SCUDDER
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EQUITY/GLOBAL
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Scudder International
Fund
Fund #068
Annual Report
August 31, 1999
A fund seeking long-term growth of capital
through investment primarily in foreign
equity securities.
A no-load fund with no commissions to buy,
sell, or exchange shares.
This report applies to the International
Shares of the fund.
<PAGE>
Contents
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4 Letter from the Fund's Chairman
6 Performance Update
8 Portfolio Summary
10 Portfolio Management Discussion
16 Investment Portfolio
23 Financial Statements
26 Financial Highlights
29 Notes to Financial Statements
37 Report of Independent Accountants
38 Tax Information
39 Officers and Directors
40 Investment Products and Services
42 Scudder Solutions
2
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Scudder International Fund
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ticker symbol SCINX fund number 068
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Date of o Although interest rate fears have produced unusually
Inception: high volatility in recent months, the long-term trends
6/18/53 of restructuring and consolidation continue to provide
attractive investment opportunities.
o Management focused the portfolio on a resurgence in
Total Net Japan, most notably in the financial sector.
Assets of Investments in the technology and cyclical sectors were
International also key.
Shares as of
8/31/99: o As of August 31, 1999, Scudder International Fund
$3.6 billion received an overall Morningstar Rating(TM) of four
stars.^1 In addition, Lipper Analytical Services ranks
the Fund in the top 16th percentile among international
funds for the one-year period ended August 31, and in
the upper 10th and 9th percentiles, respectively, over
the most recent three- and five-year periods.^2
^1 Morningstar proprietary rankings reflect historical risk-adjusted
performance as of August 31, 1999. The ratings are subject to change every
month. Morningstar ratings are calculated from the funds' 3-, 5-, and
10-year average annual returns in excess of 90-day Treasury bill returns
with appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day T-bill returns. Past performance is no guarantee
of future results. Scudder International Fund received 4 stars for the 3-,
5-, and 10-year periods. The top 10% of funds in a broad asset class
receive 5 stars, and the next 22.5% receive 4 stars, and the next 35%
receive 3 stars. Scudder International Fund was rated among 1001, 535, and
117 international equity funds for the 3-, 5-, and 10-year periods,
respectively, in its broad asset class.
^2 Lipper Analytical Services, Inc., is an independent analyst of investment
performance. Performance includes reinvestment of dividends and capital
gains. For the period ended August 31, 1999, Scudder International Fund's
Lipper ranking was 91 out of 571 international funds for the one-year
period, 37 out of 361 funds for the three-year period, 18 out of 199 for
the five-year period, and 12 out of 39 for the ten-year period.
3
<PAGE>
Letter from the Fund's Chairman
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Dear Shareholders,
Investing in the foreign markets has long been considered a way to achieve
meaningful portfolio diversification. While this notion was called into question
when all of the global markets plummeted in unison during the crisis period last
fall, the events of 1999 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
bottom-up stockpickers to invest in companies that are poised to capitalize on
the evolution of the global economy. The ability of the management team of
Scudder International Fund to take advantage of many such opportunities has
enabled the International Shares of the fund to post a 32.06% return over the
twelve months and a 15.19% return over the five 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.
We have changed the fund's fiscal year-end from March 31 to August 31 as part of
a larger effort to create efficiencies and
4
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reduce the costs of producing Scudder fund regulatory materials such as fund
reports and prospectuses. Going forward, you will receive regular reports
following the fund's annual and semiannual periods ending in August and
February.
Finally, it should be noted that Daniel Pierce retired in June of this year as
Chairman of Scudder International Fund, at which time I assumed that role and
its responsibilities. We are fortunate that Dan's longstanding affiliation with
Scudder is ongoing, and that we will continue to benefit from his counsel going
forward. I am pleased to join the International Fund's team in this capacity,
and look forward to serving your interests.
Thank you for your continued investment in Scudder International 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 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
Fund --
International MSCI EAFE & Canada
Shares Index*
'89 10000 10000
'90 10720 8799
'91 10428 8779
'92 11078 8762
'93 13226 11013
'94 15214 12188
'95 15377 12292
'96 16767 13289
'97 19559 14604
'98 20789 14447
'99 27455 18226
Yearly periods ended August 31
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Fund Index Comparison
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Total Return
Growth of Average
Period ended 8/31/1999 $10,000 Cumulative Annual
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Scudder International Fund -- International Shares
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1 year $ 13,206 32.06% 32.06%
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5 year $ 18,045 80.45% 12.53%
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10 year $ 27,455 174.55% 10.63%
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MSCI EAFE & Canada Index*
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1 year $ 12,616 26.16% 26.16%
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5 year $ 14,955 49.55% 8.38%
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10 year $ 18,226 82.26% 6.18%
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* The Morgan Stanley Capital International (MSCI) Europe, Australia, the Far
East (EAFE) & Canada Index is an unmanaged capitalization-weighted measure of
stock markets in Europe, Australia, the Far East and Canada. Index returns
assume dividends reinvested net of withholding tax and, unlike Fund returns,
do not reflect any fees or expenses.
6
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Returns and Per Share Information
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Yearly periods ended August 31
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE SCUDDER INTERNATIONAL FUND --
INTERNATIONAL SHARES TOTAL RETURN (%) AND MSCI
EAFE & CANADA INDEX* TOTAL RETURN (%)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund Total
Return (%) 7.20 -2.72 6.23 19.39 15.03 1.07 9.04 16.65 6.29 32.06
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Index Total
Return (%) -12.01 -.23 -.19 25.69 10.67 .85 8.11 9.90 -1.08 26.16
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Net Asset
Value ($) 37.39 33.93 35.12 40.58 45.07 44.09 45.90 51.35 48.57 54.82
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Income
Dividends
($) .62 .95 .51 .37 .34 -- .40 1.32 .21 --
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Capital Gains
Distributions
($) 2.61 1.37 .40 .76 1.18 1.33 1.69 .69 5.45 8.10
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</TABLE>
* The Morgan Stanley Capital International (MSCI) Europe, Australia, the Far
East (EAFE) & Canada Index is an unmanaged capitalization-weighted measure
of stock markets in Europe, Australia, the Far East and Canada. Index
returns assume dividends reinvested net of withholding tax and, unlike Fund
returns, do not reflect any fees or expenses.
Effective August 2, 1999, the Fund offers three share classes:
International Shares, Barrett International Shares, and Class R Shares. The
total return information provided is for the Fund's International Shares
Class.
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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(Excludes 1% Cash Equivalents)
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Fund management further
Europe 60% increased the
Japan 29% portfolio's weighting in
Pacific Basin 10% Japan and the Pacific
Canada 1% Basin, and reduced its
- ------------------------------------ holdings in Europe.
100%
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Sectors
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(Excludes 1% Cash Equivalents)
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
The fund's holdings in
Manufacturing 19% cyclicals and Japanese
Financial 18% financial stocks were
Technology 13% among top contributors
Communications 9% to performance.
Consumer Staples 8%
Service Industries 7%
Energy 6%
Metals & Materials 4%
Consumer Discretionary 4%
Other 12%
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100%
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8
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Ten Largest Equity Holdings
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<TABLE>
<S> <C>
(17% of Portfolio) The fund's top ten
holdings reflect its
1. Elf Aquitaine SA high level of
Petroleum company in France diversification and
focus on well-managed,
2. Reuters Group plc fast-growing companies.
International news and information organization in the
United Kingdom
3. Rio Tinto plc
Mining company based in the United Kingdom
4. NTT Mobile Communications Network, Inc.
Provider of various telecommunication services and
equipment in Japan
5. Fujitsu Ltd.
Manufacturer of computers in Japan
6. Nokia OYJ
Manufacturer of telecommunication networks and
equipment in Finland
7. Daiwa Securities Co., Ltd.
Provider of brokerage and other financial services in
Japan
8. Mannesmann AG
Manufacturer of diversified industrial products in
Germany
9. Toshiba Corp.
Manufacturer of electric machinery in Japan
10. Orange plc
Operator of digital mobile telephone network in the
United Kingdom
</TABLE>
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 Manager Irene Cheng discusses Scudder
International Fund's strategy and the market environment during the five-month
period ending August 31, 1999.
Q: The international markets have experienced high levels of volatility in
recent months. To what do you attribute this development?
A: The increase in volatility is largely the result of the market's struggle to
balance the two most important effects of a stronger economy: rising interest
rates and improved corporate earnings. Investors across the world have been
keeping a close eye on the interest rate picture in the United States, where two
quarter-point increases by the Federal Reserve have prompted investors to
question the bull market's sustainability. The concern over higher rates has
spilled over into Europe, where stronger growth has fueled fears that the
European Central Bank will be inclined to tighten as early as this year.
Although the rate issue has been roiling the markets for months now, we believe
that it represents only a short-term difficulty. In contrast, restructuring and
consolidation activity is a powerful long-term theme that has been, and should
continue to be, a primary driver of stock market performance overseas. This
continuing trend, against a backdrop of economic recovery in its early days in
Europe and Japan, remains quite bullish for the international markets despite
the day-to-day turbulence that we have witnessed in recent months.
Q: How did consolidation activity affect fund performance over the period?
A: Corporate activity had a significant impact in two ways. First, we benefited
directly from our positions in a number of companies that were the subject of
takeover bids. Second, and probably more important, we owned a number of stocks
that were lifted when other companies in similar industries announced deals. A
case in point is the recent announcement of a proposed three-way merger in the
Japanese financial industry between Fuji Bank,
10
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Industrial Bank of Japan (IBJ), and Dai-Ichi Kangyo Bank (DKB). Although Fuji is
the only one of the three that we own directly, our other holdings in the
Japanese financial sector -- such as Sakura Bank, Sanwa Bank, Sumitomo Trust and
Banking, Daiwa Securities, and Nomura Securities -- were boosted on the hopes
that meaningful rationalization in the industry has finally begun.
In Europe, consolidation has continued to accelerate at a ferocious pace, and we
have benefited from our positions on many sides of the deals. For example,
Carrefour (a fund holding) recently offered to merge with Promodes in a
combination of two of the biggest players in the French food retailing industry.
Carrefour's stock rose on the news, and we believe that it has further to run
due to the potential for the company to gain synergies and significantly improve
its competitive position. This deal also strongly boosted the price of another
potential merger target -- and fund holding -- Casino. We also owned a large
position in Elf Aquitane, the French oil company that recently agreed to join
forces with TotalFina. In the U.K., we benefited from our large position in BOC,
an industrial gases company that is the key player in a three-company
consolidation in process. Also in the U.K., we held Select Appointments, the
fast-growing specialist staffing company that was recently bought out by a Dutch
competitor, Vedior NV. Our positions in companies such as these provided a
significant boost to performance by allowing the fund to participate in the
explosive increase in consolidation activity in the overseas markets, and we
would expect more to follow.
Q: How have the International Shares of the fund performed over the last year,
and in the five months since the last report?
A: The International Shares of the fund have done very well, rising 32.06% over
the 12-month reporting period ended on August 31. In comparison, the fund's
benchmark -- the MSCI EAFE + Canada Index -- returned 26.16%. Over the five
months since the last report, the
11
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International Shares of the fund have risen 15.19% versus 6.15% for the
benchmark. International Fund has also performed well within its peer group.
According to Lipper Analytical Services, the fund beat the 24.82% average return
for international funds over the last twelve months, and is ranked in the top
decile within its category over the three- and five-year periods ended August
31. We believe that strong stock selection across all regions has been the
driving force behind the fund's outstanding performance.
Q: Earlier, you mentioned that the fund holds a large position in the Japanese
financial sector. What factors led you to take such a heavy weighting in a
sector that, until the last 9-12 months, had been performing so poorly?
A: When we first established our position in Japanese financials earlier in the
year, we were intrigued by the fact that the sector was so deeply out of favor.
Many financial stocks had been decimated, and the prevailing expectation was
that bank failures were inevitable. However, we felt that the government's
injection of public funds into the banking system was a key step that would
limit further deterioration in the sector. Most important, these funds were made
available under the strict conditions that banks improve their profitability and
institute reforms. While this view was not in line with the consensus at the
time, our early entry into financials allowed us to participate in the full
length of their rally. At this juncture, we continue to believe that the market
remains skeptical regarding meaningful restructuring and consolidation in the
industry, and has not yet fully discounted the improved outlook for the sector.
Q: How has the fund's position in cyclicals affected performance?
A: Cyclicals have been strong for us in both Europe and Japan. We first built up
the position late in 1998 once it became more apparent that the improving health
of the global economy meant that a defensive positioning was no longer
warranted. The fact that we moved into cyclicals a
12
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few months early proved to be a distinct positive in a market where changes are
being discounted into asset prices faster than at any time in history. At this
stage, we are more optimistic on Japanese cyclicals, because (as with banks)
expectations are not as high as they are in Europe. Investors have generally
accepted the notion that growth in Europe will rebound, which means that the
potential benefit of a stronger economy is already discounted into stock prices
to a greater extent. In Japan, on the other hand, there is still a great deal of
doubt as to whether the bounce in the economy is for real, or merely the
temporary result of the country's economic stimulus plan. The fact that there
are still so many variables in Japan means that there is more breathing room for
us to move in and take advantage of some very interesting opportunities.
Currently, some of our favorite names among cyclicals are Rio Tinto, the premier
global mining company in the U.K., Siemens in Germany, and NEC, Hitachi, and
Nissan Motors in Japan.
Q: Have you found any opportunities in the emerging markets?
A: Yes. The bulk of our position in the developing countries consists of
technology stocks, primarily semiconductor manufacturers. The industry has
suffered over the latter part of the 1990s, with overcapacity pushing prices to
a level that proved unprofitable for many chip makers. Now that demand is
increasing and some of the excess capacity has been wrung out of the industry,
investors have gone on the prowl for bargains among the top companies in the
sector. Fund holdings that were positioned to benefit from this turnaround were
Samsung Electronics and Taiwan Semiconductor. We also established positions in
Taiwanese tech companies that are capitalizing on the growing trend toward
outsourcing, such as Compal Electronics and Hon Hai Precision. The fund's
emerging market tech names have performed extremely well overall, with several
doubling during the first eight months of 1999.
13
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Q: What is your outlook for the international markets from here?
A: We remain optimistic that the themes I mentioned earlier -- restructuring and
consolidation -- will continue to provide a strong underpinning for the foreign
markets, and will give bottom-up investors the opportunity to take advantage of
the positive performance of the many individual companies that are poised to
benefit from the ongoing process of secular change. That said, we also believe
that some caution may be warranted at this point -- the global stock markets
have come a long way in the past twelve months, and are vulnerable to a
larger-than-expected jump in interest rates. Regardless of the short-term
fluctuations of the markets, however, we will remain focused on adding value for
shareholders by investing in companies that are on the cusp of significant
positive changes.
14
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Scudder International Fund:
A Team Approach to Investing
Scudder International 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 Irene Cheng joined the Adviser in 1993. Ms. Cheng has
over 16 years of industry experience and focuses on portfolio management and
equity strategy for the Adviser's international equity accounts.
Portfolio manager Nicholas Bratt directs the Adviser's overall global equity
investment strategies. Mr. Bratt joined the Adviser and the team in 1976.
Portfolio manager Carol L. Franklin joined the fund's portfolio management team
in 1986 and has over 21 years of experience in finance and investing. She joined
the Adviser in 1981.
15
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Investment Portfolio as of August 31, 1999
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<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
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Repurchase Agreements 0.8%
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<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 8/31/1999 at 5.42%, to be repurchased at
$29,219,398 on 9/1/1999, collateralized by a
$29,375,000 U.S. Treasury Bond, 5.875%, 2/15/2000
(Cost $29,215,000) .......................................... 29,215,000 29,215,000
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Commercial Paper 0.3%
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Wal-Mart Stores, Inc., 5.24%**, 9/13/1999
(Cost $9,982,533) ........................................... 10,000,000 9,982,533
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Participating Loan Notes 0.4%
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Luxembourg
Eurotunnel Finance Ltd., Step-up Coupon, 1.0% to
12/31/2005, 1% plus 26.45% of net available
cash flow to 4/30/2040 (Cost $13,351,889) ................... 10,250(b) 14,097,188
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Convertible Bonds 0.1%
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Philippines
International Container Terminal, Inc., 1.75%, 3/13/2004
(Putable 3/13/2002) (Cost $3,194,166) ....................... 2,753,000 2,697,940
Shares
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Common Stocks 98.4%
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Australia 1.8%
Broken Hill Proprietary Co. Ltd. (Petroleum, mineral, and
steel exploration and production) ........................... 2,974,575 32,080,322
WMC Ltd. (Mineral exploration and production) .................. 4,802,500 21,231,013
Woodside Petroleum Ltd. (Oil and gas producer) ................. 1,814,600 12,723,517
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66,034,852
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Canada 1.3%
Canadian National Railway Co. (Railroad operator) .............. 723,000 45,916,672
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China 0.1%
Jiangsu Expressway Co., Ltd. "H" (Highway developer) ........... 6,783,000 1,222,957
Shenzhen Expressway Co. "H" (Highway developer) ................ 3,016,000 528,240
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1,751,197
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</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Finland 1.5%
Nokia OYJ (Manufacturer of telecommunication networks
and equipment) ........................................ 651,200 54,426,041
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France 14.2%
AXA SA (Provider of insurance, finance and real estate
services) ............................................. 101,192 12,611,209
Accor SA (Provider of catering, hotel and travel services) 75,755 18,257,036
Alcatel (Manufacturer of telecommunication equipment) .... 118,529 18,182,679
Alstom* (Designer and manufacturer of infrastructure
systems and components) ............................... 299,275 10,093,784
Carrefour SA (Hypermarket operator and food retailer) .... 164,220 26,755,436
Christian Dior (Fashion house) ........................... 184,105 29,605,638
Club Mediterranee SA* (Operator of vacation resorts) ..... 60,992 6,323,597
Elf Aquitaine SA (Petroleum company) ..................... 583,750 102,518,027
Etablissements Economiques du Casino
Guichard-Perrachon S.A. (Operator of supermarkets
and convenience stores) ............................... 427,332 28,029,953
Eurotunnel SA* (Developer of Channel Tunnel) ............. 21,261,013 32,390,056
LVMH (Louis Vuitton Moet Hennessy) (Producer of wines,
spirits and luxury products) .......................... 64,854 19,767,206
Lafarge SA (Producer of cement, concrete and
aggregates) ........................................... 331,597 35,677,696
Pinault-Printemps-Redoute SA (Operator of department
stores) ............................................... 147,248 25,548,094
Renault SA (Manufacturer of automobiles, buses, industrial
and agricultural vehicles) ............................ 384,289 20,734,492
Rhone-Poulenc S.A. "A" (Pharmaceutical company) .......... 941,467 45,737,481
Societe BIC SA (Manufacturer of office supplies) ......... 615,087 32,276,281
Suez Lyonnaise des Eaux (Provider of water supply and
treatment services) ................................... 189,281 31,619,457
Union des Assurances Federales (Insurance group) ......... 136,948 16,994,914
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513,123,036
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Germany 10.3%
BASF AG (International chemical producer) ................ 895,339 40,635,916
Commerzbank AG (Bank) .................................... 510,000 18,290,902
Dresdner Bank AG (Bank) .................................. 569,000 26,246,054
Heidelberger Druckmaschinen AG (Manufacturer of
commercial printing presses) .......................... 119,282 7,571,666
Hoechst AG (Chemical producer) ........................... 943,564 39,929,752
HypoVereinsbank AG (Bank) ................................ 386,620 22,946,288
Karstadt AG (Operator of department store chain) ......... 43,109 20,432,016
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Mannesmann AG (Manufacturer of diversified industrial
products) ............................................... 327,292 50,276,758
SAP AG (pfd.) (Manufacturer of computer software) .......... 83,347 33,507,253
Siemens AG (Electrical engineering and electronics
company) ................................................ 562,580 47,376,461
VEBA AG (Electric utility, distributor of oil and chemicals) 650,550 41,501,448
Viag AG (Provider of electrical power and natural gas
services) ............................................... 1,113,554 23,738,408
-------------
372,452,922
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Hong Kong 1.8%
Cheung Kong Holdings Ltd. (Real estate company) ............ 2,360,000 20,591,247
Citic Pacific Ltd. (Diversified holding company) ........... 6,190,000 19,251,702
Hong Kong & China Gas Co., Ltd. (Gas utility) .............. 19 27
Kerry Properties, Ltd. (Real estate company) ............... 3,822,155 4,774,648
New World China Land Ltd.* (Property development) .......... 38,918 31,325
New World Development Co., Ltd. (Property investment
and development) ........................................ 7,783,616 18,744,953
New World Infrastructure Ltd.* (Investment and operation of
infrastructure projects) ................................ 2,068,200 2,903,223
-------------
66,297,125
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Hungary 0.1%
The First Hungary Fund Limited "A"* (Investment
company) ................................................ 3,619 4,397,085
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Italy 5.0%
Arnoldo Mondadori Editore SpA (Book publisher) ............. 763,000 12,390,767
Assicurazioni Generali (Insurance company) ................. 712,300 24,076,817
Banca Nazionale del Lavoro* (Bank) ......................... 7,816,100 25,468,659
Class Editori SpA (Publishing house) ....................... 871,900 6,724,492
Finmeccanica SpA* (Designer and developer of
aeronautical equipment) ................................. 22,814,000 19,212,318
Gruppo Editoriale L'Espresso (Publisher) ................... 587,000 9,408,405
Mediaset SpA (Broadcasting and television networks) ........ 1,803,400 15,950,107
Seat Pagine Gialle SpA (Publisher of telecommunication
directories and provider of advertising services) ....... 23,830,800 32,901,401
Tecnost SpA* (Developer of information systems) ............ 6,839,100 17,907,684
Telecom Italia SpA (Telecommunication services) ............ 1,849,500 18,647,151
-------------
182,687,801
-------------
Japan 28.9%
Advantest Corp. (Producer of measuring instruments and
semiconductor testing devices) .......................... 157,300 21,326,623
Asahi Glass Co., Ltd. (Manufacturer of glass products) ..... 2,185,000 13,804,620
Benesse Corp. (Provider of educational services) ........... 176,100 30,547,795
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Canon Inc. (Producer of visual image and information
equipment) .............................................. 658,000 19,223,957
Daiwa Securities Co., Ltd. (Provider of brokerage and other
financial services) ..................................... 5,591,000 50,585,967
Fanuc Ltd. (Manufacturer of numerically controlled
equipment for machine tools) ............................ 153,400 9,243,495
Fuji Bank, Ltd. (Commercial bank) .......................... 4,170,000 43,021,090
Fujisawa Pharmaceutical Co. (Pharmaceutical company) ....... 320,000 5,495,481
Fujitsu Ltd. (Manufacturer of computers) ................... 1,861,000 54,540,400
Fujitsu Support and Service Inc. (Provider of information
services) ............................................... 51,500 13,306,400
Hikari Tsushin, Inc. (Provider of long distance and cellular
telephone services) ..................................... 35,000 18,469,826
Hitachi, Ltd. (Manufacturer of general electronics) ........ 3,629,000 36,810,180
Kawasaki Steel Corp. (Major integrated steelmaker) ......... 7,446,000 16,995,344
Komatsu Ltd. (Manufacturer of construction machinery) ...... 1,827,000 11,676,253
Matsushita Electric Industrial Co., Ltd. (Manufacturer of
consumer electronic products) ........................... 1,732,000 34,156,122
Murata Manufacturing Co., Ltd. (Manufacturer of ceramic
applied electronic components) .......................... 473,000 38,002,374
NEC Corp. (Manufacturer of telecommunication and
computer equipment) ..................................... 2,658,000 43,195,837
Nikko Securities Co., Ltd. (Securities broker and dealer) .. 3,727,000 32,257,792
Nippon Telegraph & Telephone Corp. (Telecommunication
services) ............................................... 3,368 37,821,967
Nissan Motor Co., Ltd. (Manufacturer of motor vehicles) .... 4,702,000 27,388,624
Nomura Securities Co., Ltd. (Provider of brokerage
services) ............................................... 2,499,000 36,619,145
NSK Ltd. (Manufacturer of bearings and motor vehicle
machine parts) .......................................... 3,247,000 20,869,972
NTT Mobile Communications Network, Inc. (Provider of
various telecommunication services and equipment) ....... 3,740 61,872,364
SMC Corp. (Manufacturer of directional control devices) .... 65,200 9,941,021
Sakura Bank, Ltd. (Bank) ................................... 8,045,000 42,601,114
Sanwa Bank, Ltd. (Bank) .................................... 3,093,000 42,358,258
Shin-Etsu Chemical Co., Ltd. (Producer and distributor of
synthetic resins and chemicals) ......................... 635,000 25,856,843
Sony Corp. (Manufacturer of consumer electronic
products) ............................................... 280,600 36,327,107
Sony Corp. (ADR) ........................................... 66,700 8,491,744
Sumitomo Trust & Banking Co., Ltd. (Commercial Bank) ....... 5,994,000 39,949,055
TDK Corp. (Manufacturer of magnetic tapes and floppy
discs) .................................................. 204,000 24,771,296
Teijin Ltd. (Manufacturer of polyester products) ........... 3,881,000 16,476,445
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- --------------------------------------------------------------------------------------
<S> <C> <C>
THK Co., Ltd. (Manufacturer of linear motion systems for
industrial machinery) ............................... 321,600 10,540,893
Tokyo Electron Ltd. (Manufacturer of semiconductor
production equipment) ............................... 512,000 35,993,792
Toshiba Corp. (Manufacturer of electric machinery) ..... 5,559,000 49,382,881
Yamanouchi Pharmaceutical Co., Ltd. (Manufacturer of
ethical drugs) ...................................... 531,000 23,658,176
--------------
1,043,580,253
--------------
Korea 1.0%
Samsung Electronics Co., Ltd. (Electronics manufacturer) 194,750 36,953,833
--------------
Netherlands 6.7%
AEGON Insurance Group NV (Insurance company) ........... 248,470 21,765,546
Akzo Nobel NV (Producer and marketer of healthcare
products, coatings, chemicals and fibers) ........... 499,500 23,278,054
DSM NV (Chemical manufacturer) ......................... 109,180 12,861,706
Elsevier NV (International book publisher) ............. 1,685,000 19,430,844
Equant NV* (Provider of international data network
services) ........................................... 350,810 31,082,936
Gucci Group NV, (New York Shares) (Registered) (Designer
and producer of personal luxury accessories and
apparel) ............................................ 495,780 41,521,575
Heineken Holding NV "A" (Producer and distributor of
beers, spirits, wines, soft drinks) ................. 688,985 25,511,916
Koninklijke Ahold NV (International food retailer) ..... 450,064 16,141,327
STMicroelectronics NV (Manufacturer of semiconductor
integrated circuits) ................................ 352,420 23,433,172
United Pan-Europe Communications NV*
(Telecommunication services) ........................ 221,943 13,477,787
VNU NV (International publishing company) .............. 391,510 15,035,392
--------------
243,540,255
--------------
Philippines 0.0%
International Container Terminal Services, Inc.*
(Containerized cargo handling firm) ................. 10,537,050 1,128,733
--------------
Singapore 0.5%
DBS Bank, Ltd. (Banking and financial services) ........ 128,607 1,473,678
DBS Bank, Ltd. (Foreign Registered) .................... 789,000 9,040,967
Oversea-Chinese Banking Corp., Ltd. (Foreign registered)
(Commercial bank) ................................... 911,000 6,382,355
--------------
16,897,000
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Spain 0.6%
Telefonica Publicidad e Informacion, SA* (Publisher of
telephone directories) ..................................... 96,531 2,216,112
Telefonica S.A.* (Telecommunication services) ................. 1,324,569 21,160,055
-------------
23,376,167
-------------
Switzerland 2.4%
Clariant AG (Registered) (Manufacturer of color chemicals) .... 23,812 11,449,892
Nestle SA (Registered) (Food manufacturer) .................... 17,186 33,940,647
Novartis AG (Registered) (Pharmaceutical company) ............. 14,046 20,224,756
Roche Holdings AG (Producer of drugs and medicines) ........... 1,712 19,811,255
-------------
85,426,550
-------------
Taiwan 3.9%
China Motor Company Ltd. (Manufacturer of trucks and
automobiles) ............................................... 8,109,640 10,455,825
Chinatrust Commercial Bank (Bank) ............................. 14,861,560 14,861,560
Compal Electronics Inc. (Manufacturer and marketer of
notebook computers and color monitors) ..................... 5,281,229 17,687,135
Far Eastern Textile Ltd. (Manufacturer of natural and synthetic
textile products) .......................................... 16,115,270 23,362,074
Hon Hai Precision Industry Co., Ltd. (Manufacturer of
electronic connectors and cable assemblies) ................ 2,605,400 16,959,679
Siliconware Precision Industries Co. (Manufacturer of
integrated circuit plates) ................................. 9,156,120 17,995,519
Taiwan Semiconductor Manufacturing Co. (Manufacturer of
integrated circuits) ....................................... 7,259,630 30,819,184
Yang Ming Marine Transport (Marine transportation) ............ 18,248,000 10,386,440
-------------
142,527,416
-------------
United Kingdom 18.3%
Billiton plc (Mining company specializing in aluminum) ........ 4,087,844 16,631,235
BOC Group plc (Producer of industrial gases) .................. 2,118,054 44,540,753
BP Amoco plc (Producer of oil and petrochemicals) ............. 2,095,995 38,824,013
Carlton Communications plc (Television post production
products and services) ..................................... 2,207,253 16,719,169
General Electric Co., plc (Manufacturer of power,
communications and defense equipment) ...................... 3,706,346 36,975,873
Glaxo Wellcome plc (Pharmaceutical company) ................... 784,166 20,575,081
J Sainsbury plc (Retail distributor of food through
supermarkets) .............................................. 4,029,942 27,741,536
HSBC Holdings plc (International banking and financial
services company) .......................................... 379,200 4,700,352
LASMO plc (Oil production and exploration) .................... 1,175,893 2,909,172
Marks & Spencer, plc (Retailer of consumer goods and
foods) ..................................................... 6,943,838 46,461,739
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Orange plc* (Operator of digital mobile telephone
networks) ................................................ 2,842,834 47,930,816
Prudential Corporation plc (Provider of a broad range of
financial services) ...................................... 3,009,264 44,476,335
Reed International plc (Publisher of scientific, professional
and business to business materials) ...................... 2,706,485 17,946,245
Rentokil Intitial plc (Environmental services company) ...... 3,390,430 13,562,352
Reuters Group plc (International news and information
organization) ............................................ 4,387,671 64,390,750
Rio Tinto plc (Mining company) .............................. 3,586,204 64,237,811
Royal & Sun Alliance Insurance Group plc (Insurance
company) ................................................. 2,984,534 24,812,342
Select Appointments Holdings plc* (Provider of recruitment
services) ................................................ 1,098,634 15,655,161
Shell Transport & Trading plc (Petroleum company) ........... 6,001,208 47,794,979
SmithKline Beecham plc (Manufacturer of ethical drugs
and healthcare products) ................................. 1,753,404 22,788,272
United News & Media plc (Information and publication
services group) .......................................... 712,197 7,002,167
Vodafone AirTouch plc (Telecommunication services) .......... 1,576,406 31,706,864
-------------
658,383,017
-------------
- --------------------------------------------------------------------------------------------
Total Common Stocks (Cost $2,618,999,504) 3,558,899,955
- --------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $2,674,743,092) (a) 3,614,892,616
- --------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate (unaudited).
(a) The cost for federal income tax purposes was $2,675,421,974. At August 31,
1999, net unrealized appreciation for all securities based on tax cost was
$939,470,642. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $1,013,606,369 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$74,135,727.
(b) Represents number of contracts. Each contract equals a nominal value of EUR
2,931.
Currency Abbreviation
---------------------------
EUR euro
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities as of August 31, 1999
- -------------------------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $2,674,743,092) ....................... $ 3,614,892,616
Cash .......................................................................... 1,534
Foreign currency holdings, at market (identified cost $14,881,184) ............ 15,039,420
Receivable for investments sold ............................................... 52,323,906
Receivable for Fund shares sold ............................................... 11,672,094
Dividends and interest receivable ............................................. 2,449,642
Foreign taxes recoverable ..................................................... 3,811,902
Other assets .................................................................. 208,469
---------------
Total assets .................................................................. 3,700,399,583
Liabilities
- -------------------------------------------------------------------------------------------------
Payable for investments purchased ............................................. 48,201,018
Payable for Fund shares redeemed .............................................. 4,752,489
Unrealized depreciation on forward currency exchange contracts ................ 5,448,314
Accrued management fee ........................................................ 2,432,369
Other payables and accrued expenses ........................................... 1,706,612
---------------
Total liabilities ............................................................. 62,540,802
Net assets, at market value ................................................... $ 3,637,858,781
Net Assets
- -------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income 12,626,603 Unrealized appreciation
(depreciation) on:
Investments ................................................................. 940,149,524
Foreign currency related transactions ....................................... (5,347,150)
Accumulated net realized gain (loss) .......................................... 111,723,665
Paid-in capital ............................................................... 2,578,706,139
Net assets, at market value ................................................... $ 3,637,858,781
Net Asset Value
- -------------------------------------------------------------------------------------------------
International Shares
Net asset value, offering and redemption price per share ($3,609,871,428 /
65,846,905 shares of capital stock outstanding, $.01 par value, 100,000,000
shares authorized) ......................................................... $ 54.82
Barrett International Shares
Net asset value, offering and redemption price per share ($25,164,275 / 458,016
shares of capital stock outstanding, $.01 par value, 100,000,000 shares
authorized) ................................................................ $ 54.94
Class R Shares
Net asset value, offering and redemption price per share ($2,823,078 / 51,539
shares of capital stock outstanding, $.01 par value, 100,000,000 shares
authorized) ................................................................ $ 54.78
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Five Months
Ended Year Ended
August 31, March 31,
Investment Income 1999 (Note A) 1999
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of
$4,234,181 and $6,411,078, respectively) .................... $ 28,400,314 $ 52,285,237
Interest ....................................................... 1,835,323 9,490,808
------------- -------------
30,235,637 61,776,045
------------- -------------
Expenses:
Management fee ................................................. 11,269,103 23,819,941
Services to shareholders ....................................... 3,970,153 7,389,758
Custodian and accounting fees .................................. 1,226,072 2,319,746
Directors' fees and expenses ................................... 14,291 63,387
Reports to shareholders ........................................ 214,576 430,297
Auditing ....................................................... 65,940 159,558
Legal .......................................................... 39,476 69,182
Registration fees .............................................. 96,549 98,771
Other .......................................................... 155,188 228,884
------------- -------------
17,051,348 34,579,524
Net investment income .......................................... 13,184,289 27,196,521
Realized and unrealized gain (loss) on
investment transactions
- -------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .................................................... 121,633,538 505,050,696
Foreign currency related transactions (including
CPMF tax of $-- and $45,856, respectively) .................. (470,928) (9,203,032)
------------- -------------
121,162,610 495,847,664
------------- -------------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................... 356,001,814 (310,921,292)
Foreign currency related transactions .......................... (4,920,713) (242,949)
------------- -------------
351,081,101 (311,164,241)
Net gain (loss) on investment transactions 472,243,711 184,683,423
Net increase (decrease) in net assets resulting
from operations $ 485,428,000 $ 211,879,944
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Five Months
Ended
Increase (Decrease) in Net Assets August 31, Years Ended March 31,
1999 (Note A) 1999 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ........... $ 13,184,289 $ 27,196,521 $ 23,071,776
Net realized gain (loss) from
investment transactions ...... 121,162,610 495,847,664 283,592,889
Net unrealized appreciation
(depreciation) on investment
transactions during the period 351,081,101 (311,164,241) 229,773,170
--------------- --------------- ---------------
Net increase (decrease) in net
assets resulting from
operations ................... 485,428,000 211,879,944 536,437,835
--------------- --------------- ---------------
Distributions to shareholders
from:
Net investment income--
International Shares ......... -- -- (12,911,722)
Net realized gains--
International Shares ......... (164,421,947) (303,892,941) (274,137,681)
--------------- --------------- ---------------
Net realized gains -- Barrett
International Shares ......... (1,218,599) (2,373,251) --
--------------- --------------- ---------------
Fund share transactions:
Proceeds from shares sold ....... 1,241,030,773 2,263,481,804 1,071,204,110
Net asset value of shares issued
to shareholders in
reinvestment of distributions 157,322,243 290,405,369 269,844,500
Cost of shares redeemed ......... (1,193,055,248) (2,231,646,711) (1,288,548,383)
--------------- --------------- ---------------
Net increase (decrease) in net
assets from Fund share
transactions ................. 205,297,768 322,240,462 52,500,227
--------------- --------------- ---------------
Increase (decrease) in net assets 525,085,222 227,854,214 301,888,659
Net assets at beginning of period 3,112,773,559 2,884,919,345 2,583,030,686
Net assets at end of period
(including undistributed net
investment income of
$12,626,603, $2,638,610, and
$6,551,066, respectively) .... $ 3,637,858,781 $ 3,112,773,559 $ 2,884,919,345
</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
each period (a) and other performance information derived from the financial
statements.
International Shares
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Years Ended March 31, 1999(b) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $50.07 $52.06 $48.07 $45.71 $39.72 $42.96
----------------------------------------------------
- ------------------------------------------------------------------------------------
Income from investment
operations:
- ------------------------------------------------------------------------------------
Net investment income .20(d) .47(c) .43 .30 .38 .21
- ------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investment
transactions 7.20 3.10 9.16 4.53 7.19 (1.03)
----------------------------------------------------
- ------------------------------------------------------------------------------------
Total from investment
operations 7.40 3.57 9.59 4.83 7.57 (.82)
- ------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------
From net investment income -- -- (.25) (1.28) (.40) --
- ------------------------------------------------------------------------------------
From net realized gains on
investment transactions (2.65) (5.56) (5.35) (1.19) (1.18) (2.42)
----------------------------------------------------
- ------------------------------------------------------------------------------------
Total distributions (2.65) (5.56) (5.60) (2.47) (1.58) (2.42)
- ------------------------------------------------------------------------------------
Net asset value, end of period $54.82 $50.07 $52.06 $48.07 $45.71 $39.72
----------------------------------------------------
- ------------------------------------------------------------------------------------
Total Return (%) 15.19** 7.18 21.57 10.74 19.25 (2.02)
- ------------------------------------------------------------------------------------
Ratios and Supplemental Data
- ------------------------------------------------------------------------------------
Net assets, end of period
($ millions) 3,610 3,090 2,885 2,583 2,515 2,192
- ------------------------------------------------------------------------------------
Ratio of operating expenses to
average net assets (%) 1.21* 1.17 1.18 1.15 1.14 1.19
- ------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .93* .92 .83 .64 .86 .48
- ------------------------------------------------------------------------------------
Portfolio turnover rate (%) 81.5* 79.9 55.7 35.8 45.2 46.3
- ------------------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during period.
(b) For the five months ended August 31, 1999 (Note A).
(c) Net investment income per share includes non-recurring dividend income
amounting to $.09 per share.
(d) Net investment income per share includes non-recurring dividend income
amounting to $.02 per share.
* Annualized
** Not annualized
26
<PAGE>
The following table includes selected data for a share outstanding throughout
each period (a) and other performance information derived from the financial
wstatements.
Barrett International Shares
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1999(b) 1999(c)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $50.14 $52.40
-----------------
- ------------------------------------------------------------------------------------
Income from investment operations:
- ------------------------------------------------------------------------------------
Net investment income .25(e) .52(d)
- ------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions 7.20 2.78
-----------------
- ------------------------------------------------------------------------------------
Total from investment operations 7.45 3.30
- ------------------------------------------------------------------------------------
Less distributions from net realized gains on investment
transactions (2.65) (5.56)
- ------------------------------------------------------------------------------------
Net asset value, end of period $54.94 $50.14
-----------------
- ------------------------------------------------------------------------------------
Total Return (%) 15.27** 6.60**
- ------------------------------------------------------------------------------------
Ratios and Supplemental Data
- ------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 25 23
- ------------------------------------------------------------------------------------
Ratio of operating expenses, to average daily net assets (%) 1.03* 1.08*
- ------------------------------------------------------------------------------------
Ratio of net investment income to average daily net assets (%) 1.11* 1.02*
- ------------------------------------------------------------------------------------
Portfolio turnover rate (%) 81.5* 79.9
- ------------------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during period.
(b) For the five months ended August 31, 1999 (Note A).
(c) For the period April 3, 1998 (commencement of sale of Barrett International
Shares) to March 31, 1999.
(d) Net investment income per share includes non-recurring dividend income
amounting to $.09 per share.
(e) Net investment income per share includes non-recurring dividend income
amounting to $.02 per share.
* Annualized
** Not annualized
27
<PAGE>
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
Class R Shares
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1999(b)
- ------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $53.33
---------
- ------------------------------------------------------------------------------------
Income from investment operations:
- ------------------------------------------------------------------------------------
Net investment income (loss) (.02)
- ------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment transactions 1.47
---------
- ------------------------------------------------------------------------------------
Total from investment operations 1.45
- ------------------------------------------------------------------------------------
Less distributions from net realized gains on investment transactions --
- ------------------------------------------------------------------------------------
Net asset value, end of period $54.78
---------
- ------------------------------------------------------------------------------------
Total Return (%) 2.72**
- ------------------------------------------------------------------------------------
Ratios and Supplemental Data
- ------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 2.8
- ------------------------------------------------------------------------------------
Ratio of operating expenses, to
average daily net assets (%) 1.63*
- ------------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average daily net assets (%) (.09)**
- ------------------------------------------------------------------------------------
Portfolio turnover rate (%) 81.5*
- ------------------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during period.
(b) For the period August 2, 1999 (commencement of Class R shares) to August
31, 1999 (Note A).
* Annualized
** Not annualized
28
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
August 31, 1999
A. Significant Accounting Policies
Scudder International 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.
On June 7, 1999 the Fund changed its fiscal year end for financial reporting and
federal income tax purposes from March 31 to August 31.
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.
Effective August 2, 1999, the Fund offers three classes of shares: International
Shares, Barrett International Shares, and Class R Shares. Class R Shares are
available for purchase by participants of certain employer-sponsored retirement
plans.
Investment income, realized and unrealized gains and losses, and certain
fund-level expenses and expense reductions, if any, are borne pro rata on the
basis of relative net assets by the holders of all classes of shares except that
each class bears certain expenses unique to that class such as distribution
services, shareholder services, administrative services, and certain other class
specific expenses. Differences in class expenses may result in payment of
different per share dividends by class. All shares of the Fund have equal rights
with respect to voting subject to class specific arrangements.
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
29
<PAGE>
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 Fund,
whose quotations reflect broker/dealer-supplied valuations and electronic data
processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. Money market instruments purchased with an original maturity of
sixty days or less are valued at amortized cost.
All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Directors.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
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.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period,
30
<PAGE>
the Fund utilized forward contracts as a hedge against changes in the exchange
rates relating to foreign currency denominated assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain (loss) is recorded daily. Sales and
purchases of forward contracts having the same settlement date and broker are
offset and any gain (loss) is realized on the date of offset; otherwise, gain
(loss) is realized on settlement date. Realized and unrealized gains and losses
which represent the difference between the value of a forward contract to buy
and a forward contract to sell are included in net realized and unrealized gain
(loss) from foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
Federal Income 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.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed, and, therefore, will be distributed to shareholders at least
annually.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in forward contracts, passive
foreign investment companies, and 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
31
<PAGE>
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to the ex-dividend date as
soon as the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis.
B. Purchases and Sales of Securities
During the five months ended August 31, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $1,207,319,434 and
$1,109,806,900, respectively. During the year ended March 31, 1999, purchases
and sales of investment securities (excluding short-term investments) aggregated
$2,234,157,696 and $2,228,313,830, 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 objective, 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 0.90% of the first
$500,000,000 of average daily net assets, 0.85% of the next $500,000,000 of such
net assets, 0.80% of the next $1,000,000,000 of such net assets, 0.75% of the
next $1,000,000,000 of such net assets, and 0.70% of such net assets in excess
of $3,000,000,000, computed and accrued daily and payable monthly. For the five
months ended August 31, 1999, the fees pursuant to this agreement amounted to
$11,269,103, of which $2,432,369 is unpaid at August 31, 1999. This was
equivalent to an annualized effective rate of 0.80% of the Fund's average daily
net assets. For the year ended March 31, 1999, the fees pursuant to this
agreement amounted to $23,819,941. This was equivalent to an annual effective
rate of 0.81% of the Fund's average daily net assets.
32
<PAGE>
Administrative Service Fees. Kemper Distributors, Inc. ("KDI") provides
information and administrative services to Class R Shareholders at an annual
rate of up to .25% of average daily net assets for the class. KDI in turn has
various agreements with financial services firms that provide these services and
pays these firms based on assets of shareholder accounts the firms service. For
the period August 2, 1999 through August 31, 1999, the Administrative Services
Fee was as follows:
Unpaid at
Total Fees Waived by August 31,
Administrative Service Fee Aggregated KDI 1999
- --------------------------------------------------------------------------------
Class R ..................... $ 109 $ -- $ 109
Shareholder Services Fees. Kemper Service Company ("KSC"), an affiliate of the
Adviser, is the transfer, dividend-paying and shareholder service agent for the
Fund's Class R Shares. During the first year of operations for Class R shares,
shareholder services fee will be accrued at 0.35%. For the period August 2, 1999
through August 31, 1999, the amount charged to Class R aggregated $139 of which
all is unpaid at August 31, 1999. Scudder Service Corporation ("SSC"), a
subsidiary of the Adviser, is the transfer, dividend paying and shareholder
service agent for the other classes of the Fund. For the five months ended
August 31, 1999, the amount charged by SSC to the International Shares and
Barrett International Shares for services to shareholders aggregated $1,258,902
and $4,632, of which $255,782 is unpaid at August 31, 1999. For the year ended
March 31, 1999, the amount charged by SSC to the International Shares and
Barrett International Shares for services to shareholders aggregated $3,098,197
and $4,857, respectively.
The International Shares of the Fund are one of several Scudder Funds (the
"Underlying Funds") in which the Scudder Pathway Series Portfolios (the
"Portfolios") invest. In accordance with the Special Servicing Agreement entered
into by the Adviser, the Portfolios, the Underlying Funds, SSC, SFAC, STC, and
Scudder Investor Services, Inc., expenses from the operation of the Portfolios
are borne by the Underlying Funds based on each Underlying Fund's proportionate
share of assets owned by the Portfolios. No Underlying Funds will be charged
expenses that exceed the estimated savings to each respective Underlying Fund.
These estimated savings result from the elimination of separate shareholder
accounts which either currently are or have potential to be invested in the
Underlying Funds. For the five months ended August 31, 1999, the Special
Servicing Agreement expense charged to the International Shares of the Fund
amounted to $292,143, of which
33
<PAGE>
$241,819 is unpaid at August 31, 1999. For the year ended March 31, 1999, the
Special Servicing Agreement expense charged to the International Shares of the
Fund amounted to $817,498.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the International Shares of the Fund. For the
five months ended August 31, 1999, the amount charged to the International
Shares of the Fund by STC aggregated $1,202,021, of which $254,431 is unpaid at
August 31, 1999. For the year ended March 31, 1999, the amount charged to the
International Shares of the Fund by STC aggregated $2,067,603.
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 five months
ended August 31, 1999, the amount charged to the Fund by SFAC aggregated
$402,576, of which $83,574 is unpaid at August 31, 1999. For the year ended
March 31, 1999, the amount charged to the Fund by SFAC aggregated $893,682.
The Fund pays each Director not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and committee meetings. For the five
months ended August 31, 1999, Directors' fees and expenses aggregated $14,291.
For the year ended March 31, 1999, Directors' fees and expenses aggregated
$63,387.
D. Commitments
As of August 31, 1999, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$5,448,314.
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Settlement (Depreciation)
Contracts to Deliver In Exchange For Date (U.S.$)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Japanese Yen 9,845,626,279 U.S. Dollars 84,511,814 9/7/1999 (5,448,314)
</TABLE>
34
<PAGE>
E. Share Transactions
The following table summarizes shares of capital stock and dollar activity in
the Fund:
<TABLE>
<CAPTION>
Five Months Ended Year Ended
August 31, 1999 March 31, 1999
----------------------------------- -----------------------------
Shares sold Shares Dollars Shares Dollars
- ------------------------------------------------------------------------------------
International
<S> <C> <C> <C> <C>
Shares ....... 23,688,225 $1,237,863,482 44,060,365 $2,240,750,153
Barrett
International
Shares* ...... 6,462 343,000 434,026(a) 22,731,652(a)
Class R Shares** 51,931 2,844,504 -- --
1,241,050,986 2,263,481,805
Shares issued to shareholders in reinvestment of distributions
- ------------------------------------------------------------------------------------
International
Shares ...... 3,072,099 $ 156,369,846 5,925,727 $ 288,615,427
Barrett
International
Shares* ..... 18,682 952,397 36,722 1,789,941
Class R Shares** -- -- -- --
157,322,243 290,405,368
Shares redeemed
- ------------------------------------------------------------------------------------
International
Shares ...... (22,623,108) $(1,191,589,522) (43,688,877) $(2,231,145,939)
Barrett
International
Shares* ..... (27,968) (1,464,486) (9,908) (500,772)
Class R Shares** (392) (21,453) -- --
(1,193,075,461) (2,231,646,711)
Net increase (decrease)
- ------------------------------------------------------------------------------------
International
Shares ...... 4,137,216 $ 202,643,806 6,297,215 $ 298,219,641
Barrett
International
Shares* ..... (2,824) (169,089) 460,840 24,020,821
Class R Shares** 51,539 2,823,051 -- --
205,297,768 322,240,462
</TABLE>
(a) Includes $21,054,972 and 401,812 shares from shares issued in tax free
reorganization.
* For the period April 3, 1998 (commencement of sale of Barrett International
Shares) to March 31, 1999.
** For the period August 2, 1999 (commencement of sale of Class R Shares) to
August 31, 1999.
35
<PAGE>
Year Ended
March 31, 1998
-----------------------------------
Shares sold Shares Dollars
- ---------------------------------------------------
International
Shares ..... 21,147,508 $1,071,204,110
Shares issued to shareholders in reinvestment of
distributions
- ---------------------------------------------------------
International
Shares ..... 5,897,787 $ 269,844,500
Shares redeemed
- ---------------------------------------------------------
International
Shares ..... (25,366,964) $(1,288,548,383)
Net increase (decrease)
- ---------------------------------------------------------
International
Shares ..... 1,678,331 $ 52,500,227
F. Line of Credit
The Fund and several affiliated Funds (the "Participants") share in a $850
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated pro rata among each of the Participants. Interest is
calculated based on the market rates at the time of the borrowing. The Fund may
borrow up to a maximum of 33 percent of its net assets under the agreement.
36
<PAGE>
Report of Independent Accountants
To the Board of Directors of Scudder International Fund, Inc. and to the
Shareholders of Scudder International 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 Fund (the
"Fund") at August 31, 1999, the results of its operations, the changes in its
net assets, and the financial highlights for the periods indicated therein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
October 25, 1999
37
<PAGE>
Tax Information
- --------------------------------------------------------------------------------
August 31, 1999
The Fund paid distributions of $2.65 per share from net long-term capital gains
during the five months ended August 31, 1999, of which 100% represents 20% rate
gains. Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$112,000,000 as capital gain dividends for the five months ended August 31,
1999, of which 100% represents 20% rate gains.
The Fund paid foreign taxes of $4,200,000 and earned $17,400,000 of foreign
source income during the five months ended August 31, 1999. Pursuant to section
853 of the Internal Revenue Code, the Fund designates $0.06 per share as foreign
taxes paid and $0.26 per share as income earned from foreign sources for the
five months 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.
38
<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
39
<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>
40
<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.
41
<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.
42
<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
43
<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
