Scudder
Income
Fund
Annual Report
December 31, 1995
o Offers opportunities for a high level of income consistent with the prudent
investment of capital.
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 INCOME FUND
CONTENTS
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
13 Financial Statements
16 Financial Highlights
17 Notes to Financial Statements
22 Report of Independent Accountants
23 Tax Information
25 Officers and Trustees
26 Investment Products and Services
27 How to Contact Scudder
IN BRIEF
o Scudder Income Fund benefited from 1995's declining interest rate
environment and provided a total return of 18.54% for the 12 months ended
December 31, edging out both the unmanaged Lehman Brothers Aggregate Bond
Index and the average A-rated corporate bond fund tracked by Lipper
Analytical Services, which returned 18.47% and 18.45%, respectively.
o Duration was extended--therefore increasing the portfolio's sensitivity to
interest rate changes--to benefit more fully from the rally in bond prices
while capturing higher yields.
o The Fund's weighting in mortgage-backed securities was trimmed,
particularly in high-coupon issues trading at a premium, in favor of U.S.
Treasuries.
o Going forward, if domestic economic growth continues to slow, as we expect,
inflation should remain benign and the Fed should remain in an easing mode.
o The portfolio at year-end had a modestly higher duration than the bond
market as a whole.
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
Dear Shareholders,
Scudder Income Fund achieved a most gratifying 18.54% total return in
1995, partly the result of one of the best years for the bond market in U.S.
history. This about face from 1994 was due to a slow growth economy, falling
interest rates, and a low rate of inflation. The broad domestic bond market
provided a total return of 18.47% as measured by the Lehman Brothers Aggregate
Bond Index, which reflects the performance of a mix of corporate, government,
and mortgage-backed securities. Falling interest rates and rising bond prices
prevailed internationally as well.
While a repeat in the coming year of 1995's exceptional performance is
unlikely, the outlook for the U.S. bond market remains positive. The prospect of
slow growth and low inflation provides a favorable backdrop with respect to the
direction of interest rates. Disinflationary growth is expected to continue for
an extended period of time, which would be a plus for the bond market.
In addition, we see a number of long-term trends underway that support
the outlook for continued low inflation in the U.S. and around the world.
Technology is bringing efficiencies to every stage of the product cycle, from
design to distribution. Globalization has widened the competitive universe,
making inflationary price increases less likely. Deregulation is subjecting
major industries to market discipline, increasing capacity and reducing supply
bottlenecks. While investing will always involve uncertainties and market
fluctuation, the net result of these forces may well be an era of
disinflationary growth that benefits investors and raises living standards
worldwide. We look forward to the challenges and opportunities afforded by the
evolving economic landscape, and believe Scudder Income Fund is well-positioned
to benefit from these trends.
If you have questions about Scudder Income Fund or your investments,
please contact a Scudder Investor Relations representative at 1-800-225-2470.
Page 27 contains more information on how to contact us. Thank you for choosing
Scudder Income Fund--America's oldest no-load mutual fund--to help meet your
investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Income Fund
3
<PAGE>
SCUDDER INCOME FUND
PERFORMANCE UPDATE as of December 31, 1995
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER INCOME FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
12/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $11,854 18.54% 18.54%
5 Year $15,972 59.72% 9.82%
10 Year $24,557 145.57% 9.40%
LB AGGREGATE BOND INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
12/31/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $11,847 18.47% 18.47%
5 Year $15,727 57.27% 9.47%
10 Year $25,079 150.79% 9.62%
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 DECEMBER 31
Scudder Income Fund
Year Amount
- ----------------------
85 $10,000
86 $11,475
87 $11,559
88 $12,589
89 $14,194
90 $15,375
91 $18,037
92 $19,252
93 $21,675
94 $20,715
95 $24,557
LB Aggregate Bond Index
Year Amount
- ----------------------
85 $10,000
86 $11,526
87 $11,844
88 $12,778
89 $14,635
90 $15,946
91 $18,498
92 $19,867
93 $21,804
94 $21,168
95 $25,079
The unmanaged Lehman Brothers (LB) Aggregate Bond Index is a market
value-weighted measure of treasury 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 DECEMBER 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
--------------------------------------------------------------------------------
Net Asset Value... $13.41 $12.40 $12.41 $12.89 $12.82 $13.91 $13.48 $13.71 $12.32 $13.61
Income Dividends.. $ 1.22 $ 1.10 $ 1.07 $ 1.06 $ 1.03 $ .92 $ .93 $ .87 $ .76 $ .86
Capital Gains and
Paid-In Capital
Distributions..... -- -- -- -- $ .06 $ .14 $ .40 $ .57 $ .02 $ .09
Fund Total
Return (%)........ 14.75 0.74 8.91 12.75 8.32 17.32 6.74 12.58 -4.43 18.54
Index Total
Return (%)........ 15.26 2.76 7.88 14.53 8.96 16.00 7.40 9.75 -2.92 18.47
</TABLE>
All 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.
4
<PAGE>
PORTFOLIO SUMMARY as of December 31, 1995
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
U.S. Gov't & Agencies 32%
Corporate Bonds 29%
U.S. Gov't Agency
Pass-Thrus 16%
Asset-Backed Securities 8% Sector weightings are based
Foreign Bonds - upon our assessment of
Non U.S. $ Denominated 5% relative valuation.
Foreign Bonds - U.S. $
Denominated 5%
Cash Equivalents 3%
Collateralized Mortgage
Obligations 2%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
QUALITY
- --------------------------------------------------------------------------
AAA* 67%
AA 6% Average quality remains a
A 14% high "AA".
BBB 13%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
EFFECTIVE MATURITY
- --------------------------------------------------------------------------
Less than 1 year 10%
1 - 5 years 31% The portfolio is focused on
5 - 8 years 13% intermediate-term securities
8 - 15 years 21% where we see potential for
Greater than 15 years 25% appreciation.
----
100%
====
Weighted average effective maturity: 11.2 years
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
For more complete details about the Fund's Investment Portfolio,
see page 9.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER INCOME FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Slowing economic growth and low inflation prompted the Federal Reserve
to reverse course mid-year and cut short-term interest rates on two occasions in
1995. At the same time, rates on long-term bonds ended the year nearly two
percentage points lower, falling from 7.87% to 5.95% as measured by the 30-year
U.S. Treasury. This provided a favorable backdrop for Scudder Income Fund, which
provided a total return of 18.54% for the 12 months ended December 31, exceeding
both the Lehman Index and the average A-rated corporate bond fund tracked by
Lipper Analytical Services. The Fund's 1995 total return reflects an increase in
its net asset value from $12.32 at the end of 1994 to $13.61 on December 31,
1995, as well as per share income and capital gain distributions of $0.860 and
$0.085, respectively.
Throughout the period, we managed the portfolio actively, seeking to
capitalize upon shifts in relative valuation among the Treasury, mortgage, and
corporate sectors, as well as changes in the yield curve. Going into 1995, we
extended duration--therefore increasing the portfolio's sensitivity to interest
rate changes--to benefit more fully from the rally in bond prices while
capturing higher yields. Although the yields on bonds with differing maturities
generally go up and down together, this adjustment is not always simultaneous,
and throughout the year we felt that intermediate maturities had the most
potential for rate declines and price appreciation. This led to implementation
of a more "bulleted" portfolio configuration focused on intermediate-term
securities, rather than a "barbell" structure where a long bond is balanced with
a short position to achieve the desired overall interest rate sensitivity.
Early in the year, we began to trim our weighting in mortgage-backed
securities, particularly in high-coupon issues trading at a premium, in favor of
U.S. Treasuries; mortgage-backeds tend to underperform in periods of falling
interest rates, as investors become wary of prepayments by homeowners and seek
to maintain longer-term bond positions in order to benefit from bond market
strength. Specifically, the mortgage-backed position was reduced from a peak of
35% of the portfolio in February to a low of 12% in August. Those
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
mortgage-backeds that the Fund continued to hold were for the most part
low-coupon, discounted securities where prepayment at par would result in a gain
to the portfolio. Finally, significant holdings were maintained in the corporate
sector. Corporates were the strongest performing sector on a comparable maturity
basis in 1995, and as the year progressed were gradually scaled back as they
became less attractive versus other fixed-income alternatives.
Looking ahead, it is unlikely that 1996 will see fixed-income prices
rally to the extent they did in 1995. However, we believe the recent decline in
interest rates was fully justified by underlying economic fundamentals.
Moreover, economic growth is expected to continue to slow, meaning that
inflation should remain benign and that the Fed is likely to continue reducing
interest rates, especially if continued progress towards Federal budget
restraint in Washington is seen. Interest rates are expected to trend gradually
lower. Consequently, the Fund has a duration of 5.6 years entering 1996, which
is modestly higher than the bond market as a whole. Intermediate-term bonds
comprise 46% of the portfolio.
In terms of sectors, as 1996 began, we had increased the Fund's
mortgage-backed exposure modestly from the prior summer's nadir, to
approximately 18% of the portfolio. The yield advantage offered by corporates
has diminished somewhat, and the slowing economy could lead to credit concerns
for economically-sensitive "cyclical" companies in particular. However, certain
industries such as airlines and cable are attractive in view of restructuring
efforts, and we will continue to maintain corporate exposure on a
company-by-company basis. Finally, over the course of 1995 an international
position of approximately 11% focused on high-quality bonds in Europe was built
up. This reflects the outlook for weak growth and lower rates in that region.
Scudder Income Fund:
A Team Approach to Investing
Scudder Income Fund is managed by a team of Scudder investment professionals
who each play an important role in the Fund's management process. Team members
work together to develop investment strategies and select securities for the
Fund. They are supported by Scudder's large staff of economists, research
analysts, traders, and other investment specialists who work in Scudder's
offices across the United States and abroad. We believe our team approach
benefits Fund investors by bringing together many disciplines and leveraging
Scudder's extensive resources.
Lead Portfolio Manager William M. Hutchinson has been responsible for the
Fund's day-to-day operations and overall investment strategy since he joined
Scudder in 1986. Bill has over 20 years of investment experience. Stephen A.
Wohler, Portfolio Manager, joined the team in 1994 and is also responsible for
implementing the Fund's strategy. Steve has over 15 years' experience managing
fixed-income investments and has been with Scudder since 1979.
7
<PAGE>
As always, credit quality is a strong element of our approach to
managing the Fund, and the average rating of portfolio holdings remains a high
"AA." Please see the chart on page 5 for a quality breakdown of the portfolio's
holdings. Scudder Income Fund remains focused on providing competitive yields by
identifying areas of the fixed-income market that represent strong relative
value. Thank you for your continued investment in Scudder Income Fund.
Sincerely,
Your Portfolio Management Team
/s/William M. Hutchinson /s/Stephen A. Wohler
William M. Hutchinson Stephen A. Wohler
8
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO as of December 31, 1995
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------------------------------------
3.2% COMMERCIAL PAPER
---------------------------------------------------------------------------------
18,390,000 Associates Corp. of North America, 5.954%,
1/2/96 (Cost $18,390,000) . . . . . . . . . . . . . 18,390,000
------------
---------------------------------------------------------------------------------
32.0% U.S. GOVERNMENT & AGENCIES
---------------------------------------------------------------------------------
10,000,000 U.S. Treasury Bond, 7.25%, 5/15/16 . . . . . . . . . 11,418,700
5,000,000 U.S. Treasury Bond, 7.875%, 2/15/21 . . . . . . . . . 6,157,050
17,000,000 U.S. Treasury Bond, 6.25%, 8/15/23 . . . . . . . . . 17,491,470
34,000,000 U.S. Treasury Note, 5.5%, 9/30/97 . . . . . . . . . . 34,175,440
21,000,000 U.S. Treasury Note, 6.75%, 5/31/99 . . . . . . . . . 21,935,130
13,000,000 U.S. Treasury Note, 6.875%, 7/31/99 . . . . . . . . . 13,650,000
36,000,000 U.S. Treasury Note, 6%, 10/15/99 . . . . . . . . . . 36,900,000
23,000,000 U.S. Treasury Note, 6.375%, 8/15/02 . . . . . . . . . 24,117,570
10,000,000 U.S. Treasury Note, 5.75%, 8/15/03 . . . . . . . . . 10,120,300
15,000,000 U.S. Treasury Separate Trading Registered
Interest and Principal, 5/15/09 (5.95% (c)) (d) . . 6,850,050
-----------
TOTAL U.S. GOVERNMENT & AGENCIES
(Cost $176,435,071) . . . . . . . . . . . . . . . . 182,815,710
-----------
---------------------------------------------------------------------------------
16.4% U.S. GOVERNMENT AGENCY PASS-THRUS
---------------------------------------------------------------------------------
21,727,525 Federal National Mortgage Association,
6.5%, 10/1/25 . . . . . . . . . . . . . . . . . . . 21,469,402
25,949,018 Federal National Mortgage Association,
7%, 8/1/25 . . . . . . . . . . . . . . . . . . . . 26,159,724
25,131,256 Federal National Mortgage Association,
7%, 11/1/25 . . . . . . . . . . . . . . . . . . . . 25,335,322
18,998,414 Government National Mortgage Association
10%, 2/15/25 . . . . . . . . . . . . . . . . . . . 21,010,916
-----------
TOTAL U.S. GOVERNMENT AGENCY PASS-THRUS
(Cost $92,181,526) . . . . . . . . . . . . . . . . 93,975,364
-----------
---------------------------------------------------------------------------------
1.5% COLLATERALIZED MORTGAGE OBLIGATIONS
---------------------------------------------------------------------------------
8,832,551 Prudential Home Mortgage Securities Co.,
1993-4 Series A3, 7%, 3/25/23
(Cost $8,945,718) . . . . . . . . . . . . . . . . . 8,821,510
-----------
---------------------------------------------------------------------------------
5.1% FOREIGN BONDS -- U.S. $ DENOMINATED
---------------------------------------------------------------------------------
10,000,000 Abbey National PLC Global Medium Term
Note, 6.69%, 10/17/05 . . . . . . . . . . . . . . . 10,287,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
---
9
<PAGE>
<TABLE>
SCUDDER INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount (b) Value ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2,000,000 British Columbia Hydro & Power, Series GG,
15%, 4/15/11 . . . . . . . . . . . . . . . . . . . . 2,154,720
1,000,000 British Columbia Hydro & Power, Series FH,
15.5%, 7/15/11 . . . . . . . . . . . . . . . . . . . 1,116,410
1,000,000 British Columbia Hydro & Power, Series FF,
15.5%, 11/15/11 . . . . . . . . . . . . . . . . . . 1,146,990
7,500,000 KFW International Finance Inc. guaranteed
note, 9.5%, 12/15/00 . . . . . . . . . . . . . . . . 8,671,725
1,000,000 Province of Ontario debenture, 15.75%, 3/15/12 . . . . 1,168,220
4,425,000 State Development Institute of Hungary,
10.5%, 8/31/00 . . . . . . . . . . . . . . . . . . . 4,798,359
-----------
TOTAL FOREIGN BONDS - U.S. $ DENOMINATED
(Cost $27,590,218) . . . . . . . . . . . . . . . . . 29,343,924
-----------
--------------------------------------------------------------------------------
5.3% FOREIGN BONDS - NON U.S. $ DENOMINATED
--------------------------------------------------------------------------------
DEM 20,000,000 Federal Republic of Germany, 6.5%, 7/15/03 . . . . . . 14,536,824
FRF 73,000,000 Government of France OAT, 7.5%, 4/25/05 . . . . . . . 15,794,030
-----------
TOTAL FOREIGN BONDS -- NON
U.S. $ DENOMINATED (Cost $28,980,356) . . . . . . . . 30,330,854
-----------
--------------------------------------------------------------------------------
7.5% ASSET-BACKED SECURITIES
--------------------------------------------------------------------------------
CREDIT CARD RECEIVABLES 4.0% 15,500,000 Sears Credit Account Master Trust
Series 1995-4, 6.25%, 1/15/03 . . . . . . . . . . . 15,790,625
7,000,000 Standard Credit Card Master Trust, Series
1991-1A, 8.5%, 8/7/97 . . . . . . . . . . . . . . . 7,085,260
-----------
22,875,885
-----------
HOME EQUITY LOANS 0.3% 1,492,490 Fleet Financial Home Equity Trust,
Series 1991-2A, 6.7%, 10/15/06 . . . . . . . . . . . 1,506,482
-----------
MANUFACTURED HOUSING
RECEIVABLES 3.2% 8,071,000 Green Tree Financial Corp., 9.2%, 6/15/25 . . . . . . 9,059,698
8,500,000 Merrill Lynch Mortgage Investors Inc., "B",
Series 1991-D, 9.85%, 7/15/11 . . . . . . . . . . . 9,206,520
-----------
18,266,218
-----------
TOTAL ASSET-BACKED SECURITIES
(Cost $40,532,951) . . . . . . . . . . . . . . . . . 42,648,585
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ----
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount (b) Value ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------------------------
29.0% CORPORATE BONDS
--------------------------------------------------------------------------------
CONSUMER STAPLES 0.8% 5,000,000 Borden Inc., 7.875%, 2/15/23 . . . . . . . . . . . . . 4,671,200
-----------
COMMUNICATIONS 2.8% 4,000,000 Pacific Northwest Bell Telephone Co.
debenture, 7.5%, 12/1/96 . . . . . . . . . . . . . . 4,068,600
11,000,000 TCI Communications Inc., 8%, 8/1/05 . . . . . . . . . 11,676,390
-----------
15,744,990
-----------
FINANCIAL 9.0% 10,000,000 Ford Motor Credit Co. Global Note, 5.625%,
12/15/98 . . . . . . . . . . . . . . . . . . . . . . 9,927,200
9,000,000 General Electric Capital Services, 7.5%, 8/21/35 . . . 10,205,910
15,000,000 HSBC Finanz Nederland B.V., 7.4%, 4/15/03 . . . . . . 15,862,500
15,000,000 NationsBank Corp., 7.25%, 10/15/25 . . . . . . . . . . 15,565,200
-----------
51,560,810
-----------
MEDIA 2.4% 12,000,000 Time Warner Inc., 9.125%, 1/15/13 . . . . . . . . . . 13,523,400
-----------
DURABLES 4.9% 10,000,000 Boeing Co., 6.875%, 10/15/43 . . . . . . . . . . . . . 10,222,600
5,000,000 Ford Motor Credit Co., 6.25%, 2/26/98 . . . . . . . . 5,074,550
10,000,000 McDonnell Douglas Corp., 9.75%, 4/1/12 . . . . . . . . 12,874,400
-----------
28,171,550
-----------
MANUFACTURING 2.0% 10,000,000 Nova Corp. of Alberta, 7.875%, 4/1/23 . . . . . . . . 11,205,000
-----------
TECHNOLOGY 4.7% 15,000,000 International Business Machines Corp.,
7%, 10/30/45 . . . . . . . . . . . . . . . . . . . . 15,450,000
10,000,000 Loral Corp., 8.375%, 6/15/24 . . . . . . . . . . . . . 11,483,300
-----------
26,933,300
-----------
TRANSPORTATION 2.4% 10,000,000 AMR Corp., 9.75%, 8/15/21 . . . . . . . . . . . . . . 11,975,000
820,000 Missouri Pacific Railroad Co. Equipment
Trust, Series 21, 14.125%, 3/15/96 . . . . . . . . . 833,505
770,000 Missouri Pacific Railroad Co. Equipment Trust,
Series 21, 14.125%, 3/15/97 . . . . . . . . . . . . 847,662
-----------
13,656,167
-----------
TOTAL CORPORATE BONDS (Cost $154,115,928) . . . . . . 165,466,417
-----------
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $547,171,768) (a) . . . . . . . . . . . . . . 571,792,364
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
11
<PAGE>
SCUDDER INCOME FUND
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $547,190,674. At
December 31, 1995, net unrealized appreciation for all securities based on
tax cost was $24,601,690. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $26,435,021 and aggregate gross unrealized
depreciation for all securities in which there was an excess tax cost over
market value of $1,833,331.
(b) Principal amount is stated in U.S. dollars unless otherwise noted.
(c) Bond equivalent yield to maturity; not a coupon rate.
(d) At December 31, 1995 these securities, in part or in whole, have been
pledged to cover initial margin requirements for open futures contracts.
<TABLE>
AT DECEMBER 31, 1995, OPEN FUTURES CONTRACTS SOLD SHORT WERE AS FOLLOWS
(NOTE A):
<CAPTION>
Aggregate Market
Futures Expiration Contracts Face Value ($) Value ($)
- ------- ---------- --------- -------------- ----------
<S> <C> <C> <C> <C>
30 Year U.S.
Treasury Bonds Mar. 1996 140 16,490,111 17,005,625
==========
Net unrealized depreciation on open futures contracts sold short (515,514)
==========
</TABLE>
Included in the portfolio are investments in mortgage or asset-backed securities
which are interests in separate pools of mortgages or assets. Effective
maturities of these investments will be shorter than stated maturities due to
prepayments.
CURRENCY ABBREVIATIONS
DEM German deutschemark
FRF French franc
The accompanying notes are an integral part of the financial statements.
- ----
12
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------
DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $547,171,768)
(Note A) . . . . . . . . . . . . . . . . . . . . . . . . . $571,792,364
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,867
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 8,508,334
Fund shares sold . . . . . . . . . . . . . . . . . . . . . 890,593
Unrealized appreciation on forward currency
exchange contracts (Notes A and D) . . . . . . . . . . . . 145,645
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 4,144
------------
Total assets . . . . . . . . . . . . . . . . . . . . . . 581,342,947
LIABILITIES
Payables:
Fund shares redeemed . . . . . . . . . . . . . . . . . . . $ 2,031,057
Accrued management fee (Note C) . . . . . . . . . . . . . 292,300
Other accrued expenses (Note C) . . . . . . . . . . . . . 375,249
Daily variation margin on open futures
contracts (Note A) . . . . . . . . . . . . . . . . . . . 48,125
Unrealized depreciation on forward currency
exchange contracts (Notes A and D) . . . . . . . . . . . 329,268
-----------
Total liabilities . . . . . . . . . . . . . . . . . . . 3,075,999
------------
Net assets, at market value . . . . . . . . . . . . . . . . $578,266,948
============
NET ASSETS
Net assets consist of:
Undistributed net investment income . . . . . . . . . . . $ 968,007
Net unrealized appreciation (depreciation) on:
Investments . . . . . . . . . . . . . . . . . . . . . . 24,620,596
Futures contracts . . . . . . . . . . . . . . . . . . . (515,514)
Foreign currency related transactions . . . . . . . . . (177,638)
Accumulated distributions in excess of net
realized gain . . . . . . . . . . . . . . . . . . . . . (3,500,948)
Shares of beneficial interest . . . . . . . . . . . . . . 424,995
Additional paid-in capital . . . . . . . . . . . . . . . . 556,447,450
------------
Net assets, at market value . . . . . . . . . . . . . . . . $578,266,948
============
NET ASSET VALUE, offering and redemption price per share
($578,266,948 divided by 42,499,531 outstanding shares of
beneficial interest, $.01 par value, unlimited number
of shares authorized) . . . . . . . . . . . . . . . $13.61
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
13
<PAGE>
<TABLE>
SCUDDER INCOME FUND
- ---------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ---------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest ............................................... $38,149,074
Expenses:
Management fee (Note C) ................................ $ 3,207,423
Services to shareholders (Note C) ...................... 1,446,739
Custodian and accounting fees (Note C) ................. 158,871
Trustees' fees (Note C) ................................ 35,141
Reports to shareholders ................................ 152,385
State registration ..................................... 38,074
Auditing ............................................... 52,149
Legal .................................................. 11,589
Other .................................................. 29,607 5,131,978
--------------------------
Net investment income .................................. 33,017,096
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from:
Investment transactions ........................... 18,279,783
Foreign currency related transactions ............. 1,114,873
Futures contracts ................................. (4,848,967) 14,545,689
-----------
Net unrealized appreciation (depreciation) during
the period on:
Investments ....................................... 40,882,269
Foreign currency related transactions ............. (177,638)
Futures contracts ................................. (314,965) 40,389,666
--------------------------
Net gain on investments ................................ 54,935,355
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $87,952,451
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ----
14
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ............................ $ 33,017,096 $ 31,597,928
Net realized gain (loss) from investment
transactions ................................... 14,545,689 (11,342,040)
Net unrealized appreciation (depreciation)
on investment transactions
during the period .............................. 40,389,666 (44,189,052)
------------- -------------
Net increase (decrease) in net assets
resulting from operations ...................... 87,952,451 (23,933,164)
------------- -------------
Distributions to shareholders:
From net investment income ($.86 and $.76
per share, respectively) ....................... (34,339,511) (28,504,095)
------------- -------------
From net realized gains ($.03 per
share for December 31, 1995) ................... (1,076,384) --
------------- -------------
In excess of net realized gains ($.06 and $.02
per share, respectively) ....................... (2,464,465) (770,819)
------------- -------------
Fund share transactions:
Proceeds from shares sold ......................... 148,070,784 146,572,410
------------- -------------
Net asset value of shares issued to
shareholders in reinvestment of distributions ... 32,942,112 24,501,727
Cost of shares redeemed ........................... (116,046,438) (163,297,477)
------------- -------------
Net increase in net assets from Fund share
transactions .................................... 64,966,458 7,776,660
------------- -------------
INCREASE (DECREASE) IN NET ASSETS ................. 115,038,549 (45,431,418)
Net assets at beginning of period ................. 463,228,399 508,659,817
------------- -------------
NET ASSETS AT END OF PERIOD (including
undistributed net investment income of
$968,007 and $1,253,937, respectively) .......... $ 578,266,948 $463,228,399
============= =============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ......... 37,601,071 37,090,412
------------- -------------
Shares sold ....................................... 11,192,844 11,195,296
Shares issued to shareholders in
reinvestment of distributions ................... 2,478,660 1,951,688
Shares redeemed ................................... (8,773,044) (12,636,325)
------------- -------------
Net increase in Fund shares ....................... 4,898,460 510,659
------------- -------------
Shares outstanding at end of period ............... 42,499,531 37,601,071
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
15
<PAGE>
<TABLE>
SCUDDER INCOME 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>
Years Ended December 31,
------------------------------------------------------------------------------------------------------
1995 1986 1987 1988 1989 1990 1991 1992 1993 1994
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ............... $12.32 $13.71 $13.48 $13.91 $12.82 $12.89 $12.41 $12.40 $13.41 $12.82
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from
investment
operations:
Net investment income .. .83 .84 .90 .95 .93 1.03 1.05 1.07 1.08 1.22
Net realized and
unrealized gain
(loss) on
investments .......... 1.41 (1.45) .77 (.05) 1.22 (.01) .49 .01 (.99) .59
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations ............. 2.24 (.61) 1.67 .90 2.15 1.02 1.54 1.08 .09 1.81
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
From net
investment
income ............... (.86) (.76) (.87) (.93) (.92) (1.03) (1.06) (1.07) (1.10) (1.22)
From paid-in
capital .............. -- -- -- -- -- (.06)(a) -- -- -- --
From net realized
gains on
investment
transactions ......... (.03) -- (.45) (.40) (.14) -- -- -- -- --
In excess of net
realized gains ....... (.06) (.02) (.12) -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions .... (.95) (.78) (1.44) (1.33) (1.06) (1.09) (1.06) (1.07) (1.10) (1.22)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period .......... $13.61 $12.32 $13.71 $13.48 $13.91 $12.82 $12.89 $12.41 $12.40 $13.41
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) ......... 18.54 (4.43) 12.58 6.74 17.32 8.32 12.75 8.91 .74 14.75
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of
period ($ millions) .... 578 463 509 457 403 302 272 245 242 249
Ratio of operating
expenses to average
daily net assets (%) ... .99 .97 .92 .93 .97 .95 .93 .94 .94 .88
Ratio of net investment
income to average
daily net assets (%) ... 6.35 6.43 6.32 7.05 7.13 8.21 8.23 8.53 8.37 9.12
Portfolio turnover
rate (%) ............... 128.25 60.3 130.6 121.3 109.6 48.0 63.2 19.6 33.7 24.1
<FN>
(a) Distribution made (as a result of foreign currency related gains on the disposition of foreign bonds) in order to avoid the
payment of a 4% federal excise tax under Internal Revenue Code section 4982.
</FN>
</TABLE>
- ----
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Income 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 consistently by the Fund in the preparation of its financial
statements in conformity with generally accepted accounting principles.
SECURITY VALUATION. 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.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and
liabilities at the daily rates of exchange, and
(ii) purchases and sales of investment securities, interest income and
certain expenses at the rates of exchange prevailing on the
respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on interest and
foreign withholding taxes.
----
17
<PAGE>
SCUDDER INCOME 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 in connection with portfolio
purchases and sales of securities denominated in foreign currencies and 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.
FUTURES CONTRACTS. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period the Fund
sold interest rate futures to hedge against declines in the value of portfolio
securities.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
- ----
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
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 federal income tax provision 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 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 primarily relate to investments in foreign denominated investments
and futures. As a result, net investment income (loss) and net realized gain
(loss) on investment transactions for a reporting period may differ
significantly from distributions during such period. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting the net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
----
19
<PAGE>
SCUDDER INCOME FUND
- --------------------------------------------------------------------------------
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. All
original issue discounts are accreted for both tax and financial reporting
purposes.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
For the year ended December 31, 1995, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $373,880,430 and $385,391,156, respectively. Purchases and sales of
U.S. Government obligations aggregated $268,436,164 and $226,540,111,
respectively.
The aggregate face value of futures contracts opened and closed during the year
ended December 31, 1995 was $464,966,618 and $488,246,990, 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 0.65% on the first
$200,000,000 of average daily net assets, 0.60% on the next $300,000,000 of such
net assets, and 0.55% of such net assets in excess of $500,000,000, computed and
accrued daily and payable monthly. The Agreement provides that if the Fund's
expenses, exclusive of taxes, interest, and extraordinary expenses, exceed
specified limits, such excess, up to the amount of the management fee, will be
paid by the Adviser. For the year ended December 31, 1995, the fee pursuant to
the Agreement amounted to $3,207,423, which was equivalent to an annual
effective rate of 0.62% of the Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended December 31, 1995, the amount charged to the Fund by SSC aggregated
$1,250,139, of which $215,901 is unpaid at December 31, 1995.
- ----
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Effective January 12, 1995, Scudder Fund Accounting Corporation ("SFAC"), a
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 year ended December 31, 1995, the amount charged to
the Fund by SFAC aggregated $74,981, of which $6,709 is unpaid at
December 31, 1995.
The Fund pays each Trustee not affiliated with the Adviser $4,000 annually, plus
specified amounts for attended board and committee meetings. For the year ended
December 31, 1995, Trustees' fees aggregated $35,141.
D. COMMITMENTS
- --------------------------------------------------------------------------------
As of December 31, 1995, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized depreciation of
$183,623.
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (U.S.$)
- -------------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
DEM 20,286,722 USD 14,322,533 1/22/96 145,645
FRF 71,240,700 USD 14,242,443 1/22/96 (329,268)
--------
(183,623)
========
</TABLE>
----
21
<PAGE>
SCUDDER INCOME FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF SCUDDER INCOME FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
Income Fund, including the investment portfolio, as of December 31, 1995, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the ten years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Income Fund as of December 31, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the ten years in
the period then ended, in conformity with generally accepted accounting
principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
February 7, 1996
- ----
22
<PAGE>
TAX INFORMATION
- --------------------------------------------------------------------------------
The Fund paid distributions of $.065 per share from long-term capital gains
during its year ended December 31, 1995. Pursuant to section 852 of the Internal
Revenue Code, the Fund designates $3,136,134 as capital gain dividends for its
fiscal year ended December 31, 1995.
By now shareholders to which year-end tax reporting is required by the IRS
should have received their Form 1099-DIV and tax information letter from the
Fund. For corporate shareholders, none of the income dividends paid during the
Fund's fiscal year ended December 31, 1995 qualified for the dividends received
deduction.
In many states the amount of income you received from obligations of the U.S.
Government is exempt from your state income taxes. The percentage of the Fund's
1995 ordinary income which includes net short-term capital gains that was
derived from direct obligations of the U.S. Government was 23.18%.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Scudder Fund account, please call a Scudder Investor Relations
Representative at 1-800-225-5163.
----
23
<PAGE>
(This page intentionally left blank.)
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
-----------------------------------------------------------------------------------------------------------------
<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 Income Fund
Scudder California Tax Free Money Fund* Scudder International Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Bond 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 Small Company Value Fund
Scudder Growth and Income 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>
<S> <C>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
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
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) Institutional Funds,* funds
an institutional cash designed to meet the broad
management service for investment management and
corporations, non-profit service needs of banks and
organizations and trusts that uses other institutions, call
certain portfolios of Scudder 1-800-854-8525.
Fund, Inc.* ($100,000 minimum), call
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 37 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.
