Scudder
International Growth and Income Fund
Semiannual Report
August 31, 1998
Pure No-Load(TM) Funds
A fund seeking long-term growth of capital and current income primarily from
foreign equity securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder International Growth and Income Fund
- - - - --------------------------------------------------------------------------------
Date of Inception: 6/30/97 Total Net Assets as of Ticker Symbol: SIGIX
8/31/98: $50.85 million
- - - - --------------------------------------------------------------------------------
o For the six-month period ended August 31, 1998, the Scudder International
Growth and Income Fund provided a total return of -6.68%, versus -8.61% for the
unmanaged MSCI EAFE plus Canada Index.
o The Fund benefited from a concentration in European stocks, which made up 76%
of the portfolio and strongly outperformed other regions for the period.
o The management approach of emphasizing a "relative yield"-based discipline
combined with rigorous fundamental analysis is particularly appropriate in
today's volatile equity markets.
Table of Contents
3 Letter from the Fund's Chairman 13 Financial Statements
4 Performance Update 16 Financial Highlights
5 Portfolio Summary 17 Notes to Financial Statements
6 Portfolio Management Discussion 21 Report of Independent Accountants
8 Glossary of Investment Terms 24 Officers and Directors
9 Investment Portfolio 25 Investment Products and Services
26 Scudder Solutions
2 - Scudder International Growth and Income Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to present this semiannual report for Scudder International
Growth and Income Fund, covering the six months ended August 31, 1998. As
outlined in the portfolio management discussion that follows, this period has
proven difficult for investors. The economic crisis that began in Asia has
spread to the rest of the developing world, in addition to causing significant
disruptions in the mature markets. As difficult as these selloffs are to deal
with when they are taking place, they can also provide extraordinary
opportunities for investors willing to endure volatility. Over the long-term, we
believe that well run companies with strong earnings will ultimately provide
superior returns. In a challenging climate such as this, we believe, investors
should remain focused on their long-term investment goals, despite the near-term
volatility.
In seeking to provide long-term growth of capital plus current income,
Scudder International Growth and Income Fund uses a value-oriented approach to
investing that emphasizes high relative yields, in addition to employing
intensive fundamental analysis. The benefit of this strategy was demonstrated in
the last six months, as the Fund outperformed its benchmark, the MSCI EAFE plus
Canada Index, over a period of generally declining prices.
For those of you who are interested in new Scudder funds, we recently
introduced the Scudder Corporate Bond Fund and the Scudder Prime Reserves Money
Market Fund. These two new funds offer investors ways to diversify their
portfolios and gain monthly dividends, making them compelling choices for
investors in retirement, or for those seeking current income. For further
information on these new funds, please call Scudder Investor Information at
1-800-225-2470.
Thank you for your continued investment in Scudder International Growth and
Income Fund. Please do not hesitate to contact us at the toll-free number listed
above with any questions concerning your investment.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder International Growth and Income Fund
3 - Scudder International Growth and Income Fund
<PAGE>
PERFORMANCE UPDATE as of August 31, 1998
- - - - ----------------------------------------------------------------
FUND INDEX COMPARISONS
- - - - ----------------------------------------------------------------
Total Return
--------------
Period Ended Growth of Average
8/31/98 $10,000 Cumulative Annual
- - - - --------------------------------------------
SCUDDER INTERNATIONAL GROWTH AND INCOME FUND
- - - - --------------------------------------------
1 Year $ 10,170 1.70% 1.70%
Life of Fund* $ 9,874 -1.26% -1.08%
- - - - --------------------------------------------
MSCI EAFE PLUS CANADA INDEX
- - - - --------------------------------------------
1 Year $ 9,892 -1.08% -1.08%
Life of Fund* $ 9,332 -6.68% -5.74%
* The Fund commenced operations on June 30, 1997.
Index comparisons begin June 30, 1997.
- - - - -----------------------------------------------------------------
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 INTERNATIONAL GROWTH AND INCOME FUND
Date Amount
- - - - ----------------------
6/97* $10,000
8/97 $ 9,708
11/97 $ 9,608
2/98 $10,580
5/98 $11,682
8/98 $ 9,874
MSCI EAFE PLUS CANADA INDEX
Year Amount
- - - - ----------------------
6/97* $10,000
8/97 $ 9,433
11/97 $ 9,108
2/98 $10,211
5/98 $10,573
8/98 $ 9,332
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 PERIOD ENDED AUGUST 31
1997* 1998
-----------------
NET ASSET VALUE $11.64 $11.79
INCOME DIVIDENDS $ -- $ .07
FUND TOTAL RETURN (%) -3.00 1.70
INDEX TOTAL RETURN (%) -5.67 -1.08
Performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results. Total return and
principal value will fluctuate, so an investor's shares, when redeemed,
may be worth more or less than when purchased. If the Adviser had not
maintained the Fund's expenses, the total return for the life of Fund
period would have been lower.
4 - Scudder International Growth and Income Fund
<PAGE>
Portfolio Summary as of August 31, 1998
THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE:
PIE CHART TITLE:
Geographical
(Excludes 8% Cash Equivalents)
CHART DATA:
Europe 83%
Japan 8%
U.S. & Canada 4%
Pacific Basin 4%
Latin America 1%
---------------------------------------
100%
---------------------------------------
CALLOUT:
The Fund remained overweighted in Europe
due to ongoing investment themes such as
corporate restructuring and economic
integration, and underweighted in Asia.
THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE:
PIE CHART TITLE:
Sectors
(Excludes 8% Cash Equivalents)
CHART DATA:
Financial 31%
Manufacturing 16%
Communications 12%
Consumer Discretionary 9%
Service Industries 7%
Durables 5%
Transportation 5%
Construction 4%
Consumer Staples 4%
Other 7%
---------------------------------------
100%
---------------------------------------
CALLOUT:
We continued to place a priority on
seeking diversification among sectors.
Ten Largest Equity Holdings
(26% of Portfolio)
1. OM Gruppen AB
Operator of financial
organizations
2. Scor S.A. Property, casualty and life reinsurance company
3. British Telecom PLC
Telecommunications services
4. Banca Commerciale Italiana SpA
Commercial bank
5. Allied Irish Bank PLC
Universal banking services
6. Metro AG
Operator of department stores
7. BCE, Inc.
Telecommunication services
8. Telecom Italia SpA
Telecommunications, electronics,
and network construction
9. Accor S.A.
Operator of hotels and travel
agencies
10. Dexia France
Municipal and local development
financing
CALLOUT:
The top holdings include major European
financial and telecommunications
companies.
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 Growth and Income
<PAGE>
Portfolio Management Discussion
In the following interview, Lead Portfolio Manager Sheridan Reilly discusses
Scudder International Growth and Income Fund's strategy and the market
environment for the period ended August 31, 1998.
Q: The investment environment changed significantly over the six month reporting
period. What happened?
A: The period consisted of two entirely different phases, the first of which
occurred from March until mid-July, when the markets of the developed world were
in the midst of a dramatic rise and Europe in particular was benefiting from a
number of positive factors. Investor optimism was strong as interest rates
continued to fall, the move to the common currency approached its final stages,
and the European governments exhibited an ongoing commitment to fiscal and
monetary discipline. In the second phase from mid-July to August 31, all of
these factors remained in place, but equities were pummeled by external forces,
namely the Russian debt crisis and the subsequent turmoil in the emerging
markets. As a result, both the Fund and our benchmark index gave up almost all
of their gains for the year in a very short time frame.
Q: How did the Fund perform relative to its benchmark, the MSCI EAFE plus Canada
Index, in the six months ended August 31, 1998?
A: The Fund had a total return of negative 6.68%, compared to a decline of 8.61%
for the index for the same period. We were able to outperform the index because
we initially profited from our heavy weighting in European banks, which was the
sector that led their markets up, and we then trimmed our positions ahead of the
correction that took place in the late summer. In addition, the drop in the Fund
was cushioned as we raised cash for defensive purposes throughout the month of
August, a strategy that explains the 8% cash position at the end of the period.
Q: How do you select stocks for the Fund?
A: The objective of the Fund is to achieve long-term capital growth and current
income through foreign equity securities. To this end, we look for established,
well managed companies in mature overseas markets.
The primary criteria we use in stock selection is to find companies that have
high yields relative to their domestic equity market. Similar to the Fund's
domestic counterpart, the Scudder Growth and Income Fund, we unearth value by
screening for companies that have a yield at least 25% higher than the median of
their market. Conversely, we consider selling those holdings that have
appreciated to the point where they have a yield 25% lower than that of their
market.
Q: Once you have narrowed the investment universe based on relative yield, what
is your next step?
A: The second step of the selection process involves a rigorous fundamental
analysis of the equities that have met our criteria. Each individual company's
financial strength, projected profitability, competitive positioning and
management ability are reviewed to further discern which of the available
companies has the strongest long-term growth potential.
6 - Scudder International Growth and Income Fund
<PAGE>
The third step in our selection process is rigorous sector and country
diversification. We pursue sector diversification in order to reduce the
investment risk associated with interest rates and economic growth in the
countries in which we invest. Similarly, we seek to minimize currency risk and
political risk by diversifying among a number of different countries. The
ultimate goal of this intensive process is to provide superior risk-adjusted
returns over the long term.
Q: Please tell us about any specific companies that demonstrate the Fund's
investment approach?
A: Telecom Italia is one of many telecommunications stocks currently held by the
Fund. This is one of our favorite stocks in an industry where strong top line
revenue is being generated by new products and technologies. This growth, when
combined with the restructuring that continues to be implemented as formerly
state-owned companies such as this one adapt to the marketplace, creates a
catalyst for excellent earnings potential. Telecom Italia fits nicely with this
theme in that the company holds a dominant position in its home market, it has
generated strong sales from its new products, and we believe it has plenty of
cost cutting potential still ahead.
Metro, a German retailer that is a fairly new holding in the Fund's portfolio,
serves as another excellent example of our investment style. In addition to
fulfilling our basic requirements of being a high yielding, modestly valued
company, it possesses an outstanding fundamental story. As a leading retailer in
Europe, it is, in our view, at the forefront of the restructuring and
consolidation that is taking place in retailing. As a result, Metro stands to
prosper even in a moderate consumer environment, generating growth through
acquisitions and cost cutting.
Q: What is your outlook for international equities?
A: We think that the global equity markets will continue to be volatile due to
the instability in the developing world. Although the Fund invests primarily in
stocks from mature markets, the fluctuations of the past six months have shown
that even relatively conservative holdings can be affected by negative events in
the emerging markets. These problems may not be resolved quickly.
In this uncertain environment we intend to maintain our discipline of investing
in companies with high relative yields, strong management, and sound balance
sheets. In striving to produce a superior risk-adjusted return, we will take
advantage of market downturns to add holdings with attractive valuations that
meet our strict selection criteria. The recent market turmoil presents new
opportunities for us to capitalize on longer-term themes such as the economic
integration in continental Europe.
We are confident in the long-term value of our approach, and believe that the
Fund is an appropriate choice for investors who wish to add a relatively
conservative international investment to their portfolios, or who are seeking
diversification and balance for other, more aggressive international
investments.
7 - Scudder International Growth and Income Fund
<PAGE>
Glossary of Investment Terms
EMERGING MARKETS The regions of the world whose economies have not
yet reached mature status. These markets are often
characterized by a reliance on exports and
commodities to generate profits, and tend to have a
greater amount of political instability and currency
risk.
FUNDAMENTAL RESEARCH Analysis of companies based on the projected
impact of management, products, sales, and earnings
on balance sheets and income statements. Distinct
from technical analysis, which evaluates the
attractiveness of a stock based on historical price
and trading volume movements, rather than the
financial results of the underlying company.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into cash
within a reasonably short period of time.
MARKET CAPITALIZATION The value of a company's outstanding shares of
common stock, determined by multiplying the
number of shares outstanding by the share price
(Shares x Price = Market Capitalization). The
universe of publicly traded companies is frequently
divided into large-, mid-, and small-capitalizations.
VOLATILITY The tendency of a security, commodity, or market to
rise and fall in price over time. Volatility is
inherent in almost all investments but differs in
degree from investment to investment and from market
to market. For example, in the United States,
money-market mutual funds strive to maintain a fixed
price and thus experience very little volatility, if
any. By comparison, stocks can be very volatile.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
8 - Scudder International Growth and Income Fund
<PAGE>
Investment Portfolio as of August 31, 1998
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- - - - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper 8.3%
- - - - ------------------------------------------------------------------------------------------------------------------------------
United States
----------
Federal National Mortgage Association Discount Note, 9/1/1998 (Cost $3,980,000) ......... 3,980,000 3,980,000
----------
Convertible Bonds 3.2%
- - - - ------------------------------------------------------------------------------------------------------------------------------
Japan 1.9%
MBL International Finance Bermuda, 3%, 11/30/2002 (Bank) ................................ 1,046,000 920,480
----------
Netherlands 1.3%
BPH Finance Co., 3%, 5/22/2002 (Finance company) ........................................ 700,000 644,000
- - - - ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $1,899,581) 1,564,480
- - - - ------------------------------------------------------------------------------------------------------------------------------
Shares
- - - - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Convertible Preferred Stocks 0.9%
- - - - ------------------------------------------------------------------------------------------------------------------------------
Belgium
Lernout & Hauspie Speech Products N.V., 4.75%, 7/1/2008 (Developer of advanced ----------
speech technologies) (Cost $580,000) ................................................... 11,600 440,800
----------
Common Stocks 87.6%
- - - - ------------------------------------------------------------------------------------------------------------------------------
Australia 3.3%
Commonwealth Bank of Australia (Bank) ................................................... 65,798 701,433
Foster's Brewing Group, Ltd. (Leading brewery) .......................................... 432,710 890,180
----------
1,591,613
----------
Brazil 0.5%
Aracruz Celulose S.A. (ADR) "B" (Producer of eucalyptus kraft pulp) ..................... 37,400 236,088
----------
Canada 3.6%
BCE, Inc. (Telecommunication services) .................................................. 36,800 1,182,686
Hudson's Bay Co. (Operator of retail department store) .................................. 38,800 529,836
----------
1,712,522
----------
Finland 3.6%
Merita Ltd. "B" (Financial services group) .............................................. 183,810 927,241
Metsa-Serla Oy "B" (Manufacturer of papers, corrugated and paper board, soft
and hardwood pulp) .................................................................... 105,900 811,221
----------
1,738,462
----------
France 11.3%
Accor S.A. (Catering, hotels, travel services) .......................................... 4,847 1,119,677
Dexia France (Municipal and local development financing) ................................ 8,020 1,036,506
Scor S.A. (Property, casualty and life reinsurance company) ............................. 23,167 1,453,831
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder International Growth and Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- - - - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Societe Nationale Elf Aquitaine (Petroleum company) ..................................... 8,777 870,852
Sommer-Allibert (Manufacturer of plastic products for automotive industry) .............. 23,358 968,628
----------
5,449,494
----------
Germany 10.8%
Bayer AG (Leading chemical producer) .................................................... 26,240 987,739
Dyckerhoff AG (pfd.) (Producer of cement, ready-mixed concrete and finishing products) .. 2,884 983,937
Hochtief AG (Construction and civil engineering services) ............................... 25,690 986,026
Metro AG (pfd.) "I" (Operator of clothing stores, food stores and supermarkets) ......... 30,800 1,208,427
RWE AG (Producer and marketer of petroleum and chemical products) ....................... 21,530 1,034,478
----------
5,200,607
----------
Ireland 2.6%
Allied Irish Bank PLC (Bank) ............................................................ 91,650 1,260,389
----------
Italy 8.8%
Banca Commerciale Italiana SpA (Commercial bank) ........................................ 198,500 1,335,970
Banca di Roma SpA (Commercial and savings bank) ......................................... 503,700 975,006
La Rinascente SpA di Risparmio (Department store chain) ................................. 165,600 723,023
Telecom Italia SpA di Risparmio (Telecommunications, electronics, network
construction) ......................................................................... 235,700 1,176,195
----------
4,210,194
----------
Japan 6.2%
Matsushita Electric Works, Inc. (Leading maker of building materials and
lighting equipment) ................................................................... 71,000 553,672
Nintendo Co., Ltd. (Game equipment manufacturer) ........................................ 10,200 947,407
Nippon Meat Packers, Inc. (Leading meat processor) ...................................... 41,000 448,606
Sakura Bank Ltd. (Full service bank) .................................................... 207,000 364,266
Teijin Ltd. (Manufacturer of polyester products) ........................................ 268,000 665,579
----------
2,979,530
----------
Netherlands 6.4%
KLM Royal Dutch Air Lines NV (World-wide full service airline) .......................... 25,610 877,475
Koninklijke KPN NV (Provider of telecommunications services) ............................ 14,840 672,217
Koninklijke Nedlloyd Groep NV (Container shipping and transportation) ................... 32,140 510,120
Royal Dutch Petroleum Co. (Owner of 60% of Royal Dutch/Shell Group) ..................... 16,000 711,057
TNT Post Group NV (Provider of transportation services) ................................. 14,840 312,555
----------
3,083,424
----------
Norway 1.4%
Christiania Bank og Kreditkasse (Commercial bank) ....................................... 215,400 670,693
----------
Portugal 1.5%
Portugal Telecom S.A. (Telecommunication services) ...................................... 15,650 716,555
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder International Growth and Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- - - - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Spain 2.9%
Autopistas del Mare Nostrum S.A. (Builder and operator of toll motorways) ............... 34,900 704,826
Iberdrola S.A. (Electric utility) ....................................................... 47,300 698,617
----------
1,403,443
----------
Sweden 5.2%
AssiDoman AB (Forestry group) ........................................................... 25,440 590,416
OM Gruppen AB (Operator of financial exchanges and clearing organizations for options,
futures, and stock loans) ............................................................. 86,170 1,486,519
Svedala Industri AB (Manufacturer of machinery for construction, mineral processing
and materials handling) ............................................................... 26,670 420,365
----------
2,497,300
----------
Switzerland 3.0%
Georg Fischer AG (Registered) (Manufacturer of automotive products and piping systems) .. 2,295 692,320
Sika Finanz AG (Registered) (Manufacturer of water management products and systems) ..... 13,684 759,168
----------
1,451,488
----------
United Kingdom 16.5%
Albright & Wilson PLC (Manufacturer of phosphates, surfactants and specialty chemicals) . 252,760 466,072
British Telecom PLC (Telecommunication services) ........................................ 101,860 1,371,106
Courtaulds Textiles PLC (Producer of clothing, fabrics and home furnishings) ............ 114,552 376,366
Dorling Kindersley Holdings PLC (Book publisher) ........................................ 241,250 660,195
EMI Group PLC (Music recording and retailing company) ................................... 102,473 717,163
General Electric Co., PLC (Manufacturer of power, communications and defense equipment
and other various electrical components) .............................................. 81,314 534,322
Laporte PLC (Producer of specialty chemicals) ........................................... 76,900 729,616
Man (ED&F) Group PLC (Commodities trading company) ...................................... 188,580 1,019,476
Royal & Sun Alliance Insurance Group PLC (Multi-line insurance holding company) ......... 89,200 750,620
Tomkins PLC (Manufacturer of fluid controls, industrial products, garden and
leisure products) ..................................................................... 133,935 554,553
Transport Development Group PLC (Distribution, leasing, storage and transport services) . 197,700 785,429
----------
7,964,918
- - - - ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $43,714,259) 42,166,720
- - - - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Number of
Contracts
- - - - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Purchased Options 0.0%
- - - - ------------------------------------------------------------------------------------------------------------------------------
----------
Call on Japanese Yen, strike price 170 JPY, expire 9/19/1998 (Cost $211,200) ............ 400 10,000
----------
- - - - ------------------------------------------------------------------------------------------------------------------------------
- - - - ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $50,385,040) (a) 48,162,000
- - - - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder International Growth and Income Fund
<PAGE>
- - - - --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $50,390,086. At August 31,
1998, net unrealized depreciation for all securities based on tax cost was
$2,228,086. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $4,308,521 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$6,536,607.
Currency Abbreviation
- - - - --------------------------------------------------------------------------------
JPY Japanese Yen
Transactions in written options on securities for the six months ended August
31, 1998 were:
<TABLE>
<CAPTION>
-------------------------------------------------
General Royal & Sun Premiums
Electric Co. Alliance Received ($)
--------------- --------------- ---------------
<S> <C> <C> <C>
Outstanding at February 28, 1998 ... 78,453 48,536 26,005
Exercised .......................... (78,453) (48,536) (26,005)
--------------- --------------- ---------------
Outstanding at August 31, 1998 ..... -- -- --
=============== =============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder International Growth and Income Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of August 31, 1998
<TABLE>
<S> <C>
Assets
- - - - ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $50,385,040) ................... $ 48,162,000
Cash ................................................................... 605
Receivable for investments sold ........................................ 4,382,635
Dividends and interest receivable ...................................... 167,795
Receivable for Fund shares sold ........................................ 91,498
Foreign taxes recoverable .............................................. 84,128
Deferred organization expenses ......................................... 27,399
----------------
Total assets ........................................................... 52,916,060
Liabilities
- - - - ----------------------------------------------------------------------------------------------------------------------------
Due to custodian ....................................................... 1,188,668
Payable for Fund shares redeemed ....................................... 736,231
Accrued management fee ................................................. 22,729
Other payables and accrued expenses .................................... 121,215
----------------
Total liabilities ...................................................... 2,068,843
--------------------------------------------------------------------------------------------
Net assets, at market value $ 50,847,217
--------------------------------------------------------------------------------------------
Net Assets
- - - - ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .................................... 242,193
Unrealized appreciation (depreciation) on:
Investments ......................................................... (2,223,040)
Foreign currency related transactions ............................... (4,743)
Accumulated net realized gain (loss) ................................... (229,995)
Paid-in capital ........................................................ 53,062,802
--------------------------------------------------------------------------------------------
Net assets, at market value $ 50,847,217
--------------------------------------------------------------------------------------------
Net Asset Value
- - - - ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($50,847,217
/ 4,312,995 shares of capital stock outstanding, $.01 par value, ----------------
100,000,000 shares authorized) ...................................... $11.79
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder International Growth and Income Fund
<PAGE>
Statement of Operations
For the six months ended August 31, 1998
<TABLE>
<S> <C>
Investment Income
- - - - ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $128,998) .................. $ 1,067,358
Interest ............................................................... 114,284
----------------
1,181,642
----------------
Expenses:
Management fee ......................................................... 289,594
Services to shareholders ............................................... 146,119
Custodian and accounting fees .......................................... 78,330
Directors' fees and expenses ........................................... 33,705
Registration fees ...................................................... 24,913
Auditing ............................................................... 14,283
Reports to shareholders ................................................ 13,388
Legal .................................................................. 10,906
Amortization of organization expense ................................... 3,050
Other .................................................................. 5,563
----------------
Total expenses before reductions ....................................... 619,851
Expense reductions ..................................................... (113,057)
----------------
Expenses, net .......................................................... 506,794
--------------------------------------------------------------------------------------------
Net investment income 674,848
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- - - - ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ............................................................ 2,162,927
Foreign currency related transactions .................................. (72,497)
----------------
2,090,430
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ............................................................ (7,259,819)
Written Options ........................................................ 49,332
Foreign currency related transactions .................................. (4,184)
----------------
(7,214,671)
--------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions (5,124,241)
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (4,449,393)
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder International Growth and Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
June 30, 1997
Six Months (commencement of
Ended August operations) to
Increase (Decrease) in Net Assets 31, 1998 February 28, 1998
- - - - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................. $ 674,848 $ 50,381
Net realized gain (loss) from investment transactions . 2,090,430 (2,566,283)
Net unrealized appreciation (depreciation) on
investment transactions during the period .......... (7,214,671) 4,986,888
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ......................................... (4,449,393) 2,470,986
---------------- ----------------
Distributions to shareholders from net investment
income ............................................. (219,056) (59,796)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ............................. 23,505,090 64,146,242
Net asset value of shares issued to shareholders in
reinvestment of distributions ...................... 202,888 55,470
Cost of shares redeemed ............................... (17,072,476) (17,733,938)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ....................................... 6,635,502 46,467,774
---------------- ----------------
Increase (decrease) in net assets ..................... 1,967,053 48,878,964
Net assets at beginning of period ..................... 48,880,164 1,200
Net assets at end of period (including undistributed
net investment income of $242,193 and accumulated
distributions in excess of net investment income ---------------- ----------------
of $213,599) ....................................... $ 50,847,217 $ 48,880,164
---------------- ----------------
Other Information
- - - - ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ............. 3,854,083 100
---------------- ----------------
Shares sold ........................................... 1,711,701 5,333,375
Shares issued to shareholders in reinvestment of
distributions ...................................... 14,842 4,745
Shares redeemed ....................................... (1,267,631) (1,484,137)
---------------- ----------------
Net increase (decrease) in Fund shares ................ 458,912 3,853,983
---------------- ----------------
Shares outstanding at end of period ................... 4,312,995 3,854,083
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder International Growth and Income Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
June 30, 1997
(commencement of
Six Months Ended operations) to
August 31, 1998 February 28, 1998
- - - - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
----------------------------------
Net asset value, beginning of period ................................................. $12.68 $12.00
----------------------------------
Income from investment operations:
Net investment income ................................................................ .16 .01
Net realized and unrealized gain (loss) on investment transactions ................... (1.00) .69
----------------------------------
Total from investment operations ..................................................... (.84) .70
----------------------------------
Less distributions from:
Net investment income ................................................................ (.05) (.02)
----------------------------------
Total distributions .................................................................. (.05) (.02)
----------------------------------
----------------------------------
Net asset value, end of period ....................................................... $11.79 $12.68
----------------------------------
- - - - ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ................................................................. (6.68)** 5.80**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............................................... 51 49
Ratio of operating expenses, net to average daily net assets (%) ..................... 1.75* 1.75*
Ratio of operating expenses before expense reductions, to average daily
net assets (%) .................................................................... 2.14* 2.65*
Ratio of net investment income to average daily net assets (%) ....................... 1.18(c) .17*
Portfolio turnover rate (%) .......................................................... 74.2* 50.2*
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return would have been lower had certain expenses not been reduced.
(c) The ratio for the six months ended August 31, 1998 has not been annualized
since the Fund believes it would not be appropriate because the Fund's
dividend income is not earned ratably throughout the fiscal year.
* Annualized
** Not annualized
16 - Scudder International Growth and Income Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder International Growth and Income 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 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 Nasdaq Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on Nasdaq. If there are no such sales, the value is the high or
"inside" bid quotation. Securities which are not quoted on Nasdaq but are traded
in another over-the-counter market are valued at the most recent sale price 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, whose quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
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.
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 call options on currencies as a temporary substitute
for purchasing selected investments and to enhance potential gain.
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 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
17 - Scudder International Growth and Income Fund
<PAGE>
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, is equal to at least 100.5% of the repurchase 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 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-dividend 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.
18 - Scudder International Growth and Income Fund
<PAGE>
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, as amended, 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. In addition, from November 1, 1997 through February 28,
1998, the Fund incurred approximately $1,901,000 and $122,000 in net realized
capital losses and currency losses, respectively. As permitted by tax
regulations, the Fund intends to elect to defer these losses and treat them as
arising in the fiscal year ending February 28, 1999.
At February 28, 1998, the Fund had a net tax basis capital loss carryforward of
approximately $309,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until February 28,
2006, whichever occurs first.
Distribution of Income and Gains. Distributions of net investment income are
made semiannually. 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 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.
Organization Costs. Costs incurred by the Fund in connection with its
organization 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.
B. Purchases and Sales of Securities
For the six months ended August 31, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $21,422,159 and
$19,940,855, respectively.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. (the "Adviser"), the Fund pays the Adviser a fee equal to an
annual rate of 1.00% of the Fund's average daily net assets, computed and
accrued daily
19 - Scudder International Growth and Income Fund
<PAGE>
and payable monthly. As manager of the assets of the Fund, the Adviser directs
the investments of the Fund in accordance with its investment objective,
policies, and restrictions. The Adviser determines the securities, instruments
and other contracts relating to investments to be purchased, sold or entered
into by the Fund. In addition to portfolio management services, the Adviser
provides certain administrative services in accordance with the Agreement. In
addition, the Adviser has agreed not to impose all or a portion of its
management fee until June 30, 1999 in order to maintain the annualized expenses
of the Fund at not more than 1.75% of average daily net assets. For the six
months ended August 31, 1998, the Adviser did not impose a portion of its
management fee which amounted to $113,057, and the amount imposed amounted to
$176,537, of which $22,729 is unpaid at August 31, 1998.
On September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner of the
Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's investment management agreement with Scudder Kemper was
deemed to have been assigned and, therefore, terminated. The Board of Directors
of the Fund have approved a new investment management agreement with Scudder
Kemper, which is substantially identical to the former investment management
agreement, except for the dates of execution and termination. The Board of
Directors of the Fund will seek shareholder approval of the new investment
management agreement through a proxy solicitation that is currently scheduled to
conclude in mid-December.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended August 31, 1998, the amount charged to the Fund by SSC
aggregated $110,940, of which $19,252 is unpaid at August 31, 1998.
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Fund will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be invested in the Underlying Funds. For the six months ended
August 31, 1998, the Special Servicing Agreement expense charged to the Fund
amounted to approximately $6,000.
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 August 31,
1998, the amount charged to the Fund by STC aggregated $2,124, of which $876 is
unpaid at August 31, 1998.
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 August 31, 1998, the amount charged to the Fund by SFAC aggregated
$27,644, of which $4,167 is unpaid at August 31, 1998.
The Fund pays each Director not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and committee meetings. For the six
months ended August 31, 1998, Directors' fees and expenses aggregated $33,705.
20 - Scudder International Growth and Income Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors and the Shareholders of Scudder International Growth
and Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder International Growth and
Income Fund (the "Fund") at August 31, 1998, the results of its operations for
the six months then ended, and the changes in its net assets and the financial
highlights for the six months then ended and for the period June 30, 1997
(commencement of operations) to August 31, 1997, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers
LLP October 9, 1998
21 - Scudder International Growth and Income Fund
<PAGE>
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intentionally
left blank.
22 - Scudder International Growth and Income Fund
<PAGE>
This Page
intentionally
left blank.
23 - Scudder International Growth and Income Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board and
Director
Nicholas Bratt*
President
Paul Bancroft III
Director; Venture Capitalist and
Consultant
Sheryle J. Bolton
Director; Chief Executive
Officer, Scientific Learning
Corporation
William T. Burgin
Director; General Partner,
Bessemer Venture Partners
Thomas J. Devine
Director; Consultant
Keith R. Fox
Director; Private Equity Investor
William H. Gleysteen, Jr.
Director; Consultant
William H. Luers
Director; President, The
Metropolitan Museum of Art
Wilson Nolen
Director; Consultant
Kathryn L. Quirk*
Director, Vice President and
Assistant Secretary
Robert G. Stone, Jr.
Honorary Director; Chairman
Emeritus of the Board and
Director, Kirby Corporation
Elizabeth J. Allan*
Vice President
Irene T. Cheng*
Vice President
Joyce E. Cornell*
Vice President
Susan E. Dahl*
Vice President
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Theresa Gusman*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Sheridan Reilly*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
Richard W. Desmond*
Assistant Secretary
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - Scudder International Growth and Income Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- - - - --------------------------------------------------------------------------------
Money Market
- - - - ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- - - - ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
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 Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income 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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- - - - -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- - - - -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- - - - ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- - - - ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- - - - --------------------------------------------------------------------------------
Retirement Programs
- - - - -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- - - - ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- - - - --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal 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 in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
25 - Scudder International Growth and Income Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- - - - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- - - - ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- - - - ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- - - - ------------------------------------------------------------------------------------------------------------------------------
26 - Scudder International Growth and Income Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- - - - ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- - - - ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- - - - ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
27 - Scudder International Growth and Income Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $230 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
United States.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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