SCUDDER
INVESTMENTS(SM)
[LOGO]
EQUITY/GLOBAL
Scudder International Growth Fund
Fund #304
Semiannual Report
February 29, 2000
A fund seeking capital appreciation through
investment primarily in the equity
securities of foreign companies with high
growth potential.
A no-load fund with no commissions to buy,
sell, or exchange shares.
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Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
10 Portfolio Management Discussion
13 Glossary of Investment Terms
14 Investment Portfolio
19 Financial Statements
22 Financial Highlights
23 Notes to Financial Statements
27 Officers and Directors
28 Investment Products and Services
30 Scudder Solutions
2
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Scudder International Growth Fund
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fund number 304
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Date of Inception: o Holdings in international media, technology, and
9/1/98 telecommunications companies helped the fund to post a
45.19% total return over the six months ended February
29, 2000.
Total Net Assets as o The fund has continued to use fundamental analysis to
of 2/29/00: uncover companies with favorable growth prospects in
$9 million developed and developing countries around the world.
3
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Letter from the Fund's President
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Dear Shareholders,
We are pleased to report to you on Scudder International Growth Fund's most
recent semiannual period. The fund's objective is to provide long-term capital
appreciation by investing in companies outside of the United States that we
think have high growth potential. Managed by a team of experienced
professionals, the fund has enabled investors to participate in the growth of
several industries throughout Europe, Asia, and Latin America -- particularly
European technology and telecommunications companies. The ability of Scudder
International Growth Fund's management to take advantage of developing
opportunities in telecommunications media, in addition to the growth of other
technology-based industries, has enabled the fund to post a 45.19% return over
the six months ended February 29, 2000. For more information on the fund's
investment strategy and the trends driving overseas markets, please turn to the
Portfolio Management Discussion that begins on page 10.
The Board of Scudder International Growth Fund has voted to liquidate the fund
as of the close of business on or about May 5, 2000. The Board considered many
factors in making this decision, among them the fund's high current expenses and
the likelihood that the fund would not realize a competitive expense level in
the near future. We value our relationship with you and would like to remind you
that you may exchange shares of the fund that you
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own into other funds managed by Scudder, including Scudder International Fund^1,
a fund with similar investment objectives, as an alternative investment. Please
call a Scudder representative if you would like to discuss other appropriate
fund options.
Thank you for investing in Scudder International Growth Fund. Please do not
hesitate to contact Investor Relations at 1-800-SCUDDER with any questions
regarding your account. Or visit Scudder's Web site at www.scudder.com.
Sincerely,
/s/Nicholas Bratt
Nicholas Bratt
President,
Scudder International Growth Fund
^1 Only the International Shares of the fund are part of The Scudder
Family of Funds.
5
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Performance Update
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February 29, 2000
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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:
MSCI All Country
Scudder International World excluding
Growth Fund U.S. Index*
9/1/98** 10000 10000
11/98 10989 11639
2/99 11256 11767
5/99 11888 12389
8/99 12899 13340
11/99 15141 14469
2/00 18729 15456
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Fund Index Comparison
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Total Return
Growth of Average
Period ended 2/29/2000 $10,000 Cumulative Annual
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Scudder International Growth Fund
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1 year $ 16,638 66.38% 66.38%
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Life of the Fund** $ 18,620 86.20% 51.52%
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MSCI All Country World excluding U.S. Index*
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1 year $ 13,135 31.35% 31.35%
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Life of the Fund** $ 15,456 54.56% 35.99%
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* MSCI All Country World excluding U.S. Index is a regional or composite
index consisting of developed and emerging market countries.
** The Fund commenced operations on September 1, 1998.
6
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Returns and Per Share Information
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THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE SCUDDER INTERNATIONAL GROWTH FUND TOTAL RETURN (%) AND
MSCI ALL COUNTRY WORLD EXCLUDING U.S. INDEX* TOTAL RETURN (%)
Periods ended February
1999** 2000
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Fund Total
Return (%) 11.91 66.38
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Index Total
Return (%) 15.26 31.35
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Net Asset
Value ($) 13.36 21.59
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Income
Dividends
($) .07 .05
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Capital
Gains
Distributions
($) -- .53
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* MSCI All Country World excluding U.S. Index is a regional or composite
index consisting of developed and emerging market countries.
** The Fund commenced operations on September 1, 1998.
Performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results. Total return and
principal value will fluctuate, so an investor's shares, when redeemed,
may be worth more or less than when purchased. If the Adviser had not
maintained the Fund's expenses, the total return would have been lower.
7
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Portfolio Summary
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February 29, 2000
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Geographical
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A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
The macroeconomic
Europe 68% backdrop is very
Japan 16% positive in Europe, with
Pacific Basin 11% economic activity
Latin America 5% accelerating strongly
- ------------------------------------ throughout the region.
100%
- ------------------------------------
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Sectors
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A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Strong economic
Communication 23% growth coupled with
Technology 17% sector consolidation
Financial 12% benefited companies
Media 12% in the European
Manufacturing 10% telecommunications
Service Industries 10% and media arenas.
Consumer Staples 4%
Consumer Discretionary 3%
Energy 2%
Other 7%
- ------------------------------------
100%
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8
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Ten Largest Equity Holdings
(22% of Portfolio) Using the fundamental
research of Scudder's
1. Telefonos de Mexico S.A. de C.V. international analysts,
Telecommunications services we invest in reasonably
valued companies that
2. Kyocera Corp. possess catalysts for
Manufacturer of ceramic packaging strong growth.
3. Sony Corp.
Manufacturer of consumer electronic products
4. SK Telecom Co., Ltd.
Provider of mobile telecommunication services
5. LM Ericsson Telephone Co.
Manufacturer of telecommunications equipment
6. Altran Technologies S.A.
Provider of engineering and consulting services
7. Koninklijke (Royal) Philips Electronics NV
Manufacturer of consumer electronics
8. Marschollek, Lautenschlaeger und Partner AG
Independent life insurance company
9. Grupo Televisa S.A. de C.V.
Media company
10. Perlos Oyj
Manufacturer of injection moulds, electromechanical
connectors and assembly equipment
For more complete details about the Fund's investment portfolio, see page 14. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
9
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Portfolio Management Discussion
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February 29, 2000
Dear Shareholders,
Scudder International Growth Fund seeks long-term capital appreciation primarily
by investing in non-U.S. companies with high growth potential. Our goal is to
tap into companies that are capitalizing on economic and structural changes
taking place in developed and developing regions around the world. This is a
"best ideas" portfolio managed by three regional specialists covering Europe,
the Pacific Rim, and Latin America. As of February 29, 2000, the fund's regional
portfolio weightings were: Europe (including the Middle East) 68%, Pacific Basin
(including Japan) 27%, and Latin America 5%.
Fund Performance
The fund posted a 45.19% return for the six-month period ended February 29,
2000, compared with the 15.86% return of the unmanaged MSCI All Country World
Index over the same period. Stock selection was the primary driver of
performance, with holdings in technology, media, and telecommunications stocks
generating excellent results for the fund.
In Europe, the macroeconomic backdrop is very positive with economic activity
accelerating strongly throughout the region. Business and consumer confidence
are at high levels and unemployment, a long-standing problem in Europe, is
declining. We expect European growth to exceed 3% in 2000, up from 2.2% in 1999.
Inflation should remain benign, given deregulation, restructuring, and available
capacity. Monetary policy is likely to tighten, but we do not expect the rise in
rates to be a major deterrent to growth.
In Asia, improving macroeconomic fundamentals provide a stronger base for growth
and overall demand across the region. In addition, a combination of a
strengthening economy, domestic structural reform, and improving consumer
confidence in Japan should lead to upside surprises in macroeconomic and
corporate earnings growth in the coming year. We expect this to result in a
greater
10
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flow of capital into the region, thereby helping companies to establish a
stronger foundation for the future. Our Latin American positions have been
geared largely towards Mexico, where the economy is strong and the country is
benefiting from growing ties to the U.S., with Mexican companies retooling to
compete within a NAFTA context.
Deregulation, new technologies, and sector consolidation benefited companies in
the European telecommunications arena. We have been successfully positioned in
incumbent operator, Telefonica de Espana; equipment vendors, Nokia and Ericsson;
and select mobile operators such as Sonera in Finland. European incumbents have
access to mobile communications, data transmission, and the Internet, key
drivers of industry growth. Equipment vendors are strategically positioned to
capture ongoing revenues from new and evolving technologies. Mobile operator
Sonera, with a focus on value-added services, is a play on the convergence of
telephony and the Internet.
European service providers in media and finance also had excellent returns. Top
contributors included BIPOP, a rapidly growing Italian bank with an increasing
market share in mutual funds; Seat, with a dominant share of Yellow and White
Page directory services in Italy; and TF1, a French television broadcaster. We
also have sought to diversify the portfolio with holdings that are not directly
correlated to European growth. For example, positions in Turkey have worked very
well for the portfolio, with holdings Akbank and Yapi Kredi Bank among the best
performing stocks.
We also have been exposed to telecommunications stocks in Asia, notably in Japan
and Korea. Over the period, we benefited from large gains in NTT and DDI in
Japan, and SK Telecom and Korea Telecom in Korea. We remain positive on this
sector because telecom companies are benefiting from the adoption of new
wireless data technologies and investment in this sector allows us to capitalize
on rising consumption in the region. Exposure to telecoms in Latin America also
made a positive contribution to performance with Telmex, Latin America's
11
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largest integrated telecommunications company, among the top performing stocks
in the portfolio.
The fund has benefited from positions in technology stocks, particularly in
Asia. Our outlook is positive on the global demand for personal computers,
semiconductor-related products, and telecommunications equipment. Many companies
in Northern Asia appear to be well positioned to cater to that demand,
specifically South Korea's Samsung Electronics, the world's largest DRAM
manufacturer, and Taiwan Semiconductor, the largest chipmaker. We also continue
to favor contract manufacturers such as Hon Hai Precision in Taiwan.
Looking ahead, we remain very optimistic on all three regions. Europe continues
to restructure on the corporate front, and merger and acquisition activity is at
record levels driven by the pressures of globalization and a single currency.
Governments, for their part, are reducing taxes, deregulating and keeping budget
deficits under control. A heightened interest on the part of domestic investors
in equities is providing further support.
A number of factors point to significant potential for the Asian markets in the
years ahead: more enlightened management practices, higher quality earnings, and
improving macroeconomic fundamentals providing a stronger base for growth and
demand. We remain optimistic on the prospects for recovery in Latin America and
will maintain a focus on Mexico, home to the large, liquid, blue chip companies
that continue to attract investor attention.
Sincerely,
Your Portfolio Management Team
/s/Joan R. Gregory /s/Theresa Gusman
Joan R. Gregory Theresa Gusman
/s/Tara C. Kenney
Tara C. Kenney
12
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Glossary of Investment Terms
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Bottom-Up Investing An investment style that focuses on the use of research
Style to assess the performance of individual companies before
considering the impact of economic trends. This
approach, which is the opposite of "top-down" investing,
assumes that the most significant determinant of
performance is individual stock selection, rather than
industry or country allocation.
Diversification The spreading of risk by investing in several asset
categories, industry sectors, or individual securities.
An investor with a broadly diversified portfolio will
likely receive some protection from the price declines
of an individual asset class.
Fundamental Research Analysis of companies based on the projected impact of
management, products, sales, and earnings on their
balance sheets and income statements. It is distinct
from technical analysis, which evaluates the
attractiveness of a stock based on historical price and
trading volume movements, rather than the financial
results of the underlying company.
Growth Fund A fund that invests primarily in companies that have
displayed above average earnings growth and are expected
to continue to increase profits faster than the overall
market. Stocks of such companies usually trade at higher
valuations and experience more price volatility than the
market as a whole.
Total Return The most common yardstick to measure the performance of
a fund. Total return -- annualized or compounded -- is
based on a combination of share price changes plus
income and capital gain distributions, if any, expressed
as a percentage gain or loss in value.
(Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
13
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Investment Portfolio as of February 29, 2000 (Unaudited)
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Shares Value ($)
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Common Stocks 100.0%
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Bermuda 0.8%
FLAG Telecom Holdings Ltd.* (Telecommunication
services) .............................................. 2,621 73,485
---------
Finland 7.0%
Comptel Oyj* (Developer of communications software) ....... 89 10,846
JOT Automation Group Oyj (Manufacturer of high
technology production automation systems
and equipment) ......................................... 14,400 162,132
Nokia Oyj (Manufacturer of telecommunications
networks and equipment) ................................ 632 126,435
Perlos Oyj* (Manufacturer of injection moulds,
electromechanical connectors and assembly equipment) ... 3,895 172,782
Sonera Oyj (Provider of telecommunication services) ....... 1,278 98,933
Tietoenator Oyj (Manufacturer of computer software) ....... 900 62,191
---------
633,319
---------
France 10.7%
Altran Technologies SA (Provider of engineering and
consulting services) ................................... 620 176,164
Banque Nationale de Paris (Bank) .......................... 425 33,681
Bouygues SA (Conglomerate: public works, real
estate and industrial development, engineering
services, television and motion) ....................... 106 88,614
Cap Gemini SA (Provider of computer consulting services) .. 295 81,539
Galeries Lafayette (Department store chain) ............... 700 121,773
Publicis SA (International advertising company) ........... 223 114,009
Societe Television Francaise 1 (Television broadcasting) .. 203 132,428
Suez Lyonnaise des Eaux SA (Water and electric utility) ... 190 31,400
Total FINA SA "B" (Explorer, developer and producer
of oil and gas) ........................................ 494 65,646
Vivendi* (Provider of industrial services) ................ 1,170 137,951
---------
983,205
---------
Germany 6.0%
Allianz AG (Multi-line insurance company) ................. 242 84,712
BASF AG (International chemical producer) ................. 550 25,169
Deutsche Bank AG (Registered) (Provider of financial
services) .............................................. 1,040 87,846
Dresdner Bank AG (Provider of banking services) ........... 1,250 60,161
Marschollek, Lautenschlaeger und Partner AG
(Independent life insurance company) ................... 340 174,154
The accompanying notes are an integral part of the financial statements.
14
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Shares Value ($)
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SAP AG (Manufacturer of computer software) ................ 140 117,375
---------
549,417
---------
Greece 0.9%
Alpha Credit Bank A.E. (Commercial bank) .................. 675 48,687
National Bank of Greece SA (Bank) ......................... 550 37,490
---------
86,177
---------
Hong Kong 1.2%
Esprit Holdings Ltd. (Designer and manufacturer of high
quality fashion products) .............................. 840 804
Hutchison Whampoa, Ltd. (Diversified investment
holding company) ....................................... 7,000 109,729
New World Development Co., Ltd. (Property investment
and development company) ............................... 256 368
---------
110,901
---------
Ireland 2.2%
Anglo Irish Bank Corp. PLC* (Provider of financial
services for business and private sectors) ............. 35,484 73,560
ESAT Telecom Group PLC* (ADR) (Provider of
telecommunication services) ............................ 500 49,688
Ryanair Holdings PLC* (Airplane company) .................. 12,800 84,715
---------
207,963
---------
Italy 9.8%
ACEA SpA* (Electric and water utility) .................... 6,400 146,715
Bipop (Cooperative bank) .................................. 1,115 126,132
Bulgari SpA (Manufacturer and retailer of fine jewelry,
luxury watches and perfumes) ........................... 9,900 90,895
Class Editori SpA (Publishing house) ...................... 6,000 112,495
Gruppo Editoriale L'Espresso (Publisher) .................. 7,120 166,661
Mediaset SpA (Broadcasting and television networks) ....... 3,900 94,983
Seat Pagine Gialle SpA (Publisher of telecommunication
directories and provider of advertising services) ...... 26,000 162,074
---------
899,955
---------
Japan 16.4%
Chugai Pharmaceutical Co., Ltd. (Pharmaceutical company) .. 1,000 15,259
DDI Corp. (Long distance telephone and cellular operator) . 11 101,907
Fujitsu, Ltd. (Manufacturer of computers) ................. 2,000 66,303
Hitachi, Ltd. (Manufacturer of general electronics) ....... 7,000 95,304
Kyocera Corp. (Manufacturer of ceramic packaging) ......... 1,300 219,855
NTT Mobile Communications Network, Inc. (Provider
of various telecommunication services and equipment) ... 4 160,945
Nintendo Co., Ltd. (Manufacturer of game equipment) ....... 300 65,368
The accompanying notes are an integral part of the financial statements.
15
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Shares Value ($)
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Nippon Telegraph & Telephone Corp. (Provider of
telecommunication services) ......................... 9 124,251
Nomura Securities Co., Ltd. (Financial advisor,
securities broker and underwriter) .................. 6,000 168,937
Sakura Bank, Ltd. (Provider of banking services) ....... 19,000 108,202
Softbank Corp. (Provider of electronic commerce,
software and peripheral hardware equipment) ......... 100 145,322
Sony Corp. (Manufacturer of consumer
electronic products) ................................ 700 206,630
THK Co., Ltd. (Manufacturer of linear motion systems
for industrial machinery) ........................... 700 30,836
---------
1,509,119
---------
Korea 5.3%
Korea Data System (Manufacturer of computer monitors) .. 130 1,862
Korea Telecom Corp.* (ADR) (Provider of
telecommunication services) ......................... 2,950 128,325
SK Telecom Co., Ltd. (Provider of mobile
telecommunication services) ......................... 50 185,659
Samsung Electronics Co. (Manufacturer of electronics) .. 740 167,482
---------
483,328
---------
Mexico 5.4%
Grupo Televisa S.A. de C.V.* (GDR) (Media company) ..... 2,250 172,828
Telefonos de Mexico S.A. de C.V. "L" (ADR) (Provider
of telecommunication services) ...................... 4,890 321,518
---------
494,346
---------
Netherlands 12.0%
Equant NV* (Provider of international data
network services) ................................... 675 76,586
Getronics NV (Provider of computer installation and
maintenance services) ............................... 1,310 110,146
Gucci Group NV (New York shares) (Designer and
producer of personal luxury accessories and apparel) 1,000 87,438
Koninklijke (Royal) Philips Electronics NV (Manufacturer
of consumer electronics) ............................ 940 174,652
Qiagen NV* (Biopharmaceutical company) ................. 700 122,150
Royal Dutch Petroleum Co. (Petroleum company) .......... 800 41,975
STMicroelectronics NV (Manufacturer of
semiconductor integrated circuits) .................. 726 144,538
United Pan-Europe* Communications NV (Provider of
television and telecommunication services) .......... 710 140,427
VNU NV (International publishing company) .............. 1,310 90,712
Versatel Telecom International NV
(Telecommunication services) ........................ 1,940 117,932
---------
1,106,556
---------
The accompanying notes are an integral part of the financial statements.
16
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Shares Value ($)
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Norway 0.8%
Norsk Hydro ASA (Conglomerate: producer of
fertilizers, oil and gas, aluminum) .................... 2,050 76,617
---------
Portugal 3.2%
BPI-- SGPS SA, (Registered) (Bank) ........................ 6,330 23,614
Jeronimo Martins SGPS, SA (Food producer and retailer) .... 3,400 69,005
PT Multimedia Servicos* (Provider of cable television,
Internet and e-commerce services) ...................... 720 91,921
Portugal Telecom SA (Telecommunication services) .......... 7,600 108,486
---------
293,026
---------
Russia 0.1%
LUKoil Holdings (ADR) (Extracter, transporter, refiner, and
provider of oil and gas) ............................... 300 12,675
---------
Spain 5.3%
Empresa Nacional de Celulosas SA (Manufacturer
of celulose paper pulp) ................................ 2,310 47,976
Sogecable SA* (Provider of cable television) .............. 935 60,543
Telefonica Publicidad e Informacion, SA* (Publisher of
telephone directories) ................................. 2,350 161,252
Telefonica SA* (Provider of telecommunication services) ... 4,875 140,637
Union Electrica Fenosa SA (Producer and distributor
of electrical energy) .................................. 3,500 72,725
---------
483,133
---------
Sweden 2.0%
LM Ericsson Telephone Co. "B" (Manufacturer of
telecommunications equipment) .......................... 1,885 181,005
---------
Switzerland 0.6%
ABB, Ltd. (Manufacturer of equipment for power
generation and distribution) ........................... 540 57,720
---------
Taiwan 4.1%
Far Eastern Textile Ltd. (Manufacturer of natural
and synthetic textile products) ........................ 10 22
Hon Hai Precision Industry Co., Ltd.* (Manufacturer
of electronic connectors and cable assemblies) ......... 8,400 78,254
Taiwan Semiconductor Manufacturing Co.*
(Manufacturer of integrated circuits) .................. 23,760 155,562
United Microelectronics Corp., Ltd.* (Manufacturer
of integrated circuits) ................................ 39,000 142,915
---------
376,753
---------
The accompanying notes are an integral part of the financial statements.
17
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Shares Value ($)
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Turkey 1.6%
Akbank T.A.S. (Banking and investment organization) .... 1,119,500 22,906
Dogan Holdings (Industrial conglomerate) ............... 1,338,000 39,610
Ford Otomotiv Sanayi A.S.* (Manufacturer of trucks,
automobiles, trailers and pickups) .................. 1,027,000 49,181
Yapi ve Kredi Bankasi A.S. (Commercial bank) ........... 1,267,200 37,514
---------
149,211
---------
United Kingdom 4.6%
Aegis Group PLC (Independent media services group) ..... 18,490 62,355
BP Amoco PLC (Integrated world oil company) ............ 4,500 34,758
Flextech PLC* (Broadcaster of entertainment programs) .. 3,156 79,761
Granada Group PLC (Provider of television programs
and broadcasting services) .......................... 7,590 76,608
National Power PLC (Electricity generation company) .... 6,820 40,397
Serco Group PLC (Facilities management company) ........ 2,260 83,929
Vodafone AirTouch PLC (Provider of
telecommunication services) ......................... 7,475 41,856
---------
419,664
---------
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Total Common Stocks (Cost $5,809,952) 9,187,575
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Total Investment Portfolio -- 100.0% (Cost $5,809,952) (a) 9,187,575
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* Non-income producing.
(a) The cost for federal income tax purposes was $5,809,952. At February 29,
2000, net unrealized appreciation for all securities based on tax cost was
$3,377,623. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of value over tax cost of
$3,519,411 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over value of $141,788.
The accompanying notes are an integral part of the financial statements.
18
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Financial Statements
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Statement of Assets and Liabilities as of February 29, 2000 (Unaudited)
- ------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------
Investments in securities, at value (cost $5,809,952) $ 9,187,575
Cash ................................................ 108,241
Foreign currency, at value (cost $61,189) ........... 61,358
Receivable for investments sold ..................... 1,514,950
Dividends receivable ................................ 8,466
Receivable for Fund shares sold ..................... 101,105
Foreign taxes recoverable ........................... 1,975
Due from Adviser .................................... 152,436
Other assets ........................................ 116
-------------
Total assets ........................................ 11,136,222
Liabilities
- --------------------------------------------------------------------
Notes payable ....................................... 1,450,000
Payable for Fund shares redeemed .................... 478,179
Accrued expenses and payables ....................... 215,450
Foreign taxes payable ............................... 21,573
-------------
Total liabilities ................................... 2,165,202
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Net assets, at value $ 8,971,020
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Net Assets
- --------------------------------------------------------------------
Net assets consist of:
Accumulated net investment loss ..................... (54,790)
Unrealized appreciation (depreciation) on:
Investments ....................................... 3,377,623
Foreign currency related transactions ............. (863)
Accumulated net realized gain (loss) ................ 894,864
Paid-in capital ..................................... 4,754,186
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Net assets, at value $ 8,971,020
- --------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------
Net Asset Value, offering and redemption
price per share ($8,971,020 / 415,472
shares of capital stock outstanding,
$.01 par value, 100,000,000 shares
authorized) ...................................... $ 21.59
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
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Statement of Operations for the six months ended February 29, 2000 (Unaudited)
- -------------------------------------------------------------------------------
Investment Income
- -------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $4,669) ............ $ 21,390
Interest ....................................................... 16,366
------------
Total income ................................................... 37,756
------------
Expenses:
Management fee ................................................. 41,483
Services to shareholders ....................................... 29,636
Custodian and accounting fees .................................. 160,278
Auditing ....................................................... 21,455
Legal .......................................................... 5,282
Directors' fees and expenses ................................... 19,868
Registration fees .............................................. 31,239
Reports to shareholders ........................................ 6,370
Interest expense ............................................... 1,909
Other .......................................................... 14,307
------------
Total expenses, before expense reductions ...................... 331,827
Expense reductions ............................................. (259,233)
------------
Total expenses, after expense reductions ....................... 72,594
Net investment income (loss) ................................... (34,838)
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments (net of foreign taxes of $21,573) .................. 914,262
Foreign currency related transactions .......................... 780
------------
915,042
------------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................... 2,522,052
Foreign currency related transactions .......................... (816)
------------
2,521,236
- ------------------------------------------------------------------------------
Net gain (loss) on investment transactions 3,436,278
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 3,401,440
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
20
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Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
September 1, 1998
Six Months Ended (commencement of
February 29, operations) to
Increase (Decrease) in Net Assets 2000 (Unaudited) August 31, 1999
- ------------------------------------------------------------------------------------
Operations:
<S> <C> <C>
Net investment income (loss) ................... $ (34,838) $ 53,035
Net realized gain (loss) from investment
transactions ................................ 915,042 220,586
Net unrealized appreciation (depreciation) on
investment transactions during the period ... 2,521,236 855,524
--------------- -------------
Net increase (decrease) in net assets resulting
from operations ............................. 3,401,440 1,129,145
--------------- -------------
Distributions to shareholders from:
Net investment income .......................... (19,952) (21,758)
--------------- -------------
Net realized gains ............................. (272,096) --
--------------- -------------
Fund share transactions:
Proceeds from shares sold ...................... 24,309,997 11,085,923
Reinvestment of distributions .................. 280,674 21,084
Cost of shares redeemed ........................ (24,342,253) (6,602,384)
--------------- -------------
Net increase (decrease) in net assets from Fund
share transactions .......................... 248,418 4,504,623
--------------- -------------
Increase (decrease) in net assets .............. 3,357,810 5,612,010
Net assets at beginning of period .............. 5,613,210 1,200
Net assets at end of period (including
accumulated
net investment loss of $54,790 at
February 29, 2000) .......................... $ 8,971,020 $ 5,613,210
Other Information
- -------------------------------------------------------------------------------
Shares outstanding at beginning of period ...... 366,747 100
--------------- -------------
Shares sold .................................... 1,354,900 854,140
Shares issued to shareholders in reinvestment of
distributions ............................... 14,083 1,563
Shares redeemed ................................ (1,320,258) (489,056)
--------------- -------------
Net increase (decrease) in Fund shares ......... 48,725 366,647
Shares outstanding at end of period ............ 415,472 366,747
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
- -------------------------------------------------------------------------------
2000(b) 1999(c)
- -------------------------------------------------------------------------------
Net asset value, beginning of period $15.31 $12.00
-----------------
- -------------------------------------------------------------------------------
Income (loss) from investment operations:
- -------------------------------------------------------------------------------
Net investment income (loss) (a) (.08) .16(e)
- -------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions 6.94 3.22
-----------------
- -------------------------------------------------------------------------------
Total from investment operations 6.86 3.38
- -------------------------------------------------------------------------------
Less distributions from:
- -------------------------------------------------------------------------------
Net investment income (.05) (.07)
- -------------------------------------------------------------------------------
Net realized gains (.53)
-----------------
- -------------------------------------------------------------------------------
Total distributions (.58) (.07)
- -------------------------------------------------------------------------------
Net asset value, end of period $21.59 $15.31
-----------------
- -------------------------------------------------------------------------------
Total Return (%) (d) 45.19** 28.25
- -------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
- -------------------------------------------------------------------------------
Net assets, end of period ($ millions) 9 6
- -------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 8.02* 9.71
- -------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 1.75* 1.75
- -------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.42)** 1.19
- -------------------------------------------------------------------------------
Portfolio turnover rate (%) 131* 90
- -------------------------------------------------------------------------------
(a) Based on monthly average shares outstanding during the period.
(b) For the six months ended February 29, 2000 (Unaudited).
(c) For the period September 1, 1998 (commencement of operations) to August 31,
1999.
(d) Total returns would have been lower had certain expenses not been reduced.
(e) Net investment income per share includes non-recurring dividend income
amounting to $.03 per share.
* Annualized
** Not annualized
22
<PAGE>
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
A. Significant Accounting Policies
Scudder International Growth Fund (the "Fund") is a diversified series of
Scudder International Fund, Inc. (the "Corporation") which is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a Maryland Corporation.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. Securities which are traded
on U.S. or foreign stock exchanges are valued at the most recent sale price
reported on the exchange on which the security is traded most extensively. If no
sale occurred, the security is then valued at the calculated mean between the
most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation is used. Securities quoted on the
Nasdaq Stock Market ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are not quoted on Nasdaq but are
traded in another over-the-counter market are valued at the most recent sale
price, or if no sale occurred, at the calculated mean between the most recent
bid and asked quotations on such market. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
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
23
<PAGE>
and foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, receives delivery of the underlying securities, the amount
of which at the time of purchase and each subsequent business day is required to
be maintained at such a level that the market value is equal to at least the
principal amount of the repurchase price plus accrued interest.
Taxes. The Fund's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
Net realized and unrealized gains of the Fund derived in India are subject to
certain non-U.S. taxes.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed, and, therefore, will be distributed to shareholders at least
annually.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to foreign denominated investments. As a result,
net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to ex-dividend date as
24
<PAGE>
soon as the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis.
All discounts are accreted for both tax and financial reporting purposes.
B. Purchases and Sales of Securities
For the six months ended February 29, 2000, purchases and sales of investment
securities (excluding short-term investments) aggregated $5,270,701 and
$4,928,412, respectively.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. (the "Adviser"), the Adviser directs the investments of the
Fund in accordance with its investment objectives, policies, and restrictions.
The Adviser determines the securities, instruments and other contracts relating
to investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Agreement. The management fee payable under the
Agreement is equal to an annual rate of 1.00% of the Fund's average daily net
assets computed and accrued daily and payable monthly. The Adviser and certain
of its subsidiaries have agreed to reimburse or not impose, respectively, all or
a portion of their fees payable by the Fund until December 31, 2000 in order to
maintain the annualized expenses of the Fund at not more than 1.75% of average
daily net assets. For the six months ended February 29, 2000, the Adviser did
not impose any of its management fee amounting to $41,483. Further, the Fund's
reimbursement due from the Adviser at February 29, 2000 amounted to $152,436.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended February 29, 2000, SSC did not impose any of its fee amounting
to $20,444.
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 six months
ended February 29, 2000, SFAC did not impose any of its fee amounting to
$25,002.
The Corporation pays each Director not affiliated with the Adviser an annual
retainer plus specified amounts for attended board and committee meetings.
25
<PAGE>
For the six months ended February 29, 2000, Directors' fees and expenses not
imposed aggregated $19,868.
D. Line of Credit
The Fund and several other Scudder Funds (the "Participants") share in a$1
billion 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 based on net assets, 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. The weighted average outstanding daily balance of
all loans (based on the number of days the loans were outstanding) was $852,000
with an average interest rate of 6.30%. Interest expense for the six months
ended February 29, 2000 is $1,909.
E. Cessation of Operations
On February 7, 2000, the Board of Directors of the Fund approved the cessation
of operations of the Fund effective on or about May 5, 2000 (the "Closing
Date"). Accordingly, the Board has voted to redeem involuntarily the shares of
any Fund shareholder outstanding at that time. This may be a taxable event for
shareholders with the exception of those participating in a qualified defined
contribution plan, defined benefit plan or other qualified retirement vehicle.
In conjunction with approving the cessation of operations of the Fund, the Board
approved closing the Fund to new investors effective as of the close of business
on February 7, 2000.
26
<PAGE>
Officers and Directors
- --------------------------------------------------------------------------------
Nicholas Bratt* Joyce E. Cornell*
o President o Vice President
Sheryle J. Bolton Susan E. Dahl*
o Director; Chief Executive Officer, o Vice President
Scientific Learning Corporation
Philip S. Fortuna*
William T. Burgin o Vice President
o Director; General Partner,
Bessemer Venture Partners Carol L. Franklin*
o Vice President
Keith R. Fox
o Director; General Partner, Edmund B. Games, Jr.*
The Exeter Group of Funds o Vice President
William H. Luers Joan R. Gregory*
o Director; Chairman and President, o Vice President
U.N. Association of America
Theresa Gusman*
Kathryn L. Quirk* o Vice President
o Director; Vice President and
Assistant Secretary Ann M. McCreary*
o Vice President
Joan E. Spero
o Director; President, Doris Duke Robert C. Peck*
Charitable Foundation o Vice President
Paul Bancroft III Sheridan Reilly*
o Honorary Director; Venture o Vice President
Capitalist and Consultant
Shahram Tajbakhsh*
William H. Gleysteen, Jr. o Vice President
o Honorary Director; Consultant;
Guest Scholar, Brookings Tien Yu Sieh*
Institution o Vice President
Wilson Nolen John Millette*
o Honorary Director; Consultant o Vice President and Secretary
Robert G. Stone, Jr. John R. Hebble*
o Honorary Director; Chairman o Treasurer
Emeritus and Director, Kirby
Corporation Caroline Pearson*
o Assistant Secretary
Elizabeth J. Allan*
o Vice President *Scudder Kemper Investments, Inc.
Irene T. Cheng*
o Vice President
27
<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 Health 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>
28
<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. Montgomery Street Income Securities, Inc.
The Brazil Fund, Inc. Scudder Global High Income Fund, Inc.
The Korea Fund, Inc. Scudder New Asia Fund, 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.
29
<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.
30
<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
31
<PAGE>
About the Fund's Adviser
SCUDDER
INVESTMENTS(SM)
[LOGO]
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $290 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 over 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.
