Scudder
Greater Europe
Growth Fund
Annual Report
October 31, 1996
Pure No-Load(TM) Funds
For investors seeking long-term growth of capital through investment primarily
in the equity securities of European companies.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's Chairman
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
15 Financial Statements
18 Financial Highlights
19 Notes to Financial Statements
22 Report of Independent Accountants
23 Tax Information
25 Officers and Directors
26 Investment Products and Services
27 How to Contact Scudder
In Brief
o Scudder Greater Europe Growth Fund produced a strong total return of 25.11%
for the 12 months ended October 31, 1996, well ahead of the returns for both the
unmanaged MSCI Europe Index and the average European region fund tracked by
Lipper Analytical Services.
o Longstanding political and economic structures in Europe continue to evolve in
response to the pressures of global competition. While the transition will not
be easy, we believe the potential rewards from deregulation, privatization, and
fiscal reform are exciting.
o The Fund continues to seek out companies positioned to benefit from the
important changes in Europe, including a number of companies which are involved
in outsourcing and other means of enhancing corporate competitiveness.
2 - Scudder Greater Europe Growth Fund
<PAGE>
Letter From the Fund's Chairman
Dear Shareholders,
We hope you enjoy our newly redesigned shareholder report. 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. Going forward,
portfolio information will be made available on a more timely basis -- 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 Greater
Europe Growth Fund's performance over the 12-month period covered by this report
was most gratifying. The Fund's total return of 25.11% outstripped both
international stocks in the aggregate and the average European region fund by
comfortable margins. Going forward, we believe that the structural changes
sweeping the continent including privatization, deregulation, and fiscal reform
bode well for European equities. Scudder Greater Europe Growth Fund will
continue to provide important access to the many opportunities for capital
appreciation to be found in the region.
Finally, we would like to take this opportunity to highlight some additions
made this fall to the Scudder Family of Funds. 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. Most
recently, we introduced the Scudder Pathway Series, four portfolios --
Conservative, Balanced, Growth, and International -- which each comprise five or
more Scudder Funds and which together are designed to meet a range of investor
needs. 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 Greater Europe Growth
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 Greater Europe Growth Fund
3 - Scudder Greater Europe Growth Fund
<PAGE>
PERFORMANCE UPDATE as of October 31, 1996
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/96 $10,000 Cumulative Annual
- ----------------------------------------
SCUDDER GREATER EUROPE GROWTH FUND
- ----------------------------------------
1 Year $12,511 25.11% 25.11%
Life of Fund* $14,611 46.11% 20.21%
- ----------------------------------------
MORGAN STANLEY CAPITAL INTERNATIONAL
(MSCI) EUROPE INDEX
- ----------------------------------------
1 Year $11,747 17.47% 17.47%
Life of Fund* $13,299 32.99% 15.34%
- ----------------------------------------
*The Fund commenced operations on October 10, 1994.
Index comparisons begin October 31, 1994.
- -----------------------------------------------------------------
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:
SCUDDER GREATER EUROPE GROWTH FUND
Year Amount
- ----------------------
10/94* $10,000
1/95 $ 9,466
4/95 $10,371
7/95 $11,482
10/95 $11,506
1/96 $11,859
4/96 $12,981
7/96 $13,299
10/96 $14,395
MORGAN STANLEY CAPITAL INTERNATIONAL
(MSCI) EUROPE INDEX
Year Amount
- ----------------------
10/94* $10,000
1/95 $ 9,596
4/95 $10,597
7/95 $11,485
10/95 $11,321
1/96 $11,840
4/96 $12,288
7/96 $12,362
10/96 $13,299
The Morgan Stanley Capital International (MSCI) Europe Index is an unmanaged
capitalization-weighted measure of 14 stock markets in Europe. 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 OCTOBER 31
1994* 1995 1996
-------------------------
NET ASSET VALUE... $12.18 $13.99 $17.20
INCOME DIVIDENDS.. $ -- $ .02 $ .11
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ -- $ .14
FUND TOTAL
RETURN (%)........ 1.50 15.06 25.11
INDEX TOTAL
RETURN (%)........ -- 13.21 17.47
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.
If the Adviser had not maintained the Fund's expenses, the total returns
for the one year and life of Fund periods would have been lower.
4 - Scudder Greater Europe Growth Fund
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PORTFOLIO SUMMARY as of October 31, 1996
- ---------------------------------------------------------------------------
GEOGRAPHICAL
(Excludes 6% Cash Equivalents)
- ---------------------------------------------------------------------------
France 23%
Germany 16%
United Kingdom 13%
Sweden 10%
Italy 7%
Netherlands 7%
Spain 7%
Switzerland 6%
Poland 5%
Other 6%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Approximately half of portfolio assets
are invested in the core European
markets of France, Germany and the U.K.
- --------------------------------------------------------------------------
SECTORS
(Excludes 6% Cash Equivalents)
- --------------------------------------------------------------------------
Manufacturing 16%
Financial 12%
Service Industries 10%
Health 10%
Consumer Discretionary 8%
Media 6%
Consumer Staples 6%
Durables 6%
Construction 6%
Other 20%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Many manufacturers are actively restructuring
their businesses towards more flexible and
efficient workforces.
- --------------------------------------------------------------------------
10 LARGEST EQUITY HOLDINGS
(15% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. DASSAULT SYSTEMES SA
Computer aided design, manufacturing and engineering software products
in France
2. CIMENTOS DE PORTUGAL SA
Manufacturer of cement, ready mix concrete and aggregates
3. MANNESMANN AG
Diversified construction and technology company in Germany
4. FRESENIUS AG
Developer, manufacturer and distributor of pharmaceuticals in Germany
5. PEARSON PLC
Diversified media and entertainment holding company in the United Kingdom
6. BAYER AG
Leading chemical producer in Germany
7. COMPUTERLAND POLAND SA
Provider of computer services and systems
8. BASF AG
Leading international chemical producer in Germany
9. HENNES & MAURITZ AB
Clothing and cosmetics retailer throughout Europe
10.GENERAL ELECTRIC CO., PLC
Manufacturer of power, communications and defense equipment and other
various electrical components in the United Kingdom
Top holdings include companies positioned to benefit from Europe's evolving
economic structure.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 10. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - Scudder Greater Europe Growth Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Scudder Greater Europe Growth Fund produced a strong total return of 25.11% for
the year ended October 31, 1996, well ahead of the 17.47% return of the
unmanaged MSCI Europe Index. The Fund's performance also compared very favorably
to that of the average pan-European equity fund tracked by Lipper Analytical
Services, which returned 17.08% for the period, and the Fund was ranked second
out of 36 peers. Performance since the Fund's inception in October of 1994 has
been excellent as well. In fact, for the two years through the end of October
1996, the Fund ranked number one out of 30 peers, with a compounded annual
return of 19.98% versus 13.46% for the Lipper average.
Review of the Markets
Over the last 12 months, European equities have been underpinned by a number of
factors including falling interest rates, reasonable valuations, merger and
acquisition activity, and a growing appreciation by investors of positive
structural changes. Within Europe, economic growth patterns have diverged,
impacting individual stock markets variably. The United Kingdom displayed growth
of more than 2%, with healthy gains in employment bolstering retail spending.
This trend was captured in the portfolio's holding of Next, a leading U.K.
clothing retailer, which rose over 40% this year. Yet the U.K. market, Europe's
largest, lagged the region overall. At the same time, the economic environment
in the core continental markets of France and Germany was much gloomier as
unemployment concerns, fiscal stringency, strong currencies, and weak export
demand weighed heavily on growth. Nevertheless, the French market outpaced the
European average, led by growth stocks and companies rebounding from depressed
valuations, and a number of the Fund's best performing stocks over this period
were in France. In Germany, where stocks fell short of the average European
market, investors could still find ample rewards in companies where managements
are actively showing an interest in maximizing value for shareholders and are
taking steps to assure global competitiveness, such as BASF, Bayer,
Daimler-Benz, and Hoechst.
Among peripheral markets, strong performances were turned in by Sweden and
Spain, which benefited from significant interest rate drops as Europe approaches
currency union. While the rest of Europe focused on the problems of
restructuring, slow growth, uncompetitive currencies, and high unemployment,
Poland offered sparkling returns, recovering from the emerging market malaise of
1995. The Polish economy barreled forward with GDP growth of more than 5%,
helped by accelerating foreign direct investment and a rising, entrepreneurial
private sector. Corporate profits growth has been strong and Poland's
well-regulated, transparent stock market is attractive to foreign as well as
domestic investors. The Fund has increased its investments in Poland this year,
which now account for 5% of the portfolio.
6 - Scudder Greater Europe Growth Fund
<PAGE>
Structural Changes Enhance Equity Outlook
Europe today stands at a crossroads. Longstanding political and economic
structures are no longer viable due to the pressures of global competition,
aging dependent populations, and the limits of fiscal support. There is
widespread recognition of the imperative to change -- to deregulate, to
privatize, to reduce labor costs, to cut social welfare spending -- but it will
not be an easy evolution and investors may be shaken by transitional jitters
from time to time. The potential rewards, however, are exciting.
The United States and the United Kingdom have already surmounted similar
challenges, and there are signs that continental Europe is about to do the same.
The corporate sector has been at the forefront of change, determined to reclaim
its global competitiveness. Despite the associated costs and regulatory
barriers, many employers have already cut jobs by as much as 20-30%. Factories
have been closed, production facilities across Europe consolidated, and new
factories built in low cost regions in Eastern Europe and Asia. A push for
greater labor flexibility is making inroads: the reduction of sick pay and
movement of wage negotiations from the industry to the company level in Germany;
the abolition of wage indexation in Italy; the easing of rules on temporary
employment in Spain with expectations of similar changes forthcoming in Germany
and Sweden. A new emphasis on outsourcing has also served to enhance corporate
flexibility and competitiveness.
For their part, governments have been pushing ahead on the privatization
process, with proceeds providing a welcome source of finance in the struggle to
meet the Maastricht requirements. Recent privatizations have involved sales to
industrial buyers as well as issuance on the equity market. In the latter case,
privatizations are playing an important role in developing the equity markets of
Europe. For example, the market capitalization of still emerging Portugal
expanded by nearly 10% last year as a result of several privatizations including
Portugal Telecom, in which the Fund participated. This Fall's flotation of
Deutsche Telecom was a signal event as the largest single privatization in
European stock market history. While the German equity market is among the
larger European markets, it is still underdeveloped by international standards.
German equity market capitalization represents a mere 25% of GDP in comparison
to a similar ratio of 75% in the United States, and only 5% of the German
population own common stocks. The Deutsche Telecom issue enticed many first time
equity investors and, given its success, German investors may well be encouraged
to place more of their considerable savings in equities.
Additional signs of a developing equity culture throughout continental Europe
include a wider array of initial public offerings (IPOs). As corporations need
capital to expand and globalize, they are coming to the equity market for
financing. Adidas in Germany, one of the Fund's holdings, is an example of a
successful IPO in the last year that offered support to the equity investing
trend.
Not only are the investment choices broadening via IPOs and privatizations, the
value system is changing. Continental Europe has traditionally placed the
interests of employees, customers, and suppliers well ahead of the interests of
7 - Scudder Greater Europe Growth Fund
<PAGE>
shareholders, but a new focus on shareholder value is emerging. The drive for
growth at any cost has been supplanted at many companies by the desire to
generate returns for shareholders. Hoechst, the German chemical and
pharmaceutical company, has set strict return requirements for each of its
divisions and has moved to spin off or divest those which do not meet their
criteria or which will achieve higher valuations independently. Daimler-Benz has
jettisoned Fokker, its money-losing aircraft subsidiary, and further
rationalized its business portfolio. Companies such as Compagnie Financiere de
Paribas in France are selling off cross holdings of industrial companies and
have been rewarded with substantial stock price advances. Furthermore,
continental European managers are expected to follow the lead of U.S. companies
which have enhanced value through share buybacks. In continental Europe, share
repurchases have been delayed by regulatory impediments and, where legal, are
often taxed at very high levels. However, authorities in Germany, Switzerland,
and Sweden are reviewing current legislation with an eye towards deregulation.
Positive news on this front should lead to price appreciation for those
corporations poised to use share buybacks as a mechanism to deploy cash.
Equity market development in Europe will also be fostered by the growth of a
private pension system, still in its infancy throughout Europe. The state social
security system has been the principal guarantor of retirement support, but the
limits of affordability have been surpassed. In Germany, public deficits could
rise to more than 20% of GNP if no changes are undertaken. France has already
put proposals on the table to encourage private pension funding. Private pension
funds would create additional and growing demand for European equities as well
as serving as organized advocates for shareholder value.
Portfolio Strategy
The Fund continues to seek out companies with sound management strategies
positioned to benefit from the important changes in Europe and from growth
opportunities through new products or new customers. We have invested in a
number of companies which are involved in outsourcing and other means of
enhancing client competitiveness. Dassault Systemes in France, our largest
holding, is engaged in computer-aided design and engineering, enabling companies
to cut development time and costs in half. Altran Technologies, an engineering
consulting firm in France, helps companies keep down fixed costs while
continuing to invest in R&D. Adecco, BIS, and Randstad are temporary help
agencies and beneficiaries of the movement toward more flexible labor
utilization in Spain, Germany, and Sweden.
Europe is home base to a number of companies which are emerging global
competitors. Fresenius, the German dialysis products manufacturer has broadened
its base to become the world's largest supplier of renal products and services
after its merger with W.R. Grace's National Medical division. Ericsson (Sweden),
a leader in the booming market for cellular telecommunications, is another
example.
8 - Scudder Greater Europe Growth Fund
<PAGE>
In the emerging Eastern countries, companies with strong managements in sectors
key to the development of the economy have enormous scope for growth. Polish
portfolio holdings include Bank Rozwoju Eksportu, a technologically advanced
bank equipped to service the growing corporate middle market as well as foreign
corporations active in Poland, and Computerland, a young, entrepreneurial,
shareholder-oriented company rapidly achieving dominance in the emerging
computer service and consulting business in Poland.
Finally, the restructuring theme is most notable at present in Germany as
exemplified by our holdings in Hoechst, Daimler-Benz, and BASF, but is also
central to such holdings as Pearson (UK) and Assurances Generales de France.
There are many reasons to invest in Europe today, a continent of change and
opportunity. Going forward, Scudder Greater Europe Growth Fund will continue to
provide a vehicle for gaining important exposure to the equity markets of the
region. We are delighted you are participating in the economic and financial
evolution of Europe as shareholders in the Fund.
Sincerely,
Your Portfolio Management Team
/s/Carol L. Franklin /s/Nicholas Bratt
Carol L. Franklin Nicholas Bratt
/s/Joan R. Gregory
Joan R. Gregory
Scudder Greater Europe
Growth Fund:
A Team Approach to Investing
Scudder Greater Europe Growth 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.
Scudder believes its team approach benefits Fund investors by bringing
together many disciplines and leveraging Scudder's extensive resources.
Carol L. Franklin, Lead Portfolio Manager, sets Fund investment strategy and
oversees its daily operation. Carol joined Scudder in 1981 and has nine years
of European research and investment management experience. Nicholas Bratt,
Portfolio Manager, helps set the Fund's general investment strategies. Nick
has over 20 years of experience in worldwide investing and has been with
Scudder since 1976. Joan R. Gregory, Portfolio Manager, focuses on stock
selection, a role she has played since she joined Scudder in 1992. Joan has
been involved with investment in global and international stocks as an
assistant portfolio manager since 1989.
9 - Scudder Greater Europe Growth Fund
<PAGE>
Investment Portfolio as of October 31, 1996
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 1.1%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 10/31/96 at 5.52%, to be
repurchased at $1,342,206 on 11/1/96, collateralized by a $974,000 U.S. Treasury ------------
Note, 14.25%, 2/15/02 (Cost $1,342,000) ................................................. 1,342,000 1,342,000
------------
Short-Term Notes 5.0%
- ------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Association Discount Note, 11/13/96 (Cost $5,989,720) ........... 6,000,000 5,989,720
------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 93.9%
- ------------------------------------------------------------------------------------------------------------------------------
Czech Republic 1.0%
Central European Media Enterprises Ltd. "A" *(Owner and operator of national and regional
private commercial television stations in central Europe and Germany) ................... 42,000 1,176,000
------------
Finland 0.5%
Nokia AB Oy "A" (Leading manufacturer of telecommunications equipment and
cellular telephones) ........................................................................ 11,560 533,927
---------
France 21.4%
AXA SA (Insurance group providing insurance, finance and real estate services) ................ 9,928 620,184
Adecco SA * (Personnel and temporary employment company) ...................................... 3,186 902,557
Altran Technologies, SA (Engineering and consulting services for aerospace, telecommunications
and electronics fields) ..................................................................... 3,300 987,792
Assurances Generales de France (Health, life, fire, accident and special risk insurance) ...... 29,100 858,528
BIS SA (Operator of temporary employment agencies in France and Switzerland) .................. 5,800 601,401
Cap Gemini Sogeti SA * (Software consultants) ................................................. 18,000 876,864
Carrefour (Hypermarket operator and food retailer) ............................................ 1,625 901,930
Compagnie Financiere de Paribas "A" (Finance and investment company) .......................... 19,514 1,256,037
Compagnie Generale des Eaux (Water utility) ................................................... 8,400 1,004,108
Compagnie de Saint-Gobain (Glass manufacturer) ................................................ 5,600 755,957
Comptoirs Modernes (Operator of supermarkets, grocery and department stores) .................. 2,310 1,105,423
Dassault Systemes SA * (Computer aided design, manufacturing and engineering software
products) ................................................................................... 65,200 2,806,276
Essilor International (Manufacturer of various types of lenses, eyeglasses, contact lenses
and optical measuring instruments) .......................................................... 4,890 1,286,741
LVMH Moet-Hennessy Louis Vuitton SA (Producer of wines, spirits and luxury products) .......... 1,800 412,372
Lafarge SA (Leading producer of cement, concrete and aggregates) .............................. 13,600 816,309
Lagardere Groupe (Holding company with interests in publishing, defense, audiovisual production
and services, telecommunications and media) ................................................. 28,514 900,930
Legrand SA (Manufacturer of low-voltage electrical devices) ................................... 2,300 399,127
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Greater Europe Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Michelin "B" (Leading tire manufacturer) .................................................. 22,895 1,104,124
Pinault-Printemps, SA (Distributor of consumer goods) ..................................... 1,796 677,444
Rexel SA (Distributor of electrical equipment) ............................................ 3,100 918,829
Salomon S.A. (Manufacturer of sports equipment) ........................................... 10,600 949,799
Schneider SA (Manufacturer of electronic components and automated manufacturing systems) .. 18,392 899,558
Sligos SA (Electrical payment and computing engineering services company) (b) ............. 6,200 668,349
Sylea (Manufacturer of automobile parts and components) ................................... 4,200 485,620
Synthelabo SA (Pharmaceutical and biomedical company) ..................................... 14,600 1,393,904
Total SA "B" (International oil and gas exploration, development and production) .......... 12,223 956,289
Valeo SA (Automobile and truck components manufacturer) ................................... 14,989 899,680
----------
25,446,132
----------
Germany 15.4%
Adidas AG (Manufacturer of sport shoes, clothing and equipment) ........................... 12,200 1,046,048
Altana AG (Developer and producer of pharmaceuticals, chemicals and computer software
products) ............................................................................... 1,460 1,166,958
B.U.S. Berzelius Umwelt-Service AG (Reprocessor of high-zinc dust, aluminum-bearing salt slag) 15,600 216,402
BASF AG (Leading international chemical producer) ......................................... 47,100 1,505,856
Bayer AG (Leading chemical producer) ...................................................... 42,650 1,612,071
Bayerische Vereinsbank Girozentrale (Commercial bank) ..................................... 30,600 1,151,151
Daimler-Benz AG * (Automobile and truck manufacturer) ..................................... 19,050 1,118,701
Draegerwerk AG (pfd.)(Producer of instruments for medical and aeronautical technology) .... 2,600 346,930
Fresenius AG (Developer, manufacturer and distributor of pharmaceuticals) ................. 7,880 1,681,303
Hoechst AG (Chemical producer) ............................................................ 36,900 1,388,153
Leica Camera AG * (Leading manufacturer of cameras and optical equipment) ................. 19,961 675,102
Mannesmann AG (Bearer) (Diversified construction and technology company) .................. 4,650 1,806,123
RWE AG (pfd.)(Producer and marketer of petroleum and chemical products) ................... 31,450 1,067,827
SAP AG (pfd.)(Computer software manufacturer) ............................................. 5,750 774,086
Schering AG (Pharmaceutical and chemical producer) ........................................ 5,950 478,916
Siemens AG (Leading electrical engineering and electronics company) ....................... 18,450 953,669
VEBA AG (Electric utility, distributor of oil and chemicals) .............................. 24,350 1,299,171
----------
18,288,467
----------
Ireland 0.4%
Irish Life PLC (Provider of life and disability insurance and pensions) ................... 116,718 505,693
----------
Italy 6.6%
Banca Fideuram SpA (Commercial bank) ...................................................... 280,000 593,731
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Greater Europe Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Bulgari SpA (Manufacturer and retailer of fine jewelry, luxury watches and perfumes) ........ 47,000 815,275
Edison SpA (Hydroelectrical energy holding company) ......................................... 145,000 863,109
Ente Nazionale Idrocarburi SpA (Exploration and production of oil, natural gas and chemicals) 135,000 646,875
Gucci Group (New York Shares) (Designer and producer of personal luxury accessories
and apparel) .............................................................................. 17,300 1,193,700
Luxottica Group SpA (ADR) (Manufacturer and marketer of eyeglasses) ......................... 13,840 878,840
Saipem SpA (International contractor in oil and gas exploration and drilling, construction of
refineries and pipelines) ................................................................. 260,000 1,327,287
Telecom Italia Mobile SpA (Ord.) (Cellular telecommunication services) ...................... 572,000 1,182,726
Unicem SpA * (Cement producer) .............................................................. 55,000 366,383
---------
7,867,926
---------
Netherlands 6.5%
Akzo-Nobel N.V. (Chemical producer) ......................................................... 8,900 1,121,186
De Telegraaf Holding N.V. (Leading publisher of newspapers, magazines and books) ............ 43,840 942,851
Getronics N.V. (Provider of computer installation and maintenance services) ................. 52,884 1,299,392
Heineken Holdings N.V. "A" (Brewery) ........................................................ 5,406 915,467
Koninklijke Nedlloyd Groep N.V. (Container shipping and transportation) ..................... 20,000 502,018
Philips Electronics N.V. (Leading manufacturer of electrical equipment) ..................... 12,330 434,454
Randstad Holdings N.V. (Temporary and technical staffing services) .......................... 16,300 1,317,715
Wolters Kluwer CVA (Publisher) .............................................................. 8,940 1,148,875
----------
7,681,958
----------
Poland 5.1%
Agros Holdings "C" * (Construction holding company) ......................................... 44,400 1,145,063
Bank Rozwoju Eksportu SA (Export bank) ...................................................... 42,800 1,271,272
Bydgoska Fabryka Kabli SA * (Manufacturer of cables, wires and insulating materials) ........ 125,000 871,514
ComputerLand Poland S.A. * (Provider of computer services and systems) ...................... 87,000 1,593,803
Elektrim Spolka Akcyjna SA (Manufacturer of power equipment, electrical machinery
and apparatus) ............................................................................ 65,000 554,923
Zaklady Metali Lekkich Kety * (Manufacturer of aluminum casting alloys and products) ........ 7,700 602,590
----------
6,039,165
----------
Portugal 3.4%
Cimentos de Portugal SA (Manufacturer of cement, ready mix concrete and aggregates) ......... 100,000 2,101,927
Engil-SGPS (Civil and public works construction) ............................................ 100,000 1,019,275
Portugal Telecom SA (Telecommunication services) ............................................ 34,400 894,557
----------
4,015,759
----------
Spain 6.3%
Acerinox, S.A. (Stainless steel producer) ................................................... 7,060 846,470
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Greater Europe Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Banco Bilbao Vizcaya, S.A. (Leading financial group) ........................................ 22,600 1,098,033
Banco Popular Espanol, S.A. (Retail bank) ................................................... 2,800 535,162
Centros Comerciales Pryca, SA (Owner and operator of hypermarkets selling consumer products
including groceries, appliances and clothing) ............................................. 34,200 785,252
Compania Telefonica Nacional de Espana S.A. (Telecommunication services) .................... 67,000 1,344,095
Empresa Nacional de Electricidad SA (Electric utility) ...................................... 16,000 979,234
Hidroelectrica del Cantabrico (Electric utility) ............................................ 15,800 526,213
Iberdrola SA (Electric utility) ............................................................. 88,000 934,410
Zardoya-Otis SA (Manufacturer and installer of elevator equipment) .......................... 4,730 482,229
---------
7,531,098
---------
Sweden 9.4%
AGA AB "B" (Free) (Producer and distributor of industrial and medical gases) ................ 58,200 934,261
Autoliv AB (Free) (Manufacturer of automobile safety bags) .................................. 33,900 1,439,118
Diligentia AB * (Residential and commercial real estate investment company) ................. 54,240 697,379
Fastighets AB Nackebro Units * (Owner and manager of commercial and residential properties) . 2,000 31,344
Hennes & Mauritz AB "B" (Free) (Clothing and cosmetics retailer throughout Europe) .......... 11,300 1,497,577
Investor AB "B" (Investment company with holdings in listed shares of industrial companies) . 20,000 806,433
Kinnevik AB "B" (Free) (Diversified holding company) ........................................ 18,000 488,881
L.M. Ericsson Telephone Co. "B" (ADR) (Leading manufacturer of cellular telephone equipment) 48,220 1,332,078
NordicTel Holding AB * (Mobile telecommunication services) .................................. 30,000 543,201
S.K.F. AB "A" (Free) (Manufacturer of roller bearings) ...................................... 29,600 646,303
Skandia Foersaekrings AB (Free) (Financial conglomerate) .................................... 39,000 1,094,847
Skandinaviska Enskilda Banken "A" (Commercial bank) ......................................... 92,400 773,263
Svenska Handelbanken "A" (Commercial bank) .................................................. 38,500 949,005
----------
11,233,690
----------
Switzerland 5.3%
ABB AG (Bearer) (Manufacturer of electrical equipment) ...................................... 760 940,591
Adecco SA (Bearer) (Personnel and temporary employment company) ............................. 2,400 675,065
Baloise Holding Ltd. (Registered) (Provider of private, commercial and corporate insurance, life
insurance, international reinsurance) ..................................................... 130 271,928
CS Holdings (Registered) (Provider of bank services, management services and life insurance) 6,435 643,704
Ciba-Geigy AG (Bearer) (Pharmaceutical company) ............................................. 880 1,080,738
Elektrowatt AG (Bearer) (Holding company: owner of electric plants and interests in hydro and
nuclear power plants) ..................................................................... 1,825 694,081
Holderbank Financiere Glaris AG (Bearer) (Cement producer) 700 485,302
Oerlikon-Buehrle Holding AG (Registered)* (Diversified manufacturer of shoes and apparel,
vacuums, aircraft components, missile systems) ............................................ 5,800 573,291
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Greater Europe Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sandoz Ltd. AG (Registered) (Pharmaceutical company) ....................................... 815 943,440
----------
6,308,140
----------
United Kingdom 12.6%
BOC Group PLC (Producer of industrial gases) ............................................... 60,000 831,103
Barclays PLC (Commercial and investment banking, insurance and other financial services) ... 70,000 1,098,941
British Petroleum PLC (Major integrated world oil company) ................................. 63,260 679,848
Carlton Communications PLC (Television post production products and services) .............. 150,800 1,208,876
General Electric Co., PLC (Manufacturer of power, communications and defense equipment and
other various electrical components) ..................................................... 234,000 1,447,350
Glaxo Wellcome PLC (Pharmaceutical company) ................................................ 80,000 1,256,584
Morgan Crucible Co. PLC (Manufacturer of technologically advanced materials, chemicals and
components) .............................................................................. 80,000 615,922
Next PLC (Retailer of clothing, accessories and fashion jewelry, also through home shopping) 94,000 853,761
Pearson PLC (Diversified media and entertainment holding company) .......................... 132,000 1,628,611
PowerGen PLC (Electric utility) ............................................................ 78,750 653,725
Reuters Holdings PLC (International news agency) ........................................... 52,000 647,499
SmithKline Beecham PLC (Manufacturer of ethical drugs and healthcare products) ............. 87,232 1,077,685
Thistle Hotels PLC * (Hotel chain owner and operator) ...................................... 314,900 855,980
WPP Group PLC (Advertising agency) ......................................................... 373,000 1,384,261
Zeneca Group PLC (Holding company: manufacturing and marketing of pharmaceutical and
agrochemical products and specialty chemicals) ........................................... 29,000 790,183
-----------
15,030,329
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $94,112,641) 111,658,284
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $101,444,361) (a) 118,990,004
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $101,480,946. At October 31,
1996, net unrealized appreciation for all securities based on tax cost was
$17,509,058. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $18,257,386 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$748,328.
(b) Security valued in good faith by the Valuation Committee of the Board of
Directors. The cost of this security at October 31, 1996 aggregated
$466,434. See Note A of the Notes to Financial Statements.
Sector breakdown of the Fund's equity securities is noted on page 5.
The accompanying notes are an integral part of the financial statements.
14 - Scudder Greater Europe Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of October 31, 1996
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $101,444,361) (Note A) ......... $ 118,990,004
Cash ................................................................... 716
Receivable for investments sold ........................................ 1,357,713
Receivable for Fund shares sold ........................................ 2,076,709
Dividends and interest receivable ...................................... 38,089
Foreign taxes recoverable .............................................. 109,766
Deferred organization expenses (Note A) ................................ 34,691
---------------
Total assets ........................................................... 122,607,688
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ...................................... 1,566,140
Payable for Fund shares redeemed ....................................... 153,552
Other payables ......................................................... 399,084
Accrued management fee (Note C) ........................................ 53,856
Other accrued expenses (Note C) ........................................ 134,998
----------------
Total liabilities 2,307,630
------------------------------------------------------------------------------------------
Net assets, at market value ............................................ $ 120,300,058
------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .................................... $ 459,368
Unrealized appreciation on:
Investments ......................................................... 17,545,643
Foreign currency related transactions ............................... 2,833
Accumulated net realized gain .......................................... 1,053,305
Paid-in capital ........................................................ 101,238,909
------------------------------------------------------------------------------------------
Net assets, at market value ............................................ $ 120,300,058
------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($120,300,058 / 6,993,392 shares of capital stock outstanding, ----------------
$.01 par value, 100,000,000 shares authorized) ....................... $17.20
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Greater Europe Growth Fund
<PAGE>
Statement of Operations
year ended October 31, 1996
<TABLE>
<S> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $136,932) .............. $ 1,101,564
Interest ........................................................... 421,122
---------------
1,522,686
---------------
Expenses:
Management fee (Note C) ............................................ 655,757
Services to shareholders (Note C) .................................. 232,908
Custodian and accounting fees (Note C) ............................. 167,219
Directors' fees and expenses (Note C) .............................. 67,944
Auditing ........................................................... 45,651
Reports to shareholders ............................................ 37,479
Amortization of organization expense (Note A) ...................... 11,888
Registration fees .................................................. 46,965
Legal .............................................................. 13,328
Other .............................................................. 11,810
---------------
Total expenses before reductions ................................... 1,290,949
Expense reductions (Note C) ........................................ (305,892)
---------------
Expenses, net ...................................................... 985,057
------------------------------------------------------------------------------------------
Net investment income .............................................. 537,629
------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ........................................................ 1,061,625
Foreign currency related transactions .............................. (75,263)
---------------
986,362
---------------
Net unrealized appreciation during the period on:
Investments ........................................................ 13,127,538
Foreign currency related transactions .............................. 2,503
---------------
13,130,041
---------------
Net gain on investment transactions ................................ 14,116,403
------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations ............... $ 14,654,032
------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Greater Europe Growth Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended October 31,
Increase (Decrease) in Net Assets 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ...................................... $ 537,629 $ 345,669
Net realized gain from investment transactions ............. 986,362 394,420
Net unrealized appreciation on investment transactions
during the period ........................................ 13,130,041 4,315,264
-------------- -------------
Net increase in net assets resulting from operations 14,654,032 5,055,353
-------------- -------------
Distributions to shareholders from:
Net investment income ...................................... (320,199) (26,912)
-------------- -------------
Net realized gains ......................................... (427,101) --
-------------- -------------
Fund share transactions:
Proceeds from shares sold .................................. 110,490,941 49,268,332
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................ 727,064 26,407
Cost of shares redeemed .................................... (45,416,671) (21,590,930)
-------------- -------------
Net increase in net assets from Fund share transactions .... 65,801,334 27,703,809
-------------- -------------
Increase in net assets ..................................... 79,708,066 32,732,250
Net assets at beginning of period .......................... 40,591,992 7,859,742
-------------- -------------
Net assets at end of period (including undistributed net -------------- -------------
investment income of $459,368 and $307,076, respectively) $120,300,058 $40,591,992
-------------- -------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................. 2,901,077 645,237
-------------- --------------
Shares sold ................................................ 6,939,733 3,909,689
Shares issued to shareholders in reinvestment of
distributions ........................................... 52,194 2,316
Shares redeemed ............................................ (2,899,612) (1,656,165)
-------------- --------------
Net increase in Fund shares ................................ 4,092,315 2,255,840
-------------- --------------
Shares outstanding at end of period ........................ 6,993,392 2,901,077
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Greater Europe Growth Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
October 10, 1994
(commencement of
operations) to
Years Ended October 31, October 31,
1996 (a) 1995 1994
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period .............. $13.99 $12.18 $12.00
-----------------------------------------------
Income from investment operations:
Net investment income ............................. .13 .13 .01
Net realized and unrealized gain on investment
transactions ................................... 3.33 1.70 .17
-----------------------------------------------
Total from investment operations .................. 3.46 1.83 .18
-----------------------------------------------
Less distributions from:
Net investment income ............................. (.11) (.02) --
Net realized gains on investment transactions ..... (.14) -- --
-----------------------------------------------
Total distributions ............................... (.25) (.02) --
-----------------------------------------------
Net asset value, end of period .................... $17.20 $13.99 $12.18
-----------------------------------------------------------------------------------------------------
Total Return (%) (b) .............................. 25.11 15.06 1.50**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............ 120 41 8
Ratio of operating expenses, net to average
daily net assets (%) ........................... 1.50 1.50 1.50*
Ratio of operating expenses before expense ........ 1.97 2.74 11.46*
reductions, to average daily net assets (%)
Ratio of net investment income to average daily
net assets (%) ................................. .82 1.25 2.40*
Portfolio turnover rate (%) ....................... 39.0 27.9 --
Average commission rate paid (c) .................. $.0509 $ -- $ --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total returns would have been lower had certain expenses not been reduced.
(c) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years beginning on or after September 1, 1995.
* Annualized
** Not annualized
18 - Scudder Greater Europe Growth Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Greater Europe Growth Fund (the "Fund") is a non-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. 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. The security valued in
good faith by the Valuation Committee of the Board of Directors at fair value
amounted to $668,349 (.56% of net assets) and has been noted in the investment
portfolio as of October 31, 1996. Its value has been estimated by the Board of
Directors in the absence of a readily ascertainable market value. However,
because of the inherent uncertainty of valuation, this estimated value may
differ significantly from the value that would have been used had a ready market
for the security existed, and the difference could be material.
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, is equal to at least 100.5% of the resale price.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at the
daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on the
respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
19 - Scudder Greater Europe Growth Fund
<PAGE>
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
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.
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 difference
primarily relates to investments in 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.
Organization Costs. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are being
amortized on a straight-line basis over a five-year period.
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.
20 - Scudder Greater Europe Growth Fund
<PAGE>
B. Purchases and Sales of Securities
For the year ended October 31, 1996, purchases and sales of investment
securities (excluding short-term investments) aggregated $84,806,268 and
$23,791,070, respectively.
C. Related Parties
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund has agreed to pay to the Adviser
a fee equal to an annualized rate of 1.00% of the Fund's average daily net
assets, computed and accrued daily and payable monthly. As manager of the assets
of the Fund, the Adviser directs the investments of the Fund in accordance with
its investment objectives, policies, and restrictions. The Adviser determines
the securities, instruments, and other contracts relating to investments to be
purchased, sold or entered into by the Fund. In addition to portfolio management
services, the Adviser provides certain administrative services in accordance
with the Agreement. The Agreement provides 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. In addition, the Adviser has agreed not to impose all or a portion of
its management fee until February 28, 1997, and during such period to maintain
the annualized expenses of the Fund at not more than 1.50% of average daily net
assets. For the year ended October 31, 1996, the Adviser did not impose a
portion of its management fee amounting to $305,892, and the amount imposed
amounted to $349,865.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended October 31, 1996, the amount charged by SSC aggregated $177,772, of
which $18,156 was unpaid at October 31, 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 year ended October 31,
1996, the amount charged by STC aggregated $9,227, of which $1,722 was unpaid at
October 31, 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 for the Fund. For the year ended
October 31, 1996, the amount charged by SFAC aggregated $66,529, of which $8,120
was unpaid at October 31, 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 year
ended October 31, 1996, Directors' fees and expenses aggregated $67,944.
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.
21 - Scudder Greater Europe Growth Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder International Fund, Inc. and to the
Shareholders of Scudder Greater Europe Growth Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Greater Europe Growth Fund, including the investment portfolio, as of October
31, 1996, and the related statements 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 two years in the period then
ended, and for the period October 10, 1994 (commencement of operations) to
October 31, 1994. 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
October 31, 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 Greater Europe Growth Fund as of October 31, 1996, 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 two years in the period then ended, and for the period October 10, 1994
(commencement of operations) to October 31, 1994 in conformity with generally
accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 19, 1996
22 - Scudder Greater Europe Growth Fund
<PAGE>
Tax Information
The Fund will mail shareholders IRS Form 1099-Div in late January, summarizing
all taxable distributions paid for 1996.
The Fund paid distributions of $.025 per share from net long-term capital gains
during its year ended October 31, 1996.
Pursuant to section 852 of the Internal Revenue Code, the Fund designates
$64,992 as capital gain dividends for its taxable year ended October 31, 1996.
The Fund paid foreign taxes of $136,932 and the Fund recognized $481,714 of
foreign source income during the taxable year ended October 31, 1996. Pursuant
to section 853 of the Internal Revenue Code, the Fund designates $.02 per share
of foreign taxes and $.07 of income from foreign sources as having been paid in
the taxable year ended October 31, 1996.
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.
23 - Scudder Greater Europe Growth Fund
<PAGE>
This Page
intentionally
left blank.
24 - Scudder Greater Europe Growth Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board and Director
Nicholas Bratt*
President and Director
Paul Bancroft III
Director; Venture Capitalist and Consultant
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; President, Exeter Capital Management Corporation
William H. Gleysteen, Jr.
Director; President, The Japan Society, Inc.
Dudley H. Ladd*
Director
William H. Luers
Director; President, The Metropolitan Museum of Art
Dr. Wilson Nolen
Director; Consultant
Juris Padegs*
Director
Dr. Gordon Shillinglaw
Director; Professor Emeritus of Accounting, Columbia University
Graduate School of Business
Robert G. Stone, Jr.
Honorary Director; Chairman of the Board and Director, Kirby Corporation
Robert W. Lear
Honorary Director; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business
Elizabeth J. Allan*
Vice President
Joyce E. Cornell*
Vice President
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Jerard K. Hartman*
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
Richard W. Desmond*
Assistant Secretary
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
25 - Scudder Greater Europe Growth Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
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 Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund*
Scudder Massachusetts Limited Term
Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Zero Coupon 2000 Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
U.S. Growth
- -----------
Value
Scudder Capital Growth Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Quality Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
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Worldwide
Scudder Global Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Emerging Markets Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund
Retirement Programs
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IRA
SEP IRA
SIMPLE IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan *+++ +++
(a variable annuity)
Closed-End Funds#
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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.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed from expected
least to most risk. +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.
26 - Scudder Greater Europe Growth Fund
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How to Contact Scudder
<CAPTION>
Account Service and Information
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<S> <C>
For existing account services and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges, and an overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information
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For information about the Scudder funds, including additional applications and prospectuses, or for answers to
investment questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services
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To receive information about this discount brokerage service and to obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
Please address all correspondence to
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The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Or Stop by a Scudder Funds Center
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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 Chicago San Francisco
Boston New York
For information on Scudder Treasurers Trust(TM), 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.
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061 -- Member NASD/SIPC
** 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.
</TABLE>
27 - Scudder Greater Europe Growth 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
