SCUDDER
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EQUITY/GLOBAL
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Scudder International
Value Fund
Fund #305
Annual Report
August 31, 1999
A fund seeking long-term growth
of capital through investment
primarily in undervalued foreign
equity securities.
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
14 Glossary of Investment Terms
16 Investment Portfolio
23 Financial Statements
26 Financial Highlights
27 Notes to Financial Statements
31 Report of Independent Accountants
32 Tax Information
33 Officers and Directors
34 Investment Products and Services
36 Scudder Solutions
2
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Scudder International Value Fund
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fund number 305
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Date of Fund's o For the 12-month period that began with the fund's
Inception: inception on September 1, 1998, and ended August 31,
9/1/98 1999, Scudder International Value Fund posted a
22.49% total return. Over the same period, the
unmanaged Morgan Stanley Capital International (MSCI)
EAFE Value Index returned 35.20%.
Total Net
Assets as of o As the global markets regained their balance, value
8/31/99: stocks once again strongly competed with growth
$3.2 million stocks for global capital during the period.
o Scudder International Value Fund seeks long-term
capital appreciation primarily by investing 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.
3
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Letter from the Fund's Chairman
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Dear Shareholders,
Welcome to the first annual report for Scudder International Value Fund. The
fund seeks long-term capital appreciation through investment primarily in
undervalued foreign equity securities. 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 MSCI EAFE
Value Index -- a benchmark of foreign security performance based on
price-to-book value ratios.
The fund posted a 22.49% return over its fiscal year ended August 31, compared
with the 35.20% return of the unmanaged MSCI EAFE Value Index over the same
period. After suffering through the effects of financial crises that drove
investors to familiar large-cap growth names through much of 1998, value stocks
have re-emerged this year. For more information on the fund's performance,
investment environment, and investment process, please see 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 Value Fund, at which time I 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
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pleased to join the Scudder International Value Fund's team in this capacity,
and look forward to serving your interests.
If you have any questions regarding Scudder International Value Fund or any
other Scudder fund, please call 1-800-SCUDDER (1-800-728-3337). Or visit
Scudder's Web site at www.scudder.com.
Sincerely,
/s/Lynn S. Birdsong
Lynn S. Birdsong
Chairman,
Scudder International Value 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 ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Scudder International MSCI EAFE
Value Fund Value Index*
9/1/98** 10000 10000
11/98 10633 11670
2/99 10555 11607
5/99 11368 12500
8/99 12249 13520
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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 Value Fund
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1 Year** $ 12,249 22.49%
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MSCI EAFE Value Index*
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1 Year** $ 13,520 35.20%
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* 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.
** The Fund commenced operations on September 1, 1998.
6
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Returns and Per Share Information
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Period ended August 31
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE ILLUSTRATING THE SCUDDER
INTERNATIONAL VALUE FUND TOTAL RETURN (%) AND MSCI EAFE VALUE INDEX* TOTAL
RETURN (%)
1999
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Fund Total
Return (%) 22.49
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Index Total
Return (%) 35.20
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Net Asset
Value ($) 14.61
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Income
Dividends ($) .08
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Capital Gains
Distribution ($) --
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* 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.
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results. Investment return and
principal value will fluctuate, so an investor's shares, when redeemed, may
be worth more or less than when purchased.
7
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Portfolio Summary
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August 31, 1999
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Geographical
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A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Europe 66% Over the period, we used
Japan 17% the fund's 14 single
Pacific Basin 12% country and regional
Canada 3% models to select
Africa 1% investments in 28
Latin America 1% countries.
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100%
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Sectors
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A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Financial 41% The fund's portfolio is
Manufacturing 17% constructed to provide
Durables 7% investors with broad
Utilities 7% diversification, with
Energy 7% the goal of producing
Metals & Minerals 4% the lowest risk and the
Construction 4% highest return possible.
Technology 2%
Communications 2%
Other 9%
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100%
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8
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Ten Largest Equity Holdings
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(24.1% of Portfolio) The fund focuses its
investments on
1. BASF AG securities of mid- and
International chemical producer in Germany large-cap companies,
based outside the U.S.,
2. Royal Bank of Scotland Group PLC that are either included
Bank in the United Kingdom in, or have similar
characteristics to,
3. Sakura Bank Ltd. those in the Morgan
Bank in Japan Stanley Capital
International (MSCI)
4. National Westminster Bank PLC EAFE Value Index.
Bank in the United Kingdom
5. DaimlerChrysler AG
Worldwide designer, manufacturer, and marketer of
automobiles, trucks, and other vehicles in Germany
6. ING Groep NV
Provider of insurance and financial services in the
Netherlands
7. UPM-Kymmene OYJ
Manufacturer of paper and pulp products in Finland
8. Koninklijke (Royal) Philips Electronics NV
Manufacturer of consumer electronics in the Netherlands
9. AXA SA
Insurance group providing insurance, finance, and real estate
services in France
10. LM Ericsson Telephone Co. "B"
Manufacturer of wired and mobile telecommunications
equipment in Sweden
For more complete details about the Fund's investment portfolio, see page 16. 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
In the following interview, portfolio managers Shahram Tajbakhsh, Josephine Chu,
and Philip Fortuna discuss the fund's market environment and strategy during the
twelve-month period ended August 31, 1999.
Q: How has Scudder International Value Fund performed over this introductory
period?
A: The fund's total return was 22.49% over the 12- month period since its
inception on September 1, 1998. Over the same period, the fund's unmanaged
benchmark, the MSCI EAFE Value Index, returned 35.20%.
Q: How would you characterize the fund's performance so far?
A: I'm pleased with the results. The fund underweighted Japan by 17% during the
period and still managed to perform well through stock selection, value
selection, and other factors. Weakness in the yen and the presence and strong
performance of several "mega-cap" Japanese stocks including Fuji Bank gave Japan
a much higher weighting in the Index (29%) than usual.
Q: Have international value stocks staged a comeback?
A: In general, value has made a comeback. Most of the comeback so far has come
from the mega-capitalization stocks (which this fund doesn't generally invest
in), not from the large- or mid-caps. As the fund commenced operations a year
ago growth was outperforming value, but after several months value overtook
growth. So value has come back to some extent, but it's not fully back. And I
expect that in the future we will see more of the value stocks performing
better.
Q: For new investors, please 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
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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. Careful consideration is then
given to the risk characteristics of these stocks within the context of a
diversified portfolio.
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
each country. Each employs a "bottom-up" approach. We run about 14 regional and
single country models. These give us 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.
Each model picks stocks that display value characteristics, as well as a certain
amount of positive price momentum. Each country model is different because we
believe each country's stocks behave differently. Each country model
incorporates 5 to 8 factors depending on what works for the specific country. We
then rank stocks in 5 different quintiles. The best buys are "1" and immediate
sells are "5." We pick stocks to give us the best diversification possible and
the lowest risk and highest return.
Q: Has the fund changed its sector weightings significantly since its inception?
A: The model that we use has directed some changes to the weightings during the
past five months. We increased the fund's holdings in the the oil sector, adding
BP, Total, and Elf. The fund also increased its weighting in technology. In
telecommunications, we decreased our weighting because the sector seemed
significantly overvalued.
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Q: What type of individual is best suited for investments in international value
stocks?
A: International value stocks are for people who are seeking a diversification
tool for their U.S. investing, lower volatility, and higher returns over longer
periods of time. If you have a three-year time horizon, I think international
value stocks can be a superior vehicle. They have proved over the last year that
they can deliver low correlation with growth stocks and comparable returns. Over
the last year the Scudder International Value Fund portfolio gave us the
indication that it's doing what we're asking it to do.
12
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Scudder International Value Fund:
A Team Approach to Investing
Scudder International Value 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.
Lead portfolio manager Shahram Tajbakhsh, who joined the Adviser in 1996, is
responsible for the fund's day-to-day management and overall investment
strategies. Mr. Tajbakhsh has seven years of industry experience and six years
of experience developing analytical investment tools.
Portfolio manager Philip S. Fortuna joined the Adviser in 1986. Mr. Fortuna is
currently director of the Adviser's quantitative group.
Portfolio manager Josephine W. K. Chu joined the Adviser in 1997. Ms. Chu has
two years of industry experience. Prior to joining the Adviser, Ms. Chu worked
toward her B.B.A. degree in accounting and an M.B.A. with a concentration in
analytical finance.
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Glossary of Investment Terms
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Fundamental Analysis of companies based on the projected impact of
Research 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 The value of a company's outstanding shares of common
Capitalization 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 Refers to the allocation of assets -- usually by
Weighting 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 A widely used gauge of a stock's valuation that
Ratio (P/E) (also indicates what investors are paying for a company's
"earnings earnings on a per share basis. A higher "earnings
multiple") multiple" indicates a higher expected growth rate and
the potential for greater price fluctuations.
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August 31, 1999
Standard A statistical measure of the degree to which an
Deviation 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.
(Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
15
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Investment Portfolio as of August 31, 1999
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Market
Shares Value ($)
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Common Stocks 100%
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Australia 2.9%
Australia & New Zealand Banking Group Ltd. (General
trading and savings bank) ............................. 2,680 17,479
Commonwealth Bank of Australia (Provider of banking,
insurance and related services) ....................... 800 12,625
National Australia Bank Ltd. (Commercial bank) ........... 3,000 45,488
Qantas Airways Ltd. (International airline company) ...... 5,000 16,161
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91,753
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Austria 0.7%
Bank Austria AG (Provider of commercial and corporate
banking services) ..................................... 50 2,658
Voest-Alpine Stahl AG (Processor and distributor of steel
products) ............................................. 605 19,778
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22,436
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Belgium 2.2%
Arbed SA (Manufacturer of steel and related products) .... 100 9,998
Gevaert NV (Investor in banks, insurance companies and
chemical manufacturers) ............................... 50 2,841
Groupe Bruxelles Lambert SA (Investor in utilities, media,
finance, and real estate) ............................. 50 9,569
Solvay SA (Chemical producer) ............................ 700 49,359
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71,767
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Brazil 0.3%
Banco Bradesco SA (pfd.) (Commercial bank) ............... 500,000 1,984
Petroleo Brasileiro SA (pfd.) (Petroleum company) ........ 45,000 6,039
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8,023
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Canada 2.6%
BCE, Inc. (Telecommunication services) ................... 750 34,951
Bank of Nova Scotia (Bank) ............................... 1,200 26,033
Barrick Gold Corp. (Gold exploration and production in
North and South America) .............................. 100 1,938
Dofasco Inc. (Producer of flat rolled and tubular steel) . 640 10,906
Fletcher Challenge Canada Ltd. "A" (Producer and
supplier of printing paper) ........................... 970 10,587
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84,415
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Denmark 0.6%
Codan Forsikring (Insurance company) ..................... 70 6,874
Kapital Holding (Provider of banking services) ........... 105 3,736
The accompanying notes are an integral part of the financial statements.
16
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Market
Shares Value ($)
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Unidanmark A/S "A" (Registered) (Bank holding
company) ............................................... 150 9,863
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20,473
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Finland 2.8%
Stora Enso OYJ -- R Shares (Manufacturer of paper and
paper products) ........................................ 1,475 19,662
UPM-Kymmene OYJ (Manufacturer of paper and pulp
products) .............................................. 2,000 69,296
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88,958
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France 11.5%
AXA SA (Insurance group providing insurance, finance and
real estate services) .................................. 545 67,921
Assurances Generales de France (Health, life and liability
insurance provider) .................................... 300 15,511
Banque Nationale de Paris SA (Bank) ....................... 750 57,447
Bouygues SA (Conglomerate: public works, real estate and
industrial development, engineering services, television
and motion pictures) ................................... 45 12,426
Elf Aquitaine SA (Petroleum company) ...................... 170 29,855
Etablissements Economiques du Casino Guichard-
Perrachon SA (Operator of supermarkets and
convenience stores) .................................... 110 11,603
Finaxa (Insurance holding company) ........................ 100 10,135
Lafarge SA (Producer of cement, concrete and
aggregates) ............................................ 200 21,519
Lagardere S.C.A. (Holding company with interests in
publishing, defense, audiovisual production and
services, telecommunications and media) ................ 500 20,313
Renault SA (Manufacturer of automobiles, buses, industrial
and agricultural vehicles) ............................. 300 16,187
SEITA (Producer of cigarettes and pipe tobacco) ........... 200 10,918
Scor SA (Property, casualty and life reinsurance
company) ............................................... 140 6,994
Societe Generale (Bank) ................................... 35 6,861
Suez Lyonnaise des Eaux SA (Water and electric utility) ... 255 42,598
Total SA "B" (Explorer, developer and producer of oil
and gas) ............................................... 300 38,721
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369,009
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Germany 9.5%
Alcatel SEL AG (Manufacturer and marketer of
telecommunication equipment) ........................... 55 8,146
BASF AG (International chemical producer) ................. 2,100 95,311
Bayer AG (Chemical producer) .............................. 270 11,754
DaimlerChrysler AG (Worldwide designer, manufacturer
and marketer of automobiles, trucks and other vehicles) 1,050 79,315
The accompanying notes are an integral part of the financial statements.
17
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Market
Shares Value ($)
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Deutsche Bank AG (registered) (Provider of financial
services) ............................................. 350 23,957
Dresdner Bank AG (Bank) .................................. 270 12,454
FPB Holding AG (Manufacturer and marketer of paper and
paper products) ....................................... 280 48,285
Porsche AG (Manufacturer of luxury sports cars) .......... 6 15,139
SAP AG (pfd.) (Computer software manufacturer) ........... 25 10,051
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304,412
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Hong Kong 4.2%
Amoy Properties Ltd. (Property management company) ....... 45,000 44,334
Hang Seng Bank Ltd. (Commercial banking and related
financial services) ................................... 2,000 22,602
Kerry Properties, Ltd. (Real estate company) ............. 5,000 6,246
Sun Hung Kai Properties Ltd. (Real estate developer and
finance company) ...................................... 1,000 8,500
Wharf Holdings Ltd. (Property development and
investment) ........................................... 20,000 54,347
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136,029
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India 0.8%
ICICI Ltd. (Financial institution) (b) ................... 3,000 5,551
Oil and Natural Gas Corp., Ltd. (Explorer and producer of
crude oil) (b) ........................................ 4,000 20,968
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26,519
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Italy 3.6%
Ente Nazionale Idrocarburi SpA (Exploration and production
of oil, natural gas, and chemicals) ................... 7,000 42,138
Istituto Nazionale delle Assicurazione (Insurance
company) .............................................. 19,000 45,830
Montedison SpA (Holding company: chemicals, natural
gas and agriculture) .................................. 7,280 10,975
Telecom Italia SpA (Provider of telecommunications,
electronics and network construction services) ........ 3,000 17,202
---------
116,145
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Japan 17.0%
ACOM Co., Ltd. (Provider of financial services) .......... 100 10,143
Amada Metrecs Co., Ltd. (Manufacturer of metal molds
and automated lines) .................................. 1,000 7,067
Chugoku Electric Power Co., Inc. (Distributor of
electricity) .......................................... 1,300 21,411
Daiichi Pharmaceutical Co., Ltd. (Producer of ethical
drugs) ................................................ 1,000 15,439
Fuji Bank, Ltd. (Provider of commercial and institutional
banking services) ..................................... 4,000 41,267
Hitachi, Ltd. (General electronics manufacturer) ......... 5,000 50,717
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>
Honda Motor Co., Ltd. (Automobile and motorcycle
manufacturer) ............................................ 600 24,103
Japan Energy Corp. (Importer of crude oil) .................. 10,000 12,782
Kyushu Electric Power Co. (Provider of electricity) ......... 800 12,782
Nikko Securities Co., Ltd. (Securities broker and dealer) ... 6,000 51,931
Nintendo Co., Ltd. (Manufacturer of game equipment) ......... 100 17,347
Ono Pharmaceutical Co., Ltd. (Producer of medicines for
human and veterinary uses) ............................... 1,000 32,685
Osaka Gas Co. (Gas distributor) ............................. 1,000 3,195
Sakura Bank Ltd. (Bank) ..................................... 16,000 84,726
Sanyo Electric Co., Ltd. (Manufacturer of consumer
electronics) ............................................. 5,000 21,684
Sony Corp. (Manufacturer of consumer electronic
products) ................................................ 100 12,946
Takefuji Corp. (Consumer loan company) ...................... 200 32,156
The Mitsui Trust & Banking Co., Ltd. (Provider of trust and
commercial banking services) ............................. 16,000 33,014
Tokyo Electric Power Co. (Electric utility) ................. 2,500 58,203
---------
543,598
---------
Korea 1.7%
Kookmin Bank (Commercial bank) .............................. 1,000 13,977
Pohang Iron & Steel Co., Ltd. (Steel producer) (b) .......... 300 40,554
---------
54,531
---------
Mexico 0.3%
Cemex SA de CV (Producer and distributor of cement and
concrete) ................................................ 2,500 11,067
---------
Netherlands 6.2%
ABN AMRO Holding NV (Bank) .................................. 2,100 51,210
DSM NV (Plastics producer) .................................. 30 3,534
ING Groep NV (Provider of insurance and financial
services) ................................................ 1,350 74,125
KLM Royal Dutch Air Lines NV (World-wide full service
airline) ................................................. 50 1,375
Koninklijke (Royal) Philips Electronics N.V. (Manufacturer of
consumer electronics) .................................... 665 68,630
---------
198,874
---------
Norway 0.6%
Christiania Bank og Kreditkasse (Commercial bank) ........... 4,670 19,839
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
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Market
Shares Value ($)
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Philippines 0.6%
Philippine Commercial International Bank (Commercial
bank) ............................................... 3,000 19,282
--------
Poland 0.2%
Bank Slaski SA (Bank) .................................. 100 6,633
--------
Singapore 1.0%
Cycle & Carriage Ltd. (Distributor of motor vehicles) .. 4,000 22,561
Wing Tai Holdings Ltd. (Property investment and
development, garment manufacturing, trading in fabric
and architectural products) ......................... 8,000 8,597
--------
31,158
--------
South Africa 1.3%
AngloGold Ltd. (Holding company for group of companies
which mine gold) .................................... 520 26,053
Rembrandt Group Ltd. (Investment holding company) ...... 2,000 14,982
--------
41,035
--------
Spain 2.2%
Compania Espanola de Petroleos, SA (Manufacturer of
energy products and petrochemicals) ................. 2,400 28,996
Endesa SA (Electric power utility) ..................... 1,000 20,101
Repsol SA (Manufacturer of crude oil and natural gas) .. 1,005 21,010
--------
70,107
--------
Sweden 2.9%
LM Ericsson Telephone Co. "B" (Manufacturer of wired and
mobile telecommunications equipment) ................ 1,900 61,303
Skandinaviska Enskilda Banken "A" (Commercial bank) .... 2,920 30,283
--------
91,586
--------
Switzerland 5.1%
ABB Ltd. (Manufacturer of equipment for power generation
and distribution) ................................... 285 29,084
BK Vision AG* (Investor in banks and insurance
companies) .......................................... 100 21,334
Compagnie Financiere Richemont AG (Holding
company) ............................................ 15 28,534
Holderbank Financiere Glaris AG (Bearer) (Cement
producer) ........................................... 35 43,114
Pargesa Holding AG (Investment firm) ................... 10 15,852
SAirGroup (Airline) .................................... 50 10,518
UBS AG-Registered (Provider of banking and asset
management services) ................................ 55 15,530
--------
163,966
--------
The accompanying notes are an integral part of the financial statements.
20
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Market
Shares Value ($)
- --------------------------------------------------------------------------------
Taiwan 0.4%
China Steel Corp. (Manufacturer and marketer of steel
products) ............................................... 2,500 1,950
Want Want Holdings Ltd. (Manufacturer and trader of rice
crackers, snack foods and non-alcoholic beverages) ...... 6,000 10,800
--------
12,750
--------
Thailand 0.4%
Krung Thai Bank Public Company Co., Ltd. (Foreign
registered) (b) ......................................... 30,000 11,737
--------
Turkey 0.3%
Akbank T.A.S. (Banking and investment organization) ........ 750,000 9,933
--------
United Kingdom 18.1%
Abbey National PLC* (Financial services) ................... 500 8,587
Allied Domecq PLC (International food, drink and hospitality
group) .................................................. 160 1,470
Anglo American PLC* (International mining firm) ............ 400 22,099
Arjo Wiggins Appleton PLC (Manufacturer and distributor
of carbonless, thermal, fine, coated, premium and
specialty papers) ....................................... 4,510 15,577
BG PLC ..................................................... 4,500 27,037
BP Amoco PLC (Major oil company) ........................... 500 9,261
Barclays PLC (Commercial and investment banking,
insurance and other financial services) ................. 1,100 32,639
Blue Circle Industries PLC (Manufacturer of concrete,
cement and heating supplies) ............................ 2,000 13,776
British Telecom PLC (Telecommunication services) ........... 1,100 16,823
Delta PLC (Manufacturer of electrical cables) .............. 2,300 5,986
GKN PLC (Producer of automotive, agritechnical and
aerospace vehicles and provider of various industrial
services) ............................................... 1,000 15,262
General Electric Co., PLC (Manufacturer of power,
communications and defense equipment) ................... 3,500 34,917
Hyder PLC (Provider of infrastructure services) ............ 750 6,771
Imperial Tobacco Group PLC (Manufacturer of tobacco
products) ............................................... 1,320 14,876
Lonmin PLC (Miner of platinum, gold and coal) .............. 500 4,579
National Westminster Bank PLC (Bank) ....................... 4,130 84,661
Peninsular and Oriental Steam Navigation Co. PLC
(Shipping and transportation company) ................... 1,000 16,065
Pilkington PLC (Manufacturer of glass for building and
automotive markets) ..................................... 1,700 2,977
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Rolls-Royce PLC (Manufacturer of aero, marine, and
industrial gas turbines) ............................ 9,000 35,749
Royal Bank of Scotland Group PLC (Bank) ................ 4,200 86,500
Scottish Power PLC (Electric utility) .................. 3,010 27,635
Severn Trent PLC (Supplier of water and other related
services) ........................................... 330 4,771
Shell Transport & Trading PLC (Petroleum company) ...... 3,000 23,893
Tarmac PLC (Manufacturer of ready-mix concrete) ........ 1,568 12,734
Thames Water PLC (Water holding company) ............... 600 8,627
Tomkins PLC (Diversified international industrial
company) ............................................ 5,000 21,768
United Utilities PLC (Multi-utility business) .......... 1,750 20,804
W.H. Smith Group PLC (Book, newspaper, music and
hardware retailer) .................................. 500 4,603
---------
580,447
---------
Total Investment Portfolio -- 100.0% (Cost $2,859,716) (a) 3,206,482
* Non-income producing security
(a) The cost for federal income tax purposes was $2,877,859. At August 31,
1999, net unrealized appreciation for all securities based on tax cost was
$328,623. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of
$431,373 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $102,750.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $78,810 (2.44% 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 $73,420. These securities may also
have certain restrictions as to resale.
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
Financial Statements
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities as of August 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
- ------------------------------------------------------------------------------------------
<S> <C>
Investment securities, at market (identified cost $2,859,716) ............... $3,206,482
Cash and foreign currency holdings, at market (identified cost $40,314) ..... 40,951
Receivable for investments sold ............................................. 22,720
Dividends and interest receivable ........................................... 9,072
Foreign taxes recoverable ................................................... 5,053
Due from Adviser ............................................................ 176,090
Other ....................................................................... 145
----------
Total assets ................................................................ 3,460,513
Liabilities
- ------------------------------------------------------------------------------------------
Payable for investments purchased ........................................... 43,458
Payable for Fund shares redeemed ............................................ 21,914
Other payables and accrued expenses ......................................... 167,820
----------
Total liabilities ........................................................... 233,192
Net assets, at market value $3,227,321
Net Assets
- ------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income 21,945
Unrealized appreciation (depreciation) on:
Investment securities ..................................................... 346,766
Foreign currency related transactions ..................................... 666
Accumulated net realized gain (loss) ........................................ 177,010
Paid-in capital ............................................................. 2,680,934
Net assets, at market value $3,227,321
Net Asset Value
- ------------------------------------------------------------------------------------------
NetAsset Value, offering and redemption price per share ($3,227,321 / 220,899
shares of capital stock outstanding, $.01 par value, 100,000,000 of shares
authorized) .............................................................. $ 14.61
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations for the period September 1, 1998 (commencement of
operations) to August 31, 1999
- --------------------------------------------------------------------------------
Investment Income
- --------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $8,736) ............ $ 79,517
Interest ....................................................... 5,104
---------
84,621
---------
Expenses:
Management fee ................................................. 26,917
Services to shareholders ....................................... 26,677
Custodian and accounting fees .................................. 143,189
Directors' fees and expenses ................................... 45,450
Registration fees .............................................. 12,245
Auditing ....................................................... 47,700
Reports to shareholders ........................................ 10,093
Organization fees .............................................. 12,500
Legal .......................................................... 9,934
Other .......................................................... 8,714
---------
Total expenses before reductions ............................... 343,419
Expense reductions ............................................. (296,252)
---------
Expenses, net .................................................. 47,167
Net investment income 37,454
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .................................................... 177,010
Foreign currency related transactions (net of CPMF tax $99) .... 493
---------
177,503
Net unrealized appreciation (depreciation) during the period on:
Investments (net of deferred India tax $2,349) ................. 346,766
Foreign currency related transactions .......................... 666
---------
347,432
Net gain (loss) on investment transcations ..................... 524,935
Net increase (decrease) in net assets resulting from operations $ 562,389
The accompanying notes are an integral part of the financial statements.
24
<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 ............................................. $ 37,454
Net realized gain (loss) from investment transactions ............. 177,503
Net unrealized appreciation (depreciation) on investment
transactions during the period ................................. 347,432
-----------
Net increase (decrease) in net assets resulting from operations ... 562,389
-----------
Distributions to shareholders from net investment income .......... (16,002)
-----------
Fund share transactions:
Proceeds from shares sold ......................................... 5,547,701
Net asset value of shares issued to shareholders in reinvestment of
distributions .................................................. 15,431
Cost of shares redeemed ........................................... (2,883,398)
-----------
Net increase (decrease) in net assets from Fund share transactions 2,679,734
-----------
Increase (decrease) in net assets ................................. 3,226,121
Net assets at beginning of period ................................. 1,200
Net assets at end of period (including undistributed net investment
income of $21,945) ............................................. $ 3,227,321
Other Information
- ------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ......................... 100
-----------
Shares sold ....................................................... 445,751
Shares issued to shareholders in reinvestment of distributions .... 1,169
Shares redeemed ................................................... (226,121)
-----------
Net increase (decrease) in Fund shares ............................ 220,799
Shares outstanding at end of period ............................... 220,899
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<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.
- --------------------------------------------------------------------------------
1999(b)
- --------------------------------------------------------------------------------
Net asset value, beginning of period $12.00
--------
- --------------------------------------------------------------------------------
Income from investment operations:
- --------------------------------------------------------------------------------
Net investment income .18
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.51
--------
- --------------------------------------------------------------------------------
Total from investment operations 2.69 Less distributions:
From net investment income (.08)
--------
- --------------------------------------------------------------------------------
Total distributions (.08)
- --------------------------------------------------------------------------------
Net asset value, end of period $14.61
--------
- --------------------------------------------------------------------------------
Total Return (%) (c) 22.49
- --------------------------------------------------------------------------------
Ratios and Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of period ($ millions) 3
- --------------------------------------------------------------------------------
Ratio of operating expenses to average daily net assets (%) 1.75
- --------------------------------------------------------------------------------
Ratio of operating expenses, before expense reductions,
to average daily net assets (%) 12.74
- --------------------------------------------------------------------------------
Ratio of net investment income to average daily net assets (%) 1.39
- --------------------------------------------------------------------------------
Portfolio turnover rate (%) 75.3
- --------------------------------------------------------------------------------
(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.
26
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
August 31, 1999
A. Significant Accounting Policies
Scudder International Value 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 consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. Securities which are traded
on U.S. or foreign stock exchanges are valued at the most recent sale price
reported on the exchange on which the security is traded most extensively. If no
sale occurred, the security is then valued at the calculated mean between the
most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation is used. Securities quoted on the
Nasdaq Stock Market ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are not quoted on Nasdaq but are
traded in another over-the-counter market are valued at the most recent sale
price, or if no sale occurred, at the calculated mean between the most recent
bid and asked quotations on such market. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
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
27
<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 0.38% 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
28
<PAGE>
regulations which may differ from generally accepted accounting principles.
These differences primarily relate to investments in forward contracts, passive
foreign investment companies, foreign denominated investments, and certain
securities sold at a loss. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. Accordingly, the
Fund may periodically make reclassifications among certain of its capital
accounts without impacting the net asset value of the Fund.
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.
B. Purchases and Sales of Securities
For the year ended August 31, 1999, purchases and sales of investment securities
(excluding short-term investments) aggregated $4,721,913 and $2,039,207,
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 $26,917. Further,
the Fund's reimbursement due from the Adviser at August 31, 1999 amounted to
$176,090.
29
<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
$20,491.
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 $50,004.
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.
30
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors of Scudder International Fund, Inc. and to 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 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
31
<PAGE>
Tax Information
- --------------------------------------------------------------------------------
August 31, 1999
The Fund paid foreign taxes of $8,736 and earned $51,150 of foreign source
income during the year ended August 31, 1999. Pursuant to Section 853 of the
Internal Revenue Code, the Fund designates $0.04 per share as foreign taxes paid
and $0.23 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.
32
<PAGE>
Officers and Directors
- --------------------------------------------------------------------------------
Lynn S. Birdsong* Elizabeth J. Allan*
o Chairman of the Board and o Vice President
Director
Irene T. Cheng*
Nicholas Bratt* o Vice President
o President
Joyce E. Cornell*
Paul Bancroft III o Vice President
o Director; Venture Capitalist and
Consultant Susan E. Dahl*
o Vice President
Sheryle J. Bolton
o Director; Chief Executive Officer, Philip S. Fortuna*
Scientific Learning Corporation o Vice President
William T. Burgin Carol L. Franklin*
o Director; General Partner, o Vice President
Bessemer Venture Partners
Edmund B. Games, Jr.*
Keith R. Fox o Vice President
o Director; Private Equity Investor
Theresa Gusman*
William H. Luers o Vice President
o Director; Chairman and President,
U.N. Association of America Ann M. McCreary*
o Vice President
Kathryn L. Quirk*
o Director; Vice President and Sheridan Reilly*
Assistant Secretary o Vice President
Joan E. Spero Shahram Tajbakhsh*
o Director; President, Doris Duke o Vice President
Charitable Foundation
John Millette*
Thomas J. Devine o Vice President and Secretary
o Honorary Director; Consultant
John R. Hebble*
William H. Gleysteen, Jr. o Treasurer
o Honorary Director; Consultant;
Guest Scholar, Brookings Richard W. Desmond*
Institution o Assistant Secretary
Wilson Nolen Caroline Pearson*
o Honorary Director; Consultant o Assistant Secretary
Robert G. Stone, Jr. *Scudder Kemper Investments, Inc.
o Honorary Director; Chairman
Emeritus and Director, Kirby
Corporation
33
<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>
34
<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.
35
<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.
36
<PAGE>
- --------------------------------------------------------------------------------
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
37
<PAGE>
Notes
- --------------------------------------------------------------------------------
<PAGE>
Notes
- --------------------------------------------------------------------------------
<PAGE>
About the Fund's Adviser
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.
SCUDDER
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
