Scudder
International
Fund
Semiannual Report
September 30, 1996
Pure No-Load(TM) Funds
A fund offering opportunities for long-term growth of capital primarily from
foreign equity securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
16 Financial Statements
19 Financial Highlights
20 Notes to Financial Statements
25 Report of Independent Accountants
26 Investment Products and Services
27 How to Contact Scudder
In Brief
o For the six-month period ended September 30, 1996, Scudder International Fund
provided a total return of 3.72%, comparing favorably to both the unmanaged MSCI
EAFE plus Canada Index and the average international fund tracked by Lipper
Analytical Services.
o In Europe, where slightly more than half of the Fund's assets are invested,
growth is moderate and inflation benign. Industry consolidation and corporate
restructuring are the principal themes driving our investment strategy in
Europe.
o At 24% of Fund assets, our Japanese position is slightly underweight versus
the MSCI index. We continue to focus on Japanese companies that we believe are
beneficiaries of a weaker yen and companies geared to economic recovery.
2 - SCUDDER INTERNATIONAL FUND
<PAGE>
Letter From the Fund's Chairman
Dear Shareholders,
Your shareholder report has a new look which we hope you will enjoy. The
new format is designed to enhance the attractiveness and readability of the
annual and semiannual reports. Let us know what you think.
In this age of electronic information we have also taken a look at our
short-form quarterly reports, sent after the end of your fund's first and third
fiscal quarters. Many shareholders have told us that these reports are no longer
as useful as they once were, so they have been discontinued. Portfolio
information, however, will be available on a more timely basis going forward --
each month in most cases -- through Scudder's Web site, Scudder's automated
information line (SAIL), and by calling a Scudder Investor Relations
representative.
As detailed in the management discussion that follows, Scudder
International Fund provided a total return of 3.72% for the six-month period
covered by this report, outperforming international stocks in the aggregate.
Going forward, a strong profit outlook for the European corporate sector and a
gradually improving Japanese economic climate are among the factors that bode
well for equities abroad. Scudder International Fund will continue to provide
important access to the expanding range of opportunities for capital
appreciation to be found overseas.
Finally, we would like to take this opportunity to introduce two new funds
offered by Scudder in September. Scudder Classic Growth Fund seeks long-term
capital appreciation with a higher degree of principal stability than the
average growth fund. Scudder 21st Century Growth Fund takes a more aggressive
approach, focusing primarily on emerging companies with the potential to benefit
from the rapidly changing industrial and economic landscape. For more
information on these and other Scudder Fund products and services, please turn
to page 26.
Thank you for your continued investment in Scudder International Fund.
Please do not hesitate to call Investor Relations at 1-800-225-2470 with any
questions regarding your account.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder International Fund
3 - SCUDDER INTERNATIONAL FUND
<PAGE>
PERFORMANCE UPDATE as of September 30, 1996
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
9/30/96 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER INTERNATIONAL FUND
- --------------------------------------
1 Year $ 10,839 8.39% 8.39%
5 Year $ 15,791 57.91% 9.57%
10 Year $ 26,658 166.58% 10.30%
- --------------------------------------
MSCI EAFE & CANADA INDEX
- --------------------------------------
1 Year $ 10,901 9.01% 9.01%
5 Year $ 14,774 47.74% 8.11%
10 Year $ 22,961 129.61% 8.66%
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
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 SEPTEMBER 30
SCUDDER INTERNATIONAL FUND
Year Amount
- ----------------------
'86 $10000
'87 $14395
'88 $11783
'89 $16081
'90 $14566
'91 $16882
'92 $16810
'93 $20757
'94 $22970
'95 $24594
'96 $26658
MSCI EAFE & CANADA INDEX
Year Amount
- ----------------------
'86 $10000
'87 $14493
'88 $14319
'89 $17540
'90 $12795
'91 $15542
'92 $14412
'93 $18093
'94 $19894
'95 $21063
'96 $22961
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 returns
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 SEPTEMBER 30
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
-------------------------------------------------------------------------------
NET ASSET VALUE... $46.59 $31.96 $39.20 $32.65 $35.30 $34.25 $40.93 $43.73 $45.32 $46.90
INCOME DIVIDENDS.. $ .46 $ .49 $ -- $ .62 $ .55 $ .51 $ .35 $ .34 $ -- $ .40
CAPITAL GAINS
DISTRIBUTIONS..... $ 8.82 $ 5.37 $ 3.65 $ 2.61 $ 1.77 $ .40 $ -- $ 1.18 $ 1.33 $ 1.69
FUND TOTAL
RETURN (%)........ 43.95 -18.15 36.48 -9.42 15.90 -.45 23.48 10.66 7.07 8.39
INDEX
RETURN (%)........ 44.93 -1.20 22.49 -27.05 21.47 -7.27 25.54 9.96 5.87 9.01
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
4 - SCUDDER INTERNATIONAL FUND
<PAGE>
PORTFOLIO SUMMARY as of September 30, 1996
- ---------------------------------------------------------------------------
GEOGRAPHICAL
(Excludes 4% Cash Equivalents)
- ---------------------------------------------------------------------------
Europe 53%
Japan 24%
Pacific Basin 15%
Latin America 4%
Canada 3%
Other 1%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
European companies represent slightly more
than half of the portfolio's equity holdings.
- --------------------------------------------------------------------------
SECTORS
(Excludes 4% Cash Equivalents)
- --------------------------------------------------------------------------
Manufacturing 23%
Financial 13%
Metals & Minerals 9%
Service Industries 8%
Technology 6%
Communications 6%
Health 5%
Utilities 5%
Durables 5%
Other 20%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The manufacturing sector contains many beneficiaries
of industry consolidation and corporate restructuring.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
(14% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. SAP AG
German computer software manufacturer
2. L.M. ERICSSON TELEPHONE CO.
Leading manufacturer of cellular telephone equipment in Sweden
3. MATSUSHITA ELECTRICAL INDUSTRIAL CO., LTD.
Leading Japanese manufacturer of consumer electronic products
4. AEGON INSURANCE GROUP NV
Insurance company in the Netherlands
5. ABB AG
Manufacturer of electrical equipment in Switzerland
6. TELECOM ITALIA MOBILE SPA
Cellular telecommunication services in Italy
7. SGS HOLDINGS SA
Trade inspection company in Switzerland
8. HUTCHISON WHAMPOA, LTD.
Container terminal and real estate company in Hong Kong
9. VEBA AG
Electric utility, distributor of oil and chemicals in Germnay
10. ZENECA GROUP PLC
Holding company: Manufacturing and marketing of pharmaceutical and
agrochemical products and specialty chemicals in United Kingdom
Industry leaders among the Fund's top holdings include
a German software company, a Swedish cellular telephone manufacturer,
and a Japanese electronics company.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 9. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - SCUDDER INTERNATIONAL FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
For the six-month period ended September 30, 1996, Scudder International Fund
provided a total return of 3.72%. This performance compares favorably with that
for both the unmanaged MSCI EAFE plus Canada Index and the average international
fund tracked by Lipper Analytical Services, which returned 1.71% and 2.95%,
respectively. The Fund's return for the 12 months through September was 8.39%,
roughly in keeping with the 9.01% total return for the Index and return of 9.36%
for the Lipper average.
The Fund's recent strong relative performance has been due principally to an
underweight position in Japan and positive stock selection in Europe. A weaker
yen versus the dollar also made a positive contribution. Adjustments in the
portfolio have been stock specific, rather than reflecting any major strategic
shifts. In Europe, we continued to focus on beneficiaries of industry
consolidation and candidates for restructuring. In Japan, we are positioned in
globally competitive companies that we believe are beneficiaries of a weaker yen
and companies geared to a recovery in the domestic economy.
Strong Profitability Outlook
for European Companies
In Europe, where slightly more than half of the Fund's assets are invested,
growth is moderate and inflation benign. Monetary conditions are easy and should
help support a broadening of economic growth. These factors will provide a solid
tailwind for corporate profit expansion into next year. Against a backdrop of
high unemployment, prospects for a more flexible interpretation of the
convergence criteria for joining European Monetary Union (EMU) have emerged.
Though markets have responded positively to the possibility of convergence
laggards such as Italy and Spain achieving the Maastricht targets, the outcome
for EMU remains uncertain and will ultimately be driven by political rather than
economic agendas.
Industry consolidation and corporate restructuring are the principal themes
driving our investment strategy in Europe today. Corporate mergers are being
propelled by the forces of global competition as European managers focus their
businesses to achieve cost efficiencies. This process is being facilitated by a
trend toward deregulation in European economies. For example, the German banking
sector is undergoing fundamental structural change in the wake of deregulation,
technological innovation, and increasing foreign competition. Traditional
banking relationships are breaking down as clients begin to shop around instead
of relying on one institution to meet all financial needs. We believe the
winners in the sector will be those banks specializing in niche areas where
their product ranges and distribution strategies have an edge. The recent
addition of Bayerische Vereinsbank to the portfolio reflects this trend.
Bayerische Vereinsbank has a strong presence in traditional lending activities,
and is pursuing a niche strategy to expand its private client expertise with
innovative products, in addition to focusing on its investment banking business.
6 - SCUDDER INTERNATIONAL FUND
<PAGE>
The forces of consolidation reshaping the engineering sector in the UK underpin
the addition of General Electric Company (GEC) to the portfolio. GEC is a UK
industrial company active in defense, power systems, and telecommunications. The
company is a recognized leader in the defense arena and should occupy a top
position as that industry consolidates in Europe. GEC has a successful joint
venture in power systems with Alcatel Alsthom and will probably number among the
few surviving players in global power generation as the industry undergoes a
period of protracted consolidation. The company has a strong balance sheet and,
for the first time in 30 years, changes in its management structure are taking
place. In addition, we believe GEC is the most likely partner for US defense
companies looking to establish a foothold in Europe.
Japanese Upturn Muted
but Ongoing
At 24% of Fund assets, our Japanese position is slightly underweight versus the
MSCI index. The Japanese economic recovery has not been as strong as initially
anticipated. However, low interest rates and a modest acceleration in the money
supply continue to provide a favorable liquidity backdrop. Consumer prices are
stable after three years of inflation and the fundamentals of the real estate
market appear to be improving. Residential prices are showing signs of bottoming
out and the supply of commercial properties is expected to tighten in the next
two or three years. The yen continues to move in the right direction and a
weaker currency should help to reinflate the economy.
We continue to focus on companies that are beneficiaries of a weaker yen and
companies geared to economic recovery. Ishikawajima-Harima Heavy Industries
(I.H.I.) is a leading manufacturer of heavy machinery, with business lines that
include industrial and environmental plants, power plants, bridges and ships.
I.H.I. is strongly positioned in aerospace and defense and is Japan's dominant
manufacturer of jet engines. Management has put in place an ambitious five year
plan to double profits through cost restructuring, growth in exports and
increasing profitability in the shipbuilding division. I.H.I. is attractively
valued and is a major beneficiary of a weaker yen.
Kokuyo is illustrative of a Japanese company positioned to benefit from economic
recovery. Kokuyo is Japan's largest manufacturer of office supplies and
stationery products, and has a substantial sales and distribution network. The
company is also one of the largest commercial furniture makers in the country.
Profit margins are expected to improve due to cost cutting efforts, a higher
level of operating efficiency, and lower depreciation charges. Highly sensitive
to economic activity, the commercial furniture market should recover on the back
of stronger corporate earnings and an improving office occupancy ratio.
Less Established Investment
Venues Provide Opportunity
Outside of Japan, growth expectations in Asia have slowed from the torrid pace
of recent years. Asia is vulnerable to global supply and demand imbalances, and
the slowdown in growth reflects several cyclical factors: pricing weakness in
semiconductors and consumer electronics, the impact of a depreciating Japanese
7 - SCUDDER INTERNATIONAL FUND
<PAGE>
yen on the competitiveness of other Asian exporters, and weak demand in
industrial countries. We believe, however, that the long term growth prospects
for the region remain intact. Asian countries are still enjoying foreign capital
and technology inflows, while expanding regional trade provides a cushion for
growth. Against this backdrop, we are adding selectively as attractive
opportunities arise.
The recent addition of Kerry Properties to the portfolio reflects our positive
view on the recovering property market in Hong Kong and a better economic
outlook in China. Kerry is a diversified property company with a high quality
investment portfolio. Focused primarily on Hong Kong, the company has locked in
low development costs by making strategic land purchases at attractive levels.
Development profits are expected to rise substantially as key projects come on
stream. The company has an attractive rental portfolio that is skewed towards
the luxury market and has considerable price appreciation potential. Kerry also
has exposure to prime properties in several major Chinese cities.
Brazil remains our preferred investment arena in Latin America. Lower inflation,
progress on privatization and the possibility of strong, investment-led growth
underpin this view. We recently added a foothold in Mexico through the
acquisition of Telmex, the country's dominant telecommunications provider. While
the Mexican government has done a good job of turning the economy around, we
continue to have concerns that the recovery will not be broadly based in view of
a weakened banking system and declining real wages. Telmex, however, has strong
value characteristics in a market dominated by growth stocks. The company has a
high level of cash flow which we believe will be used to repurchase shares,
thereby enhancing shareholder value. Telmex also has room for aggressive cost
cutting, which we expect to begin in 1997 when the regulatory climate improves.
Going forward, the Fund will continue to seek capital appreciation by holding
overseas companies we believe are positioned to benefit from strong domestic
growth, regional developments, or the globalization of economic activity. We
believe Scudder International Fund remains an excellent vehicle for attaining
exposure to the many investment opportunities that reside outside of the United
States. Thank you for your continued investment in the Fund.
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
8 - SCUDDER INTERNATIONAL FUND
<PAGE>
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO as of September 30, 1996
<CAPTION>
PRINCIPAL MARKET
AMOUNT($) VALUE($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS 1.6%
- -----------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 9/30/96 at 5.7%, to be
repurchased at $40,996,490 on 10/1/96, collateralized by a $38,671,000 U.S. Treasury
Note, 8.875%, 2/15/99 (Cost $40,990,000) ................................................ 40,990,000 40,990,000
COMMERCIAL PAPER 2.4%
- -----------------------------------------------------------------------------------------------------------------------------
Associates Corp. of North America, 11/21/96 .............................................. 25,000,000 24,807,889
E.I. du Pont de Nemours & Co., 10/7/96 ................................................... 20,000,000 19,982,467
Walt Disney Co., 10/11/96 ................................................................ 15,000,000 14,975,617
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER (Cost $59,765,973) 59,765,973
- -----------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS 1.4%
- -----------------------------------------------------------------------------------------------------------------------------
GHANA 0.6%
Ashanti Capital Corp., 5.5%, 3/15/03 ..................................................... 17,608,000 15,935,240
----------
JAPAN 0.6%
Softbank Corp., 0.5%, 3/29/02 ............................................................ [yen]1,500,000,000 14,837,380
----------
MALAYSIA 0.0%
Renong Bhd. ICULS, 4%, 5/21/01 ........................................................... MYR 1,620,000 594,697
----------
PHILIPPINES 0.2%
International Container Terminal Services, Inc., 5%, 9/15/01 ............................. 7,000,000 6,055,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (Cost $40,207,612) 37,422,317
- -----------------------------------------------------------------------------------------------------------------------------
SHARES
- -----------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS 2.6%
- -----------------------------------------------------------------------------------------------------------------------------
GERMANY
RWE AG (Producer and marketer of petroleum and chemical products) ........................ 700,000 21,382,968
SAP AG (Computer software manufacturer) .................................................. 263,000 44,173,460
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (Cost $22,418,456) ................................................ 65,556,428
- -----------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 91.8%
ARGENTINA 0.7%
YPF S.A. "D" (ADR) (Petroleum company) ................................................... 785,000 17,956,875
----------
AUSTRALIA 1.4%
National Australia Bank, Ltd. (Commercial bank) .......................................... 1,141,784 12,023,299
Normandy Mining Ltd. (Invests in mining and oil enterprises in Australia) ................ 9,200,671 12,529,565
Woodside Petroleum Ltd. (Major oil and gas producer) ..................................... 1,480,100 9,820,263
----------
34,373,127
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BRAZIL 3.1%
Centrais Eletricas Brasileiras S/A "B" (pfd.)(Electric utility) ............................ 43,226,227 12,065,496
Companhia Energetica de Minas Gerais (pfd.) (Electric power utility) ....................... 548,000,000 16,369,424
Petroleo Brasileiro S/A (pfd.) (Petroleum company) ......................................... 108,000,000 12,691,758
Telecomunicacoes Brasileiras S.A. (pfd.) (Telecommunication services) ...................... 300,000,000 23,563,978
Usinas Siderurgicas de Minas Gerais S/A (pfd.) (Non-coated flat products and
electrolytic galvanized products) ......................................................... 14,050,000,000 13,897,948
-----------
78,588,604
-----------
CANADA 2.9%
Barrick Gold Corp. (Gold exploration and production in North and South America) ............ 755,000 18,872,921
Battle Mountain Gold Co. (Exploration, mining and processing of gold and silver) ........... 2,214,080 16,904,476
Canadian National Railway Co. (Operator of one of Canada's two principal railroads) ........ 670,000 13,735,000
Canadian Pacific Ltd. (Transportation and natural resource conglomerate) ................... 225,000 5,203,125
Canadian Pacific Ltd. (Ord.) (Transportation and natural resource conglomerate) ............ 709,718 16,464,478
-----------
71,180,000
-----------
FINLAND 1.7%
Nokia AB Oy "A" (Leading manufacturer of cellular telephones) .............................. 515,000 22,971,758
Outokumpu Oy "A" (Metals and minerals) ..................................................... 1,113,000 20,452,398
-----------
43,424,156
-----------
FRANCE 6.6%
AXA SA (Insurance group providing insurance, finance and real estate services) ............. 302,857 18,140,346
Carrefour (Hypermarket operator and food retailer) ......................................... 55,800 31,316,271
Compagnie Financiere de Paribas "A" (Finance and investment company) ....................... 309,814 19,912,544
LVMH Moet-Hennessy Louis Vuitton SA (Producer of wines, spirits and luxury
products) ................................................................................. 62,000 13,455,038
Lafarge SA (Leading producer of cement, concrete and aggregates) ........................... 220,000 12,968,735
Pinault-Printemps, SA (Distributor of consumer goods) ...................................... 50,000 18,391,250
Schneider SA (Manufacturer of electronic components and automated manufacturing
systems) .................................................................................. 528,223 24,849,132
Total SA "B" (International oil and gas exploration, development and production) ........... 363,336 28,592,795
-----------
167,626,111
-----------
GERMANY 8.5%
BASF AG (Leading international chemical producer) .......................................... 415,000 13,043,905
Bayer AG (Leading chemical producer) ....................................................... 800,000 29,335,691
Bayerische Vereinsbank Girozentrale (Commercial bank) ...................................... 550,000 19,087,843
Daimler-Benz AG (Automobile and truck manufacturer) ........................................ 437,000 24,008,316
Hoechst AG (Chemical producer) ............................................................. 804,000 29,313,898
Mannesmann AG (Bearer) (Diversified construction and technology company) ................... 71,162 26,654,005
Schering AG (Pharmaceutical and chemical producer) ......................................... 243,000 18,776,152
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Siemens AG (Leading electrical engineering and electronics company) ........................ 440,000 23,182,006
VEBA AG (Electric utility, distributor of oil and chemicals) ............................... 621,500 32,516,681
-----------
215,918,497
-----------
HONG KONG 5.5%
First Pacific Co., Ltd. (International management and investment company) .................. 14,387,681 21,768,507
HSBC Holdings Ltd. (Bank) .................................................................. 1,208,033 22,417,268
Hong Kong & China Gas Co., Ltd. (Gas utility) .............................................. 12,334,408 20,974,714
Hong Kong & China Gas Co., Ltd. Warrants (expiration 9/30/97)* ............................. 1,027,867 312,361
Hutchison Whampoa, Ltd. (Container terminal and real estate company) ....................... 4,838,584 32,536,709
Kerry Properties Ltd. (Real estate company)* ............................................... 8,352,000 19,764,852
Television Broadcasts, Ltd. (Television broadcasting) ...................................... 5,810,000 21,600,608
-----------
139,375,019
-----------
HUNGARY 0.1%
First Hungary Fund Units (Investment company)(b) ........................................... 3,619 3,431,789
-----------
INDONESIA 1.3%
Asia Pulp & Paper Co., Ltd. (ADR) (Producer of pulp and paper)* ............................ 853,495 10,135,253
HM Sampoerna (Foreign registered) (Tobacco company) ........................................ 1,200,000 11,679,587
Indah Kiat Pulp & Paper (Foreign registered) (Producer of pulp and paper) .................. 8,979,712 6,864,336
Indah Kiat Pulp & Paper Warrants (expiration 4/13/01)* ..................................... 672,750 275,242
Kalbe Farma (Foreign registered) (Pharmaceutical producer and distributor) ................. 700 1,673
Pabrik Kertas Tjiwi Kimia (Operator of pulp and paper factory) ............................. 4,732,800 4,637,003
-----------
33,593,094
-----------
ITALY 1.3%
Telecom Italia Mobile SpA (Ord.) (Cellular telecommunication services) ..................... 15,200,000 33,727,884
-----------
JAPAN 22.7%
Bridgestone Corp. (Leading automobile tire manufacturer) ................................... 1,505,000 27,103,754
Canon Inc. (Leading producer of visual image and information equipment) .................... 1,488,000 29,197,384
DDI Corp. (Long distance telephone and cellular operator) .................................. 2,975 24,016,441
East Japan Railway Co. (Railroad operator) ................................................. 2,319 11,178,407
Fujitsu Ltd. (Leading manufacturer of computers) ........................................... 1,015,000 9,639,817
Hitachi Ltd. (General electronics manufacturer) ............................................ 2,981,000 28,845,802
Hitachi Metals, Ltd. (Major producer of high-quality specialty steels) ..................... 839,000 8,193,800
Horipro Inc. (Growing entertainment production company) .................................... 250,000 3,113,520
Ishikawajima-Harima Heavy Industries Co., Ltd. (Comprehensive heavy machinery
manufacturer in aerospace and defense fields) ............................................. 2,900,000 14,005,017
Ito-Yokado Co., Ltd. (Leading supermarket operator) ........................................ 373,000 21,154,825
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Itochu Corp. (Leading general trading company) ............................................. 3,170,000 20,080,548
Japan Associated Finance Co. (Venture capital company) ..................................... 90,000 8,144,432
Jusco Co., Ltd. (Major supermarket operator) ............................................... 810,000 24,602,634
Kajima Corp. (Leading contractor engaged in large-scale civil engineering projects) ........ 1,435,000 13,242,989
Kawasaki Steel Corp. (Major integrated steelmaker) ......................................... 6,500,000 21,781,202
Keyence Corp. (Specialized manufacturer of sensors) ........................................ 218,000 26,954,574
Kokuyo (Leading manufacturer of paper stationery) .......................................... 580,000 15,330,168
Kyocera Corp. (Leading ceramic package manufacturer) ....................................... 352,000 25,073,022
Mabuchi Motor Co., Ltd. (Manufacturer of DC motors) ........................................ 265,000 14,720,903
Matsushita Electric Works, Inc. (Leading maker of building materials and lighting
equipment) ................................................................................ 1,400,000 13,798,047
Matsushita Electrical Industrial Co., Ltd. (Leading manufacturer of consumer
electronic products) ...................................................................... 2,096,000 35,118,000
Mitsubishi Heavy Industries, Ltd. (Diversified heavy machinery manufacturer
and leading shipbuilder) .................................................................. 2,825,000 22,957,396
NSK Ltd. (Leading manufacturer of bearings and other machinery parts) ...................... 1,300,000 8,887,196
Nichiei Co., Ltd. (Finance company for small- and medium-sized firms) ...................... 255,500 16,802,885
Nippon Electric Glass Co., Ltd. (Leading producer of cathode-ray tube glass) ............... 161,000 2,625,392
Nisshin Steel Co., Ltd. (Blast furnace steelmaker) ......................................... 897,000 3,110,286
Pioneer Electronics Corp. (Leading manufacturer of audio equipment) ........................ 750,000 15,321,208
Ricoh Co., Ltd. (Leading maker of copiers and information equipment) ....................... 2,130,000 21,756,115
SMC Corp. (Leading maker of pneumatic equipment) ........................................... 273,300 19,099,901
Secom Co., Ltd. (Electronic security system operator) ...................................... 170,000 10,738,285
ShinMaywa Industries, Ltd. (Leading maker of dump trucks and other specialty
vehicles) ................................................................................. 1,150,000 10,715,886
Sumitomo Metal Industries, Ltd. (Leading integrated crude steel producer) .................. 7,650,000 21,659,350
Sumitomo Metal Mining Co., Ltd. (Leading gold, nickel and copper mining company) ........... 2,200,000 18,548,517
THK Co., Ltd. (Manufacturer of linear motion systems for industrial machinery) ............. 357,800 6,315,438
-----------
573,833,141
-----------
KOREA 0.8%
Korea Electric Power Co. (ADR) (Electric utility) .......................................... 465,100 8,778,763
Korea Long Term Credit Bank (Major commercial bank)* ....................................... 257,668 5,958,183
Pohang Iron & Steel Co., Ltd. (Leading steel producer) (b) ................................. 7,030 503,419
Pohang Iron & Steel Co., Ltd. (ADR) (Leading steel producer) ............................... 292,900 6,260,738
-----------
21,501,103
-----------
MALAYSIA 1.0%
Malayan Banking Bhd. (Leading banking and financial services group) ........................ 1,350,000 13,413,004
Renong Bhd (Holding company involved in engineering, construction, financial
services, telecommunication and information technology)* .................................. 8,100,000 12,411,069
-----------
25,824,073
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEXICO 0.5%
Telefonos de Mexico S.A. de C.V. "L" (ADR) (Telecommunication services) .................... 375,000 12,046,875
-----------
NETHERLANDS 5.5%
AEGON Insurance Group NV (Insurance company) ............................................... 695,500 34,318,102
Akzo-Nobel N.V. (Chemical producer) ........................................................ 120,000 14,533,139
Elsevier NV (International publisher of scientific, professional, business,
and consumer information books) ........................................................... 1,676,000 27,696,818
Heineken Holdings N.V. "A" (Brewery) ....................................................... 160,000 26,179,270
Philips Electronics N.V. (Leading manufacturer of electrical equipment) .................... 447,000 16,131,153
Wolters Kluwer CVA (Publisher) ............................................................. 154,963 19,482,356
-----------
138,340,838
-----------
NEW ZEALAND 0.7%
Telecom Corp. of New Zealand (Telecommunication services) .................................. 3,500,000 16,441,653
-----------
NORWAY 0.7%
Saga Petroleum AS "A" (Oil and gas exploration and production) ............................. 1,023,200 16,515,911
-----------
PHILIPPINES 1.5%
C & P Homes, Inc. (Home construction company) .............................................. 20,318,000 13,746,693
Manila Electric Co. "B" (Electric utility) 2,275,000 16,822,946
SM Prime Holdings Corp. (Leader in commercial center operations) ........................... 30,000,000 6,975,415
-----------
37,545,054
-----------
PORTUGAL 0.2%
Portugal Telecom SA (Telecommunication services) ........................................... 239,300 6,150,126
-----------
SPAIN 3.0%
Acerinox, S.A. (Stainless steel producer) .................................................. 217,800 25,341,350
Banco Popular Espanol, S.A. (Retail bank) .................................................. 147,600 27,109,970
Compania Telefonica Nacional de Espana SA (ADR) (Telecommunication services) ............... 381,000 21,193,125
-----------
73,644,445
-----------
SWEDEN 4.0%
Astra AB "A" (Free) (Pharmaceutical company) ............................................... 368,100 15,539,842
L.M. Ericsson Telephone Co. "B" (ADR) (Leading manufacturer of cellular telephone
equipment) ................................................................................ 1,540,000 39,077,500
S.K.F. AB "B" (Free)* (Manufacturer of roller bearings) .................................... 750,000 18,036,185
Skandia Foersaekrings AB (Free) (Financial conglomerate) ................................... 1,040,000 28,773,464
-----------
101,426,991
-----------
SWITZERLAND 6.6%
ABB AG (Bearer) (Manufacturer of electrical equipment) ..................................... 27,610 33,753,379
CS Holdings (Registered} (Provider of bank services, management services and
life insurance) ........................................................................... 250,000 24,705,132
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ciba-Geigy AG (Bearer) (Pharmaceutical company) ............................................ 17,600 22,399,745
Holderbank Financiere Glaris AG (Bearer) (Cement producer) ................................. 16,000 11,603,443
Nestle SA (Registered) (Food manufacturer) ................................................. 14,737 16,418,813
SGS Holdings SA (Bearer) (Trade inspection company) ........................................ 14,490 32,737,608
Sandoz Ltd. AG (Registered) (Pharmaceutical company) ....................................... 20,000 24,003,825
-------------
165,621,945
-------------
TAIWAN 0.6%
China Development Corp. Ltd. (Provider of loan and guarantee services to manufacturing
and service industries) ................................................................... 2,587,500 7,250,273
Far Eastern Department Stores Ltd. (Department store chain) ................................ 5,250,000 7,049,672
-------------
14,299,945
-------------
THAILAND 1.2%
Bangkok Bank Ltd. (Foreign registered) (Leading commercial bank) ........................... 1,250,000 16,318,666
Thai Farmers Bank Ltd. (Foreign registered) (Commercial bank) .............................. 1,500,000 15,807,479
Thai Farmers Bank Ltd. Warrants (expiration 9/15/02) (b)* .................................. 187,500 501,357
-------------
32,627,502
-------------
UNITED KINGDOM 9.7%
Glaxo Wellcome PLC (Researches, develops, manufactures and markets pharmaceuticals) ........ 422,500 6,623,097
BOC Group PLC (Producer of industrial gases) ............................................... 850,000 11,648,192
British Petroleum PLC (Major integrated world oil company) ................................. 2,951,776 30,632,353
Carlton Communications PLC (Television post production products and services) .............. 3,487,500 26,366,032
General Electric Co., PLC (Manufacturer of power, communications and defense
equipment and other various electrical components) ........................................ 4,450,000 27,548,000
Pearson PLC (Diversified media and entertainment holding company) .......................... 590,200 6,300,384
PowerGen PLC (Electric utility) ............................................................ 2,538,059 19,227,840
RTZ Corp., PLC (Mining and finance company) ................................................ 1,688,460 25,860,388
Reuters Holdings PLC (International news agency) ........................................... 2,639,600 30,512,096
SmithKline Beecham PLC (Manufacturer of ethical drugs and healthcare products) ............. 2,358,984 28,819,161
Zeneca Group PLC (Holding company: manufacturing and marketing of pharmaceutical
and agrochemical products and specialty chemicals) ........................................ 1,285,000 31,940,157
-------------
245,477,700
-------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $1,856,118,405) 2,320,492,458
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT($) VALUE($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASED OPTIONS 0.2%
- -----------------------------------------------------------------------------------------------------------------------------
Put on Japanese Yen, strike price 110, expire 7/10/97 ............................... JPY 11,500,000,000 2,024,000
Put on Japanese Yen, strike price 110, expire 7/10/97 ............................... JPY 11,500,000,000 2,024,000
Put on Japanese Yen, strike price 110, expire 7/10/97 ............................... JPY 11,500,000,000 2,081,500
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS (Cost $5,801,750) 6,129,500
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0% (Cost $2,025,302,196)(a) 2,530,356,676
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(a) The cost for federal income tax purposes was $2,031,963,862. At September 30, 1996, net unrealized appreciation for
all securities based on tax cost was $498,392,814. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of $560,242,848 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over market value of $61,850,034.
(b) Securities valued in good faith by the Valuation Committee of the Board of Directors. The cost of these securities at
September 30, 1996 aggregated $4,588,313. See Note A of the Notes to Financial Statements.
* Non-income producing security.
Sector breakdown of the Fund's equity securities is noted on page 5.
</FN>
</TABLE>
<TABLE>
At September 30, 1996, outstanding written call options were as follows (Note A):
<CAPTION>
PRINCIPAL EXPIRATION STRIKE MARKET
AMOUNT DATE PRICE VALUE($)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Japanese Yen ....... JPY 11,500,000,000 July 10, 1997 JPY 99.22 816,500
Japanese Yen ....... JPY 11,500,000,000 July 10, 1997 JPY 99.06 816,500
Japanese Yen ....... JPY 11,500,000,000 July 10, 1997 JPY 98.98 778,550
---------
Total outstanding written options (Premiums received $5,801,750) 2,411,550
=========
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Transactions in written call options during the six months ended September 30, 1996 were:
<CAPTION>
PREMIUMS
PRINCIPAL AMOUNT RECEIVED($)
----------------------------------------
<S> <C> <C> <C>
Outstanding at
March 31, 1996 JPY 32,532,000,000 12,317,038
Contracts written JPY 34,500,000,000 5,801,750
Contracts closed JPY (19,352,000,000) (8,047,848)
Contracts expired JPY (13,180,000,000) (4,269,190)
----------------------------------------
Outstanding at
September 30, 1996 JPY 34,500,000,000 5,801,750
============== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
as of September 30, 1996
<CAPTION>
<S> <C> <C>
ASSETS
- --------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $2,025,302,196)(Note A) ............. $2,530,356,676
Cash ........................................................................ 268,175
Foreign currency holdings, at market (identified cost $9,066,737) ........... 9,056,037
Receivable on investments sold .............................................. 12,548,291
Receivable on Fund shares sold .............................................. 2,216,024
Dividends and interest receivable ........................................... 5,096,105
Foreign taxes recoverable ................................................... 2,314,128
Other assets ................................................................ 8,142
--------------
Total assets ................................................................ 2,561,863,578
LIABILITIES
- --------------------------------------------------------------------------------------------------------
Payable for investments purchased ........................................... $ 17,359,244
Payable for Fund shares redeemed ............................................ 2,537,876
Accrued management fee (Note C) ............................................. 1,714,368
Other accrued expenses (Note C) ............................................. 1,135,382
Written options, at market (premiums received $5,801,750)(Note A) ........... 2,411,550
Other payables .............................................................. 436,943
--------------
Total liabilities ........................................................... 25,595,363
----------------------------------------------------------------------------------------------
NET ASSETS, AT MARKET VALUE $2,536,268,215
----------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ......................................... $ 769,211
Unrealized appreciation on:
Investments ............................................................ 505,054,480
Written options ........................................................ 3,390,200
Foreign currency related transactions .................................. 65,020
Accumulated net realized gain ............................................... 87,550,066
Capital stock ............................................................... 540,793
Additional paid-in capital .................................................. 1,938,898,445
----------------------------------------------------------------------------------------------
NET ASSETS, AT MARKET VALUE $2,536,268,215
----------------------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, offering and redemption price per share ($2,536,268,215 /
54,079,301 shares of capital stock outstanding, $.01 par value, --------------
100,000,000 shares authorized) ......................................... $46.90
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
Statement of Operations
six months ended September 30, 1996
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $3,656,160) ..................... $ 25,229,699
Interest (net of foreign taxes withheld of $5,601) .......................... 3,805,225
------------
29,034,924
------------
Expenses:
Management fee (Note C) ..................................................... 10,443,197
Services to shareholders (Note C) ........................................... 1,956,490
Custodian and accounting fees (Note C) ...................................... 1,302,808
Directors' fees (Note C) .................................................... 36,910
Reports to shareholders ..................................................... 234,687
Auditing .................................................................... 71,742
Legal ....................................................................... 39,288
State Registration .......................................................... 38,791
Other ....................................................................... 115,640
------------
14,239,553
--------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 14,795,371
--------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
- ------------------------------------------------------------------------------------------------------
Net realized gain from:
Investments ................................................................. 47,640,042
Written options ............................................................. 12,317,038
Foreign currency related transactions ....................................... 27,967,571
------------
87,924,651
------------
Net unrealized appreciation (depreciation) during the period on:
Investments ................................................................. (2,638,333)
Written options ............................................................. (8,718,101)
Foreign currency related transactions ....................................... 118,081
------------
(11,238,353)
------------
Net gain on investment transactions ......................................... 76,686,298
--------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 91,481,669
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 -- SCUDDER INTERNATIONAL FUND
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31,
INCREASE (DECREASE) IN NET ASSETS 1996 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ........................................... $ 14,795,371 $ 20,332,419
Net realized gain from investment transactions .................. 87,924,651 97,431,462
Net unrealized appreciation (depreciation) on investment
transactions during the period ............................. (11,238,353) 293,552,612
-------------- --------------
Net increase in net assets resulting from operations ............ 91,481,669 411,316,493
-------------- --------------
Distributions to shareholders from:
Net investment income ........................................... -- (20,899,123)
-------------- --------------
Net realized gains .............................................. (28,118,813) (61,655,254)
-------------- --------------
Fund share transactions:
Proceeds from shares sold ....................................... 255,321,131 566,171,226
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 26,310,854 75,365,736
Cost of shares redeemed ......................................... (323,680,943) (647,503,731)
-------------- --------------
Net decrease in net assets from Fund share transactions ......... (42,048,958) (5,966,769)
-------------- --------------
INCREASE IN NET ASSETS .......................................... 21,313,898 322,795,347
Net assets at beginning of period ............................... 2,514,954,317 2,192,158,970
NET ASSETS AT END OF PERIOD (including undistributed net
investment income of $769,211 and accumulated
distributions in excess of net investment income of -------------- --------------
$14,026,160, respectively) ................................. $2,536,268,215 $2,514,954,317
-------------- --------------
OTHER INFORMATION
- -------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ....................... 55,022,967 55,183,581
-------------- --------------
Shares sold ..................................................... 5,495,846 12,911,834
Shares issued to shareholders in reinvestment of
distributions .............................................. 559,092 1,726,196
Shares redeemed ................................................. (6,998,604) (14,798,644)
-------------- --------------
Net decrease in Fund shares ..................................... (943,666) (160,614)
-------------- --------------
Shares outstanding at end of period ............................. 54,079,301 55,022,967
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 -- SCUDDER INTERNATIONAL FUND
<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>
SIX MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED MARCH 31,
1996 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of ------------------------------------------------------------------------------------------------
period ........................ $45.71 $39.72 $42.96 $35.69 $34.36 $34.69 $37.00 $34.79 $33.43 $ 44.05 $36.93
------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income ........... .27 .38 .21 .31 .38 .44 .80 .49 .40 .45 .47
Net realized and unrealized
gain (loss) on investment
transactions .................. 1.43 7.19 (1.03) 7.74 2.64 (.37) (.39) 5.30 4.15 (.86) 13.07
Total from investment ------------------------------------------------------------------------------------------------
operations .................... 1.70 7.57 (.82) 8.05 3.02 .07 .41 5.79 4.55 (.41) 13.54
------------------------------------------------------------------------------------------------
Less distributions:
From net investment income ...... -- (.40) -- (.63) (.83) -- (.74) (.43) (.13) (.82) (.49)
In excess of net investment
income ........................ -- -- -- (.06) -- -- -- -- -- -- --
From net realized gains on
investment transactions ....... (.51) (1.18) (2.42) (.09) (.86) (.40) (1.98) (3.15) (3.06) (9.39) (5.93)
------------------------------------------------------------------------------------------------
Total distributions ............. (.51) (1.58) (2.42) (.78) (1.69) (.40) (2.72) (3.58) (3.19) (10.21) (6.42)
------------------------------------------------------------------------------------------------
Net asset value, end of ------------------------------------------------------------------------------------------------
period ........................ $46.90 $45.71 $39.72 $42.96 $35.69 $34.36 $34.69 $37.00 $34.79 $ 33.43 $44.05
------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) ................ 3.72** 19.25 (2.02) 22.69 9.12 .18 1.46 17.08 14.34 (.47) 40.18
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
($ millions) .................. 2,536 2,515 2,192 2,198 1,180 933 929 783 550 559 791
Ratio of operating expenses
to average net assets (%) ..... 1.11* 1.14 1.19 1.21 1.26 1.30 1.24 1.18 1.22 1.21 1.09
Ratio of net investment income
to average net assets (%) ..... .58(c) .86 .48 .75 1.13 1.25 2.22 1.33 1.20 1.16 1.19
Portfolio turnover rate (%) ..... 35.1* 45.2 46.3 39.9 29.2 50.4 70.1 49.4 48.3 54.8 66.5
Average commission rate
paid(b) ....................... $.0002 $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
<FN>
(a) Based on monthly average shares outstanding during the period.
(b) Average commission rate paid per share of common and preferred stocks is calculated for fiscal years beginning on or after
September 1, 1995.
(c) The ratio for the six months ended September 30, 1996 has not been annualized since the Fund believes it would not be
appropriate because the Fund's dividend income is not earned rateably throughout the fiscal year.
* Annualized
** Not annualized
</FN>
</TABLE>
19 -- SCUDDER INTERNATIONAL FUND
<PAGE>
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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the 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 $4,436,565 (.17% of net assets) and have been noted in the
investment portfolio as of September 30, 1996. Their values have been estimated
by the Board of Directors in the absence of readily ascertainable market values.
However, because of the inherent uncertainty of valuation, those estimated
values may differ significantly from the values that would have been used had a
ready market for the securities existed, and the difference could be material.
OPTIONS. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the
period, the Fund purchased put options and wrote call options on currencies as a
hedge against potential adverse price movements in the value of portfolio
assets.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium paid. If the Fund elects
20 -- SCUDDER INTERNATIONAL FUND
<PAGE>
to close out the option it would recognize a gain or loss equal to the
difference between the cost of acquiring the option and the amount realized upon
the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked price are available. Over-the-counter written or purchased options are
valued using dealer supplied quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
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. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
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:
21 -- SCUDDER INTERNATIONAL FUND
<PAGE>
(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.
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, 1995 through March 31, 1996, the Fund incurred approximately
$314,000 of net realized currency losses. As permitted by tax regulations, the
Fund intends to elect to defer these losses and treat them as arising in the
fiscal year ending March 31, 1997.
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 income tax return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from 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.
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.
22 -- SCUDDER INTERNATIONAL FUND
<PAGE>
B. PURCHASES AND SALES OF SECURITIES
For the six months ended September 30, 1996, purchases and sales of investment
securities (excluding short-term investments) aggregated $432,969,780 and
$426,400,118, respectively.
C. RELATED PARTIES
On September 5, 1996, the Fund's Board of Directors approved a new Investment
Management Agreement (the "Management Agreement") with Scudder, Stevens & Clark,
Inc. (the "Adviser"). Under the Management Agreement the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management, 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 approximately 0.90% of the first $500,000,000 of average daily net assets,
0.85% of the next $500,000,000 of such net assets, 0.80% of the next
$1,000,000,000 of such net assets, .75% of the next $1,000,000,000 of such net
assets, and 0.70% of such net assets in excess of $3,000,000,000, 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 5, 1996 (the "Agreement"), the Fund agreed to
pay to the Adviser a fee 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. The
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 six
months ended September 30, 1996, the fee pursuant to both agreements amounted to
$10,443,197 which was equivalent to an annual effective rate of .82% of the
Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. Included
in services to shareholders is $1,238,513 charged to the Fund by SSC for the six
months ended September 30, 1996, of which $206,131 is unpaid at September 30,
1996.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the six months ended September
30, 1996, the amount charged to the Fund by STC aggregated $311,522, of which
$54,581 is unpaid at September 30, 1996.
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 September 30, 1996, the amount charged to the Fund by SFAC aggregated
$398,669, of which $65,856 is unpaid at September 30, 1996.
The Fund pays each Director not affiliated with the Adviser $4,000 annually plus
specified amounts for attended board and committee meetings. For the six months
ended September 30, 1996, Directors' fees aggregated $36,910.
23 -- SCUDDER INTERNATIONAL FUND
<PAGE>
D. LINES OF CREDIT
The Fund and several affiliated Funds (the "Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
24 -- SCUDDER INTERNATIONAL FUND
<PAGE>
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 September 30,
1996, and the related statement of operations for the six months then ended, the
statements of changes in net assets for the six months then ended, and for the
year ended March 31, 1996, and the financial highlights for the six months ended
September 30, 1996 and for each of the ten years in the period ended March 31,
1996. 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
September 30, 1996 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 September 30, 1996, the results of its
operations for the six months then ended, the changes in its net assets for the
six months then ended and for the year ended March 31, 1996, and the financial
highlights for the six months ended September 30, 1996 and for each of the ten
years in the period ended March 31, 1996, in conformity with generally accepted
accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
November 15, 1996
25 -- SCUDDER INTERNATIONAL FUND
<PAGE>
Investment Products and Services
The Scudder Family of Funds
- --------------------------------------------------------------------------------
Money Market
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
Tax Free Money Market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
Scudder California Tax Free Fund*
Scudder High Yield Tax Free Fund
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited Term
Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder Medium Term Tax Free Fund
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund
Income
Scudder Emerging Markets Income Fund
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Growth
Scudder Capital Growth Fund
Scudder Classic Growth Fund
Scudder Development Fund
Scudder Emerging Markets Growth Fund
Scudder Global Discovery Fund
Scudder Global Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Latin America Fund
Scudder Micro Cap Fund
Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder 21st Century Growth Fund
Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
- --------------------------------------------------------------------------------
IRAs
Keogh Plans
Scudder Horizon Plan*+++ (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase
Pension Plans
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia 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)++
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.
26 - SCUDDER INTERNATIONAL FUND
<PAGE>
How to Contact Scudder
Account Service and Information
For existing account service and transactions
Scudder Investor Relations
1-800-225-5163
For personalized information about your Scudder accounts;
exchanges and redemptions; or information on any Scudder fund
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
Visit the Scudder World Wide Web Site at:
http://funds.scudder.com
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 which utilizes 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.
27 - SCUDDER INTERNATIONAL FUND
<PAGE>
Celebrating Over 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 over 40 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.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
