Scudder
Greater Europe
Growth Fund
Semiannual Report
April 30, 1998
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 (logo)
<PAGE>
Scudder Greater Europe Growth Fund
- --------------------------------------------------------------------------------
Total Net Assets as of
Date of Inception: 10/10/94 4/30/98: $787.2 million Ticker Symbol: SCGEX
- --------------------------------------------------------------------------------
o Scudder Greater Europe Growth Fund provided a total return of 35.74% for the
six months ended April 30, 1998. The Fund was ranked number one out of 43
European funds tracked by Lipper Analytical Services for the three-year period
ended April 30, with an average annual return of 32.86% versus 23.46% for the
same period for the Lipper average.^1
o Strong corporate profit growth helped the "peripheral" European markets --
such as Finland, Spain and Portugal -- to lead stock market performance in the
region.
o Morningstar assigned the Fund an overall rating of five stars (out of five
stars) for its risk-adjusted performance among 740 international equity funds as
of April 30, 1998.^2
Table of Contents
3 Letter from the Fund's Chairman 19 Financial Highlights
4 Performance Update 20 Notes to Financial Statements
5 Portfolio Summary 25 Report of Independent Accountants
6 Portfolio Management Discussion 28 Officers and Directors
9 Glossary of Investment Terms 29 Investment Products and Services
11 Investment Portfolio 30 Scudder Solutions
16 Financial Statements
^1 Source: Lipper Analytical Services. The Fund was also ranked number four
out of 83 European funds for the one-year period ended April 30, 1998 with
an average annual return of 54.25% versus 39.23% for the same period for
the Lipper average.
^2 Source: Morningstar. Ratings are subject to change monthly and are
calculated from a Fund's three-, five-, and ten-year average annual returns
in excess of 90-day Treasury bill returns with appropriate fee adjustments,
and a risk factor that reflects Fund performance below 90-day T-bill
returns. The Fund received a five star rating for the three-year period
among 740 international equity funds. In an investment category, the top
10% of funds receive five stars and the next 22.5% receive four stars. Past
performance is no guarantee of future results.
2 - Scudder Greater Europe Growth Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to present the semiannual report for Scudder Greater Europe
Growth Fund, covering the six-month period ended April 30, 1998. As detailed in
the management discussion beginning on page 6, the Fund provided a strong total
return of 35.74% for the period, and continues to receive top ratings for
long-term performance from Morningstar (please see page 2 for more details).
Europe has been in the economic spotlight recently, and we expect that it
will be for some time, as the economies there prepare for monetary union to take
hold. While EMU is the most significant sign of the ongoing structural evolution
in Europe, we also think that corporate restructuring and consolidation activity
will continue to provide attractive opportunities for equity investors in these
markets. We believe Scudder Greater Europe Growth Fund is well positioned to
capitalize on these favorable conditions in the region, and thank you for your
continued investment in the Fund.
At the beginning of 1998, the Fund's investment adviser changed its name to
Scudder Kemper Investments, Inc. from Scudder, Stevens and Clark, Inc.,
reflecting the acquisition of a majority interest in Scudder by Zurich Insurance
Company, and the combining of Scudder's business with that of Zurich Kemper
Investments, Inc. We think this combination is very positive, and will provide
your Fund's management team with expanded resources in managing the Fund.
For those of you who are interested in new products and services, we would
like to take this opportunity to highlight the two most recent additions to our
growth and income category: Scudder Real Estate Investment Fund, which was
launched on April 6th, and Scudder Dividend & Growth Fund, which will begin
operations on July 17th. For further information on these new funds, please call
1-800-225-2470.
If you have any questions regarding your Fund, please contact an Investor
Relations representative at the toll-free number above, or visit our Web site at
http://www.funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Greater Europe Growth Fund
3 - Scudder Greater Europe Growth Fund
<PAGE>
PERFORMANCE UPDATE as of April 30, 1998
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
- ---------------------------------------------
Period Ended Growth of Average
4/30/98 $10,000 Cumulative Annual
- ---------------------------------------------
SCUDDER GREATER EUROPE GROWTH FUND
- ---------------------------------------------
1 Year $ 15,425 54.25% 54.25%
3 Year $ 23,450 134.50% 32.86%
Life of Fund* $ 24,686 146.86% 28.93%
- ---------------------------------------------
MORGAN STANLEY CAPITAL INTERNATIONAL
(MSCI) EUROPE INDEX
- ---------------------------------------------
1 Year $ 14,549 45.49% 45.49%
3 Year $ 20,404 104.04% 26.81%
Life of Fund* $ 21,624 116.24% 24.66%
- ---------------------------------------------
*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
4/95 $10,371
10/95 $11,506
4/96 $12,981
10/96 $14,395
4/97 $15,767
10/97 $17,917
4/98 $24,321
Morgan Stanley Capital International
(MSCI) Europe Index
Year Amount
- ----------------------
10/94* $10,000
4/95 $10,598
10/95 $11,321
4/96 $12,288
10/96 $13,298
4/97 $14,863
10/97 $16,754
4/98 $21,624
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 APRIL 30
1995* 1996 1997 1998
---------------------------------------------
NET ASSET VALUE......... $12.61 $15.50 $18.63 $26.37
INCOME DIVIDENDS........ $ .02 $ .22 $ .06 .54
CAPITAL GAINS
DISTRIBUTIONS........... $ -- $ .14 $ .14 1.30
FUND TOTAL RETURN (%)... 5.27 25.16 21.47 54.25
INDEX TOTAL RETURN (%).. 5.97 15.95 20.96 45.49
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 three year and life of Fund periods
would have been lower.
4 - Scudder Greater Europe Growth Fund
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PORTFOLIO SUMMARY as of April 30, 1998
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GEOGRAPHICAL
(Excludes 7% Cash Equivalents)
- ---------------------------------------------------------------------------
France 27%
United Kingdom 14%
Italy 12%
Germany 9%
Switzerland 7%
Portugal 6%
Spain 6%
Netherlands 5%
Finland 4%
Other 10%
- --------------------------------------
100%
- --------------------------------------
Seven of the nine highest-weighted
countries in the portfolio will be
participants in the first round of
European Monetary Union.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS
(Excludes 7% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 31%
Service Industries 13%
Durables 9%
Manufacturing 8%
Technology 6%
Consumer Discretionary 6%
Communications 5%
Media 4%
Consumer Staples 4%
Other 14%
- --------------------------------------
100%
- --------------------------------------
The Fund remained focused on
the financial sector, while
broadening its exposure to more
economically sensitive stocks in
sectors such as manufacturing and
durables.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
(17% of Portfolio)
- --------------------------------------------------------------------------
1. Nokia AB
Manufacturer of telecommunication systems
and equipment
2. Misys PLC
Software and hardware computer solutions,
support and data services for various
industries
3. WPP Group PLC
Advertising agency
4. Alcatel Alsthom
Manufacturer of transportation,
telecommunication and energy equipment
5. Compania Telefonica Nacional de
Espana S.A.
Telecommunication services
6. Dassault Systemes S.A.
Computer aided design, manufacturing and
engineering software products
7. Accor S.A.
Catering, hotels, travel services
8. Schneider S.A.
Manufacturer of electronic components and
automated manufacturing systems
9. Telecom Italia SpA
Telecommunications, electronics and network
construction
10. Akzo-Nobel NV
Chemical producer
Top holdings reflect the current
demand for telecommunications
equipment and services in Europe
and worldwide.
For more complete details about the Fund's investment portfolio, see page 11.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5 - Scudder Greater Europe Growth Fund
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Portfolio Management Discussion
Dear Shareholders,
Scudder Greater Europe Growth Fund provided a total return of 35.74% for the six
months ended April 30, 1998, well ahead of the average European region fund
return of 26.03%, as tracked by Lipper Analytical Services, and the 29.07%
return for the unmanaged MSCI (Morgan Stanley Capital International) Europe
Index.
The steep climb of the European equity markets over the last three months of the
period was remarkable. Once again, peripheral European markets have led the race
with Finland rising a dizzying 47.0% in the quarter, while Spain and Portugal
jumped 31.8% and 29.7%, respectively. The Fund has been overweighted in all
three of these markets. Outstanding individual stock performances came from Fund
holdings Nokia (+71%) and TT Tieto (+69%). Nokia, the global leader in mobile
telecommunications, leaped forward as investors reacted to the impressive new
product lineup, strength in infrastructure orders, and a beneficial product mix,
while TT Tieto benefited from the high demand for information technology support
services. In Portugal, the banking sector was the highlight, with Fund holdings
Banco Portugues do Investimento (BPI) and Banco Comercial Portugues advancing
69% and 51%, respectively, for the quarter. And in Spain, appetite was strong
for Tele Pizza, which advanced 48% for the quarter, while the banking sector
also offered appeal with a 47% return for Fund holding Banco Bilbao Vizcaya.
Economic Upswing and Restructuring Boost
European Markets
European equity markets, having lagged the U.S. market for a number of years,
are now moving ahead sharply. Both cyclical and structural factors have
underpinned the recent movement in European share prices. Cyclically,
continental Europe has been behind the United States in the economic cycle. In
1998, Europe is positioned to be the fastest growing major region in the world
- -- albeit at a moderate rate of 2.8-3.0%. Exports were the principal engine of
continental European growth in 1997, profiting from the relative weakness of
European currencies. Growth is now broadening out to other sectors of the
continental economies. Consumer confidence is rising, capital spending is
picking up, and unemployment is falling, although it remains at high levels
throughout much of Europe. Fiscal policy -- a perennial drag in the run up to
EMU (European Monetary Union) qualification -- is likely to be a neutral factor
overall this year. Corporate profit growth -- despite the impact of Asia -- has
been strong and is expected to continue to advance at a rate of 12-15% in
aggregate into 1998. Equity markets have been buoyed by the combination of
accelerating growth and low inflation as the convergence of European economies
towards monetary union has allowed interest rates to remain low and to fall
further in Portugal, Spain, and Italy.
The cyclical dynamic driving European markets has been important. But the
sweeping structural changes Europe is now undergoing are even more important as
6 - Scudder Greater Europe Growth Fund
<PAGE>
one assesses the potential for equity investors in these markets. Corporate
restructuring along with merger and acquisition activity is continuing at an
accelerating pace, pushed forward by EMU pressures as well as ever-tougher
global competition. This activity is occurring across sectors -- banking and
insurance, pharmaceuticals, media, chemicals, construction, defense, and the
automotive industry. The momentum continues to build as corporations then need
to respond to the transforming landscape.
There are other positive aspects of the structural revolution taking place in
Europe today. Improved corporate governance, higher disclosure standards with
many companies moving to IAS or GAAP accounts, and a new recognition of the
importance of shareholders should encourage the trend toward equity investing in
Europe. There is a growing respect for the constructive use of shareholder
capital and a new willingness of corporations to return it when appropriate.
Governments are now being more supportive by moving toward dismantling the legal
and tax barriers which have inhibited share buybacks in Europe. At the same
time, there is a new-found interest on the part of European domestic investors
in boosting their pension fund equity assets, since public sector provisioning
in the future will be inadequate to meet their retirement needs.
A significant step forward in the structural evolution of Europe took place at
the end of this reporting period. Eleven initial participants were confirmed for
the first wave of EMU which will commence on January 1, 1999. Bilateral rates
have been initially established for conversion to the euro for Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal
and Spain.
Continued Focus on Growth and Change
Over the last six months, the Fund's asset base has grown significantly from
just over $198 million to nearly $826 million. The portfolio structure has
evolved during this period, with cash inflows being directed in large part to
increased positions in France, Spain, Italy and Ireland. A recovery in economic
momentum and confidence in France, coupled with a rich and varied equity market
- -- offering restructuring companies as well as exposure to growing industries --
encouraged additions to our existing positions there, as well as the initiation
of new holdings including Groupe Danone, TF1 (Television Francaise), Lagardere,
and Saint Gobain. Spanish retailer Cortefiel was also added, given prospects for
interest rate declines in Spain and further uplift to an already buoyant
economy.
In Italy, which is still in the early stages of economic recovery, the market
also looked forward to interest rate declines and further stimulation of the
burgeoning asset management industry. Growth and consolidation in the Italian
financial sector supported investment commitments during the period to Banca
Intesa, Istituto Bancario San Paolo di Torino, and Ina. The Fund's focus on the
financial sector elsewhere in Europe was maintained, including positions added
in Portugal during the period. However, the scope of the Fund's sectoral
positioning was broadened further with exposure to more economically sensitive
stocks, including Saint Gobain and Sika Finanz in the construction area, and
7 - Scudder Greater Europe Growth Fund
<PAGE>
Fiat and Daimler Benz, two automotive manufacturers offering both restructuring
appeal and cyclical strength.
The Fund also expanded its geographic scope with first-time purchases in Greece,
following its devaluation and currency link to the ERM (Exchange Rate Mechanism)
in late March. The Greek government has committed itself to a program of
privatization and reform with the intention of qualifying for EMU participation
in 2001. Growth and restructuring in the financial sector is at an early stage
in Greece and has the potential to achieve returns realized elsewhere in Europe.
Alpha Credit Bank and National Bank of Greece were added to the portfolio along
with two companies in other sectors poised for growth, Delta Informatics
(software) and Titan Cement.
Developing Equity Culture in Europe Supports Outlook
European markets have leapt forward at an impressive rate in recent months,
reflecting positive cyclical and structural impulses. Market consolidation and
even retracement can be anticipated as these rapid gains are digested. Concerns
over the fallout from the Asian crisis, a turn in interest rates, political
concerns over upcoming elections in Germany, stalled reforms, and U.S. market
and/or dollar weakness are all factors which could trouble markets in the months
ahead. Nevertheless, we believe investors in Europe will enjoy the prospect of
substantial rewards over time as more competitive corporations embrace new
values centered on generating returns for shareholders, thereby offering further
encouragement to the developing European equity culture.
Sincerely,
Your Portfolio Management Team
/s/Carol L. Franklin /s/Joan R. Gregory
Carol L. Franklin Joan R. Gregory
/s/Nicholas Bratt
Nicholas Bratt
8 - Scudder Greater Europe Growth Fund
<PAGE>
Glossary of Investment Terms
CURRENCY EXCHANGE RATE The price at which one country's currency can
be exchanged into another currency. When a
country's currency rises relative to other
currencies, this decreases the buying power
of foreign purchasers of that country's goods
and services and tends to hurt the earnings
of companies that export; by contrast, a weak
currency promotes exports. From the
perspective of a U.S. investor in overseas
securities, a weakening U.S. dollar adds to
total returns, as assets denominated in
foreign currencies then translate into more
in dollar terms; a strengthening dollar
relative to foreign currencies reduces
returns to U.S. investors.
DIVIDEND YIELD With stocks, a company's payment out of
earnings to shareholders divided by its share
price. For example, a stock that sells for
$10 and pays annual dividends totaling $1 has
a yield of 10%; if the stock price goes up to
$20, the yield would fall to 5%.
EMU (EUROPEAN MONETARY UNION) A proposed integration of European economies
involving among other changes a move to a
single currency for member nations. To
qualify for EMU membership, nations will be
required to meet certain guidelines
concerning total governmental debt and annual
budget deficits, designed to ensure a strong
common currency.
FUNDAMENTAL RESEARCH Analysis of companies based on the projected
impact of management, products, sales, and
earnings on their balance sheets and income
statements. Distinct from technical analysis,
which evaluates the attractiveness of a stock
based on historical price and trading volume
movements, rather than the financial results
of the underlying company.
GROWTH STOCK Stock of a company that has displayed above
average earnings growth and is expected to
continue to increase profits rapidly going
forward. Stocks of such companies usually
trade at higher multiples to earnings (see
price/earnings ratio) and experience more
price volatility than the market as a whole.
Distinct from value stock.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into
cash within a reasonably short period of
time. A stock that is liquid has enough
shares outstanding and a substantial enough
market capitalization to allow large
purchases and sales to occur without causing
a significant move in its market price as a
result.
9 - Scudder Greater Europe Growth Fund
<PAGE>
MARKET CAPITALIZATION The value of a company's outstanding shares
of common stock, determined by the number of
shares outstanding multiplied by the share
price (shares x price = market
capitalization). The universe of publicly
traded companies is frequently divided into
large-, mid-, and small-capitalization. In
general, "large-cap" stocks tend to be more
liquid than "small-cap" stocks.
PRICE/EARNINGS RATIO (also A widely used gauge of a stock's valuation,
"P/E" or "earnings multiple") that indicates what investors are paying for
a company's earning power at the current
stock price. May be based on a company's
projected earnings for the coming 12 months.
A higher "earnings multiple" indicates higher
expected earnings growth, along with greater
risk of earnings disappointments.
VALUE STOCK A company whose stock price does not fully
reflect its intrinsic value, as indicated by
price/earnings ratio, price/book value ratio,
dividend yield, or some other valuation
measure, relative to its industry or the
market overall. Value stocks tend to display
less price volatility and may carry higher
dividend yields. Distinct from growth stock.
WEIGHTING (OVER/UNDER) Refers to the allocation of assets -- usually
in terms of sectors, industries, or countries
-- within a portfolio relative to the
portfolio's benchmark index or investment
universe.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
10 - Scudder Greater Europe Growth Fund
<PAGE>
Investment Portfolio as of April 30, 1998
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 1.9%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/98 at 5.5%, to be
repurchased at $14,133,159 on 5/1/98, collateralized by a $13,278,000 U.S. Treasury -----------
Note, 7.625%, 2/15/07 (Cost $14,131,000) .............................................. 14,131,000 14,131,000
-----------
Short-Term Notes 5.4%
- ------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 5.45%, 5/1/98** ....................................... 40,000,000 40,000,000
U.S. Treasury Bill, 6/18/98 ............................................................. 515,000 511,730
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Notes (Cost $40,511,550) 40,511,730
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock 92.7%
- ------------------------------------------------------------------------------------------------------------------------------
Austria 0.4%
OMV AG (Oil and gas company) ............................................................ 22,000 3,265,196
-----------
Finland 4.1%
Nokia AB "A" (Manufacturer of telecommunication systems and equipment) .................. 258,320 17,376,903
Pohjola Insurance Co., Ltd. "B" (Insurance company) ..................................... 70,000 3,885,422
Sampo Insurance Co., Ltd. "A" (Multi-line insurance company) ............................ 135,000 6,103,826
TT Tieto Oy "B" (Manufacturer of computer software) ..................................... 19,000 3,492,101
-----------
30,858,252
-----------
France 24.8%
AXA S.A. (Insurance group providing insurance, finance and real estate services) ........ 36,700 4,310,464
Accor S.A. (Catering, hotels, travel services) .......................................... 42,650 11,629,238
Alcatel Alsthom (Manufacturer of transportation, telecommunication and energy
equipment) ............................................................................ 73,635 13,658,796
Altran Technologies, S.A. (Engineering and consulting services for aerospace,
telecommunications and electronics fields) ............................................ 43,000 6,860,256
Assurances Generales de France (Markets health, life, and liability insurance) .......... 21,235 1,342,422
Assurances Generales de France, CVG Shares* ............................................. 21,236 84,789
Banque Nationale de Paris S.A. (CI) (Bank) .............................................. 101,000 8,518,882
Cap Gemini Sogeti S.A. (Software consultants) ........................................... 41,761 5,425,943
Compagnie Financiere de Paribas (Finance and investment company) ........................ 80,000 8,517,718
Compagnie de Saint-Gobain (Glass manufacturer) .......................................... 48,500 8,084,678
Credit Commercial de France (Bank) ...................................................... 90,000 7,186,824
Dassault Systemes S.A. (Computer aided design, manufacturing and engineering software
products) ............................................................................. 305,900 12,010,048
Groupe Danone (Producer of packaged foods and beverages) ................................ 30,700 7,252,371
Imetal S.A. (Manufacturer of building materials) ........................................ 30,200 3,923,840
</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>
L'Air Liquide (World's leading producer of industrial gases) ............................ 34,900 6,444,685
Lagardere S.C.A. (Holding company with interests in publishing, defense,
audiovisual production and services, telecommunications and media) .................... 111,100 4,251,040
Le Carbone-Lorraine (Manufacturer of industrial and technological systems and
components) ........................................................................... 24,400 10,005,989
Peugeot S.A. (Manufacturer of automobiles and light commercial vehicles) ................ 36,000 6,252,537
Pinault-Printemps, S.A. (Distributor of consumer goods) ................................. 3,996 2,976,890
Rhone-Poulenc S.A. "A" (Medical, agricultural and consumer chemicals) ................... 149,567 7,317,860
SEITA (Producer of cigarettes and pipe tobacco) ......................................... 75,800 3,404,758
Schneider S.A. (Manufacturer of electronic components and automated manufacturing
systems) .............................................................................. 151,092 11,311,163
Scor S.A. (Property, casualty and life reinsurance company) ............................. 91,200 5,625,846
Societe Lyonnaise des Eaux S.A. (Water utility) ......................................... 51,900 8,806,854
Societe Nationale Elf Aquitaine (Petroleum company) ..................................... 41,325 5,424,293
Synthelabo S.A. (Pharmaceutical and biomedical company) ................................. 24,300 3,658,543
Television Francaise (Television broadcasting) .......................................... 45,929 6,456,497
Total S.A. "B" (International oil and gas exploration, development and production) ...... 49,123 5,843,112
-----------
186,586,336
-----------
Germany 8.3%
Allianz AG (Multi-line insurance company) ............................................... 30,300 9,322,557
Allianz AG New* ......................................................................... 450 137,200
Daimler-Benz AG (Automobile and truck manufacturer) ..................................... 87,200 8,515,378
Deutsche Bank AG (Bank) ................................................................. 99,000 7,620,478
Dresdner Bank AG (Universal bank) ....................................................... 76,500 4,140,321
Fresenius AG (Pharmaceutical company) ................................................... 15,480 3,390,915
Fresenius AG (pfd.) ..................................................................... 1,153 276,666
Marschollek Lautenschlaeger und Partner AG (pfd.) (Leading independent life
insurance company) .................................................................... 23,300 9,084,416
Philipp Holzmann AG* (Construction engineering services) ................................ 20,400 6,037,791
SAP AG (pfd.) (Computer software manufacturer) .......................................... 16,700 8,330,918
Schering AG (Pharmaceutical and chemical producer) ...................................... 54,110 5,805,794
-----------
62,662,434
-----------
Greece 3.9%
Alpha Credit Bank A.E. (Commercial bank) ................................................ 74,100 7,816,677
Delta Informatics S.A. (Corporate information services) ................................. 118,000 4,505,106
Hellenic Telecommunication Organization S.A. (Telecommunications services) .............. 186,000 5,325,952
National Bank of Greece S.A. (Full service bank) ........................................ 37,100 6,527,409
Titan Cement Co. S.A. (Cement producer) ................................................. 61,100 5,229,200
-----------
29,404,344
-----------
</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>
Hungary 0.2%
Graboplast Rt (Producer of home improvement materials, artificial leather and
book bindings) ........................................................................ 30,000 1,137,629
-----------
Ireland 2.4%
Allied Irish Bank PLC (Bank) ............................................................ 312,000 4,291,953
Bank of Ireland PLC (Bank) .............................................................. 348,200 7,062,702
Elan Corp. PLC (ADR)* (Research and development of drug delivery technology) ............ 1,700 105,610
Irish Life PLC (Provider of life and disability insurance and pensions) ................. 656,718 6,093,329
-----------
17,553,594
-----------
Italy 11.3%
Aeroporti di Roma SpA (Management of Fiumicino and Ciampino airports) ................... 377,000 5,278,234
Alleanza Assicurazioni (Life insurance company) ......................................... 552,400 7,032,275
Assicurazioni Generali SpA (Life and property insurance company) ........................ 226,920 6,828,033
Banca Commerciale Italiana SpA (Commercial bank) ........................................ 1,005,000 5,083,580
Banca Popolare di Brescia SpA (Cooperative bank) ........................................ 450,500 6,866,797
Banca di Roma SpA* (Commercial and savings bank) ........................................ 2,062,000 3,800,734
Banca Intesa SpA (Bank) ................................................................. 900,000 5,080,871
Credito Italiano SpA (Commercial bank) .................................................. 1,374,000 7,221,577
Fiat SpA (Manufacturer of automobiles, commercial vehicles, farm and
construction equipment) ............................................................... 1,540,000 6,107,489
Istituto Bancario San Paolo di Torino (Commercial bank) ................................. 526,300 7,606,221
Istituto Nazionale delle Assicurazione (Insurance company) .............................. 2,223,500 6,646,587
La Rinascente SpA (Department store chain) .............................................. 363,300 3,640,486
La Rinascente SpA di Risparmio .......................................................... 665,000 3,423,829
Telecom Italia SpA (Telecommunications, electronics and network construction) ........... 1,033,000 7,727,016
Telecom Italia SpA di Risparmio ......................................................... 550,000 2,900,048
-----------
85,243,777
-----------
Netherlands 4.9%
Akzo-Nobel NV (Chemical producer) ....................................................... 52,200 10,620,365
Getronics NV (Provider of computer installation and maintenance services) ............... 164,119 7,263,125
Hagemeyer NV (Distributor of branded consumer and technical products) ................... 76,700 3,663,952
Unilever NV (Producer of packaged consumer goods, food, detergent, personal
care items) ........................................................................... 101,280 7,209,576
Vedior NV CVA (Temporary employment services) ........................................... 259,908 7,899,783
-----------
36,656,801
-----------
Portugal 5.2%
Banco Comercial Portugues (Commercial bank) ............................................. 229,500 8,047,224
Banco Comercial Portugues (New) (b) ..................................................... 39,039 1,327,804
Banco Portugues do Investimento (Bank) .................................................. 203,400 9,455,579
Cimentos de Portugal S.A. (Manufacturer of cement, ready mix concrete and aggregates) ... 115,300 4,264,821
</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>
Electricidade de Portugal (Electric utility) ............................................ 229,400 5,986,951
Portugal Telecom S.A. (Telecommunication services) ...................................... 131,400 7,062,250
Semapa Cement S.A. (Cement producer) .................................................... 87,000 2,544,911
-----------
38,689,540
-----------
Spain 5.7%
Argentaria Corporacion Bancaria de Espana (Commercial bank) ............................. 99,295 8,280,016
Banco Bilbao Vizcaya S.A. (Commercial bank) ............................................. 81,000 4,169,665
Compania Telefonica Nacional de Espana S.A. (Telecommunication services) ................ 268,300 11,204,123
Compania Telefonica Nacional de Espana S.A. (New) (b) ................................... 24,390 978,332
Cortefiel, S.A. (Clothing retailer) ..................................................... 368,000 8,722,784
Tabacalera S.A. "A" (Manufacturer and distributor of tobacco products) .................. 45,500 984,389
Tele Pizza, S.A.* (Operator of fast-food pizza restaurants in Spain, Portugal,
Poland, Mexico and Chile) ............................................................. 60,000 8,627,708
-----------
42,967,017
-----------
Sweden 2.6%
Astra AB "A" (Free) (Pharmaceutical company) ............................................ 138,900 2,852,635
L.M. Ericsson Telephone Co. "B" (ADR) (Leading manufacturer of cellular
telephone equipment) .................................................................. 91,620 4,712,704
Skandia Foersaekrings AB (Free) (Financial conglomerate) ................................ 52,300 3,641,139
Stora Kopparbergs Bergslags AB "A" (Manufacturer of paper and lumber products) .......... 505,800 8,656,484
-----------
19,862,962
-----------
Switzerland 6.1%
Clariant AG (Registered) (Manufacturer of color chemicals) .............................. 4,683 5,040,350
Credit Suisse Group (Registered) (Provider of bank services, management services
and life insurance) ................................................................... 22,835 5,022,026
Julius Baer & Co. (Stockbrokerage) ...................................................... 1,300 3,586,804
Kuoni Reisen AG (Registered) (Travel agency) ............................................ 1,630 8,744,752
Novartis AG (Bearer) (Pharmaceutical company) ........................................... 938 1,555,311
Novartis AG (Registered) ................................................................ 2,485 4,107,164
Schweizerische Lebensversicherungs und Rentenanstalt AG (Global life insurance company) . 3,300 2,790,870
Sika Finanz AG "B" (Bearer) (Manufacturer of water management products and systems) ..... 21,400 8,557,148
Swiss Bank Corp. (Registered) (Universal bank) .......................................... 8,300 2,881,906
Union Bank of Switzerland (Bearer) (Bank) ............................................... 2,410 3,880,413
-----------
46,166,744
-----------
United Kingdom 12.8%
Aegis Group PLC (Leading independent media services group) .............................. 4,432,740 6,821,471
Avis Europe PLC (Car rental services) ................................................... 2,175,000 8,404,061
Bank of Scotland (Bank) ................................................................. 599,400 7,369,228
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Greater Europe Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
British Petroleum PLC (Major integrated world oil company) .............................. 1,368 21,624
Compass Group PLC (International catering group) ........................................ 537,400 9,303,705
General Electric Co., PLC (Manufacturer of power, communications and defense
equipment and other various electrical components) .................................... 844,000 6,988,204
Glaxo Wellcome PLC (Pharmaceutical company) ............................................. 177,318 5,012,536
Granada Group PLC (Television systems and broadcast, travel and leisure services,
entertainment and theme park operator) ................................................ 321,500 5,539,061
Lloyds TSB Group PLC (Banking and financial services) ................................... 3,153 47,229
Misys PLC (Software and hardware computer solutions, support and data services
for various industries) ............................................................... 307,822 14,803,194
Orange PLC* (Operator of digital mobile telephone network) .............................. 280,000 2,010,418
Pearson PLC (Diversified media and entertainment holding company) ....................... 401,300 6,289,653
Royal & Sun Alliance Insurance Group PLC (Multi-line insurance holding company) ......... 366,000 4,089,550
SmithKline Beecham PLC (Manufacturer of ethical drugs and healthcare products) .......... 216,764 2,585,203
WPP Group PLC (Advertising agency) ...................................................... 2,198,000 13,952,673
Zeneca Group PLC (Manufacturer of pharmaceutical and agrochemical products and
specialty chemicals) .................................................................. 77,600 3,343,686
-----------
96,581,496
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $576,156,502) 697,636,122
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $630,799,052) (a) 752,278,852
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate. (Unaudited)
(a) The cost for federal income tax purposes was $630,799,453. At April 30,
1998, net unrealized appreciation for all securities based on tax cost was
$121,479,399. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $126,528,854 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$5,049,455.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $2,306,136 (.29% of net assets). Their
values have been estimated by the Board of Directors in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of
these securities at April 30, 1998 aggregated $1,417,142. These securities
may also have certain restrictions as to resale.
Transactions in written call options on currencies during the six months ended
April 30, 1998 were:
Principal Amount (000s) Premiums ($)
--------------------------------------------
Outstanding at
October 31, 1997 ....... FRF 213,000 670,950
Contracts written ...... FRF -- --
Contracts closed ....... FRF (213,000) (670,950)
--------------------------------------------
Outstanding at
April 30, 1998 ......... FRF -- --
========== ==========
Currency Abbreviations: FRF French Franc
The accompanying notes are an integral part of the financial statements.
15 - Scudder Greater Europe Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1998
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $630,799,052) ................. $ 752,278,852
Cash .................................................................. 869
Foreign currency holdings, at market (cost $5,376,499) ................ 5,486,567
Receivable for investments sold ....................................... 44,892,706
Receivable for Fund shares sold ....................................... 21,747,475
Dividends and interest receivable ..................................... 971,658
Foreign taxes recoverable ............................................. 311,753
Deferred organization expenses ........................................ 16,957
Other assets .......................................................... 1,598
----------------
Total assets .......................................................... 825,708,435
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ..................................... 29,597,390
Payable for fund shares redeemed ...................................... 8,104,380
Accrued management fee ................................................ 560,000
Other payables and accrued expenses ................................... 291,980
----------------
Total liabilities ..................................................... 38,553,750
--------------------------------------------------------------------------------------------
Net assets, at market value $ 787,154,685
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................... 848,963
Unrealized appreciation (depreciation) on:
Investments ........................................................ 121,479,800
Foreign currency related transactions .............................. 88,725
Accumulated net realized gain ......................................... 13,348,395
Paid-in capital ....................................................... 651,388,802
--------------------------------------------------------------------------------------------
Net assets, at market value $ 787,154,685
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($787,154,685 / 29,847,999 shares of capital stock outstanding, ----------------
$.01 par value, 100,000,000 shares authorized) ..................... $ 26.37
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Greater Europe Growth Fund
<PAGE>
Statement of Operations
six months ended April 30, 1998
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $320,474) ................. $ 2,240,097
Interest .............................................................. 1,201,059
----------------
3,441,156
----------------
Expenses:
Management fee ........................................................ 1,712,325
Services to shareholders .............................................. 406,093
Custodian and accounting fees ......................................... 183,571
Directors' fees and expenses .......................................... 29,799
Auditing .............................................................. 27,326
Reports to shareholders ............................................... 39,332
Amortization of organization expense .................................. 5,879
Registration fees ..................................................... 180,707
Legal ................................................................. 8,040
Other ................................................................. 11,844
----------------
2,604,916
--------------------------------------------------------------------------------------------
Net investment income 836,240
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ........................................................... 13,712,449
Futures ............................................................... 432,198
Written options ....................................................... (55,167)
Foreign currency related transactions ................................. (588,762)
----------------
13,500,718
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ........................................................... 84,112,453
Written options ....................................................... 1,072,061
Foreign currency related transactions ................................. 82,668
----------------
85,267,182
--------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 98,767,900
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $99,604,140
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Greater Europe Growth Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .................................. $ 836,240 $ 273,770
Net realized gain (loss) from investment transactions .. 13,500,718 17,401,800
Net unrealized appreciation (depreciation) on
investment transactions during the period ........... 85,267,182 18,752,867
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations .......................................... 99,604,140 36,428,437
---------------- ----------------
Distributions to shareholders from:
Net investment income .................................. (5,194,972) (490,975)
---------------- ----------------
Net realized gains ..................................... (12,506,412) (1,145,609)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .............................. 869,076,859 279,382,379
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................... 16,979,895 1,574,869
Cost of shares redeemed ................................ (376,319,160) (240,534,824)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ........................................... 509,737,594 40,422,424
---------------- ----------------
Increase (decrease) in net assets ...................... 591,640,350 75,214,277
Net assets at beginning of period ...................... 195,514,335 120,300,058
Net assets at end of period (including undistributed
net investment income of $848,963 and $5,207,695, ---------------- ----------------
respectively) ....................................... $ 787,154,685 $ 195,514,335
---------------- ----------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .............. 9,234,823 6,993,392
---------------- ----------------
Shares sold ............................................ 35,497,063 14,311,846
Shares issued to shareholders in reinvestment of
distributions ....................................... 824,267 88,625
Shares redeemed ........................................ (15,708,154) (12,159,040)
---------------- ----------------
Net increase (decrease) in Fund shares ................. 20,613,176 2,241,431
---------------- ----------------
Shares outstanding at end of period .................... 29,847,999 9,234,823
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - 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
Six Months (commencement
Ended Years Ended October 31, of operations)
April 30, to October 31,
1998 (a) 1997 (a) 1996 (a) 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------
Net asset value, beginning of period ...... $21.17 $17.20 $13.99 $12.18 $12.00
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) .............. .05 .03 .13 .13 .01
Net realized and unrealized gain (loss)
on investment transactions ............. 6.99 4.14 3.33 1.70 .17
------------------------------------------------------------------------------
Total from investment operations .......... 7.04 4.17 3.46 1.83 .18
------------------------------------------------------------------------------
Less distributions from:
Net investment income ..................... (.54) (.06) (.11) (.02) --
Net realized gains on investment
transactions ........................... (1.30) (.14) (.14) -- --
------------------------------------------------------------------------------
Total distributions ....................... (1.84) (.20) (.25) (.02) --
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net asset value, end of period ............ $26.37 $21.17 $17.20 $13.99 $12.18
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ...................... 35.74** 24.47 25.11 15.06 1.50**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .... 787 196 120 41 8
Ratio of operating expenses, net to
average daily net assets (%) ........... 1.52* 1.66 1.50 1.50 1.50*
Ratio of operating expenses before
expense reductions, to average daily
net assets (%) ......................... 1.52* 1.72 1.97 2.74 11.46*
Ratio of net investment income to average
daily net assets (%) ................... .49* .16 .82 1.25 2.40*
Portfolio turnover rate (%) ............... 64.7* 88.8 39.0 27.9 --
Average commission rate paid (c) .......... $.0592 $.0562 $.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 ending on or after October 31, 1996.
* Annualized
** Not annualized
19 - 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 Nasdaq Stock Market, Inc.
("Nasdaq"), 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 most
recent bid quotation. Securities which are not quoted on Nasdaq but are traded
in another over-the-counter market are valued at the most recent sale price 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. Money market
investments having an original maturity of sixty days or less are valued at
amortized cost. All other securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased securities index futures as a temporary substitute for purchasing
selected investments.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
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
20 - Scudder Greater Europe Growth Fund
<PAGE>
the period, the Fund held put options and written call options on currencies
primarily as a hedge against potential adverse price movements in the value of
portfolio assets.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium paid. If the Fund elects to close out the option it
would recognize a gain or loss equal to the difference between the cost of
acquiring the option and the amount realized upon the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked price are available. Over-the-counter written or purchased options are
valued using dealer supplied quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, 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 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.
21 - 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, as amended, 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.
22 - Scudder Greater Europe Growth Fund
<PAGE>
B. Purchases and Sales of Securities
For the six months ended April 30, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $519,874,888 and
$107,251,327, respectively.
The aggregate face value of futures contracts opened and closed during the six
months ended April 30, 1998 was $19,959,326.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Directors and by the Fund's Shareholders. The
Management Agreement, which was effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, 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. The Adviser
determines the securities, instruments, and other contracts relating to
investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Management Agreement. For the six months ended
April 30, 1998, the fees pursuant to these agreements amounted to $1,712,325.
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 April 30, 1998, the amount charged by SSC aggregated $379,193,
of which $130,028 was unpaid at April 30, 1998.
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 April 30,
1998, the amount charged by STC aggregated $16,431, of which $6,336 was unpaid
at April 30, 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 for the Fund. For the six months
ended April 30, 1998, the amount charged by SFAC aggregated $107,150, of which
$32,080 was unpaid at April 30, 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 Funds 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
23 - Scudder Greater Europe Growth Fund
<PAGE>
invested in the Underlying Funds. For the six months ended April 30, 1998, the
Special Servicing Agreement expense charged to the Fund amounted to $3,603.
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 April 30, 1998, Directors' fees and expenses aggregated $29,799.
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 1/3 percent of its net assets under the agreement. In addition,
the Fund also maintains an uncommitted line of credit.
24 - 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 April 30,
1998, and the related statements of operations for the six months then ended,
the statements of changes in net assets for the six months then ended and for
the year ended October 31, 1997, and the financial highlights for the six months
ended April 30, 1998, for each of the three years in the period ended October
31, 1997, 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 April
30, 1998, 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 April 30, 1998, the results of its
operations for the six months then ended, the changes in its net assets for the
six months then ended and for the year ended October 31, 1997 and the financial
highlights for the six months ended April 30, 1998, for each of the three years
in the period ended October 31, 1997 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.
June 9, 1998
25 - Scudder Greater Europe Growth Fund
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intentionally
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27 - Scudder Greater Europe Growth Fund
<PAGE>
Officers and Directors
Daniel Pierce*
Chairman of the Board and Director
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; President, Exeter Capital
Management Corporation
William H. Gleysteen, Jr.
Director; Consultant; Guest
Scholar, Brookings Institute
William H. Luers
Director; President, The
Metropolitan Museum of Art
Wilson Nolen
Director; Consultant
Kathryn L. Quirk*
Director, Vice President and
Assistant Secretary
Robert W. Lear
Honorary Director;
Executive-in-Residence, Visiting
Professor, Columbia University
Graduate School of Business
Robert G. Stone, Jr.
Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
Nicholas Bratt*
President
Elizabeth J. Allan*
Vice President
Irene T. Cheng*
Vice President
Joyce E. Cornell*
Vice President
Susan E. Dahl*
Vice President
Richard W. Desmond*
Assistant Secretary
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
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
Sheridan P. Reilly*
Vice President
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
28 - 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
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 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 Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International 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
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. +++ +++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.
29 - Scudder Greater Europe Growth 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
- ------------------------------------------------------------------------------------------------------------------------------
30 - Scudder Greater Europe Growth 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 Scudder 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>
31 - Scudder Greater Europe Growth 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 $200 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
U.S.
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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