SCUDDER
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EQUITY/GLOBAL
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Scudder International
Growth Fund
Fund #304
Annual Report
August 31, 1999
A fund seeking long-term growth of capital 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.
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Contents
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4 Letter from the Fund's Chairman
6 Performance Update
8 Portfolio Summary
10 Portfolio Management Discussion
16 Glossary of Investment Terms
18 Investment Portfolio
25 Financial Statements
28 Financial Highlights
29 Notes to Financial Statements
33 Report of Independent Accountants
34 Tax Information
35 Officers and Directors
36 Investment Products and Services
38 Scudder Solutions
2
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Scudder International Growth Fund
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fund number 304
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Date of Inception: o Holdings in Hong Kong, Indonesia, Finland, Italy, and
9/1/98 Mexico generated excellent results and enabled the fund
to post a 28.25% total return over its current fiscal
Total Net Assets as year.
of 8/31/99:
$5.6 million o The fund continues to employ fundamental analysis to
uncover companies with favorable growth prospects in
developed and developing countries around the world.
o Management is optimistic concerning the near-term
prospects for select European and Asian stocks, and
cautiously optimistic on the Latin American region.
3
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Letter from the Fund's Chairman
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Dear Shareholders,
Investing in foreign markets has long been considered a way to achieve
meaningful portfolio diversification. While this notion was called into question
when global markets experienced significant price declines during the crisis
period a year ago, more recent events have shown that investors who place a
portion of their assets overseas may be able to take advantage of important
developments occurring outside of the United States. In Europe, for instance,
the introduction of the euro has facilitated a new wave of merger and
acquisition activity. In Japan, corporate earnings stand to benefit from the
fact that the long awaited restructuring process finally appears to be underway.
The historic changes taking place in these regions have created a wealth of
opportunities for funds such as Scudder International Growth Fund to invest in
companies that are poised to capitalize on the evolution of the global economy.
The ability of the fund's management team to take advantage of many such
opportunities has enabled Scudder International Growth Fund to post a 28.25%
return over the twelve months ended August 31, 1999. For more information on the
fund's investment strategy and the trends driving the overseas markets, please
turn to the Portfolio Management Discussion that begins on Page 10.
It should be noted that Daniel Pierce retired in June of this year as President
of Scudder International Growth Fund, at which time I
4
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assumed that role and its responsibilities. We are fortunate that Dan's
long-standing affiliation with Scudder is ongoing, and that we will continue to
benefit from his counsel going forward. I am pleased to join the International
Growth Fund's team in this capacity, and look forward to serving your interests.
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-SCUDDER (1-800-728-3337), or visit our Web site at
www.scudder.com.
Sincerely,
/s/Lynn S. Birdsong
Lynn S. Birdsong
Chairman,
Scudder International Growth Fund
5
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Performance Update
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August 31, 1999
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Growth of a $10,000 Investment
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THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
Scudder International MSCI Country World
Growth Fund excluding U.S. Index*
9/1/98** 10000 10000
11/98 10925 11401
2/99 11191 11526
5/99 11819 12135
8/99 12824 13067
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Fund Index Comparison
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Total Return
Growth of
Period ended 8/31/1999 $10,000 Cumulative
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Scudder International Growth Fund
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1 Year** $ 12,825 28.25%
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MSCI All Country World excluding U.S. Index*
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1 Year** $ 13,067 30.67%
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* MSCI All Country World excluding U.S. Index is a regional or composite index
consisting of developed and emerging market countries.
** The Fund commenced operations on September 1, 1998.
6
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Returns and Per Share Information
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THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE ILLUSTRATING
THE SCUDDER INTERNATIONAL GROWTH FUND TOTAL RETURN (%)
AND MSCI ALL COUNTRY WORLD EXCLUDING U.S. INDEX* TOTAL RETURN (%)
CHART DATA:
Scudder International MSCI All Country
Growth Fund World Excluding U.s. Index*
1999 28.25 30.67
Period ended August 31
1999
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Fund Total
Return (%) 28.25
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Index Total
Return (%) 30.67
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Net Asset
Value ($) 15.31
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Income
Dividends ($) .07
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Capital Gains
Distributions ($) --
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* MSCI All Country World excluding U.S. Index is a regional or composite
index consisting of developed and emerging market countries.
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.
7
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Portfolio Summary
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August 31, 1999
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Geographical
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(Excludes 2% Cash Equivalents) Despite a challenging
macroeconomic
environment in Europe
earlier in the year,
compounded by a weak
euro, the fund's
European holdings fared
well during the period.
Europe 59%
Pacific Basin 19%
Japan 16%
Latin America 5%
Middle East 1%
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100%
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Sectors
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(Excludes 2% Cash Equivalents) Though the fund was
underweight in the
banking sector,
successful positioning
in special situations in
the financial services
area boosted performance.
Financial 20%
Communications 15%
Manufacturing 12%
Technology 11%
Consumer Staples 10%
Consumer Discretionary 6%
Media 6%
Service Industries 6%
Energy 5%
Other 9%
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100%
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8
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Ten Largest Equity Holdings
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(17.5% of Portfolio) Using the fundamental
research of Scudder's
international analysts,
we invest in reasonably
valued companies that
possess catalysts for
strong growth.
1. Korea Telecom Corp.
Telecommunications services in Korea
2. Fuji Bank, Ltd.
Commercial Bank in Japan
3. Samsung Electronics Co., Ltd.
Electronics manufacturer in Korea
4. Nippon Telegraph & Telephone Corp.
Telecommunication services in Japan
5. Taiwan Semiconductor Manufacturing Co.
Manufacturer of integrated circuits in Taiwan
6. Sakura Bank, Ltd.
Bank in Japan
7. Nomura Securities Co., Ltd.
Financial adviser, securities broker and underwriter in Japan
8. Getronics NV
Provider of computer installation and maintenance services
in the Netherlands
9. Telefonos de Mexico SA de CV
Telecommunications services in Mexico
10. ENI SpA
Explorer and distributor of petroleum products in Italy
For more complete details about the Fund's investment portfolio, see page 18. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
9
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Portfolio Management Discussion
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August 31, 1999
Dear Shareholders,
Scudder International Growth Fund seeks long-term capital appreciation primarily
by investing in non-U.S. companies with high growth potential. Our goal is to
tap into companies that are capitalizing on economic and structural changes
taking place in developed and developing regions around the world. This is a
"best ideas" portfolio managed by three regional specialists covering Europe,
the Pacific Basin, and Latin America. As of August 31, 1999, the fund's regional
portfolio weightings were: Europe (including the Middle East) 60%; Pacific Basin
(including Japan) 35%; and Latin America 5%. In addition, emerging markets
represented approximately 19% of the fund's portfolio at the close of the
period.
Fund Performance
The fund posted a 28.25% total return for its current fiscal year, compared with
the 30.67% return of the unmanaged MSCI All World Country Index over the same
period. Stock selection was the primary driver of performance, and the fund's
holdings in Hong Kong, Indonesia, Finland, Italy, and Mexico generated excellent
results.
Despite a challenging macroeconomic environment in Europe earlier in the year
compounded by a weak currency versus the dollar, the fund's holdings in the
region fared well during the period, benefitting from extraordinary returns by
certain issuers. In a buoyant consumer environment, exposure to domestic
cyclicals in the media and leisure areas worked well. L'Espresso, Italy's third
largest publishing group, rose 82.7% year to date, reaping the advantages of a
strong advertising market. Flextech, a leading provider of basic channel
programming in Britain, rose 45.8% over the same period.
Though the fund was underweighted in the banking sector, successful positioning
in special situations in the financial services arena reflects our approach.
Bipop, a rapidly growing Italian bank with an important market share in mutual
funds and a unique situation in Italy, rose 79.9%
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year to date. The Portuguese financial sector is in the early stages of
consolidation and undervalued relative to its European peers. Performance was
rewarded by our holding in Mundial Confianca, a key player in the consolidation
process (+36.7% since being added to the Fund). A Turkish holding, Yapi Kredi
Bankasi (+10.2% since purchased) reflected our view that the IMF package
currently under review would result in structural economic reform and an
improving macroeconomic backdrop.
The fund's best performing European stock over the last twelve months was JOT in
Finland, up 377%. JOT is a leading supplier of automation equipment to the
electronics industry with key international clients such as cellular
infrastructure manufacturer Nokia.
The Pacific Basin region made a major contribution to performance over the year
with holdings in Korea, Indonesia, Hong Kong, and Taiwan generating returns far
in excess of their respective markets. One of the fund's best performing Asian
issues was the Indonesian consumer products company PT Indofood Sukses Makmur
(+51.4% since April 21,1999). Over the three months ended August 31, 1999,
Natsteel Electronics in Singapore rose 49.7%. In Taiwan, tech stocks Delta
Electronics and Hon Hai Precision rose 21% and 44.5% respectively.
Country allocation likewise proved a plus. Our bottom-up approach to investing
caused the fund to significantly increase our exposure to Japan. We have more
than doubled our weight in Japan. Over the course of the quarter ended August
31, 1999, Japan was the best performing market in Asia after India (where we are
already overweight). This increase in allocation came at the expense of Hong
Kong and Indonesia whose combined weighting declined from 10.8% to 5.2% over the
same three-month period.
11
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In Latin America, Mexican stocks were the best performers in the region, with
Telmex rising 115% and consumer- oriented stocks Femsa and CIFRA up 93% and 37%,
respectively. The fund's second-largest holding in Latin America, Petrobras,
rose 36%.
Portfolio Positioning and Outlook
Europe
In a global environment of accelerating growth, we have increased our focus on
economically sensitive stocks. The addition of German companies Bayer and BASF,
with exposure to specialty chemicals, reflects this view. We have also increased
the fund's weighting in the energy sector by adding to Royal Dutch Petroleum and
initiating a position in Netherlands-based IHC Caland, a global leader in the
oil services industry. The addition of the global building materials company
Lafarge, listed in France, supports this portfolio tilt.
We will continue to participate in growth opportunities where appropriate. This
strategy is reflected in the recent purchases of Telefonica Publicidad e
Informacion (TPI) in Spain and Prudential Corporation in the U.K. TPI publishes
the Yellow and White page directories for Spain, an underdeveloped and
underpenetrated market. Prudential Corporation has a leading position in life
insurance in the U.K. and recently launched a very successful Direct Banking
operation under the brand name EGG.
Pacific Basin
Based on our in-depth bottom-up research and on-the-ground experience, we will
maintain the fund's overweight position in companies with exposure to the
recovery of the domestic economy, as well as leading exporters of both
industrial cyclicals and technology products and services. Another key theme we
believe will distinguish our investment strategy in the region is exposure to
companies that have seized the initiative to improve their competitive position.
These include retail,
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industrial cyclicals, and technology. We expect that as the recovery deepens,
these companies will become increasingly differentiated from companies whose
share prices have simply rebounded in accordance with an improving macroeconomic
outlook.
Latin America
A tightening bias on the part of the Fed and continued economic decline in most
Latin American markets has had a negative impact on the region's stock markets
since last May. In addition, increased political risk due to upcoming
presidential elections in Argentina, Chile, Mexico, and Peru has dampened
investor enthusiasm for Latin American equities. Trading volumes have been at
record lows, and valuations are at levels not experienced since the Mexican
crisis.
Against this regional backdrop, the Latin American portion of the portfolio has
been concentrated largely in Mexico, the Latin American country with an economic
cycle most tied to the United States. Mexico is expected to post the highest
growth in the region this year. Macroeconomic trends continue to be very strong
in Mexico, with rising GDP growth, declining inflation, low debt, and a healthy
fiscal situation. The country is also benefiting from rising oil prices and
growing foreign direct investment. With rising wages and a strengthening
consumer outlook, our holdings should continue to benefit from a sustained
recovery in the market.
Regional Summary
The fund will continue to employ a bottom-up approach to search for the best
ideas in the respective regions. In Europe, a strategic overweight in
economically sensitive stocks reflects a combination of recovering export
markets, a buoyant consumer, rising business confidence, and declining
unemployment. Interest rates will probably remain subdued against a relatively
benign inflation backdrop as deregulation and a common currency push prices
lower. The value of the euro has risen recently
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highlighting improved growth prospects for the region. We believe that the
potentially adverse impact of an appreciating currency on corporate earnings is
likely to be offset by stronger economic growth in euro-land.
In the Pacific Basin, we believe that a combination of a stronger Japanese
economy, a steady global backdrop, domestic structural reform at the macro and
micro level, and improving consumer confidence will deliver macroeconomic and
corporate earnings growth in excess of market expectations into the next year.
This will in turn lead to a further flow of funds into the region to absorb
capital raising by companies seeking to rebuild their balance sheets and
establish a firmer financial foundation for the future. We anticipate that this
virtuous cycle will go a long way to reestablishing the Asian economic miracle,
this time on more orthodox and prudent terms, and lay the ground for sustained
economic growth in the years ahead.
We remain cautiously optimistic on Latin America for the year ahead as a return
to growth is forecast in most major markets, valuations are extremely
compelling, and most of the current political uncertainty should be resolved in
the coming months. In addition, Latin America is a prime beneficiary of rising
commodity prices, given the substantial representation of commodities in its
export base. With strong prospects for synchronized world growth ahead, the
region should rebound in the year 2000.
Sincerely,
Your Portfolio Management Team
/s/Joan R. Gregory /s/Theresa Gusman
Joan R. Gregory Theresa Gusman
/s/Tara C. Kenney
Tara C. Kenney
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Scudder International Growth Fund:
A Team Approach to Investing
Scudder International Growth Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an important
role in the fund's management process. Team members work together to develop
investment strategies and select securities for the fund's portfolio. They are
supported by the Adviser's large staff of economists, research analysts,
traders, and other investment specialists who work in our offices across the
United States and abroad. We believe our team approach benefits fund investors
by bringing together many disciplines and leveraging our extensive resources.
Scudder International Growth Fund portfolio managers Joan R. Gregory, Theresa
Gusman, and Tara C. Kenney share responsibility for the fund's day-to-day
management and investment strategies.
Joan R. Gregory joined the Adviser in 1992. Ms. Gregory has 10 years of
international investing experience.
Theresa Gusman joined the Adviser in 1995 after three years as a Pacific Basin
analyst. Ms. Gusman has 14 years of experience in international investments.
Tara C. Kenney joined the Adviser in 1995 and has over 10 years of financial
industry experience. Ms. Kenney was a vice president of corporate finance for an
investment banking firm for seven years.
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Glossary of Investment Terms
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Bottom-Up An investment style that focuses on the use of
Investing Style research to assess the performance of individual
companies before considering the impact of economic
trends. This approach, which is the opposite of
"top-down" investing, assumes that the most
significant determinant of performance is individual
stock selection, rather than industry or country
allocation.
Currency A significant decline of a currency's value relative
Devaluation to other currencies, such as the U.S. dollar,
typically resulting from the cessation of a country's
central bank intervention in the currency markets.
For U.S. investors who are investing overseas, a
devaluation of a foreign currency can reduce the
total return of their investment.
Cyclical Stocks Companies whose earnings are closely tied to the
business cycle. Cyclical industries include steel,
cement, paper, machinery, and autos.
Diversification The spreading of risk by investing in several asset
categories, industry sectors, or individual
securities. An investor with a broadly diversified
portfolio will likely receive some protection from
the price declines of an individual asset class.
Fundamental Analysis of companies based on the projected impact
Research of management, products, sales, and earnings on their
balance sheets and income statements. Distinct from
technical analysis, which evaluates the
attractiveness of a stock based on historical price
and trading volume movements, rather than the
financial results of the underlying company.
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Stock of a company that has displayed above-average
Growth Stock earnings growth and is expected to continue to
increase profits rapidly going forward. Stocks of
such companies usually trade at higher multiples to
earnings and experience more price volatility than
the market as a whole. Distinct from value stock.
A method in which the investor first looks at trends
Top-Down in the general economy (or, in the case of
Investing Style international investing, the economies of several
countries), and next selects companies or industries
that stand to benefit from those trends. Opposite of
bottom-up investing.
(Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
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Investment Portfolio as of August 31, 1999
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Principal Market
Amount ($) (c) Value ($)
<TABLE>
<CAPTION>
<S> <C> <C>
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Repurchase Agreements 2.2%
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Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 8/31/1999 at 5.42%,
to be repurchased at $121,018 on 9/1/1999, collateralized by a $123,000 U.S.
Treasury Bond, 3.875%, 4/15/2029
(Cost $121,000) .................................... 121,000 121,000
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Convertible Bonds 0.7%
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Indonesia
APP Global Finance Ltd., 2%, 7/25/2000 (Manufacturer of
pulp and paper products) (Cost $36,627) .............. 43,000 40,420
Shares
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Common Stocks 97.1%
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Brazil 1.2%
Companhia Cervejaria Brahma (pfd.) (Beer producer and
distributor) ....................................... 35,000 18,587
Petroleo Brasileiro S.A. (pfd.) (Petroleum company) .. 365,000 48,984
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67,571
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Finland 3.6%
JOT Automation Group OYJ (Developer and manufacturer
of production automation systems and equipment) .... 1,540 65,153
Nokia OYJ (Manufacturer of telecommunication networks
and equipment) ..................................... 632 52,821
Perlos OYJ* (Manufacturer of injection moulds,
electromechanical connectors and assembly
equipment) ......................................... 2,000 28,565
Pohjola Insurance Corp. (Insurance company) .......... 700 34,140
Tietoenator OYJ (Manufacturer of computer software) .. 600 20,313
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200,992
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France 8.7%
Altran Technologies SA (Provider of engineering and
consulting services) ............................... 95 25,961
Cap Gemini SA (Software consultants) ................. 252 43,323
Carbone Lorraine SA (Manufacturer of industrial and
technological systems and components) .............. 267 14,392
Compagnie de Saint Gobain (Glass manufacturer) ....... 205 39,689
Elf Aquitaine SA (Petroleum company) ................. 340 59,711
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
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<TABLE>
<CAPTION>
Market
Shares Value ($)
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<S> <C> <C>
Galeries Lafayette (Department store and supermarket
chain) .................................................. 340 50,718
Imetal SA (Manufacturer of building materials) ............ 120 19,145
Lafarge SA (Producer of cement, concrete and
aggregates) ............................................. 510 54,873
Publicis SA (International advertising company) ........... 194 40,228
Rexel SA (Distributor of electrical equipment) ............ 334 31,095
Rhone-Poulenc SA "A" (Pharmaceutical company) ............. 758 36,824
Suez Lyonnaise des Eaux SA (Water utility) ................ 125 20,881
Television Francaise SA (Television broadcasting) ......... 173 43,194
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480,034
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Germany 5.6%
BASF AG (International chemical producer) ................. 550 24,962
Bayer AG (Chemical producer) .............................. 570 24,815
Mannesmann AG (Diversified construction and technology
company) ................................................ 424 65,133
Marschollek, Lautenschlaeger und Partner AG (pfd.)
(Insurance company) ..................................... 291 50,028
Metro AG (Operator of building, clothing, department,
electronic and food stores) ............................. 735 42,223
SAP AG (pfd.) (Manufacturer of computer software ) ........ 140 56,283
Siemens AG (Electrical engineering and electronics
company) ................................................ 550 46,317
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309,761
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Greece 1.7%
Alpha Credit Bank (Commercial bank) ....................... 675 50,758
National Bank of Greece S.A. (Bank) ....................... 550 40,646
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91,404
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Hong Kong 4.0%
Citic Pacific Ltd. (Diversified holding company) .......... 16,000 49,762
Esprit Holdings Ltd. (Designer and manufacturer of fashion
products) ............................................... 62,500 49,501
HSBC Holdings PLC (International banking and financial
services company) ....................................... 1,200 14,875
New World China Land Ltd. (Property development) .......... 133 107
New World Development Co., Ltd. (Property investment
and development) ........................................ 26,663 64,211
SmarTone Telecommunications Holdings Ltd. (Cellular
communication services) ................................. 13,000 43,362
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221,818
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Indonesia 1.3%
PT Indah Kiat Pulp & Paper* (Foreign registered)
(Manufacturerof pulp and paper products) ................ 77,000 28,091
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
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<TABLE>
<CAPTION>
Market
Shares Value ($)
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<S> <C> <C>
PT Indofood Sukses Makmur Tbk* (Manufacturer of food
products) ............................................... 43,500 46,476
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74,567
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Ireland 1.8%
Esat Telecom Group PLC* (ADR) (Provider of
telecommunication services) ............................. 500 20,375
Irish Life & Permanent PLC (Retail financial services group) 1,801 18,673
Ryanair Holdings PLC* (Provider of airline services in
Europe) ................................................. 6,400 59,088
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98,136
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Italy 5.3%
Alleanza Assicurazioni SpA (Life insurance company) ....... 1,900 19,840
Bipop-Carire SpA (Cooperative bank) ....................... 1,700 74,548
ENI SpA (Explorer and distributor of petroleum products) .. 13,200 79,461
Gruppo Editoriale L'Espresso SpA (Publisher) .............. 3,900 62,509
Mediaset SpA (Broadcasting and television networks) ....... 2,000 17,689
Seat Pagine Gialle SpA (Publisher of telecommunication
directories and provider of advertising services) ....... 27,500 37,967
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292,014
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Japan 16.0%
Fuji Bank, Ltd. (Commercial bank) ......................... 11,000 113,485
Fujisawa Pharmaceutical Co. (Manufacturer and marketer of
antibiotics) ............................................ 3,000 51,520
Hitachi, Ltd. (Manufacturer of general electronics ) ...... 7,000 71,003
NHK Spring Co., Ltd. (Manufacturer of suspension springs
for automobiles) ........................................ 7,000 41,030
NTT Mobile Communications Network, Inc. (Provider of
various telecommunication services and equipment) ....... 4 66,466
Nintendo Co., Ltd. (Manufacturer of video game equipment) . 300 52,041
Nippon Telegraph & Telephone Corp. (Provider of
telecommunication services) ............................. 9 101,068
Nissan Motor Co., Ltd. (Manufacturer of motor vehicles) ... 11,000 64,074
Nomura Securities Co., Ltd. (Financial adviser, securities
broker and underwriter) ................................. 6,000 87,921
Rock Field Co., Ltd. (Marketer of delicatessen food) ...... 1,000 58,431
Sakura Bank, Ltd. (Bank) .................................. 19,000 100,612
Sony Corp. (Manufacturer of consumer electronic
products) ............................................... 600 77,677
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885,328
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Korea 7.3%
Kookmin Bank (Commercial bank) ............................ 4,040 56,468
Korea Data System Co., Ltd. (Manufacturer and exporter of
computer monitors) ...................................... 2,930 40,332
Korea Telecom Corp.* (ADR) (Provider of telecommunication
services) ............................................... 3,500 113,751
Medison Co., Ltd. (Producer of medical equipment) ......... 3,500 44,473
Samsung Corp. (Trading company) ........................... 2,250 39,644
Samsung Electronics Co., Ltd. (Manufacturer of electronics) 580 110,055
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404,723
---------------
Mexico 3.3%
CIFRA SA de CV "C"* (Discount retailer) ................... 7,500 11,388
Fomento Economico Mexicano, SA de CV (ADR)
(Producer of beer, soft drinks and mineral water) ....... 1,475 48,767
Grupo Continental, SA (Producer and distributor of soft
drinks, sugar and mineral water) ........................ 12,500 17,242
Grupo Modelo SA de CV "C" (Brewery) ....................... 9,000 24,107
Telefonos de Mexico SA de CV "L" (ADR)
(Provider of telecommunication services) ................ 1,075 79,953
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181,457
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Netherlands 8.6%
Akzo Nobel NV (Producer and marketer of healthcare
products, coatings, chemicals and fibers) ............... 750 34,952
Getronics NV (Provider of computer installation and
maintenance services) ................................... 1,680 82,380
Gucci Group NV (New York Shares) (Registered) (Designer
and producer of personal luxury accessories and
apparel) ................................................ 700 58,625
IHC Caland NV (Supplier of materials for offshore
oilfields) .............................................. 1,600 75,411
Koninklijke (Royal) Philips Electronics NV (Manufacturer of
consumer electronics) ................................... 395 40,765
Laurus NV (International food retailer) ................... 970 21,807
Royal Dutch Petroleum Co. (Petroleum company) ............. 800 49,258
STMicroelectronics (Manufacturer of semiconductor
integrated circuits) .................................... 500 33,246
United Pan-Europe Communications NV*
(Provider of telecommunication services) ................ 710 43,116
VNU NV (International publishing company) ................. 420 16,130
Vendex NV (Operator of department stores and specialty
stores) ................................................. 744 19,520
---------------
475,210
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Portugal 2.6%
BPI-- SGPS SA (Registered) (Bank) .................... 1,266 25,461
Banco Mello SA (Commercial bank) ..................... 3,300 30,897
Companhia de Seguros Mundial Confianca, SA*
(Insurance company) ................................ 1,100 42,360
Jeronimo Martins SGPS, SA (Food producer and retailer) 1,600 46,736
---------------
145,454
---------------
Singapore 1.8%
Natsteel Electronics Ltd. (Manufacturer of
telecommunication and network products) ............ 11,000 54,860
Oversea-Chinese Banking Corp., Ltd. (Foreign registered)
(Commercial bank) .................................. 6,000 42,035
---------------
96,895
---------------
Spain 3.7%
Argentaria SA (Bank) ................................. 1,422 32,420
Empresa Nacional de Celulosas SA (Manufacturer of
celulose paper pulp) ............................... 1,800 36,182
Sogecable, SA* (Provider of cable television) ........ 535 14,592
Telefonica Publicidad e Informacion, SA (Publisher of
telephone directories) ............................. 2,600 59,690
Telefonica SA (Provider of telecommunication services) 3,966 63,357
---------------
206,241
---------------
Switzerland 1.3%
ABB Ltd. (Manufacturer of equipment for power generation
and distribution) .................................. 324 33,063
Clariant AG (Registered) (Manufacturer of dye chemicals) 38 18,272
Novartis AG (Registered) (Pharmaceutical company) .... 14 20,159
---------------
71,494
---------------
Taiwan 4.8%
Bank Sinopac (Bank) .................................. 61,000 37,597
Delta Electronics Inc. (Manufacturer of power
supply equipment) .................................. 600 2,443
Far East Textile Ltd. (Manufacturer of natural and synthetic
textile products) .................................. 46,010 66,700
Hon Hai Precision Industry Co., Ltd. (Manufacturer of
electronic connectors, cable assemblies and memory
chips) ............................................. 8,400 54,679
Taiwan Semiconductor Manufacturing Co. (Manufacturer of
integrated circuits) ............................... 23,760 100,868
---------------
262,287
---------------
Turkey 0.8%
Akbank T.A.S. (Banking and investment organization) .. 721,500 9,556
Tupras-Turkiye Petrol Rafinerileri A.S. (Petroleum
refinery) (b) ...................................... 214,000 15,349
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Yapi ve Kredi Bankasi A.S. (Receipts)* (Commercial
bank) (b) .......................................... 650,400 8,468
Yapi ve Kredi Bankasi A.S. (Commercial bank) ......... 813,000 10,585
---------------
43,958
---------------
United Kingdom 13.7%
Aegis Group PLC (Independent media services group) ... 18,490 40,992
BP Amoco PLC (Oil company) ........................... 2,250 41,677
Barclays PLC (Commercial and investment banking,
insurance and other financial services) ............ 1,140 33,826
British Aerospace PLC (Producer of military aircraft) 2,600 18,942
British Telecommunications PLC (Provider of
telecommunication services) ........................ 3,300 50,470
Carlton Communications PLC (Television post production
products and services) ............................. 2,689 20,368
Compass Group PLC (International catering group) ..... 2,991 28,110
Flextech PLC (Broadcaster of entertainment programs) . 3,200 47,295
Glaxo Wellcome PLC (Pharmaceutical company) .......... 2,170 56,937
Granada Group PLC (Provider of television programs and
broadcasting services) ............................. 7,590 67,551
J Sainsbury PLC (Retail distributor of food supermarkets) 11,000 75,722
Kingston Communication (Hull) PLC* (Provider of
telecommunication services) ........................ 2,675 15,471
Marks & Spencer PLC (Retailer of consumer goods and
foods) ............................................. 11,615 77,717
Orange PLC* (Operator of digital mobile telephone
network) ........................................... 2,505 42,235
Prudential Corp. PLC (Provider of broad range of
financial services) ................................ 1,330 19,657
Rio Tinto PLC (Mining company) ....................... 1,810 32,422
SmithKline Beecham PLC (Manufacturer of ethical drugs
and healthcare products) ........................... 2,635 34,246
Vodafone Airtouch PLC (Provider of mobile
telecommunication services) ........................ 2,629 52,878
---------------
756,516
---------------
Total Common Stocks (Cost $4,514,082) ................ 5,365,860
- ------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $4,671,709) (a) 5,527,280
- ------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security
(a) The cost for federal income tax purposes was $4,671,709. At August 31, 1999,
net unrealized appreciation for all securities based on tax cost was
$855,571 This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of
$968,000 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $112,429.
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $23,817 (.42% 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 August 31, 1999 aggregated $17,192. 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.
24
<PAGE>
Financial Statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities as of August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
- ------------------------------------------------------------------------------------
<S> <C>
Investment securities, at market (identified cost $4,671,709) ...... $ 5,527,280
Cash and foreign currency holdings, at market (identified cost
$52,987) ......................................................... 53,628
Receivable for investments sold .................................... 9,587
Dividends and interest receivable .................................. 8,651
Receivable for Fund shares sold .................................... 24,527
Foreign taxes recoverable .......................................... 2,967
Due from Adviser ................................................... 201,421
Other assets ....................................................... 145
---------------
Total assets ....................................................... 5,828,206
Liabilities
- ------------------------------------------------------------------------------------
Payable for investments purchased .................................. 26,390
Payable for Fund shares redeemed ................................... 1,250
Other payables and accrued expenses ................................ 187,356
---------------
Total liabilities .................................................. 214,996
Net assets, at market value ........................................ $ 5,613,210
Net Assets
- ------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation (depreciation) on:
Investments ........................................................ 855,571
Foreign currency related transactions .............................. (47)
Accumulated net realized gain (loss) ............................... 251,918
Paid-in capital .................................................... 4,505,768
Net assets, at market value ........................................ $ 5,613,210
Net Asset Value
- ------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($5,613,210 / 366,747
shares of capital stock outstanding, $.01 par value, 100,000,000 shares
authorized) ........................................................ $15.31
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations for the period September 1, 1998 (commencement of
operations) to August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment Income
- ------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $5,372) ............ $ 75,526
Interest ....................................................... 55,434
---------------
130,960
---------------
Expenses:
Management fee ................................................. 44,526
Services to shareholders ....................................... 40,344
Custodian and accounting fees .................................. 200,294
Directors' fees and expenses ................................... 45,450
Registration fees .............................................. 13,602
Auditing ....................................................... 45,500
Reports to shareholders ........................................ 10,786
Organization fees .............................................. 12,500
Legal .......................................................... 9,600
Other .......................................................... 9,762
---------------
Total expenses before reductions ............................... 432,364
Expense reductions ............................................. (354,439)
---------------
Expenses, net .................................................. 77,925
Net investment income 53,035
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investment securities (net of India tax of $2,540) ............. 250,733
Foreign currency related transactions (including CPMF tax of $563) (30,147)
---------------
220,586
Net unrealized appreciation (depreciation) during the period on:
Investment securities .......................................... 855,571
Foreign currency related transactions .......................... (47)
---------------
855,524
Net gain (loss) on investment transactions ..................... 1,076,110
Net increase (decrease) in net assets resulting from operations $ 1,129,145
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
September 1, 1998
(commencement of
operations) to
Increase (Decrease) in Net Assets August 31, 1999
- --------------------------------------------------------------------------------------
<S> <C>
Operations:
Net investment income .......................................... $ 53,035
Net realized gain (loss) from investment transactions .......... 220,586
Net unrealized appreciation (depreciation) on investment
transactions during the period ............................... 855,524
---------------
Net increase (decrease) in net assets resulting from operations 1,129,145
---------------
Distributions to shareholders from net investment income ....... (21,758)
---------------
Fund share transactions:
Proceeds from shares sold ...................................... 11,085,923
Net asset value of shares issued to shareholders in reinvestment
of distributions ............................................... 21,084
Cost of shares redeemed ........................................ (6,602,384)
---------------
Net increase (decrease) in net assets from Fund share transactions 4,504,623
---------------
Increase (decrease) in net assets .............................. 5,612,010
Net assets at beginning of period .............................. 1,200
Net assets at end of period .................................... $ 5,613,210
Other Information
- ------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ...................... 100
---------------
Shares sold .................................................... 854,140
Shares issued to shareholders in reinvestment of distributions . 1,563
Shares redeemed ................................................ (489,056)
---------------
Net increase (decrease) in Fund shares ......................... 366,647
Shares outstanding at end of period ............................ 366,747
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<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>
- ------------------------------------------------------------------------------------
1999(b)
- ------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $12.00
---------
- ------------------------------------------------------------------------------------
Income from investment operations:
- ------------------------------------------------------------------------------------
Net investment income .16(d)
- ------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 3.22
---------
- ------------------------------------------------------------------------------------
Total from investment operations 3.38
- ------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------
From net investment income (.07)
---------
- ------------------------------------------------------------------------------------
Total distributions (.07)
- ------------------------------------------------------------------------------------
Net asset value, end of period $15.31
---------
- ------------------------------------------------------------------------------------
Total Return (%) (c) 28.25
- ------------------------------------------------------------------------------------
Ratios and Supplemental Data
- ------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 6
- ------------------------------------------------------------------------------------
Ratio of operating expenses to average daily net assets (%) 1.75
- ------------------------------------------------------------------------------------
Ratio of operating expenses, before expense reductions, to average daily
net assets (%) 9.71
- ------------------------------------------------------------------------------------
Ratio of net investment income to average daily net assets (%) 1.19
- ------------------------------------------------------------------------------------
Portfolio turnover rate (%) 89.6
- ------------------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) For the period September 1, 1998 (commencement of operations) to August 31,
1999.
(c) Total return would have been lower had certain expenses not been reduced.
(d) Net investment income per share includes non-recurring dividend income
amounting to $.03 per share.
28
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
August 31, 1999
A. Significant Accounting Policies
Scudder International Growth Fund (the "Fund") is a diversified series of
Scudder International Fund, Inc. (the "Corporation") which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a Maryland Corporation.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed by the Fund in the preparation of its
financial statements.
Security Valuation. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. Securities which are traded
on U.S. or foreign stock exchanges are valued at the most recent sale price
reported on the exchange on which the security is traded most extensively. If no
sale occurred, the security is then valued at the calculated mean between the
most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation is used. Securities quoted on the
Nasdaq Stock Market ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are not quoted on Nasdaq but are
traded in another over-the-counter market are valued at the most recent sale
price, or if no sale occurred, at the calculated mean between the most recent
bid and asked quotations on such market. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities purchased with an original maturity greater than sixty
days are valued by pricing agents approved by the officers of the Corporation,
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.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
29
<PAGE>
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, receives delivery of the underlying securities, the amount
of which at the time of purchase and each subsequent business day is required to
be maintained at such a level that the market value is equal to at least the
principal amount of the repurchase price plus accrued interest.
Taxes. The Fund's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
The Fund is subject to a .38% Contribuicao Provisoria sobre Movimentacao
Financiera (CPMF) tax which is applied to foreign exchange transactions
representing capital inflows or outflows to the Brazilian market.
Net realized and unrealized gains of the Fund derived in India are subject to
certain non-U.S. taxes.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed, and, therefore, will be distributed to shareholders at least
annually.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
30
<PAGE>
regulations which may differ from generally accepted accounting principles.
These differences primarily relate to foreign denominated investments. As a
result, net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to ex-dividend date as soon
as the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis.
All discounts are accreted for both tax and financial reporting purposes.
B. Purchases and Sales of Securities
For the year ended August 31, 1999, purchases and sales of investment securities
(excluding short-term investments) aggregated $7,899,230 and $3,621,187,
respectively.
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, 2000 in order to maintain the annualized expenses of the Fund at not more
than 1.75% of average daily net assets. For the year ended August 31, 1999, the
Adviser did not impose any of its management fee amounting to $44,526. Further,
the Fund's reimbursement due from the Adviser at August 31, 1999 amounted to
$201,421.
31
<PAGE>
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended August 31, 1999, SSC did not impose any of its fee amounting to
$35,730.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
August 31, 1999, SFAC did not impose any of its fee amounting to $50,012.
The Corporation pays each Director not affiliated with the Adviser an annual
retainer plus specified amounts for attended board and committee meetings. For
the year ended August 31, 1999, Directors' fees and expenses not imposed
aggregated $22,750 and the amount imposed aggregated $22,700, all of which is
unpaid at August 31, 1999.
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.
32
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors of Scudder International Fund, Inc. and to 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 August 31, 1999, the results of its operations, the changes in
its net assets, and the financial highlights for the period indicated therein,
in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our 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 August 31, 1999 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
October 12, 1999
33
<PAGE>
Tax Information
- --------------------------------------------------------------------------------
August 31, 1999
The Fund paid foreign taxes of $7,977 and earned $28,380 of foreign source
income during the year ended August 31, 1999. Pursuant to section 853 of the
Internal Revenue Code, the Fund designates $0.0218 per share as foreign taxes
paid and $0.0774 per share as income earned from foreign sources for the year
ended August 31, 1999.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your account, please call 1-800-SCUDDER.
34
<PAGE>
Officers and Directors
- --------------------------------------------------------------------------------
Lynn S. Birdsong*
o Chairman of the Board and
Director
Nicholas Bratt*
o President
Paul Bancroft III
o Director; Venture Capitalist and
Consultant
Sheryle J. Bolton
o Director; Chief Executive Officer,
Scientific Learning Corporation
William T. Burgin
o Director; General Partner,
Bessemer Venture Partners
Keith R. Fox
o Director; Private Equity Investor
William H. Luers
o Director; Chairman and President,
U.N. Association of America
Kathryn L. Quirk*
o Director; Vice President and
Assistant Secretary
Joan E. Spero
o Director; President, Doris Duke
Charitable Foundation
Thomas J. Devine
o Honorary Director; Consultant
William H. Gleysteen, Jr.
o Honorary Director; Consultant;
Guest Scholar, Brookings
Institution
Wilson Nolen
o Honorary Director; Consultant
Robert G. Stone, Jr.
o Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
Elizabeth J. Allan*
o Vice President
Irene T. Cheng*
o Vice President
Joyce E. Cornell*
o Vice President
Susan E. Dahl*
o Vice President
Philip S. Fortuna*
o Vice President
Carol L. Franklin*
o Vice President
Edmund B. Games, Jr.*
o Vice President
Theresa Gusman*
o Vice President
Ann M. McCreary*
o Vice President
Sheridan Reilly*
o Vice President
Shahram Tajbakhsh*
o Vice President
John Millette*
o Vice President and Secretary
John R. Hebble*
o Treasurer
Richard W. Desmond*
o Assistant Secretary
Caroline Pearson*
o Assistant Secretary
*Scudder Kemper Investments, Inc.
35
<PAGE>
Investment Products and Services
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
<S> <C>
Money Market U.S. Growth and Income
Scudder U.S. Treasury Money Fund Scudder Balanced Fund
Scudder Cash Investment Trust Scudder Dividend & Growth Fund
Scudder Money Market Series -- Scudder Growth and Income Fund
Prime Reserve Shares* Scudder Select 500 Fund
Premium Shares* Scudder S&P 500 Index Fund
Managed Shares* Scudder Real Estate Investment Fund
Scudder Government Money Market
Series -- Managed Shares* U.S. Growth
Value
Tax Free Money Market+ Scudder Large Company Value Fund
Scudder Tax Free Money Fund Scudder Value Fund***
Scudder Tax Free Money Market Scudder Small Company Value Fund
Series -- Managed Shares* Scudder Micro Cap Fund
Scudder California Tax Free Money Fund** Growth
Scudder New York Tax Free Money Fund** Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Tax Free+ Scudder Select 1000 Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Medium Term Tax Free Fund Scudder 21st Century Growth Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund Global Equity
Scudder California Tax Free Fund** Worldwide
Scudder Massachusetts Limited Term Scudder Global Fund
Tax Free Fund** Scudder International Value Fund
Scudder Massachusetts Tax Free Fund** Scudder International Growth and
Scudder New York Tax Free Fund** Income Fund
Scudder Ohio Tax Free Fund** Scudder International Fund++
Scudder International Growth Fund
U.S. Income Scudder Global Discovery Fund***
Scudder Short Term Bond Fund Scudder Emerging Markets Growth Fund
Scudder GNMA Fund Scudder Gold Fund
Scudder Income Fund Regional
Scudder Corporate Bond Fund Scudder Greater Europe Growth Fund
Scudder High Yield Bond Fund Scudder Pacific Opportunities Fund
Scudder Latin America Fund
Global Income The Japan Fund, Inc.
Scudder Global Bond Fund
Scudder International Bond Fund Industry Sector Funds
Scudder Emerging Markets Income Fund Choice Series
Scudder Financial Services Fund
Asset Allocation Scudder Heath Care Fund
Scudder Pathway Conservative Portfolio Scudder Technology Fund
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio Preferred Series
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
- --------------------------------------------------------------------------------
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs Education Accounts
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Closed-End Funds#
- -----------------------------------------------------------------------------------------
<S> <C>
The Argentina Fund, Inc. Scudder Global High Income Fund, Inc.
The Brazil Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Montgomery Street Income Securities, Inc.
</TABLE>
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money.
+++ Funds within categories are listed in order from expected least
risk to most risk. Certain Scudder funds or classes thereof may
not be available for purchase or exchange.
+ A portion of the income from the tax-free funds may be subject to
federal, state, and local taxes.
* A class of shares of the fund.
** Not available in all states.
*** Only the Scudder Shares of the fund are part of the Scudder Family
of Funds.
++ Only the International Shares of the fund are part of the Scudder
Family of Funds.
+++ +++ A no-load variable annuity contract provided by Charter National
Life Insurance Company and its affiliate, offered by Scudder's
insurance agencies, 1-800-225-2470.
+++ +++ +++ A no-load variable annuity contract issued by Glenbrook Life and
Annuity Company and underwritten by Allstate Financial Services,
Inc., sold by Scudder's insurance agencies, 1-800-225-2470.
# These funds, advised by Scudder Kemper Investments, Inc., are
traded on the New York Stock Exchange and, in some cases, on
various other stock exchanges.
37
<PAGE>
Scudder Solutions
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Convenient Automatic Investment Plan
ways to invest,
quickly and A convenient investment program in which money is
reliably electronically debited from your bank account monthly to
regularly purchase fund shares and "dollar cost average" --
buy more shares when the fund's price is lower and fewer
when it's higher, which can reduce your average purchase
price over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to purchase
shares -- use distributions from one Scudder fund to
purchase shares in another, automatically (accounts with
identical registrations or the same social security or tax
identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically,
avoiding potential mailing delays; money for each of your
transactions is electronically debited from a previously
designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government checks
-- invested in up to four Scudder funds at one time.
* Dollar cost averaging involves continuous investment in
securities regardless of price fluctuations and does not
assure a profit or protect against loss in declining
markets. Investors should consider their ability to
continue such a plan through periods of low price
levels.
Around-the- Scudder Automated Information Line: SAIL(TM) --
clock electronic 1-800-343-2890
account
service and Personalized account information, the ability to exchange
information, or redeem shares, and information on other Scudder funds
including some and services via touchtone telephone.
transactions
Scudder's Web Site -- www.scudder.com
Personal Investment Organizer: Offering account information
and transactions, interactive worksheets, prospectuses and
applications for all Scudder funds, plus your current asset
allocation, whenever your need them. Scudder's site also
provides news about Scudder funds, retirement planning
information, and more.
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1-800-SCUDDER www.scudder.com
Retirees and Automatic Withdrawal Plan
those who depend
on investment You designate the bank account, determine the schedule (as
proceeds for frequently as once a month) and amount of the redemptions,
living expenses and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into the
automated bank account you designate within three business days after
withdrawal each distribution is paid.
programs
QuickSell
Provides speedy access to your money by electronically
crediting your redemption proceeds to the bank account you
previously designated.
For more Call a Scudder representative at
information about 1-800-SCUDDER
these services
Or visit our Web site at
www.scudder.com
Please address The Scudder Funds
all written PO Box 2291
correspondence Boston, Massachusetts
to 02107-2291
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About the Fund's Adviser
SCUDDER
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $280 billion
in assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services Group. As a result, Zurich's subsidiary, Zurich
Kemper Investments, Inc., with 50 years of mutual fund and investment management
experience, was combined with Scudder. Headquartered in New York, Scudder Kemper
Investments offers a full range of investment counsel and asset management
capabilities, based on a combination of proprietary research and disciplined,
long-term investment strategies. With its global investment resources and
perspective, the firm seeks opportunities in markets throughout the world to
meet the needs of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Financial Services Group. The Zurich Financial Services Group is
an internationally recognized leader in financial services, including
property/casualty and life insurance, reinsurance, and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
