Scudder
21st Century
Growth Fund
Semiannual Report
February 28, 1998
Pure No-Load(TM) Funds
A pure no-load(TM) (no sales charges) mutual fund which seeks long-term growth
of capital by investing primarily in securities of emerging growth companies
poised to be leaders in the 21st century.
SCUDDER (logo)
<PAGE>
Scudder 21st Century Growth Fund
- --------------------------------------------------------------------------------
Date of Inception: 9/9/96 Total Net Assets as of Ticker Symbol: SCTGX
2/28/98: $33.0 million
- --------------------------------------------------------------------------------
o While concerns over the Asian financial crisis increased in the fall,
contributing to declines for small- and large-cap stocks, these worries abated
toward the end of the fiscal period.
o Despite increased price volatility during the period, Scudder 21st Century
Growth Fund posted a 9.53% total return for the six months ended February 28,
1998, which compares favorably with its benchmark, the unmanaged Russell 2000
Growth Index.
o The number of Fund holdings was reduced dramatically during the period in
order to concentrate assets on companies that, in the opinion of the Fund's
managers, have the greatest potential for earnings gains and higher stock
prices.
Table of Contents
3 Letter from the Fund's President 18 Financial Highlights
4 Performance Update 19 Notes to Financial Statements
5 Portfolio Summary 22 Shareholder Meeting Results
6 Portfolio Management Discussion 24 Officers and Trustees
9 Glossary of Investment Terms 25 Investment Products and Services
10 Investment Portfolio 26 Scudder Solutions
15 Financial Statements
2 - Scudder 21st Century Growth Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
Small growth stocks certainly had their ups and downs in the first half of
your Fund's six-month fiscal period as the Asian financial crisis prompted
investors to seek the relative safety of larger, more established companies.
Considering this volatile environment, it is reassuring to see that your Fund
outperformed its benchmark. Although investors continue to speculate on the
potential impact of Asia's economic woes, the fear of a significantly weakened
U.S. economy has subsided, and small growth stocks were able to stage a comeback
in February.
As Fund Managers Peter Chin and Roy McKay outline in the following letter,
the Fund's holdings are primarily domestic, with the bulk of their sales and
earnings coming from the United States. Moreover, the number of Fund holdings
was pared back dramatically during the period in order to concentrate on what
Peter and Roy considered the best ideas -- a move that helped the Fund
outperform its benchmark index by a comfortable margin.
At the beginning of 1998, the Fund's investment adviser changed its name to
Scudder Kemper Investments, Inc. from Scudder, Stevens & Clark, Inc., reflecting
the acquisition of a majority interest in Scudder by Zurich Insurance Company,
and the combining of Scudder's business with that of Zurich Kemper Investments,
Inc. We think this combination is very positive, and will provide your Fund's
manager with expanded resources in managing the Fund.
For those of you who are interested in new Scudder products, we recently
introduced three industry sector funds that comprise the Choice Series: Scudder
Financial Services Fund, Scudder Health Care Fund and Scudder Technology Fund.
In addition, April 6 marked the debut of our latest entrant in the growth and
income category, Scudder Real Estate Investment Fund. For further information on
any of these new funds, please call 1-800-225-2470.
Thank you for your continued investment in Scudder 21st Century Growth
Fund. If you have any questions about your account, please call Scudder Investor
Relations at the toll-free number above, or visit our Web site at
http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder 21st Century Growth Fund
3 - Scudder 21st Century Growth Fund
<PAGE>
PERFORMANCE UPDATE as of February 28, 1998
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
2/28/98 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER 21ST CENTURY GROWTH FUND
- --------------------------------------
1 Year $ 12,984 29.84% 29.84%
Life of
Fund* $ 11,967 19.67% 13.00%
- --------------------------------------
RUSSELL 2000 GROWTH INDEX
- --------------------------------------
1 Year $ 12,592 25.92% 25.92%
Life of
Fund* $ 12,160 21.60% 14.84%
*The Fund commenced operations on September 9, 1996.
Index comparisons begin September 30, 1996.
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
SCUDDER 21ST CENTURY GROWTH FUND
Year Amount
- ----------------------
9/96* $10,000
11/96 $ 9,444
2/97 $ 8,778
5/97 $ 9,302
8/97 $10,405
11/97 $10,119
2/98 $11,397
RUSSELL 2000 GROWTH INDEX
Year Amount
- ----------------------
9/96* $10,000
11/96 $ 9,835
2/97 $ 9,657
5/97 $10,204
8/97 $11,423
11/97 $11,317
2/98 $12,160
The Russell 2000 Growth Index is an unmanaged capitalization-weighted measure
of 2,000 of the smallest capitalized U.S. companies with a greater-than-average
growth orientation and whose common stocks trade on the NYSE, AMEX, and Nasdaq.
Index returns assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended February 28
<TABLE>
<S> <C> <C>
1997 1998
----------------
NET ASSET VALUE... $ 11.06 $ 14.36
INCOME DIVIDENDS.. $ -- $ --
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ --
FUND TOTAL
RETURN (%)........ -7.13 29.84
INDEX TOTAL
RETURN (%)........ -3.43 25.92
</TABLE>
All performance is historical, 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 for
the life of the Fund period would have been lower.
4 - Scudder 21st Century Growth Fund
<PAGE>
PORTFOLIO SUMMARY as of February 28, 1997
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ASSET ALLOCATION
- ---------------------------------------------------------------------------
Equity Holdings 95%
Cash Equivalents 5%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The fund seeks to be fully
invested in stocks of small U.S.
growth companies.
- --------------------------------------------------------------------------
SECTOR DIVERSIFICATION
(Excludes 5% Cash Equivalents)
- --------------------------------------------------------------------------
Technology 27%
Health 22%
Service Industries 18%
Consumer Discretionary 12%
Financial 8%
Energy 5%
Consumer Staples 3%
Manufacturing 2%
Durables 2%
Other 1%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
While the Fund's top sector
weightings remained essentially
unchanged, management reduced
exposure to foreign companies
and the energy sector.
- --------------------------------------------------------------------------
10 LARGEST EQUITY HOLDINGS
(30% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. QUADRAMED CORP.
Developer of financial management and data
interchange software products and services
2. VITESSE SEMICONDUCTOR CORP.
Manufacturer of digital integrated circuits
3. WEST MARINE, INC.
Retailer of recreational and commercial boating
supplies and apparel
4. PINNACLE SYSTEMS, INC.
Manufacturer of video post-production
workstations
5. ACCESS HEALTH, INC.
Personal health management services
6. WACKENHUT CORRECTIONS CORP.
Manager of privatized correctional and detention
facilities
7. G & K SERVICES, INC.
Uniform rentals
8. PROTEIN DESIGN LABS, INC.
Developer of human and humanized antibodies
9. MAPICS, INC.
Business planning and control solutions and
services
10. MEDQUIST, INC.
Electronic document transcription and
management services
Stock picking emphasized
several investment themes
including meeting needs of aging
baby boomers, productivity
enhancement, outsourcing, and
consolidation.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 10. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - Scudder 21st Century Growth Fund
<PAGE>
Portfolio Management Discussion
In the following interview, Peter Chin and Roy C. McKay, portfolio managers of
Scudder 21st Century Growth Fund, discuss the Fund's strategy and the market
environment during the six-month period.
Q: How did Scudder 21st Century Growth Fund perform relative to its benchmark,
the Russell 2000 Growth Index, for the six-month fiscal period ended February
28, 1998?
A: The Fund provided a 9.53% total return, surpassing the 6.45% index return for
the same period. Small growth stocks were hit hard in the fall by the Asian
financial crisis, but began to recover in February. As the crisis unfolded, the
U.S. stock market initially focused on the negative impact of faltering demand
for U.S. exports in Asian markets. Investors generally fled to the perceived
safety of larger, more liquid companies. The Fund fared relatively well during
the downturn, declining 7.56% versus an 8.20% drop in the Russell index, in part
because the portfolio is largely invested in companies with purely U.S. sales
and earnings. When small growth stocks began to bounce back in February, our
stock-picking strategy helped us outperform on the upside. The Fund rose 13.25%
in the final month of the period, versus 8.83% for the index.
Q: What sectors and stocks helped boost performance?
A: Technology-related companies came back to life toward the end of the period,
with sharp gains posted by Vitesse Semiconductor Corp., CMG Information
Services, and Pinnacle Systems. Regional banks provided strong performance,
thanks to a wave of merger activity in some of the country's fastest-growing
areas. Specialty service and consumer stocks also performed well, with solid
gains by West Marine, Inc., Wackenhut Corrections Corp., and G&K Services Inc.
Q: What were some of the disappointments?
A: Sectors that underperformed included energy, manufacturing, and certain
biotech companies -- with many disappointments related to the Asian financial
crisis and a sharp drop in the price of oil. Superior Energy Services, Alyn
Corp., and ESC Medical Systems are three examples of Fund holdings that declined
sharply in the fourth quarter of 1997.
Q: How would you characterize the current investment environment?
A: The situation has two sides. On the negative side, the stock market is
reacting to a global weakening of demand as the Asian crisis unfolds and spreads
to the Americas and Europe. This sentiment has triggered a flight to liquidity
and quality, and large-capitalization stocks continue to outperform small-caps.
In the United States, long-term interest rates have dropped below 6% for the
first time in many years. The good news is that falling long-term rates usually
produce higher valuations for growth stocks, while a strong U.S. dollar tends to
favor small-cap stocks because of their domestic focus. Also, the recently
lowered capital gains tax rate should heighten the appeal of growth stocks,
since they tend to provide more capital appreciation than income.
6 - Scudder 21st Century Growth Fund
<PAGE>
As we expected, earnings of the 30 largest companies in the portfolio grew
dramatically during the most recently reported quarter, up 57% on average.
Normally, a drop in rates combined with earnings growth of this magnitude would
produce superior absolute and relative performance. But the current environment
is not normal, and the flight to quality favored large companies over small
ones. We are beginning to see some improvement in small growth-stock prices, but
we may not be entirely out of the woods yet.
Q: What was the Fund's strategy during the period?
A: We reduced export exposure to Asia via the sale of technology companies such
as Sawtek, Inc., a component supplier for cellular phones exported to Korea. In
addition, we are limiting the Fund's energy exposure. Valuations of energy
companies tend to move with prices over the short term, and since energy prices
are often determined by political considerations, predictability in the
valuations of energy stocks is inherently difficult.
We also took steps to concentrate the portfolio in only those companies in which
we have the highest confidence in future earnings increases. Overall, the number
of portfolio holdings has dropped to 66 from 91 on August 31, and further
reductions are in progress. Purchases were and continue to be concentrated in
U.S. companies whose operations do not overly depend upon foreign activities.
Q: What kinds of stocks do you consider buying?
A: There are several themes guiding investments in the portfolio. One concept is
that of the aging baby boomers. For this group, income and accumulated wealth
are on the rise as their careers advance and key expenses -- including the
mortgage and education costs for their children -- decline. Providers of
specialty products and services should benefit from this trend. Fund holdings
include St. John Knits, the leading specialty retailer of high-quality knitwear;
and West Marine, Inc., a retailer of recreational and commercial boating
supplies and apparel. With age comes a greater need for medical products and
services. We have invested in medical device companies such as ESC Medical
Systems, the largest supplier of medical lasers used to eliminate wrinkles and
the visibility of varicose and other veins. Another sector which should benefit
is financial services, as the baby-boomer segment of the population accelerates
its retirement savings. Fund holdings include Silicon Valley Bancshares,
FirstFed Financial, and Southwest Bancorp of Texas.
A second investment theme involves the providers and users of
productivity-enhancing products and services. These ideas are rooted in
corporate America's continuing drive to reduce costs, improve service, and
enhance profit margins in an environment of little or no room to increase
prices. Software-related holdings in this vein include Vantive Corp., a provider
of sophisticated sales management services; and Wind River Systems, the leading
independent supplier of software and hardware combinations tailored to specific
customer needs. On the service side of this theme, the common threads are
outsourcing, consolidation, and the privatization of government services.
Outsourcing enables companies to shed functions that are necessary to keep every
7 - Scudder 21st Century Growth Fund
<PAGE>
corporation running but that are not central to the basic business. For example,
Fund holdings Computer Horizons and Analysts International provide technology
services for one-time projects, such as the "year 2000" conversion, as well as
ongoing maintenance. Consolidating companies are those that acquire competitors
to achieve economies of scale or new geographic penetrations, while the
privatization of government services is basically outsourcing by the government
to the private sector. For instance, Fund holdings Wackenhut Corrections and
Cornell Corrections manage recently privatized correctional and detention
facilities.
Q: Any final thoughts?
A: Above all, we remain committed to investing Scudder 21st Century Growth Fund
in the best-available small growth companies for long-term growth of capital.
The current environment calls for caution. However, we believe that once the
Asian solution becomes more clear, the recovery in small stocks that
characterized the second and third quarters of 1997 should resume, fueled by low
interest rates, improved earnings growth, and the cut in the capital gains tax
rate.
8 - Scudder 21st Century Growth Fund
<PAGE>
Glossary of Investment Terms
EARNINGS The net income of a company. Earnings are an
important gauge of a company's health.
Primary earnings per share refers to net
income after preferred dividends, divided by
common shares outstanding plus the shares
that would be outstanding if common stock
equivalents were actually converted. Retained
earnings are the profits remaining in the
company after payment of preferred and common
stock dividends. Retained earnings provide an
important internal source of capital for
business expansion.
FUNDAMENTAL RESEARCH Analysis of companies based on the projected
impact of management, products, sales, and
earnings on their balance sheets and income
statements. Fundamental research 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 STOCK Stock of a company that has displayed
above-average earnings growth and is expected
to continue to increase profits rapidly going
forward. Stocks of such companies usually
trade at higher multiples to earnings and
experience more price volatility than the
market as a whole.
MARKET CAPITALIZATION The market value of a company's outstanding
shares of common stock, determined by
multiplying the number of shares outstanding
by the share price (shares x price = market
capitalization). The universe of publicly
traded companies is frequently divided into
large-, mid-, and small-capitalization.
"Large-cap" stocks tend to be among the most
liquid.
PRICE/EARNINGS RATIO (P/E) A widely used gauge of a stock's valuation
(also "earnings multiple") that indicates what investors are paying for
a company's earning power at the current
stock price. A P/E ratio may be based on a
company's projected earnings for the coming
12 months. A higher "earnings multiple"
indicates higher expected earnings growth,
along with greater risk of earnings
disappointment.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
9 - Scudder 21st Century Growth Fund
<PAGE>
Investment Portfolio as of February 28, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 5.1%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with State Street Bank and Trust Company dated 2/27/98
at 5.55%, to be repurchased at $1,674,774 on 3/2/98, collateralized by a -----------
$1,535,000 U.S. Treasury Bond, 7.875%, 11/15/07 (Cost $1,674,000) ..................... 1,674,000 1,674,000
-----------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 94.9%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 11.4%
Apparel & Shoes 2.1%
Ashworth, Inc.* (Manufacturer of golf sportswear) ....................................... 25,500 355,412
St. John Knits, Inc. (Manufacturer of woman's clothing) ................................. 8,100 342,225
-----------
697,637
-----------
Department & Chain Stores 2.1%
Renters Choice, Inc.* (Operator of rent-to-own stores offering home electronics,
appliances, furniture and accessories) ................................................ 27,600 690,000
-----------
Recreational Products 1.7%
Family Golf Centers, Inc.* (Operator of golf-related recreational facilities) ........... 16,300 548,088
-----------
Restaurants 0.9%
Il Fornaio (America) Corp. *(Restaurant chain) .......................................... 21,800 297,025
-----------
Specialty Retail 4.6%
CDnow, Inc.* (Online retailer of music related products) ................................ 1,200 27,450
West Marine, Inc.* (Retailer of recreational and commercial boating supplies
and apparel) .......................................................................... 38,000 1,042,625
Wilmar Industries, Inc.* (National distributor of repair and maintenance
products for the apartment housing market) ............................................ 19,700 449,406
-----------
1,519,481
-----------
Consumer Staples 2.7%
Food & Beverage 2.7%
Authentic Specialty Foods, Inc.* (Producer and distributor of Mexican foods) ............ 29,700 419,513
Hain Food Group, Inc.* (Provider of specialty food products) ............................ 34,000 484,500
-----------
904,013
-----------
Health 20.4%
Biotechnology 3.7%
Hyseq, Inc.* (Developer of gene-based therapeutic and diagnostic products) .............. 4,600 60,950
Protein Design Labs, Inc.* (Developer of human and humanized antibodies) ................ 20,500 881,500
Vysis, Inc.* (Developer of genetic disease evaluation products) ......................... 25,700 285,913
-----------
1,228,363
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder 21st Century Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Industry Services 7.7%
Access Health, Inc.* (Personal health management services) .............................. 28,500 1,033,125
IDX Systems Corp. *(Provider of health care information systems to physician
groups and academic medical centers) .................................................. 9,900 409,613
MedQuist, Inc.* (Electronic document transcription and management services) ............. 24,750 863,156
Renex Corp.* (Dialysis and ancillary services) .......................................... 36,500 255,500
-----------
2,561,394
-----------
Hospital Management 0.9%
Sunrise Assisted Living, Inc.* (Provider of assisted living to the elderly) ............. 7,300 308,425
-----------
Medical Supply & Specialty 6.7%
ESC Medical Systems Ltd.* (Producer of devices for non-invasive treatment of
benign vascular lesions) .............................................................. 22,500 767,813
Focal, Inc.* (Manufacturer of synthetic liquid surgical sealants) ....................... 22,800 336,300
Novoste Corp.* (Developer of a beta radiation catheter delivery system) ................. 12,500 370,313
Perclose, Inc.* (Developer and producer of minimally invasive single-use systems
to close arterial access sites surgically) ............................................ 24,900 628,725
Vista Medical Technologies, Inc.* (Manufacturer of visualization systems for
microsurgical procedures) ............................................................. 9,400 97,525
-----------
2,200,676
-----------
Pharmaceuticals 1.4%
Coulter Pharmaceutical, Inc.* (Developer of drugs and therapies for treatment
of cancer) ............................................................................ 20,000 465,000
-----------
Financial 7.6%
Banks 6.0%
FirstFed Financial Corp.* (Commercial bank holding company) ............................. 14,300 577,363
Republic Banking Corp. of Florida* (Commercial bank holding company) .................... 45,000 765,000
Silicon Valley Bancshares* (Commercial bank holding company) ............................ 5,600 319,200
Southwest Bancorporation of Texas, Inc.* (Commercial bank holding company) .............. 9,250 333,000
-----------
1,994,563
-----------
Insurance 1.6%
ESG Re Ltd.* (Accident, health, life and special risk reinsurance) ...................... 14,000 371,000
Stirling Cooke Brown Holdings Limited* (Holding company which provides risk
management services and products) ..................................................... 7,000 173,250
-----------
544,250
-----------
Media 0.7%
Advertising 0.7%
DoubleClick, Inc.* (Internet advertising network) ....................................... 7,300 233,144
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder 21st Century Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service Industries 17.3%
EDP Services 5.5%
Analysts International Corp.* (Contract programming and software services) .............. 18,750 663,281
Computer Horizons Corp.* (Diversified information technology services and
solutions) ............................................................................ 5,250 273,984
Keane, Inc.* (Provider of computer software project management and design
development services) ................................................................. 6,400 297,600
Micromuse, Inc.* (Developer of software solutions to manage information
technology infrastructure) ............................................................ 7,600 144,400
Sapient Corp.* (Producer of flexible information technology applications) ............... 5,500 436,563
-----------
1,815,828
-----------
Miscellaneous Commercial Services 11.8%
ABR Information Services, Inc.* (Benefits, compliance and information services) ......... 11,800 334,813
CMG Information Services, Inc.* (Developer of information-based products and
services for direct marketing) ........................................................ 16,600 794,725
Cornell Corrections, Inc.* (Developer and operator of correctional, detention
and pre-release facilities) ........................................................... 18,500 388,500
G & K Services, Inc. "A" (Uniform rentals) .............................................. 20,400 897,600
Lamalie Associates, Inc.* (Executive search company) .................................... 25,000 489,063
Stratesec, Inc. (Technology based security provider for commercial and
governmental facilities) .............................................................. 28,500 53,438
Wackenhut Corrections Corp. (Manager of privatized correctional and detention
facilities) ........................................................................... 32,900 937,650
-----------
3,895,789
-----------
Durables 1.7%
Telecommunications Equipment 1.7%
RIT Technologies Ltd. (Manufacturer of wiring products and systems) ..................... 45,000 562,500
-----------
Manufacturing 1.4%
Electrical Products 1.4%
Advanced Lighting Technologies, Inc. (Manufacturer of metal halide lighting
products) ............................................................................. 17,100 459,563
-----------
Technology 25.3%
Computer Software 14.7%
Advent Software, Inc.* (Provider of stand-alone and client/server software
products) ............................................................................. 10,400 380,900
H.T.E., Inc. (Developer of software applications for utilities and municipal
agencies) ............................................................................. 17,000 357,000
MAPICS, Inc. (Business planning and control solutions and services) ..................... 56,800 880,400
QuadraMed Corp.* (Developer of financial management and data interchange
software products and services) ....................................................... 42,700 1,361,063
Vantive Corp.* (Provider of customer interaction applications software) ................. 30,300 829,463
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder 21st Century Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wind River Systems* (Producer of advanced software operation systems and
development tools) .................................................................... 15,400 602,525
Xylan Corp.* (Producer of switching systems for local area networks) .................... 18,000 434,250
-----------
4,845,601
-----------
EDP Peripherals 1.0%
Network Appliance, Inc.* (Designer and manufacturer of network data storage
devices) .............................................................................. 11,200 330,400
-----------
Electronic Components/Distributors 1.8%
Flextronics International Ltd. (Contract services for manufacturers of
communications and computer equipment) ................................................ 12,900 614,363
-----------
Office/Plant Automation 4.4%
DAOU Systems, Inc. (Designer of computer systems for health care providers) ............. 9,700 255,838
Mercury Computer Systems, Inc.* (Manufacturer of digital signal processing
computer systems) ..................................................................... 10,400 157,950
Pinnacle Systems, Inc.* (Manufacturer of video post-production workstations) ............ 34,400 1,036,300
-----------
1,450,088
-----------
Semiconductors 3.4%
Vitesse Semiconductor Corp.* (Manufacturer of digital integrated circuits) .............. 21,900 1,112,109
-----------
Energy 5.1%
Oil & Gas Production 2.1%
KCS Energy, Inc.* (Crude oil and natural gas exploration, development and
production) ........................................................................... 10,500 186,375
St. Mary Land & Exploration Co. (Oil and gas exploration, development and
production) ........................................................................... 6,400 232,000
Virginia Gas Company (Natural gas, pipeline and storager company) ....................... 33,300 262,238
-----------
680,613
-----------
Oilfield Services/Equipment 3.0%
Global Industries Ltd.* (Pipeline construction, derrick and diving services for
offshore oil and gas industry) ........................................................ 26,400 455,400
National-Oilwell, Inc. (Manufacturer of oil and gas drilling equipment) ................. 7,200 201,600
Superior Energy Services, Inc. (Oilfield products and services provider) ................ 38,000 337,250
-----------
994,250
-----------
Construction 1.3%
Building Materials 1.3%
Simpson Manufacturing Co., Inc.* (Manufacturer of wood-to-wood, wood-to-concrete
and wood-to-masonry connectors) ....................................................... 10,400 427,700
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $24,485,775) 31,380,863
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $26,159,775) (a) 33,054,863
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder 21st Century Growth Fund
<PAGE>
- --------------------------------------------------------------------------------
* Non-income producing security.
(a) The cost for federal income tax purposes was $26,369,580. At February 28,
1998, net unrealized appreciation for all securities based on tax cost was
$6,685,283. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $7,097,991 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$412,708. The accompanying notes are an integral part of the financial
statements.
The accompanying notes are an integral part of the financial statements.
14 - Scudder 21st Century Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of February 28, 1998 (Unaudited)
<TABLE>
<CAPTION>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments, at market (identified cost $26,159,775) ................ $ 33,054,863
Cash ................................................................ 471
Receivable for Fund shares sold ..................................... 41,133
Dividends and interest receivable ................................... 1,099
Deferred organization expenses ...................................... 15,354
Other assets ........................................................ 103
----------------
Total assets ........................................................ 33,113,023
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................... 15,725
Payable for Fund shares redeemed .................................... 18,053
Accrued management fee .............................................. 22,689
Other payables and accrued expenses ................................. 61,539
----------------
Total liabilities ................................................... 118,006
-------------------------------------------------------------------------------------------
Net assets, at market value $ 32,995,017
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated net investment loss ..................................... (191,139)
Net unrealized appreciation on investments .......................... 6,895,088
Accumulated net realized loss ....................................... (1,564,828)
Paid-in capital ..................................................... 27,855,896
-------------------------------------------------------------------------------------------
Net assets, at market value $ 32,995,017
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($32,995,017 / 2,296,945 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ----------------
authorized) ....................................................... $14.36
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder 21st Century Growth Fund
<PAGE>
Statement of Operations
for the six months ended February 28, 1998 (Unaudited)
<TABLE>
<CAPTION>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends ........................................................... $ 27,057
Interest ............................................................ 29,871
----------------
56,928
Expenses:
Management fee ...................................................... 141,324
Services to shareholders ............................................ 76,556
Custodian and accounting fees ....................................... 25,957
Trustees' fees and expenses ......................................... 22,258
Auditing ............................................................ 11,234
Registration fees ................................................... 13,183
Reports to shareholders ............................................. 20,820
Legal ............................................................... 6,930
Amortization of organization expense ................................ 2,156
Other ............................................................... 3,049
----------------
Total expenses before reductions .................................... 323,467
Expense reductions .................................................. (75,400)
----------------
Expenses, net ....................................................... 248,067
-------------------------------------------------------------------------------------------
Net investment loss (191,139)
-------------------------------------------------------------------------------------------
<CAPTION>
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net realized gain from investments .................................. 3,437
Net unrealized appreciation during the period on investments ........ 2,779,943
-------------------------------------------------------------------------------------------
Net gain on investment transactions 2,783,380
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 2,592,241
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder 21st Century Growth Fund
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
September 9,
1996
Six Months (commencement
Ended February of operations)
28, 1998 to August 31,
Increase (Decrease) in Net Assets (Unaudited) 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment loss .......................................... $ (191,139) $ (164,846)
Net realized gain (loss) from investment transactions ........ 3,437 (1,568,265)
Net unrealized appreciation on investment transactions
during the period .......................................... 2,779,943 4,115,145
---------------- ----------------
Net increase in net assets resulting from operations ......... 2,592,241 2,382,034
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .................................... 11,669,430 24,126,673
Cost of shares redeemed ...................................... (4,578,388) (3,228,689)
Redemption fees .............................................. 15,558 14,958
---------------- ----------------
Net increase in net assets from Fund share transactions ...... 7,106,600 20,912,942
---------------- ----------------
Increase in net assets ....................................... 9,698,841 23,294,976
Net assets at beginning of period ............................ 23,296,176 1,200
Net assets at end of period (including accumulated net
investment loss of $191,139 for the period ended
---------------- ----------------
February 28, 1998) ......................................... $ 32,995,017 $ 23,296,176
---------------- ----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................... 1,776,347 100
---------------- ----------------
Shares sold .................................................. 872,947 2,058,513
Shares redeemed .............................................. (352,349) (282,266)
---------------- ----------------
Net increase in Fund shares .................................. 520,598 1,776,247
---------------- ----------------
Shares outstanding at end of period .......................... 2,296,945 1,776,347
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder 21st Century Growth Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
September 9, 1996
Six Months Ended (commencement of
February 28, 1998 operations) to
(Unaudited) August 31, 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period ...................................... $13.11 $12.00
----------------------------------------
Income from investment operations:
Net investment loss ....................................................... (.09) (.15)
Net realized and unrealized gain on investments ........................... 1.33 1.25
----------------------------------------
Total from investment operations .......................................... 1.24 1.10
----------------------------------------
Redemption fees ........................................................... .01 .01
----------------------------------------
Net asset value, end of period ............................................ $14.36 $13.11
- ----------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ...................................................... 9.53** 9.25 (c)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .................................... 33 23
Ratio of operating expenses, net to average daily net assets (%) .......... 1.75* 1.75*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ............................................................. 2.27* 3.52*
Ratio of net investment loss to average daily net assets (%) .............. (1.34)* (1.27)*
Portfolio turnover rate (%) ............................................... 133.7* 92.0*
Average commission rate paid .............................................. $.0454 $.0405
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return would have been lower had certain expenses not been reduced.
(c) Total return does not reflect the effect to the shareholder of the 1%
redemption fee on shares held less than one year.
* Annualized
** Not annualized
18 - Scudder 21st Century Growth Fund
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder 21st Century Growth Fund (the "Fund") is a diversified series of Scudder
Securities Trust, a Massachusetts business trust, and is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed by the Fund in the preparation of its
financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq System, for which
there have been sales, are valued at the most recent sale price reported on such
system. If there are no such sales, the value is the most recent bid quotation.
Securities which are not quoted on the Nasdaq System but are traded in another
over-the-counter market are valued at the most recent sale price on such market.
If no sale occurred, the security is then valued at the calculated mean between
the most recent bid and asked quotations. If there are no such bid and asked
quotations the most recent bid quotation shall be used. 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 Trustees.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
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. At August 31, 1997, the Fund had a net tax
basis capital loss carryforward of approximately $7,000, which may be applied
against any realized net taxable gains of each succeeding year until fully
utilitzed or until August 31, 2005, the expiration date, whichever occurs first.
In addition, from November 1, 1996 through August 31, 1997, the Fund incurred
approximately $1,337,000 in net realized capital losses. As permitted by tax
regulations, the Fund intends to elect to defer these losses and treat them as
arising in the fiscal year ended August 31, 1998.
Redemption Fees. In general, shares of the Fund may be redeemed at net asset
value. However, upon the redemption or exchange of shares held by shareholders
for less than one year, a fee of 1% of the current net asset value of the shares
will be assessed and retained by the Fund for the benefit of the remaining
shareholders. The redemption fee is accounted for as an addition to paid-in
capital.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. During any particular year net realized gains from
investment transactions, in excess of available capital loss carryforwards,
would be taxable to the
19 - Scudder 21st Century Growth Fund
<PAGE>
Fund if not distributed and, therefore, will be distributed to shareholders
annually. An additional distribution may be made to the extent necessary to
avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. As a result, net
investment income (loss) and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during such
period. Accordingly, the Fund may periodically make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Organization Costs. Costs incurred by the Fund in connection with its
organization have been deferred and are being amortized on a straight-line basis
over a five-year period.
Other. Investment security transactions are accounted for on a trade-date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. Purchases and Sales of Securities
For the six months ended February 28, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $24,101,094 and
$18,549,052, respectively.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Directors/Trustees and by the Fund's
Shareholders. The Management Agreement, which is effective December 31, 1997, is
the same in all material respects as the corresponding previous Investment
Management Agreement, except that Scudder Kemper is the new investment adviser
to the Fund.
Under the Management Agreement with Scudder Kemper, the Fund pays the Adviser a
fee equal to an annual rate of 1.00% of the Fund's average daily net assets,
computed and accrued daily and payable monthly. As manager of the assets of the
Fund, 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 Adviser has agreed not to impose all or a portion of the
Fund's management fee until December 31, 1998 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
20 - Scudder 21st Century Growth Fund
<PAGE>
ended February 28, 1998, the Adviser did not impose a portion of its management
fee amounting to $75,400 and the amount imposed amounted to $65,924 of which
$22,689 was unpaid.
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 28, 1998, SSC imposed fees amounting to $50,802, of
which $9,070 was unpaid at February 28, 1998.
The Fund is 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 Fund 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. At February 28, 1998, the
Special Servicing Agreement expense charged to the Fund amounted to $17,063.
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 Fund. For the six months ended February
28, 1998, STC imposed fees amounting to $3,808, of which $750 is unpaid at
February 28, 1998.
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 28, 1998, SFAC imposed fees amounting to $18,750, of which $3,125
is unpaid at February 28, 1998.
The Fund pays each of its Trustees not affiliated with the Adviser an annual
retainer plus specified amounts for attended board and committee meetings. For
the six months ended February 28, 1998, the Trustees' fees and expenses
aggregated $22,258.
21 - Scudder 21st Century Growth Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder 21st Century Growth
Fund (the "Fund") was held on October 27, 1997, at the office of Scudder Kemper
Investments, Inc. (formerly Scudder, Stevens & Clark, Inc.), 345 Park Avenue (at
51st Street), New York, New York 10154. At the Meeting, as adjourned and
reconvened, the following matters were voted upon by the shareholders (the
resulting votes for each matter are presented below). With regard to certain
proposals, it was recommended that the Meeting be reconvened in order to provide
shareholders with an additional opportunity to return their proxies. The date of
the reconvened meeting at which the matters were decided is noted after the
proposed matter.
1. To elect Trustees.
Number of Votes:
----------------
Trustee For Withheld
------- --- --------
Paul Bancroft III 1,157,384 34,311
Sheryle J. Bolton 1,157,670 34,025
William T. Burgin 1,157,956 33,739
Thomas J. Devine 1,157,645 34,050
Keith R. Fox 1,156,071 35,624
William H. Luers 1,158,001 33,694
Wilson Nolen 1,157,237 34,458
Daniel Pierce 1,157,220 34,475
Kathryn L. Quirk 1,157,071 34,624
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
1,121,389 38,632 31,674 13,606
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
1,056,944 58,283 62,862 13,606
22 - Scudder 21st Century Growth Fund
<PAGE>
4. To approve certain amendments to the Declaration of Trust. Sufficient
proxies had not been received by December 2, 1997 to approve the
amendments to the Declaration of Trust. Management has determined not to
continue to seek shareholder approval for this item.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
1,112,044 46,935 46,340 13,606
5. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Fundamental Policies For Against Abstain Broker
-------------------- --- ------- ------- ------
Non-Votes*
<S> <C> <C> <C> <C>
5.1 Diversification 1,066,244 48,186 63,659 13,606
5.2 Borrowing 1,065,823 48,393 63,873 13,606
5.3 Senior securities 1,066,043 48,386 63,660 13,606
5.4 Concentration 1,066,443 47,987 63,659 13,606
5.5 Underwriting of securities 1,065,600 48,616 63,873 13,606
5.6 Investment in real estate 1,065,647 43,144 69,298 13,606
5.7 Purchase of physical 1,065,220 43,358 69,511 13,606
commodities
5.8 Lending 1,065,448 43,343 69,298 13,606
</TABLE>
6. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
1,133,596 19,488 38,611
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
23 - Scudder 21st Century Growth Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Paul Bancroft III
Trustee; Venture Capitalist and
Consultant
Sheryle J. Bolton
Trustee; Chief Executive Officer,
Scientific Learning Corporation
William T. Burgin
Trustee; General Partner,
Bessemer Venture Partners
Thomas J. Devine
Trustee; Consultant
Keith R. Fox
Trustee; President, Exeter Capital
Management Corporation
William H. Luers
Trustee; Director, The
Metropolitan Museum of Art
Wilson Nolen
Trustee; Consultant
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Robert W. Lear
Honorary Trustee;
Executive-in-Residence, Visiting
Professor, Columbia University
Graduate School of Business
Robert G. Stone, Jr.
Honorary Trustee; Chairman
Emeritus and Director, Kirby
Corporation
Edmund R. Swanberg*
Honorary Trustee
Peter Chin*
Vice President
James M. Eysenbach*
Vice President
Philip S. Fortuna*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Roy C. McKay*
Vice President
Thaddeus Paluszek*
Vice President
Peter Taylor*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
John R. Hebble*
Assistant Treasurer
Richard W. Desmond*
Assistant Secretary
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - Scudder 21st Century Growth Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care FUnd
Scudder Technology Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including
management fees and expenses, call or write for a free prospectus. Read it
carefully before you invest or send money. +++Funds within categories are listed
in order from expected least risk to most risk. Certain Scudder funds may not be
available for purchase or exchange. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *A class of shares of
the Fund. **Not available in all states. +++ +++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. #These funds, advised
by Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange
and, in some cases, on various other stock exchanges.
25 - Scudder 21st Century Growth Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
26 - Scudder 21st Century Growth Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
27 - Scudder 21st Century Growth Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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