Scudder
Balanced
Fund
Semiannual Report
June 30, 1996
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.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
<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
25 Officers and Trustees
26 Investment Products and Services
27 How to Contact Scudder
IN BRIEF
o Scudder Balanced Fund provided a total return of 5.84% for the six month
period ended June 30, 1996, comparing favorably with the 5.05% return of
the average balanced fund tracked by Lipper Analytical Services. For the
trailing 12 months, the Fund's 16.05% return also exceeded that of the
Lipper average, which was 15.52%.
o Performance of the equity and fixed-income markets diverged over the first
half of 1996. The U.S. stock market on the whole continued its rally, while
bond prices generally fell as interest rates rose across the spectrum of
maturities.
o Consumer-oriented stocks are currently weighted most heavily in the equity
portion of the Fund, including several holdings that reflect the Fund's
attempt to capture the value of a company's global franchise before it is
fully reflected in its stock price.
o The fixed income portion of the Fund is presently maintaining its
relatively neutral stance with respect to the direction of interest rates,
with duration roughly in keeping with that of the overall bond market.
Nonetheless, we are on the whole more bullish than bearish on the bond
market.
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
Dear Shareholders,
We are pleased to present the 1996 Semiannual Report for Scudder
Balanced Fund. The Fund continued to perform well, and for the one-year period
ending June 30, the Fund's return was a solid 16.05%. This reflected in part the
impressive returns generated by the U.S. stock market over the last 12 months.
While domestic equity returns in the aggregate have been positive over
the first half of 1996, stock prices have become much more volatile in the last
few months. Bond prices generally fell over this same period, as interest rates
rose sharply on all but the shortest-maturity fixed-income instruments.
Investors have reacted strongly to any sign that the business cycle may be
poised to reaccelerate its growth and inflation trends upward. However, while
the stock and bond markets may vacillate with each conflicting economic
indicator, we do not believe that inflation will accelerate to any meaningful
degree, and the long-term trend of interest rates is downward. Scudder Balanced
Fund, with its roughly 60/40 split between stocks and bonds, should continue to
appeal to individuals seeking the potential for more consistent performance
offered by a quality, balanced approach to asset class diversification.
In this era of electronic information, we have taken a look at our
abbreviated quarterly reports, which you generally receive during the month
after the end of your fund's first and third fiscal quarters. Going forward,
these printed reports will be discontinued, and portfolio information will be
made available on a more timely basis -- each month, in most cases -- through
Scudder's Web site, Scudder's automated information line (SAIL), and calling
Investor Relations.
Thank you for your continued investment in Scudder Balanced Fund, and
please do not hesitate to call Investor Relations at 1-800-225-2470 with any
questions about your account.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Balanced Fund
3
<PAGE>
SCUDDER BALANCED FUND
PERFORMANCE UPDATE as of June 30, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER BALANCED FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $11,605 16.05% 16.05%
Life of
Fund* $13,606 36.06% 9.23%
S&P 500 INDEX (60%)
AND LBAB INDEX (40%)
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $11,902 19.02% 19.02%
Life of
Fund* $15,116 51.16% 12.89%
*The Fund commenced operations on January 4, 1993.
Index comparisons begin January 31, 1993.
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 $10,000
6/93 $ 9,876
12/93 $10,395
6/94 $ 9,823
12/94 $10,147
6/95 $11,705
12/95 $12,834
6/96 $13,584
S&P 500 Index
Year Amount
- ----------------------
1/31/93 $10,000
6/93 $10,401
12/93 $10,917
6/94 $10,547
12/94 $11,061
6/95 $13,296
12/95 $15,217
6/96 $16,753
LBAB Index
Year Amount
- ----------------------
1/31/93 $10,000
6/93 $10,488
12/93 $10,768
6/94 $10,352
12/94 $10,454
6/95 $11,651
12/95 $12,386
6/96 $12,235
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.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED JUNE 30
1993* 1994 1995 1996
-------------------------------
NET ASSET VALUE... $11.82 $11.49 $13.33 $14.74
INCOME DIVIDENDS.. $ .05 $ .28 $ .32 $ .32
CAPITAL GAINS
DISTRIBUTIONS..... - - - $ .37
FUND TOTAL
RETURN (%)........ -1.07 -.54 19.16 16.05
INDEX TOTAL
RETURN (%)........ 4.30 .49 20.72 19.02
Performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased. If
the Adviser had not maintained the Fund's expenses, the average annual
total return for the Fund for the one year, and life of Fund
periods would have been lower.
4
<PAGE>
PORTFOLIO SUMMARY as of June 30, 1996
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Common Stocks 60%
Fixed Income Holdings 33%
Cash Equivalents 7% Portfolio assets are divided
---- 60/40 between equity and fixed
100% income (including cash) instruments.
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
EQUITY HOLDINGS
- --------------------------------------------------------------------------
Consumer Staples 19% Five Largest Equity Holdings
Health 17% ------------------------------
Manufacturing 13% 1. PHILLIP MORRIS COMPANIES INC.
Technology 12% Tobacco, food products and brewing
Consumer Discretionary 11% 2. GENERAL ELECTRIC CO.
Service Industries 10% Leading producer of electrical
Financial 7% equipment
Other 11% 3. PROCTER & GAMBLE CO.
---- Diversified manufacturer of
100% consumer products
==== 4. PEPSICO INC.
Soft drinks, snack foods, and
food services
5. MERCK & CO. INC.
Leading ethical drug manufacturer
CONSUMER-ORIENTED STOCKS ARE WELL REPRESENTED IN THE PORTFOLIO
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
FIXED INCOME HOLDINGS (Excludes Cash Equivalents)
- --------------------------------------------------------------------------
TYPE QUALITY
- ---- -------
U.S. Gov't & Agencies 31% AAA 65%
Corporate Bonds 31% AA 7%
U.S. Gov't Mortgages 25% A 13%
Asset-Backed Securities 8% BBB 15%
Foreign-U.s.$ Denominated 5% ----
---- 100%
100% ====
====
Average quality of fixed
income holdings is in
excess of "AA."
- -----------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 10.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER BALANCED FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Scudder Balanced Fund provided a total return of 5.84% for the six
month period ended June 30, 1996, comparing favorably with the 5.05% average
return of the 268 balanced funds tracked by Lipper Analytical Services. For the
trailing 12 months, the Fund's 16.05% return also exceeded that of the Lipper
average, which was 15.52% for 247 funds.
Performance of the equity and fixed-income markets diverged over the
first half of 1996. The U.S. stock market on the whole continued its rally,
providing a total return of 10.1% for the period as gauged by the unmanaged S&P
500 Index. At the same time, bond prices generally fell, as reflected in the
- -1.21% return for the unmanaged Lehman Brothers Aggregate Bond Index.
Equity Focus Remains on
Quality Growth Companies
The relatively impressive total return for the S&P 500 since the
beginning of the year masks the greatly increased volatility displayed by stocks
over the past few months. Investors have been reacting almost daily to
conflicting signals concerning where the United States is in its business cycle.
Rising interest rates jolted equities on more than one occasion during the
period, but did not derail the longer-term market upswing. If interest rate
levels have begun to recede, as it appeared towards the end of the period, this
would be constructive for the stock market. However, there are some indications
that the stock market may have reached an unsustainable level, as reflected in a
high level of initial public offerings and, on the demand side, a record inflow
of money into mutual funds.
Market leadership, which had rotated towards cyclicals following an
unexpectedly strong February employment report, shifted back to more
"consumer-defensive" sectors near the end of the period, including consumer
staples and healthcare/pharmaceutical stocks. In this environment, instead of
attempting to outguess the market over the short term, the Fund's equity
holdings continued to focus on large, high-quality companies with the ability to
grow earnings under a range of economic conditions.
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
Consumer-oriented stocks are currently weighted most heavily in the
equity portion of the Fund. Several holdings reflect the Fund's attempt to
capture the value of a company's global franchise before it is fully reflected
in its stock price. In this vein, the Fund initiated a meaningful position in
Anheuser Busch. The company has traditionally been viewed as a sleepy behemoth
with a stagnant market share. However, it owns one of the world's strongest
brand names -- Budweiser -- and has started to expand on a global basis. We not
only expect the company's earnings to grow but also the stock to trade at a
higher multiple as the market recognizes the power of its consumer franchise and
growing international presence. For similar reasons, the Fund has significant
holdings in McDonald's and Black & Decker. We believe McDonald's is trading at
levels that more fully reflect the highly competitive domestic restaurant
environment than the positive leverage to be gained from serving hamburgers in
more than 90 countries (and counting). Black & Decker has been very active in
developing new products while at the same time expanding sales in international
markets.
Health and technology stocks are also well-represented in the Fund.
With respect to the health sector, we have modestly repositioned the Fund to
focus on the pharmaceutical group at the expense of service companies such as
health maintenance organizations and hospitals. Pharmaceutical companies are
benefiting from the trend towards substituting drug treatments for hospital
stays. In the technology sector, we have sought to take advantage of the
market's tendency to punish stocks as a group, recently adding on price weakness
to positions in companies we have a high degree of confidence in such as 3COM
and Ascend.
Going forward, the equity portion of the Fund will continue to consist
of a diversified portfolio built on a company-by-company basis. The focus will
remain on seeking high-quality companies with bright earnings growth prospects,
rather than trying to forecast the direction of the economy and interest rates.
7
<PAGE>
SCUDDER BALANCED FUND
Bond Holdings Assume
More Defensive Posture
The question overhanging the bond markets for most of the last six
months has concerned where the United States is in its business cycle. Is it
near the end, implying a slowdown and perhaps a recession? If so, this would
dictate continued low inflation, falling interest rates and rising bond prices.
Or has the economy this time bypassed the traditional end of the cycle, and is
there still risk to fixed-income investors from strong growth and the threat of
inflation?
In the face of conflicting signals concerning the direction of the
economy and interest rates, the bond market retreated somewhat over the first
half of 1996. The decline in momentum towards achieving a balanced U.S. budget
added to the negative market sentiment. Yields rose for bonds with maturities of
all lengths. Treasury yields for maturities ranging from two to 30 years ended
June in the neighborhood of a full percentage point higher than their levels at
the end of 1995 (for example, the two-year treasury yield went from 5.15% to
6.11%). In general, corporate and mortgage-backed debt issues outperformed
Treasuries during the period.
In the face of any such move in interest rates, duration -- which
measures sensitivity to changes in rates -- will normally be the key determinant
of a fixed-income portfolio's performance. In view of the uncertain outlook for
rates, the Fund assumed an increasingly defensive stance over the period,
focusing on shorter maturities and lowering portfolio duration from 5.4 to 5.1
years over the period. This strategy limited to a degree the impact of the
downturn in bonds and proved beneficial to the Fund's performance relative to
its peer group.
8
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
Longer term, we are on the whole more bullish than bearish on the bond
market. For starters, we do not view current inflation as a threat to the prices
of fixed-income securities. Inflation has remained remarkably under control even
during this growth spurt. We view the expansion as having matured and we expect
the economy to slow during the second half of the year. Moreover, with long-term
rates over 7%, investors are fairly compensated by the current level of
fixed-income yields. Of course, the extent and timing of any action by the
Federal Reserve Board to raise or lower short-term rates is a variable with
respect to the direction of bond prices.
As of the end of June, the Fund's assets were allocated 60% in equities
and 40% in fixed-income securities (including a 7% cash position), roughly in
keeping with its benchmark 60/40 division between stocks and bonds. Going
forward, the Fund will continue to focus on both growth from quality stocks and
income from a diverse portfolio of investment-grade bonds. We feel Scudder
Balanced Fund remains an excellent vehicle for investors seeking a convenient
way to achieve asset class diversification, and appreciate your continued
investment.
Sincerely,
Your Portfolio Management Team
/s/Valerie F. Malter /s/William M. Hutchinson
Valerie F. Malter William M. Hutchinson
/s/Michael K. Shields
Michael K. Shields
9
<PAGE>
SCUDDER BALANCED FUND
INVESTMENT PORTFOLIO as of June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-------------------------------------------------------------------
7.1% REPURCHASE AGREEMENTS
-------------------------------------------------------------------
7,420,000 Repurchase Agreement with Donaldson,
Lufkin & Jenrette dated 6/28/96 at
5.45%, to be repurchased at $7,423,370
on 7/1/96, collateralized by a $7,391,000
U.S. Treasury Note, 6.5%, 5/15/97
(Cost $7,420,000) ..................... 7,420,000
----------
-------------------------------------------------------------------
10.4% U.S. GOVERNMENT & AGENCIES
-------------------------------------------------------------------
500,000 U.S. Treasury Bond, 6.25%, 8/15/23 ..... 453,280
500,000 U.S. Treasury Bond, 7.25%, 5/15/16 ..... 511,720
500,000 U.S. Treasury Bond, 7.875%, 2/15/21 .... 548,515
1,500,000 U.S. Treasury Note, 5.5%, 9/30/97 ...... 1,492,965
2,000,000 U.S. Treasury Note, 5.75%, 8/15/03 ..... 1,904,680
2,500,000 U.S. Treasury Note, 5.75%, 10/31/00 .... 2,435,150
1,500,000 U.S. Treasury Note, 6%, 10/15/99 ....... 1,484,295
1,000,000 U.S. Treasury Note, 6.125%, 7/31/00 .... 988,910
1,000,000 U.S. Treasury Note, 6.875%, 7/31/99 .... 1,014,220
----------
TOTAL U.S. GOVERNMENT & AGENCIES
(Cost $11,096,728) .................... 10,833,735
----------
-------------------------------------------------------------------
1.3% GOV'T NATIONAL MORTGAGE ASSOCIATION
-------------------------------------------------------------------
26,754 Government National Mortgage Association
Pass-thru, 9.5%, 8/15/19 .............. 28,727
1,194,195 Government National Mortgage Association
Pass-thru 10%, 2/15/25 ................ 1,302,783
----------
TOTAL GOV'T NATIONAL MORTGAGE ASSOCIATION
(Cost $1,331,627) ..................... 1,331,510
----------
-------------------------------------------------------------------
6.9% U.S. GOVERNMENT AGENCY PASS-THRUS
-------------------------------------------------------------------
1,949,981 Federal Home Loan Mortgage Corp.,
8%, 4/1/08 ............................ 1,991,165
1,073,678 Federal National Mortgage Association,
6.5%, 11/1/25 ......................... 1,004,222
1,226,734 Federal National Mortgage Association,
6.5%, 1/1/26 .......................... 1,147,377
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1,204,574 Federal National Mortgage Association,
7%, 7/1/25 ............................ 1,158,643
2,012,981 Federal National Mortgage Association,
7%, 4/1/26 ............................ 1,936,226
----------
TOTAL U.S. GOVERNMENT AGENCY PASS-THRUS
(Cost $7,385,608) ..................... 7,237,633
----------
-------------------------------------------------------------------
1.6% FOREIGN BONDS - U.S. $ DENOMINATED
-------------------------------------------------------------------
750,000 Abbey National PLC Global Medium Term
Note, 6.69%, 10/17/05 ................. 721,275
1,000,000 Province of Ontario Global, 6%, 2/21/06 915,870
----------
TOTAL FOREIGN BONDS - U.S. $
DENOMINATED (Cost $1,744,743) ......... 1,637,145
----------
-------------------------------------------------------------------
2.6% ASSET-BACKED SECURITIES
-------------------------------------------------------------------
AUTOMOBILE RECEIVABLES 1.9%
1,000,000 Ford Credit Automobile Trust Series
1996-A A4, 6.75%, 9/15/00 ............. 1,010,740
1,000,000 Premier Auto Trust Asset Backed
Certificate Series 1996-3 A4,
6.75%, 11/6/00 ........................ 1,005,313
----------
2,016,053
----------
CREDIT CARD RECEIVABLES 0.7%
750,000 Sears Credit Account Master Trust
Series 1995-4, 6.25%, 1/15/03 ......... 748,358
----------
TOTAL ASSET-BACKED SECURITIES
(Cost $2,747,418) ..................... 2,764,411
----------
-------------------------------------------------------------------
10.2% CORPORATE BONDS
-------------------------------------------------------------------
CONSUMER STAPLES 0.5%
500,000 Seagram Co., Ltd., 8.35%, 1/15/22 ...... 526,950
----------
COMMUNICATIONS 0.7%
750,000 TCI Communications, Inc., 8%, 8/1/05 ... 733,073
----------
FINANCIAL 3.5%
500,000 Associates Corp. of North America,
6.625%, 5/15/01 ....................... 494,200
1,000,000 Capital One Bank Medium Term Note,
5.95%, 2/15/01 ........................ 951,340
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
250,000 General Electric Capital Services Inc.,
7.5%, 8/21/35 ......................... 249,740
200,000 Norwest Financial Inc. Senior Note,
8.875%, 7/1/96 ........................ 200,000
1,000,000 Southern National Corp., 7.05%, 5/23/03 994,990
750,000 Wells Fargo & Co., 6.875%, 4/1/06 ...... 722,505
----------
3,612,775
----------
MEDIA 1.5%
750,000 News America Holdings Inc., 8.5%, 2/15/05 788,340
750,000 Time Warner Inc., 9.125%, 1/15/13 ...... 783,285
----------
1,571,625
----------
DURABLES 2.1%
250,000 Boeing Co., 6.875%, 10/15/43 ........... 226,020
750,000 Comdisco, Inc., Senior Note, 5.75%,
2/15/01 ............................... 716,055
500,000 Ford Motor Co., 8.875%, 1/15/22 ........ 558,605
250,000 Ford Motor Credit Co., 6.25%, 2/26/98 .. 249,513
500,000 Lockheed Martin Corp., 7.75%, 5/1/26 ... 498,420
----------
2,248,613
----------
MANUFACTURING 1.4%
1,000,000 ITT Corp., 7.375%, 11/15/15 ............ 940,150
500,000 Nova Corp. of Alberta, 7.875%, 4/1/23 .. 499,300
----------
1,439,450
----------
TECHNOLOGY 0.5%
500,000 Loral Corp., 8.375%, 6/15/24 ........... 531,385
----------
TOTAL CORPORATE BONDS (COST $10,826,391) 10,663,871
----------
-------------------------------------------------------------------
59.9% COMMON STOCKS
-------------------------------------------------------------------
Shares
-------------------------------------------------------------------
CONSUMER DISCRETIONARY 6.7%
Department & Chain
Stores 2.5% 21,500 Nordstrom, Inc. ........................ 956,750
23,100 Price/Costco Inc.* ..................... 499,538
46,900 Wal-Mart Stores Inc. ................... 1,190,088
----------
2,646,376
----------
Hotels & Casinos 1.0% 16,700 Grand Casinos Inc. ..................... 430,025
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
50,800 Host Marriott Corp. .................... 666,750
----------
1,096,775
----------
Restaurants 1.4% 32,300 McDonald's Corp. ....................... 1,510,025
----------
Specialty Retail 1.8% 23,600 Corporate Express, Inc.* ............... 944,000
38,800 Intimate Brands, Inc. .................. 887,550
----------
1,831,550
----------
CONSUMER STAPLES 11.2%
Alcohol & Tobacco 3.3% 17,400 Anheuser-Busch Companies, Inc. ......... 1,305,000
20,200 Philip Morris Companies Inc. ........... 2,100,800
----------
3,405,800
----------
Consumer Electronic &
Photographic Products 0.5% 11,500 Duracell International Inc. ............ 495,938
----------
Food & Beverage 4.5% 32,300 Albertson's Inc. ....................... 1,336,413
22,600 Coca-Cola Co., Inc. .................... 1,104,575
15,100 Dole Food Co. .......................... 649,300
47,000 PepsiCo Inc. ........................... 1,662,625
----------
4,752,913
----------
Package Goods/Cosmetics 2.9% 5,600 Clorox Co. ............................. 496,300
11,800 Gillette Co. ........................... 736,025
19,700 Procter & Gamble Co. ................... 1,785,313
----------
3,017,638
----------
HEALTH 10.2%
Biotechnology 1.4% 15,300 Amgen Inc. ............................. 826,200
13,020 Guidant Corp. .......................... 641,235
----------
1,467,435
----------
Medical Supply & Specialty 0.8% 14,500 Medtronic Inc. ......................... 812,000
----------
Pharmaceuticals 8.0% 13,000 American Home Products Corp. ........... 781,625
21,400 Baxter International Inc. .............. 1,011,150
20,344 Eli Lilly & Co. ........................ 1,322,360
30,000 Johnson & Johnson ...................... 1,485,000
23,700 Merck & Co. Inc. ....................... 1,531,613
9,300 Pfizer, Inc. ........................... 663,788
13,000 Sandoz Ltd. AG (ADR) ................... 741,813
16,200 SmithKline Beecham PLC (ADR) ........... 880,875
----------
8,418,224
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMUNICATIONS 0.9%
Telephone/
Communications 16,000 American Telephone & Telegraph Co. ..... 992,000
----------
FINANCIAL 4.3%
Banks 1.2% 23,600 State Street Boston Corp. .............. 1,203,600
----------
Insurance 2.1% 14,650 American International Group, Inc. ..... 1,444,856
9,500 MBIA Inc. .............................. 739,813
----------
2,184,669
----------
Consumer Finance 0.4% 12,300 Associates First Capital Corp.* ........ 462,788
----------
Other Financial Companies 0.6% 18,900 Federal National Mortgage Association .. 633,150
----------
MEDIA 3.2%
Advertising 0.6% 13,100 Interpublic Group of Companies Inc. .... 614,063
----------
Broadcasting &
Entertainment 2.6% 9,700 Clear Channel Communications, Inc. ..... 799,038
22,500 Time Warner Inc. ....................... 883,125
15,300 Walt Disney Co. ........................ 961,988
----------
2,644,151
----------
SERVICE INDUSTRIES 5.9%
EDP Services 2.2% 23,000 Electronic Data Systems Corp. .......... 1,236,250
13,400 First Data Corp. ....................... 1,066,975
----------
2,303,225
----------
Investment 0.9% 38,900 Charles Schwab Corp. ................... 953,050
----------
Miscellaneous
Commercial Services 0.5% 33,100 Sensormatic Electronics Corp. .......... 542,001
----------
Miscellaneous Consumer
Services 1.6% 19,300 CUC International Inc. ................. 685,150
16,600 Service Corp. International ............ 954,500
----------
1,639,650
----------
Printing/Publishing 0.7% 10,200 Reuters Holdings PLC "B" (ADR) ......... 739,500
----------
DURABLES 1.4%
Telecommunications
Equipment 14,300 Ascend Communications, Inc. ............ 804,375
7,600 U.S. Robotics Corp. .................... 649,800
----------
1,454,175
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) (b) Value ($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MANUFACTURING 7.7%
Chemicals 1.5% 16,100 Praxair Inc. ........................... 680,225
17,100 Sigma-Aldrich Corp. .................... 914,850
----------
1,595,075
----------
Diversified Manufacturing 3.0% 23,500 General Electric Co. ................... 2,032,750
10,900 Honeywell, Inc. ........................ 594,050
12,450 Thermo Electron Corp. .................. 518,231
----------
3,145,031
----------
Electrical Products 2.6% 5,900 ASEA AB (ADR) .......................... 620,975
15,400 Emerson Electric Co. ................... 1,391,775
19,100 FORE Systems, Inc. ..................... 689,988
----------
2,702,738
----------
Hand Tools 0.6% 15,500 Black & Decker Corp. ................... 598,688
----------
TECHNOLOGY 7.1%
Computer Software 2.4% 10,100 Computer Associates International, Inc. 719,625
10,200 Microsoft Corp.* ....................... 1,225,275
13,000 Oracle Systems Corp. ................... 512,688
----------
2,457,588
----------
Electronic Components/
Distributors 0.6% 16,400 Altera Corp.* .......................... 623,200
----------
Electronic Data Processing 1.0% 10,800 Hewlett-Packard Co. .................... 1,075,950
----------
Office/Plant Automation 2.1% 27,400 3Com Corp.* ............................ 1,253,550
16,800 Cisco Systems, Inc. .................... 951,300
----------
2,204,850
----------
Semiconductors 1.0% 34,900 Atmel Corp. ............................ 1,051,363
----------
ENERGY 1.3%
Engineering 0.7% 10,400 Fluor Corp. ............................ 679,900
----------
Oil/Gas Transmission 0.6% 15,900 Enron Corp. ............................ 649,913
----------
TOTAL COMMON STOCKS (COST $48,609,417) . 62,604,992
----------
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $91,161,932) (a) ................ 104,493,297
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $91,239,358. At June 30, 1996,
net unrealized appreciation for all securities based on tax cost was
$13,253,939. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $14,690,854 and aggregate gross unrealized depreciation for all
securities in which there was an excess tax cost over market value of
$1,436,915.
(b) Principal amount is stated in U.S. dollars unless otherwise noted.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments, at market (identified cost $91,161,932)
(Note A) ............................................. $104,493,297
Cash .................................................... 403
Receivables
Investments sold ..................................... 150,014
Fund shares sold ..................................... 1,198,715
Dividends and interest ............................... 593,790
Deferred organization expenses (Note A) ................. 14,488
------------
Total assets ......................................... 106,450,707
Liabilities
Payables:
Investments purchased ................................$ 185,691
Fund shares redeemed ................................. 1,056,857
Accrued management fee (Note C) ...................... 8,601
Other accrued expenses (Note C) ...................... 95,672
----------
Total liabilities .................................... 1,346,821
------------
Net assets, at market value ............................. $105,103,886
============
Net Assets Net assets consist of:
Undistributed net investment income .................. $ 662,328
Net unrealized appreciation on investments ........... 13,331,365
Accumulated net realized gain ........................ 2,709,030
Shares of beneficial interest ........................ 71,299
Additional paid-in capital ........................... 88,329,864
------------
Net assets, at market value ............................. $105,103,886
============
Net asset value, offering and redemption price per
share ($105,103,886 \ 7,129,917 outstanding
shares of beneficial interest, $.01 par value,
unlimited number of shares authorized) ............... $14.74
======
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income
Interest ................................................ $1,270,394
Dividends (net of withholding taxes of $5,136) .......... 396,799
----------
1,667,193
Expenses:
Management fee (Note C) .................................$ 348,601
Services to shareholders (Note C) ....................... 207,294
Custodian and accounting fees (Note C) ................. 36,751
Trustees' fees and expenses (Note C) .................... 19,740
Reports to shareholders ................................. 19,931
Auditing ................................................ 28,138
Federal registration .................................... 4,196
State registration ...................................... 9,648
Legal ................................................... 2,932
Amortization of organization expense (Note A) ........... 4,787
Other ................................................... 3,157
----------
Total expenses before reductions ........................ 685,175
Expense reductions (Note C) ............................. (190,173)
----------
Expenses, net ........................................... 495,002
----------
Net investment income ................................... 1,172,191
----------
Net realized and unrealized gain on investment
transactions
Net realized gain from:
Investments .......................................... 2,723,006
Foreign currency related transactions ................ 71,376 2,794,382
----------
Net unrealized appreciation (depreciation)
during the period on:
Investments .......................................... 1,652,700
Foreign currency related transactions ................ (1,248) 1,651,452
---------- ----------
Net gain on investment transactions ..................... 4,445,834
----------
Net increase in net assets resulting from operations..... $5,618,025
==========
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
June 30, Ended
1996 December 31,
Increase (Decrease) in Net Assets (Unaudited) 1995
- --------------------------------------------------------------------------------
Operations:
Net investment income .......................... $ 1,172,191 $ 1,928,669
Net realized gain from investment
transactions ................................ 2,794,382 2,899,315
Net unrealized appreciation on investment
transactions during the period .............. 1,651,452 12,905,909
------------- -------------
Net increase in net assets resulting from
operations .................................. 5,618,025 17,733,893
------------- -------------
Distributions to shareholders:
From net investment income ($.08 and $.32
per share, respectively) .................... (562,413) (1,901,397)
------------- -------------
From net realized gains ($.12 and $.25 per
share, respectively) ........................ (831,199) (1,503,700)
------------- -------------
Fund share transactions:
Proceeds from shares sold ...................... 24,290,648 29,440,217
Net asset value of shares issued to
shareholders in reinvestment of distributions 1,363,571
3,318,154
Cost of shares redeemed ........................ (14,925,968) (22,968,196)
------------- -------------
Net increase in net assets from Fund share
transactions ................................ 10,728,251 9,790,175
------------- -------------
Increase in net assets ......................... 14,952,664 24,118,971
Net assets at beginning of period .............. 90,151,222 66,032,251
------------- -------------
Net assets at end of period (including
undistributed net investment income of
$662,328 and $52,550 at June 30, 1996
and December 31, 1995, respectively) ........ $ 105,103,886 $ 90,151,222
============= =============
Other Information
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ...... 6,386,156 5,680,135
------------- -------------
Shares sold .................................... 1,679,763 2,222,129
Shares issued to shareholders in
reinvestment of distributions ............... 94,653 241,695
Shares redeemed ................................ (1,030,655) (1,757,803)
------------- -------------
Net increase in Fund shares .................... 743,761 706,021
------------- -------------
Shares outstanding at end of period ............ 7,129,917 6,386,156
============= =============
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
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.
<TABLE>
<CAPTION>
For the Period
Six Months January 4, 1993
Ended (commencement
June 30, Years Ended December 31, of operations) to
1996 -------------------------- December 31,
(Unaudited) 1995 1994 1993
----------- -------------------------- -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............................ $ 14.12 $ 11.63 $ 12.23 $ 12.00
------- ------- ------- -------
Income from investment operations:
Net investment income (a) ..................................... .16 .32 .31 .26
Net realized and unrealized gain (loss)
on investment transactions ................................... .66 2.74 (.60) .23
------- ------- ------- -------
Total from investment operations ................................ .82 3.06 (.29) .49
------- ------- ------- -------
Less distributions:
From net investment income .................................... (.08) (.32) (.31) (.26)
From net realized gains on
investment transactions ...................................... (.12) (.25) -- --
------- ------- ------- -------
Total distributions ........................................... (.20) (.57) (.31) (.26)
------- ------- ------- -------
Net asset value, end of period .................................. $ 14.74 $ 14.12 $ 11.63 $ 12.23
======= ======= ======= =======
Total Return (%) ................................................ 5.84** 26.48 (2.39) 4.12**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .......................... 105 90 66 64
Ratio of operating expenses, net to average
daily net assets (%) (a) ...................................... 1.00* 1.00 1.00 1.00
Ratio of net investment income to average
daily net assets (%) .......................................... 2.37* 2.51 2.66 2.43
Portfolio turnover rate (%) ..................................... 82.8* 103.3 105.4 99.3
Average commission rate paid (b) ................................ $ .0538 $ -- $ -- $ --
(a)Reflects a per share amount of management
fee not imposed by the Adviser of .......................... $ .03 $ .05 $ .06 $ .06
Operating expense ratio before expense reductions (%) ........ 1.38* 1.40 1.47 1.53
(b)Average commission rate paid per share of common and preferred stocks is calculated for fiscal years beginning on or
after September 1, 1995.
* Annualized
** Not annualized
</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 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. 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 six months
ended June 30, 1996, 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.
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
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 Costs. Costs incurred by the Fund in connection with its
organization have been deferred and are being amortized on a straight-line basis
over a five-year period.
Other. Investment security transactions are accounted for on a trade date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
For the six months ended June 30, 1996, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $42,186,072 and $28,097,484 respectively. Purchases and sales of U.S.
Government obligations aggregated $5,574,355 and $10,350,116, 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
23
<PAGE>
SCUDDER BALANCED FUND
- --------------------------------------------------------------------------------
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, 1997 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, 1996, the Adviser imposed fees amounting to $158,428
and the portion not imposed amounted to $190,173.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended June 30, 1996, the amount charged to the Fund by SSC aggregated
$90,807, of which $15,142 is unpaid at June 30, 1996.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans for the Fund. For the six months ended June 30, 1996, the
amount charged to the Fund by STC aggregated $86,600, of which $28,533 is unpaid
at June 30, 1996.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended June 30, 1996, the amount charged to the Fund by SFAC aggregated $21,933
of which $7,228 is unpaid at June 30, 1996.
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, 1996, Trustees' fees and expenses aggregated $19,740.
24
<PAGE>
OFFICERS AND TRUSTEES
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager, WGBH Educational Foundation
Dudley H. Ladd*
Trustee
David S. Lee*
Vice President and Trustee
George M. Lovejoy, Jr.
Trustee; President and Director, Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business Administration, Northeastern University,
College of Business Administration
Jean C. Tempel
Trustee; Director, General Partner, TL Ventures
Jerard K. Hartman*
Vice President
William M. Hutchinson*
Vice President
Thomas W. Joseph*
Vice President
Valerie F. Malter*
Vice President
Thomas F. McDonough*
Vice President, Secretary and Assistant Treasurer
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Coleen Downs Dinneen*
Assistant Secretary
* Scudder, Stevens & Clark, Inc.
25
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder Global Bond Fund
Tax Free Money Market+ Scudder GNMA Fund
Scudder Tax Free Money Fund Scudder High Yield Bond Fund
Scudder California Tax Free Money Fund* Scudder Income Fund
Scudder New York Tax Free Money Fund* Scudder International Bond Fund
Tax Free+ Scudder Short Term Bond Fund
Scudder California Tax Free Fund* Scudder Zero Coupon 2000 Fund
Scudder High Yield Tax Free Fund Growth
Scudder Limited Term Tax Free Fund Scudder Capital Growth Fund
Scudder Managed Municipal Bonds Scudder Development Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Emerging Markets Growth Fund
Scudder Massachusetts Tax Free Fund* Scudder Global Fund
Scudder Medium Term Tax Free Fund Scudder Global Discovery Fund
Scudder New York Tax Free Fund* Scudder Gold Fund
Scudder Ohio Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Pennsylvania Tax Free Fund* Scudder International Fund
Growth and Income Scudder Latin America Fund
Scudder Balanced Fund Scudder Pacific Opportunities Fund
Scudder Growth and Income Fund Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder Value 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 Treasurers Trust(TM)++
Scudder Fund, Inc.
-----------------------------------------------------------------------------------------------------------------
</TABLE>
For complete information on any of the above Scudder funds, including
management fees and expenses, call or write for a free prospectus. Read it
carefully before you invest or send money. +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.
26
<PAGE>
HOW TO CONTACT SCUDDER
<TABLE>
<CAPTION>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
<S> <C>
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your
Scudder accounts; exchanges and
redemptions; or information on any
Scudder fund
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
Visit the Scudder World Wide Web Site at:
-------------------------------------------------------------------------------------------------------------
http://funds.scudder.com
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 Funds,* funds
institutional cash management designed to meet the broad
service for 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.
-------------------------------------------------------------------------------------------------------------
</TABLE>
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.
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 40 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.
