Scudder
International Growth Fund
Semiannual Report
February 28, 1999
No-Load Funds
A fund seeking long-term capital appreciation through investment primarily in
equity securities of foreign companies with high growth potential.
A no-load fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder International Growth Fund
- --------------------------------------------------------------------------------
Date of Inception: 9/1/98 Total Net Assets as of 2/28/99: $4.5 million
- --------------------------------------------------------------------------------
o Rallies in the overseas markets helped Scudder International Growth Fund
post a gain of 11.91% during the reporting period.
o The Fund continues to use fundamental analysis to uncover companies with
favorable growth prospects in Europe, Asia, and Latin America.
o Management found opportunities in companies poised to benefit from the trends
toward restructuring and outsourcing in Europe. In addition, they sought to take
advantage of the attractive valuations in the emerging markets.
Table of Contents
3 Letter from the Fund's Chairman 19 Notes to Financial Statements
4 Performance Update 22 Report of Independent Accountants
5 Portfolio Summary 23 Shareholder Meeting Results
6 Portfolio Management Discussion 24 Officers and Directors
9 Investment Portfolio 25 Investment Products and Services
15 Financial Statements 26 Scudder Solutions
18 Financial Highlights
2 - Scudder International Growth Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
Significant changes have taken place in the international markets during
the past six months. In Europe, the launch of the new currency has been one of
several catalysts fueling the ongoing evolution of the corporate culture. In
Asia, the economic crisis has forced many corporations to begin the long-overdue
process of restructuring, and in Brazil, the currency devaluation has awakened
the government to the importance of fiscal reforms. Such events, while often a
source of market volatility, can also present astute investors with the
opportunity to invest in companies that are well-positioned for the new economy.
The management team of Scudder International Growth Fund seeks to take
advantage of these opportunities by investing in a diversified portfolio of
growth stocks from Europe, Asia, and Latin America. Using the fundamental
research of Scudder's experienced team of international analysts, management
strives to uncover companies that possess a catalyst for strong future growth,
yet are selling at attractive valuations. For more information on their
investment strategy, please turn to the Portfolio Management Discussion on
page 6.
For those of you who are interested in new Scudder products, we are pleased
to introduce Scudder Select 500 Fund and Scudder Select 1000 Growth Fund. Both
funds are managed with the goal of providing long term outperformance compared
to their benchmark indices, the S&P 500 Index and the Russell 1000 Growth Index,
respectively. For more information on either Select fund, please call us at the
number below.
Thank you for your continued investment in Scudder International 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 International Growth Fund
3 - Scudder International Growth Fund
<PAGE>
Performance Update as of February 28, 1999
- ---------------------
Fund Index Comparison
- ---------------------
Total Return
- ----------------------------------------------------
Period Ended Growth of
2/28/99 $10,000 Cumulative
- ----------------------------------------------------
Scudder International Growth Fund
- ----------------------------------------------------
Life of Fund* $ 11,191 11.91%
- ----------------------------------------------------
MSCI All Country World excluding U.S. Index
- ----------------------------------------------------
Life of Fund* $ 11,526 15.26%
- ----------------------------------------------------
* The Fund commenced operations on September 1, 1998.
- ------------------------------
Growth of a $10,000 Investment
- ------------------------------
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
MSCI All Country World Scudder International
excluding U.S.Index Growth Fund
---------------------- ---------------------
9/1/98* 10000 10000
9/98 9795 9942
10/98 10821 10433
11/98 11401 10925
12/98 11787 11334
1/99 11775 11518
2/99 11526 11191
MSCI All Country World excluding U.S. Index is a regional or composite index
consisting of developed and emerging market countries.
- ---------------------------------
Returns and Per Share Information
- ---------------------------------
Period ended February 28
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
1999
- ----------------------------------------------------------
Net Asset Value $ 13.36
- ----------------------------------------------------------
Income Dividends $ .07
- ----------------------------------------------------------
Capital Gains Distributions $ --
- ----------------------------------------------------------
Fund Total Return (%) 11.91
- ----------------------------------------------------------
Index Total Return (%) 15.26
- ----------------------------------------------------------
Performance is historical and assumes reinvestment of all dividends and capital
gains and is not indicative of future results. Total return and principal value
will fluctuate, so an investor's shares, when redeemed, may be worth more or
less than when purchased. If the Adviser had not maintained the Fund's expenses,
the total return would have been lower.
4 - Scudder International Growth Fund
<PAGE>
Portfolio Summary as of February 28, 1999
- ------------------------------
Geographical
(Excludes 8% Cash Equivalents)
- ------------------------------
THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE:
CHART DATA:
Europe 76%
Pacific Basin 17%
Latin America 7%
---------------------------------------------
100%
---------------------------------------------
Despite slowing growth in the region, Europe continued to
provide attractive investment opportunities.
- ------------------------------
Sectors
(Excludes 8% Cash Equivalents)
- ------------------------------
THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE:
CHART DATA:
Financial 17%
Communications 13%
Manufacturing 12%
Technology 10%
Consumer Discretionary 8%
Media 8%
Service Industries 6%
Health 6%
Consumer Staples 5%
Other 15%
---------------------------------------------
100%
---------------------------------------------
Sector weightings are not the result of top down analysis;
instead, they reflect a higher proportion of companies with
favorable growth profiles in these industries.
- ---------------------------
Ten Largest Equity Holdings
(15% of Portfolio)
- ---------------------------
1. Natsteel Electronics Ltd.
Manufacturer of computer peripheral,
telecommunication and network products
2. JOT Automation Group Oyj
Developer and manufacturer of high
technology production automation
systems and equipment
3. Vodafone Group PLC
Provider of mobile telecommunication
systems
4. Equant NV
Provider of international data network
services
5. Indah Kiat Pulp & Paper
Producer of pulp and paper
6. Suez Lyonnaise des Eaux
Water utility
7. APP Global Finance Ltd.
Producer of pulp and paper
8. National Bank of Greece S.A.
Full service bank
9. British Telecom PLC
Telecommunication services
10. Mannesmann AG
Diversified construction and
technology company
Using the fundamental research of Scudder's international
analysts, we invest in reasonably valued companies that
possess catalysts for strong growth.
For more complete details about the Fund's investment portfolio, see page 9. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder International Growth Fund
<PAGE>
Portfolio Management Discussion
We asked Joan R. Gregory, portfolio manager of Scudder International Growth
Fund, to discuss the overseas market environment and Scudder's investment
strategy in the period from September 1, 1998, to February 28, 1999.
Q: How would you characterize market conditions of the past six months?
A: For growth investors who have maintained diversified exposure among several
different regions, the environment has been generally positive. Among the areas
where we invest, Europe provided the strongest performance. In that region,
concerns about sluggish economic growth have been offset by the many favorable
developments taking place on the corporate level, such as restructuring,
consolidation, and cost cutting. In addition, falling interest rates have
provided a positive backdrop for equities. European stocks posted strong gains
over the full six months as a result, although the concerns about slowing growth
hampered the ascent of stock prices in the final two months of the period.
Elsewhere, ongoing economic difficulties in the less developed regions dampened
returns during the full period, although many stock markets rallied strongly off
of their October lows. While the crises in the emerging markets has proven
challenging for investors, it has also provided the opportunity to purchase
shares of growing companies at what we believe to be bargain prices.
Although attempts to make generalizations about the foreign markets can often
lead to inaccuracies, it is important to note that investors tended to favor
growth stocks in this period, particularly the larger, established companies. In
an environment where commodity prices have been weak and the economies of so
many countries have been struggling, corporate profits have suffered. As a
consequence, investors have focused on growth companies that are perceived to
have the most reliable earnings, at the expense of smaller companies and value
stocks. While this trend does not represent a permanent shift, it has worked to
the benefit of growth investors during this period.
Q: How did the Fund perform in this environment?
A: The Fund posted a total return of 11.91%, which trailed the 15.26% return of
its unmanaged benchmark, the MSCI All Country World (ex U.S.) Growth Index. When
assessing the Fund's performance, it is important to keep in mind that new funds
generally commence operations with a large cash position that needs to be put to
work gradually. For this reason, the Fund was only partially invested in stocks
when the markets were rallying off of their lows early in the period. Going
forward, we expect to remain as close to fully invested as possible.
Q: How do you select stocks for the Fund?
A: We utilize a unique approach designed to provide investors with access to the
best ideas of Scudder's regional experts. At the same time, we maintain a
neutral approach to allocating assets among regions by matching our weightings
in Europe, Asia, and Latin America to the weightings in the Lipper international
fund peer group average. These weightings are rebalanced each month to ensure
that our allocation remains substantially similar to the benchmark's even as
short-term market fluctuations affect the portfolio. The purpose of this
strategy is to increase the impact of individual stock selection by eliminating
6 - Scudder International Growth Fund
<PAGE>
"top-down" considerations from the decision making process.
Next, we draw upon the research capabilities of Scudder's team of international
analysts to create a diversified portfolio of growth companies that we believe
are positioned for long-term outperformance. Using intensive fundamental
research, we search for companies with catalysts for growth, such as a dominant
market position or an expanding brand franchise. To identify the stocks most
likely to outperform, we look for companies with strong financial positions and
high quality management teams capable of profiting from the rapid changes taking
place in the global marketplace. Conversely, we seek to avoid stocks whose
fundamentals are showing signs of deterioration, or whose valuations are
becoming excessively rich. Any changes in the Fund's country allocations or
sector weightings are not the result of top-down analysis; instead, they reflect
a higher proportion of companies with favorable growth profiles in these areas.
Q: Has your quest for growth led you to uncover certain investment themes?
A: Yes. Our large weighting in European equities reflects the many drivers of
growth that are currently at work in the area. The most important theme we are
focusing on is the trend toward restructuring and outsourcing. In France, for
instance, we have invested in Altran, a firm that hires out its 3,000-plus
highly trained engineers to companies that wish to accelerate their R&D without
incurring the significant expenses associated with permanent employees. We
believe that Altran is ideally positioned to benefit from the broader changes
taking place in Europe's labor market. In the U.K., we own shares of Pearson, a
diversified conglomerate that has been hurt in the past by poor management. Now,
a new management team has taken over and refocused the company by spinning off
nonproductive assets and instituting clear and measurable financial targets. We
feel that by selecting companies with positive growth catalysts such as these,
we are improving our chances of outperforming the benchmark over the long term.
Q: Are you finding that value is emerging in the developing countries?
A: Yes -- one upside to the crises in the emerging markets is that the strongest
companies have had the opportunity to strengthen their positions at the expense
of the marginal players. In spite of this fact, the violent market selloffs
have, in many cases, taken down the stock prices of the good companies as well
as the bad. In the telecommunications sector, for example, growth has remained
strong as the demand for voice and data traffic in the emerging markets has
exploded. When the stock prices of companies such as Telmex (of Mexico) and
Telefonica de Argentina came under pressure as a result of dips in the broader
Latin markets, we took advantage of the opportunity to purchase shares at
reasonable prices. Telmex has demonstrated impressive cash flows and financial
stability in an extremely difficult environment. Faced with 19% inflation, a
decline of the peso, and the competitive opening of Mexico's long distance
market, the company still managed to grow its dollar-denominated cash flow by
17% in 1998.
7 - Scudder International Growth Fund
<PAGE>
In Asia, we own shares of Indah Kiat and Asia Pulp and Paper (AP&P), two of the
lowest cost producers of paper products in the world. Cyclical stocks such as
these suffered during the crisis in the Pacific markets, but the drop
represented an opportunity for long-term investors to buy these companies at
very attractive valuations. We believe that the companies that have demonstrated
the ability to prosper in the bad times, such as Telmex and AP&P, will be
positioned for outperformance once the emerging market economies turn around.
Q: What is your outlook for the international markets?
A: We believe that low interest rates and the positive forces of change
unfolding in all parts of the world should continue to provide a positive
backdrop for stocks, even after their solid performance of the last six months.
Regardless of what is taking place in the markets, however, our focus is on
uncovering the best growth stocks available. Over the long term, we believe that
a strategy that seeks to find companies with strong earnings growth and positive
catalysts for change will be highly beneficial for investors.
8 - Scudder International Growth Fund
<PAGE>
Investment Portfolio as of February 28, 1999
<TABLE>
<CAPTION>
Principal Market
Amount ($) (c) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 7.6%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenerette, 4.75%, 2/26/1999, to be
repurchased at $338,134 on 3/1/1999, collatralized by a $336,000 U.S. Treasury Note, -----------
3.625%, 1/15/2008 (Cost $338,000) ..................................................... 338,000 338,000
-----------
Convertible Bonds 1.3%
- ------------------------------------------------------------------------------------------------------------------------------
Indonesia
-----------
APP Global Finance Ltd., 2%, 7/25/2000 (Producer of pulp and paper) (Cost $55,468) ...... 79,000 59,250
-----------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 91.1%
- ------------------------------------------------------------------------------------------------------------------------------
Argentina 1.7%
Telecom Argentina SA "B" (ADR) (Telecommunication services) ............................. 1,020 27,604
Telefonica de Argentina SA "B" (ADR) (Telecommunication services) ....................... 1,020 29,835
YPF SA "D" (ADR) (Petroleum company) .................................................... 600 17,400
-----------
74,839
Brazil 2.1%
Banco Itau S.A. (pfd.) (Bank) ........................................................... 40,000 13,783
Companhia Cervejaria Brahma (pfd.) (Leading beer producer and distributor) .............. 35,000 12,988
Companhia Energetica de Minas Gerais (pfd.) (Electric power utility) .................... 1,000,000 12,916
Embratel Participacoes S.A.(pfd.) (Telecommunications services)* ........................ 1,600,000 21,590
Petroleo Brasileiro S.A. (pfd.) (Petroleum company) ..................................... 250,000 19,411
Telecomunicacoes de Sao Paulo S.A. (pfd.) (Telecommunication services) .................. 140,000 12,824
-----------
93,512
-----------
China 1.9%
Beijing Datang Power Generation Co., Ltd. "H" (Owner and operator of coal-fired electric
power plants) ......................................................................... 100,000 21,943
Jiangsu Expressway Co., Ltd. "H" (Traffic management company) ........................... 88,000 18,174
Shenzhen Expressway Co. "H" (Highway developer) ......................................... 112,000 20,528
Zhejiang Expressway Co., Ltd. "H" (Road construction and management) .................... 142,000 23,094
-----------
83,739
-----------
Denmark 0.5%
Unidanmark A/S "A" (Registered) (Bank holding company) .................................. 300 21,367
-----------
Finland 5.4%
Fortum Corp. (Provider of a full range of energy related services)* ..................... 9,425 50,527
JOT Automation Group Oyj (Developer and manufacturer of high technology production
automation systems and equipment) ..................................................... 1,500 69,044
The accompanying notes are an integral part of the financial statements.
9 - Scudder International Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Nokia AB "A" (Manufacturer of telecommunication systems and equipment) .................. 416 56,942
Pohjola Insurance Co., Ltd. "B" (Insurance company) ..................................... 700 38,449
Tieto Corp. "B" (Manufacturer of computer software) ..................................... 600 24,058
-----------
239,020
-----------
France 14.7%
AXA SA (Insurance group providing insurance, finance and real estate services) .......... 241 31,452
Altran Technologies, SA (Engineering and consulting services) ........................... 95 26,143
Canal Plus (Leading pay television network) ............................................. 150 46,897
Cap Gemini Sogeti SA (Software consultants) ............................................. 252 43,601
Castorama-Dubois Investissements (Retailer specializing in home repair) ................. 167 35,224
Compagnie Financiere de Paribas (Financial services conglomerate) ....................... 52 4,484
Elf Aquitaine SA (Petroleum company) .................................................... 340 35,483
Etablissements Economiques du Casino Guichard-Perrachon SA (Operator of supermarkets and
convenience stores) ................................................................... 243 22,344
Galeries Lafayette (Group of department stores and supermarkets chains) ................. 24 24,889
L'Air Liquide (Leading producer of industrial gases) .................................... 192 28,643
Lagardere S.C.A. (Holding company with interests in publishing, defense, audiovisual production
and services, telecommunications and media) ........................................... 740 28,452
Publicis SA (International advertising company) ......................................... 194 32,607
Rexel SA (Distributor of electrical equipment) .......................................... 334 27,445
Rhone-Poulenc SA "A" (Medical, agricultural and consumer chemicals) ..................... 758 34,765
Sanofi SA (Researcher and manufacturer of health care products and beauty aids) ......... 80 14,088
Scor SA (Property, casualty and life reinsurance company) ............................... 642 33,042
Suez Lyonnaise des Eaux SA (Water utility) .............................................. 301 60,214
Synthelabo SA (Pharmaceutical and biomedical company) ................................... 178 41,259
Television Francaise SA (Television broadcasting) ....................................... 173 30,978
Vivendi SA (Water utility) .............................................................. 205 53,486
-----------
655,496
-----------
Germany 7.7%
Allianz AG (Multi-line insurance company) ............................................... 101 30,634
DaimlerChrysler AG (Worldwide designer, manufacturer and marketer of automobiles, trucks
and other vehicles) ................................................................... 290 27,127
Douglas Holding AG (Marketer of a broad range of high-end retail products) .............. 492 23,457
Mannesmann AG (Diversified construction and technology company) ......................... 424 56,966
Marschollek Lautenschlaeger und Partner AG (pfd.) (Leading independent life insurance
company) .............................................................................. 97 52,214
Metro AG (Operator of building, clothing and food stores and supermarkets) .............. 735 51,999
The accompanying notes are an integral part of the financial statements.
10 - Scudder International Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Schering AG (Pharmaceutical and chemical producer) ...................................... 294 37,820
Siemens AG (Leading electrical engineering and electronics company) ..................... 454 28,678
VEBA AG (Electric utility, distributor of oil and chemicals) ............................ 200 10,678
VIAG AG (Provider of electrical power and natural gas services, aluminum products, chemicals,
ceramics and glass) ................................................................... 45 24,040
-----------
343,613
-----------
Greece 3.3%
Alpha Credit Bank (Commercial bank) ..................................................... 300 34,473
National Bank of Greece S.A. (Full service bank) ........................................ 800 58,571
Panafon Hellenic Telecom SA (Provider of mobile telephone services) ..................... 1,760 56,195
-----------
149,239
-----------
Hong Kong 3.6%
Citic Pacific Ltd. (Diversified holding company) ........................................ 18,000 31,365
Esprit Holdings Ltd. (Designer and manufacturer of high quality fashion products) ....... 114,500 46,554
New World Development Co., Ltd. (Property investment and development, construction and
engineering, hotels and restaurants, telecommunications) .............................. 26,450 48,820
SmarTone Telecommunications Holdings Ltd. (Cellular communication services) ............. 13,000 35,153
-----------
161,892
-----------
India 1.0%
Aptech Ltd. (New shares) (Provider of professional education services) (b) .............. 2,300 43,112
-----------
Indonesia 1.7%
Indah Kiat Pulp & Paper (Foreign registered) (Producer of pulp and paper)* .............. 266,500 63,327
Indorama Synthetics (Foreign registered) (Producer of polyester yarn, fiber and fabric)* 124,500 13,736
-----------
77,063
-----------
Ireland 1.8%
ESAT Telecom Group PLC (ADR) (Provider of telecommunication services)* .................. 400 18,800
Elan Corp. PLC (ADR) (Research and development of drug delivery technology)* ............ 440 33,743
Irish Permanent PLC (Retail financial services group) ................................... 1,801 28,688
-----------
81,231
-----------
Italy 9.0%
Alleanza Assicurazioni SpA (Life insurance company) ..................................... 1,900 20,372
Assicurazioni Generali SpA (Life and property insurance company) ........................ 1,300 50,270
Banca Popolare di Brescia SpA (Cooperative bank) ........................................ 1,700 52,104
Banca di Roma SpA (Commercial and savings bank) ......................................... 16,300 23,636
Finmeccanica SpA (Designer and developer of commercial and military aircraft, space systems
and air defense systems)* ............................................................. 22,300 25,478
Gruppo Editoriale L'Espresso SpA (Publisher) ............................................ 3,900 46,914
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder International Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Istituto Bancario San Paolo di Torino SpA (Commercial bank) ............................. 1,900 33,187
La Rinascente SpA di Risparmio (Department store chain) ................................. 7,700 33,582
Mediaset SpA (Broadcasting and television networks) ..................................... 2,000 18,895
Seat Pagine Gialle SpA di Risparmio (Publisher of telecommunications directories and
provider of advertising services) ..................................................... 59,000 56,389
Telecom Italia SpA (Cellular telecommunications services) ............................... 5,700 38,510
Unione Immobiliare SpA (Owner of a portfolio of real estate) ............................ 7,900 4,383
-----------
403,720
-----------
Korea 0.8%
Korea Data System Co., Ltd. (Manufacturer and exporter of computer monitors)* ........... 300 3,727
Medison Co., Ltd. (Producer of medical equipment) ....................................... 3,500 32,897
-----------
36,624
-----------
Mexico 2.4%
CIFRA SA de CV "C" (Discount retailer) .................................................. 7,500 9,589
Fomento Economico Mexicano, SA de C.V. (ADR) (Producer of beer, soft drinks and
mineral water) ........................................................................ 1,000 26,313
Grupo Continental, SA (Producer and distributor of soft drinks, sugar, mineral water) ... 9,000 22,380
Grupo Modelo SA "C" (Leading brewery) ................................................... 10,000 22,249
Telefonos de Mexico SA de C.V. "L" (ADR) (Telecommunication services) ................... 500 28,594
-----------
109,125
-----------
Netherlands 4.7%
Akzo Nobel NV (Producer and marketer of healthcare products, coatings, chemicals and fibers) 750 28,466
Equant NV (Provider of international data network services)* ............................ 890 64,236
Getronics NV (Provider of computer installation and maintenance services) ............... 580 25,327
Laurus NV (International food retailer) ................................................. 970 27,705
United Pan-Europe Communications NV (Provider of television and telecommunication
services)* ............................................................................ 710 26,480
Vedior NV CVA (Temporary employment services) ........................................... 950 20,194
Vendex NV (Operator of department stores and specialty stores) .......................... 744 19,943
-----------
212,351
-----------
Portugal 1.1%
BPI - SGPS SA (Registered) (Bank) ....................................................... 950 32,999
Jeronimo Martins SA (Food producer and retailer) ........................................ 450 18,365
-----------
51,364
-----------
Singapore 2.4%
Natsteel Electronics Ltd. (Manufacturer of computer peripheral, telecommunication and
network products) ..................................................................... 34,000 94,735
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder International Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pacific Internet Ltd. (Provider of internet access services to Asia and
Pacific market)* ................................................................... 400 11,950
-----------
106,685
-----------
Spain 6.3%
Argentaria SA (Bank) .................................................................... 1,422 34,055
Autopistas del Mare Nostrum SA (Registered) (Builder and operator of toll motorways) .... 1,000 25,486
Cia Sevillana de Electricidad SA (Supplier of electrical power and services in
southern Spain) .................................................................... 1,000 14,171
Compania Telefonica Nacional de Espana SA (Telecommunication services) .................. 887 40,536
Cortefiel, SA (Owner and operator of various retail clothing stores) .................... 1,400 36,435
Dragados & Construcciones, SA (Construction company) .................................... 1,000 38,669
Fomento de Construcciones y Contratas SA (Infrastructure construction and
property development) ................................................................. 200 14,193
Gas Natural SDG, SA (Natural and manufactured gas distributor) .......................... 150 14,921
Tabacalera SA "A" (Manufacturer and distributor of tobacco products) .................... 1,720 38,622
TelePizza, SA (Operator of fast food restaurants)* ...................................... 3,250 26,599
-----------
283,687
-----------
Switzerland 1.9%
Novartis AG (Bearer) (Pharmaceutical company) ........................................... 12 21,028
Novartis AG (Registered) ................................................................ 14 24,552
Swisscom AG (Registered) (Operator of telecommunication networks and network application
services)* ............................................................................ 94 37,159
-----------
82,739
-----------
Taiwan 3.6%
ASE Test Ltd. (Testing services to semiconductor manufacturers)* ........................ 1,300 52,813
Delta Electronic Industrial Co. (Manufacturer of power supply equipment) ................ 11,000 26,602
Hon Hai Precision Industry Co., Ltd. (Manufacturer of electronic connectors, cable assemblies
and memory chips) ..................................................................... 6,000 29,021
Winbond Electronics Corp. (GDR) (Designer, manufacturer and retailer of integrated circuits
and related products)* ................................................................ 3,800 51,490
-----------
159,926
-----------
United Kingdom 13.5%
Aegis Group PLC (Leading independent media services group) .............................. 21,420 41,202
Avis Europe PLC (Car rental services) ................................................... 7,803 32,145
BOC Group PLC (Producer of industrial gases) ............................................ 2,570 34,810
Bank of Scotland PLC (Bank) ............................................................. 1,230 17,728
British Telecom PLC (Telecommunication services) ........................................ 3,300 57,156
Carlton Communications PLC (Television post production products and services) ........... 1,810 17,843
Compass Group PLC (International catering group) ........................................ 2,991 36,869
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder International Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Flextech PLC (Broadcaster of entertainment programs)* ................................... 3,200 39,958
Glaxo Wellcome PLC (Pharmaceutical company) ............................................. 1,157 36,944
Granada Group PLC (Television systems and broadcast, travel and leisure services) ....... 1,795 36,110
Marks & Spencer, PLC (Retailer of consumer goods and foods) ............................. 1,922 12,970
Orange PLC (Operator of digital mobile telephone network)* .............................. 2,505 36,259
Pearson PLC (Diversified media and entertainment holding company) ....................... 2,193 48,159
Reed International PLC (Publisher of scientific, professional and business to
business materials) ................................................................ 4,140 39,817
SmithKline Beecham PLC (Manufacturer of ethical drugs and healthcare products) .......... 2,635 37,275
Vodafone Group PLC (Provider of mobile telecommunication systems) ....................... 3,753 68,892
Zeneca Group PLC (Manufacturer of pharmaceutical and agrochemical products and
specialty chemicals) .................................................................. 246 10,245
----------
604,382
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $3,596,707) 4,074,726
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $3,990,175) (a) 4,471,976
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security
(a) The cost for federal income tax purposes was $3,990,175. At February 28,
1999, net unrealized appreciation for all securities based on tax cost was
$481,801 This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of
$640,764 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $158,963.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $43,112 (.97% of net assets). Their
values have been estimated by the Valuation Committee in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. The cost of these
securities at February 28, 1999 aggregated $29,128. These securities may
also have certain restrictions as to resale.
(c) Principal amount stated in U.S. dollars unless otherwise noted.
The accompanying notes are an integral part of the financial statements.
14 - Scudder International Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of February 28, 1998
<TABLE>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment securities, at market (identified cost $3,990,175) ......... $ 4,471,976
Foreign currency holdings, at market (identified cost $5,163) ......... 5,354
Receivable for investments sold ....................................... 33,175
Dividends and interest receivable ..................................... 7,246
Receivable for Fund shares sold ....................................... 4,547
Foreign taxes recoverable ............................................. 210
Due from Adviser ...................................................... 111,833
----------------
Total assets .......................................................... 4,634,341
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Due to custodian bank ................................................. 1,071
Payable for investments purchased ..................................... 20,356
Payable for Fund shares redeemed ...................................... 15,600
Other payables and accrued expenses ................................... 143,289
----------------
Total liabilities ..................................................... 180,316
-------------------------------------------------------------------------------------------
Net assets, at market value $ 4,454,025
-------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income
(6,962) Unrealized appreciation (depreciation) on:
Investments ........................................................ 481,801
Foreign currency related transactions .............................. (89)
Accumulated net realized gain (loss) .................................. (39,526)
Paid-in capital ....................................................... 4,018,801
-------------------------------------------------------------------------------------------
Net assets, at market value $ 4,454,025
-------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($4,454,025 / 333,271
shares of capital stock outstanding, $.01 par value, 100,000,000 -----------
shares authorized) ................................................. $13.36
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder International Growth Fund
<PAGE>
Statement of Operations
For the period September 1, 1998 (commencement
of operations) to February 28, 1999
<TABLE>
<CAPTION>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $1,555) ................... $ 14,187
Interest .............................................................. 35,145
----------------
49,332
----------------
Expenses:
Management fee ........................................................ 19,732
Services to shareholders .............................................. 18,048
Custodian and accounting fees ......................................... 78,172
Directors' fees and expenses .......................................... 23,555
Registration fees ..................................................... 7,669
Auditing .............................................................. 24,000
Reports to shareholders ............................................... 6,318
Organization fees ..................................................... 12,500
Legal ................................................................. 7,438
Other ................................................................. 2,020
----------------
Total expenses before reductions ...................................... 199,452
Expense reductions .................................................... (164,916)
----------------
Expenses, net ......................................................... 34,536
-------------------------------------------------------------------------------------------
Net investment income 14,796
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investment securities ................................................. (34,583)
Foreign currency related transactions (net of CPMF tax $241) .......... (4,943)
----------------
(39,526)
----------------
Net unrealized appreciation (depreciation) during the period on:
Investment securities (net of deferred India tax $4,224) .............. 481,801
Foreign currency related transactions ................................. (89)
----------------
481,712
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 442,186
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 456,982
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder International Growth Fund
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
September 1, 1998
(commencement of
operations) to
Increase (Decrease) in Net Assets February 28, 1999
- -----------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C>
Net investment income ................................................. $ 14,796
Net realized gain (loss) from investment transactions ................. (39,526)
Net unrealized appreciation (depreciation) on investment
transactions during the period ..................................... 481,712
----------------
Net increase (decrease) in net assets resulting from operations ....... 456,982
----------------
Distributions to shareholders from net investment income .............. (21,758)
----------------
Fund share transactions:
Proceeds from shares sold ............................................. 7,479,291
Net asset value of shares issued to shareholders in reinvestment of
distributions ...................................................... 21,084
Cost of shares redeemed ............................................... (3,482,774)
----------------
Net increase (decrease) in net assets from Fund share transactions .... 4,017,601
----------------
Increase (decrease) in net assets ..................................... 4,452,825
Net assets at beginning of period ..................................... 1,200
Net assets at end of period (including accumulated distributions ----------------
in excess of net investment income of $6,962) ...................... $ 4,454,025
----------------
Other Information
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ............................. 100
----------------
Shares sold ........................................................... 607,134
Shares issued to shareholders in reinvestment of distributions ........ 1,563
Shares redeemed ....................................................... (275,526)
----------------
Net increase (decrease) in Fund shares ................................ 333,171
----------------
Shares outstanding at end of period ................................... 333,271
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder International Growth Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
September 1,
1998
(commencement of
operations) to
February 28, 1999
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
-----------
Net asset value, beginning of period ................................................................... $12.00
-----------
Income from investment operations:
Net investment income .................................................................................. .05
Net realized and unrealized gain (loss) on investment transactions ..................................... 1.38
-----------
Total from investment operations ....................................................................... 1.43
-----------
Less distributions from:
Net investment income .................................................................................. (.07)
-----------
Total distributions .................................................................................... (.07)
-----------
-----------
Net asset value, end of period ......................................................................... $13.36
-----------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ................................................................................... 11.91**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................................................................. 4
Ratio of operating expenses, net to average daily net assets (%) ....................................... 1.75*
Ratio of operating expenses before expense reductions, to average daily net assets (%) ................. 10.11*
Ratio of net investment income to average daily net assets (%) ......................................... .75*
Portfolio turnover rate (%) ............................................................................ 37*
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
18 - Scudder International Growth Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder International Growth Fund ("the Fund") is a diversified series of
Scudder International Fund, Inc. (the "Corporation"). The corporation is
organized as a Maryland corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed by the Fund in the preparation of its
financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on such system. If there are no such sales, the value is the most
recent bid quotation. Securities which are not quoted on Nasdaq but are traded
in another over-the-counter market are valued at the most recent sale price on
such market. If no sale occurred, the security is then valued at the calculated
mean between the most recent bid and asked quotations. If there are no such bid
and asked quotations, the most recent bid quotation shall be used.
Portfolio debt securities other than money market securities with an original
maturity over 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. All other securities are valued at their fair value
as determined in good faith by the Valuation Committee of the Board of
Directors.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value 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 other liabilities
at the daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest income
and certain expenses at the rates of exchange prevailing on the respective
dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
19 - Scudder International Growth Fund
<PAGE>
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.
Taxes. The Fund's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. The Fund paid
no federal income taxes and no federal income tax provision was required.
Net realized and unrealized gains of the Fund derived in India are subject to
certain non-U.S. taxes.
The Fund is subject to a .20% Contribuicao Provisoria sobre Movimentacoes
Financieras (CPMF) tax which is applied to foreign exchange transactions
representing capital inflows or outflows to the Brazilian market.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders. An additional distribution may be made to the extent necessary to
avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. The differences
primarily relate to investments in forward contracts, passive foreign investment
companies, foreign denominated investments, and certain securities sold at a
loss. As a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
B. Purchases and Sales of Securities
For the period September 1, 1998 (commencement of operations) to February 28,
1999, purchases and sales of investment securities (excluding short-term
investments) aggregated $4,249,286 and $573,357, respectively.
20 - Scudder International Growth Fund
<PAGE>
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 Fund's
average daily net assets computed and accrued daily and payable monthly. The
Adviser and certain of its subsidiaries agreed to reimburse or not impose,
respectively, all or a portion of their fees payable by the Fund until December
31, 1999 in order to maintain the annualized expenses of the Fund at not more
than 1.75% of average daily net assets. For the period ended February 28, 1999,
the Adviser did not impose any of its management fee amounting to $19,732.
Further, the Fund's reimbursement due from the Adviser at February 28, 1999
amounted to $111,833.
Effective September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner
of the Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998, the Board of
Directors and the shareholders of the Fund approved a new investment management
agreement with Scudder Kemper, which is substantially identical to the former
Agreement, except for the dates of execution and termination.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
period ended February 28, 1999, SSC did not impose any of its fee amounting to
$8,349.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the period ended
February 28, 1999, SFAC did not impose any of its fee amounting to $25,002.
The Corporation pays each Director not affiliated with the Adviser an annual
retainer plus specified amounts for attended board and committee meetings. For
the period ended February 28, 1999, Directors' fees and expenses aggregated
$23,555.
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 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 International Growth Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder International Fund, Inc. and the
Shareholders of Scudder International 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 International Growth Fund
(the "Fund") at February 28, 1999, the results of its operations, the changes in
its net assets and the financial highlights for the period September 1, 1998
(commencement of operations) to February 28, 1999, 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 audit. We conducted our audit
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
audit, which included confirmation of securities at February 28, 1999 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
April 9, 1999
22 - Scudder International Growth Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder International
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 shareholders (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*
--- ------- ------- -----------------
169,261 2,076 4,095 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
150,297 6,436 5,303 13,396
- --------------------------------------------------------------------------------
* 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 International 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 Spero
Director; President, Doris Duke
Charitable Foundation
Thomas J. Devine
Honorary Director; Consultant
William H. Gleysteen, Jr.
Honorary Director; Managing
Director
Wilson Nolen
Honorary Director; Consultant
Robert G. Stone, Jr.
Honorary Director; Chairman E
meritus of the Board and
Director, Kirby Corporation
Elizabeth J. Allan*
Vice President
Irene T. Cheng*
Vice President
Joyce E. Cornell*
Vice President
Susan E. Dahl*
Vice President
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 Reilly*
Vice President
Shahram Tajbakhsh*
Vice President
Thomas F. McDonough*
Vice President, Secretary and Treasurer
Richard W. Desmond*
Assistant Secretary
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - Scudder International Growth 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 Zero Coupon 2000 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 S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
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 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 International Growth Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- 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:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
26 - Scudder International Growth Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
800 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
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Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
27 - Scudder International Growth Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $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 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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