prospects in Japan
In our mid-year report, we explained that Japan was positioned to influence
greatly the pace and nature of the world's economic growth. If Japan truly opens
its economy to foreign competition, prices of Japanese goods and services could
be forced lower, contributing to a much-anticipated decline in the value of the
yen. Japanese investment capital, which has remained largely in Japan since the
late 1980s, may then flow out of Japan in pursuit of higher returns, which would
help stimulate other economies whose savings are less plentiful.
While we believe this economic and capital markets scenario is inevitable,
recent events in Japan have prompted us to rethink its timing. The Kobe
earthquake, for example, will keep Japanese capital at home in the near future
to finance the rebuilding of that crucial port city. Also, the continued
strength of the Japanese yen has imperiled Japan's fledgling economic recovery.
Continued economic weakness could reduce the near-term availability of global
investment capital. The strong yen (up 20% against the U.S. dollar in the first
quarter of 1995) has made Japanese exports substantially more expensive, eroding
the earnings of Japanese exporters. Already, the stronger yen and the effects of
the Kobe earthquake have produced an increase in corporate bankruptcies -- up
10% in March from a year earlier. As the outlook for Japan's economic recovery
dims, we are reducing the Fund's Japanese holdings. While Japan is still the
8
<PAGE>
Fund's largest single country position, some of the Fund's largest holdings at
the start of the period, such as Sony, Kamigumi, and Autobacs Seven, were
reduced or sold during the year. In hindsight, our partial hedge of the yen in
anticipation of dollar strengthening in 1994 detracted from investment
performance.
Scudder International Fund:
A Team Approach to Investing
Scudder International Fund is managed by a team of Scudder investment
professionals who each play 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 Scudder's large staff
of economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. We believe our
team approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.
Lead Portfolio Manager Carol L. Franklin joined Scudder International Fund's
portfolio management team in 1986 and has been responsible for setting the
Fund's investment strategy and overseeing security selection since 1992. Carol,
who has 18 years of experience in finance and investing, joined Scudder in 1981.
Nicholas Bratt, portfolio manager, directs Scudder's overall global equity
investment strategies. Nick joined Scudder and the team in 1976. Irene T. Cheng
joined Scudder and the team in 1993 as a portfolio manager, and has 11 years of
experience in finance and investing. Francisco S. Rodrigo III, portfolio
manager, joined Scudder and the team in 1994. Francisco has been involved with
investment in global and international stocks and bonds as a portfolio manager
and analyst since 1989. Joan R. Gregory, portfolio manager, focuses on stock
selection, a role she has played since she joined Scudder in 1992. Joan, who
joined the team in 1994, has been involved with investment in global and
international stocks since 1989.
Outlook
We expect overall global expansion to continue through 1995. The
implications are manifold, including an even greater demand for global capital,
continued currency pressures, and continued price volatility in global
investment markets. Historically, the global capital markets have brought
equilibrium to questions of currency and price inequity, although not without
jarring short-term results for investors.
Given potential market volatility, we have increased the Fund's
holdings of gold production companies. Gold typically gains additional luster in
an environment of fluctuating currencies and heightened market uncertainties.
Recent investments were made where we considered stock prices reasonable
--Barrick Gold and Hemlo Gold Mines in Canada, for example.
Where the potential for near-term instability exists, the potential for
investment opportunity is great. After months of negative returns, stock
valuations in parts of Asia and Latin America are very attractive in our
opinion. In Brazil, for example, we believe the stock market offers significant
upside potential for the balance of 1995 and beyond, as that country continues a
process of corporate restructuring, inflation containment, and privatization.
Through additions of mining, telecommunications, energy, and other stocks, we
increased the Fund's Brazilian holdings during the year to 2.7% of the
portfolio. In the coming months, we will continue to monitor political and
economic activity in Brazil and around the world to determine the potential
impact on Scudder International Fund's portfolio, while making the most of any
near-term investment opportunities. For the long-term investor, we believe the
Fund is well positioned for capital appreciation.
Sincerely,
Your Portfolio Management Team
/s/ Carol L. Franklin /s/ Nicholas Bratt
Carol L. Franklin Nicholas Bratt
/s/Irene T. Cheng /s/Joan R. Gregory
Irene T. Cheng Joan R. Gregory
/s/Francisco S. Rodrigo III
Francisco S. Rodrigo III
9
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL FUND
INVESTMENT PORTFOLIO as of March 31, 1995
---------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1.2% REPURCHASE AGREEMENTS
----------------------------------------------------------------------------------
26,530,000 Repurchase Agreement with Salomon
Brothers dated 3/31/95 at 6.2% to be
repurchased at $26,543,707 on 4/3/95,
collateralized by a $26,093,000
U.S. Treasury Note, 7.375%, 11/15/97
(Cost $26,530,000).................................... 26,530,000
-----------
8.2% COMMERCIAL PAPER
----------------------------------------------------------------------------------
30,000,000 Commercial Credit Corp., 5.95%, 4/12/95............... 29,945,458
30,605,000 Corporate Asset Funding Co., Inc., 5.97%, 5/1/95...... 30,452,740
40,000,000 Ford Motor Credit Corp., 6.01%, 5/16/95............... 39,699,500
45,000,000 New Center Asset Trust, 5.98%, 4/5/95................. 44,970,100
35,000,000 Seagram & Sons, Inc., 5.97%, 4/18/95.................. 34,901,329
-----------
TOTAL COMMERCIAL PAPER (Cost $179,969,127)............ 179,969,127
-----------
1.1% CONVERTIBLE BONDS
----------------------------------------------------------------------------------
8,300,000 Henderson Land Development Co., Ltd.,
4%, 10/27/96......................................... 8,113,250
5,000,000 Ssangyong Cement Industrial Co., Ltd.,
3%, 12/31/05......................................... 5,912,500
4,000,000 Tong Yang Nylon, 3.25%, 12/31/05...................... 4,800,000
7,000,000 International Container Terminal Services,
Inc., 5%, 9/15/01.................................... 5,040,000
-----------
TOTAL CONVERTIBLE BONDS (Cost $24,097,542)............ 23,865,750
-----------
3.3% PREFERRED STOCKS
----------------------------------------------------------------------------------
Shares
----------------------------------------------------------------------------------
GERMANY 70,000 Rheinisch-Westfaelisches Elektrizitaetswerk
AG (Electric utility)................................ 18,612,423
70,000 SAP AG (Computer software manufacturer)............... 54,515,074
-----------
TOTAL PREFERRED STOCKS (Cost $31,952,714)............. 73,127,497
-----------
86.2% COMMON STOCKS
----------------------------------------------------------------------------------
ARGENTINA 0.7% 785,000 YPF SA "D" (ADR) (Petroleum company).................. 14,915,000
-----------
AUSTRALIA 2.3% 6,184,644 Ampol Exploration Ltd. (Oil and gas exploration
company)............................................. 15,776,043
709,100 Broken Hill Proprietary Co. Ltd. (Petroleum,
minerals and steel).................................. 9,283,101
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
---------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
700,000 CRA Ltd. (Mining, manufacturing
and development).................................... 9,112,659
1,608,698 Coca Cola Amatil Ltd. (Soft drink bottler
and distributor).................................... 9,787,161
196,067 M.I.M. Holdings Ltd. (Nonferrous metals
and coal)........................................... 268,751
780,000 Poseidon Gold Ltd. (Growing gold producer) 1,423,633
1,480,100 Woodside Petroleum Ltd. (Major oil and
gas company)........................................ 5,880,232
-----------
51,531,580
-----------
BRAZIL 2.7% 36,226,227 Centrais Eletricas Brasileiras S/A "B" (pfd.)
(Electric utility).................................. 6,930,936
14,000,000 Companhia Cervejaria Brahma (pfd.) (Leading
beer producer and distributor)*..................... 3,348,320
152,060,000 Companhia Vale do Rio Doce (pfd.) (Diverse
mining and industrial complex)*..................... 20,466,363
170,000,000 Lojas Americanas S.A. (pfd.) (Discount
department store chain)............................. 3,214,683
68,000,000 Petroleo Brasileiro S/A (pfd.)
(Petroleum company)................................. 4,727,475
300,000,000 Telecomunicacoes Brasileiras S.A. (pfd.)
(Telecommunication services)........................ 8,075,640
10,499,200,000 Usinas Siderurgicas de Minas Gerais S/A (pfd.)
(Non-coated flat products and electrolytic
galvanized products)................................ 12,029,117
-----------
58,792,534
-----------
CANADA 2.8% 635,000 Barrick Gold Corp. (Gold exploration and
production in North and South America).............. 15,927,310
225,000 Canadian Pacific Ltd. (Transportation
and resource conglomerate).......................... 3,375,000
700,000 Canadian Pacific Ltd. (Ord.)......................... 10,444,587
200,000 Hemlo Gold Mines, Inc. (Large gold producer,
with single mine in Ontario; active
exploration company)................................ 2,037,097
500,000 Imperial Oil Ltd. (Producer and refiner of
natural gas and petroleum products in Canada)....... 17,779,922
325,000 Magna International, Inc. "A" (Manufacturer
of automotive parts)................................ 12,390,625
-----------
61,954,541
-----------
FINLAND 2.9% 450,000 Metsa-Serla Oy "B" (Tissue paper producer)........... 16,554,031
150,000 Nokia AB Oy (Preference) (Leading
manufacturer of cellular telephones)................ 21,863,815
1,678,000 Outokumpu Oy "A" (Metals and minerals)*.............. 24,963,017
-----------
63,380,863
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL FUND
---------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANCE 6.4% 47,800 Carrefour (Hypermarket and food retailing)........... 24,083,884
81,056 Castorama-Dubois Investissements
(Retailer, wholesaler and distributor).............. 13,264,935
88,000 LVMH Moet-Hennessy Louis Vuitton
(Producer of wine, spirits and luxury products)..... 17,255,978
470,000 Michelin "B" (Leading tire manufacturer)* ........... 20,221,044
261,828 Societe Nationale Elf Aquitaine
(Petroleum company)................................. 20,482,365
344,040 Total SA "B" (International oil and gas
exploration, development and production) ........... 20,517,919
93,000 Union des Assurances Federales SA
(Insurance group)* ................................. 9,669,370
289,028 Valeo SA (Automobile and truck components)........... 15,596,333
-----------
141,091,828
-----------
GERMANY 5.5% 80,000 Bayer AG (Leading chemical producer)................. 19,632,401
37,191 Deutsche Bank AG (Bank).............................. 17,548,532
682 Deutsche Bank AG Warrants (expire 6/30/95)*.......... 44,096
5,620 Deutsche Bank AG Warrants (expire 6/30/97)*.......... 133,508
71,162 Mannesmann AG (Bearer) (Diversified
construction and technology company)................ 18,326,865
24,300 Schering AG (Pharmaceutical and
chemical producer) ................................. 17,918,271
81,650 VEBA AG (Electric utility, distributor of oil
and chemicals)...................................... 29,510,262
51,000 Viag AG (Provider of electrical power
and natural gas services, aluminum
products, chemicals, ceramics and glass) ........... 18,265,892
-----------
121,379,827
-----------
GREECE 0.2% 236,069 Delta Dairy SA (Food producer and distributor)....... 4,671,538
-----------
HONG KONG 3.5% 2,731,500 Cheung Kong Holdings Ltd.
(Real estate company)............................... 11,869,943
2,822,400 China Light & Power Co., Ltd. (Electric utility)..... 13,688,567
1,718,844 HSBC Holdings Ltd. (Bank)............................ 19,395,905
6,982,229 Hong Kong & China Gas Co., Ltd. (Gas utility)........ 12,461,816
4,213,584 Hutchison Whampoa, Ltd. (Container
terminal and real estate company)................... 18,582,930
-----------
75,999,161
-----------
HUNGARY 0.2% 3,619 First Hungary Fund (Investment company) (d).......... 3,485,097
-----------
INDIA 0.5% 2,110,000 The India Fund (Investment company)*................. 11,897,532
-----------
INDONESIA 0.9% 1,690,000 Gadjah Tunggal (Tire manufacturer)................... 1,812,332
800,000 Indocement Tunggal (Foreign registered)
(Cement producer)................................... 2,520,107
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
---------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
82,000 Kalbe Farma (Pharmaceutical producer
and distributor).................................... 314,187
3,369,600 Kalbe Farma (Foreign registered)..................... 12,910,777
952,000 Sinar Mas Agro Resource and Technology
Corp. (Producer of edible oils)..................... 1,031,546
----------
18,588,949
----------
ITALY 0.9% 6,500,000 Istituto Nazionale delle Assicurazione
(Insurance company)................................. 7,739,932
5,050,000 Societa Finanziaria Telefonica Torino SpA
(Telephone utility and telecommunication
equipment manufacturer)............................. 12,989,390
----------
20,729,322
----------
JAPAN 22.0% 1,933,000 Canon Inc. (Leading producer of visual
image and information equipment).................... 31,863,862
2,800 DDI Corp. (Long distance telephone and
cellular operator).................................. 24,207,493
1,950,000 Fujitsu Ltd. (Leading manufacturer of computers)..... 19,443,804
2,776,000 Hitachi Ltd. (General electronics manufacturer)...... 28,800,000
1,800,000 Hitachi Metals, Ltd. (Major producer of high
quality specialty steels)........................... 22,409,222
250,000 Horipro Inc. (Growing entertainment
production company)................................. 4,899,135
318,000 Ito-Yokado Co., Ltd. (Leading
supermarket operator)............................... 15,762,536
2,550,000 Itochu Corp. (Leading general trading company)....... 15,579,251
65,000 Japan Associated Finance Co. (Venture
capital company).................................... 8,017,291
2,200,000 Kawasaki Steel Corp. (Major integrated
steelmaker)*........................................ 8,647,839
192,000 Keyence Corp. (Specialized manufacturer
of sensors) ........................................ 20,207,032
297,000 Kyocera Corp. (Leading ceramic package
manufacturer)....................................... 22,116,657
340,000 Mabuchi Motor Co., Ltd. (Manufacturer
of DC motors)....................................... 22,927,954
1,216,000 Matsushita Electrical Industrial Co., Ltd.
(Consumer electronic products manufacturer)......... 19,624,207
1,965,000 NGK Spark Plug Co., Ltd. (Leading
manufacturer of automotive spark plugs)............. 23,557,349
2,700,000 NSK Ltd. (Leading manufacturer of bearings
and other machinery parts).......................... 19,234,582
284,900 Nichiei Co., Ltd. (Finance company for small
and medium-sized firms)............................. 16,749,164
1,231,000 Nippon Shokubai Corp., Ltd. (Specialty
chemical producer).................................. 12,118,432
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL FUND
---------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4,150,000 Nisshin Steel Co., Ltd. (Blast furnace
steelmaker)......................................... 18,657,061
430,000 Pioneer Electronics Corp. (Leading
manufacturer of audio equipment).................... 8,674,352
300,000 SMC Corp. (Leading maker of pneumatic
equipment).......................................... 14,870,317
160,000 Secom Co., Ltd. (Electronic security
system operator).................................... 9,867,435
1,700,000 ShinMaywa Industries, Ltd. (Leading maker of
dump trucks and other specialty vehicles)........... 15,461,671
430,000 Sony Corp. (Consumer electronic products
manufacturer)....................................... 21,561,960
1,450,000 Sumitomo Corp. (Leading general trading
company, with offices, subsidiaries and
affiliates throughout the world).................... 13,204,611
1,540,000 Sumitomo Electric Industries, Ltd. (Leading
manufacturer of electric wires and cables).......... 19,882,421
5,900,000 Sumitomo Metal Industries, Ltd. (Leading
integrated crude steel producer)*................... 18,091,066
178,000 Suzuki Motor Corp. (Leading minicar and
motorcycle producer)................................ 1,906,190
120,000 Tsutsumi Jewelry Co., Ltd. (Manufacturer,
wholesaler and retailer of jewelry)................. 7,303,746
-----------
485,646,640
-----------
KOREA 1.8% 250 units(c) Korea 1990 Trust IDR (Investment company)*........... 1,125,000
585 units(c) Korea Asia Fund IDR (Investment company)* ........... 5,850,000
190 units(c) Korea Equity Trust IDR (Investment company)*......... 2,137,500
257,668 Korea Long Term Credit Bank (New (e))
(Major commercial bank)............................. 7,975,994
21,000 Korea Trust (Investment company)* (b)................ 1,270,500
75,000 Pohang Iron & Steel Co., Ltd. (ADR)
(Leading producer of steel products for
construction and shipbuilding industries)........... 2,165,625
4,398 Samsung Electronics Co., Ltd. (GDR)
(Major electronics manufacturer) (New (e)) (d)...... 285,474
251,639 Samsung Electronics Co., Ltd. (GDS).................. 11,197,936
49,780 Samsung Electronics Co., Ltd. (New (e)) (d).......... 2,168,132
22,221 Samsung Electronics Co., Ltd. (GDR).................. 1,444,365
95,917 Samsung Heavy Industries Co., Ltd.
(Machinery manufacturer)............................ 3,602,633
12,527 Samsung Heavy Industries Co., Ltd. (New (e)) (d)..... 469,513
-----------
39,692,672
-----------
MALAYSIA 1.7% 2,550,000 Malayan Banking Bhd. (Leading banking
and financial services group)....................... 17,228,368
320 Malaysian Helicopter Bhd. (Aviation
transport services)................................. 566
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
---------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
6,035,800 Technology Resources Industries (Mobile
telephone operator)*................................ 17,289,431
750,000 Westmont Bhd. (Conglomerate: construction
and repair of ships and offshore oil platforms,
power transmission, garment manufacturing,
marketing services)................................. 3,763,335
-----------
38,281,700
-----------
NETHERLANDS 5.0% 249,200 AEGON Insurance Group NV
(Insurance company)................................. 17,755,807
120,000 Akzo-Nobel NV (Chemical producer).................... 13,121,128
1,676,000 Elsevier NV (International publisher of
scientific, professional, business, and
consumer information books)......................... 17,618,911
140,000 Heineken Holdings NV "A" (Brewery)*.................. 21,803,655
670,000 Philips N.V. (Leading manufacturer of electrical
equipment).......................................... 22,782,224
229,963 Wolters Kluwer CVA (Publisher)....................... 17,713,269
-----------
110,794,994
-----------
NEW ZEALAND 1.0% 9,957,171 Carter Holt Harvey Ltd. (Resource
conglomerate)....................................... 22,184,771
-----------
NORWAY 1.1% 1,823,200 Saga Petroleum AS "A" (Oil and gas
exploration and production)......................... 23,961,141
-----------
PHILIPPINES 0.5% 4 Philippine Long Distance Telephone Co. (ADR)
(Telecommunication services)........................ 242
2,393,020 San Miguel Corp. "B" (Brewery)....................... 10,735,558
-----------
10,735,800
-----------
SINGAPORE 0.4% 1,184,100 Sembawang Corp. (Ship repair and maritime
services group)..................................... 8,221,169
-----------
SPAIN 3.5% 198,000 Acerinox, S.A (Stainless steel producer)............. 19,059,306
97,600 Banco Popular Espanol, S.A. (Retail bank)............ 12,629,197
431,000 Compania Telefonica Nacional de Espana
SA (ADR) (Telecommunication services)............... 16,162,500
225,700 Empresa Nacional de Electricidad SA
(Electric utility) ................................. 9,616,286
163,300 Repsol SA (Integrated oil company)................... 4,625,543
513,000 Repsol SA (ADR)...................................... 14,877,000
-----------
76,969,832
-----------
SWEDEN 3.4% 798,100 Astra AB "A" (Free) (Pharmaceutical company)......... 21,142,613
350,000 L.M. Ericsson Telephone Co. "B" (ADR)
(Leading manufacturer of cellular
telephone equipment)*............................... 21,634,375
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL FUND
---------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
330,000 Mo och Domsjo AB "B" (Free)
(Manufacturer of newsprint, paperboard,
and various sawn timber products)*.................. 14,808,031
1,000,000 Volvo AB "B" (Free) (Automobile manufacturer)*....... 17,232,785
-----------
74,817,804
-----------
SWITZERLAND 5.6% 34,000 Alusuisse-Lonza Holdings AG (Registered)
(Manufacturer of aluminum, chemicals,
and paper packaging products)*...................... 18,433,554
27,610 Brown, Boveri & Cie. AG (Bearer)
(Manufacturer of electrical equipment).............. 26,232,547
19,850 Holderbank Financiere Glaris AG (Bearer)
(Cement company).................................... 14,512,848
17,737 Nestle SA (Registered) (Food manufacturer)........... 17,306,300
14,490 SGS Holdings SA (Bearer) (Trade
inspection company)................................. 22,838,543
20,000 Sandoz Ltd. AG (Registered) (Pharmaceutical
company)............................................ 12,891,832
34,563 Swiss Bank Corp. (Bearer) (Switzerland's
second largest universal bank)...................... 11,383,664
1,000 Swiss Bank Corp. (Bearer) Warrants
(expire 6/30/95)*................................... 13,907
1,501 Swiss Bank Corp. (Bearer) Warrants
(expire 6/30/98)*................................... 18,887
-----------
123,632,082
-----------
THAILAND 0.1% 154,900 American Standard Sanitaryware
(Foreign registered) (Manufacturer of
bathroom fixtures).................................. 2,579,046
-----------
UNITED KINGDOM 10.6% 3,100,000 British Gas PLC (Integrated gas utility)............. 14,365,572
2,250,000 British Petroleum PLC (Major integrated
world oil company).................................. 15,603,480
2,688,800 Cable and Wireless PLC (International
telecommunication services in the United
Kingdom and Hong Kong).............................. 16,816,709
1,520,000 Carlton Communications PLC (Television
post production products and services).............. 22,609,006
2,500,000 Enterprise Oil PLC (Oil and gas exploration
and production)..................................... 15,838,424
3,737,620 Hanson PLC (Industrial management company)........... 14,080,345
9,494,993 Lasmo PLC (Oil production and exploration)........... 24,615,566
1,250,000 Midlands Electricity PLC (Electric companies)........ 12,334,527
2,386,700 PowerGen PLC (Electric utility)...................... 17,866,316
1,658,881 RTZ Corp. PLC (Mining and finance company)........... 21,610,583
2,689,600 Reuters Holdings PLC (International
news agency)........................................ 20,678,503
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
-----------------------------------------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE ($)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
2,245,704 SmithKline Beecham "A" (Manufacturer of
ethical drugs and healthcare products).............. 17,429,431
1,243,600 Waste Management International PLC
(Waste collection and disposal services)*........... 5,077,810
1,075,000 Zeneca Group PLC (Holding company:
manufacturing and marketing of
pharmaceutical and agrochemical
products and specialty chemicals)................... 15,206,102
-------------
234,132,374
-------------
TOTAL COMMON STOCKS (Cost $1,715,423,566)........... 1,900,067,797
-------------
=====================================================================================================
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $1,977,972,949) (a).......................... 2,203,560,171
=============
<FN>
(a) The cost for federal income tax purposes was $1,998,882,334. At March 31, 1995,
net unrealized appreciation for all securities based on tax cost was $204,677,837.
This consisted of aggregate gross unrealized appreciation for all securities
in which there was an excess of market value over tax cost of $323,082,414
and aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over market value of $118,404,577.
(b) Security trades in units; however, equivalent shares are represented in the portfolio.
(c) 500 shares = 1 IDR unit (International Depository Receipt) for Korea Asia Fund.
1,000 shares = 1 IDR unit for Korea 1990 Trust and Korea Equity Trust.
(d) Securities valued in good faith by the Valuation Committee of the Board of
Directors. The cost of these securities at March 31, 1995 aggregated $5,556,636.
See Note A of the Notes to Financial Statements.
(e) New shares issued during 1995, eligible for a pro rata share of 1995 dividends.
* Non-income producing security.
Sector breakdown of the Fund's equity securities is noted on page 5.
</FN>
Transactions in written put options during the year ended March 31, 1995 were:
<CAPTION>
PREMIUMS
NUMBER OF CONTRACTS RECEIVED ($)
----------------------------------------
<S> <C> <C>
Outstanding at
March 31, 1994 375,000 1,190,609
Contracts expired (375,000) (1,190,609)
----------------------------------------
Outstanding at
March 31, 1995 -- --
======== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL FUND
FINANCIAL STATEMENTS
-------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
-------------------------------------------------------------------------------------------
MARCH 31, 1995
-------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $1,977,972,949)
(Note A)................................................... $2,203,560,171
Cash......................................................... 103
Foreign currency holdings, at market (identified cost
$5,499,776) (Note A)....................................... 5,594,146
Forward foreign currency exchange contracts to buy,
at market (contract cost $29,642,661)
(Notes A and D)............................................ 29,760,745
Receivable on forward foreign currency exchange
contracts to sell (Notes A and D).......................... 31,752,317
Other receivables:
Investments sold........................................... 32,093,979
Fund shares sold........................................... 3,929,293
Dividends and interest..................................... 6,892,746
Foreign taxes recoverable.................................. 3,564,863
--------------
Total assets............................................. 2,317,148,363
LIABILITIES
Payables:
Investments purchased...................................... $34,039,188
Fund shares redeemed....................................... 1,780,408
Accrued management fee (Note C)............................ 1,490,958
Other accrued expenses (Note C)............................ 1,170,002
Payable on closed forward foreign currency
exchange contracts (Note A)............................. 24,772,197
Forward foreign currency exchange contracts to buy
(Notes A and D).......................................... 29,642,661
Forward foreign currency exchange contracts to sell,
at market (contract cost $31,752,317)
(Notes A and D).......................................... 32,093,979
-----------
Total liabilities........................................ 124,989,393
--------------
Net assets, at market value.................................. $2,192,158,970
==============
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net
investment income........................................ $ (20,685,063)
Unrealized appreciation on:
Investments.............................................. 225,587,222
Foreign currency related transactions.................... 608,219
Accumulated net realized loss.............................. (878,845)
Capital stock.............................................. 551,836
Additional paid-in capital................................. 1,986,975,601
--------------
Net assets, at market value.................................. $2,192,158,970
==============
NET ASSET VALUE, offering and redemption price per share
($2,192,158,970 / 55,183,581 shares of capital
stock outstanding, $.01 par value, 100,000,000
shares authorized)......................................... $39.72
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
---------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
---------------------------------------------------------------------------------------------
YEAR ENDED MARCH 31, 1995
---------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld of $3,842,703)....... $ 28,663,740
Interest (net of foreign taxes withheld of $156,772).......... 9,707,973
-------------
38,371,713
Expenses:
Management fee (Note C)....................................... $ 19,032,146
Services to shareholders (Note C)............................. 3,681,903
Directors' fees (Note C)...................................... 61,500
Custodian fees................................................ 2,899,938
Reports to shareholders....................................... 767,069
Auditing...................................................... 147,101
Legal......................................................... 62,517
Other......................................................... 596,157 27,248,331
-----------------------------
Net investment income......................................... 11,123,382
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments................................................. 72,987,478
Options..................................................... 425,233
Foreign currency related transactions....................... (26,032,238) 47,380,473
-------------
Net unrealized appreciation (depreciation)
during the period on:
Investments................................................. (123,780,558)
Written options............................................. 454,754
Foreign currency related transactions....................... 12,616,307 (110,709,497)
-----------------------------
Net loss on investment transactions........................... (63,329,024)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.......... $ (52,205,642)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
<TABLE>
SCUDDER INTERNATIONAL FUND
------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income............................ $ 11,123,382 $ 13,085,309
Net realized gain from investment
transactions................................... 47,380,473 85,909,114
Net unrealized appreciation (depreciation) on
investment transactions during the period...... (110,709,497) 206,203,647
-------------- --------------
Net increase (decrease) in net assets
resulting from operations...................... (52,205,642) 305,198,070
-------------- --------------
Distributions to shareholders:
From net investment income ($.63 per share)...... -- (25,672,105)
-------------- --------------
In excess of net investment income ($.06 per
share)......................................... -- (2,685,200)
-------------- --------------
From net realized gains ($2.42 and $.09 per
share, respectively)........................... (129,363,905) (4,116,057)
-------------- --------------
Fund share transactions:
Proceeds from shares sold........................ 718,118,586 1,265,991,777
Net asset value of shares issued to shareholders
in reinvestment of distributions............... 121,144,225 29,236,041
Cost of shares redeemed.......................... (663,875,447) (549,728,090)
-------------- --------------
Net increase in net assets from Fund share
transactions................................... 175,387,364 745,499,728
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS................ (6,182,183) 1,018,224,436
Net assets at beginning of period................ 2,198,341,153 1,180,116,717
-------------- --------------
NET ASSETS AT END OF PERIOD (including
accumulated distributions in excess
of net investment income of
$20,685,063 and $8,283,579, respectively)...... $2,192,158,970 $2,198,341,153
============== ==============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period........ 51,177,699 33,066,860
-------------- --------------
Shares sold...................................... 16,848,858 30,640,577
Shares issued to shareholders in
reinvestment of distributions.................. 2,949,426 712,983
Shares redeemed.................................. (15,792,402) (13,242,721)
-------------- --------------
Net increase in Fund shares...................... 4,005,882 18,110,839
-------------- --------------
Shares outstanding at end of period.............. 55,183,581 51,177,699
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
---------------------------------------------------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout each period (a) and other
performance information derived from the financial statements.
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period........ $42.96 $35.69 $34.36 $34.69 $37.00 $34.79 $33.43 $44.05 $36.93 $23.03
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income................... .21 .31 .38 .44 .80 .49 .40 .45 .47 .74
Net realized and
unrealized gain (loss)
on investment
transactions............. (1.03) 7.74 2.64 (.37) (.39) 5.30 4.15 (.86) 13.07 13.70
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations................. (.82) 8.05 3.02 .07 .41 5.79 4.55 (.41) 13.54 14.44
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
From net investment
income................... -- (.63) (.83) -- (.74) (.43) (.13) (.82) (.49) (.41)
In excess of net
investment income........ -- (.06) -- -- -- -- -- -- -- --
From net realized gains
on investment
transactions............. (2.42) (.09) (.86) (.40) (1.98) (3.15) (3.06) (9.39) (5.93) (.13)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions.......... (2.42) (.78) (1.69) (.40) (2.72) (3.58) (3.19) (10.21) (6.42) (.54)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period.............. $39.72 $42.96 $35.69 $34.36 $34.69 $37.00 $34.79 $33.43 $44.05 $36.93
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%)............. (2.02) 22.69 9.12 .18 1.46 17.08 14.34 (.47) 40.18 64.17
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of period
($ millions)............... 2,192 2,198 1,180 933 929 783 550 559 791 597
Ratio of operating
expenses to average
net assets (%)............. 1.19 1.21 1.26 1.30 1.24 1.18 1.22 1.21 1.09 .99
Ratio of net investment
income to average
net assets (%)............. .48 .75 1.13 1.25 2.22 1.33 1.20 1.16 1.19 2.60
Portfolio turnover rate (%).. 46.3 39.9 29.2 50.4 70.1 49.4 48.3 54.8 66.5 36.0
<FN>
(a) Based on monthly average shares outstanding during the period.
</FN>
</TABLE>
21
<PAGE>
SCUDDER INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
Scudder International Fund (the "Fund") is a diversified series of Scudder
International Fund, Inc. (the "Corporation"). The Corporation is organized as a
Maryland corporation and is registered under the Investment Company Act of
1940, as amended, as an open-end, management investment company. The policies
described below are followed consistently by the Fund in the preparation of its
financial statements in conformity with generally accepted accounting
principles.
SECURITY VALUATION. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the National Association of
Securities Dealers Automatic Quotation ("NASDAQ") System, for which there have
been sales, are valued at the most recent sale price reported on such system.
If there are no such sales, the value is the high or "inside" bid quotation.
Securities which are not quoted on the NASDAQ System but are traded in another
over-the-counter market are valued at the most recent sale price on such market.
If no sale occurred, the security is then valued at the calculated mean between
the most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a 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. Securities valued in good
faith by the Valuation Committee of the Board of Directors at fair value
amounted to $6,408,216 (.29% of net assets) and have been noted in the
investment portfolio as of March 31, 1995.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OPTIONS. The Fund may write (sell) exchange-listed and over-the-counter call
and put options on securities, securities indices, currencies and other
financial instruments. When the Fund writes a call, it gives the purchaser of
the call option the right to buy the underlying security or currency at the
price specified in the option (the "exercise price") at any time during the
option period, generally ranging up to nine months. When the Fund writes a put
option, it gives the purchaser of the put option the right to sell the
underlying security or currency to the Fund at the exercise price at any time
during the option period, generally ranging up to nine months.
If the option expires unexercised, the Fund will realize income, in the form of
a capital gain, to the extent of the amount received for the option (the
"premium"). If the option is exercised, a decision over which the Fund has no
control, the Fund must sell the underlying security or currency to the option
holder or purchase the underlying security or currency from the option holder
at the exercise price. Certain options, including options on indices will
require cash settlement by the Fund if the option is exercised. By writing a
call option, the Fund foregoes, in exchange for the premium less the commission
("net premium"), the opportunity to profit during the option period from
increase in the market value of the underlying security or currency above
the exercise price. By writing a put option, the Fund, in exchange for the net
premium received, accepts the risk of a decline in the market value of the
underlying security or currency below the exercise price.
The liability representing the Fund's obligation under an exchange traded
written call or put option is valued at the last sale price or, in the absence
of a sale, the mean between the closing bid and asked quotations or at the
most recent asked quotation if no bid and asked quotations are available.
Over-the-counter written options are valued at the most recent asked quotation.
In addition, the Fund may purchase, singly and in combination, call and put
options on securities, securities indices, currencies and other financial
instruments. Exchange traded purchased options are valued at the last sales
price or, in the absence of a sale, the mean between the closing bid and
asked quotations or at the most recent bid quotation if no bid and asked
quotations are available. Over-the-counter purchased options are valued at the
most recent bid quotation.
23
<PAGE>
SCUDDER INTERNATIONAL FUND
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement and the underlying collateral, is equal to at least 100.5% of the
resale price.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. In connection with portfolio
purchases and sales of securities denominated in a foreign currency, the Fund
may enter into forward foreign currency exchange contracts ("contracts").
Additionally, the Fund may enter into contracts to hedge certain other foreign
currency denominated assets. Contracts are recorded at market value. In
addition to hedging its purchases and sales of securities during the period,
the Fund entered into yen forward exchange contracts to hedge a portion of the
Fund's Japanese yen exposure. These contracts were closed out prior to the year
end of the Fund. Certain risks may arise upon entering into these contracts
from the potential inability of counterparties to meet the terms of their
contracts. Realized and unrealized gains and losses arising from such
transactions are included in net realized and unrealized gain (loss) from
foreign currency related transactions. Purchases and sales of forward foreign
currency exchange contracts having the same settlement date and broker are
offset and any realized gain (loss) is recognized on the date of offset,
otherwise gain (loss) is recognized on the settlement date.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and other
liabilities at the daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on
the respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes
in market prices of the investments. Such fluctuations are included with the
net realized and unrealized gains and losses from investments.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements
of the Internal Revenue Code which are applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders. The
Fund paid no federal income taxes and no federal income tax provision was
required.
From November 1, 1994 through March 31, 1995, the Fund incurred approximately
$1,139,000 of net realized capital losses. As permitted by tax regulations,
the Fund intends to elect to defer these losses and treat them as arising in
the fiscal year ended March 31, 1996.
DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax. 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 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 generally accepted accounting principles. The
differences primarily relate to investments in forward contracts, passive
foreign investment companies, foreign denominated investments, and certain
securities sold at a loss. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. Accordingly, the
Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
25
<PAGE>
SCUDDER INTERNATIONAL FUND
--------------------------------------------------------------------------------
OTHER. Investment security transactions are accounted for on a trade date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. PURCHASES AND SALES OF SECURITIES
--------------------------------------------------------------------------------
For the year ended March 31, 1995, purchases and sales of investment securities
(excluding short-term investments) aggregated $1,002,136,957 and $1,087,018,726,
respectively.
C. RELATED PARTIES
--------------------------------------------------------------------------------
On September 8, 1994, the Fund's Board of Directors approved a new Investment
Management Agreement (the "Management Agreement") with Scudder, Stevens & Clark,
Inc. (the "Adviser"), the Adviser directs the investments of the Fund in
accordance with its investment objective, policies, and restrictions. The
Adviser determines the securities, instruments, and other contracts relating to
investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Management Agreement. The management fee
payable under the Management Agreement is equal to an annual rate of 0.90% on
the first $500,000,000 of the Fund's average daily net assets, 0.85% on the next
$500,000,000, 0.80% on the next $1,000,000,000, and 0.75% of such net assets in
excess of $2,000,000,000, computed and accrued daily and payable monthly. Under
the Investment Management Agreement between the Fund and the Adviser which was
in effect prior to September 8, 1994 (the "Agreement"), the Fund agreed to pay
the Adviser an annual rate of 1% on the first $200,000,000 of the Fund's average
daily net assets, 0.90% on the next $200,000,000, 0.85% on the next
$400,000,000, and 0.80% of such net assets in excess of $800,000,000, computed
and accrued daily and payable monthly. Both Agreements also provide that if the
Fund's expenses, exclusive of taxes, interest, and extraordinary expenses,
exceed specified limits, such excess, up to the amount of the management fee,
will be paid by the Adviser. For the year ended March 31, 1995, the fee pursuant
to both the Management Agreement and the Agreement amounted to $19,032,146,
which was equivalent to an annual effective rate of .83% of the Fund's average
daily net assets.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend-paying and shareholder service agent for the Fund.
For the year ended March 31, 1995, the amount charged to the Fund by SSC
aggregated $3,119,691 of which $262,717 is unpaid at March 31, 1995.
The Fund pays each Director not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the year
ended March 31, 1995, Directors' fees aggregated $61,500.
<TABLE>
D. COMMITMENTS
--------------------------------------------------------------------------------
As of March 31, 1995, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$223,578.
<CAPTION>
NET UNREALIZED
APPRECIATION
SETTLEMENT (DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR DATE (U.S.$)
----------------------------- --------------------------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
U.S. Dollars 2,049,744 Swiss Francs 2,377,703 4/3/95 49,773
U.S. Dollars 4,022,579 Canadian Dollars 5,629,600 4/5/95 1,294
U.S. Dollars 13,930,498 Canadian Dollars 19,487,160 4/7/95 (1,646)
U.S. Dollars 2,856,323 British Pounds 1,791,472 4/7/95 46,397
U.S. Dollars 1,347,658 Australian Dollars 1,838,701 4/9/95 111
U.S. Dollars 5,435,859 French Francs 26,247,587 4/28/95 22,155
Australian Dollars 75,998 U.S. Dollars 55,087 4/3/95 (619)
Deutsche Marks 20,836,378 U.S. Dollars 14,750,687 4/3/95 (386,529)
Japanese Yen 44,589,048 U.S. Dollars 503,824 4/3/95 (10,171)
Australian Dollars 558,634 U.S. Dollars 404,898 4/4/95 (4,581)
Deutsche Marks 12,943,534 U.S. Dollars 9,465,107 4/4/95 61,886
Greek Drachmas 24,626,864 U.S. Dollars 107,847 4/4/95 (1,544)
Japanese Yen 9,131,200 U.S. Dollars 101,911 4/4/95 (3,348)
Deutsche Marks 8,269,482 U.S. Dollars 6,009,842 4/5/95 2,227
Japanese Yen 30,544,401 U.S. Dollars 353,114 4/5/95 1,017
--------
(223,578)
========
</TABLE>
27
<PAGE>
SCUDDER INTERNATIONAL FUND
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS OF SCUDDER INTERNATIONAL FUND, INC. AND TO THE
SHAREHOLDERS OF SCUDDER INTERNATIONAL FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
International Fund, including the investment portfolio, as of March 31, 1995,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the ten years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder International Fund as of March 31, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each of the
ten years in the period then ended in conformity with generally accepted
accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
May 15, 1995
28
<PAGE>
TAX INFORMATION
--------------------------------------------------------------------------------
The Fund paid distributions of $2.42 per share from net long-term capital gains
during its taxable year ended March 31, 1995. Pursuant to Section 852 of the
Internal Revenue Code, the Fund designates $73,027,778 as capital gain dividends
for its taxable year ended March 31, 1995.
The Fund paid foreign taxes of $3,999,475 and the Fund recognized $3,999,475 of
foreign source income during the taxable year ended March 31, 1995. Pursuant to
section 853 of the Internal Revenue Code, the Fund designates $.072 per
share of foreign taxes paid and $.072 of gross income earned from foreign
sources in the taxable year ended March 31, 1995.
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 Scudder Fund account, please call a Scudder Investor Relations
Representative at 1-800-225-5163.
TAX INFORMATION
The Fund paid distributions of $2.42 per share from net long-term capital gains
during its taxable year ended March 31, 1995. Pursuant to Section 852 of the
Internal Revenue Code, the Fund designates $73,027,778 as capital gain dividends
for its taxable year ended March 31, 1995.
The Fund paid foreign taxes of $3,999,475 and the Fund recognized
$3,999,475 of foreign source income during the taxable year ended March 31,
1995. Pursuant to section 853 of the Internal Revenue Code, the Fund designates
$.072 per share of foreign taxes paid and $.072 of gross income earned from
foreign sources in the taxable year ended March 31, 1995.
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 Scudder Fund account, please call a Scudder Investor
Relations Representative at 1-800-225-5163.
OFFICERS AND DIRECTORS
Edmond D. Villani*
Chairman of the Board and Director
Nicholas Bratt*
President and Director
Paul Bancroft III
Director; Venture Capitalist and Consultant
Thomas J. Devine
Director; Consultant
William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.
William H. Luers
Director; President, The Metropolitan Museum of Art
Wilson Nolen
Director; Consultant
Juris Padegs*
Director, Vice President and Assistant Secretary
Daniel Pierce*
Director
Gordon Shillinglaw
Director; Professor Emeritus of Accounting,
Columbia University Graduate School of Business
Robert G. Stone, Jr.
Director; Chairman of the Board and Director, Kirby Corporation
Robert W. Lear
Honorary Director
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Jerard K. Hartman*
Vice President
William E. Holzer*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Vice President and Assistant Treasurer
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Kathryn L. Quirk*
Vice President and Assistant Secretary
William F. Truscott*
Vice President
Richard W. Desmond*
Assistant Secretary
Coleen Downs Dinneen*
Assistant Secretary
* Scudder, Stevens & Clark, Inc.
29
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
The Scudder Family of Funds
<S> <C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Value Fund
Scudder Growth and Income Fund The Japan Fund
Retirement Plans and Tax-Advantaged Investments
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan*+++ (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
</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. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *Not available
in all states. +++A no-load variable annuity contract provided by Charter
National Life Insurance Company and its affiliate, offered by Scudder's
insurance agencies, 1-800-225-2470. #These funds, advised by Scudder, Stevens &
Clark, Inc. are traded on various stock exchanges. ++For information on Scudder
Treasurers Trust,(TM) an institutional cash management service that utilizes
certain portfolios of Scudder Fund, Inc. ($100,000 minimum), call
1-800-541-7703.
30
<PAGE>
HOW TO CONTACT SCUDDER
Account Service and Information
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For account updates, prices, yields, exchanges, and redemptions
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they
can be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
For information on Scudder Treasurers Trust,(TM) an institutional cash
management service for corporations, non-profit organizations and trusts that
uses certain portfolios of Scudder Fund,Inc.* ($100,000 minimum), call
1-800-541-7703.
For information on Scudder Institutional Funds,* funds designed to meet the
broad investment management and service needs of banks and other institutions,
call 1-800-854-8525.
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
31
<PAGE>
Celebrating 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the first independent investment counsel
firm in the United States. Since its birth, Scudder's pioneering spirit and
commitment to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load mutual
fund. Today we offer 36 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
