Scudder
21st Century
Growth Fund
Annual Report
July 31, 1999
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No-Load Funds
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A no-load (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
<PAGE>
Scudder 21st Century Growth Fund
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Date of Inception: 9/9/96 Total Net Assets as of Ticker Symbol: SCTGX
7/31/99: $72 million
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o During the fund's most recent fiscal year ended July 31, 1999, small-cap
growth stocks as a group rebounded from difficulties in 1998 to post strong
performance.
o Scudder 21st Century Growth Fund returned an impressive 39.65% over the
12-month period ended July 31, solidly outgaining the 14.53% return of the
Russell 2000 Growth Index over the same period.
o The fund benefited from a strong showing by select technology stocks during
the period.
Table of Contents
3 Letter from the Fund's President 19 Notes to Financial Statements
4 Performance Update 23 Report of Independent Accountants
5 Portfolio Summary 24 Tax Information
6 Portfolio Management Discussion 25 Officers and Trustees
9 Investment Portfolio 26 Investment Products and Services
15 Financial Statements 27 Scudder Solutions
18 Financial Highlights
2 - Scudder 21st Century Growth Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
Small-cap growth stocks, especially in the technology sector, staged a
strong comeback during Scudder 21st Century Growth Fund's most recent fiscal
year. As solidly as the sector performed, though, your fund performed even
better. The fund's total return for the 12-month period was 39.65%, while its
benchmark, the Russell 2000 Growth Index, returned 14.53%.
As noted in the interview that begins on page 6, small-cap growth stocks
are benefiting from a reversal of the massive "flight to quality" that
accompanied a series of financial crises during the summer of 1998. And though
added risk goes hand-in-hand with investments in small growth stocks, I believe
the fund's recent performance demonstrates the enormous potential that can come
from holding a diversified portfolio of fundamentally sound small growth
companies.
It should be noted that Daniel Pierce retired in June of this year as
President of Scudder 21st Century Growth Fund, at which time I assumed that role
and its responsibilities. We are fortunate that Dan's longstanding affiliation
with Scudder is ongoing, and that we will continue to benefit from his counsel
going forward. I am pleased to join the Fund's team in this capacity, and look
forward to serving your interests.
If you have any questions regarding Scudder 21st Century Growth Fund or any
other Scudder fund, please call Investor Relations at 1-800-SCUDDER
(1-800-728-3337). Or visit Scudder's Web site at www.scudder.com.
Sincerely,
/s/Lynn S. Birdsong
Lynn S. Birdsong
President,
Scudder 21st Century Growth Fund
3 - Scudder 21st Century Growth Fund
<PAGE>
Performance Update as of July 31, 1999
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Fund Index Comparison
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Total Return
---------------------------------------------
Period Ended Growth of Average
7/31/1999 $10,000 Cumulative Annual
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Scudder 21st Century Growth Fund
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1 Year $ 13,965 39.65% 39.65%
Life of $ 15,408 54.08% 16.15%
Fund*
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Russell 2000 Growth Index
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1 Year $ 11,453 14.53% 14.53%
Life of $ 12,534 25.34% 8.30%
Fund*
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* The Fund commenced operations on September 9, 1996.
Index comparisons begin September 30, 1996.
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Growth of a $10,000 Investment
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THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
Scudder 21st Century Russell 2000
Growth Fund Index Growth
9/96* 10000 10000
1/97 9413 10277
7/97 10214 11090
1/98 10063 11173
7/98 10508 10944
1/99 12087 11980
7/99 14675 12534
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.
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Returns and Per Share Information
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THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
<TABLE>
<CAPTION>
1997* 1998 1999
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<S> <C> <C> <C>
Net Asset Value $ 12.87 $ 13.24 $ 18.48
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Income Dividends $ -- $ -- $ --
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Capital Gains Distributions $ -- $ -- $ --
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Fund Total Return (%) 7.25 2.87 39.65
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Index Total Return (%) 10.90 -1.32 14.53
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</TABLE>
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 returns would have been lower.
4 - Scudder 21st Century Growth Fund
<PAGE>
Portfolio Summary as of July 31, 1999
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Asset Allocation
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THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE:
CHART DATA:
Equity Holdings 95%
Cash Equivalents 5%
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100%
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The fund retained a modest cash position during the period.
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Sector Diversification
(Excludes 5% Cash Equivalents)
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THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE:
CHART DATA:
Technology 31%
Service Industries 17%
Health 13%
Consumer Discretionary 10%
Construction 6%
Energy 4%
Manufacturing 4%
Media 4%
Communications 4%
Other 7%
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100%
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With holdings in 12 separate sectors and more than 85 issues, the fund is
broadly diversified.
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Ten Largest Equity Holdings
(24% of Portfolio)
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1. VISX Inc.
Developer of laser technologies and systems for
vision correction
2. Pinnacle Systems, Inc.
Manufacturer of video post-production
workstations
3. Mercury Interactive Corp.
Producer of automated software testing tools
4. Vitesse Semiconductor Corp.
Manufacturer of digital integrated circuits
5. Realty Information Group, Inc.
Provider of building plan information
6. PMC-Sierra, Inc.
Producer of high speed internetworking component
solutions
7. Trex Company, Inc.
Manufacturer of non-wood decking alternative
products
8. MedQuist, Inc.
Electronic document transcription and
management services
9. Whittman-Hart, Inc.
Information technology consulting and system
integration services
10. Abacus Direct Corp.
Provider of information products and marketing
research services
VISX Inc. and Trex Company, the fund's #1 and #7 holdings, respectively, were
major contributors to the fund's return over the period.
For more complete details about the Fund's investment portfolio, see page 9.
A quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder 21st Century Growth Fund
<PAGE>
Portfolio Management Discussion
In the following interview, Peter Chin and Roy McKay, portfolio managers of
Scudder 21st Century Growth Fund, discuss the Fund's market environment and
strategy for its most recent fiscal year ended July 31, 1999, as well as their
outlook for the coming months.
Q: How did Scudder 21st Century Growth Fund perform over the most recent
12-month period?
A: The fund posted an impressive 39.65% return for the 12 months ended July 31,
1999. Over the same period, the Fund outpaced by a wide margin the 14.53% return
of its benchmark, the Russell 2000 Growth Index.
Q: To what do you attribute the fund's strong performance?
A: Two things. Clearly there has been a period of snapback -- beginning in
October 1998 and continuing through this past July -- from worries over such
issues as the Asian financial crisis, the Russian devaluation, and the Long Term
Capital Management problem. These "macro" factors negatively affected small
growth stocks during the fund's prior fiscal year, causing a flight to perceived
quality, and all of these negative factors seem to have reversed themselves.
Second, the fund's portfolio held stocks that overall were fundamentally sound,
and performed well.
Q: Please discuss some of the stocks that made important contributions to the
fund's return over the period.
A: One of the top contributors, and a company that we still like, is VISX, the
dominant supplier of lasers for vision correction eye surgery. The number of
such procedures performed continues to rise as the public's anxiety concerning
the risks of eye surgery ebbs. As you'd expect, the company is compensated for
sales of its lasers to medical practices, but it is also compensated for each
surgical procedure that takes place. As more and more procedures are performed,
VISX's revenues rise not only because they are paid for each procedure, but
because more laser units are going out into the field. The retail terminology is
"same store sales" -- more procedures per laser plus more lasers. Cost-cutting
competitors present some risk to VISX's rosy picture, but VISX remains the clear
leader. We'll be monitoring the company's progress closely over the coming
months.
Q: What were some other top performers for the fund?
A: Lycos, the search engine company, was a major contributor to the fund's
return. We bought Lycos in the fall; the stock split two for one; and it then
made dramatic gains. But, by last February, we felt Lycos was becoming
overpriced, and we sold it at an average of $113. There was a second reason we
sold the stock: In early 1999, there had been a so-called "take-under" media
merger -- where one company makes an offer for another company and the second
company's stock actually declines in price. A precedent was set, and we were
concerned that this could happen to Lycos. Shortly after we sold the stock,
there was an announcement that Lycos was going to merge with USA Network, with
the result that Lycos' stock price was hit hard. So selling Lycos when we did
helped the fund's performance.
Another top performer for the fund was Network Appliance, which supplies a new
technology called
6 - Scudder 21st Century Growth Fund
<PAGE>
"storage caching." Within a computer network, you're constantly pulling data
that typically doesn't change during the course of a day back and forth from a
database. With storage caching, you can take that daily usage data and store it
in a system that's much closer to the requestor. This new technology makes
computer networks cheaper and more efficient to operate, and Network Appliance
is the leader in the field. We purchased the stock at $44 when the fund
commenced operations, and it closed at $54.50 on July 31.
Q: Were there strong performers outside the technology sector?
A: Yes. One example is Gildan Activewear, an apparel manufacturer and marketer.
Their principal product is t-shirts; they sell them at resorts, to companies for
promotions, and via retail in stores. The name of the game for Gildan is making
t-shirts cheaper, and making them better. The company markets a limited
selection of products, so they can afford larger production runs. And because
they're based in Canada, they can take advantage of inexpensive hydroelectric
power. We look for earnings growth wherever we can find it, and this company has
produced. We bought Gildan in early May at $12, and now it's $20 per share.
Another non-tech stock that has performed well for the fund is Trex, which
manufactures a unique mixture of plastic and recycled wood for outdoor decking.
Unlike other decking materials, the product is maintenance free. Trex's product
is selling briskly, and we believe that it has extremely strong market
penetration potential.
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Scudder 21st Century Growth Fund: A Team Approach
to Investing
Scudder 21st Century Growth Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an important
role in the Fund's management process. Team members work together to develop
investment strategies and select securities for the Fund's portfolio. They are
supported by the Adviser's large staff of economists, research analysts,
traders, and other investment specialists who work in our offices across the
United States and abroad. We believe our team approach benefits Fund investors
by bringing together many disciplines and leveraging our extensive resources.
Lead Portfolio Manager Peter Chin, who joined the Adviser in 1973, has
responsibility for the Fund's day-to-day management and overall investment
strategies. Mr. Chin has over 25 years of research and portfolio management
experience, primarily in small company growth stocks.
Portfolio Manager Roy C. McKay joined the Adviser in 1988. Mr. McKay has over 31
years of investment experience, including 22 years of experience specializing in
small company growth stocks.
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7 - Scudder 21st Century Growth Fund
<PAGE>
Q: Which stocks detracted from performance?
A: Two that didn't perform well were ESC Medical Systems and Family Golf. ESC
makes lasers for skin blemishes, used by dermatologists. The company was growing
very fast, but they couldn't ship their product quickly enough to keep up with
demand. Family Golf is a consolidator of driving ranges. They had a formula of
buying golf facilities and then using their management systems to reduce costs.
Unfortunately, the company began to buy more than it could afford, borrowed too
much to do it, and acquisitions didn't generate the required level of revenues.
We sold our position when the company reported disappointing earnings.
Q: Can small growth stocks continue their strong performance over the coming
months?
A: Sector-wide, we think the primary risk for small-cap stocks going forward
would come from significant increases in short-term interest rates. With the Fed
announcing a neutral stance along with the August 24 rate hike, additional rate
increases are possible but less likely for now. Meanwhile, the sorts of
small-cap growth companies we like are generally moving along at rapid clips.
The top ten companies in the fund's portfolio are all leaders in their fields,
and we expect that they will continue their rapid growth. We believe Scudder
21st Century Growth Fund remains an appropriate holding for investors who
require an aggressive growth component for a well-diversified portfolio.
8 - Scudder 21st Century Growth Fund
<PAGE>
Investment Portfolio as of July 31, 1999
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
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<S> <C> <C>
Repurchase Agreement 5.3%
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Repurchase Agreement with State Street Bank and Trust Company dated 7/30/1999 at
5.04%, to be repurchased at $3,788,591 on 8/2/1999, collateralized by a
$3,800,000 U.S. Treasury Note, 5.125%, 8/31/2000 (Cost $3,787,000) .................... 3,787,000 3,787,000
Shares
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Common Stocks 94.7%
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Consumer Discretionary 9.8%
Department & Chain Stores 1.9%
Pacific Sunwear of California* (Operator of a nation-wide mall-based specialty
retail chain of stores) ............................................................... 25,500 637,500
Rent-A-Center, Inc.* (Owner and operator of rent-to-own stores and franchises) .......... 39,700 719,563
------------
1,357,063
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Recreational Products 1.0%
THQ, Inc.* (Developer, publisher and distributor of interactive entertainment
software) ............................................................................. 26,700 749,269
------------
Restaurants 3.0%
Dave & Buster's, Inc.* (Operator of restaurant/entertainment complexes) ................. 21,500 561,688
Il Fornaio America Corp.* (Restaurant chain) ............................................ 29,200 397,850
The Cheesecake Factory Inc.* (Operator of casual dining restaurants) .................... 39,900 1,197,000
------------
2,156,538
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Specialty Retail 3.9%
Action Performance Companies, Inc.* (Designer and retailer of licensed motorsports
merchandise) .......................................................................... 16,000 554,000
David's Bridal, Inc.* (Seller of wedding attire) ........................................ 36,300 562,650
Gildan Activewear Inc. "A"* (Manufacturer and marketer of branded basic activewear) ..... 40,600 834,838
Urban Outfitters, Inc.* (Retailer and wholesaler of specialty merchandise to
customer niches) ...................................................................... 34,100 861,025
------------
2,812,513
------------
Consumer Staples 2.6%
Farming 0.3%
Hines Horticulture, Inc.* (Operator of commercial nurseries) ............................ 26,000 217,750
------------
Food & Beverage 2.3%
Hain Food Group, Inc.* (Manufacturer of specialty food products) ........................ 31,900 803,481
Horizon Organic Holding Corp.* (Producer and marketer of a line of organic dairy
products) ............................................................................. 66,900 827,888
------------
1,631,369
------------
Health 12.2%
Biotechnology 2.6%
CryoLife, Inc.* (Cryopreservation of viable human tissue for transplants) ............... 81,100 973,200
Hyseq, Inc.* (Developer of gene-based therapeutic and diagnostic products) .............. 14,100 53,316
The accompanying notes are an integral part of the financial statements.
9 - Scudder 21st Century Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
QLT PhotoTherapeutics Inc.* (Developer of pharmaceutical products) ...................... 13,200 844,579
------------
1,871,095
------------
Health Industry Services 1.9%
MedQuist, Inc.* (Electronic document transcription and management services) ............. 32,000 1,388,000
------------
Hospital Management 0.7%
Sunrise Assisted Living, Inc.* (Provider of assisted living to the elderly) ............. 16,300 492,056
------------
Medical Supply & Specialty 5.6%
Endocardial Solutions, Inc.* (Manufacturer and marketer of heart monitor system) ........ 67,540 721,834
Fusion Medical Technologies, Inc.* (Developer surgical sealants for the treatment
of surgical wounds) ................................................................... 48,800 494,100
VISX Inc.* (Developer of laser technologies and systems for vision correction) .......... 27,300 2,764,125
------------
3,980,059
------------
Pharmaceuticals 1.4%
Coulter Pharmaceutical, Inc.* (Developer of drugs and therapies for treatment of
cancer) ............................................................................... 39,800 990,025
------------
Communications 3.7%
Cellular Telephone 1.5%
Research in Motion Ltd.* (Manufacturer and marketer of radio modem technology for
a wide variety of access devices) ..................................................... 46,400 1,094,994
------------
Telephone/Communications 2.2%
AudioCodes Ltd.* (Designer, developer and marketer of enabling technologies
and products for voice over packet networks) .......................................... 8,200 246,000
Convergent Communications, Inc.* (Provider of data and voice communication systems) ..... 6,000 96,000
IXC Communications, Inc.* (Provider of data and voice telecommunications
transmission services) ................................................................ 18,600 790,500
Net2Phone, Inc.* (Provider of voice-enhanced Internet communication services) ........... 700 19,163
Terayon Communication Systems, Inc.* (Developer and seller of cable modem systems
that enable cable operators to deploy two-way broadband access services) .............. 11,200 438,200
------------
1,589,863
------------
Media 3.8%
Advertising 1.8%
AdForce, Inc.* (Provider of advertisement management and delivery services on the
Internet) ............................................................................. 27,900 646,931
Speedway Motorsports, Inc.* (Marketer and promoter of motorsports entertainment) ........ 16,100 627,900
------------
1,274,831
------------
Broadcasting & Entertainment 1.7%
Cumulus Media Inc. "A"* (Radio broadcasting company) .................................... 30,200 728,575
Salem Communications Corp. "A"* (Radio broadcasting company) ............................ 4,900 137,200
Source Media, Inc.* (Provider of on-demand information, services and programming) ....... 36,500 396,938
------------
1,262,713
------------
The accompanying notes are an integral part of the financial statements.
10 - Scudder 21st Century Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Cable Television 0.3%
Insight Communications Co., Inc.* (Cable television system operator) .................... 7,000 209,125
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Service Industries 15.8%
EDP Services 3.0%
Pegasus Systems, Inc.* (Provider of global electronic commerce and transaction
processing solutions to diverse businesses) ........................................... 22,700 766,125
Sapient Corp.* (Producer of flexible information technology applications) ............... 14,700 812,175
Ultimate Software Group, Inc.* (Developer of personnel and payroll
management software solutions) ........................................................ 79,700 577,825
------------
2,156,125
------------
Miscellaneous Commercial Services 9.6%
Abacus Direct Corp.* (Provider of information products and marketing research
services) ............................................................................. 16,500 1,338,556
Cornell Corrections, Inc.* (Developer and operator of correctional, detention and
pre-release facilities) ............................................................... 57,300 845,175
Digital River, Inc.* (Provider of comprehensive electronic commerce outsourcing
solutions to software publishers and online retailers) ................................ 27,500 625,625
Eagle USA Airfreight, Inc.* (Provider of airfreight forwarding services) ................ 27,100 985,763
Korn/Ferry International* (Global executive search firm) ................................ 45,600 629,850
Modis Professional Services, Inc.* (Provider of business services including
consulting,
outsourcing, outplacement, training and strategic staffing) ........................... 40,600 588,700
Newgen Results Corp.* (Provider of customized database management and related
services
for automobile dealerships and manufacturers) ......................................... 37,200 465,000
Whittman-Hart, Inc.* (Information technology consulting and system integration
services) ............................................................................. 54,200 1,371,938
------------
6,850,607
------------
Miscellaneous Consumer Services 1.7%
Complete Business Solutions, Inc.* (Provider of information technology services to
organizations) ........................................................................ 32,100 609,900
Steiner Leisure Ltd.* (Provider of spa services and skin and hair products on
cruise ships) ......................................................................... 20,500 635,500
------------
1,245,400
------------
Printing/Publishing 1.5%
Consolidated Graphics, Inc.* (Provider of printing services) ............................ 26,800 1,065,300
------------
Durables 1.5%
Telecommunications Equipment 1.5%
Polycom, Inc.* (Manufacturer of audio and data conferencing products) ................... 32,600 1,092,100
------------
Manufacturing 4.0%
Chemicals 1.1%
Albany Molecular Research, Inc.* (An integrated chemistry outsourcing company) .......... 23,100 785,400
------------
The accompanying notes are an integral part of the financial statements.
11 - Scudder 21st Century Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Machinery/Components/Controls 1.0%
Astec Industries, Inc.* (Designer and manufacturer of equipment and components for
road building and related construction activities) .................................... 20,400 696,150
------------
Wholesale Distributors 0.8%
WESCO International, Inc.* (Distributor of electrical products and other industrial
maintenance, repair and operating supplies) ........................................... 32,700 588,600
------------
Miscellaneous 1.1%
JAKKS Pacific, Inc.* (Manufacturer and developer of toys and related products for
children) ............................................................................. 25,700 785,456
------------
Technology 29.7%
Computer Software 5.3%
Advent Software, Inc.* (Provider of stand-alone and client/server software products) .... 16,600 1,130,875
ISS Group, Inc.* (Provider of network security monitoring, detection, and response
software) ............................................................................. 29,000 630,750
Packeteer, Inc.* (Provider of application-adaptive bandwidth management solutions) ...... 3,400 100,300
Pilot Network Services, Inc.* (Provider of comprehensive security services over the
internet) ............................................................................. 48,900 446,213
SalesLogix Corp.* (Provider of software that enables mid-market businesses to sell
products over internet) ............................................................... 3,100 52,313
TSI International Software Ltd.* (Provider of software and related services to
businesses) ........................................................................... 62,200 1,185,688
Watchguard Technologies, Inc.* (Provider of Internet security products) ................. 19,600 237,650
------------
3,783,789
------------
Diverse Electronic Products 1.2%
InterVU, Inc.* (Provider of Internet video delivery products) ........................... 22,500 838,125
------------
EDP Peripherals 6.2%
AboveNet Communications Inc.* (Provider of internet operations) ......................... 18,300 647,934
CAIS Internet, Inc.* (Provider of internet services) .................................... 44,300 692,188
Mercury Interactive Corp.* (Producer of automated software testing tools) ............... 43,200 1,992,600
Network Appliance, Inc.* (Designer and manufacturer of network data storage devices) .... 20,200 1,100,900
------------
4,433,622
------------
Office/Plant Automation 4.4%
Mercury Computer Systems, Inc.* (Manufacturer of digital signal processing computer
systems) .............................................................................. 38,600 1,104,925
Pinnacle Systems, Inc.* (Manufacturer of video post-production workstations) ............ 71,200 2,073,700
------------
3,178,625
------------
Semiconductors 7.0%
PLX Technology, Inc.* (Provider of semiconductor devices and related software) .......... 25,000 728,125
PMC-Sierra, Inc.* (Producer of high speed internetworking component solutions) .......... 19,600 1,533,700
Transwitch Corp.* (Developer, marketer and supporter of integrated digital and
mixed-signal semiconductors for telecommunication markets) ............................ 19,500 855,563
The accompanying notes are an integral part of the financial statements.
12 - Scudder 21st Century Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.* (Manufacturer of digital integrated circuits) .............. 29,100 1,858,763
------------
4,976,151
------------
Miscellaneous 5.6%
Chemdex Corp.* (Provider of e-commerce solutions) ....................................... 1,100 33,000
Commerce One, Inc.* (Provider of Web-based, enterprise procurement solutions) ........... 20,900 1,039,775
Digex, Inc.* (Provider of Web site hosting services) .................................... 2,100 46,856
Engage Technologies, Inc.* (Provider of profile driven Internet marketing solutions) .... 1,500 51,844
MEDE AMERICA Corp.* (Provider of electronic interchange products and services
to the healthcare industry) ........................................................... 23,600 663,750
National Computer Systems, Inc. (Global information services company) ................... 20,400 698,700
National Information Consortium, Inc.* (Provider of Internet based electronic
government solutions) ................................................................. 49,400 808,925
SonoSite, Inc.* (Developer of miniaturized digital ultrasound imaging devices) .......... 38,400 693,600
------------
4,036,450
------------
Energy 4.2%
Oil & Gas Production 2.2%
Key Production Co., Inc.* (Oil and gas production) ...................................... 62,500 636,719
Swift Energy Co.* (Oil and gas exploration and production) .............................. 89,900 938,331
------------
1,575,050
------------
Oil Companies 1.0%
Stone Energy Corp.* (Independent oil and gas company) ................................... 15,300 691,369
------------
Oilfield Services/Equipment 1.0%
National-Oilwell, Inc.* (Manufacturer of oil and gas drilling equipment) ................ 47,100 750,656
------------
Construction 5.3%
Building Materials 1.0%
Simpson Manufacturing Co., Inc.* (Manufacturer of wood-to-wood, wood-to-concrete
and wood-to-masonry connectors) ....................................................... 13,400 688,425
------------
Building Products 4.3%
Realty Information Group, Inc.* (Provider of building plan information) ................. 43,900 1,679,175
Trex Company, Inc.* (Manufacturer of non-wood decking alternative products) ............. 50,700 1,432,275
------------
3,111,450
------------
Transportation 2.1%
Airlines 1.1%
America West Holdings Corp. "B"* (Passenger airline) .................................... 39,700 786,556
------------
The accompanying notes are an integral part of the financial statements.
13 - Scudder 21st Century Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Railroads 1.0%
Wisconsin Central Transportation Co.* (Operator of regional freight railroad) ........... 39,500 706,063
Total Common Stocks (Cost $52,430,780) 67,898,732
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $56,217,780) (a) 71,685,732
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $56,257,517. At July 31,
1999, net unrealized appreciation for all securities based on tax cost was
$15,428,215. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $18,221,023 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$2,792,808.
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 July 31, 1999
<TABLE>
<S> <C> <C>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $56,217,780) ............. $ 71,685,732
Cash ............................................................. 200
Receivable for investments sold .................................. 746,837
Receivable for Fund shares sold .................................. 50,125
Dividends and interest receivable ................................ 1,060
Deferred organization expenses ................................... 9,185
Other assets ..................................................... 972
----------------
Total assets ..................................................... 72,494,111
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................ 769,795
Payable for Fund shares redeemed ................................. 12,528
Accrued management fee ........................................... 59,048
Other payables and accrued expenses .............................. 101,013
----------------
Total liabilities ................................................ 942,384
-------------------------------------------------------------------------------------------
Net assets, at market value $ 71,551,727
-------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on investments ........ 15,467,952
Accumulated net realized gain (loss) ............................. 3,816,227
Paid-in capital .................................................. 52,267,548
-------------------------------------------------------------------------------------------
Net assets, at market value $ 71,551,727
-------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($71,551,727
/ 3,870,878 outstanding shares of beneficial interest, $.01 par ----------------
value, unlimited number of shares authorized) .................... $18.48
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder 21st Century Growth Fund
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Eleven Months Year Ended
Ended August 31,
Investment Income July 31, 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Dividends ............................................................. $ 21,651 $ 46,233
Interest .............................................................. 117,559 72,729
---------------- ----------------
139,210 118,962
Expenses:
Management fee ........................................................ 416,678 323,987
Services to shareholders .............................................. 339,978 191,319
Custodian and accounting fees ......................................... 45,405 51,536
Trustees' fees and expenses ........................................... 48,924 55,131
Auditing .............................................................. 25,059 17,635
Registration fees ..................................................... 17,810 17,253
Reports to shareholders ............................................... 14,666 23,204
Legal ................................................................. 7,670 14,634
Amortization of organization expense .................................. 3,978 4,347
Other ................................................................. 4,147 4,732
---------------- ----------------
Total expenses before reductions ...................................... 924,315 703,778
Expense reductions .................................................... (195,129) (136,802)
---------------- ----------------
Expenses, net ......................................................... 729,186 566,976
Net investment income (loss) (589,976) (448,014)
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ........................................................... 6,048,551 (75,261)
Foreign currency related transactions ................................. 106 --
---------------- ----------------
6,048,657 (75,261)
Net unrealized appreciation (depreciation) during the period on
investments ........................................................ 19,613,097 (8,260,290)
Net gain (loss) on investment transactions ............................ 25,661,754 (8,335,551)
Net increase (decrease) in net assets resulting from operations $ 25,071,778 $ (8,783,565)
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder 21st Century Growth Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
September 9,
1996
Eleven Months (commencement of
Ended July 31, Year Ended operations) to
Increase (Decrease) in Net Assets 1999 August 31, 1998 August 31, 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income (loss) ................. $ (589,976) $ (448,014) $ (164,846)
Net realized gain (loss) from investment
transactions .............................. 6,048,657 (75,261) (1,568,265)
Net unrealized appreciation (depreciation)
on investment transactions during the
period .................................... 19,613,097 (8,260,290) 4,115,145
---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations ................. 25,071,778 (8,783,565) 2,382,034
Fund share transactions:
Proceeds from shares sold .................... 34,857,980 21,758,221 24,126,673
Cost of shares redeemed ...................... (15,346,773) (9,368,423) (3,228,689)
Redemption fees .............................. 43,738 22,595 14,958
---------------- ---------------- ----------------
Net increase (decrease) in net assets from
Fund share transactions ................... 19,554,945 12,412,393 20,912,942
---------------- ---------------- ----------------
Increase (decrease) in net assets ............ 44,626,723 3,628,828 23,294,976
Net assets at beginning of period ............ 26,925,004 23,296,176 1,200
Net assets at end of period .................. $ 71,551,727 $ 26,925,004 $ 23,296,176
Other Information
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .... 2,653,082 1,776,347 100
---------------- ---------------- ----------------
Shares sold .................................. 2,232,047 1,580,844 2,058,513
Shares redeemed .............................. (1,014,251) (704,109) (282,266)
---------------- ---------------- ----------------
Net increase (decrease) in Fund shares ....... 1,217,796 876,735 1,776,247
Shares outstanding at end of period .......... 3,870,878 2,653,082 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
(commencememt
Eleven Months Year Ended of operations) to
Ended July 31, August 31, August 31,
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period ..................................... $10.15 $13.11 $12.00
Income from investment operations:
Net investment income (loss) ............................................. (.19) (.19) (.15)
Net realized and unrealized gain on investments .......................... 8.51 (2.78) 1.25
Total from investment operations ......................................... 8.32 (2.97) 1.10
Redemption fees .......................................................... .01 .01 .01
Net asset value, end of period ........................................... $18.48 $10.15 $13.11
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) (c) ................................................. 82.07** (22.58) 9.25**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................................... 72 27 23
Ratio of operating expenses, net to average daily net assets (%) ......... 1.75* 1.75 1.75*
Ratio of operating expenses before expense reductions, to average daily
net assets (%) 2.22* 2.17 3.52*
Ratio of net investment income (loss) to average daily net assets (%) .... (1.42)* (1.38) (1.27)*
Portfolio turnover rate (%) .............................................. 147.6* 119.8 92.0*
</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
A. Significant Accounting Policies
Scudder 21st Century Growth Fund (the "Fund") is a diversified series of Scudder
Securities Trust (the "Trust") 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 Massachusetts business trust.
On September 16, 1998, the Fund changed its fiscal year end for financial
reporting and federal income tax purposes from August 31 to July 31.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
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 Trustees.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, receives delivery of the underlying securities, the amount
of which at the time of purchase and each subsequent business day is required to
be maintained at such a level that the market value is equal to at least the
principal amount of the repurchase price plus accrued interest.
19 - Scudder 21st Century Growth Fund
<PAGE>
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. In addition, from November 1, 1998 through
July 31, 1999 the Fund incurred approximately $542,000 of net realized long term
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 July 31,
2000.
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 net investment losses incurred by the Fund. 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. Realized gains and
losses from investment transactions are recorded on an identified cost basis.
Expenses. Expenses arising in connection with a specific Fund are allocated to
that Fund. Other Trust expenses are allocated between the Funds in proportion to
their relative net assets.
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.
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.
B. Purchases and Sales of Securities
For the eleven months ended July 31, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $76,541,134 and
$59,372,461, respectively. For the year ended August 31, 1998, purchases and
sales of investment securities (excluding short-term investments) aggregated
$46,724,351 and $36,369,360, respectively.
20 - Scudder 21st Century Growth Fund
<PAGE>
C. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), 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 November 30, 1999 in order to maintain the
annualized expenses of the Fund at not more than 1.75% of average daily net
assets. For the eleven months ended July 31, 1999, the Adviser did not impose a
portion of its management fee amounting to $195,129 and the amount imposed
amounted to $221,549, of which $59,048 was unpaid at July 31, 1999. For the year
ended August 31, 1998, the Adviser did not impose a portion of its management
fee amounting to $136,802 and the amount imposed amounted to $187,185.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
eleven months ended July 31, 1999, SSC imposed fees amounting to $140,376, of
which $16,387 was unpaid at July 31, 1999. For the year ended August 31, 1998,
SSC imposed fees amounting to $109,029.
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 eleven months ended July
31, 1999, STC imposed fees amounting to $34,388, of which $8,169 was unpaid at
July 31, 1999. For the year ended August 31, 1998, STC imposed fees amounting to
$10,812.
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 eleven months
ended July 31, 1999, SFAC imposed fees amounting to $35,359, of which $7,091 was
unpaid at July 31, 1999. For the year ended August 31, 1998, SFAC imposed fees
amounting to $37,500.
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. For the eleven months ended
July 31, 1999, the Special Servicing Agreement expense charged to the Fund
amounted to $133,128. For the year ended August 31, 1998, the Special Servicing
Agreement expense charged to the Fund amounted to $53,609.
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 eleven months ended July 31, 1999, the Trustees' fees and expenses
aggregated $48,924. For the year ended August 31, 1998, the Trustees' fees and
expenses aggregated $55,131.
21 - Scudder 21st Century Growth Fund
<PAGE>
D. Line of Credit
The Fund and several Scudder Funds (the "Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated pro rata among each of the Participants. Interest is
calculated based on the market rates at the time of the borrowing. The Fund may
borrow up to a maximum of 33 percent of its net assets under the agreement.
22 - Scudder 21st Century Growth Fund
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder Securities Trust and the Shareholders of Scudder 21st
Century Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder 21st Century Growth Fund
(the "Fund") at July 31, 1999, the results of its operations, the changes in its
net assets, and the financial highlights for the periods indicated therein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at July 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
September 17, 1999
23 - Scudder 21st Century Growth Fund
<PAGE>
Tax Information
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$2,350,000 as capital gain dividends for its year ended July 31, 1999, of which
100% represents 20% rate gains.
Please consult a tax adviser if you have any questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have specific
questions about your account, please call 1-800-SCUDDER.
24 - Scudder 21st Century Growth Fund
<PAGE>
Officers and Trustees
Lynn S. Birdsong*
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
Keith R. Fox
Trustee; Private Equity Investor
William H. Luers
Trustee; Chairman and
President, U.N. Association of
America
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Joan E. Spero
Trustee; President, Doris Duke
Charitable Foundation
Thomas J. Devine
Honorary Trustee; Consultant
Wilson Nolen
Honorary Trustee; Consultant
Robert G. Stone, Jr.
Honorary Trustee; Chairman
Emeritus and Director, Kirby
Corporation
Edmund R. Swanberg
Honorary Trustee
Peter Chin*
Vice President
J. Brooks Dougherty*
Vice President
James M. Eysenbach*
Vice President
James E. Fenger*
Vice President
Philip S. Fortuna*
Vice President
Ann M. McCreary*
Vice President
Thaddeus Paluszek*
Vice President
Kurt R. Stalzer*
Vice President
Peter Taylor*
Vice President
John Millette*
Vice President and Secretary
Richard W. Desmond*
Assistant Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
25 - 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 --
Prime Reserve Shares*
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**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Corporate Bond 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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 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 Select 1000 Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth 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
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
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.
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.
26 - 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 -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: 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-SCUDDER
Please address all written correspondence to: The Scudder Funds, P.O. Box 2291, Boston, Massachusetts 02107-2291
- ------------------------------------------------------------------------------------------------------------------------------
</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 $280 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services Group. As a result, Zurich's subsidiary, Zurich
Kemper Investments, Inc., with 50 years of mutual fund and investment management
experience, was combined with Scudder. Headquartered in New York, Scudder Kemper
Investments offers a full range of investment counsel and asset management
capabilities, based on a combination of proprietary research and disciplined,
long-term investment strategies. With its global investment resources and
perspective, the firm seeks opportunities in markets throughout the world to
meet the needs of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Financial Services Group. The Zurich Financial Services Group is
an internationally recognized leader in financial services, including
property/casualty and life insurance, reinsurance, and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
