SCUDDER
INVESTMENTS(SM)
[LOGO]
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EQUITY/GLOBAL
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Scudder Greater
Europe Growth Fund
Fund #077
Annual Report
October 31, 1999
The fund seeks to provide long-term growth of capital.
A no-load fund with no commissions to buy, sell, or exchange shares.
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Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
10 Portfolio Management Discussion
15 Investment Portfolio
20 Financial Statements
23 Financial Highlights
24 Notes to Financial Statements
29 Report of Independent Accountants
30 Tax Information
31 Officers and Directors
32 Investment Products and Services
34 Scudder Solutions
2 SCUDDER GREATER EUROPE GROWTH FUND
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Scudder Greater Europe Growth Fund
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ticker symbol SCGEX fund number 077
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Date of Inception: 10/10/94
o Scudder Greater Europe Growth Fund returned 16.36% for
the twelve months ended October 31, 1999, beating the
12.53% return of its unmanaged benchmark, the MSCI
Europe Index.
Total Net Assets as of 10/31/99: $1.0 billion
o European stocks have experienced high levels of
volatility in the past year, but the fundamental
investment backdrop has grown increasingly compelling
due to improved economic growth and accelerating
consolidation activity at the corporate level.
o The portfolio is currently focused on stocks that are
economically sensitive and those that fund management
expects to produce above-average earnings growth. In
recent months, the cyclical, media, services, and
technology sectors have been fertile ground for
attractive investment opportunities.
SCUDDER GREATER EUROPE GROWTH FUND 3
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Letter from the Fund's President
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[PHOTO]
Nicholas Bratt
President,
Scudder Greater Europe
Growth Fund
Dear Shareholders,
In the past six months, the European stock markets have posted a relatively flat
performance compared to the sharp runup they experienced from 1996-1998. Despite
this slowdown, we believe that Europe continues to present an attractive
long-term investment opportunity. Improving growth, low levels of inflation,
widespread corporate restructuring, and an acceleration of merger activity are
among the many positive factors providing a strong fundamental underpinning to
the region's stock markets. We believe that the emerging forces of change in
Europe will unleash a wave of productivity growth similar to that which has
benefited the United States over the last decade, a scenario that supports a
continued positive outlook for European equities.
Despite the recent volatility in European stock markets, Scudder Greater Europe
Growth Fund continues to post excellent performance. Its 6.03% year-to-date
return from January 1 through October 31 places it in the top 24% of European
stock funds, according to Lipper Analytical Services. Over the one-, three-, and
five-year periods, the fund is ranked in the top 29th, 14th, and 9th
percentiles, respectively.^(1) In addition, Morningstar has awarded the fund a
5-star overall rating as of October 31.^(2) We believe that the fund's strong
showing is a result of its disciplined, research-intensive method of individual
stock selection, an approach that has allowed it to outperform its peers in all
market conditions.
4 SCUDDER GREATER EUROPE GROWTH FUND
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Finally, it should be noted that Daniel Pierce retired in June of this year as
President of Scudder Greater Europe Growth Fund, at which time I assumed that
role and its responsibilities. We are fortunate that Dan's longstanding
affiliation with Scudder is ongoing, and that we will continue to benefit from
his counsel going forward. I am pleased to join the Greater Europe Growth Fund's
team in this capacity, and look forward to serving your interests.
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-SCUDDER (1-800-728-3337), or visit our Web site at
www.scudder.com.
Sincerely,
/s/ Nicholas Bratt
Nicholas Bratt
President,
Scudder Greater Europe Growth Fund
^(1) Source: Lipper Analytical Services, Inc. Lipper Analytical Services, Inc.,
is an independent analyst of investment performance. Performance includes
reinvestment of dividends and capital gains. For the period ended October 31,
1999, Scudder Greater Europe Growth Fund's Lipper ranking was 39 out of 138
European region funds for the one-year period, 10 out of 72 funds for the
three-year period, 3 out of 36 for the five-year period.
^(2) Morningstar proprietary rankings reflect historical risk-adjusted
performance as of October 31, 1999. The ratings are subject to change every
month. Morningstar ratings are calculated from the funds' 3-, 5-, and 10-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. Past performance is no guarantee of future results.
Scudder Greater Europe Growth Fund received 4 stars for the 3- and 5-year
periods. The top 10% of funds in a broad asset class receive 5 stars, and the
next 22.5% receive 4 stars, and the next 35% receive 3 stars. Scudder Greater
Europe Growth Fund was rated among 1,053 and 597 international funds for the 3-
and 5-year periods, respectively, in its broad asset class. Not all Scudder
Funds receive 4 and 5 star ratings.
SCUDDER GREATER EUROPE GROWTH FUND 5
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Performance Update
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October 31, 1999
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Growth of a $10,000 Investment
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE:
LINE CHART DATA:
Scudder Greater Europe Morgan Stanley Capital
Growth Fund International (MSCI) Europe Index*
'94** 10000 10000
'95 11506 11321
'96 14395 13298
'97 17917 16754
'98 22339 20618
'99 25993 23201
Yearly periods ended October 31
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Fund Index Comparison
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Total Return
Growth of Average
Period ended 10/31/1999 $10,000 Cumulative Annual
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Scudder Greater Europe Growth Fund
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1 year $ 11,636 16.36% 16.36%
5 year $ 25,993 159.93% 21.05%
Life of Fund** $ 26,383 163.83% 21.16%
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Morgan Stanley Capital International (MSCI) Europe Index*
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1 year $ 11,253 12.53% 12.53%
5 year $ 23,201 132.01% 18.32%
Life of Fund** $ 23,201 132.01% 18.32%
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* 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.
** The Fund commenced operations on October 10, 1994. Index comparisons begin
October 31, 1994.
6 SCUDDER GREATER EUROPE GROWTH FUND
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Returns and Per Share Information
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THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)*
CHART DATA:
Yearly periods ended October 31
Scudder Greater Europe Morgan Stanley Capital
Growth Fund International (MSCI) Europe Index*
'95 15.06 13.21
'96 25.11 17.47
'97 24.47 25.99
'98 24.68 23.06
'99 16.36 12.53
1995** 1996 1997 1998 1999
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Fund Total
Return (%) 15.06 25.11 24.47 24.68 16.36
Index Total
Return (%) 13.21 17.47 25.99 23.06 12.53
Net Asset
Value ($) 13.99 17.20 21.17 24.23 28.13
Income
Dividends ($) .02 .11 .06 .54 .06
Capital Gains
Distributions($) -- .14 .14 1.30 --
* 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.
** The Fund commenced operations on October 10, 1994. Index comparisons begin
October 31, 1994.
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.
SCUDDER GREATER EUROPE GROWTH FUND 7
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Portfolio Summary
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October 31, 1999
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Geographical
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(Excludes 8% Cash Equivalents)
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Geographic weightings reflect the result of management's fundamental analysis of
individual companies, rather than their macroeconomic views.
United Kingdom 25%
France 21%
Germany 14%
Netherlands 11%
Italy 9%
Spain 5%
Finland 5%
Greece 4%
Switzerland 3%
Other 3%
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100%
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Sectors
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(Excludes 8% Cash Equivalents)
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
The fund's holdings in manufacturing and technology stocks increased during the
period.
Financial 16%
Manufacturing 14%
Communications 11%
Media 10%
Service Industries 10%
Energy 8%
Consumer Discretionary 7%
Technology 7%
Consumer Staples 6%
Other 11%
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100%
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8 SCUDDER GREATER EUROPE GROWTH FUND
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Ten Largest Equity Holdings
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(20% of Portfolio)
Top holdings reflect management's emphasis on companies undergoing positive
fundamental change.
1. Total Fina SA
Explorer, developer and producer of oil and gas in France
2. Gruppo Editoriale L'Espresso
Publisher in Italy
3. Siemens AG
Electrical engineering and electronics company in Germany
4. Bipop-Carire SpA
Cooperative bank in Italy
5. Publicis SA
International advertising company in France
6. BOC Group PLC
Producer of industrial gases in the United Kingdom
7. Telefonica SA
Telecommunication services in Spain
8. Nokia Oyj
Manufacturer of telecommunication networks and equipment in Finland
9. BP Amoco PLC
Explorer and producer of oil and natural gas in the United Kingdom
10. United Pan-Europe Communications NV
Telecommunication services in the Netherlands
For more complete details about the Fund's investment portfolio, see page 15.
A quarterly Fund Summary and Portfolio Holdings are available upon request.
SCUDDER GREATER EUROPE GROWTH FUND 9
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Portfolio Management Discussion
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October 31, 1999
Dear Shareholders,
European stock markets have moved higher over the past year, but have done so
with an increased level of volatility. While on one hand the markets have
benefited from the accelerating pace of merger and restructuring activity, fears
of higher interest rates have weighed on sentiment throughout the summer and
early autumn. In this environment, the fund returned 16.36% compared to 12.53%
for its unmanaged benchmark, the MSCI Europe Index. The fund's three- and
five-year average annual returns through October 31, 1999 are 21.77% and 21.05%,
respectively, which outpaced the 20.39% and 18.32% returns for the benchmark
over the same periods. We attribute the fund's outperformance over both the
short- and long-term periods to disciplined portfolio management, superior
fundamental analysis, and strong individual stock selection.
Investment Backdrop
There is no longer any doubt that the European economic recovery is underway, as
evidenced by the rising expectations for an above-average growth rate of 3% in
the year 2000. An improving global growth environment, the lagged effect of a
weaker euro, and favorable fiscal and monetary policies have all contributed to
the upturn. Consumer confidence is high across much of Europe, as rising
disposable income and falling unemployment have reinforced investor optimism.
Deregulation in key industries such as telecommunications and utilities should
temper rising inflationary pressures, as should the trend toward price
convergence across the continent. Most important, the estimates for overall
profit growth for 1999 are being revised upward into double digits following a
spate of upside earnings surprises.
Merger and acquisition activity is continuing at a rapid pace across a wide
range of sectors, due in part to the introduction of the euro, which has created
a more stable environment for cross border capital flows. By early September,
the level of activity in 1999 had already
10 SCUDDER GREATER EUROPE GROWTH FUND
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exceeded that of the full twelve months of 1998, which itself was a banner year.
Beyond the welcome boost to share prices, the long-term positive effects from
these transactions include increased efficiency, greater capacity utilization,
and improved prospects for higher sustained levels of future profitability.
During the last six months, we have benefited from several high-profile
transactions. For example, there was a hostile bid by Total Fina for Elf
Aquitane, both portfolio holdings. In the banking sector, we have witnessed the
merger of BCH and Banco Santander in Spain, and Banque Nationale de Paris'
acquisition of Paribas in France. In the food retailing sector, Carrefour
combined with Promodes, another leading French-based chain, to create a
formidable global competitor second only to Wal-Mart. In the U.K., BOC, an
industrial gases company, was the key player in a three-company consolidation
that is still in process. Orange, a fund holding also based in the U.K., was bid
for by Mannesmann and Vodafone later made a bid for the combined entity. The
acceleration of consolidation activity proved beneficial for the fund even in
cases even where we did not own shares of the companies directly involved in
deals, since merger activity often provides a boost to all the companies in the
affected sector.
European corporations have also been active in pursuing value creation for
shareholders via restructuring and more active capital management as they look
to manage their balance sheets as well as their profitability. Siemens, one of
the ten largest holdings in the fund, provides an excellent illustration of how
European companies are redefining themselves and showing greater concern for the
interests of shareholders. The company is delivering on its 10-point
restructuring plan, which centers on selling or spinning off elements of its
business that management feels no longer mesh with its core competencies. The
goal of these changes is to accelerate the pace of technological innovation and
enhance shareholder returns. Siemens is adopting U.S. GAAP accounting and is
listing its stock on the NYSE, a move which demonstrates a commitment to raising
its
SCUDDER GREATER EUROPE GROWTH FUND 11
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profile in the global investment community. At the end of the restructuring
process, Siemens should be a more focused, more transparent company whose
management interests will be better aligned with the interests of its
shareholders.
In combination, merger and restructuring activity provided a positive investment
backdrop for European equities in spite of the interest rate fears that plagued
the world's markets throughout much of the summer and early fall. Even when the
broader market environment is unfavorable, the positive changes taking place at
so many companies present a wide range of opportunities for astute investors. We
will continue to invest in individual stocks that stand to benefit from these
ongoing trends, a strategy that we believe will lead to outperformance even when
the performance of the broader indices is soft.
Portfolio Positioning
The portfolio is currently balanced on two poles: stocks that are economically
sensitive, and those that we expect to exhibit above-average growth. Earlier
this year, in expectation of a recovery in growth, we increased our exposure to
cyclical stocks in chemicals (such as BASF, Bayer, and Clariant), building
materials/construction-related (Saint Gobain and Lafarge), and capital goods
(ABB). We also added to what had been our scant holdings in the oil sector,
buying BP Amoco, Royal Dutch Petroleum, ENI, and Total Fina. More recently, we
have added Norsk Hydro. Among growth stocks, we have found opportunities in
media, services, and technology. The portfolio is underweight in health,
banking, insurance, beverages, transportation, food manufacturing, and
utilities, which has been beneficial for performance.
In recent months, we have added Schneider, a French capital goods producer with
leading positions in the world markets for electrical distribution, industrial
controls, and automation. We see the potential for 15% earnings growth per annum
over the next several years due to the company's exposure to the booming
construction and
12 SCUDDER GREATER EUROPE GROWTH FUND
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renovation market, personnel cuts, and ongoing restructuring from better supply
chain management. Another new addition is Commerzbank, a German bank
distinguished by its innovative response to the competitive challenges of its
domestic marketplace. The upcoming partial spin-off of its highly successful
Internet brokerage subsidiary, Condirect, should highlight its attractive
valuation.
Outlook
Looking past the volatility that is likely to accompany the millennium
transition, the prospects for European equities remain positive. Economic
strength and ongoing merger and restructuring activity present an attractive
backdrop for global investors. In addition, we are seeing the development of an
"equity culture" among European retail investors. Over time, this should be a
powerful force as market participants finally adjust their heavy fixed income
weightings to capture the higher return potential of equities. Although 1999 has
not brought the high-octane stock market gains that we saw over the previous
three years, we believe that the fundamental backdrop remains extremely
positive, and the ongoing trends of consolidation and restructuring will
continue to provide a wealth of investment opportunities for bottom-up
stockpickers.
Sincerely,
Your Portfolio Management Team
/s/ Carol L. Franklin /s/ Joan R. Gregory
Carol L. Franklin Joan R. Gregory
/s/ Nicholas Bratt
Nicholas Bratt
SCUDDER GREATER EUROPE GROWTH FUND 13
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Scudder Greater Europe Growth Fund:
A Team Approach to Investing
Scudder Greater Europe Growth Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays 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 our offices across the
United States and abroad. We believe our team approach benefits fund investors
by bringing together many disciplines and leveraging our extensive resources.
[PHOTO]
Carol L. Franklin
Carol L. Franklin, lead portfolio manager, sets fund investment strategy and
oversees its daily operation. Ms. Franklin joined the Adviser in 1981 and has
eleven years of European research and investment management experience.
[PHOTO]
Nicholas Bratt
Nicholas Bratt, portfolio manager, helps set the fund's general investment
strategies. Mr. Bratt has over 20 years of experience in worldwide investing and
has been with the Adviser since 1976.
[PHOTO]
Joan R. Gregory
Joan R. Gregory, portfolio manager, focuses on stock selection, a role she has
played since she joined the Adviser in 1992. Ms. Gregory has been involved with
investment in global and international stocks as an assistant portfolio manager
since 1989.
14 SCUDDER GREATER EUROPE GROWTH FUND
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Investment Portfolio as of October 31, 1999
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<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
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<S> <C> <C>
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Repurchase Agreements 5.3%
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Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 10/29/1999 at 5.2%, to be repurchased at
$54,544,626 on 11/1/1999, collateralized by a
$50,000,000 U.S. Treasury Note, 5.875%, 2/15/2000 and
a $4,319,000 U.S. Treasury Note, 5.875%, 11/15/2005 --------------
(Cost $54,521,000) ....................................... 54,521,000 54,521,000
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Short Term Notes 2.4%
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Federal Home Loan Mortgage Corp., 5.16%**, 11/1/1999 --------------
(Cost $25,000,000) ....................................... 25,000,000 25,000,000
--------------
<CAPTION>
Shares
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<S> <C> <C>
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Common Stocks 92.3%
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Finland 4.7%
JOT Automation Group Oyj (Manufacturer of high
technology production automation systems and
equipment) ............................................... 1,014,200 5,239,426
Nokia Oyj (Manufacturer of telecommunication networks
and equipment) ........................................... 153,500 17,609,265
Pohjola Insurance Co., Ltd. "B" (Insurance company) ......... 222,200 11,947,534
Sonera Oyj (Telecommunication services) ..................... 239,813 7,218,432
Tietoenator Oyj Abp (Manufacturer of computer software) ..... 184,000 6,401,707
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48,416,364
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France 18.8%
Accor SA (Provider of catering, hotel and travel services) .. 45,000 10,152,905
Altran Technologies, SA (Provider of engineering and
consulting services) ..................................... 38,091 13,087,924
Assurances Generales de France -- CVG Shares warrants
(expire 6/15/2000) (Health, life and liability insurance) 21,235 111,940
Bouygues SA (Conglomerate: public works, real estate and
industrial development, engineering services, television
and motion ............................................... 24,600 8,584,740
Cap Gemini Sogeti SA (Software consultants) ................. 32,987 5,008,058
Carbone-Lorraine (Manufacturer of industrial and
technological systems and components) .................... 75,580 3,259,871
Castorama-Dubois Investissements (Retailer specializing in
home repair) ............................................. 44,300 13,301,718
Compagnie de Saint-Gobain (Glass manufacturer) .............. 61,350 10,672,411
</TABLE>
The accompanying notes are an integral part of the financial statements.
SCUDDER GREATER EUROPE GROWTH FUND 15
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<TABLE>
<CAPTION>
Market
Shares Value ($)
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<S> <C> <C>
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Etablissements Economiques du Casino Guichard-
Perrachon SA (Operator of supermarkets and
convenience stores) ...................................... 100,000 11,386,436
Galeries Lafayette (Department store chain) ................. 55,800 8,236,188
LVMH (Producer of wines, spirits and luxury products) ....... 16,600 5,022,894
Lafarge SA (Producer of cement, concrete and
aggregates) .............................................. 93,800 9,048,737
Publicis SA (International advertising company) ............. 79,900 20,234,097
Rhone-Poulenc SA "A" (Pharmaceutical company) ............... 221,250 12,409,633
Schneider SA (Manufacturer of electronic components
and automated manufacturing systems) ..................... 167,600 11,573,890
Societe Television Francaise 1 (Television broadcasting) .... 34,180 10,738,716
Suez Lyonnaise des Eaux SA (Water and electric utility) ..... 29,400 4,757,949
Total Fina SA "B" (Explorer, developer and producer of oil
and gas) ................................................. 248,987 33,732,136
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191,320,243
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Germany 13.1%
Allianz AG (Multi-line insurance company) ................... 33,532 10,234,628
BASF AG (International chemical producer) ................... 239,700 10,803,592
Bayer AG (Chemical producer) ................................ 298,100 12,225,753
Commerzbank AG (Bank) ....................................... 273,800 10,464,187
Deutsche Bank AG (Provider of financial services) ........... 141,500 10,174,307
Dresdner Bank AG (Bank) ..................................... 98,800 5,078,034
Epcos AG* (Producer of electronic components and
intergrated circuits) .................................... 87,109 3,579,884
Karstadt AG (Operator of department stores) ................. 100,000 4,533,488
Mannesmann AG (Registered) (Manufacturer of production
machinery and assembly systems) .......................... 103,500 16,313,441
Marschollek, Lautenschlaeger und Partner AG (pfd.)
(Insurance company) ...................................... 76,050 16,075,987
SAP AG (Computer software manufacturer) ..................... 12,100 4,505,781
SAP AG (pfd.) ............................................... 15,800 6,979,674
Siemens AG (Electrical engineering and electronics
company) ................................................. 260,700 23,458,951
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134,427,707
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Greece 3.3%
Alpha Credit Bank SA (Commercial bank) ...................... 139,950 10,736,136
Delta Informatics SA (Corporate information services) ....... 73,600 8,090,471
Hellenic Telecommunication Organization SA
(Telecommunication services) ............................. 1 21
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 SCUDDER GREATER EUROPE GROWTH FUND
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<TABLE>
<CAPTION>
Market
Shares Value ($)
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<S> <C> <C>
National Bank of Greece SA (Bank) ........................... 108,942 7,835,049
Titan Cement Co. SA (Cement producer) ....................... 61,100 6,796,484
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33,458,161
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Ireland 1.6%
ESAT Telecom Group PLC (ADR)* (Provider of
telecommunication services) .............................. 240,300 10,753,425
Irish Life & Permanent PLC (Retail financial services
group) ................................................... 576,156 5,892,178
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16,645,603
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Italy 8.1%
Bipop-Carire SpA (Cooperative bank) ......................... 503,700 21,374,791
ENI SpA (Explorer and distributor of petroleum products) .... 2,144,000 12,567,926
Finmeccanica SpA* (Designer and developer of commercial
and military aircraft, space systems and air defense
systems) ................................................. 5,954,500 5,436,598
Gruppo Editoriale L'Espresso (Publisher) .................... 1,077,700 23,462,916
Mediaset SpA (Broadcasting and television networks) ......... 1,163,000 11,636,168
Seat Pagine Gialle SpA (Publisher of telecommunication
directories and provider of advertising services) ........ 5,771,300 8,244,740
--------------
82,723,139
--------------
Netherlands 11.2%
Akzo Nobel NV (Producer and marketer of healthcare
products, coatings, chemicals and fibers) ................ 299,800 12,940,275
Equant NV* (Provider of international data network
services) ................................................ 111,200 10,844,526
Gucci Group NV (New York Shares) (Designer and producer
of personal luxury accessories and apparel) .............. 146,600 11,837,950
Koninklijke (Royal) Philips Electronics NV (Manufacturer
of consumer electronics) ................................. 71,852 7,385,970
Laurus NV (International food retailer) ..................... 447,859 9,986,555
Royal Dutch Petroleum Co. (Petroleum company) ............... 253,200 15,170,692
STMicroelectronics NV (Manufacturer of semiconductor
integrated circuits) ..................................... 135,757 11,951,234
Unilever NV (Manufacturer of branded and packaged
consumer goods) .......................................... 101,400 6,735,077
United Pan-Europe Communications NV*
(Telecommunication services) ............................. 216,893 16,715,792
VNU NV (International publishing company) ................... 324,520 10,999,843
Vedior NV CVA (Temporary employment services) ............... 40,580 684,536
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115,252,450
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Norway 0.9%
Norsk Hydro AS (Conglomerate: producer of fertilizers, oil
and gas, aluminum) ....................................... 229,300 9,164,212
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
SCUDDER GREATER EUROPE GROWTH FUND 17
<PAGE>
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<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Spain 4.9%
Centros Comerciales Pryca, SA (Owner and operator of
hypermarkets selling consumer products including
groceries, appliances and clothing) ...................... 253,800 4,781,677
Cortefiel, SA (Owner and operator of various retail clothing
stores) .................................................. 416,000 10,890,156
Fomento de Construcciones y Contratas SA (Designer of
highways, bridges and buildings) ......................... 204,376 5,139,044
Sogecable, SA* (Provider of cable television) ............... 108,766 2,994,085
Tabacalera SA "A" (Manufacturer and distributor of tobacco
products) ................................................ 324,000 5,345,932
Telefonica Publicidad e Informacion, SA* (Publisher of
telephone directories) ................................... 175,205 3,829,216
Telefonica SA* (Provider of telecommunication services) ..... 1,068,388 17,616,912
--------------
50,597,022
--------------
Switzerland 2.5%
ABB Ltd. (Bearer) (Manufacturer of equipment for power
generation and distribution) ............................. 118,098 11,905,197
Clariant AG (Registered) (Manufacturer of dye chemicals) .... 7,781 3,408,371
Roche Holdings AG (PC) (Producer of drugs and
medicines) ............................................... 880 10,575,951
--------------
25,889,519
--------------
United Kingdom 23.2%
Aegis Group PLC (Independent media services group) .......... 4,752,900 12,508,105
Avis Europe PLC (Car rental services) ....................... 1,801,000 7,761,182
BOC Group PLC (Producer of industrial gases) ................ 885,500 19,079,751
BP Amoco PLC (Explorer and producer of oil and
natural gas) ............................................. 1,737,000 16,884,964
Bank of Scotland PLC (Bank) ................................. 457,891 5,731,385
Barclays PLC (Commercial and investment banking,
insurance and other financial services) .................. 386,200 11,859,583
Billiton PLC (Resource group that explores, produces and
markets aluminum and other metal products) ............... 1,143,000 4,982,012
British Aerospace PLC (Producer of military aircraft) ....... 1,315,000 7,786,479
British Telecom PLC (Telecommunication services) ............ 634,000 11,512,541
Compass Group PLC (International catering group) ............ 537,500 5,746,517
Dixons Group PLC (Retailer of high technology consumer
electronics and computer related products) ............... 300,947 5,336,071
Flextech PLC* (Broadcaster of entertainment programs) ....... 472,100 6,835,226
Glaxo Wellcome PLC (Pharmaceutical company) ................. 315,566 9,322,006
Granada Group PLC (Provider of television programs and
broadcasting services) ................................... 1,288,400 10,235,539
Great Universal Stores PLC "A" (Catalog home shopping,
retailing, finance and property investment) .............. 525,600 3,985,374
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 SCUDDER GREATER EUROPE GROWTH FUND
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
J Sainsbury PLC (Retail distributor of food through
supermarkets) ............................................ 1,278,700 7,687,213
National Power PLC (Electricity generation company) ......... 1,263,700 8,584,340
Orange PLC* (Operator of digital mobile telephone
network) ................................................. 218,500 5,433,956
Perpetual PLC (Holding company) ............................. 98,100 5,437,656
Prudential Corp. PLC (Provider of broad range of financial
services) ................................................ 789,100 12,382,070
Reed International PLC (Publisher of scientific, professional
and business to business materials) ...................... 1,223,800 7,186,071
Reuters Group PLC (International news and information
agency) .................................................. 493,400 4,544,646
Rio Tinto PLC (Registered) (Mining company) ................. 529,200 9,043,743
Royal & Sun Alliance Insurance Group PLC (Insurance
company) ................................................. 698,400 4,755,733
SmithKline Beecham PLC (Manufacturer of ethical drugs
and healthcare products) ................................. 828,733 10,700,329
Vodafone AirTouch PLC (Provider of telecommunication
services) ................................................ 2,628,140 12,255,031
WPP Group PLC (Advertising agency) .......................... 972,900 10,577,487
--------------
238,155,010
--------------
- ------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $770,138,840) ..................... 946,049,430
- ------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $849,659,840) (a) 1,025,570,430
- ------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate.
(a) The cost for federal income tax purposes was $852,882,242. At October 31,
1999, net unrealized appreciation for all securities based on tax cost was
$172,688,188. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $204,319,536 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$31,631,348.
The accompanying notes are an integral part of the financial statements.
SCUDDER GREATER EUROPE GROWTH FUND 19
<PAGE>
Financial Statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities as of October 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments, at market (identified cost $849,659,840) ........................ $1,025,570,430
Foreign currency holdings, at market (identified cost $116,040) .............. 116,040
Receivable for investments sold .............................................. 23,057,608
Receivable for Fund shares sold .............................................. 8,667,674
Dividends and interest receivable ............................................ 437,034
Foreign taxes recoverable .................................................... 1,106,809
Other assets ................................................................. 7,030
--------------
Total assets ................................................................. 1,058,962,625
Liabilities
- -----------------------------------------------------------------------------------------------
Due to custodian bank ........................................................ 48,657
Payable for investments purchased ............................................ 6,195,509
Payable for Fund shares redeemed ............................................. 15,582,069
Accrued management fee ....................................................... 847,539
Other payables and accrued expenses .......................................... 921,583
--------------
Total liabilities ............................................................ 23,595,357
- -----------------------------------------------------------------------------------------------
Net assets, at market value .................................................. $1,035,367,268
- -----------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .......................................... 2,822,146
Unrealized appreciation (depreciation) on:
Investments ................................................................ 175,910,590
Foreign curency related transactions ....................................... 31,550
Accumulated net realized gain (loss) ......................................... 403,123
Paid-in capital .............................................................. 856,199,859
- -----------------------------------------------------------------------------------------------
Net assets, at market value .................................................. $1,035,367,268
- -----------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($1,035,367,268 /
36,803,269 shares of capital stock outstanding, $.01 par value, 100,000,000 --------------
number of shares authorized) .............................................. $ 28.13
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 SCUDDER GREATER EUROPE GROWTH FUND
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Operations for the year ended October 31, 1999
- --------------------------------------------------------------------------------
Investment Income (Loss)
- --------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $2,218,926) ........ $ 18,721,429
Interest ....................................................... 2,351,234
-------------
21,072,663
-------------
Expenses:
Management fee ................................................. 11,429,428
Services to shareholders ....................................... 3,384,100
Custodian and accounting fees .................................. 1,381,684
Directors' fees and expenses ................................... 53,262
Auditing ....................................................... 92,497
Reports to shareholders ........................................ 270,132
Amortization of organization expense ........................... 10,848
Registration fees .............................................. 53,050
Legal .......................................................... 90,694
Other .......................................................... 81,790
-------------
16,847,485
- --------------------------------------------------------------------------------
Net investment income (loss) ................................... 4,225,178
- --------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- --------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .................................................... 61,242,618
Futures ........................................................ 539,032
Foreign currency related transactions .......................... (1,073,119)
-------------
60,708,531
-------------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................... 106,992,804
Foreign currency related transactions .......................... (34,919)
-------------
106,957,885
- --------------------------------------------------------------------------------
Net gain (loss) on investment transactions ..................... 167,666,416
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 171,891,594
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
SCUDDER GREATER EUROPE GROWTH FUND 21
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended October 31,
Increase (Decrease) in Net Assets 1999 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .......................... $ 4,225,178 $ 4,563,525
Net realized gain (loss) from investment
transactions ................................ 60,708,531 (63,302,028)
Net unrealized appreciation (depreciation) on
investment transactions during the period ... 106,957,885 32,682,912
--------------- ---------------
Net increase (decrease) in net assets resulting
from operations ............................. 171,891,594 (26,055,591)
--------------- ---------------
Distributions to shareholders from:
Net investment income .......................... (2,849,719) (5,194,972)
--------------- ---------------
Net realized gains ............................. -- (12,506,412)
--------------- ---------------
Fund share transactions:
Proceeds from shares sold ...................... 1,875,696,213 2,795,798,253
Net asset value of shares issued to shareholders
in reinvestment of distributions ............ 2,719,498 16,979,895
Cost of shares redeemed ........................ (2,144,456,345) (1,832,169,481)
--------------- ---------------
Net increase (decrease) in net assets from Fund
share transactions .......................... (266,040,634) 980,608,667
--------------- ---------------
Increase (decrease) in net assets .............. (96,998,759) 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 --------------- ---------------
$2,822,146 and $2,510,550, respectively) .... $ 1,035,367,268 $ 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 .................................... 70,803,786 108,247,834
Shares issued to shareholders in reinvestment of
distributions ............................... 102,622 824,267
Shares redeemed ................................ (80,829,241) (71,580,822)
--------------- ---------------
Net increase (decrease) in Fund shares ......... (9,922,833) 37,491,279
--------------- ---------------
Shares outstanding at end of period ............ 36,803,269 46,726,102
--------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22 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>
- ---------------------------------------------------------------------------------------------------
Years Ended October 31, 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $24.23 $21.17 $17.20 $13.99 $12.18
----------------------------------------------------------
Income from investment operations:
Net investment income (a) .10(b) .16 .03 .13 .13
Net realized and unrealized gain
(loss) on investment transactions 3.86 4.74 4.14 3.33 1.70
----------------------------------------------------------
Total from investment operations 3.96 4.90 4.17 3.46 1.83
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 $28.13 $24.23 $21.17 $17.20 $13.99
==========================================================
Total Return (%) 16.36 24.68 24.47(c) 25.11(c) 15.06(c)
Ratios and Supplemental Data
- ---------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 1,035 1,132 196 120 41
Ratio of operating expenses, net, to
average daily net assets (%) 1.46 1.48 1.66 1.50 1.50
Ratio of operating expenses, before
expense reductions, to average daily
net assets (%) 1.46 1.48 1.72 1.97 2.74
Ratio of net investment income to
average daily net assets (%) .37 .63 .16 .82 1.25
Portfolio turnover rate (%) 83.2 92.7 88.8 39.0 27.9
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Net investment income per share includes non-recurring dividend income
amounting to $0.08 per share.
(c) Total returns would have been lower had certain expenses not been reduced
SCUDDER GREATER EUROPE GROWTH FUND 23
<PAGE>
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
October 31, 1999
A. Significant Accounting Policies
Scudder Greater Europe Growth Fund (the "Fund") is a non-diversified series of
Scudder International Fund, Inc. (the "Corporation") which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a Maryland Corporation.
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. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. 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 ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. 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, or if no sale occurred, at the calculated mean between the most recent
bid and asked quotations on such market. If there are no such bid and asked
quotations, the most recent bid quotation 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.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
24 SCUDDER GREATER EUROPE GROWTH FUND
<PAGE>
- --------------------------------------------------------------------------------
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, 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
principal amount of the repurchase price plus accrued interest.
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 a financial
instrument 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. In addition, the Fund also sold securities
index futures to hedge against declines in the value of portfolio securities.
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 dependent upon
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 the changes in the value of
the securities or currencies hedged. When utilizing futures contracts to hedge,
SCUDDER GREATER EUROPE GROWTH FUND 25
<PAGE>
- --------------------------------------------------------------------------------
the Fund gives up the opportunity to profit from favorable price movements in
the hedged positions during the term of the contract.
Taxes. The Fund's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. 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 at least
annually.
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. These
differences primarily relate 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.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to the ex-dividend date as
soon as the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis.
Original issue discounts are accreted for both tax and financial reporting
purposes.
Organization Costs. Costs incurred by the Fund in connection with its
organization were deferred and amortized on a straight-line basis over a
five-year period.
26 SCUDDER GREATER EUROPE GROWTH FUND
<PAGE>
- --------------------------------------------------------------------------------
B. Purchases and Sales of Securities
For the year ended October 31, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $906,570,983 and
$1,156,480,319, respectively.
The aggregate face value of futures contracts opened and closed during the year
ended October 31, 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 year ended October 31, 1999, the fees pursuant to the Agreement amounted to
$11,429,428. This was equivalent to annual effective rate of 0.99% 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. For the
year ended October 31, 1999, the amount charged by SSC aggregated $1,711,671, of
which $225,749 was unpaid at October 31, 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 year ended October 31,
1999, the amount charged by STC aggregated $159,061, of which $27,389 was unpaid
at October 31, 1999.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records for the Fund. For the year ended
October 31, 1999, the amount charged by SFAC aggregated $507,241, of which
$78,772 was unpaid at October 31, 1999.
SCUDDER GREATER EUROPE GROWTH FUND 27
<PAGE>
- --------------------------------------------------------------------------------
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 year ended October 31,
1999, the Special Servicing Agreement expense charged to the Fund amounted to
$8,802.
The Fund pays each Director not affiliated with the Adviser an annual retainer,
plus specified amounts for attended board and committee meetings. For the year
ended October 31, 1999, Directors' fees and expenses aggregated $53,262.
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.
28 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 October 31, 1999, the
results of its operations, the changes in its net assets, and the
financial highlights for the periods indicated therein, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at October 31, 1999
by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
December 10, 1999
SCUDDER GREATER EUROPE GROWTH FUND 29
<PAGE>
Tax Information
- --------------------------------------------------------------------------------
October 31, 1999
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$4,000,000 as capital gain dividends for its year ended October 31, 1999,
of which 100% represents 20% rate gains.
The Fund paid foreign taxes of $2,218,926 and earned $5,161,406 of foreign
source income during the year ended October 31, 1999. Pursuant to section
853 of the Internal Revenue Code, the Fund designates $0.06 per share as
foreign taxes paid and $0.14 per share as income earned from foreign
sources for the year ended October 31, 1999.
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 account, please call 1-800-SCUDDER.
30 SCUDDER GREATER EUROPE GROWTH FUND
<PAGE>
Officers and Directors
- --------------------------------------------------------------------------------
Nicholas Bratt*
o President
Sheryle J. Bolton
o Director; Chief Executive Officer, Scientific Learning Corporation
William T. Burgin
o Director; General Partner, Bessemer Venture Partners
Keith R. Fox
o Director; Private Equity Investor
William H. Luers
o Director; Chairman and President, U.N. Association of America
Kathryn L. Quirk*
o Director, Vice President and Assistant Secretary
Joan E. Spero
o Director; President, Doris Duke Charitable Foundation
Thomas J. Devine
o Honorary Director; Consultant
William H. Gleysteen, Jr.
o Honorary Director; Consultant; Guest Scholar, Brookings Institution
Wilson Nolen
o Honorary Director; Consultant
Robert G. Stone, Jr.
o Honorary Director; Chairman Emeritus and Director, Kirby Corporation
Elizabeth J. Allan*
o Vice President
Irene T. Cheng*
o Vice President
Joyce E. Cornell*
o Vice President
Susan E. Dahl*
o Vice President
Philip S. Fortuna*
o Vice President
Carol L. Franklin*
o Vice President
Edmund B. Games, Jr.*
o Vice President
Theresa Gusman*
o Vice President
Ann M. McCreary*
o Vice President
Sheridan P. Reilly*
o Vice President
Shahram Tajbakhsh*
o Vice President
John Millette*
o Vice President and Secretary
John R. Hebble*
o Treasurer
Richard W. Desmond*
o Assistant Secretary
Caroline Pearson*
o Assistant Secretary
*Scudder Kemper Investments, Inc.
SCUDDER GREATER EUROPE GROWTH FUND 31
<PAGE>
Investment Products and Services
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
- --------------------------------------------------------------------------------
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**
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
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 Heath Care Fund
Scudder Technology Fund
Preferred Series
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
32 SCUDDER GREATER EUROPE GROWTH FUND
<PAGE>
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
- --------------------------------------------------------------------------------
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.
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.
SCUDDER GREATER EUROPE GROWTH FUND 33
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Scudder Solutions
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1-800-SCUDDER www.scudder.com
Convenient ways to invest, quickly and reliably
Automatic Investment Plan
A convenient investment program in which money is electronically debited
from your bank account monthly to regularly purchase fund shares and
"dollar cost average" -- buy more shares when the fund's price is lower
and fewer when it's higher, which can reduce your average purchase price
over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to purchase shares -- use
distributions from one Scudder fund to purchase shares in another,
automatically (accounts with identical registrations or the same social
security or tax identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically, avoiding potential
mailing delays; money for each of your transactions is electronically
debited from a previously designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government checks -- invested in
up to four Scudder funds at one time.
* 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) -- 1-800-343-2890
Personalized account information, the ability to exchange or redeem
shares, and information on other Scudder funds and services via touchtone
telephone.
Scudder's Web Site -- www.scudder.com
Personal Investment Organizer: Offering account information and
transactions, interactive worksheets, prospectuses and applications for
all Scudder funds, plus your current asset allocation, whenever your need
them. Scudder's site also provides news about Scudder funds, retirement
planning information, and more.
34 SCUDDER GREATER EUROPE GROWTH FUND
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1-800-SCUDDER www.scudder.com
Retirees and those who depend on investment proceeds for living expenses can
enjoy these convenient, timely, and reliable automated withdrawal programs
Automatic Withdrawal Plan
You designate the bank account, determine the schedule (as frequently as
once a month) and amount of the redemptions, and Scudder does the rest.
Distributions Direct
Automatically deposits your fund distributions into the bank account you
designate within three business days after each distribution is paid.
QuickSell
Provides speedy access to your money by electronically crediting your
redemption proceeds to the bank account you previously designated.
For more information about these services
Call a Scudder representative at
1-800-SCUDDER
Or visit our Web site at
www.scudder.com
Please address all written correspondence to
The Scudder Funds
PO Box 2291
Boston, Massachusetts
02107-2291
SCUDDER GREATER EUROPE GROWTH FUND 35
<PAGE>
SCUDDER
INVESTMENTS(SM)
[LOGO]
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
About the Fund's Adviser
Scudder Kemper Investments, Inc. is one of the largest and most
experienced investment management organizations worldwide, managing more
than $290 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 over 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.
