Scudder
Greater Europe
Growth Fund
Semiannual Report
April 30, 1999
No-Load Funds
For investors seeking long-term growth of capital through investment primarily
in the equity securities of European companies.
A no-load fund with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Scudder Greater Europe Growth Fund
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Date of Inception: 10/10/94 Total Net Assets as of Ticker Symbol: SCGEX
4/30/99: $1.140 billion
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o After staging an exuberant rally following the successful launch of the euro,
stocks in Europe fell when investors became concerned about a negative political
environment in Germany and slowing growth throughout the region.
o We maintained a focus on growing companies with catalysts for positive change.
We took advantage of opportunities in the U.K., which offered an improving
fundamental backdrop and a favorable interest rate outlook. We also increased
our weighting in oil stocks, believing that stronger global growth and/or the
restraint of OPEC production could result in a rebound in the energy sector.
o Despite challenges in the months ahead, the longer term outlook for the region
remains favorable as European companies become more globally competitive and
shareholder-oriented.
Table of Contents
3 Letter from the Fund's Chairman 17 Financial Highlights
4 Performance Update 18 Notes to Financial Statements
5 Portfolio Summary 22 Report of Independent Accountants
6 Portfolio Management Discussion 23 Stockholder Meeting Results
9 Glossary of Investment Terms 24 Officers and Directors
10 Investment Portfolio 25 Investment Products and Services
14 Financial Statements 26 Scudder Solutions
2 - Scudder Greater Europe Growth Fund
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Letter from the Fund's Chairman
Dear Shareholders,
European stock markets have slowed somewhat in recent months after several
years of stellar performance. Despite the short-term concerns that have hindered
returns so far in 1999, we believe that the region continues to provide a wealth
of investment opportunities in companies that are undergoing positive
fundamental changes. Stocks benefited from the accelerated pace of industry
consolidation, with many high-profile combinations taking place in the financial
and telecommunications sectors. We expect that corporate restructuring
initiatives will also continue to benefit shareholders as Europe's economy
becomes increasingly integrated. Despite recent choppiness in Europe's stock
markets, we remain enthusiastic on the long-term prospects of the region.
The management team of Greater Europe Growth Fund continues to look for
fast-growing companies that are poised to benefit from the evolution of the
European corporate environment. The Fund's long-term performance record has
earned it a five-star overall Morningstar Rating(TM) in addition to a five-star
rating for the three-year period ended April 30.^1 In addition, the Fund was
ranked in the 13th percentile among comparable funds by Lipper Analytical
Services for the trailing three-year period ended on the same date.^2 For more
information on the Fund's strategy and market conditions during the last six
months, please see the letter from the Portfolio Management Team beginning on
page 6.
Thank you for your continued investment in Scudder Greater Europe Growth
Fund. If you have any questions about your investment, please call Scudder
Investor Information at 1-800-225-2470, or visit our Web site at
www.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder Greater Europe Growth Fund
^1 Source: Morningstar proprietary rankings reflect historical risk-adjusted
performance as of April 30, 1999. Ratings are subject to change monthly, and
past performance is no guarantee of future results. Morningstar ratings are
calculated from the Fund's three-, five-, and ten-year average annual returns
in excess of 90-day Treasury bills with appropriate fee adjustments, and a
risk factor that reflects fund performance below 90-day T-bill returns.
Scudder Greater Europe Growth Fund received a 5-star rating for the
three-year period. The top 10% of funds in a broad asset class receive 5
stars, and the next 22.5% receive 4 stars. Scudder Greater Europe Growth Fund
was rated among 944 funds in its broad asset class for the three-year period
ended April 30, 1999.
^2 Source: Lipper Analytical Services, Inc., is an independent analyst of
investment performance. Performance includes reinvestment of dividends and
capital gains. Past performance is no guarantee of future results. Scudder
Greater Europe Growth Fund's Lipper ranking was 54 out of 101 comparable
funds for the one-year period ended April 30, 1999, and 9 out of 67 funds for
the three-year period ended April 30, 1999.
3 - Scudder Greater Europe Growth Fund
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Performance Update as of April 30, 1999
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Fund Index Comparisons
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Total Return
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Period Growth of Average
Ended 4/30/1999 $ 10,000 Cumulative Annual
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Scudder Greater Europe Growth Fund
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1 Year $ 10,102 1.02% 1.02%
Life of $ 24,938 149.38% 22.21%
Fund*
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Morgan Stanley Capital International (MSCI)
Europe Index
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1 Year $ 10,565 5.65% 5.65%
Life of $ 22,847 128.47% 20.16%
Fund*
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* The Fund commenced operations on October 10, 1994.
Index comparisons begin October 31, 1994.
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Growth of a $10,000 Investment
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THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
Scudder Greater Europe Morgan Stanley Capital
Growth Fund International (MSCI)
Europe Index
10/94* 10000 10000
4/95 10371 10598
10/95 11506 11321
4/96 12981 12288
10/96 14395 13298
4/97 15767 14863
10/97 17917 16754
4/98 24321 21624
10/98 22329 20618
4/99 24570 22847
The Morgan Stanley Capital International (MSCI) Europe Index is an unmanaged
capitalization-weighted measure of 14 stock markets in Europe. Index returns
assume dividends reinvested net of withholding tax and, unlike Fund returns, do
not reflect any fees or expenses.
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Returns and Per Share Information
- ----------------------------------
Yearly periods ended April 30
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
<TABLE>
<CAPTION>
1995* 1996 1997 1998 1999
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<S> <C> <C> <C> <C> <C>
Net Asset Value $ 12.61 $ 15.50 $ 18.63 $ 26.37 $ 26.59
- -----------------------------------------------------------------------------------------------------------------------------
Income Dividends $ .02 $ .22 $ .06 $ .54 $ .06
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Capital Gains Distributions $ -- $ .14 $ .14 $ 1.30 $ --
- -----------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 5.27 25.16 21.47 54.25 1.02
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Index Total Return (%) 5.97 15.95 20.96 45.49 5.65
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</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. If the Adviser had not maintained the
Fund's expenses, the total returns for the life of Fund period would have been
lower.
4 - Scudder Greater Europe Growth Fund
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Portfolio Summary as of April 30, 1999
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Geographical
(Excludes 2% Cash Equivalents)
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A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
United Kingdom 29%
France 19%
Italy 12%
Germany 10%
Netherlands 10%
Spain 8%
Finland 4%
Greece 3%
Ireland 2%
Other 3%
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100%
--------------------------------------
The Fund increased its weighting in the U.K., and trimmed its weighting in
France.
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Sectors
(Excludes 2% Cash Equivalents)
- -----------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Financial 19%
Service Industries 12%
Communications 12%
Media 12%
Manufacturing 10%
Energy 8%
Consumer Discretionary 8%
Consumer Staples 6%
Technology 4%
Other 9%
--------------------------------------
100%
--------------------------------------
The Fund's holdings in the media, communications, and energy sectors increased
during the period.
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Ten Largest Equity Holdings
(19% of Portfolio)
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1. Equant NV
Provider of international data network services in
the Netherlands
2. Siemens AG
German electrical engineering and electronics
company
3. Nokia OYJ
Finnish manufacturer of telecommunication
networks and equipment
4. Flextech plc
Broadcaster of entertainment programs
in the United Kingdom
5. Banca Popolare di Brescia SpA
Cooperative bank in Italy
6. Aegis Group plc
Independent media services group in the United
Kingdom
7. Marschollek Lautenschlaeger und
Partner AG (pfd.)
Independent life insurance company in Germany
8. Elf Aquitaine SA
French petroleum company
9. Mannesmann AG
Diversified industrial manufacturing company in
Germany
10. Orange plc
Operator of digital mobile telephone network in
the United Kingdom
Top holdings reflect a continued emphasis on companies positioned for growth in
new or expanding markets.
For more complete details about the Fund's investment portfolio, see page 10. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Greater Europe Growth Fund
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Portfolio Management Discussion
Dear Shareholders,
After rebounding from their lows in November and December, European stock
markets provided flat performance in the first four months of 1999 amid a more
challenging investment environment. In the six-month period ended April 30,
1999, Scudder Greater Europe Growth Fund posted a total return of 9.99%,
trailing the 10.81% return of its unmanaged benchmark, the MSCI Europe Index.
The Fund's three-year average return of 23.70% remains ahead of the 22.97%
three-year return of the Index.
Markets Offer Mixed Performance
The reporting period began with European stock markets in the midst of a strong
rebound off the lows they set during the autumn correction. As fears of a global
economic collapse faded, investors began to focus on the potential benefits of
the euro. Believing that the new currency would promote further consolidation
and more efficient business practices, investors took advantage of lower stock
prices and pushed the major European markets into positive territory during
November and December.
The launch of the euro on January 1 was a historical milestone for Europe.
Equity markets celebrated the event by rallying strongly into the first week of
January, due in part to investors' relief that the transition had gone smoothly.
In addition, pent-up demand helped fuel the initial bounce since most investors
had refrained from taking on additional risk in the weeks immediately preceding
the changeover. "Europhoria" proved fleeting, however, when concerns emerged
about the region's slowing economy. Although consumer confidence in a number of
European countries remained high, business confidence began to deteriorate when
growth in the major continental economies failed to meet expectations. Since
Europe's weakness became evident at the same time as the powerful expansion in
the United States appeared to be gathering fresh steam, the euro slid 9% versus
the dollar in the first four months of 1999.
Concerns about political instability in Germany also contributed to weaker stock
market performance. An unsatisfactory tax reform package, tensions within the
country's uneasy coalition government, and the attempts of Finance Minister
Oskar LaFontaine to jawbone the newly established European Central Bank (ECB)
into lowering interest rates all weighed on market sentiment. Mr. LaFontaine's
abrupt resignation in March prompted an enthusiastic rally in German shares and
raised hopes among European investors that Prime Minister Gerhard Schroeder
would be able to conduct a more cohesive and pro-business policy. The rest of
Europe was also relieved at LaFontaine's departure, and hopes were raised that
the ECB would no longer be inhibited from lowering interest rates. Three weeks
later, the ECB did indeed announce that rates would be cut a larger than
expected .50% to 2.50% in an effort to stimulate growth on the continent.
Another surprise in the European political arena was the investigation by the
European Parliament of the European Commission, an action that ultimately
resulted in the resignation of all the Commissioners. European stock markets
were not concerned by this event. In fact, the push toward greater transparency,
6 - Scudder Greater Europe Growth Fund
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accountability, and democracy is a step forward for Europe. We feel that the
prompt appointment of Romano Prodi as the next European commissioner is a
further positive. Mr. Prodi, the former Prime Minister of Italy, is well
respected, reform-minded, and pro-growth. On the downside, the crisis in Kosovo
has brought armed conflict to the doorstep of the Eurozone.
Consolidation Remains a Powerful Theme
The transformation of the European corporate world continued in dramatic form
with more mergers and acquisitions of ever-larger proportions. BP Amoco, a
holding in the portfolio, announced an agreement to merge with Atlantic
Richfield, creating the world's second largest oil company. In the
telecommunications sector, Vodafone acquired Airtouch and Olivetti bid for
Telecom Italia. The financial sector saw renewed activity with further
consolidation taking place in Italy, where San Paolo/Imi bid for Banca di Roma
and Unicredito bid for BCI. In France, Societe General and Paribas agreed to
merge, then received a bid for the new, combined entity from Banque Nationale de
Paris. Consolidation has been one of the primary drivers of positive stock
market performance in Europe over the past three years, and we believe that
opportunities remain to select individual companies poised to benefit from this
ongoing trend.
Opportunities in Telecommunications, Media, and Energy
During the period we increased our weighting in the U.K., which offered an
improving fundamental backdrop and substantial scope for further interest rate
reduction. We purchased Vodafone, whose combination with Airtouch creates the
largest telecommunications company in the world and positions the company ahead
of any other comparable competitor in terms of the scale, scope, and quality of
its wireless operations. Based on our expectation for accelerating organic
growth in wireless communications, we believe that the company will enjoy strong
operating leverage and a rising subscriber base. We also continued to add to our
weighting in the media sector by building new positions in Carlton
Communications and Mirror Group to complement our established holdings in WPP
Group and Pearson, parent company and publisher of the Financial Times daily.
In the retailing sector, we began to build up a position in Marks & Spencer,
taking advantage of share price weakness following a first quarter profit
warning. We believe that the new leadership understands the challenges the
company faces in the competitive U.K. retailing environment, and is taking steps
to reinvigorate their business. An improving consumer environment in the U.K.
should provide an additional underpinning for the firm's recovery.
An example of a firm with an expanding global franchise is Equant, a recent
holding that represents a growth opportunity in the telecommunications
7 - Scudder Greater Europe Growth Fund
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field. From its origins as a cooperative venture among the world's airlines to
serve their communications and data processing needs, the company has built the
most geographically extensive commercial data network in the world, and now
offers its seamless international data networking services to multinational
businesses. Equant already has 15% penetration of the top 1,000 global
companies, and is well positioned to benefit from the boom in data
communications.
Other notable additions during the reporting period were several oil stocks --
BP Amoco, Royal Dutch, and ENI. We have been significantly underweight in the
energy sector for some time, and remain modestly so at present. However, low oil
prices forced out non-OPEC capacity and investment, reducing supply at a time
when stock prices have been discounting the poor pricing environment. We believe
that this discrepancy created an opportunity to take advantage of a possible
long-term shift in supply and demand fundamentals. Even in the wake of the
powerful April rally in the energy sector, we believe that the potential of this
sector remains compelling, particularly if global economic growth increases
and/or OPEC follows through on its pledges to cut production.
Outlook
European stock markets face a number of challenges in the months ahead.
Investors must cope with the ongoing crisis in Kosovo at a time when a
substantial amount of new equity supply will be coming to the market. In
addition, we feel that business confidence must improve in order for the markets
to add to their gains. This process would be facilitated if lower interest rates
and a weaker euro were in place to support increased business investment and
stronger exports, which in turn would revive growth in Germany and Italy. In the
meantime, governments need to move forward with structural reforms in order to
support sustainable economic progress.
Despite the near term risks, the longer-term picture remains positive as
corporate restructuring, merger and acquisition activity, and share buybacks all
demonstrate the resolve of European corporations to become more profitable,
shareholder-oriented, and globally competitive. In this environment, we will
continue to search for the individual companies most likely to emerge as the
winners in Europe's new economy.
Sincerely,
Your Portfolio Management Team
/s/Carol L. Franklin /s/Joan R. Gregory
Carol L. Franklin Joan R. Gregory
/s/Nicholas Bratt
Nicholas Bratt
8 - Scudder Greater Europe Growth Fund
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Glossary of Investment Terms
EUROPEAN CENTRAL BANK The bank founded to oversee monetary policy for the
(ECB) eleven countries that converted their local
currencies to the euro on January 1, 1999. The ECB's
primary mission is to maintain price stability and
issue euro currency.
(EMU) EUROPEAN MONETARY The integration of European economies involving,
UNION 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.
RESTRUCTURING The general term for major corporate changes aimed at
greater efficiency and adaptation to changing
markets. Cost-cutting initiatives, debt retirement,
management realignments, and the sale of non-core
businesses are all developments frequently associated
with corporate restructuring.
TRANSPARENCY The degree to which investors can evaluate if a
company is managed in the interests of shareholders.
Transparency is often not as strong in developing
markets where disclosure requirements may be less
stringent and protectionism, subsidies, and cronyism
may distort the business environment.
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)
9 - Scudder Greater Europe Growth Fund
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Investment Portfolio as of April 30, 1999
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
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<S> <C> <C>
Repurchase Agreements 2.0%
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Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 4/30/1999 at 4.87%,
to be repurchased at $22,513,133 on 5/3/1999, collateralized by a $22,555,000 ------------
U.S. Treasury Note, 3.375%, 1/15/2007 (Cost $22,504,000) .............................. 22,504,000 22,504,000
------------
Shares
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Common Stocks 98.0%
- ------------------------------------------------------------------------------------------------------------------------------
Finland 3.9%
Fortum Corp. (Provider of a full range of energy related services) ...................... 282,894 1,509,402
Nokia OYJ (Manufacturer of telecommunication networks and equipment) .................... 292,500 22,544,526
Pohjola Insurance Co., Ltd. "B" (Insurance company) ..................................... 222,200 10,529,226
Tieto Corp. "B" (Manufacturer of computer software) ..................................... 251,000 9,997,813
------------
44,580,967
------------
France 18.8%
Accor SA (Provider of catering, hotel and travel services) .............................. 23,900 6,300,259
Air Liquide (Producer of industrial gases) .............................................. 69,900 10,782,512
Altran Technologies, SA (Provider of engineering and consulting services) ............... 48,991 11,646,321
Assurances Generales de France-- CVG Shares (Health, life and liability insurance) ...... 21,235 163,782
AXA SA (Insurance group providing insurance, finance and real estate services) .......... 88,150 11,381,080
Banque Nationale de Paris (Bank) ........................................................ 59,369 4,920,878
Cap Gemini Sogeti SA (Software consultants) ............................................. 84,387 12,901,316
Castorama-Dubois Investissements (Retailer specializing in home repair) ................. 67,900 16,249,048
Club Mediterranee SA* (Operator of vacation resorts) .................................... 24,401 2,255,826
Compagnie de Saint-Gobain (Glass manufacturer) .......................................... 75,800 13,014,051
Elf Aquitaine SA (Petroleum company) .................................................... 120,850 18,769,553
Etablissements Economiques du Casino Guichard-Perrachon SA
(Operator of supermarket and convenience stores) ....................................... 100,000 9,847,043
Galeries Lafayette (Group of department stores and supermarkets chains) ................. 7,380 8,499,097
Groupe Danone (Producer of packaged foods and beverages) ................................ 37,100 9,917,093
Imetal SA (Manufacturer of building materials) .......................................... 48,600 6,320,978
Lagardere S.C.A. (Holding company with interests in publishing, defense,
audiovisual production and services, telecommunications and media) .................... 222,700 8,818,805
Publicis SA (International advertising company) ......................................... 46,574 8,808,187
Rexel SA (Distributor of electrical equipment) .......................................... 68,500 5,681,332
Rhone-Poulenc SA "A" (Medical, agricultural and consumer chemicals) ..................... 284,850 13,543,118
Suez Lyonnaise des Eaux (Water and electric utility) .................................... 30,900 5,256,229
Television Francaise (Television broadcasting) .......................................... 34,180 6,680,881
The accompanying notes are an integral part of the financial statements.
10 - Scudder Greater Europe Growth Fund
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Market
Shares Value ($)
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Total SA "B" (International oil and gas exploration, development and production) ........ 114,600 15,692,045
Vivendi (Water utility) ................................................................. 35,670 8,332,624
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215,782,058
------------
Germany 9.9%
Allianz AG (Multi-line insurance company) ............................................... 29,070 9,260,241
Bayer AG (Chemical producer) ............................................................ 298,100 12,661,290
Mannesmann AG (Manufacturer of diversified industrial products) ......................... 139,300 18,338,301
Marschollek Lautenschlaeger und Partner AG (pfd) (Independent life insurance company) ... 36,050 20,186,967
Metro AG (Operator of building, clothing, department, electronic and food stores) ....... 179,100 12,943,199
Schering AG (Pharmaceutical and chemical producer) ...................................... 107,145 12,367,539
Siemens AG (Electrical engineering and electronics company) ............................. 366,500 27,105,783
------------
112,863,320
------------
Greece 2.9%
Alpha Credit Bank (Commercial bank) ..................................................... 124,400 8,881,677
Delta Informatics SA (Corporate information services) ................................... 225,350 7,422,933
Hellenic Telecommunication Organization SA (OTE) (Telecommunication services) ........... 1 23
National Bank of Greece SA (Full service bank) .......................................... 163,820 11,167,129
National Bank of Greece SA* (Rights) (Full service bank) (b) ............................ 214,220 622,207
Titan Cement Co. SA (Cement producer) ................................................... 61,100 4,719,219
------------
32,813,188
------------
Ireland 2.3%
ESAT Telecom Group plc (ADR)* (Telecommunication services) .............................. 240,300 11,744,663
Irish Permanent plc (Retail financial services group) ................................... 1,056,356 15,290,469
------------
27,035,132
------------
Italy 12.2%
Alleanza Assicurazioni SpA (Life insurance company) ..................................... 527,240 6,322,577
Arnoldo Mondadori Editore SpA (Book publisher) .......................................... 572,500 10,161,895
Assicurazioni Generali SpA (Life and property insurance company) ........................ 318,600 12,404,327
Banca Popolare di Brescia SpA (Cooperative bank) ........................................ 608,900 20,940,493
Banco Intesa SpA (Bank) ................................................................. 1,018,000 5,420,861
Ente Nazionale Idrocarburi SpA (Explorer and producer of oil, natural gas
and chemicals) ....................................................................... 2,144,000 14,112,461
Finmeccanica SpA* (Designer and developer of commercial and military aircraft,
space systems and air defense systems) ............................................... 9,603,000 9,456,116
Gruppo Editoriale L'Espresso (Publisher) ................................................ 944,100 13,815,217
Istituto Bancario San Paolo di Torino (Commercial bank) ................................. 659,500 9,894,482
Mediaset SpA (Broadcasting and television networks) ..................................... 1,163,000 10,075,892
The accompanying notes are an integral part of the financial statements.
11 - Scudder Greater Europe Growth Fund
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Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Seat Pagine Gialle SpA (Publisher of telecommunication directories and
provider of advertising services) .................................................... 8,157,500 10,170,189
Telecom Italia SpA (Telecommunication services) ......................................... 1,610,500 17,134,843
------------
139,909,353
------------
Netherlands 9.4%
Akzo Nobel NV (Producer and marketer of healthcare products, coatings,
chemicals and fibers) ................................................................ 299,800 13,541,217
Equant NV* (Provider of international data network services) ............................ 348,000 31,583,652
Laurus NV (International food retailer) ................................................. 447,860 9,629,342
Royal Dutch Petroleum Co. (Petroleum company) ........................................... 232,000 13,506,086
United Pan-Europe Communications NV* (Provider of television and telecommunication
services) ............................................................................. 280,693 14,516,911
Vedior NV CVA (Temporary employment services) ........................................... 502,850 11,316,392
VNU NV (International publishing company) ............................................... 324,520 13,131,979
------------
107,225,579
------------
Portugal 0.6%
BPI -- SGPS SA* (Registered) (Bank) ..................................................... 261,000 7,031,867
------------
Spain 7.5%
Argentaria SA (Bank) .................................................................... 694,188 16,326,466
Banco Popular Espanol (Bank) ............................................................ 142,600 10,094,487
Compania Telefonica Nacional de Espana SA (Telecommunication services) .................. 297,840 13,956,181
Cortefiel, SA (Owner and operator of various retail clothing stores) .................... 416,000 11,427,642
Fomento de Construcciones y Contratas SA (Infrastructure construction and property
development) .......................................................................... 202,188 12,347,333
Tabacalera SA "A" (Manufacturer and distributor of tobacco products) .................... 640,700 12,557,077
TelePizza, SA* (Operator of fast food restaurants) ...................................... 1,396,000 8,849,660
Telefonica SA* (Rights) (Telecommunication services) .................................... 297,840 276,921
------------
85,835,767
------------
Switzerland 2.0%
Novartis AG (Bearer) (Pharmaceutical company) ........................................... 938 1,371,618
Novartis AG (Registered) ................................................................ 4,375 6,403,208
Roche Holdings AG (Pharmaceutical company) .............................................. 525 6,173,232
UBS AG (Registered) (Provider of banking and asset management services) ................. 25,400 8,623,714
------------
22,571,772
------------
United Kingdom 28.5%
Aegis Group plc (Independent media services group) ...................................... 9,647,500 20,872,999
Avis Europe plc (Car rental services) ................................................... 3,125,000 13,220,673
Bank of Scotland plc (Bank) ............................................................. 874,500 13,054,359
The accompanying notes are an integral part of the financial statements.
12 - Scudder Greater Europe Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Barclays plc (Commercial and investment banking, insurance and other
financial services) .................................................................. 386,200 12,288,145
BOC Group plc (Producer of industrial gases) ............................................ 885,500 13,987,749
BP Amoco plc (Producer of oil and petrochemicals) ....................................... 868,500 16,485,404
British Telecom plc (Telecommunication services) ........................................ 1,066,900 17,814,303
Carlton Communications plc (Television post production products and services) ........... 1,757,738 16,979,110
Compass Group plc (International catering group) ........................................ 1,083,700 11,156,727
Dixon Group plc (Retailer of high technology consumer electronics and
computer related products) ........................................................... 451,700 9,636,587
Flextech plc* (Broadcaster of entertainment programs) ................................... 1,544,500 22,267,907
Glaxo Wellcome plc (Pharmaceutical company) ............................................. 407,800 12,083,274
Granada Group plc (Television systems and broadcast, travel and leisure services) ....... 644,200 13,740,800
Great Universal Stores P.L.C. "A" (Catalog home shopping, retailing, finance
and property investment) ............................................................. 525,600 6,036,724
Marks & Spencer, plc (Retailer of consumer goods and foods) ............................. 2,194,400 15,046,239
Mirror Group News plc (Newspaper publisher) ............................................. 1,892,000 6,878,240
Orange plc* (Operator of digital mobile telephone network) .............................. 1,336,500 18,059,097
Pearson plc (Diversified media and entertainment holding company) ....................... 670,300 14,232,819
Reed International plc (Publisher of scientific, professional and
business to business materials) ...................................................... 1,548,800 14,088,856
Reuters Group plc (International news agency) ........................................... 493,400 6,686,777
Rio Tinto plc (Mining company) .......................................................... 331,500 5,785,768
Select Appointments Holdings plc* (Recruitment services company) ........................ 587,100 7,479,715
SmithKline Beecham plc (Manufacturer of ethical drugs and healthcare products) .......... 826,000 10,921,936
Vodafone Group plc (Telecommunication services) ......................................... 891,900 16,427,422
WPP Group plc (Advertising agency) ...................................................... 1,264,700 11,197,921
------------
326,429,551
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $944,313,596) 1,122,078,554
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $966,817,596) (a 1,144,582,554
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $972,469,724. At April 30,
1999, net unrealized appreciation for all securities based on tax cost was
$172,112,830. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $190,868,487 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$18,755,657.
(b) The security has been valued in good faith by the Valuation Committee of
the Board of Directors at fair value amounting to $622,207 (.05%) of net
assets). Its value has been estimated by the Board of Directors in absence
of readily ascertainable market values. However, because of the inherent
uncertainty of valuation, the estimated value may differ significantly
from the value that would have been used had a ready market for the
security existed, and the difference could be material. The cost of the
security at April 30, 1999 aggregated $0. The security may also have
certain restrictions as to resale.
The accompanying notes are an integral part of the financial statements.
13 - Scudder Greater Europe Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1999
<TABLE>
<CAPTION>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $966,817,596) ............ $1,144,582,554
Cash ............................................................. 783
Receivable for investments sold .................................. 13,118,538
Receivable for Fund shares sold .................................. 1,197,738
Dividends and interest receivable ................................ 2,568,271
Foreign taxes recoverable ........................................ 1,275,876
Deferred organization expenses ................................... 5,102
Other assets ..................................................... 326
----------------
Total assets ..................................................... 1,162,749,188
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Due to custodian bank ............................................ 2,389,994
Payable for investments purchased ................................ 10,603,013
Payable for Fund shares redeemed ................................. 8,215,653
Accrued management fee ........................................... 918,739
Other payables and accrued expenses .............................. 447,517
----------------
Total liabilities ................................................ 22,574,916
-------------------------------------------------------------------------------------------
Net assets, at market value $1,140,174,272
-------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .............................. 1,356,726
Unrealized appreciation (depreciation) on:
Investments ................................................... 177,764,958
Foreign currency related transactions ......................... (141,588)
Accumulated net realized gain (loss) ............................. (61,475,830)
Paid-in capital .................................................. 1,022,670,006
-------------------------------------------------------------------------------------------
Net assets, at market value $1,140,174,272
-------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($1,140,174,272 / 42,872,725 shares of capital stock ----------------
outstanding, $.01 par value, 100,000,000 shares authorized) ...... $ 26.59
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Greater Europe Growth Fund
<PAGE>
Statement of Operations
six months ended April 30, 1999
<TABLE>
<CAPTION>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $978,711) ............ $ 9,378,924
Interest ......................................................... 1,352,756
----------------
10,731,680
----------------
Expenses:
Management fee ................................................... 6,148,000
Services to shareholders ......................................... 1,617,202
Custodian and accounting fees .................................... 748,399
Directors' fees and expenses ..................................... 22,338
Auditing ......................................................... 31,063
Reports to shareholders .......................................... 102,942
Amortization of organization expense ............................. 5,879
Registration fees ................................................ 211,619
Legal ............................................................ 32,579
Other ............................................................ 115,833
----------------
9,035,854
-------------------------------------------------------------------------------------------
Net investment income 1,695,826
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ...................................................... (66,160)
Futures .......................................................... 539,032
Foreign currency related transactions ............................ (570,175)
----------------
(97,303)
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ...................................................... 108,847,172
Foreign currency related transactions ............................ (208,057)
----------------
108,639,115
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 108,541,812
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 110,237,638
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Greater Europe Growth Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Year Ended
Ended October 31,
Increase (Decrease) in Net Assets April 30, 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ............................... $ 1,695,826 $ 4,563,525
Net realized gain (loss) from investment transactions (97,303) (63,302,028)
Net unrealized appreciation (depreciation) on
investment transactions during the period ........ 108,639,115 32,682,912
---------------- ----------------
Net increase (decrease) in net assets resulting
from operations ................................. 110,237,638 (26,055,591)
---------------- ----------------
Distributions to shareholders from:
Net investment income ............................... (2,849,650) (5,194,972)
---------------- ----------------
Net realized gains .................................. -- (12,506,412)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ........................... 1,191,666,613 2,795,798,253
Net asset value of shares issued to shareholders in
reinvestment of distributions .................... 2,719,429 16,979,895
Cost of shares redeemed ............................. (1,293,965,785) (1,832,169,481)
Net increase (decrease) in net assets from Fund share ---------------- ----------------
transactions ..................................... (99,579,743) 980,608,667
---------------- ----------------
Increase (decrease) in net assets ................... 7,808,245 936,851,692
Net assets at beginning of period ................... 1,132,366,027 195,514,335
Net assets at end of period (including undistributed
net investment income of $1,356,726 and $2,510,550, ---------------- ----------------
respectively) .................................... $1,140,174,272 $1,132,366,027
--------------- ----------------
Other Information
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ........... 46,726,102 9,234,823
---------------- ----------------
Shares sold ......................................... 45,396,263 108,247,834
Shares issued to shareholders in reinvestment of
distributions 102,620 824,267
Shares redeemed ..................................... (49,352,260) (71,580,822)
---------------- ----------------
Net increase (decrease) in Fund shares .............. (3,853,377) 37,491,279
---------------- ----------------
Shares outstanding at end of period ................. 42,872,725 46,726,102
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Greater Europe Growth Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
October 10,
1994
Six Months (commencement
Ended Years Ended October 31, of operations)
April 30, to October 31,
1999 (a) 1998 (a) 1997 (a) 1996(a) 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
Net asset value, beginning of period ..... $24.23 $ 21.17 $ 17.20 $ 13.99 $ 12.18 $12.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) ............. .04(c) .16 .03 .13 .13 .01
Net realized and unrealized gain (loss) .. 2.38 4.74 4.14 3.33 1.70 .17
on investment transactions --------------------------------------------------------------------------------
Total from investment operations ......... 2.42 4.90 4.17 3.46 1.83 .18
--------------------------------------------------------------------------------
Less distributions from:
Net investment income .................... (.06) (.54) (.06) (.11) (.02) --
Net realized gains on investment transactions -- (1.30) (.14) (.14) -- --
--------------------------------------------------------------------------------
Total distributions ...................... (.06) (1.84) (.20) (.25) (.02) --
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net asset value, end of period ........... $26.59 $ 24.23 $ 21.17 $ 17.20 $ 13.99 $12.18
--------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ......................... 9.99** 24.68 24.47(b) 25.11(b) 15.06(b) 1.50(b)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ... 1,140 1,132 196 120 41 8
Ratio of operating expenses, net to ...... 1.44* 1.48 1.66 1.50 1.50 1.50*
average daily net assets (%)
Ratio of operating expenses before ....... 1.44* 1.48 1.72 1.97 2.74 11.46*
expense reductions, to average
daily net assets (%)
Ratio of net investment income to average .13** .63 .16 .82 1.25 2.40*
daily net assets (%)
Portfolio turnover rate (%) .............. 100.8* 92.7 88.8 39.0 27.9 --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total returns would have been lower had certain expenses not been reduced.
(c) Net investment income per share includes non-recurring dividend income
amounting to $.08 per share.
* Annualized
** Not annualized
17 - Scudder Greater Europe Growth Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Greater Europe Growth Fund (the "Fund") is a non-diversified series of
Scudder International Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on such system. If there are no such sales, the value is the most
recent bid quotation. Securities which are not quoted on Nasdaq but are traded
in another over-the-counter market are valued at the most recent sale price on
such market. If no sale occurred, the security is then valued at the 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 purchased with original maturities greater than sixty
days are valued by pricing agents approved by the officers of the Fund, whose
quotations reflect broker/dealer-supplied valuations and electronic data
processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. 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.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased securities index futures as a temporary substitute for purchasing
selected investments.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
18 - Scudder Greater Europe Growth Fund
<PAGE>
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 is equal to at least the repurchase price.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at the
daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest income
and certain expenses at the rates of exchange prevailing on the respective
dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
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 of 1986, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no federal
income tax provision was required.
At October 31, 1998, the Fund had a net tax basis capital loss carryforward of
approximately $55,700,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2006.
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
19 - Scudder Greater Europe Growth Fund
<PAGE>
distributed and, therefore, will be distributed to shareholders annually. An
additional distribution may be made to the extent necessary to avoid the payment
of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. The difference
primarily relates to foreign denominated investments, and certain securities
sold at a loss. As a result, net investment income (loss) and net realized gain
(loss) on investment transactions for a reporting period may differ
significantly from distributions during such period. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting the net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Organization Costs. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are being
amortized on a straight-line basis over a five-year period.
Other. Investment security transactions are accounted for on a trade-date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. Purchases and Sales of Securities
For the six months ended April 30, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $600,225,092 and
$614,650,894, respectively.
The aggregate face value of futures contracts opened and closed during the six
months ended April 30, 1999 was $27,344,410.
C. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. The management fee
payable under the Agreement is equal to an annual rate of 1.00% of the first
$1,000,000,000 of average daily net assets, and 0.90% of such net assets in
excess of $1,000,000,000, computed and accrued daily and payable monthly. For
the six months ended April 30, 1999, the fees pursuant to the Agreement amounted
to $6,148,000, of which $918,739 was unpaid at April 30, 1999.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended April 30, 1999, the amount charged by SSC aggregated $926,899,
of which $158,003 was unpaid at April 30, 1999.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the six months ended April 30,
1999, the amount charged by STC aggregated $44,093, of which $7,040 was unpaid
at April 30, 1999.
20 - Scudder Greater Europe Growth Fund
<PAGE>
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records for the Fund. For the six months
ended April 30, 1999, the amount charged by SFAC aggregated $264,939, of which
$87,953 was unpaid at April 30, 1999.
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be invested in the Underlying Funds. For the six months ended April
30, 1999, the Special Servicing Agreement expense charged to the Fund amounted
to $4,405.
The Fund pays each Director not affiliated with the Adviser an annual retainer,
plus specified amounts for attended board and committee meetings. For the six
months ended April 30, 1999, Directors' fees and expenses aggregated $22,338.
D. Line of Credit
The Fund and several Scudder Funds (the "Participants") share in a $850 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 pro rata 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.
21 - Scudder Greater Europe Growth Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder International Fund, Inc. and to the
Shareholders of Scudder Greater Europe Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder Greater Europe Growth Fund
(the "Fund") at April 30, 1999, the results of its operations, the changes in
its net assets, and the financial highlights for the periods indicated therein,
in comformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
June 11, 1999
22 - Scudder Greater Europe Growth Fund
<PAGE>
Stockholder Meeting Results
A Special Meeting of Stockholders (the "Meeting") of Scudder Greater Europe
Growth Fund (the "Fund") was held on December 15, 1998, at the office of Scudder
Kemper Investments, Inc., Two International Place, Boston, Massachusetts 02110.
At the Meeting the following matters were voted upon by the stockholders (the
resulting votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
22,806,837 561,821 645,052 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
16,774,818 955,206 748,240 5,535,446
- --------------------------------------------------------------------------------
* 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.
23 - Scudder Greater Europe Growth 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
Keith R. Fox
Director; Private Equity
Investor
William H. Luers
Director; Chairman and
President, U.N. Association of
the U.S.A.
Kathryn L. Quirk*
Director, Vice President and
Assistant Secretary
Joan E. Spero
Director; President, Doris Duke
Charitable Foundation
Thomas J. Devine
Honorary Director; Consultant
William H. Gleysteen, Jr.
Honorary Director; Consultant;
Guest Scholar, Brookings
Institute
Wilson Nolen
Honorary Director; Consultant
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
Philip S. Fortuna*
Vice President
Carol L. Franklin*
Vice President
Edmund B. Games, Jr.*
Vice President
Theresa Gusman*
Vice President
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
Sheridan P. Reilly*
Vice President
Shahram Tajbakhsh*
Vice President
John R. Hebble*
Treasurer
Richard W. Desmond*
Assistant Secretary
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - Scudder Greater Europe Growth Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Prime Reserve Shares*
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 GNMA Fund
Scudder Income Fund
Scudder Corporate Bond Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 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 Select 1000 Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
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.
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 or classes thereof may
not be available for purchase or exchange. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *A class of
shares of the Fund. **Not available in all states. ***Only the Scudder Shares of
the Fund are part of the Scudder Family of Funds. ++Only the International
Shares of the Fund are part of the Scudder Family of Funds. +++ +++A no-load
variable annuity contract provided by Charter National Life Insurance Company
and its affiliate, offered by Scudder's insurance agencies, 1-800-225-2470. +++
+++ +++A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold by Scudder's
insurance agencies, 1-800-225-2470. #These funds, advised by Scudder Kemper
Investments, Inc., are traded on the New York Stock Exchange and, in some cases,
on various other stock exchanges.
25 - Scudder Greater Europe Growth Fund
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Scudder Solutions
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Convenient ways to invest, quickly and reliably:
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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:
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Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: 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:
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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
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26 - Scudder Greater Europe Growth Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
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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
800 no-load funds from well-known companies--with no
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder
Brokerage account already reserved for them, with
no minimum investment. For information about
Scudder Brokerage Services, call 1-800-700-0820.
Fund Folio funds held less than six months will be charged a transaction fee. 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.
For more information about these services, call a Scudder representative at 1-800-225-5163
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Additional Information on How to Contact Scudder:
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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
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27 - Scudder Greater Europe Growth Fund
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About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $280 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services 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 Financial Services Group. The Zurich Financial Services 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
