Scudder
Balanced Fund
Semiannual Report
June 30, 1997
Pure No-Load(TM) Funds
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.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER [LOGO]
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
8 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
21 Investment Products and Services
22 Scudder Solutions
In Brief
o Reflecting the favorable environment for quality growth stocks for the
six-month period ended June 30, 1997, Scudder Balanced Fund provided a return of
13.77%, a performance that ranked in the top 6% (20th) of 340 balanced funds
tracked by Lipper Analytical Services, Inc.
o At the end of the period, the Fund's assets were allocated 60% in equities
and 40% in fixed income securities (including cash equivalents).
o The equity portion of the Fund was invested in companies with consistent,
above-average growth potential in areas such as healthcare and consumer
products.
o With an uncertain outlook for interest rates, the Fund's fixed income
management maintained a neutral portfolio duration with an emphasis on short-
and long-term maturities.
2 - SCUDDER BALANCED FUND
<PAGE>
Letter From the Fund's President
Dear Shareholders,
We are witnessing a remarkable period in the U.S. stock market. The
six-year rally in stocks continued through the first half of 1997, pausing only
momentarily in March to digest an increase in interest rates before resuming its
rise. Expanding corporate earnings, healthy economic growth, and benign
inflation reports were the primary drivers of the favorable environment, which
has been responsible for an unprecedented rise in stock prices -- especially for
larger capitalization issues. The question on every investor's mind seems to be:
"How long can stocks continue to rise?" The answer is, we do not know.
After such a prolonged upward move, some form or correction would seem
logical. Yet, if the Goldilocks economy persists as "not too hot and not too
cold," U.S. stocks may continue to rise for some time. The keys to this ideal
environment seem to lie in low inflation, stable-to-falling interest rates, and
improving corporate profits. Any change in these factors could threaten the
favorable environment for stocks.
What should investors do in this environment?
Careful Portfolio Diversification
Exposure to sectors that have a lower correlation to the S&P 500 can
provide improved diversification and reduced price volatility over the long
term. Small-cap, international, emerging markets, and fixed income sectors have
not had as a dramatic price run-up and are attractively valued relative to many
U.S. stocks. Adding representation in each of these areas can provide valuable
diversification and balance to your investment portfolio. In addition,
maintaining cash reserves, such as a money market fund, can dampen the effects
of a market correction and provide flexibility to take advantage of
opportunities presented by a market decline.
Appropriate diversification can provide you with a comfort level in view of
the short-term and sometimes unpredictable movements of the market. This Fund's
balanced approach to investing in quality growth stocks and bonds is designed to
result in lower volatility, making it an attractive choice for many investors.
For a complete discussion of your Fund's recent activities, please turn to page
6.
Thank you for your continued investment in Scudder Balanced Fund. If you
have any questions about your investment, please call Scudder Investor Relations
at 1-800-225-2470 or visit our Internet Web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Balanced Fund
3 - SCUDDER BALANCED FUND
<PAGE>
PERFORMANCE UPDATE as of June 30, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
- --------------------------------------------
Period Growth
Ended of Average
6/30/97 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER BALANCED FUND
- --------------------------------------------
1 Year $ 11,990 19.90% 19.90%
Life of Fund* $ 16,313 63.13% 11.52%
- --------------------------------------------
S&P 500 INDEX (60%) and LBAB Index (40%)
- --------------------------------------------
1 Year $ 12,364 23.64% 23.64%
Life of Fund* $ 18,299 82.99% 14.67%
- --------------------------------------------
* The Fund commenced operations January 4, 1993. Index
comparisons begin January 31, 1993.
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
SCUDDER 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
12/96 $14,315
6/97 $16,286
S&P 500 INDEX
Year Amount
- ----------------------
1/31/93* $10,000
6/93 $10,399
12/93 $10,915
6/94 $10,546
12/94 $11,059
6/95 $13,293
12/95 $15,214
6/96 $16,749
12/96 $18,707
6/97 $22,564
LBAB INDEX
Year Amount
- ----------------------
1/31/93* $10,000
6/93 $10,489
12/93 $10,768
6/94 $10,351
12/94 $10,454
6/95 $11,650
12/95 $12,386
6/96 $12,234
12/96 $12,833
6/97 $13,232
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 Aggregrate 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 1997
--------------------------------------------
NET ASSET VALUE... $ 11.82 $ 11.49 $ 13.33 $ 14.74 $ 16.51
INCOME DIVIDENDS.. $ .05 $ .28 $ .32 $ .32 $ .09
CAPITAL GAINS
DISTRIBUTIONS..... $ - $ - $ - $ .37 $ -
FUND TOTAL
RETURN (%)........ -1.07 -.54 19.16 16.05 19.90
INDEX TOTAL
RETURN (%)........ 4.30 .49 20.72 19.02 23.64
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. If the Adviser had not
temporarily capped expenses, the average annual total return for the Fund for
the one year and life of Fund would have been lower.
4 - SCUDDER BALANCED FUND
<PAGE>
PORTFOLIO SUMMARY as of June 30, 1997
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Common Stocks 60%
Fixed Income Holdings 32%
Cash Equivalents 8%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund's conservative
approach to investing in
a combination of quality
stocks and bonds
provides the potential
for lower volatility.
- --------------------------------------------------------------------------
FIXED INCOME HOLDINGS
(Excludes 8% of Cash Equivalents)
- --------------------------------------------------------------------------
Type
- --------------------------------------------
Corporate Bonds 45%
U.S. Government Mortgages 31%
U.S. Government & Agencies 12%
Asset-Backed Securities 8%
Foreign Bonds - U.S.
$ Denominated 4%
- --------------------------------------------
100%
- --------------------------------------------
Quality
- --------------------------------------------
AAA 60%
AA 7%
A 7%
BBB 26%
- --------------------------------------------
100%
- --------------------------------------------
Management maintained
a neutral portfolio
duration and AA average
quality rating, while
focusing on sector
allocations.
- --------------------------------------------------------------------------
EQUITY HOLDINGS
- --------------------------------------------------------------------------
Consumer Staples 23%
Health 21%
Technology 17%
Consumer Discretionary 9%
Manufacturing 8%
Media 6%
Service Industries 5%
Financial 5%
Durables 5%
Construction 1%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Five Largest Equity Holdings
- --------------------------------------------
1. COCA-COLA CO., INC.
International soft drink company
2. GENERAL ELECTRIC CO.
Leading producer of electrical equipment
3. MERCK & CO., INC.
Leading drug manufacturer
4. MICROSOFT CORP.
Computer operating systems software
5. COLGATE-PALMOLIVE CO.
Manufacturer of household and personal care products
The portfolio benefitted from the strong performance
of quality growth stocks, the primary focus of the
Fund's equity holdings.
For more complete details about the Fund's investment portfolio,
see page 8. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - SCUDDER BALANCED FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Over the first half of 1997, stocks recorded yet another period of outstanding
performance while bonds provided positive, but more modest, total returns.
Scudder Balanced Fund's approach to investing in a combination of quality growth
stocks and bonds resulted in a total return of 13.77% for the six-month period
ended June 30, 1997. The Fund's benchmark, which consists of 60% S&P 500 and 40%
Lehman Aggregate Bond Index, returned 13.41% for the same period. The Fund's
total return represents an increase in its net asset value from $14.60 at the
end of 1996 to $16.51 on June 30, as well as an income distribution of 9 cents
per share.
Market Summary
Record corporate earnings, healthy economic growth, and benign inflation
sustained a very favorable environment for equity investors over the first six
months of 1997. The economy's robust 4.9% growth rate in the first quarter
raised concerns about accelerating inflation, which encouraged the Federal
Reserve (the Fed) to increase a key short-term interest rate -- the Fed Funds
rate -- from 5.25% to 5.50% at their March 25 meeting. While stocks and bonds
initially declined on this news, the economy has subsequently slowed, inflation
has continued to moderate, and the Fed has passed up two opportunities since
March to raise rates again. Investors had built a rate increase into their
thinking, and when it failed to materialize, the stock and bond markets reacted
favorably. The positive mood caused the stock market to rebound in the second
quarter for one of its strongest quarterly returns in history.
Stock Selection
The equity portion of the portfolio represented 60% of assets at the end of the
period. Our investment philosophy is premised on achieving superior investment
returns by investing in companies with consistent, above-average earnings
growth. We held true to our strategy of investing in those companies that we
believed would deliver solid earnings growth, and focused on companies with
long-term franchises, experienced management teams, and dominant market shares
in growing industries. Investors favored these characteristics, which are
typical of many of the Fund's equity holdings. These blue chip stocks were among
the Fund's best performers, especially the healthcare and consumer staples
sectors.
The Fund's sector weights in the equity portion of the portfolio remained close
to that of its benchmark as our approach was to focus on selecting individual
stocks, not industry sectors. The largest industry representations in the equity
portion of the portfolio were in healthcare (with pharmaceuticals the largest
subsector), consumer staples, and technology.
Particularly noteworthy performers over the period included Avon Products and
Revlon in the consumer staples sector, Pfizer, and Warner-Lambert in healthcare,
Clear Channel Communications in media, Corporate Express in specialty retail,
and finally, Applied Materials, Computer Associates, Microsoft, and Teradyne in
the technology sector. Our decision to hold on to several networking stocks also
paid off, with 3Com and Cisco among the portfolio's best performers.
6 - SCUDDER BALANCED FUND
<PAGE>
Stocks which detracted from performance included Federated Department Stores,
Boston Scientific, EDS, AMD, and Intel. Our relatively small holding in Intel
actually contributed positively to performance relative to the Russell 1000
Growth Index during the six-month period.
Fixed Income Strategy
Bonds provided attractive income and total returns as they traded in a narrow
range over the six-month period. The path of the benchmark 30-year U.S. Treasury
bond yield took the appearance of a mountain top, with yields rising modestly
during the first three months of 1997 and retreating during the second three
months. The 30-year Treasury started 1997 with a yield of 6.64%, rose to 7.10%
on March 31, and ended the period at 6.78%.
As of the end of the six-month period, fixed income securities represented 40%
of assets, including cash and equivalents. Over the period we managed the
portfolio actively, seeking to capitalize on shifts in relative valuations among
the Treasury, mortgage, and corporate bond sectors. Our portfolio duration was
essentially neutral, as we focused on allocating assets across sectors. During
the first quarter, we de-emphasized mortgage securities, which typically have
intermediate term (3-5 year average effective) maturities, and increased the
"barbelling" of the Fund's maturity structure by adding to holdings at the short
and long ends of the spectrum. The barbelled strategy helped performance during
the first quarter, but held back performance somewhat during the second quarter.
The investment-grade corporate bond sector provided good returns, and we
slightly increased our holdings in this sector. As of the end of the period, the
fixed income portion of the portfolio had maintained its high average quality
rating of AA.
Outlook
As we look forward to the remainder of 1997, we see few signs of concern for
investors. Leading economic indicators supply little evidence to suggest that
inflation will accelerate anytime soon. However, the stock and bond markets are
currently very sensitive to any changes in the positive expectations for
corporate earnings, economic activity, or inflation. Any reversal of this
favorable sentiment could cause the markets to back off from their upward
momentum. Longer term, our outlook is for slower economic growth with benign
inflation. We believe Scudder Balanced Fund will continue to provide attractive
performance, as well as reduced volatility, through investment in a balanced
portfolio of quality stocks and bonds.
Sincerely,
Your Portfolio Management Team
/s/Valerie F. Malter /s/William M. Hutchinson
Valerie F. Malter William M. Hutchinson
7 - SCUDDER BALANCED FUND
<PAGE>
Investment Portfolio as of June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 7.6%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 6/30/97 at 5.9% to be
repurchased at $10,432,710 on 7/1/97, collateralized by a $10,465,000 U.S. Treasury ------------
Note, 5%, 1/31/99 (Cost $10,431,000) .................................................. 10,431,000 10,431,000
------------
U. S. Government & Agencies 3.8%
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bond, 7.25%, 5/15/16 ...................................................... 500,000 521,405
U.S. Treasury Bond, 7.875%, 2/15/21 ..................................................... 500,000 557,500
U.S. Treasury Note, 6.875%, 7/31/99 ..................................................... 1,000,000 1,014,530
U.S. Treasury Note, 5.875%, 11/15/99 .................................................... 1,500,000 1,490,385
U.S. Treasury Note, 6.125%, 7/31/00 ..................................................... 1,000,000 996,560
U.S. Treasury Note, 5.75%, 10/31/00 ..................................................... 750,000 738,045
U.S. Treasury Separate Trading Registered Interest and Principal, Principal Only,
9%, 11/15/18 .......................................................................... 1,000,000 228,630
- ------------------------------------------------------------------------------------------------------------------------------
Total U.S. Government & Agencies (Cost $5,634,440) 5,318,425
- ------------------------------------------------------------------------------------------------------------------------------
Gov't National Mortgage Association 2.2%
- ------------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Association Pass-thru, 9.5%, 8/15/19 ....................... 24,870 26,947
Government National Mortgage Association Pass-thru, 10% with various maturities
to 2/15/25 ............................................................................ 950,440 1,044,657
Government National Mortgage Association Pass-thru, 8.5% with various maturities
to 9/15/26 ............................................................................ 1,894,548 1,969,494
- ------------------------------------------------------------------------------------------------------------------------------
Total Gov't National Mortgage Association (Cost $3,005,406) 3,041,098
- ------------------------------------------------------------------------------------------------------------------------------
U. S. Government Agency Pass-Thrus 7.8%
- ------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 8%, 4/1/08 ............................................ 1,574,188 1,612,661
Federal National Mortgage Association, 6.5% with various maturities to 1/1/26 ........... 3,343,987 3,200,831
Federal National Mortgage Association, 7% with various maturities to 9/1/26 ............. 6,004,301 5,887,093
- ------------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency Pass-Thrus (Cost $10,662,460) 10,700,585
- ------------------------------------------------------------------------------------------------------------------------------
Foreign Bonds - U.S.$ Denominated 1.4%
- ------------------------------------------------------------------------------------------------------------------------------
Abbey National PLC Global Medium Term Note, 6.69%, 10/17/05 ............................. 750,000 732,870
Province of Ontario Global, 6%, 2/21/06 ................................................. 1,000,000 941,330
- ------------------------------------------------------------------------------------------------------------------------------
Total Foreign Bonds - U.S.$ Denominated (Cost $1,744,743) 1,902,830
- ------------------------------------------------------------------------------------------------------------------------------
Asset Backed Securities 2.5%
- ------------------------------------------------------------------------------------------------------------------------------
Automobile Receivables 1.5%
Ford Credit Automobile Trust Series 1996-A A4, 6.75%, 9/15/00 ........................... 1,000,000 1,007,500
Premier Auto Trust Asset Backed Certificate Series 1996-3 A4, 6.75%, 11/6/00 ............ 1,000,000 1,007,810
----------
2,015,310
----------
Credit Card Receivables 1.0%
Sears Credit Account Master Trust, Series 1995-4, 6.25%, 1/15/03 ........................ 1,400,000 1,402,618
- ------------------------------------------------------------------------------------------------------------------------------
Total Asset Backed Securities (Cost $3,396,960) 3,417,928
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 - SCUDDER BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Corporate Bonds 14.6%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 0.7%
ITT Corp., 7.375%, 11/15/15 ............................................................. 1,000,000 930,260
----------
Consumer Staples 0.4%
Seagram Co., Ltd., 8.35%, 1/15/22 ....................................................... 500,000 538,390
----------
Communications 0.7%
WorldCom, Inc., 7.75%, 4/1/27 ........................................................... 1,000,000 1,022,530
----------
Financial 6.6%
Associates Corp. of North America, 6.625%, 5/15/01 ...................................... 500,000 498,500
Capital One Bank Medium Term Note, 5.95%, 2/15/01 ....................................... 1,000,000 966,890
Deutsche Bank, 7.5%, 4/25/09 ............................................................ 1,500,000 1,534,395
First Industrial LP, 7.6%, 5/15/07 ...................................................... 700,000 711,830
General Electric Capital Services Inc., 7.5%, 8/21/35 ................................... 250,000 255,630
Highwoods/Forsyth L.P., 7%, 12/1/06 ..................................................... 1,500,000 1,454,145
Southern National Corp., 7.05%, 5/23/03 ................................................. 1,000,000 1,000,260
Spieker Properties, Inc., 7.875%, 12/1/16 ............................................... 750,000 726,023
Susa Partnership L.P., 8.2%, 6/1/17 ..................................................... 1,000,000 1,025,610
US West Capital Funding Inc., 7.9%, 2/1/27 .............................................. 1,000,000 1,010,200
----------
9,183,483
----------
Media 1.4%
Tele-Communications, Inc., 8%, 8/1/05 ................................................... 750,000 761,985
Time Warner Inc., 9.125%, 1/15/13 ....................................................... 1,000,000 1,105,720
----------
1,867,705
----------
Durables 2.2%
Ford Motor Co., 8.875%, 1/15/22 ......................................................... 500,000 568,320
Ford Motor Credit Co., 6.25%, 2/26/98 ................................................... 250,000 250,353
Lockheed Martin Corp., 7.75%, 5/1/26 .................................................... 500,000 512,185
Northrop Grumman Corp., 7%, 3/1/06 ...................................................... 750,000 737,115
Northrop Grumman Corp., 7.875%, 3/1/26 .................................................. 1,000,000 1,012,670
----------
3,080,643
----------
Manufacturing 0.4%
Nova Corp. of Alberta, 7.875%, 4/1/23 ................................................... 500,000 517,145
----------
Technology 0.4%
Loral Corp., 8.375%, 6/15/24 ............................................................ 500,000 544,565
----------
Energy 0.7%
PanEnergy Corp., 7.375%, 9/15/03 ........................................................ 1,000,000 1,024,340
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - SCUDDER BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Metals & Minerals 0.7%
Potash Corp., 7.125%, 6/15/07 ........................................................... 1,000,000 995,900
----------
Transportation 0.4%
Norfolk Southern Corp., 7.8%, 5/15/27 ................................................... 500,000 513,550
- ------------------------------------------------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $20,031,829) 20,218,511
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 60.1%
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 5.6%
Department & Chain Stores 4.2%
Federated Department Stores, Inc.* ...................................................... 19,800 688,050
Home Depot, Inc. ........................................................................ 29,400 2,026,763
Price/Costco Inc.* ...................................................................... 41,000 1,347,875
Wal-Mart Stores Inc. .................................................................... 51,100 1,727,819
----------
5,790,507
----------
Hotels & Casinos 0.7%
Host Marriott Corp. ..................................................................... 55,300 985,031
----------
Specialty Retail 0.7%
Corporate Express, Inc. ................................................................. 70,100 1,012,069
----------
Consumer Staples 13.9%
Alcohol & Tobacco 1.8%
Philip Morris Companies Inc. ............................................................ 56,300 2,498,313
----------
Consumer Specialties 0.6%
Samsonite Corp.* ........................................................................ 18,000 794,250
----------
Food & Beverage 3.7%
Coca-Cola Co., Inc. ..................................................................... 58,600 3,955,500
Interstate Bakeries Corp. ............................................................... 18,700 1,109,144
----------
5,064,644
----------
Package Goods/Cosmetics 7.8%
Avon Products Inc. ...................................................................... 27,100 1,912,244
Colgate-Palmolive Co. ................................................................... 40,200 2,623,050
Gillette Co. ............................................................................ 24,276 2,300,151
Procter & Gamble Co. .................................................................... 17,200 2,429,500
Revlon, Inc. "A" * ...................................................................... 29,700 1,538,831
----------
10,803,776
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - SCUDDER BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health 12.3%
Biotechnology 1.0%
Guidant Corp. ........................................................................... 16,200 1,377,000
----------
Health Industry Services 0.7%
HBO & Company ........................................................................... 13,800 950,475
----------
Hospital Management 0.6%
Tenet Healthcare Corp.* ................................................................. 27,800 821,838
----------
Medical Supply & Specialty 0.6%
Boston Scientific Corp. ................................................................. 14,200 872,413
----------
Pharmaceuticals 9.4%
Eli Lilly & Co. ......................................................................... 19,619 2,144,602
Johnson & Johnson ....................................................................... 32,600 2,098,625
Merck & Co. Inc. ........................................................................ 28,300 2,929,050
Pfizer, Inc. ............................................................................ 15,800 1,888,100
SmithKline Beecham PLC (ADR) ............................................................ 23,300 2,134,863
Warner-Lambert Co. ...................................................................... 14,300 1,776,775
----------
12,972,015
----------
Financial 3.1%
Banks 0.7%
NationsBank Corp. ....................................................................... 15,700 1,012,650
----------
Insurance 1.7%
American International Group, Inc. ...................................................... 15,950 2,382,524
----------
Other Financial Companies 0.6%
Federal National Mortgage Association ................................................... 20,500 894,313
----------
Media 3.5%
Advertising 1.5%
Interpublic Group of Companies Inc. ..................................................... 18,800 1,152,675
Outdoor Systems, Inc. ................................................................... 25,500 975,375
----------
2,128,050
----------
Broadcasting & Entertainment 2.0%
Clear Channel Communications, Inc. ...................................................... 30,700 1,888,050
Walt Disney Co. ......................................................................... 10,400 834,600
----------
2,722,650
----------
Service Industries 3.3%
Electronic Data Processing Services 1.1%
Electronic Data Systems Corp. ........................................................... 38,600 1,582,600
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - SCUDDER BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Miscellaneous Consumer Services 1.5%
CUC International Inc. .................................................................. 31,450 811,803
Service Corp. International ............................................................. 36,100 1,186,788
----------
1,998,591
----------
Printing/Publishing 0.7%
Reuters Holdings PLC "B" (ADR) .......................................................... 15,600 982,800
----------
Durables 2.7%
Aerospace 0.9%
AlliedSignal Inc. ....................................................................... 15,400 1,293,600
----------
Telecommunications Equipment 1.8%
Ascend Communications, Inc.* ............................................................ 28,800 1,134,000
Nokia AB Oy (ADR) ....................................................................... 18,000 1,327,500
----------
2,461,500
----------
Manufacturing 4.7%
Diversified Manufacturing
General Electric Co. .................................................................... 59,400 3,883,275
Honeywell, Inc. ......................................................................... 11,900 902,913
Textron, Inc. ........................................................................... 25,500 1,692,563
----------
6,478,751
----------
Technology 10.2%
Computer Software 3.4%
Computer Associates International, Inc. ................................................. 16,450 916,059
Microsoft Corp. ......................................................................... 22,300 2,818,163
PeopleSoft Inc. ......................................................................... 17,000 896,750
----------
4,630,972
----------
Diverse Electronic Products 1.7%
Applied Materials, Inc.* ................................................................ 19,500 1,380,844
Teradyne Inc.* .......................................................................... 24,600 965,550
----------
2,346,394
----------
Electronic Data Processing 1.4%
Ceridian Corp.* ......................................................................... 21,300 899,925
Compaq Computer Corp. ................................................................... 9,700 962,725
----------
1,862,650
----------
Office/Plant Automation 1.4%
3Com Corp.* ............................................................................. 21,200 954,000
Cisco Systems, Inc.* .................................................................... 15,100 1,013,588
----------
1,967,588
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - SCUDDER BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Semiconductors 2.3%
Advanced Micro Devices Inc.* ............................................................ 25,800 928,800
Intel Corp. ............................................................................. 8,500 1,205,406
National Semiconductor Corp.* ........................................................... 36,100 1,105,563
----------
3,239,769
----------
Construction 0.8%
Building Products
American Standard Companies, Inc.* ...................................................... 24,000 1,074,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $55,914,320) 83,001,733
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $110,821,158)(a) 138,032,110
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $110,899,261. At June 30,
1997, net unrealized appreciation for all securities based on tax cost was
$27,132,849. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $28,077,903 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$945,054.
The accompanying notes are an integral part of the financial statements.
13 - SCUDDER BALANCED FUND
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of June 30, 1997 (Unaudited)
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $110,821,158) ................. $ 138,032,110
Cash .................................................................. 583
Receivable for Fund shares sold ....................................... 1,210,759
Dividends and interest receivable ..................................... 637,801
Foreign taxes recoverable ............................................. 233
Deferred organization expenses ........................................ 4,889
Other assets .......................................................... 1,968
----------------
Total assets .......................................................... 139,888,343
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ...................................... 758,089
Accrued management fee ................................................ 20,892
Other payables and accrued expenses ................................... 102,838
----------------
Total liabilities ..................................................... 881,819
--------------------------------------------------------------------------------------------
Net assets, at market value $ 139,006,524
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................... 851,574
Net unrealized appreciation on investments ............................ 27,210,952
Accumulated net realized gain ......................................... 3,668,238
Paid-in capital ....................................................... 107,275,760
--------------------------------------------------------------------------------------------
Net assets, at market value $ 139,006,524
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($139,006,524 / 8,418,686 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) .... $16.51
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - SCUDDER BALANCED FUND
<PAGE>
Statement of Operations
six months ended June 30, 1997 (Unaudited)
<TABLE>
<S> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Income:
Interest .............................................................. $ 1,725,730
Dividends (net of foreign taxes withheld of $5,638) ................... 396,166
-----------------
2,121,896
Expenses:
Management fee ........................................................ 434,734
Services to shareholders .............................................. 306,921
Custodian and accounting fees ......................................... 36,849
Trustees' fees and expenses ........................................... 20,664
Reports to shareholders ............................................... 27,472
Auditing .............................................................. 17,834
Registration fees ..................................................... 15,438
Legal ................................................................. 5,121
Amortization of organization expenses ................................. 4,760
Other ................................................................. 4,388
-----------------
Total expenses before reductions ...................................... 874,181
Expense reductions .................................................... (258,421)
-----------------
Expenses, net ......................................................... 615,760
---------------------------------------------------------------------------------------------
Net investment income 1,506,136
---------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ........................................................... 3,746,341
-----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ........................................................... 11,642,288
---------------------------------------------------------------------------------------------
Net gain on investment transactions 15,388,629
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 16,894,765
---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - SCUDDER BALANCED FUND
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year ended
1997 December 31,
Increase (Decrease) in Net Assets (Unaudited) 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ........................................ $ 1,506,136 $ 2,514,758
Net realized gain from investment transactions ............... 3,746,341 4,906,972
Net unrealized appreciation on investment transactions
during the period .......................................... 11,642,288 3,888,751
--------------- ----------------
Net increase in net assets resulting from operations ......... 16,894,765 11,310,481
--------------- ----------------
Distributions to shareholders:
From net investment income ................................... (749,333) (2,447,716)
--------------- ----------------
From net realized gains ...................................... -- (5,755,741)
--------------- ----------------
Fund share transactions:
Proceeds from shares sold .................................... 31,544,533 39,011,632
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 724,348 8,015,313
Cost of shares redeemed ...................................... (18,949,331) (30,743,649)
--------------- ----------------
Net increase in net assets from Fund share transactions ...... 13,319,550 16,283,296
--------------- ----------------
Increase in net assets ....................................... 29,464,982 19,390,320
Net assets at beginning of period ............................ 109,541,542 90,151,222
Net assets at end of period (including undistributed net ---------------- -----------------
investment income of $851,574 and $94,771, respectively) ... $139,006,524 $109,541,542
---------------- -----------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................... 7,502,830 6,386,156
--------------- ----------------
Shares sold .................................................. 2,075,353 2,665,524
Shares issued to shareholders in reinvestment of
distributions .............................................. 49,075 547,246
Shares redeemed .............................................. (1,208,572) (2,096,096)
--------------- ----------------
Net increase in Fund shares .................................. 915,856 1,116,674
---------------- -----------------
Shares outstanding at end of period .......................... 8,418,686 7,502,830
---------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - SCUDDER BALANCED FUND
<PAGE>
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
1997 December 31,
(Unaudited)(a) 1996(a) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------
Net asset value, beginning of period ... $14.60 $14.12 $11.63 $12.23 $12.00
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income .................. .18 .36 .32 .31 .26
Net realized and unrealized gain on
investments ......................... 1.82 1.25 2.74 (.60) .23
---------------------------------------------------------------------------------
Total from investment operations ....... 2.00 1.61 3.06 (.29) .49
---------------------------------------------------------------------------------
Less distributions from:
Net investment income .................. (.09) (.34) (.32) (.31) (.26)
Net realized gains on investment
transactions ........................ -- (.79) (.25) -- --
---------------------------------------------------------------------------------
Total distributions .................... (.09) (1.13) (.57) (.31) (.26)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Net asset value, end of period ......... $16.51 $14.60 $14.12 $11.63 $12.23
---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Total Return (%) ....................... 13.77** 11.54 26.48 (2.39) 4.12**
Ratios and Supplemental Data
Net assets, end of period ($ millions) . 139 110 90 66 64
Ratio of operating expenses, net to
average daily net assets (%) ........ 1.00* 1.00 1.00 1.00 1.00
Ratio of operating expenses before
expense reductions, to average daily
net assets (%) ..................... 1.42* 1.37 1.40 1.47 1.53
Ratio of net investment income to
average daily net assets (%) ........ 2.45* 2.42 2.51 2.66 2.43
Portfolio turnover rate (%) ............ 54.3* 69.7 103.3 105.4 99.3
Average commission rate paid (b) ....... $.0534 $.0551 $ -- $ -- $ --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(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
17 - SCUDDER BALANCED FUND
<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 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.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code 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 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)
18 - SCUDDER BALANCED FUND
<PAGE>
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, 1997, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $34,789,937 and $30,150,253, respectively. Purchases and sales of
U.S. Government obligations aggregated $230,330 and $1,048,516, 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 .70% of the Fund's
average daily net assets, computed and accrued daily and payable monthly. In
addition, the Adviser has agreed not to impose all or a portion of its
management fee until October 31, 1997 to maintain the annualized expenses of the
Fund at not more than 1.00% of average daily net assets. Accordingly, for the
six months ended June 30, 1997, the Adviser did not impose a portion of its fees
amounting to $258,421, and the portion imposed amounted to $176,313, of which
$20,892 is unpaid at June 30, 1997.
On June 26, 1997, the Adviser entered into an agreement with The Zurich
Insurance Company ("Zurich"), an international insurance and financial services
organization, pursuant to which Zurich will acquire a majority interest in the
Adviser, and the Adviser will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc. and change
its name to Scudder Kemper Investments, Inc. Subject to the receipt of the
required regulatory and shareholder approvals, the transaction is expected to
close in the fourth quarter of 1997.
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, 1997, the amount charged to the Fund by SSC aggregated
$130,685, of which $21,882 is unpaid at June 30, 1997.
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, 1997, the
amount charged to the Fund by STC aggregated $143,371, of which $23,739 is
unpaid at June 30, 1997.
19 - SCUDDER BALANCED FUND
<PAGE>
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, 1997, the amount charged to the Fund by SFAC aggregated $23,257,
of which $3,914 is unpaid at June 30, 1997.
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, 1997, Trustees' fees and expenses aggregated $20,664.
20 - SCUDDER BALANCED FUND
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *A class of shares of
the Fund. **Not available in all states. +++ +++A no-load variable annuity
contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised
by Scudder, Stevens & Clark, Inc., are traded on various stock exchanges.
21 - SCUDDER BALANCED FUND
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from that account.
fewer when it's higher, which can reduce your average
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you designate.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
22 - SCUDDER BALANCED FUND
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
- ------------------------------------------------------------------------------------------------------------------------------
New From Scudder: Scudder International Growth and Income Fund
Scudder International Growth and Income Fund takes a yield-oriented approach to investing in international equities. The
Fund seeks to provide long-term growth of capital plus current income. Investors who desire international exposure but
who wish to take a more conservative approach may appreciate the Fund's emphasis on the dividend paying stocks of
well-established companies outside the United States.
- ------------------------------------------------------------------------------------------------------------------------------
The share price of Scudder International Growth and Income Fund will fluctuate. International investing involves special
risks including currency fluctuation and political instability. Contact Scudder Investor Services, Inc., Distributor,
for a prospectus which contains more complete information, including management fees and other expenses. Please read it
carefully before you invest or send money.
</TABLE>
23 - SCUDDER BALANCED FUND
<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 over 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.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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