This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
102-6-85
MIS62S
Scudder
Balanced
Fund
Semiannual Report
June 30, 1995
o A fund that seeks a balance of growth and income, as well as long-term
preservation of capital, from a diversified portfolio of equity and
fixed-income securities.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
CONTENTS
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
17 Financial Statements
20 Financial Highlights
21 Notes to Financial Statements
26 Investment Products and Services
27 How to Contact Scudder
IN BRIEF
* Reflecting a significantly improved environment for both stocks and bonds,
Scudder Balanced Fund provided a strong 15.35% total return for the six
months ended June 30, 1995.
* The Fund performed well relative to its peers, outpacing the 13.70% average
total return of the 212 balanced funds tracked by Lipper Analytical
Services.
* Reflecting the earnings-driven momentum of the U.S. stock market in recent
months, stock holdings accounted for 59% of the Fund's assets on June 30,
while fixed-income securities and cash equivalents totaled 41%.
* Within the Fund's stock portfolio, those holdings in the financial,
technology, consumer staples, and healthcare industries provided the best
overall performance, contributing to the Fund's strong return during the
period.
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
- --------------------------------------------------------------------------------
Dear Shareholders,
We are pleased to report that Scudder Balanced Fund provided a total
return of 15.35% in the six months ended June 30, 1995. What's more, the Fund
outpaced 82% of its peers as tracked by Lipper Analytical Services, Inc. This
strong performance is particularly heartening, especially since it has come on
the heels of a disappointing -2.39% return in 1994 -- a challenging year for
stocks and one of the worst years for bonds since the 1920s.
The dramatic rally in stocks and bonds so far this year reflects a much
more positive interest rate environment than existed last year, which has
allowed stock investors to focus on the fact that corporate earnings have been
rising for the last several quarters. This combination of positive earnings and
declining interest rates, exemplified by the recent easing of rates by the
Federal Reserve, reflects the twin trends of a generally slow but growing
economy and low inflation. While interest rates have eased in many parts of the
globe, U.S. stock and bond investors have responded most enthusiastically over
the past six months, as evidenced by the strong relative performance of U.S.
financial markets.
The trend change in interest rates over the past eight months and the
resultant financial market rally testify to the often short-term nature of
market pullbacks. We encourage investors to keep recent price swings in mind as
they focus on future performance. Our longer-term outlook is positive overall
for stocks and bonds, based on our view that the economy will be characterized
by disinflationary growth through the balance of the decade. Even so, we expect
pockets of market volatility along the way as industries and individual
companies adjust to this sometimes challenging economic reality.
If you have questions about your Fund or your investments, please
contact a Scudder Investor Relations representative at 1-800-225-2470. Page 27
provides more information on how to contact Scudder. Thank you for choosing
Scudder Balanced Fund to help meet your investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Balanced Fund
3
<PAGE>
SCUDDER BALANCED FUND
PERFORMANCE UPDATE as of June 30, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
<TABLE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
Total Return
Period Growth --------------------
Ended of Cumu- Average
6/30/95 $10,000 lative Annual
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Year $11,916 19.16% 19.16%
Life of $11,724 17.24% 6.61%
Fund*
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
S&P 500 INDEX (60%)
AND LBAB INDEX (40%)
- --------------------------------------------------------------------------------
Total Return
Period Growth --------------------
Ended of Cumu- Average
6/30/95 $10,000 lative Annual
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Year $12,072 20.72% 20.72%
Life of $12,638 26.38% 10.20%
Fund*
- --------------------------------------------------------------------------------
<FN>
*The Fund commenced operations on January 4, 1993. Index comparisons begin
January 31, 1993.
</FN>
</TABLE>
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:
Yearly periods ended June 30
Scudder Balanced Fund
Year Amount
- ----------------------
1/31/93 10000
6/93 9876
12/93 10395
6/94 9823
12/94 10147
6/95 11705
S&P 500 Index
Year Amount
- ----------------------
1/31/93 10000
6/93 10401
12/93 10916
6/94 10547
12/94 11061
6/95 13296
LBAB Index
Year Amount
- ----------------------
1/31/93 10000
6/93 10488
12/93 10768
6/94 10352
12/94 10454
6/95 11651
The Standard & Poor's (S&P) 500 Index is an unmanaged capitalization-weighted
measure of 500 widely held common stocks listed on the New York Stock Exchange,
American Stock Exchange, and Over-The-Counter market and The Lehman Brothers
Aggregate Bond (LBAB) Index is an unmanaged market value-weighted measure of
treasury issues, agency issues, corporate bond issues and mortgage securities.
Index returns assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees or expenses.
<TABLE>
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- --------------------------------------------------------------------------------
PERIODS ENDED JUNE 30
<CAPTION>
1993* 1994 1995
--------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE.............. $11.82 $11.49 $13.33
INCOME DIVIDENDS............. $ .05 $ .28 $ .32
FUND TOTAL RETURN (%)........ -1.07 -.54 19.16
INDEX TOTAL RETURN (%)....... 4.30 .49 20.72
<FN>
Performance is historical and assumes reinvestment of all dividends and capital
gains and is not indicative of future results. Investment return and principal
value will fluctuate, so an investor's shares, when redeemed, may be worth more
or less than when purchased. If the Adviser had not maintained the Fund's
expenses, the averae annual total return for the 1 Year and Life of Fund
periods would have been lower.
</FN>
</TABLE>
4
<PAGE>
PORTFOLIO SUMMARY as of June 30, 1995
- --------------------------------------------------------------------------------
- -----------------------------------------------------
DIVERSIFICATION
- -----------------------------------------------------
/ / Common Stocks 59% [PIE GIVEN THE RAPID INCREASES IN
CHART] STOCK PRICES, WE HAVE ALLOWED
/ / Fixed Income Holdings 29% THE FUND'S CASH POSITION TO
ACCUMULATE TO TAKE ADVANTAGE
/ / Cash Equivalents 12% OF BUYING OPPORTUNITIES IN
---- THE FUTURE.
100%
====
- -----------------------------------------------------
EQUITY HOLDINGS
- -----------------------------------------------------
/ / Technology 15% Five Largest Equity Holdings
------------------------------
/ / Consumer Staples 14% [PIE 1. COLUMBIA/HCA HEALTHCARE CORP.
CHART] Leading hospital management
/ / Financial 14% company
/ / Health 12% 2. FEDERAL NATIONAL MORTGAGE
ASSOCIATION Insurer and
/ / Consumer Discretionary 8% holder of mortgage loans
/ / Durables 8% 3. AMERICAN INTERNATIONAL GROUP,
INC. Major international
/ / Energy 8% insurance holding company
/ / Other 21% 4. ELI LILLY CO. Leading
---- pharmaceutical company
100%
==== 5. MOTOROLA INC. Manufacturer
of semiconductors and
communication products
TECHNOLOGY HOLDINGS DOMINATED RETURNS DURING THE PERIOD, BASED ON STRONG
EARNINGS INCREASES.
- -----------------------------------------------------
FIXED INCOME HOLDINGS (EXCLUDES CASH EQUIVALENTS)
- -----------------------------------------------------
Type Quality
- ---------------------------------- ----------------
U.S. Gov't & Agencies 65% AAA 86% THE FUND'S
MORTGAGE-RELATED
Corporate Bonds 12% AA 4% HOLDINGS WERE
DE-EMPHASIZED DURING
U.S. Gov't Mortgages 10% A 6% THE PERIOD DUE TO THE
INCREASED RISK OF
Collateralized Mortgage BBB 4% PREPAYMENT ASSOCIATED
Obligations 5% ---- WITH THE FALLING
100% INTEREST RATES.
Foreign -- Non U.S. $ ====
Denominated 4%
Foreign -- U.S. $ Denominated 3%
Asset-Backed Securities 1%
----
100%
====
- --------------------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio, see page 10.
A monthly investment portfolio summary is available upon request.
5
<PAGE>
SCUDDER BALANCED FUND
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Dear Shareholders,
A combination of positive factors -- including strong corporate
earnings, moderate inflation, declining interest rates, and strong flows into
mutual funds -- drove the markets forward in the year's first two quarters.
Scudder Balanced Fund's 15.35% total return for the six-month period reflects
the strong participation of both the equity and income portions of the portfolio
in their respective market rallies: The unmanaged S&P 500 Index returned 20.21%
while the bond market, as measured by the unmanaged Lehman Brothers Aggregate
Bond Index, returned 11.44% in the first six months of 1995. The Fund
significantly outperformed the 13.70% average return for its peer group of 212
balanced funds tracked by Lipper Analytical Services, Inc.
Given the rise in asset prices, and of stocks in particular, we
maintained a neutral stance with respect to asset allocation, allowing the
Fund's cash reserves to accumulate so that we can pursue investment
opportunities as they arise. At the end of June, the Fund's stock holdings
accounted for 59% of portfolio assets, while fixed-income holdings accounted for
41%.
Stock Holdings Benefited from Strong Overall Earnings Gains
The gain in average earnings for the S&P 500 Composite Index was close
to 21% in the first six months of this year. Technology sector earnings were
stronger than average, driven by robust demand for computers and other
technology-based products. In a number of industries, higher operating profit
margins on relatively sluggish sales growth were achieved through financial
restructuring and increased productivity. Meanwhile, increased competition and
excess capacity put downward pressure on prices, helping to contain inflation
and contributing to slow overall growth for the U.S. economy.
In this environment, our investment strategy for the equity portion of
the portfolio remains focused on purchasing medium- to large-capitalization
growth companies that have attractive earnings gains relative to the overall
market and industry peers. In the first half of the year, we concentrated the
portfolio in financial service, consumer staples, healthcare, and technology
issues. Combined, these sectors represented roughly half of the equity portfolio
on June 30.
Declining interest rates thus far in 1995 resulted in the strong
performance of select financial issues. Standouts included specialty insurer
EXEL, Federal National Mortgage Association (the portfolio's second largest
holding), and State Street Bank.
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- -------------------------------------------------------------------------------
Although discretionary consumer spending has been weak this year,
demand for consumer staples remains solid. Among the portfolio's holdings in
this sector, Pepsi provided strong gains in both the first and second quarters.
The company appears to have addressed problems in the restaurant division, and
sales of snacks and beverages have been strong. Holdings of Colgate, Sara Lee,
and McDonalds also outperformed the market average and in some cases were
trimmed after appreciating sharply. Elsewhere, holdings were sold due to
disappointing performance, as was the case with Toys "R" Us in the specialty
retail area.
The healthcare sector provided solid results for the period, led by
Baxter International, whose stock rose 29% as the company's restructuring
strategy delivered favorable earnings. We sold Baxter in June when it reached
our price target. Merck also provided strong gains following solid earnings and
renewed interest in the company's impressive pipeline of new drugs. Other top
performers included Abbott Labs and Johnson & Johnson. United Healthcare, on the
other hand, has proved a disappointment. In June, the company announced a
takeover that would extend its principal business beyond that of traditional
health maintenance organizations (we believe unsuccessfully), thus we sold the
Fund's position.
Of all sectors represented in the portfolio, however, technology
dominated results during the period -- especially in the second quarter when
many holdings enjoyed dramatic gains. Among the best-performing issues were
telecommunication infrastructure suppliers Nokia (up 63% in the second quarter
alone), Ericsson, and Motorola. Semiconductors also provided impressive gains,
with notable performance from Intel and Texas Instruments. Computer makers and
software companies, including Hewlett Packard, Cisco, DSC Communications,
Oracle, and Microsoft, also significantly outperformed the market based on rapid
current and expected earnings growth. We sold software manufacturer Sybase,
however, due to poor performance. While we are certainly pleased with results in
the technology sector, we are also mindful that demand for computers and related
technology is unpredictable and that stellar profits can lead to unrealistic
expectations about future performance. Fortunately, the fundamental long-term
outlook for this sector remains positive, in our view.
7
<PAGE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
Income Portfolio: A Longer Average Duration and a Growing Emphasis on
Intermediate Maturities
In 1994, the fixed-income portion of the Fund had focused on bonds at
the shorter and longer ends of the maturity spectrum, a "barbell" strategy
designed to provide an optimal mix of competitive yields and reduced price
fluctuation in an environment of unstable but generally rising interest rates.
The portfolio's 1995 strategy has been to shift toward intermediate-maturity
bonds. Reallocating the portfolio to focus more on intermediate-term issues is
in keeping with our outlook for a steeper yield curve (in which short-term
yields move down faster than long-term yields) as the Federal Reserve moves to a
more accommodative interest rate policy. The Fed demonstrated this intent after
the close of the semiannual period when they lowered short-term interest rates
in early July, after raising them seven times in the prior 17 months.
In view of the dramatic bond market rally so far in 1995, the
fixed-income portion of the portfolio benefited from its relatively long average
duration of 5.17 years as of June 30, versus 5.05 years on December 31, 1994.
This bullish positioning allowed the Fund to participate more fully in the bond
market's price appreciation while capturing higher relative yields in a
declining interest rate environment. Also, the Fund de-emphasized its position
in mortgage-backed securities late in the period, which aided overall portfolio
performance. Mortgage-backed securities tend to underperform other types of
bonds during periods of strong price appreciation. This is because as interest
rates decline the risk of mortgage prepayment generally increases. As the
markets settled somewhat in June, however, premium coupon mortgage-backed
securities outperformed U.S. Treasuries based on their higher yields. We expect
this trend to continue if the overall bond market becomes more placid over the
near term.
The income portfolio's recent positions in German and French government
bonds reflect our belief that these issues represent attractive relative values.
The major European bond markets have underperformed U.S. Treasuries to date this
year, and we expect these positions, which total approximately 3.0% of the
fixed-income portion of the portfolio, to provide more total return than the
U.S. market overall in the year's second half.
8
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Outlook
The economic statistics released in recent months were weaker than
expected and second quarter GDP growth was essentially flat. Measures of
inflation were stable, and were referenced by the Federal Reserve as the primary
reason it reduced the federal funds rate on July 6. Globally, similar patterns
of modest economic growth and subdued inflation should provide a positive
environment for investors. This outlook is enhanced by our expectation that
disinflationary growth should remain the overriding economic theme for the
balance of the decade, providing a favorable backdrop for accommodative monetary
policy. Consequently, we believe interest rates, which in the United States are
still comfortably above the inflation rate, have room to fall over the next year
to 18 months. While this leaner economic environment will likely include some
bouts of market volatility along the way, we view the current positioning of
Scudder Balanced Fund as appropriate, with its emphasis on both income and price
appreciation. Thank you for your continued interest in Scudder Balanced Fund.
Sincerely,
Your Portfolio Management Team
/s/Bruce F. Beaty /s/William M. Hutchinson
Bruce F. Beaty William M. Hutchinson
/s/Michael K. Shields
Michael K. Shields
<PAGE>
<TABLE>
SCUDDER BALANCED FUND
INVESTMENT PORTFOLIO as of June 30, 1995 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
---------------------------------------------------------------------------------------------
11.6% REPURCHASE AGREEMENTS
---------------------------------------------------------------------------------------------
9,482,000 Repurchase Agreement with Donaldson,
Lufkin and Jenrette dated 6/30/95 at 6.07%
to be repurchased at $9,486,796 on 7/3/95,
collateralized by a $8,848,000 U.S. Treasury
Note, 7.875%, 1/15/98 (Cost $9,482,000)..................... 9,482,000
-----------
---------------------------------------------------------------------------------------------
19.3% U.S. GOVERNMENT & AGENCIES
---------------------------------------------------------------------------------------------
1,500,000 U.S. Treasury Bond, 7.25%, 5/15/16............................ 1,589,760
1,750,000 U.S. Treasury Bond, 7.875%, 2/15/21........................... 1,990,082
250,000 U.S. Treasury Note, 8%, 10/15/96.............................. 256,640
250,000 U.S. Treasury Note, 8.5%, 4/15/97............................. 261,093
2,500,000 U.S. Treasury Note, 5.5%, 7/31/97............................. 2,483,200
2,500,000 U.S. Treasury Note, 5.5%, 9/30/97............................. 2,480,850
500,000 U.S. Treasury Note, 5.125%, 4/30/98........................... 490,080
500,000 U.S. Treasury Note, 6.375%, 1/15/99........................... 506,485
2,000,000 U.S. Treasury Note, 6.875%, 7/31/99........................... 2,062,500
500,000 U.S. Treasury Note, 7.5%, 11/15/01............................ 536,720
1,000,000 U.S. Treasury Note, 6.375%, 8/15/02........................... 1,011,870
1,500,000 U.S. Treasury Note, 5.875%, 2/15/04........................... 1,463,205
1,500,000 U.S. Treasury Separate Trading Registered
Interest and Principal, 5/15/09 (6.691% (c))................ 601,860
-----------
TOTAL U.S. GOVERNMENT & AGENCIES
(Cost $15,559,786).......................................... 15,734,345
-----------
---------------------------------------------------------------------------------------------
1.2% GOV'T NATIONAL MORTGAGE ASSOCIATION
---------------------------------------------------------------------------------------------
29,654 Government National Mortgage Association
Pass-thru, 9.5%, 8/15/19.................................... 31,489
870,497 Government National Mortgage Association
Pass-thru, 10%, 2/15/25..................................... 947,476
-----------
TOTAL GOV'T NATIONAL MORTGAGE ASSOCIATION
(Cost $969,310)............................................. 978,965
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------------------------------------
1.9% U.S. GOVERNMENT AGENCY PASS-THRUS
------------------------------------------------------------------------------------
533,124 Federal Home Loan Mortgage Corp.,
9.5%, 2/1/25...................................... 559,444
970,854 Federal Home Loan Mortgage Corp., 9.5%, 4/1/25...... 1,018,785
TOTAL U.S. GOVERNMENT AGENCY PASS-THRUS ----------
(Cost $1,571,679)................................. 1,578,229
----------
------------------------------------------------------------------------------------
1.5% COLLATERALIZED MORTGAGE OBLIGATIONS
------------------------------------------------------------------------------------
1,250,000 Federal National Mortgage Association,
7%, 8/1/24 (Cost $1,228,906)....................... 1,228,906
----------
------------------------------------------------------------------------------------
0.8% FOREIGN BONDS - U.S. $ DENOMINATED
------------------------------------------------------------------------------------
661,000 United Mexican States Tesobonos, U.S.
Dollar Linked, 8/17/95 (Cost $654,415).............. 651,874
----------
------------------------------------------------------------------------------------
1.2% FOREIGN BONDS - NON U.S. $ DENOMINATED
------------------------------------------------------------------------------------
DEM 650,000 Federal Republic of Germany, 6.5%, 7/15/03............. 455,425
FRF 2,700,000 Government of France OAT, 7.5%, 4/25/05................ 551,381
----------
TOTAL FOREIGN BONDS # NON U.S. $
DENOMINATED (Cost $1,008,121)........................ 1,006,806
----------
------------------------------------------------------------------------------------
0.3% ASSET-BACKED SECURITIES
------------------------------------------------------------------------------------
AUTOMOBILE
RECEIVABLES
280,528 Capital Automobile Receivable Asset Trust,
Series A6, 4.9%, 2/15/98 (Cost $280,397)............. 279,650
----------
------------------------------------------------------------------------------------
3.5% CORPORATE BONDS
------------------------------------------------------------------------------------
FINANCIAL 0.3%
200,000 Norwest Financial Inc. Senior Note,
8.875%, 7/1/96....................................... 205,132
----------
MEDIA 0.6% 500,000 Time Warner Inc., 9.125%, 1/15/13...................... 519,645
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
11
<PAGE>
<TABLE>
SCUDDER BALANCED FUND
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DURABLES 1.3% 250,000 Boeing Co., 6.875%, 10/15/43..................... 231,513
500,000 Ford Motor Co., 8.875%, 1/15/22.................. 575,185
250,000 Ford Motor Credit Co., 6.25%, 2/26/98............ 249,355
-----------
1,056,053
-----------
MANUFACTURING 0.6% 500,000 Nova Corp. of Alberta, 7.875%, 4/1/03............. 519,525
-----------
TECHNOLOGY 0.7% 500,000 Loral Corp., 8.375%, 6/15/24...................... 531,950
-----------
TOTAL CORPORATE BONDS (Cost $2,797,026)........... 2,832,305
-----------
------------------------------------------------------------------------------------
58.7% COMMON STOCKS
------------------------------------------------------------------------------------
Shares
------------------------------------------------------------------------------------
CONSUMER
DISCRETIONARY 4.7%
Department &
Chain Stores 3.3% 20,966 Home Depot, Inc. ................................. 851,744
3,400 J.C. Penney Inc. ................................. 163,200
10,800 May Department Stores............................. 449,550
30,200 Wal-Mart Stores Inc. ............................. 807,850
8,200 Walgreen Co. .................................... 411,025
-----------
2,683,369
-----------
Hotels &
Casinos 0.7% 23,300 Carnival Corp., "A"............................... 544,637
-----------
Restaurants 0.3% 6,400 McDonald's Corp. ................................. 250,400
-----------
Specialty
Retail 0.4% 13,700 Pep Boys - Manny, Moe and Jack.................... 366,475
-----------
CONSUMER
STAPLES 8.2%
Alcohol &
Tobacco 0.6% 6,900 Philip Morris Companies Inc. .................... 513,188
-----------
Consumer
Electronic &
Photographic
Products 0.3% 5,400 Duracell International Inc. ...................... 233,550
-----------
Food &
Beverage 4.9% 31,100 Albertson's Inc. ................................ 925,225
3,100 CPC International Inc. ........................... 191,425
17,500 ConAgra Inc. ..................................... 610,313
5,100 General Mills, Inc. .............................. 262,013
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ----
12
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
24,600 PepsiCo Inc. ................................... 1,122,375
32,000 Sara Lee Corp. .................................. 912,000
-----------
4,023,351
-----------
Package Goods/
Cosmetics 2.4% 5,400 Clorox Co. ..................................... 352,350
6,800 Colgate-Palmolive Co. ........................... 497,250
9,600 Gillette Co. .................................... 428,400
8,900 Procter & Gamble Co. ........................... 639,688
-----------
1,917,688
-----------
HEALTH 7.0%
Biotechnology 0.2% 2,700 Biogen Inc.* .................................... 120,150
-----------
Hospital
Management 1.7% 32,600 Columbia/HCA Healthcare Corp. ................... 1,409,950
-----------
Pharmaceuticals 5.1% 8,600 Abbott Laboratories.............................. 348,300
6,300 American Home Products Corp. .................... 487,463
15,700 Eli Lilly Co. ................................... 1,232,450
6,500 Johnson & Johnson................................ 439,562
16,100 Merck & Co. Inc. ............................... 788,900
7,000 Sandoz Ltd. AG (ADR)............................. 241,500
14,400 Schering-Plough Corp. ........................... 635,400
-----------
4,173,575
-----------
COMMUNICATIONS 1.6%
Cellular
Telephone 0.5% 5,200 AirTouch Communications, Inc. ................... 148,200
6,500 Vodafone Group PLC (ADR)......................... 246,187
-----------
394,387
-----------
Telephone/
Communications 1.1% 16,400 American Telephone & Telegraph Co. .............. 871,250
-----------
FINANCIAL 8.2%
Banks 2.9% 14,917 Banc One Corp. .................................. 481,073
19,100 Mellon Bank Corp. ............................... 795,038
8,300 Norwest Corp. ................................... 238,625
22,700 State Street Boston Corp. ....................... 837,063
-----------
2,351,799
-----------
Insurance 3.6% 12,300 American International Group, Inc. .............. 1,402,200
8,500 EXEL, Ltd. ...................................... 442,000
2,000 General Re Corp. ................................ 267,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
13
<PAGE>
<TABLE>
SCUDDER BALANCED FUND
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10,500 MBIA Inc. ....................................... 698,250
3,700 PMI Group, Inc. ................................. 160,487
-----------
2,970,687
-----------
Other
Financial
Companies 1.7% 14,900 Federal National Mortgage Association............ 1,406,188
-----------
MEDIA 4.1%
Advertising 0.6%
12,600 Interpublic Group of Companies Inc. ............. 472,500
-----------
Broadcasting &
Entertainment 2.8% 8,700 Capital Cities/ABC Inc. ......................... 939,600
12,500 Time Warner Inc. ................................ 514,063
4,200 Viacom Inc. "B"* ................................ 194,775
11,300 Walt Disney Co. ................................. 628,562
-----------
2,277,000
-----------
Cable
Television 0.7% 24,300 Tele-Communications Inc. "A" (New)*.............. 569,531
-----------
SERVICE
INDUSTRIES 2.6%
EDP Services 1.4% 3,400 Automatic Data Processing, Inc. ................. 213,775
8,100 First Data Corp. ................................ 460,687
10,100 General Motors Corp. "E"......................... 439,350
-----------
1,113,812
-----------
Miscellaneous
Commercial
Services 0.4% 2,400 Flightsafety International Inc. ................ 117,000
8,500 Sysco Corp. ..................................... 250,750
-----------
367,750
-----------
Miscellaneous
Consumer
Services 0.2% 3,200 H & R Block Inc. ................................ 131,600
-----------
Printing/
Publishing 0.6% 10,500 Reuters Holdings PLC "B" (ADR)................... 526,312
-----------
DURABLES 4.5%
Automobiles 0.2% 3,800 Echlin, Inc. ................................... 132,050
-----------
Tele-
communications
Equipment 3.5% 12,900 DSC Communications Corp.* ....................... 599,850
22,000 General Instrument Corp.* ....................... 844,250
37,200 L.M. Ericsson Telephone Co. "B" (ADR)............ 744,000
8,000 Nokia Corp. "A" (ADR)............................ 477,000
1,900 U.S. Robotics Corp. ............................. 207,100
-----------
2,872,200
-----------
Tires 0.8% 27,400 Cooper Tire & Rubber Co. ........................ 667,875
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ----
14
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Manufacturing 3.8%
Diversified
Manufacturing 2.7% 6,800 Dover Corp. ..................................... 494,700
9,200 General Electric Co. ............................ 518,650
11,100 Minnesota Mining & Manufacturing Co. ............ 635,475
4,900 TRW Inc. ........................................ 391,387
3,300 Thermo Electron Corp.* .......................... 132,825
-----------
2,173,037
-----------
Electrical
Products 1.1% 3,700 ASEA AB (ADR).................................... 316,350
8,000 Emerson Electric Co. ............................ 572,000
-----------
888,350
-----------
Technology 8.9%
Computer
Software 1.1% 5,600 Microsoft Corp.* ................................ 506,100
10,450 Oracle Systems Corp.* ........................... 403,631
-----------
909,731
-----------
Diverse
Electronic
Products 2.3% 1,700 Applied Materials, Inc.* ........................ 147,263
13,800 General Motors Corp. "H"......................... 545,100
18,200 Motorola Inc. ................................... 1,221,675
-----------
1,914,038
-----------
Electronic Data
Processing 1.6% 10,700 Ceridian Corp. .................................. 394,563
10,300 Hewlett-Packard Co............................... 767,350
3,100 Silicon Graphics Inc.* .......................... 123,612
-----------
1,285,525
-----------
Military
Electronics 0.9% 14,900 Loral Corp. ..................................... 771,075
-----------
Office/Plant
Automation 1.4% 3,600 3Com Corp.* ..................................... 241,200
8,100 Cabletron Systems Inc.* ......................... 431,325
8,700 Cisco Systems, Inc.* ............................ 439,894
-----------
1,112,419
-----------
Semiconductors 1.6% 14,200 Intel Corp. ..................................... 899,038
3,000 Texas Instruments Inc. .......................... 401,625
-----------
1,300,663
-----------
ENERGY 4.6%
Engineering 0.7% 11,500 Fluor Corp. ...................................... 598,000
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
15
<PAGE>
SCUDDER BALANCED FUND
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Oil Companies 3.1% 8,100 Amoco Corp. ..................................... 539,662
12,000 Chevron Corp. ................................... 559,500
7,700 Exxon Corp. ..................................... 543,812
4,100 Mobil Corp. ..................................... 393,600
3,900 Royal Dutch Petroleum Co. ....................... 475,312
-----------
2,511,886
-----------
Oil/Gas
Transmission 0.8% 19,100 Enron Corp. ..................................... 670,888
-----------
METALS AND
MINERALS 0.5%
Steel & Metals 7,900 Nucor Corp. ..................................... 422,650
-----------
TOTAL COMMON STOCKS (Cost $40,612,491)........... 47,919,536
-----------
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $74,164,131) (a)......................... 81,692,616
===========
<FN>
(a) The cost for federal income tax purposes was $74,275,668. At June 30, 1995, net unrealized appreciation for
all securities based on tax cost was $7,416,948. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of $7,946,893 and aggregate gross unrealized
depreciation for all securities in which there was an excess tax cost over market value of $529,945.
(b) Principal amount is stated in U.S. dollars unless otherwise noted.
(c) Bond equivalent yield to maturity; not a coupon rate.
* Non-income producing security.
CURRENCY ABBREVIATIONS
---------------------
DEM German Deutschemark
FRF French Franc
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ----
16
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------
<CAPTION>
JUNE 30, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $74,164,131)
(Note A) .......................................... $ 81,692,616
Unrealized appreciation on forward currency exchange
contracts (Notes A and D) ......................... 14,931
Other receivables:
Fund shares sold .................................. 454,953
Dividends and interest ............................ 495,690
Deferred organization expenses (Note A)................ 24,115
------------
Total assets ...................................... 82,682,305
LIABILITIES
Payables:
Investments purchased.............................. $ 5,336,342
Fund shares redeemed............................... 49,968
Accrued management fee (Note C).................... 10,887
Other accrued expenses (Note C).................... 54,947
---------
Total liabilities ................................. 5,452,144
------------
Net assets, at market value............................ $ 77,230,161
============
NET ASSETS
Net assets consist of:
Undistributed net investment income................ $ 500,472
Unrealized appreciation on:
Investments ................................... 7,528,485
Foreign currency related transactions.......... 14,682
Accumulated net realized loss.................. (227,621)
Shares of beneficial interest.................. 57,945
Additional paid-in capital..................... 69,356,198
------------
Net assets, at market value............................ $ 77,230,161
============
NET ASSET VALUE, offering and redemption price per
share ($77,230,161 -:- 5,794,473 outstanding
shares of beneficial interest, $.01 par value,
unlimited number of shares authorized)............. $13.33
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
17
<PAGE>
<TABLE>
SCUDDER BALANCED FUND
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest............................................. $ 891,535
Dividends (net of withholding taxes of $7,090)....... 422,268
------------
1,313,803
Expenses:
Management fee (Note C) ............................. $ 78,248
Services to shareholders (Note C).................... 153,101
Trustees' fees (Note C).............................. 20,623
Custodian and accounting fees (Note C)............... 32,615
Reports to shareholders.............................. 27,797
Auditing............................................. 13,966
Legal................................................ 5,292
State registration................................... 5,194
Amortization of organization expense (Note A)........ 4,760
Other................................................ 8,003 349,599
------------ ------------
Net investment income................................ 964,204
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
TRANSACTIONS.....................................
Net realized gain (loss) from:
Investments...................................... 389,476
Foreign currency related transactions............ (3,296) 386,180
------------
Net unrealized appreciation during the period on:
Investments...................................... 8,754,481
Foreign currency related transactions............ 14,682 8,769,163
------------ ------------
Net gain on investment transactions.................. 9,155,343
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,119,547
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ----
18
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED YEAR
JUNE 30, ENDED
1995 DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income................................... $ 964,204 $ 1,724,357
Net realized gain (loss) from investment
transactions ....................................... 386,180 (401,176)
Net unrealized appreciation (depreciation) on
investment transactions during the period........... 8,769,163 (2,937,217)
----------- ------------
Net increase (decrease) in net assets
resulting from operations........................... 10,119,547 (1,614,036)
----------- ------------
Distributions to shareholders from net
investment income ($.08 and $.31 per
share, respectively)................................ (452,222) (1,678,241)
----------- ------------
Fund share transactions:
Proceeds from shares sold............................... 12,480,907 23,615,096
Net asset value of shares issued to
shareholders in reinvestment of distributions....... 438,348 1,621,585
Cost of shares redeemed................................. (11,388,670) (19,948,276)
----------- ------------
Net increase in net assets from Fund share
transactions........................................ 1,530,585 5,288,405
----------- ------------
INCREASE IN NET ASSETS.................................. 11,197,910 1,996,128
Net assets at beginning of period....................... 66,032,251 64,036,123
----------- ------------
NET ASSETS AT END OF PERIOD (including
undistributed net investment income of
$500,472 and accumulated net
investment loss of $11,510 at June 30,1995
and December 31, 1994, respectively)................ $77,230,161 $ 66,032,251
=========== ============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period............... 5,680,135 5,235,193
----------- ------------
Shares sold............................................. 1,001,786 1,976,188
Shares issued to shareholders in
reinvestment of distributions....................... 35,265 139,036
Shares redeemed ....................................... (922,713) (1,670,282)
----------- ------------
Net increase in Fund shares............................. 114,338 444,942
----------- ------------
Shares outstanding at end of period..................... 5,794,473 5,680,135
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
19
<PAGE>
<TABLE>
SCUDDER BALANCED FUND
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD AND OTHER
PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL STATEMENTS.
<CAPTION>
FOR THE PERIOD
SIX MONTHS JANUARY 4, 1993
ENDED YEAR (COMMENCEMENT
JUNE 30, ENDED OF OPERATIONS) TO
1995 DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1994 1993
----------- ------------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period................... $11.63 $12.23 $12.00
------ ------ ------
Income from investment operations:
Net investment income (a).......................... .17 .31 .26
Net realized and unrealized gain (loss) on
investment transactions........................... 1.61 (.60) .23
------ ------ ------
Total from investment operations....................... 1.78 (.29) .49
------ ------ ------
Less distributions from net investment income.......... (.08) (.31) (.26)
------ ------ ------
Net asset value, end of period......................... $13.33 $11.63 $12.23
====== ====== ======
TOTAL RETURN (%)....................................... 15.35** (2.39) 4.12**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions)................. 77 66 64
Ratio of operating expenses, net to average daily
net assets (%) (a)................................... 1.00* 1.00 1.00
Ratio of net investment income to average daily
net assets (%)....................................... 2.76* 2.66 2.43
Portfolio turnover rate (%)............................ 114.6* 105.4 99.3
<FN>
(a) Reflects a per share amount of management fee
not imposed by the Adviser of................... $ .03 $ .06 $ .06
Operating expense ratio including management fee
not imposed (%)................................. 1.49* 1.47 1.53
* Annualized
** Not annualized
</FN>
</TABLE>
- ----
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Balanced Fund (the "Fund") is a diversified series of Scudder Portfolio
Trust (the "Trust"). The Trust is organized as 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 policies described
below are followed by the Fund in the preparation of its financial statements
in conformity with generally accepted accounting principles.
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 National Association of
Securities Dealers Automatic Quotation ("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 high or "inside" 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.
Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a 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.
----
21
<PAGE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract (forward contract) is a commitment to purchase or sell a
foreign currency at the settlement date at a negotiated rate. During the
period, the Fund utilized forward contracts as a hedge against changes in
exchange rates relating to foreign currency denominated assets.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
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 and the underlying collateral, is equal to at least 100.5% of the
resale price.
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders. The
Fund accordingly paid no federal income taxes and no provision for federal
income taxes was required.
- ----
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
At December 31, 1994, the Fund had a net tax basis capital loss carryforward of
approximately $127,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until December
31, 2001, the expiration date. In addition, from November 1, 1994 through
December 31, 1994, the Fund incurred approximately $330,000 of 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 December
31, 1995.
DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made quarterly. During any particular year, 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. 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.
These differences relate primarily to investments in foreign denominated
investments and certain securities sold at a loss. As a result, net investment
income (loss) and net realized gain (loss) on investment transactions for a
reporting period may differ significantly from distributions during such
period. Accordingly, the Fund may periodically make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
The Fund uses the specific identified cost method for determining realized
gain or loss on investments for both financial and federal income tax reporting
purposes.
ORGANIZATION COST. Costs incurred by the Fund in connection with its
organization and initial registration of shares 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.
----
23
<PAGE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
For the six months ended June 30, 1995, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $28,473,934 and $30,878,391, respectively. Purchases and sales of
U.S. Government obligations aggregated $11,483,223 and $4,822,546,
respectively.
C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Adviser directs the investments of
the Fund in accordance with its investment objectives, policies, and
restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides
certain administrative services in accordance with the Agreement. The
management fee payable under the Agreement is equal to an annual rate of 0.70%
of the Fund's average daily nets assets, computed and accrued daily and payable
monthly. The Agreement also provides that if the Fund's expenses exceed
specified limits, such excess, up to the amount of the management fee, will be
paid by the Adviser. In addition, the Adviser has agreed not to impose all or a
portion of its management fee until April 30, 1996 to maintain the annualized
expenses of the Fund at not more than 1.00% of average daily net assets. For
the six months ended June 30, 1995, the Adviser imposed fees amounting to
$78,248 and the portion not imposed amounted to $170,531.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend paying and shareholder service agent for the Fund.
For the six months ended June 30, 1995, the amount charged to the Fund by SSC
aggregated $134,945, of which $23,131 is unpaid at June 30, 1995.
Effective January 17, 1995, Scudder Fund Accounting Corporation ("SFAC"), a
wholly-owned subsidiary of the Adviser, assumed responsibility 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 June 30, 1995, the
amount charged to the Fund by SFAC aggregated $18,282 of which $3,266 is unpaid
at June 30, 1995.
- ----
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Fund pays each Trustee not affiliated with the Adviser $4,000 annually,
plus specified amounts for attended board and committee meetings. For the six
months ended June 30, 1995, Trustees' fees aggregated $20,623.
D. COMMITMENTS
- --------------------------------------------------------------------------------
As of June 30, 1995, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized appreciation of
$14,931.
<TABLE>
<CAPTION>
Net Unrealized
Settlement Appreciation
Contracts to Deliver In Exchange For Date (U.S.$)
- ----------------------------- ------------------------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
German Deutschemark 659,318 U.S. Dollar 491,383 10/23/95 12,511
French Franc 2,634,930 U.S. Dollar 544,014 10/23/95 2,420
------
14,931
======
</TABLE>
----
25
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<S> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Value Fund
Scudder Growth and Income Fund The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
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. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *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, Stevens & Clark, Inc. are traded
on various stock exchanges. ++For information on Scudder Treasurers Trust,(TM) an institutional cash management
service that utilizes certain portfolios of Scudder Fund, Inc. ($100,000 minimum), call 1-800-541-7703.
</TABLE>
26
<PAGE>
HOW TO CONTACT SCUDDER
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For account updates, prices, yields, exchanges, and redemptions
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
-------------------------------------------------------------------------------------------------------------
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
-------------------------------------------------------------------------------------------------------------
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
-------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
-------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided through Scudder Investor Services,
Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a prospectus with more complete
information, including management fees and expenses. Please read it carefully before you invest or send
money.
</TABLE>
27
<PAGE>
Celebrating Over 75 Years of Serving Investors
- --------------------------------------------------------------------------------
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the first independent investment counsel
firm in the United States. Since its birth, Scudder's pioneering spirit and
commitment to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load mutual
fund. Today we offer 36 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
