Scudder
International
Fund
Annual Report
March 31, 1998
Pure No-Load(TM) Funds
A fund seeking long-term growth of capital primarily from foreign equity
securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder International Fund
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Date of Inception: 6/18/53 Total Net Assets as of Ticker Symbol: SCINX
3/31/98: $2.88 billion
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o For the one-year period ended March 31, 1998, Scudder International Fund
provided a strong total return of 21.57%, outperforming the unmanaged MSCI EAFE
plus Canada Index return of 19.13%. The Fund's overweighting of European
equities particularly helped its performance over the period.
o Morningstar awarded the Fund an overall rating of four stars for its
risk-adjusted performance as of March 31, 1998.*
o While we expect volatility to continue for the short term, we believe the Fund
is positioned to benefit from the longer-term gains that may result from
industry consolidation and corporate restructuring.
Table of Contents
3 Letter from the Fund's Chairman 22 Notes to Financial Statements
4 Performance Update 26 Report of Independent Accountants
5 Portfolio Summary 27 Tax Information
6 Portfolio Management Discussion 28 Shareholder Meeting Results
10 Glossary of Investment Terms 32 Officers and Directors
12 Investment Portfolio 33 Investment Products and Services
18 Financial Statements 34 Scudder Solutions
21 Financial Highlights
* Source: Morningstar. Ratings are subject to change monthly and are calculated
from the 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 four star ratings for the three- and ten-year periods among 722 and
100 international equity funds, respectively, and a 3 star rating for the
five-year period among 311 international equity funds. In an investment
category, the top 10% of funds receive five stars, the next 22.5% receive four
stars, and the next 35% receive three stars. Past performance is no guarantee
of future results.
2 - Scudder International Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to present the annual report of the Scudder International
Fund for the fiscal year ended March 31, 1998. The Fund had a successful year,
providing a total return of 21.57% for the twelve months, outperforming its
benchmark index, the MSCI EAFE plus Canada Index, which returned 19.13% for the
same period.
As outlined in the management discussion that begins on page, the period of
this report was marked by outstanding performance by the Fund's European equity
holdings, as well as by limited exposure to the economic crisis in Southeast
Asia and the weak Japanese market. We believe that the Fund is currently
positioned to benefit from industry consolidation and corporate restructuring in
Europe, as well as to capitalize on economic growth in selected developing
countries.
For those of you who are interested in new Scudder products, we recently
introduced three industry sector funds that comprise the Choice Series: Scudder
Financial Services Fund, Scudder Health Care Fund, and Scudder Technology Fund.
In addition, April 6 marked the debut of our latest entrant in the growth and
income category, Scudder Real Estate Investment Fund. For further information on
any of these new funds, please call 1-800-225-2470.
Lastly, at the start of 1998, the Fund's investment adviser changed its
name to Scudder Kemper Investments, Inc., from Scudder, Stevens & Clark, Inc.,
pursuant to 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 these changes are positive and broaden our
resources in managing the Fund.
Thank you for your continued investment in Scudder International Fund. If
you have any questions about your account, please call our Investor Relations
representatives at the number above, or visit our Web site at
http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder International Fund
3 - Scudder International Fund
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PERFORMANCE UPDATE as of March 31, 1998
- -------------------------------------------
Fund Index Comparisons
- -------------------------------------------
Total Return
- -------------------------------------------
Period Ended Growth of Average
3/31/98 $10,000 Cumulative Annual
- -------------------------------------------
Scudder International Fund
- -------------------------------------------
1 Year $12,157 21.57% 21.57%
5 Year $19,298 92.98% 14.05%
10 Year $28,651 186.51% 11.10%
- -------------------------------------------
MSCI EAFE & Canada Index
- -------------------------------------------
1 Year $11,913 19.13% 19.13%
5 Year $17,704 77.04% 12.10%
10 Year $18,483 84.83% 6.33%
- -------------------------------------------
Growth of a $10,000 Investment
- -------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Yearly periods ended March 31
Scudder International Fund
Year Amount
- ---------------------
'88 $10,000
'89 $11,434
'90 $13,386
'91 $13,581
'92 $13,606
'93 $14,846
'94 $18,215
'95 $17,848
'96 $21,282
'97 $23,568
'98 $28,651
MSCI EAFE & Canada Index
Year Amount
- ---------------------
'88 $10,000
'89 $11,166
'90 $ 9,951
'91 $10,194
'92 $ 9,402
'93 $10,440
'94 $12,189
'95 $13,489
'96 $15,193
'97 $15,515
'98 $18,483
The Morgan Stanley Capital International (MSCI) Europe, Australia, the Far East
(EAFE) & Canada Index is an unmanaged capitalization-weighted measure of stock
markets in Europe, Australia, the Far East and Canada. Index returns assume
dividends reinvested net of withholding tax and, unlike Fund returns, do not
reflect any fees or expenses.
- -----------------------------------------------------------------
Returns and Per Share Information
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended March 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
--------------------------------------------------------------------------------
Net Asset Value $34.79 $37.00 $34.69 $34.36 $35.69 $42.96 $39.72 $45.71 $48.07 $52.06
Income Dividends $ .13 $ .43 $ .74 $ -- $ .83 $ .69 $ -- $ .40 $ 1.28 $ .25
Capital Gains
Distributions $ 3.06 $ 3.15 $ 1.98 $ .40 $ .86 $ .09 $ 2.42 $ 1.18 $ 1.19 $ 5.35
Fund Total
Return (%) 14.34 17.08 1.46 .18 9.12 22.69 -2.02 19.25 10.74 21.57
Index Total
Return (%) 11.64 -10.87 2.44 -7.73 10.99 21.87 6.02 12.62 2.12 19.13
</TABLE>
All performance is historical, assumes reinvestment of all dividends and capital
gains, and is not indicative of future results. Investment return and principal
value will fluctuate, so an investor's shares, when redeemed, may be worth more
or less than when purchased.
4 - Scudder International Fund
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PORTFOLIO SUMMARY as of March 31, 1998
- -------------------------------
Geographical
(Excludes 4% Cash Equivalents)
- -------------------------------
Europe 78%
Japan 13%
Pacific Basin 5%
U.S. & Canada 2%
Latin America 2%
- -------------------------------
100%
- -------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund increased its weighting
in Europe, where corporate
restructuring and the prospect of
monetary union are supporting
the investment climate, while
further underweighting Japan.
- ------------------------------
Sectors
(Excludes 4% Cash Equivalents)
- ------------------------------
Financial 26%
Manufacturing 19%
Durables 8%
Health 7%
Consumer Staples 6%
Media 5%
Service Industries 4%
Communications 4%
Technology 4%
Other 17%
- ------------------------------
100%
- ------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Many companies in the financial
sector are realigning their
businesses to better position
themselves for a pan-European agenda.
- -------------------------------
Ten Largest Equity Holdings
(17% of Portfolio)
- -------------------------------
1. Alcatel Alsthom
Transportation and telecommunication
equipment
2. Bayerische Vereinsbank AG
Commercial bank
3. Clariant AG
Manufacturer of color chemicals
4. Skandia Foersaekrings AB
Financial conglomerate
5. Credit Suisse Group
Bank, management and life insurance
services
6. Zeneca Group PLC
Pharmaceuticals and agrochemicals
holding company
7. SAP AG
Computer software manufacturer
8. Istituto Nazionale delle
Assicurazione
Insurance company
9. AEGON Insurance Group NV
Insurance company
10. Mannesmann AG
Diversified construction and technology
company
Top holdings include companies
restructuring with the full global
arena in mind, such as Alcatel
Alsthom in France.
For more complete details about the Fund's investment portfolio, see page 12. A
monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5 - Scudder International Fund
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<PAGE>
Portfolio Management Discussion
Dear Shareholders,
For the fiscal year ended March 31, 1998, the Scudder International Fund
provided a total return of 21.57%. This performance exceeded the 19.13% return
for the Fund's benchmark, the unmanaged MSCI (Morgan Stanley Capital
International) EAFE (Europe, Asia and the Far East) plus Canada Index.
Market Summary: European
Equities Forge Ahead
The international equity markets offered a mixed bag of returns over the past
twelve months. On a positive note, many European markets witnessed some
spectacular advances, frequently marking new all-time highs. On a more sober
note, the Japanese market continued to slump with little respite. The headline
event of the year was the dramatic shakeout across emerging Asia. A widespread
collapse of these economies in the latter part of 1997 sent shock waves through
markets around the world. It heightened concerns about deflationary pressures
and weakened prospects for global growth. So far, the ripple effects from Asia
have led to only a temporary correction in global equity prices. Over the last
few months, markets have resumed their upward push, having judged the Asian
problem to be largely contained and discounted.
Fund performance over the year relative to the benchmark MSCI index benefited
from our greater exposure to Europe at the expense of Japan. The steep downdraft
in emerging Asia did hurt overall returns somewhat. The damage was limited,
however, due to the small overall weighting in emerging Asian securities in the
portfolio and some mitigating gains from Latin America. As of March 31st, the
European and Japanese portfolio weightings stood at 78% and 13%, respectively.
Emerging markets in total stood at only about 3% of the portfolio.
The European bourses were almost unanimously strong over the past year, with
many markets surpassing the Standard & Poor's 500 Index in their local currency
gains. The peripheral markets were particularly robust, as the promise of
European Monetary Union (EMU) was translated into steeply declining interest
rates and higher than expected growth for these countries. The Italian market
rocketed 108% over the period, Spain 88%, and Portugal 76%. The major
continental bourses were nothing to groan about either; Switzerland, Germany and
France rose a solid 63%, 49% and 46%, respectively. Continued strengthening in
the U.S. dollar took away a part of these gains for U.S. investors. The European
markets were driven by three powerful forces: growing confidence in EMU, renewed
economic growth, and further momentum in corporate restructuring.
The major market to disappoint was Japan. The Tokyo Price Index (TOPIX) fell 9%
during the period, and the yen weakened as well. Through a series of policy
missteps, the domestic economy has slipped into a downward spiral. The
government has proven itself hardpressed to put forth the actions needed to
stimulate domestic growth. In conjunction with more supply pressure from the
unwinding of crossholdings among banks, manufacturers, and suppliers, and
renewed weakness in the financial system, the stock market has languished. There
were brief bouts of optimism as the government looked to initiate change, but
6 - Scudder International Fund
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hopes were quickly dashed as reality fell short of promise. In addition, over
the course of the year, the polarization of the Japanese market widened even
further. The globally powerful exporters and domestic blue chips held their own,
while the troubled domestic sectors declined further. While progress continued
in the much needed areas of deregulation and structural reform, notably in the
financial sector, these changes will bear fruit only longer term. At the moment,
they only add stress to an already weak economy.
Outlook: Shockwaves from
Southeast Asia Easing
Just as the crisis in emerging Asia sent jitters through global markets as it
first unfolded, so too developments from this region influence much of the
current outlook. The present Asian demise is the result of many years of
economic mismanagement now being called to task. These small, developing
countries were overwhelmed by global capital flows which their weak financial
systems and economic structures were ill-adapted to handle. It will likely take
years to fully right the situation. The uncertainty is high, since the future
course of these Asian economies depends on multiple government policy actions
still in their infancy. However, it would appear that we have stepped well back
from any brink, and the path to recovery is in sight. Central banks around the
world have kept interest rates low and held the deflationary effects of Asia at
bay. Some of the more damaged countries, notably Korea and Thailand, are
initiating responsible programs to restructure their economies and the markets
are rewarding their diligence.
At the moment, it would appear that the risk of global "contagion" from Asia has
diminished greatly. The markets are relishing the prospect of prolonged, low
inflationary growth. While all looks well for now, the risks are there for
reality to check in more solemnly than the markets currently expect. It is
likely that the changed circumstances in Asia have only begun to take their full
toll on the balance of global trade and production. It also remains to be seen
what level of growth the world economies can sustain when one of the main
engines has gone on the blink. As a final uncertainty, Japan is in a position to
scuttle or ease any attempt at recovery by its neighbors, with implications for
the global economy at large. How this all plays out will depend on the way Japan
reconciles its conflicting internal needs, and to what extent external factors
are weighed.
In striking contrast, the favorable momentum behind the European markets looks
well-underpinned for now. Several factors should continue to support this
strength. First, as the final push for EMU draws to its conclusion, interest
rates and inflation will likely stay low. Deflation from Asia provides an added
discipline. Against this backdrop, corporate profits and equity valuations are
thriving. In addition, there is building optimism that EMU will breathe new life
into European economies, as well as encourage further development of their
capital markets. Second, now that the convergence criteria have been either met
or excused, the fiscal straightjacket has loosened. Economic growth is
accelerating in many countries. Finally, the push for corporate restructuring is
7 - Scudder International Fund
<PAGE>
continuing unabated, lending a solid secular foundation for greater corporate
profitability. Against this very favorable backdrop, it is no surprise that many
of these markets have been reaching all-time highs. While they may have gotten
ahead of themselves temporarily, there can be no doubt that the underlying
forces are quite real.
Strategy Focused on Europe
with an Eye on Future
Japanese Restructuring
The focus of the Fund shifted progressively toward Europe over the course of the
year. This was in response to the better corporate and macroeconomic
fundamentals in the European markets, and deteriorating trends in Asia. How long
the portfolio remains in this balance will depend foremost on the unfolding of
events in Japan. In due time, we would expect widespread economic and structural
reforms to take root there. The early signs are becoming more visible, and the
momentum is building. At some point, Japan's corporate restructuring will be an
attractive investment alternative to that of Europe. As long as the Japanese
government follows its past pattern of relative inaction, however, the economy
will likely stagnate and the market will hold to a trading range. We wait for
more evidence to build, or the nearing of a defining event.
The investment strategy in Europe has been to focus on two broad categories of
companies. In one group are those companies that we believe are already
well-positioned for the challenges of increased global competition. Included
among these are several of the core holdings of the portfolio, including: SAP, a
German provider of business software; Nokia, the wireless communications company
in Finland; Aegon, a life insurance provider from the Netherlands; and Nestle,
the food manufacturer based in Switzerland. The other group of companies is a
much broader one, where various forms of restructuring lie at the core of the
investment thesis. Some of these companies are in the process of restructuring
with the full global arena in mind. Industrial giants such as Alcatel Alsthom in
France and Imperial Chemicals Industries of the UK fit this description. Many
companies, however, fall into the group of those that are realigning businesses
to better position themselves primarily for a pan-European agenda as EMU takes
hold. Included in this group are many financial groups such as Allianz of
Germany, INA in Italy, or UBS of Switzerland.
From a cyclical point of view, the Fund has only a limited exposure to companies
that require strong economic growth to perform well. While many countries in
Europe currently have the cyclical winds at their backs, it is still very early
for the effects of Asia to reach the shores of Europe. Rather than banking on
any view of the cycle, we have tried to position the Fund to benefit from the
longer term secular gains to be derived from industry consolidation and
corporate restructuring. With respect to Japan, the Fund's exposure to
8 - Scudder International Fund
<PAGE>
restructuring is relatively light for now, but we remain vigilant in
anticipation of the time that this theme will become as promising there as it
has been in Europe.
Sincerely,
Your Portfolio Management Team
/s/Irene T. Cheng /s/Nicholas Bratt
Irene T. Cheng Nicholas Bratt
/s/Deborah A. Chaplin /s/Carol L. Franklin
Deborah A. Chaplin Carol L. Franklin
/s/Joan R. Gregory /s/Sheridan Reilly
Joan R. Gregory Sheridan Reilly
Scudder International Fund:
A Team Approach to Investing
Scudder International Fund is managed by a team of Scudder Kemper Investments,
Inc. (the "Adviser") professionals who each play an important role in the
Fund's management process. Team members work together to develop investment
strategies and select securities for the Fund's portfolio. They are supported
by the Adviser's large staff of economists, research analysts, traders and
other investment specialists who work in the Adviser's offices across the
United States and abroad.
Irene Cheng, Lead Portfolio Manager, joined the Adviser in 1993. Ms. Cheng,
who has over 15 years of industry experience, focuses on portfolio management
and equity strategy for the Adviser's international equity accounts. Nicholas
Bratt, Portfolio Manager, directs the Adviser's overall global equity
investment strategies. Mr. Bratt joined the Adviser and the team in 1976.
Deborah A. Chaplin, Portfolio Manager, focuses on stock selection and
investment strategy. Ms. Chaplin has five years of experience in investment
management as both a securities analyst and equity portfolio manager, prior to
joining the Adviser in 1996. Carol L. Franklin, Portfolio Manager, joined
Scudder International Fund's portfolio management team in 1986 and has over 20
years of experience in finance and investing. She joined the Adviser in 1981.
Joan Gregory, Portfolio Manager, focuses on stock selection, a role she has
played since she joined the Adviser in 1992. Ms. Gregory, who joined the team
in 1994, has been involved with investment in global and international stocks.
Sheridan Reilly, Portfolio Manager, joined the Adviser in 1995 and is a member
of the Adviser's Global Equity Group. Mr. Reilly has over 10 years of industry
experience focusing on strategies for global portfolios, currency hedging and
foreign equity markets.
9 - Scudder International 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 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.
10 - Scudder International Fund
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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.
"Large-cap" stocks tend to be more liquid.
PRICE/EARNINGS RATIO A widely used gauge of a stock's valuation
(also "P/E" or "earnings that indicates what investors are paying for
multiple") 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)
11 - Scudder International Fund
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Investment Portfolio as of March 31, 1998
<TABLE>
<CAPTION>
Principal Market
Amount (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreements 0.1%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 3/31/98 at 5.85%,
to be repurchased at $1,823,296 on 4/1/98, collateralized by a $1,438,000 U.S. ------------
Treasury Note, 11.625%, 11/15/02 (Cost $1,823,000) ............................... 1,823,000 1,823,000
------------
Commercial Paper 3.4%
- ------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., Discount Note, 4/9/98 ............................. 25,000,000 24,969,167
Goldman Sachs & Co., Discount Note, 4/1/98 ......................................... 30,000,000 30,000,000
Old Line Funding Corp., Discount Note, 4/7/98 ...................................... 25,000,000 24,976,667
Sheffield Receivables Corp., Discount Note, 4/20/98 ................................ 20,000,000 19,938,444
- ------------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper (Cost $99,887,251) 99,884,278
- ------------------------------------------------------------------------------------------------------------------------------
Bonds 0.3%
- ------------------------------------------------------------------------------------------------------------------------------
Japan 0.2%
Sumitomo Bank, 9.4% to 6/30/08, variable based on LIBOR to 12/29/49 ................ 5,346,000 5,526,428
------------
United States 0.1%
IBJ Preferred Capital Co., 8.79% to 6/30/08, variable based on LIBOR to 12/29/49 ... 4,581,000 4,397,760
- ------------------------------------------------------------------------------------------------------------------------------
Total Bonds (Cost $9,927,000) 9,924,188
- ------------------------------------------------------------------------------------------------------------------------------
Convertible Bonds 0.5%
- ------------------------------------------------------------------------------------------------------------------------------
Japan 0.4%
Softbank Corp., 0.5%, 3/29/02 ...................................................... JPY 1,500,000,000 10,243,518
------------
Philippines 0.1%
International Container Terminal, Inc., 1.75%, 3/13/04 (Putable 3/13/02) ........... 3,765,000 3,200,250
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $18,971,081) 13,443,768
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 95.7%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 0.9%
YPF S.A. "D" (ADR) (Petroleum company) ............................................. 785,000 26,690,000
------------
Australia 0.4%
Woodside Petroleum Ltd. (Major oil and gas producer) ............................... 1,814,600 12,000,854
------------
Brazil 1.0%
Companhia Vale do Rio Doce (pfd.) (Diverse mining and industrial complex) .......... 710,000 16,766,491
Usinas Siderurgicas de Minas Gerais S.A. (pfd.) (Steel manufacturer) ............... 1,527,033 12,355,940
------------
29,122,431
Canada 1.5%
Canadian National Railway (Railroad operator) ...................................... 670,000 43,093,886
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder International Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
China 0.8%
Anhui Expressway Co., Ltd. "H" (Developer and manager of toll highways in Anhui
province) .............................................................................. 18,581,000 3,381,067
China Telecommunications Ltd. (Telecommunication services) ............................... 1,564,000 3,168,852
GZI Transport Ltd. (Developer and operator of toll highways in Guangdong
Province) .............................................................................. 4,492,000 1,623,167
Jiangsu Expressway Co., Ltd. "H"* (Builder and manager of the Shanghai-Nanjing
expressway) ............................................................................ 14,864,000 4,220,112
Shenzhen Expressway Co. "H" (Highway developer) .......................................... 15,848,000 4,448,353
Sichuan Expressway Co. "H"* (Developer of toll roads, bridges and tunnels) ............... 11,266,000 1,948,229
Zhejiang Expressway Co., Ltd. "H"* (Road construction and management) .................... 16,008,000 4,090,419
------------
22,880,199
------------
Finland 1.4%
Nokia AB Oy "A" (Leading manufacturer of telecommunications equipment and
cellular telephones) ................................................................... 382,400 41,036,255
------------
France 18.4%
AXA S.A. (Insurance group providing insurance, finance and real estate services) ......... 302,857 31,177,534
Accor S.A. (Catering, hotels, travel services) ........................................... 139,122 35,692,453
Alcatel Alsthom (Manufacturer of transportation, telecommunication and energy
equipment) ............................................................................. 288,598 54,157,237
Carrefour (Hypermarket operator and food retailer) ....................................... 55,800 32,863,251
Christian Dior (Leading fashion house) ................................................... 87,468 11,629,469
Compagnie Financiere de Paribas "A" (Finance and investment company) ..................... 157,962 15,980,988
Compagnie de Saint-Gobain (Glass manufacturer) ........................................... 135,742 22,340,757
Credit Commercial de France (Bank) ....................................................... 218,459 17,942,014
France Telecom SA* (Telecommunication services) .......................................... 449,031 23,677,827
Groupe Danone (Producer of packaged foods and beverages) ................................. 60,469 14,596,470
LVMH Moet-Hennessy Louis Vuitton SA (Producer of wines, spirits and luxury
products) .............................................................................. 66,709 14,143,707
Lagardere S.C.A. (Holding company with interests in publishing, defense,
audiovisual production and services, telecommunications and media) ..................... 470,178 18,966,438
Renault SA (PC) (Manufacturer of automobiles, buses, industrial and agricultural
vehicles) .............................................................................. 90,220 34,210,085
Rhone-Poulenc S.A. "A" (Medical, agricultural and consumer chemicals) .................... 693,916 35,258,435
Schneider S.A. (Manufacturer of electronic components and automated
manufacturing systems) ................................................................. 379,138 29,180,932
Societe Lyonnaise des Eaux SA (Water utility) ............................................ 272,544 39,358,916
Societe Nationale Elf Aquitaine (Petroleum company) ...................................... 311,858 40,859,814
Television Francaise (Television broadcasting) ........................................... 123,879 15,391,179
Thomson CSF (Manufacturer of aerospace systems and industrial electronics
products) .............................................................................. 596,950 24,080,274
Usinor Sacilor (Producer of flat steel and stainless steel) .............................. 1,197,495 20,017,827
------------
531,525,607
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder International Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Germany 17.8%
Allianz AG (Multi-line insurance company) ................................................ 137,587 41,540,891
Allianz AG New* .......................................................................... 4,046 1,212,838
BASF AG (Leading international chemical producer) ........................................ 744,228 33,091,552
Bayerische Vereinsbank AG (Commercial bank) .............................................. 718,222 52,416,461
Commerzbank AG (Worldwide multi-service bank) ............................................ 988,400 35,693,113
Deutsche Telekom AG (Telecommunication services) ......................................... 667,122 14,479,916
Dresdner Bank AG (Universal bank) ........................................................ 631,567 28,747,941
Heidelberger Druckmaschinen AG (Manufacturer of commercial printing presses) ............. 98,677 7,590,949
Hoechst AG (Chemical producer) ........................................................... 501,117 19,626,947
Mannesmann AG (Bearer) (Diversified construction and technology company) ................. 61,702 45,164,076
Muenchener Rueckversicherungs-Gesellschaft AG (Registered) (pfd.) (Insurance
company) ............................................................................... 101,647 43,960,212
RWE AG (pfd.) (Producer and marketer of petroleum and chemical products) ................. 879,200 39,592,042
SAP AG (pfd.) (Computer software manufacturer) ........................................... 113,000 48,045,464
Schering AG (Pharmaceutical and chemical producer) ....................................... 283,357 33,363,150
Siemens AG (Leading electrical engineering and electronics company) ...................... 219,741 14,706,420
VEBA AG (Electric utility, distributor of oil and chemicals) ............................. 621,500 44,080,874
VIAG AG (Provider of electrical power and natural gas services, aluminum
products, chemicals, ceramics and glass) ............................................... 24,680 13,448,719
------------
516,761,565
------------
Hong Kong 3.9%
Cheung Kong Holdings Ltd. (Real estate company) .......................................... 2,848,000 20,214,743
Citic Pacific Ltd. (Diversified holding company) ......................................... 2,158,000 7,602,906
Cosco Pacific Ltd. (Investment holding company) .......................................... 7,040,000 5,814,578
Great Eagle Holdings Ltd. (Property development) ......................................... 1,109,000 1,509,905
HSBC Holdings Ltd. (Bank) ................................................................ 909,132 27,806,149
Hong Kong & China Gas Co., Ltd. (Gas utility) ............................................ 17 29
Hutchison Whampoa, Ltd. (Container terminal and real estate company) ..................... 2,150,584 15,125,804
Kerry Properties, Ltd. (Real estate company) ............................................. 6,622,000 7,990,360
New World Development Co., Ltd. (Property investment and development,
construction and engineering, hotels and restaurants, telecommunications) .............. 5,172,465 18,223,247
New World Infrastructure Ltd.* (Investment and operation of infrastructure
projects) .............................................................................. 530,000 1,275,617
Television Broadcasts, Ltd. (Television broadcasting) .................................... 3,318,000 8,713,775
------------
114,277,113
------------
Hungary 0.2%
First Hungary Fund* (Investment company) ................................................. 3,619 4,885,650
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder International Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Italy 4.7%
Banca Commerciale Italiana SpA (Commercial bank) ......................................... 2,087,900 10,416,594
Banca di Roma SpA (Commercial and savings bank) .......................................... 6,182,900 10,429,192
Credito Italiano SpA (Commercial bank) ................................................... 2,189,100 10,813,409
Istituto Bancario San Paolo di Torino (Commercial bank) .................................. 735,400 10,306,895
Istituto Nazionale delle Assicurazione (Insurance company) ............................... 14,667,500 47,550,699
Telecom Italia Mobile SpA (Cellular telecommunication services) .......................... 3,055,000 16,414,550
Telecom Italia SpA (Telecommunications, electronics and network construction) ............ 3,912,500 30,829,985
------------
136,761,324
------------
Japan 12.2%
Asahi Bank Ltd. (Commercial bank) ........................................................ 1,350,000 5,521,369
Bridgestone Corp. (Leading automobile tire manufacturer) ................................. 916,000 20,759,596
Canon Inc. (Leading producer of visual image and information equipment) .................. 983,000 22,204,270
Daiwa Securities Co., Ltd. (Brokerage and other financial services) ...................... 3,297,000 13,855,540
Fujitsu Ltd. (Leading manufacturer of computers) ......................................... 1,500,000 15,646,692
Industrial Bank of Japan, Ltd. (Commercial bank and trust company) ....................... 1,179,000 8,051,405
Keyence Corp. (Specialized manufacturer of sensors) ...................................... 104,900 14,484,710
Long-Term Credit Bank of Japan (Commercial bank) ......................................... 4,359,000 7,589,119
Minebea Co., Ltd. (Manufacturer of bearings, electronic equipment, machinery
parts) ................................................................................. 1,307,000 14,320,063
Nichiei Co., Ltd. (Finance company for small and medium-sized firms) ..................... 322,080 28,520,836
Nintendo Co., Ltd. (Game equipment manufacturer) ......................................... 294,000 25,372,406
Nippon Telegraph & Telephone Corp. (Leading telecommunications company) .................. 1,559 12,986,304
Nomura Securities Co., Ltd. (Financial advisor, securities broker and
underwriter) ........................................................................... 1,453,000 17,119,132
Orix Corp. (Major leasing company) ....................................................... 289,200 19,662,692
SMC Corp. (Leading maker of pneumatic equipment) ......................................... 177,800 13,222,753
Sakura Bank Ltd. (Full service bank) ..................................................... 2,539,000 9,012,397
Secom Co., Ltd. (Electronic security system operator) .................................... 195,000 11,926,382
Shohkoh Fund & Co., Ltd. (Finance company for small and medium-sized firms) .............. 58,200 19,435,668
Sony Corp. (Consumer electronic products manufacturer) ................................... 252,300 21,394,995
Sumitomo Electric Industries, Ltd. (Leading manufacturer of electric wires and
cables) ................................................................................ 878,000 11,332,858
Teijin Ltd. (Manufacturer of polyester products) ......................................... 3,716,000 11,015,121
Tokyo Electron Ltd. (Leading semiconductor production equipment manufacturer) ............ 434,000 14,623,541
Yamanouchi Pharmaceutical Co., Ltd. (Leading manufacturer of ethical drugs) .............. 593,000 13,617,351
------------
351,675,200
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder International Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Netherlands 5.9%
AEGON Insurance Group NV (Insurance company) ............................................. 375,400 45,643,253
Akzo-Nobel NV (Chemical producer) ........................................................ 120,000 24,374,685
Elsevier NV (International publisher of scientific, professional, business, and
consumer information books) ............................................................ 1,676,000 27,572,268
Heineken Holdings NV "A" (Brewery) ....................................................... 160,000 31,847,287
Philips Electronics NV (Leading manufacturer of electrical equipment) .................... 369,400 27,107,700
Royal Dutch Petroleum Co. (Owner of 60% of Royal Dutch/Shell Group) ...................... 250,950 14,202,787
------------
170,747,980
------------
Portugal 0.7%
Portugal Telecom S.A. (Telecommunication services) ....................................... 389,300 20,253,469
------------
Sweden 3.4%
AGA AB "B" (Free) (Producer and distributor of industrial and medical gases) ............. 899,000 12,257,302
L.M. Ericsson Telephone Co. "B" (ADR) (Leading manufacturer of cellular
telephone equipment) ................................................................... 777,100 36,960,819
Skandia Foersaekrings AB (Free) (Financial conglomerate) ................................. 769,500 50,148,164
------------
99,366,285
------------
Switzerland 9.4%
Ciba Specialty Chemical (Registered) (Manufacturer of chemical products for
plastics, coatings, fibers and fabrics) ................................................ 223,609 28,592,626
Clariant AG (Registered) (Manufacturer of color chemicals) ............................... 48,447 52,259,223
Credit Suisse Group (Registered) (Provider of bank services, management services
and life insurance) .................................................................... 250,000 50,000,000
Nestle SA (Registered) (Food manufacturer) ............................................... 20,377 38,923,410
Novartis AG (Bearer) (Pharmaceutical company) ............................................ 18,773 33,360,544
Novartis AG (Registered) ................................................................. 6,360 11,251,987
Roche Holdings AG (PC) (Producer of drugs and medicines) ................................. 3,405 36,840,984
Union Bank of Switzerland (Bearer) (Bank) ................................................ 12,892 21,049,889
------------
272,278,663
------------
United Kingdom 13.1%
BOC Group PLC (Producer of industrial gases) ............................................. 1,622,226 25,897,922
Carlton Communications PLC (Television post production products and services) ............ 3,487,500 27,794,195
General Electric Co., PLC (Manufacturer of power, communications and defense
equipment and other various electrical components) ..................................... 4,450,000 35,185,589
Glaxo Wellcome PLC (Pharmaceutical company) .............................................. 1,111,682 29,855,055
Imperial Chemical Industries PLC (Leading international chemical producer) ............... 1,523,100 27,235,328
Pearson PLC (Diversified media and entertainment holding company) ........................ 1,619,000 26,293,689
Pilkington PLC (Manufacturer of glass for building and transport markets) ................ 6,173,700 12,610,674
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder International Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PowerGen PLC (Electric utility) .......................................................... 1,172,768 16,385,941
Reuters Holdings PLC (International news agency) ......................................... 1,941,968 21,004,267
Rio Tinto PLC (Mining and finance company) ............................................... 1,014,160 13,626,504
Shell Transport & Trading PLC (Part owner of Royal Dutch Shell Co.) ...................... 2,624,300 19,278,074
SmithKline Beecham PLC (Manufacturer of ethical drugs and healthcare products) ........... 2,694,026 33,942,296
WPP Group PLC (Advertising agency) ....................................................... 7,111,800 40,484,743
Zeneca Group PLC (Manufacturer of pharmaceutical and agrochemical products and
specialty chemicals) ................................................................... 1,143,700 49,193,663
------------
378,787,940
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $1,876,333,261) 2,772,144,421
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $2,006,941,593) (a) 2,897,219,655
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $2,020,951,988. At March 31,
1998, net unrealized appreciation for all securities based on tax cost was
$876,267,667. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $951,481,215 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$75,213,548.
(b) Principal amount is stated in U.S. dollars unless otherwise specified.
Currency Abbreviations: JPY Japanese Yen
The accompanying notes are an integral part of the financial statements.
17 - Scudder International Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of March 31, 1998
<TABLE>
<CAPTION>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments, at market (identified cost $2,006,941,593) ............... $ 2,897,219,655
Foreign currency holdings, at market (identified cost $2,068,391) ..... 2,068,337
Receivable for investments sold ....................................... 3,815,876
Receivable for Fund shares sold ....................................... 5,667,628
Dividends and interest receivable ..................................... 7,879,338
Foreign taxes recoverable ............................................. 2,281,883
Other assets .......................................................... 108,678
-----------------
Total assets .......................................................... 2,919,041,395
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ..................................... 28,374,553
Payable for Fund shares redeemed ...................................... 2,110,249
Unrealized depreciation on forward currency exchange contracts ........ 337,276
Accrued management fee ................................................ 1,914,719
Other payables and accrued expenses ................................... 1,385,253
-----------------
Total liabilities ..................................................... 34,122,050
-------------------------------------------------------------------------------------------
Net assets, at market value $2,884,919,345
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................... 6,551,066
Unrealized appreciation (depreciation) on:
Investments ........................................................ 890,278,062
Foreign currency related transactions .............................. (183,488)
Accumulated net realized gain ......................................... 5,363,292
Paid-in capital ....................................................... 1,982,910,413
-------------------------------------------------------------------------------------------
Net assets, at market value $ 2,884,919,345
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($2,884,919,345 / 55,412,474 shares of capital stock -----------------
outstanding, $.01 par value, 200,000,000 shares authorized) ......... $52.06
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder International Fund
<PAGE>
Statement of Operations
year ended March 31, 1998
<TABLE>
<CAPTION>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $5,929,019) ............... $ 47,316,658
Interest (net of foreign taxes withheld of $30,635) ................... 8,415,880
-----------------
55,732,538
-----------------
Expenses:
Management fee ........................................................ 22,491,681
Services to shareholders .............................................. 6,416,559
Custodian and accounting fees ......................................... 2,778,696
Directors' fees and expenses .......................................... 77,489
Reports to shareholders ............................................... 416,751
Auditing .............................................................. 127,848
Legal ................................................................. 51,187
Registration fees ..................................................... 80,669
Other ................................................................. 219,882
-----------------
32,660,762
--------------------------------------------------------------------------------------------
Net investment income 23,071,776
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ........................................................... 288,206,626
Foreign currency related transactions ................................. (4,613,737)
-----------------
283,592,889
-----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ........................................................... 229,867,422
Foreign currency related transactions ................................. (94,252)
-----------------
229,773,170
--------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 513,366,059
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 536,437,835
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 - Scudder International Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended March 31,
Increase (Decrease) in Net Assets 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ........................................... $ 23,071,776 $ 16,304,485
Net realized gain (loss) from investment transactions ........... 283,592,889 104,826,570
Net unrealized appreciation (depreciation) on investment
transactions during the period ................................ 229,773,170 140,573,351
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations .................................................... 536,437,835 261,704,406
----------------- -----------------
Distributions to shareholders from:
Net investment income ........................................... (12,911,722) (68,670,750)
----------------- -----------------
Net realized gains .............................................. (274,137,681) (64,600,067)
----------------- -----------------
Fund share transactions:
Proceeds from shares sold ....................................... 1,071,204,110 563,459,224
Net asset value of shares issued to shareholders in
reinvestment of distributions ................................. 269,844,500 117,795,156
Cost of shares redeemed ......................................... (1,288,548,383) (741,611,600)
----------------- -----------------
Net increase (decrease) in net assets from Fund share
transactions .................................................. 52,500,227 (60,357,220)
----------------- -----------------
Increase (decrease) in net assets ............................... 301,888,659 68,076,369
Net assets at beginning of period ............................... 2,583,030,686 2,514,954,317
Net assets at end of period (including undistributed net
investment income of $6,551,066 and $1,417,347, ----------------- -----------------
respectively) ................................................. $2,884,919,345 $2,583,030,686
----------------- -----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ....................... 53,734,143 55,022,967
----------------- -----------------
Shares sold ..................................................... 21,147,508 11,978,853
Shares issued to shareholders in reinvestment of
distributions ................................................. 5,897,787 2,508,054
Shares redeemed ................................................. (25,366,964) (15,775,731)
----------------- -----------------
Net increase (decrease) in Fund shares .......................... 1,678,331 (1,288,824)
----------------- -----------------
Shares outstanding at end of period ............................. 55,412,474 53,734,143
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 - Scudder International Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Years Ended March 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of ------------------------------------------------------------------------------------------
period ............................ $48.07 $45.71 $39.72 $42.96 $35.69 $34.36 $34.69 $37.00 $34.79 $33.43
Income from investment operations: ------------------------------------------------------------------------------------------
Net investment income ................ .43 .30 .38 .21 .31 .38 .44 .80 .49 .40
Net realized and unrealized gain
(loss) on investment
transactions ...................... 9.16 4.53 7.19 (1.03) 7.74 2.64 (.37) (.39) 5.30 4.15
Total from investment ------------------------------------------------------------------------------------------
operations ........................ 9.59 4.83 7.57 (.82) 8.05 3.02 .07 .41 5.79 4.55
Less distributions: ------------------------------------------------------------------------------------------
From net investment income ........... (.25) (1.28) (.40) -- (.63) (.83) -- (.74) (.43) (.13)
In excess of net investment
income ............................ -- -- -- -- (.06) -- -- -- -- --
From net realized gains on
investment transactions ........... (5.35) (1.19) (1.18) (2.42) (.09) (.86) (.40) (1.98) (3.15) (3.06)
------------------------------------------------------------------------------------------
Total distributions .................. (5.60) (2.47) (1.58) (2.42) (.78) (1.69) (.40) (2.72) (3.58) (3.19)
------------------------------------------------------------------------------------------
Net asset value, end of ------------------------------------------------------------------------------------------
period ............................ $52.06 $48.07 $45.71 $39.72 $42.96 $35.69 $34.36 $34.69 $37.00 $34.79
------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ..................... 21.57 10.74 19.25 (2.02) 22.69 9.12 .18 1.46 17.08 14.34
Ratios and Supplemental Data
Net assets, end of period
($ millions) ...................... 2,885 2,583 2,515 2,192 2,198 1,180 933 929 783 550
Ratio of operating expenses to
average net assets (%) ............ 1.18 1.15 1.14 1.19 1.21 1.26 1.30 1.24 1.18 1.22
Ratio of net investment income to
average net assets (%) ............ .83 .64 .86 .48 .75 1.13 1.25 2.22 1.33 1.20
Portfolio turnover rate (%) .......... 55.7 35.8 45.2 46.3 39.9 29.2 50.4 70.1 49.4 48.3
Average commission rate paid (b) ..... $ .004 $.0002 -- -- -- -- -- -- -- --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal periods ending on or after March 31, 1997.
21 - Scudder International Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder International Fund (the "Fund") is a diversified series of Scudder
International Fund, Inc. (the "Corporation"). The Corporation is organized as a
Maryland corporation and is registered under the Investment Company Act of 1940,
as amended, as an open-end, management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the 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 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 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 other than money market instruments with an original
maturity over sixty days are valued by pricing agents approved by the officers
of the Fund, which quotations reflect broker/dealer-supplied valuations and
electronic data processing techniques. If the pricing agents are unable to
provide such quotations, the most recent bid quotation supplied by a bona fide
market maker shall be used. Money market instruments purchased with 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.
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.
22 - Scudder International 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. 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. Earnings
and profits distributed to shareholders on redemption of Fund shares ("tax
equalization") may be utilized by the Fund, to the extent permissible, as part
of the Fund's dividends paid deduction on its federal income tax return.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. The differences
primarily relate to investments in forward contracts, passive foreign investment
companies, and foreign denominated investments. As a result, net investment
income (loss) and net realized gain (loss) on investment transactions for a
reporting period may differ significantly from distributions during such period.
Accordingly, the Fund may periodically make reclassifications among certain of
its capital accounts without impacting the net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
23 - Scudder International Fund
<PAGE>
B. Purchases and Sales of Securities
For the year ended March 31, 1998, purchases and sales of investment securities
(excluding short-term investments) aggregated $1,451,009,783 and $1,573,739,708,
respectively.
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 is 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 annual rate of 0.90% of the first $500,000,000
of average daily net assets, 0.85% of the next $500,000,000 of such net assets,
0.80% of the next $1,000,000,000 of such net assets, 0.75% of the next
$1,000,000,000 of such net assets, and 0.70% of such net assets in excess of
$3,000,000,000, computed and accrued daily and payable monthly. 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 year ended March
31, 1998, the fees pursuant to these agreements amounted to $22,491,681 which
was equivalent to an annual effective rate of .81% of the Fund's average daily
net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. Included
in services to shareholders is $3,394,358 charged to the Fund by SSC for the
year ended March 31, 1998, of which $263,596 was unpaid at March 31, 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 year ended March 31, 1998,
the amount charged to the Fund by STC aggregated $1,561,049, of which $152,878
was unpaid at March 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 year ended
March 31, 1998, the amount charged to the Fund by SFAC aggregated $838,885, of
which $71,107 was unpaid at March 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 Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These
24 - Scudder International Fund
<PAGE>
estimated savings result from the elimination of separate shareholder accounts
which either currently are or have potential to be invested in the Underlying
Funds. At March 31, 1998, the Special Servicing Agreement expense charged to the
Fund amounted to $586,075.
The Trust pays each Trustee not affiliated with the Adviser an annual retainer,
divided equally among the series of the Trust, plus specified amounts for
attended board and committee meetings. For the year ended March 31, 1998,
Trustees' fees and expenses charged to the Fund aggregated $77,489.
D. Commitments
As of March 31, 1998, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$337,276.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
--------------------------------- --------------------------------- -------------- --------------------
<S> <C> <C> <C> <C> <C>
French Francs 87,507,014 U.S. Dollars 14,372,035 4/30/98 (227,649)
French Francs 54,754,816 U.S. Dollars 8,960,042 4/30/98 (109,627)
---------
(337,276)
=========
</TABLE>
E. Lines of Credit
The Fund and several affiliated Funds (the "Participants") share in a $500
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, the
Fund also maintains an uncommitted line of credit.
F. Subsequent Event
Effective April 3, 1998, the Fund merged with the Barrett International Shares,
a class of shares of a series of Scudder Institutional Fund, Inc., with net
assets of approximately $21 million (unaudited). A new class of shares was
issued by the Fund to effect the merger. In fiscal 1999, the Fund will be
offering two classes of shares, International Shares and Barrett International
Shares.
25 - Scudder International Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder International Fund, Inc. and to the
Shareholders of Scudder International Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
International Fund, including the investment portfolio, as of March 31, 1998,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the ten years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 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 International Fund as of March 31, 1998, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for the each ot the ten
years in the period then ended, in conformity with generally accepted accounting
principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
May 15, 1998
26 - Scudder International Fund
<PAGE>
Tax Information
The Fund paid distributions of $4.53 per share from net long-term capital gains
during its year ended March 31, 1998 of which 87% represents 20% rate gain.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$252,000,000 as capital gain dividends for its fiscal year ended March 31, 1998
of which 88% represents 20% rate gain.
The Fund paid foreign taxes of $6,000,000 and the Fund recognized $29,000,000 of
foreign source income during the year ended March 31, 1998. Pursuant to section
853 of the Internal Revenue Code, the Fund designates $0.11 per share of foreign
taxes paid and $0.51 of income earned from foreign sources in the year ended
March 31, 1998.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Scudder Fund account, please call a Scudder Investor Relations
Representative at 1-800-225-5163.
27 - Scudder International Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder International Fund
(the "Fund") was held on October 27, 1997, at the office of Scudder Kemper
Investments, Inc. (formerly Scudder, Stevens & Clark, Inc.), 345 Park Avenue (at
51st Street), New York, New York 10154. At the Meeting, as adjourned and
reconvened, the following matters were voted upon by the shareholders (the
resulting votes for each matter are presented below). With regard to certain
proposals, it was recommended that the Meeting be reconvened in order to provide
shareholders with an additional opportunity to return their proxies. The date of
the reconvened meeting at which the matters were decided is noted after the
proposed matter.
1. To elect Directors.
Number of Votes:
----------------
Director For Withheld
-------- --- --------
Paul Bancroft III 27,833,435 924,040
Sheryle J. Bolton 27,794,740 962,735
William T. Burgin 27,800,675 956,800
Thomas J. Devine 27,822,121 935,354
Keith R. Fox 27,841,824 915,651
William H. Gleysteen 27,806,608 950,867
William H. Luers 27,831,160 926,314
Wilson Nolen 27,785,600 971,875
Daniel Pierce 27,837,435 920,040
Kathryn L. Quirk 27,814,033 943,442
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
27,279,635 864,816 613,023 0
28 - Scudder International Fund
<PAGE>
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise. (Approved on December 2, 1997.)
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
29,207,181 2,078,055 1,067,683 0
4. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Broker
Fundamental Policies For Against Abstain Non-Votes*
-------------------- --- ------- ------- ----------
<S> <C> <C> <C> <C>
4.1 Diversification 22,932,636 1,842,500 988,082 2,994,256
4.2 Borrowing 22,544,067 2,215,109 1,004,042 2,994,256
4.3 Senior securities 22,777,330 1,966,532 1,019,356 2,994,256
4.4 Purchase of physical commodities 22,727,464 2,009,490 1,026,264 2,994,256
4.5 Concentration 22,793,243 1,934,035 1,035,939 2,994,256
4.6 Underwriting of securities 22,820,291 1,935,529 1,007,398 2,994,256
4.7 Investment in real estate 22,811,825 1,952,756 998,637 2,994,256
4.8 Lending 22,802,016 1,801,499 1,159,703 2,994,256
</TABLE>
5. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
27,666,753 405,659 685,063
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
29 - Scudder International Fund
<PAGE>
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intentionally
left blank.
30 - Scudder International Fund
<PAGE>
This Page
intentionally
left blank.
31 - Scudder International 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; 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
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
John R. Hebble*
Assistant Treasurer
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
Caroline Pearson*
Assistant Secretary
Sheridan Reilly*
Vice President
*Scudder Kemper Investments, Inc.
32 - Scudder International 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.
33 - Scudder International 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
- ------------------------------------------------------------------------------------------------------------------------------
34 - Scudder International 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>
35 - Scudder International 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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