Scudder
International
Value Fund
Semiannual Report
February 28, 1999
No-Load Funds
A fund seeking long-term capital appreciation through investment primarily in
under-valued foreign equity securities.
A no-load fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder International Value Fund
- --------------------------------------------------------------------------------
Date of Inception: 9/1/98 Total Net Assets as of 2/28/99: $2.53 million
- --------------------------------------------------------------------------------
o For the semiannual period beginning with the Fund's inception on September 1,
1998, and ended February 28, 1999, Scudder International Value Fund posted a
5.55% total return. Over the same period, the Morgan Stanley Capital
International (MSCI) EAFE Value Index returned 12.21%.
o Scudder International Value Fund seeks long-term capital appreciation
investing primarily in undervalued foreign equity securities. The Fund's
investments focus on securities of mid- and large-cap companies, based outside
the U.S., that are either included in, or have similar characteristics to, those
in the MSCI EAFE Value Index.
Table of Contents
3 Letter from the Fund's Chairman 18 Financial Highlights
4 Performance Update 19 Notes to Financial Statements
5 Portfolio Summary 22 Report of Independent Accountants
6 Portfolio Management Discussion 23 Shareholder Meeting Results
8 Glossary of Investment Terms 24 Officers and Directors
9 Investment Portfolio 25 Investment Products and Services
15 Financial Statements 26 Scudder Solutions
2 - Scudder International Value Fund
<PAGE>
Letter from the Fund's Chairman
Dear Shareholders,
We are pleased to present the first semiannual report for Scudder
International Value Fund. The Fund seeks long-term capital appreciation by
investing in undervalued foreign equity securities. The Fund will focus its
investments on securities of mid- and large-cap companies that are either
included in, or have similar characteristics to, those in the MSCI EAFE Value
Index -- a benchmark of foreign security performance based on price-to-book
value ratios.
In a period where value suffered and large-cap growth stocks predominated,
the Fund managed to post a 5.55% return over the six months ended February 28,
1999, compared with the 12.21% return of the MSCI EAFE Value Index over the same
period. For more information on the Fund's performance, investment environment,
and investment process, please see the portfolio management discussion that
begins 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.
If you have any questions regarding Scudder International Value Fund or any
other Scudder fund, please call Investor Relations at 1-800-225-2470. Or visit
Scudder's Web site at www.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
Chairman,
Scudder International Value Fund
3 - Scudder International Value Fund
<PAGE>
Performance Update as of February 28, 1999
Fund Index Comparison
========================================
Total Return
-------------------------------------
Period Ended Growth of Cumulative
2/28/99 $10,000
-------------------------------------
Scudder International Value Fund
-------------------------------------
Life of $ 10,555 5.55%
Fund*
-------------------------------------
MSCI EAFE Value Index
-------------------------------------
Life of $ 11,221 12.21%
Fund*
-------------------------------------
* The Fund commenced operations on September 1, 1998.
Growth of a $10,000 Investment
========================================
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
ILLUSTRATING THE FOLLOWING DATA:
Scudder International MSCI EAFE
Value Fund Value Index
- ---------------------- ---------------
9/1/98* 10000 10000
9/98 9425 9668
10/98 10325 10704
11/98 10633 11283
12/98 11025 11521
1/99 10874 11388
2/99 10555 11221
The Morgan Stanley Capital International (MSCI) Europe, Australia and the Far
East (EAFE) Value Index is an unmanaged capitalization-weighted measure of stock
markets in Europe, Australia and the Far East. The index consists of the lowest
price to book value stocks that add up to 50% of the Market Cap on a country to
country basis. Index returns assume dividends reinvested net of withholding tax
and, unlike Fund returns, do not reflect any fees or expenses.
Returns and Per Share Information
========================================
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
Yearly Periods Ended February 28
1999
- ----------------------------------------------------------------
Net Asset Value $ 12.59
- ----------------------------------------------------------------
Income Dividends $ .08
- ----------------------------------------------------------------
Capital Gains Distributions $ --
- ----------------------------------------------------------------
Fund Total Return (%) 5.55
- ----------------------------------------------------------------
Index Total Return (%) 12.21
- ----------------------------------------------------------------
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 Value Fund
<PAGE>
Portfolio Summary as of February 28, 1999
Geographical
========================================
THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE
ILLUSTRATING THE FOLLOWING DATA:
Europe 68%
Pacific Basin 14%
Japan 9%
Canada 4%
Africa 3%
Other 2%
--------------------------------------
100%
======================================
Over the period, we used the Fund's 14 single country and regional
quantitative models to select investments in 28 countries.
Sectors
========================================
THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE
ILLUSTRATING THE FOLLOWING DATA:
Financial 43%
Manufacturing 17%
Durables 8%
Utilities 7%
Metals & Minerals 5%
Communications 4%
Service Industries 3%
Construction 3%
Consumer Staples 3%
Other 7%
--------------------------------------
100%
======================================
Scudder International Value Fund's portfolio is constructed to provide
investors with broad diversification, with the goal of producing the lowest
risk and the highest return possible.
Ten Largest Equity Holdings
(24% of Portfolio)
========================================
1. AXA SA
Insurance group providing
insurance, finance and real
estate services
2. Istituto Nazionale delle
Assicurazione
Insurance Company
3. Royal Bank of Scotland PLC
Bank
4. DaimlerChrysler AG
Worldwide designer, manufacturer
and marketer of automobiles,
trucks and other vehicles
5. General Electric Co., PLC
Manufacturer of power,
communications and defense
equipment
6. BASF AG
Leading international chemical
producer
7. ING Groep NV
Insurance and financial services
8. FPB Holding AG
Manufacturer and marketer of
paper and paper products
9. UPM-Kymene OYJ
Manufacturer of paper and paper
products
10. Suez Lyonnaise des Eaux SA
Water utility
The Fund focuses its investments on securities of mid- and large-cap
companies, based outside the U.S., that are either included in, or have
similar characteristics to those in the Morgan Stanley Capital International
(MSCI) Value Index.
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 Value Fund
<PAGE>
Portfolio Management Discussion
In the following interview, portfolio managers Shahram Tajbakhsh, Josephine Chu,
and Philip Fortuna discuss the Fund's market environment and strategy for the
six-month period ended February 28, 1999.
Q: How has Scudder International Value Fund performed over this introductory
period?
A: The Fund's total return was 5.55% over the six-month period since its
inception on September 1, 1998. Over the same period, the Fund's benchmark, the
MSCI EAFE Value Index, returned 12.21%.
Q: Please comment on the Fund's performance so far.
A: During the last six months value under-performed. Historically, we don't
believe you can find many periods such as we've just experienced. If you divide
the equity universe into value and growth, value performed significantly worse
than growth. If you divide the value universe into "high value" and "low value,"
high value did even worse than low value. Historically, it's been the opposite
case. High value over the years has done much better than low value. And value
has outperformed growth. Still, the Fund managed to post fairly good
performance. The Fund underperformed its comparative index because the Fund
represents "higher value." When the cycle shifts and value starts outperforming
we believe the Fund should also perform extremely well.
Q: Why has growth outperformed value over the most recent period?
A: Global market volatility has greatly increased over the last seven months.
That volatility has created a flight to so-called quality stocks, and
momentum-driven Internet stocks. These are primarily brand-name, larger cap,
high P/E growth stocks. Technology stocks have made huge gains, even in down
markets, and despite extremely large price-to-earnings ratios. We assume that
the markets will remain cyclical in nature, and that at some point, growth
stocks will weaken and value will again outperform.
Q: For investors who are new to the Fund, could you explain how the Fund selects
investments?
A: We use a highly systematic process that begins with collecting extensive
financial information on individual companies. Using proprietary quantitative
models, we analyze this data in a consistent, objective way across a large
universe of companies. As new information streams in, such as recent earnings
reports, it is incorporated into the evaluation so that we can instantly see how
the fresh data affects the relative attractiveness of each stock and the
expected performance of the Fund. Careful consideration is simultaneously given
to the risk characteristics of these stocks within the context of a diversified
portfolio.
At the portfolio level, we use a program called a portfolio optimizer to manage
risk. The optimizer takes into consideration the correlation between various
securities, and how they interact with each other, and allows us to monitor and
manage the overall risk profile of the portfolio.
Q: Can you elaborate on the use of quantitative models?
A: We use two types of models. One is a country model that selects stocks within
each country; the second is a global model that selects relative weightings for
6 - Scudder International Value Fund
<PAGE>
each country. With respect to individual stock selection, we run about 14
regional and single country models. Each employs a "bottom up" approach. These
give us company rankings within each region or country. The country models are
for bigger countries, like Germany and the U.K., making up about 80% of the
market's capitalization. The regional models select stocks within smaller
countries in Europe, Latin America, and Asia.
Q: How do the models work?
A: Each model picks stocks that display value characteristics, and a certain
amount of positive price momentum. Each country model is different,
incorporating 5 to 8 unique factors. We then rank stocks in 5 different
quintiles. The best buys are "1" and immediate sells are "5." The portfolio is
constructed to provide investors with the best diversification possible, the
lowest risk and the highest return.
Q: What are some of the specific evaluation criteria?
A: The criteria we use include book-to-price, dividend-to-price, and
earnings-to-price ratios. Additional fundamental ratios are used as well,
depending on what country we're talking about.
Q: How do you determine which criteria are used for which country?
A: We "back test" to see how well various evaluation criteria helped predict
performance in various countries over certain historical periods. From that, we
know which factors worked best for that country for a specified sample period.
We also look to see which factors work well together to help determine stock
price performance. Then we combine those factors and test them together during
another period. If the model works, then we know it's appropriate for a specific
country.
Q: What is your outlook for the international value sector?
A: The Fund has performed well to date, but we expect it will perform even
better in the future. We are readying ourselves for what we believe will be a
significant shift into value stocks by investors. Our strategy, even in tough
months, is to be 1.5 to 2 times more value-oriented than our comparative index.
Over the long term, we're optimistic about the outlook for the international
value sector, and we believe the Fund is an appropriate vehicle for investors
who are seeking to diversify their international holdings.
7 - Scudder International Value Fund
<PAGE>
Glossary of Investment Terms
FUNDAMENTAL RESEARCH Analysis of companies based on the projected
impact of management, products, sales, and earnings
on balance sheets and income statements. Distinct
from technical analysis, which evaluates the
attractiveness of a stock based on historical price
and trading volume movements, rather than the
financial results of the underlying company.
GROWTH STOCK Stock of a company that has displayed
above-average earnings growth and is expected to
continue to increase profits rapidly going forward.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into cash
within a reasonably short period of time.
MARKET CAPITALIZATION The value of a company's outstanding shares of
common stock, determined by multiplying the
number of shares outstanding by the share price
(shares x price = market capitalization). The
universe of publicly-traded companies is frequently
divided into large-, mid-, and small-capitalizations.
OVER/UNDER WEIGHTING Refers to the allocation of assets -- usually by
sector, industry, or country -- within a
portfolio relative to a benchmark index, (e.g. the
Russell 2000 Value Index) or an investment universe.
PRICE/EARNINGS RATIO A widely used gauge of a stock's valuation that
(P/E) (also "earnings indicates what investors are paying for a company's
multiple") earnings on a per share basis. A higher "earnings
multiple" indicates a higher expected growth rate and
the potential for greater price fluctuations.
STANDARD DEVIATION A statistical measure of the degree to
which an investment's return tends to vary from the
mean return. Frequently used in portfolio management
to measure the variability of past returns and to
gauge the likely range of possible future returns.
VALUE STOCK A company whose stock price does not fully reflect
its intrinsic value, as indicated by price-earnings
ratio, price-book value ratio, dividend yield, or
some other valuation measure, relative to its
industry or the market overall. Value stocks tend to
display less price volatility and may carry higher
dividend yields.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of
Finance and Investment Terms)
8 - Scudder International Value Fund
<PAGE>
Investment Portfolio as of February 28, 1999
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Australia 4.0%
Australia & New Zealand Banking Group Ltd. (General trading and savings bank) ........... 2,680 17,309
Commonwealth Bank of Australia (Provider of banking, insurance and related
services) ............................................................................. 1,270 19,086
National Australia Bank Ltd. (Commercial bank) .......................................... 2,600 43,352
Pioneer International Ltd. (Producer of concretes, asphalt and other building
materials) ............................................................................ 4,000 8,061
Qantas Airways Ltd. (International airline company) ..................................... 5,000 13,196
-----------
101,004
-----------
Austria 1.4%
Bank Austria AG (Provider of commercial and corporate banking services) ................. 325 17,494
Voest-Alpine Stahl AG (Processor and distributor of steel products) ..................... 605 18,649
-----------
36,143
-----------
Belgium 3.3%
Arbed SA (Manufacturer of steel and related products) ................................... 100 7,327
Cockerill Sambre SA (Producer and seller of steel and steel products) ................... 1,000 4,493
Gevaert NV (Investor in banks, insurance companies and chemical manufacturers)* ......... 50 3,735
Groupe Bruxelles Lambert SA (Investor in utilities, media, finance, and real
estate) ............................................................................... 100 18,675
Solvay SA (Chemical producer) ........................................................... 700 48,138
-----------
82,368
-----------
Brazil 0.3%
Banco Bradesco SA (pfd.) (Commercial bank) .............................................. 500,000 1,971
Banco do Brasil SA (pfd.) (Government controlled Brazilian bank) ........................ 1,400,000 5,715
-----------
7,686
-----------
Canada 4.4%
BCE, Inc. (Telecommunication services) .................................................. 750 30,382
Bank of Montreal (Bank) ................................................................. 410 16,921
Bank of Nova Scotia (Bank) .............................................................. 1,200 24,783
Barrick Gold Corp. (Gold exploration and production in North and South America) ......... 1,000 17,669
Dofasco Inc. (Producer of flat rolled and tubular steel) ................................ 640 8,062
Fletcher Challenge Canada Ltd. "A" (Producer and supplier of printing paper) ............ 970 9,004
Noranda, Inc. (Operator in mining and metals) ........................................... 500 5,387
-----------
112,208
-----------
Denmark 0.9%
Codan Forsikring (Insurance company) .................................................... 70 7,447
Kapital Holding (Provider of banking services) .......................................... 105 5,159
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder International Value Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Unidanmark A/S "A" (Registered) (Bank holding company) .................................. 150 10,683
-----------
23,289
-----------
Finland 2.6%
Stora Enso OYJ-- R Shares (Manufacturer of paper and paper products) .................... 1,475 13,044
UPM-Kymmene OYJ (Manufacturer of paper and paper products) .............................. 2,000 51,961
-----------
65,005
-----------
France 14.2%
AXA SA (Insurance group providing insurance, finance and real estate services) .......... 545 71,127
Assurances Generales de France (Health, life and liability insurance) ................... 300 16,973
Banque Nationale de Paris SA (Bank) ..................................................... 600 47,919
Bouygues SA (Conglomerate: public works, real estate and industrial development,
engineering services, television and motion pictures) ................................. 45 11,197
Cap Gemini Sogeti SA (Software consultants) ............................................. 130 22,493
Dassault Aviation SA (Manufacturer of aircraft) ......................................... 50 8,915
Dexia France (Municipal and local development financing) ................................ 100 13,457
Etablissements Economiques du Casino Guichard-Perrachon SA (Operator of
supermarkets and convenience stores) .................................................. 110 10,114
Finaxa (Insurance holding company) ...................................................... 200 21,070
Lafarge SA (Leading producer of cement, concrete and aggregates) ........................ 200 19,005
Lagardere S.C.A. (Holding company with interests in publishing, defense,
audiovisual production and services, telecommunications and media) .................... 500 19,225
Renault SA (Manufacturer of automobiles, buses, industrial and agricultural
vehicles) ............................................................................. 600 28,013
SEITA (Producer of cigarettes and pipe tobacco) ......................................... 200 11,864
Scor SA (Property, casualty and life reinsurance company) ............................... 140 7,205
Suez Lyonnaise des Eaux SA (Water utility) .............................................. 255 51,012
-----------
359,589
-----------
Germany 11.1%
Alcatel SEL AG (Manufacturer and marketer of telecommunication equipment) ............... 55 9,546
BASF AG (Leading international chemical producer) ....................................... 1,700 58,921
Bayer AG (Leading chemical producer) .................................................... 405 14,348
Bayerische Motoren Werke AG (Manufacturer of luxury cars and motorcycles) ............... 25 18,071
Commerzbank AG (Worldwide multi-service bank) ........................................... 420 11,812
DaimlerChrysler AG (Worldwide designer, manufacturer and marketer of
automobiles, trucks and other vehicles) ............................................... 650 60,802
Deutsche Telekom AG (Telecommunication services) ........................................ 440 20,205
Dresdner Bank AG (Universal bank) ....................................................... 270 9,402
FPB Holding AG (Manufacturer and marketer of paper and paper products) .................. 280 52,291
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder International Value Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rheinische Hypothekenbank AG (Provider of long-term financing for commercial
real estate) .......................................................................... 30 17,632
SAP AG (pfd.) (Computer software manufacturer) .......................................... 25 9,448
-----------
282,478
-----------
Hong Kong 5.5%
Amoy Properties Ltd. (Property management company) ...................................... 45,000 32,527
CLP Holdings Ltd. (Electric power holding company) ...................................... 4,000 18,845
Dah Sing Financial Group (General banking and property investment holding
company) .............................................................................. 10,000 19,426
Hang Seng Bank Ltd. (Commercial banking and related financial services) ................. 2,000 16,263
Hong Kong Telecommunications, Ltd. (Provider of telecommunication services) ............. 8,000 13,372
Hongkong Land Holdings, Ltd. (Investor in commercial property) .......................... 15,000 15,750
Kerry Properties, Ltd. (Real estate company) ............................................ 5,000 3,049
Wing Hang Bank Ltd. (Corporate and retail banking, foreign exchange) .................... 8,000 17,657
Wing Lung Bank (Provider of banking and related financial services) ..................... 1,000 2,943
-----------
139,832
-----------
India 0.9%
ICICI Ltd. (Financial institution) (b) .................................................. 3,000 2,843
Reliance Industries Ltd. (Manufacturer of synthetic fibers, fiber intermediates,
petrochemicals and textiles) (b) ...................................................... 3,000 9,799
State Bank of India (Bank) (b) .......................................................... 2,700 9,312
-----------
21,954
-----------
Indonesia 0.6%
Indah Kiat Pulp & Paper (Foreign registered) (Producer of pulp and paper) ............... 60,000 14,257
-----------
Ireland 0.9%
Irish Permanent PLC (Retail financial services group) ................................... 1,473 23,463
-----------
Italy 4.6%
Ente Nazionale Idrocarburi SpA (Exploration and production of oil, natural gas
and chemicals) ........................................................................ 4,620 26,645
Fiat SpA (Manufacturer of automobiles, commercial vehicles, farm and
construction equipment) ............................................................... 6,710 20,197
Istituto Nazionale delle Assicurazione (Insurance company) .............................. 29,000 70,406
-----------
117,248
-----------
Japan 9.5%
ACOM Co., Ltd. (Provider of financial services) ......................................... 100 5,909
Chugoku Electric Power Co., Inc. (Distributor of electricity) ........................... 900 14,188
Daiichi Pharmaceutical Co., Ltd. (Leading producer of ethical drugs) .................... 1,000 15,224
Fuji Bank, Ltd. (Provider of commercial and institutional banking services) ............. 6,000 23,621
Honda Motor Co., Ltd. (Leading automobile and motorcycle manufacturer) .................. 600 23,115
Japan Energy Corp. (Importer of crude oil) .............................................. 4,000 3,574
Kyushu Electric Power Co. (Provider of electricity) ..................................... 800 12,746
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder International Value Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lion Corp. (Manufacturer of household products such as toothpaste and detergent) ........ 3,000 11,785
Ono Pharmaceutical Co., Ltd. (Producer of medicines for human and veterinary
uses) ................................................................................. 1,000 36,670
Sakura Bank Ltd. (Full service bank) .................................................... 8,000 17,399
Shikoku Electric Power Co., Inc. (Distributor of electricity) ........................... 800 12,611
The Daiwa Bank, Ltd. (Bank) ............................................................. 3,000 4,628
The Mitsui Trust & Banking Co., Ltd. (Provider of trust and commercial banking
services) ............................................................................. 16,000 15,781
Tokyo Electric Power Co. (Electric utility) ............................................. 1,600 32,303
Toyota Tsusho Corp. (Exporter of cars) .................................................. 4,000 10,082
-----------
239,636
-----------
Korea 0.8%
Kookmin Bank (Major commercial bank) .................................................... 3,000 20,351
-----------
Netherlands 6.5%
ABN AMRO Holding NV (Bank) .............................................................. 2,000 40,756
DSM NV (Plastics producer) .............................................................. 30 2,604
ING Groep NV (Insurance and financial services) ......................................... 950 53,225
KLM Royal Dutch Air Lines NV (World-wide full service airline) .......................... 50 1,395
Koninklijke KPN NV (Provider of telecommunications services) ............................ 500 26,255
Philips Electronics NV (Leading manufacturer of electrical equipment) ................... 500 34,879
Rodamco NV (Investor in commercial property) ............................................ 200 4,735
-----------
163,849
-----------
Norway 0.6%
Christiania Bank og Kreditkasse (Commercial bank) ....................................... 4,170 14,965
-----------
Philippines 0.5%
Philippine Commercial International Bank (Commercial bank) .............................. 3,000 13,710
-----------
Poland 0.2%
Bank Slaski SA (Bank) ................................................................... 100 4,398
-----------
South Africa 2.6%
Anglo American Corp. of South Africa Ltd. (Mining finance house in gold and
diamonds) ............................................................................. 1,060 33,070
AngloGold Ltd. (Holding company for group of companies which mine gold) ................. 520 18,977
Rembrandt Group Ltd. (Investment holding company) ....................................... 2,000 13,112
-----------
65,159
-----------
Spain 1.6%
Compania Espanola de Petroleos, SA (Exploration, refining and manufacture of
energy products, lubricants, asphalts and petrochemicals) ............................. 800 29,705
Corporacion Mapfre, SA (Provider of life, health, real estate, business and
credit card insurance services) ....................................................... 500 10,931
-----------
40,636
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder International Value Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sweden 3.1%
CIE Financiere Michelin (Manufacturer of tires) ......................................... 5 2,139
LM Ericsson Telephone Co. "B" (Leading manufacturer of wired and mobile
telecommunications equipment) ......................................................... 700 18,551
Skandinaviska Enskilda Banken "A" (Commercial bank) ..................................... 2,920 32,630
Svenska Handelsbanken "A" (Commercial bank) ............................................. 700 24,792
-----------
78,112
-----------
Switzerland 1.8%
Holderbank Financiere Glaris AG (Bearer) (Cement producer) .............................. 30 31,211
Julius Baer Holding AG (Holding company for international bank) ......................... 5 15,181
-----------
46,392
-----------
Taiwan 1.5%
China Steel Corp. (Manufacturer and marketer of steel products) ......................... 30,000 16,687
Teco Electric & Machinery Co., (Manufacturer of household appliances and
industrial motors) .................................................................... 13,000 9,825
Want Want Holdings Ltd. (Manufacturer and trader of rice crackers, snack foods
and non-alcoholic beverages) .......................................................... 11,000 12,210
-----------
38,722
-----------
Thailand 0.5%
Krung Thai Bank Public Co., Ltd. (Foreign registered) (Bank) (b)* ....................... 30,000 12,657
-----------
Turkey 0.6%
Turkiye IS Bankasi AS-"C" (Bank) ........................................................ 400,000 14,955
-----------
United Kingdom 15.5%
Arjo Wiggins Appleton PLC (Manufacturer and distributor of carbonless, thermal,
fine, coated, premium and specialty papers) ........................................... 4,510 8,766
Arriva PLC (Vehicle finance and distribution) ........................................... 1,850 10,928
Bass PLC (Producer and distributor of beer and soft drinks) ............................. 1,800 25,001
Britax International PLC (Manufacturer and distributor of automotive components) ........ 5,000 9,297
General Electric Co., PLC (Manufacturer of power, communications and defense
equipment) ............................................................................ 7,400 59,013
Hyder PLC (Provider of infrastructure services) ......................................... 650 8,288
Imperial Tobacco Group PLC (Manufacturer of tobacco products) ........................... 1,320 15,753
Man (ED&F) Group PLC (Commodities trading company) ...................................... 30 147
National Westminster Bank PLC (Bank) .................................................... 1,800 37,307
Peninsular and Oriental Steam Navigation Co. PLC (Performer of container and
bulk shipping, property investment, and transport services) ........................... 1,000 11,726
Rank Group PLC (Diversified leisure services: hotels, amusement machines,
restaurants, film and television) ..................................................... 2,280 8,698
Rolls-Royce PLC (Manufacturer of aero, marine, and industrial gas turbines) ............. 6,600 28,855
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder International Value Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Royal Bank of Scotland PLC (Bank) ....................................................... 3,530 68,750
Scottish Power PLC (Electric utility) ................................................... 2,910 26,845
Severn Trent PLC (Supplier of water and offers other related services)* ................. 1,130 16,184
Tarmac PLC (Manufacturer and supplier of raw materials for the heavy building
and construction industries) .......................................................... 7,844 13,517
Thames Water PLC (Water holding company)* ............................................... 600 9,897
United Assurance Group PLC (Holding company for insurance businesses and
financial service providers) .......................................................... 1,190 10,110
United Utilities PLC (Multi-utility business) ........................................... 1,750 22,203
W.H. Smith Group PLC (Book, newspaper, music and hardware retailer) ..................... 300 2,621
-----------
393,906
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $2,452,289) 2,533,972
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $2,452,289) (a) 2,533,972
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security
(a) The cost for federal income tax purposes was $2,452,289. At February 28,
1999, net unrealized appreciation for all securities based on tax cost was
$81,683. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of
$206,823 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $125,140.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $34,611 (1.37% 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 $38,911. These securities
may also have certain restrictions as to resale.
The accompanying notes are an integral part of the financial statements.
14 - Scudder International Value Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of February 28, 1999
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $2,452,289) ................... $ 2,533,972
Foreign currency holdings, at market (identified cost $15,953) ........ 16,422
Receivable for investments sold ....................................... 64,093
Dividends and interest receivable ..................................... 7,142
Foreign taxes recoverable ............................................. 237
Due from Adviser ...................................................... 140,329
----------------
Total assets .......................................................... 2,762,195
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Due to custodian bank ................................................. 21,653
Payable for investments purchased ..................................... 53,826
Other payables and accrued expenses ................................... 158,149
----------------
Total liabilities ..................................................... 233,628
-------------------------------------------------------------------------------------------
Net assets, at market value $ 2,528,567
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income .......... (11,952)
Unrealized appreciation (depreciation) on:
Investment securities .............................................. 81,683
Foreign currency related transactions .............................. 117
Accumulated net realized gain (loss) .................................. 58,387
Paid-in capital ....................................................... 2,400,332
-------------------------------------------------------------------------------------------
Net assets, at market value $ 2,528,567
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($2,528,567 / 200,898 shares of capital stock outstanding, ----------------
$.01 par value, 100,000,000 shares authorized) ...................... $12.59
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder International Value Fund
<PAGE>
Statement of Operations
For the period September 1, 1998 (commencement
of operations) to February 28, 1999
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $1,481) .................. $ 20,801
Interest ............................................................. 4,353
----------------
25,154
----------------
Expenses:
Management fee ....................................................... 12,059
Services to shareholders ............................................. 14,250
Custodian and accounting fees ........................................ 86,531
Directors' fees and expenses ......................................... 22,555
Registration fees .................................................... 6,881
Auditing ............................................................. 24,000
Reports to shareholders .............................................. 6,418
Organization fees .................................................... 12,500
Legal ................................................................ 7,438
Other ................................................................ 14,238
----------------
Total expenses before reductions ..................................... 206,870
Expense reductions ................................................... (185,766)
----------------
Expenses, net ........................................................ 21,104
-------------------------------------------------------------------------------------------
Net investment income 4,050
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .......................................................... 56,747
Foreign currency related transactions (net of CPMF tax $48) .......... 1,640
----------------
58,387
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments .......................................................... 81,683
Foreign currency related transactions ................................ 117
----------------
81,800
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 140,187
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 144,237
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder International Value Fund
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
September 1,
1998
(commencement
of operations) to
February 28,
Increase (Decrease) in Net Assets 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Operations:
Net investment income ....................................................... $ 4,050
Net realized gain (loss) from investment transactions ....................... 58,387
Net unrealized appreciation (depreciation) on investment
transactions during the period ........................................... 81,800
----------------
Net increase (decrease) in net assets resulting from operations ............. 144,237
----------------
Distributions to shareholders from net investment income .................... (16,002)
----------------
Fund share transactions:
Proceeds from shares sold ................................................... 4,241,146
Net asset value of shares issued to shareholders in reinvestment of
distributions ............................................................ 15,431
Cost of shares redeemed ..................................................... (1,857,445)
----------------
Net increase (decrease) in net assets from Fund share transactions .......... 2,399,132
----------------
Increase (decrease) in net assets ........................................... 2,527,367
Net assets at beginning of period ........................................... 1,200
Net assets at end of period (including accumulated distributions ----------------
in excess of net investment income of $11,952) ........................... $ 2,528,567
----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ................................... 100
----------------
Shares sold ................................................................. 351,426
Shares issued to shareholders in reinvestment of distributions .............. 1,169
Shares redeemed ............................................................. (151,797)
----------------
Net increase (decrease) in Fund shares ...................................... 200,798
----------------
Shares outstanding at end of period ......................................... 200,898
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder International Value 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 ............................................................................... .02
Net realized and unrealized gain (loss) on investment transactions .................................. .65
-------------------
Total from investment operations .................................................................... .67
-------------------
Less distributions from:
Net investment income ............................................................................... (.08)
-------------------
Total distributions ................................................................................. (.08)
-------------------
-------------------
Net asset value, end of period ...................................................................... $ 12.59
-------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ................................................................................ 5.55**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .............................................................. 3
Ratio of operating expenses, net to average daily net assets (%) .................................... 1.75*
Ratio of operating expenses before expense reductions, to average daily net assets (%) .............. 17.15*
Ratio of net investment income to average daily net assets (%) ...................................... .34*
Portfolio turnover rate (%) ......................................................................... 95*
</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 Value Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder International Value 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. Money market instruments purchased with an original
maturity of sixty days or less are valued at amortized cost. All other
securities are valued at their fair value as determined in good faith by the
Valuation Committee of the Board of Directors.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value 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 Value 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
relate primarily 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.
Other. Investment security transactions are accounted for on a trade
date basis. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
B. Purchases and Sales of Securities
For the period September 1, 1998 (commencement of operations) to February 28,
1999, purchases and sales of investment securities (excluding short-term
investments) aggregated $3,526,733 and $1,131,191, respectively.
20 - Scudder International Value 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 $12,059.
Further, the Fund's reimbursement due from the Adviser at February 28, 1999
amounted to $140,329.
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 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
$8,376.
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
$22,555.
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 Value Fund
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder International Fund, Inc. and the
Shareholders of Scudder International Value 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 Value 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 Value Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder International Value
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 Value 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
Emeritus 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 and Secretary
Richard W. Desmond*
Assistant Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - Scudder International Value 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 Value 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 Value 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
- ------------------------------------------------------------------------------------------------------------------------------
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 Value 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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