Scudder
Corporate
Bond Fund
Annual Report
January 31, 1999
No-Load Funds
A no-load (no sales charges) mutual fund seeking a high level of current income
through investment primarily in investment-grade corporate debt securities.
SCUDDER (logo)
<PAGE>
Scudder Corporate Bond Fund
- --------------------------------------------------------------------------------
Date of Inception: 8/31/98 Total Net Assets as of Ticker Symbol: SCCBX
1/31/99: $36.7 million
- --------------------------------------------------------------------------------
o Led by the largest, most liquid issues, corporate bonds regained strength
after undergoing a sharp correction in the late summer.
o The Fund was well positioned for the rebound, posting a total return of 5.53%
for the five months ended January 31, 1999, outpacing the 4.23% return of its
unmanaged benchmark, the Lehman Brothers Intermediate Corporate Bond Index. As
of January 31, 1999 the Fund's 30-day SEC yield was 6.61%.
o Fund management focused on bonds in non-cyclical industries, such as the
telecommunications, media, and consumer non-durables sectors.
Table of Contents
3 Letter from the Fund's President 15 Financial Highlights
4 Performance Update 16 Notes to Financial Statements
5 Portfolio Summary 19 Report of Independent Accountants
6 Portfolio Management Discussion 20 Officers and Trustees
9 Investment Portfolio 21 Investment Products and Services
12 Financial Statements 22 Scudder Solutions
2 - Scudder Corporate Bond Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
In the past five months, investors have witnessed a wide range of extremes
in the financial markets. Euphoric highs have given way to frightening lows,
only to be followed by equally dizzying rebounds. While historically such
volatility has been reserved for the stock market, bonds have also been subject
to extraordinary fluctuations in recent months. Corporate issues, which for
three years had benefited from almost ideal conditions, surprised many investors
by falling sharply during the financial crises of 1998. As we believe the
subsequent rebound has demonstrated, however, a long-term perspective that
stresses patience continues to be a key element of a sound investment
philosophy. In addition, we believe that investors with adequate exposure to
several asset classes such as domestic fixed income, international bonds, and
equities will be the most successful over time.
In this abbreviated period, Scudder Corporate Bond Fund outperformed its
benchmark by a wide margin. A relatively new addition to the Scudder family of
funds, Scudder Corporate Bond Fund has already demonstrated the value of
diligent research, prudent security selection, and a focus on long-term
performance. A detailed discussion of the market conditions, investment
strategy, and outlook of the Fund's management team begins on page 6.
For those of you who are interested in new Scudder products, we recently
introduced the Scudder Tax Managed Growth Fund, which invests in medium- to
large-sized U.S. companies, and Scudder Tax Managed Small Company Fund, which
focuses on stocks of small U.S. companies. Using a combination of quantitative
and fundamental research, the funds emphasize companies with strong earnings
growth, reasonable valuations, and favorable risk profiles. Both funds strive to
maximize after-tax returns by systematically taking into account the tax
implications of portfolio transactions and seeking to offset capital gains by
realizing losses when appropriate.
Thank you for your continued investment in Scudder Corporate Bond Fund. If
you have any questions about your investment, please call Scudder Investor
Information at 1-800-225-2470, or visit our Web site at www.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Corporate Bond Fund
3 - Scudder Corporate Bond Fund
<PAGE>
Performance Update as of January 31, 1999
- ---------------------
Fund Index Comparison
- ---------------------
Total Return
- ---------------------------------------------------
Period Ended Growth of
1/31/1999 $10,000 Cumulative
- ---------------------------------------------------
Scudder Corporate Bond Fund
- ---------------------------------------------------
Life of Fund* $ 10,553 5.53%
- ---------------------------------------------------
Lehman Brothers Corporate Intermediate Bond Index
- ---------------------------------------------------
Life of Fund* $ 10,423 4.23%
- ---------------------------------------------------
* The Fund commenced operations on August 31, 1998.
- ------------------------------
Growth of a $10,000 Investment
- ------------------------------
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
Lehman Brothers Corporate
Intermediate Bond Index Scudder Corporate Bond Fund
8/98 10000 10000
9/98 10299 10292
10/98 10217 10178
11/98 10296 10406
12/98 10341 10433
1/99 10423 10553
The Lehman Brothers Corporate Intermediate Bond Index is a subset of the Lehman
Brothers Corporate Bond Index with maturities of less than 10 years, calculated
on a total return basis. Index returns assume reinvested dividends and, unlike
Fund returns, do not reflect any fees or expenses.
- ---------------------------------
Returns and Per Share Information
- ---------------------------------
Period ended January 31
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
1999*
- --------------------------------------------------------------------------------
Net Asset Value $ 12.27
- --------------------------------------------------------------------------------
Income Dividends $ .36
- --------------------------------------------------------------------------------
Capital Gains Distributions $ .03
- --------------------------------------------------------------------------------
Fund Total Return (%) 5.53
- --------------------------------------------------------------------------------
Index Total Return (%) 4.23
- --------------------------------------------------------------------------------
Performance is historical and assumes reinvestment of all dividends and capital
gains and is not indicative of future results. Total return and principal value
will fluctuate, so an investor's shares, when redeemed, may be worth more or
less than when purchased. If the Adviser had not maintained the Fund's expenses,
the total return for the Fund would have been lower.
4 - Scudder Corporate Bond Fund
<PAGE>
Portfolio Summary as of January 31, 1999
- ---------------
Diversification
- ---------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Corporate Bonds 73%
U.S. Government Agencies &
Treasury Obligations 11%
Cash Equivalents 8%
Foreign Bonds -- U.S. $ Denominated 4%
U.S. Government-Backed Mortgages 4%
---------------------------------------------
100%
---------------------------------------------
The Fund's focus is on high-quality corporate bonds.
Government securities are held in lieu of a larger cash
position.
- -------
Quality
- -------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
U.S. Government Agencies &
Treasury Obligations 16%
AAA* 7%
AA 7%
A 30%
BBB 14%
BB 15%
B 10%
NR 1%
---------------------------------------------
100%
---------------------------------------------
*Category includes cash equivalents
The Fund is defensively positioned for an environment of
slower global growth.
- ------------------
Effective Maturity
- ------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Less than 1 year 1%
1 - 5 years 38%
5 - 8 years 23%
8 - 15 years 27%
Greater than 15 years 11%
---------------------------------------------
100%
---------------------------------------------
Weighted average effective maturity:
8.16 years
Corporate bonds of intermediate maturities offered
attractive valuations following the global crises of early
autumn.
For more complete details about the Fund's investment portfolio, see page 9. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Corporate Bond Fund
<PAGE>
Portfolio Management Discussion
In the following interview, Lead Portfolio Manager Stephen Wohler discusses
Scudder Corporate Bond Fund's strategy and the market environment in the period
from the Fund's inception on August 31, 1998, to January 31, 1999.
Q: The past five months have been highly eventful for corporate bonds. What
happened?
A: Corporate bonds tend to perform best when economic growth is steady and
interest rates are stable or declining. Although conditions were very favorable
in the first half of the year, the global financial crises of the late summer
essentially froze the corporate bond market for two months. Brokers refused to
take on new positions, and the resulting evaporation of liquidity sent bond
yields soaring (and prices falling), prompting investors to flee to the relative
safety of Treasuries. Once the Federal Reserve cut interest rates three times
between September and November, sentiment improved and trading volume gradually
began to return to normal levels. In this phase, investors generally favored the
liquid bonds of large, well known firms over those issued by smaller, less
reliable companies. Even during the January rally, the preference for liquidity
and familiarity was strong, reflecting the market's collective memory of last
year's debacle. In this environment, we have maintained a focus on household
names such as Ford and IBM, which can usually be bought and sold with a
relatively low degree of difficulty.
Q: How did the Fund perform in these conditions?
A: Very well. Although it would appear that the Fund commenced operations at the
worst possible time -- directly in the middle of a global crisis -- the timing
proved to be highly advantageous. In a period when many established investors
were absorbing losses in their portfolios, the fact that we were putting new
assets to work provided us with the opportunity to purchase quality issues at
distressed prices. This fortuitous timing, in combination with strong selection
of individual bonds, enabled the Fund to post a stellar return for the period.
In the five months ended January 31, Corporate Bond Fund had a total return of
5.53%, beating the 4.23% return of its unmanaged benchmark, the Lehman Brothers
Intermediate Corporate Bond Index.
Q: What is the Fund's strategy?
A: Our primary objective is to provide investors with a high level of current
income while striving to minimize risk. To do so, we utilize intensive
fundamental research to select undervalued corporate bonds that we believe are
positioned for an upgrade in their credit rating. Diversification across a wide
range of sectors and industries also allows the Fund to both minimize risk and
provide investors with extensive exposure to many sectors within the corporate
bond market. In general, we focus on bonds with maturities of five to ten years.
Q: In what sectors have you found the most attractive opportunities?
A: The most significant decision we made was to avoid a sector that we found to
be very unattractive -- industrial cyclicals. In light of the tenuous situation
overseas, we felt that it would be prudent to minimize exposure to fluctuations
in the economy and instead focus on companies that offer a higher level of
earnings reliability. As a result, we have overweighted the communications,
6 - Scudder Corporate Bond Fund
<PAGE>
media, and consumer nondurables sectors. Due to the robust growth in these
areas, we believed that the likelihood of ratings upgrades was much higher here
than in industries suffering from weaker earnings, such as heavy equipment
makers. Examples of bonds that we found particularly attractive are Qwest
Communications, Time Warner, Sprint, and Chancellor Media. One of our best
performers has been TCI Communications, whose bond price was boosted by a rating
upgrade after the company was taken over by AT&T.
Our position in the energy sector proved detrimental to Fund performance.
Believing that low oil prices provided an opportunity to capitalize on emerging
value, we established positions in a wide range of issues within the industry.
Contrary to our expectations, energy prices have continued to fall, causing
these holdings to underperform the broader corporate market. Over the long term,
we think they will add value to the portfolio because of their attractive
yields, reasonable valuations, and favorable business fundamentals. As a result,
although we have trimmed the lower quality names, we have maintained our
positions in the strongest credits.
Q: What has been the average credit quality of Fund holdings?
A: We are able to invest up to 35% of assets in below investment-grade credits
(i.e. those rated BB and lower), with the remaining 65% in investment-grade
bonds, Treasuries, or cash. As of January 31, we had 25% of assets in bonds
rated B or BB, which placed the average quality of the Fund at low to middle A.
While it would be possible to achieve a higher yield by investing a greater
7 - Scudder Corporate Bond Fund
<PAGE>
percentage of assets in lower-rated bonds, we believe that a full weighting in
this sector is unwarranted in light of the continued weakness in the global
economy. At this level we are defensively positioned, but we have the
flexibility to lower our average quality if strong domestic growth sparks a
return of liquidity to the high yield sector.
Q: What was your strategy with respect to duration?
A: Duration measures a portfolio's sensitivity to interest rate changes, and can
be adjusted by altering the mix of yields and maturities in the portfolio. The
shorter a portfolio's duration, the less its net asset value will be affected by
rising interest rates. We strive to maintain a duration range of about 4 to 5.5
years, and will not alter the Fund's duration for the purpose of making large
interest rate bets. Our duration of 5.3 reflects the opportunities currently
available in bonds of intermediate maturities. At present, such issues offer
much of the yield available in longer-term securities at a substantially lower
level of risk.
Q: What is your outlook for corporate bonds?
A: We believe that corporates are highly attractive at their current yield
levels. Although a slowing domestic economy and lower corporate earnings are
certainly a possibility at this stage of the business cycle, growth is robust
and the balance sheets of companies in our investment universe remain strong.
Despite the existence of a favorable investment environment, prices in the
corporate market appear to be discounting a high probability of a recession. We
feel that this phenomenon is more reflective of investors' fears of another
liquidity crunch than it is of fundamental weakness in corporate America. Going
forward, we believe that our strong research capabilities will enable us to take
advantage of this unusual situation by uncovering fundamentally strong,
undervalued issues in the corporate bond sector.
Scudder Corporate Bond Fund:
A Team Approach to Investing
Scudder Corporate Bond Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an
important role in the Fund's management process. Team members work together to
develop investment strategies and select securities for the Fund's portfolio.
They are supported by the Adviser's large staff of economists, research
analysts, traders, and other investment specialists who work in our offices
across the United States and abroad. We believe our team approach benefits
Fund investors by bringing together many disciplines and leveraging our
extensive resources.
Stephen A. Wohler, Lead Portfolio Manager, is responsible for implementing the
Fund's strategy and overseeing its daily operations. Mr. Wohler has over 19
years of experience managing fixed-income investments and has been with the
Adviser since 1979. Kelly D. Babson, Portfolio Manager, joined the Adviser in
1994 as a portfolio manager and has 17 years of experience in the fixed income
field, including 14 years of high-yield management. Robert S. Cessine,
Portfolio Manager, is responsible for the Fund's investment strategy including
duration management, asset allocation, security selection and trading. Mr.
Cessine joined the Adviser as a portfolio manager in January 1993, and has
over 17 years of industry experience.
8 - Scudder Corporate Bond Fund
<PAGE>
Investment Portfolio as of January 31, 1999
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 8.1%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with State Street Bank and Trust Company dated 1/29/1999 at
4.7%, to be repurchased at $3,141,230 on 2/1/1999, collateralized by a -----------
$3,115,000 U.S. Treasury Note, 5.75%, 11/15/2000 (Cost $3,140,000) .................... 3,140,000 3,140,000
-----------
U.S. Government Agency Pass-Thrus 2.7%
- ------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 5.75%, 7/15/2003 (Cost $1,025,610) .................... 1,000,000 1,029,370
-----------
U.S. Treasury Obligations 8.1%
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Note, 5.875%, 11/30/2001 (c) .............................................. 1,000,000 1,033,440
U.S. Treasury Note, 5.625%, 12/31/2002 .................................................. 1,000,000 1,034,690
U.S. Treasury Note, 6.5%, 10/15/2006 .................................................... 500,000 554,920
U.S. Treasury Note, 3.875%, 1/15/2009 ................................................... 500,000 504,375
- ------------------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury Obligations (Cost $3,130,465) 3,127,425
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Government Backed Mortgages 3.9%
- ------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Association, 6.5%, 2/25/2028 (Cost $1,509,082) (b) ............ 1,500,000 1,513,590
-----------
Foreign Bonds -- U.S. $ Denominated 4.4%
- ------------------------------------------------------------------------------------------------------------------------------
Hutchison Whampoa, Ltd., 7.5%, 8/1/2027 ................................................. 250,000 203,508
PacifiCorp Australia, 6.15%, 1/15/2008 .................................................. 1,000,000 1,027,300
Petroleum Geo-Services, 6.625%, 3/30/2008 ............................................... 500,000 490,085
- ------------------------------------------------------------------------------------------------------------------------------
Total Foreign Bonds -- U.S. $ Denominated (Cost $1,683,907) 1,720,893
- ------------------------------------------------------------------------------------------------------------------------------
Corporate Bonds 72.8%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 3.9%
Finlay Fine Jewelry Co., 8.375%, 5/1/2008 ............................................... 250,000 235,000
NBTY Inc., 8.625%, 9/15/2007 ............................................................ 250,000 240,000
Tricon Global Restaurants, 7.65%, 5/15/2008 ............................................. 500,000 530,000
Westpoint Stevens, Inc., 7.875%, 6/15/2005 .............................................. 500,000 513,750
-----------
1,518,750
-----------
Consumer Staples 7.1%
Bass America Inc., 6.625%, 3/1/2003 ..................................................... 500,000 515,575
Dyersburg Corp., 9.75%, 9/1/2007 ........................................................ 250,000 212,500
Fleming Companies, Inc., 10.625%, 7/31/2007 ............................................. 250,000 228,750
Revlon Consumer Products, 8.625%, 2/1/2008 .............................................. 300,000 266,250
Safeway Inc., 6.05%, 11/15/2003 ......................................................... 500,000 504,255
The Great Atlantic & Pacific Tea Company, Inc., 7.7%, 1/15/2004 ......................... 1,000,000 1,005,000
-----------
2,732,330
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Corporate Bond Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Communications 9.4%
Allegiance Telecom, Inc., 12.875%, 5/15/2008 ............................................ 250,000 260,000
Intermedia Communications, Inc., 8.875%, 11/1/2007 ...................................... 250,000 242,500
Iridium LLC Capital Corp., 11.25%, 7/15/2005 ............................................ 250,000 212,500
MCI Communications Corp., 6.125%, 4/15/2002 ............................................. 600,000 608,898
Qwest Communications International, 7.5%, 11/1/2008 ..................................... 1,000,000 1,060,000
SBA Communications Corp., Step-up Coupon, 0% to 3/1/2003, 12% to 3/1/2008 ............... 400,000 231,000
Sprint Capital Corp., 6.125%, 11/15/2008 ................................................ 1,000,000 1,023,540
-----------
3,638,438
-----------
Financial 15.3%
Bank United Capital Trust, 10.25%, 12/31/2026 ........................................... 250,000 250,000
Capital One Bank, 6.57%, 1/27/2003 ...................................................... 250,000 249,725
First Union Institutional Capital II, 7.85%, 1/1/2027 ................................... 1,000,000 1,099,200
First USA Bank, 5.85%, 2/22/2001 ........................................................ 250,000 252,393
Ford Motor Credit Co., 6.125%, 4/28/2003 ................................................ 500,000 512,755
General Electric Capital Corp., 6.02%, 5/4/2001 ......................................... 1,000,000 1,010,000
Home Savings of America, 6%, 11/1/2000 .................................................. 1,000,000 1,005,130
Morgan Stanley Dean Witter & Co., 5.625%, 1/20/2004 ..................................... 500,000 499,880
Prudential Insurance Co., 6.375%, 7/23/2006 ............................................. 1,000,000 1,023,950
-----------
5,903,033
-----------
Media 10.7%
Chancellor Media Corp., 8%, 11/1/2008 ................................................... 500,000 538,750
Cox Communications, Inc., 6.85%, 1/15/2018 .............................................. 1,000,000 1,050,880
News America Holdings Inc., 9.25%, 2/1/2013 ............................................. 500,000 633,260
Outdoor Systems, Inc., 8.875%, 6/15/2007 ................................................ 250,000 268,125
TCI-Communications, Inc., 8%, 8/1/2005 (c) .............................................. 1,000,000 1,132,950
Time Warner Inc., 6.875%, 6/15/2018 (c) ................................................. 500,000 528,460
-----------
4,152,425
-----------
Service Industries 3.3%
Allied Waste North America, 7.375%, 1/1/2004 ............................................ 250,000 255,000
Cendant Corp., 7.75%, 12/1/2003 ......................................................... 500,000 518,200
Integrated Electrical Services, Inc., 9.375%, 2/1/2009 .................................. 500,000 512,500
-----------
1,285,700
-----------
Manufacturing 5.2%
AEP Industries Inc., 9.875%, 11/15/2007 ................................................. 250,000 250,624
Federal-Mogul Corp., 7.375%, 1/15/2006 .................................................. 500,000 494,525
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Corporate Bond Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Radnor Holdings Corp., 10%, 12/1/2003 ................................................... 250,000 257,500
Xerox Corp., 5.5%, 11/15/2003 ........................................................... 1,000,000 1,012,899
-----------
2,015,548
-----------
Technology 3.9%
IBM Corp., 5.1%, 11/10/2003 ............................................................. 1,000,000 994,070
Raytheon Co., 6%, 12/15/2010 ............................................................ 500,000 501,500
-----------
1,495,570
-----------
Energy 8.5%
Anadarko Petroleum Corp., 7%, 11/15/2027 ................................................ 700,000 680,183
Barrett Resources Corp., 7.55%, 2/1/2007 ................................................ 300,000 286,920
Bellwether Exploration Co., 10.875%, 4/1/2007 ........................................... 250,000 240,000
Louis Dreyfus Natural Gas Corp., 6.875%, 12/1/2007 ...................................... 500,000 478,560
Louisiana Land & Exploration Co., 7.65%, 12/1/2023 ...................................... 1,000,000 1,066,180
Texas Eastern Transmission Corp., 10%, 8/15/2001 ........................................ 500,000 552,650
-----------
3,304,493
-----------
Construction 0.7%
Nortek, Inc., 9.125%, 9/1/2007 .......................................................... 250,000 260,625
-----------
Utilities 4.8%
CalEnergy Co., Inc., 7.23%, 9/15/2005 ................................................... 500,000 529,800
Houston Light & Power Capital Trust II, 8.257%, 2/1/2037 ................................ 250,000 266,250
Niagara Mohawk Power Corp., 7.375%, 7/1/2003 ............................................ 1,000,000 1,039,330
-----------
1,835,380
- ------------------------------------------------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $27,564,962) 28,142,292
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $38,054,026) (a) 38,673,570
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $38,054,026. At January 31,
1999, net unrealized appreciation for all investment securities based on
tax cost was $619,544. This consisted of aggregate gross unrealized
appreciation for all investments in which there was an excess of market
value over tax cost of $790,955 and aggregate gross unrealized
depreciation for all investment securities in which there was an excess of
tax cost over market value of $171,411.
(b) When issued or forward delivery pools included.
(c) At January 31, 1999, these securities, in part or in whole, have been
segregated to cover when-issued or forward delivery pools.
The accompanying notes are an integral part of the financial statements.
11 - Scudder Corporate Bond Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of January 31, 1999
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $38,054,026) ................. $ 38,673,570
Cash ................................................................. 56
Receivable for investments sold ...................................... 1,532,884
Interest receivable .................................................. 488,055
Receivable for Fund shares sold ...................................... 31,262
Due from Adviser ..................................................... 223,108
----------------
Total assets ......................................................... 40,948,935
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased .................................... 2,616,221
Payable for when-issued and forward delivery pools ................... 1,509,082
Dividends payable .................................................... 10,410
Payable for Fund shares redeemed ..................................... 9,096
Other payables and accrued expenses .................................. 88,260
----------------
Total liabilities .................................................... 4,233,069
-------------------------------------------------------------------------------------------
Net assets, at market value $ 36,715,866
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on investments ............ 619,544
Accumulated net realized gain (loss) ................................. 59,282
Paid-in capital ...................................................... 36,037,040
-------------------------------------------------------------------------------------------
Net assets, at market value $ 36,715,866
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($36,715,866 / 2,991,753 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ----------------
authorized) ........................................................ $12.27
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Corporate Bond Fund
<PAGE>
Statement of Operations
for the period August 31, 1998 (commencement
of operations) to January 31, 1999
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Interest .............................................................. $ 901,007
----------------
Expenses:
Management fees ....................................................... 83,075
Services to shareholders .............................................. 156,889
Custodian and accounting fees ......................................... 17,592
Trustees' fees and expenses ........................................... 5,136
Reports to shareholders ............................................... 4,223
Auditing .............................................................. 20,300
Legal ................................................................. 7,079
Registration fees ..................................................... 29,233
Other ................................................................. 6,544
----------------
Total expenses before reductions ...................................... 330,071
Expense reductions .................................................... (330,071)
----------------
Expenses, net ......................................................... --
-------------------------------------------------------------------------------------------
Net investment income ................................................. 901,007
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investments ............................. 141,244
Net unrealized appreciation (depreciation) during the period on
investments ......................................................... 619,544
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 760,788
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 1,661,795
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Corporate Bond Fund
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
August 31,
1998
(commencement
of operations)
to January 31,
Increase (Decrease) in Net Assets 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Operations:
Net investment income ....................................................... $ 901,007
Net realized gain (loss) from investment transactions ....................... 141,244
Net unrealized appreciation (depreciation) on investment
transactions during the period ............................................ 619,544
----------------
Net increase (decrease) in net assets resulting from operations ............. 1,661,795
Distributions to shareholders from:
Net investment income ..................................................... (901,007)
----------------
Net realized gains ........................................................ (81,962)
----------------
Fund share transactions:
Proceeds from shares sold ................................................... 36,901,098
Net asset value of shares issued to shareholders in reinvestment of
distributions ............................................................. 956,646
Cost of shares redeemed ..................................................... (1,821,904)
----------------
Net increase (decrease) in net assets from Fund share transactions .......... 36,035,840
----------------
Increase (decrease) in net assets ........................................... 36,714,666
Net assets at beginning of period ........................................... 1,200
----------------
Net assets at end of period ................................................. $ 36,715,866
----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ................................... 100
----------------
Shares sold ................................................................. 3,063,041
Shares issued to shareholders in reinvestment of distributions .............. 78,297
Shares redeemed ............................................................. (149,685)
----------------
Net increase (decrease) in Fund shares ...................................... 2,991,653
----------------
Shares outstanding at end of period ......................................... 2,991,753
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Corporate Bond Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
August 31,
1998
(commencement
of operations) to
January 31,
1999
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
--------------------
Net asset value, beginning of period .............................................................. 12.00
--------------------
Income from investment operations:
Net investment income ............................................................................. .36
Net realized and unrealized gain (loss) on investment transactions ................................ .30
--------------------
Total from investment operations .................................................................. .66
--------------------
Less distributions from:
Net investment income ............................................................................. (.36)
Net realized gains from investment transactions ................................................... (.03)
--------------------
Total distributions ............................................................................... (.39)
--------------------
--------------------
Net asset value, end of period .................................................................... 12.27
--------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) .............................................................................. 5.53**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............................................................ 37
Ratio of operating expenses, net to average daily net assets (%) .................................. 0.00*
Ratio of operating expenses before expense reductions, to average daily net assets (%) ............ 2.55*
Ratio of net investment income to average daily net assets (%) .................................... 6.96*
Portfolio turnover rate (%) ....................................................................... 96.7*
</TABLE>
(a) Total return would have been lower had expenses not been reduced.
* Annualized
** Not annualized
15 - Scudder Corporate Bond Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Corporate Bond 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 an 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 by the Fund in the preparation of its
financial statements.
Security Valuation. Portfolio debt securities purchased with original 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. Money market investments purchased with an original
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 is equal to at least the repurchase price.
When-issued and Forward Delivery Securities. The Fund may purchase securities on
a when-issued or forward delivery basis, for payment and delivery at a later
date. The price of such securities, which may be expressed in yield terms, is
fixed at the time the commitment to purchase is made, but delivery and payment
take place at a later time. At the time the Fund makes the commitment to
purchase a security on a when-issued or forward delivery basis, it will record
the transaction and reflect the value of the security in determining its net
asset value. During the period between purchase and settlement, no payment is
made by the Fund to the issuer and no interest accrues to the Fund. At the time
of settlement, the market value of the security may be more or less than the
purchase price. The Fund will establish a segregated account in which it will
maintain cash and liquid debt securities equal in value to commitments for
when-issued or forward delivery securities.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly the Fund paid no federal income taxes and no federal
income tax provision was required.
Distribution of Income and Gains. Distribution of net investment income is
declared daily and distributed monthly. 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. 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.
16 - Scudder Corporate Bond Fund
<PAGE>
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade-date basis.
Distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis. All discounts are accreted for both tax
and financial reporting purposes.
B. Purchases and Sales of Securities
For the period ended January 31, 1999, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $36,859,006 and $5,245,703, respectively. Purchases and sales of U.S.
Government obligations aggregated $9,700,579 and $6,560,156, respectively.
C. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or 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%. The Adviser and
certain of its subsidiaries have agreed to reimburse or not to impose,
respectively, all of their fees payable by the Fund until August 31, 1999 in
order to maintain the annualized expenses of the Fund at not more than 0.0% of
average daily net assets. For the period August 31, 1998 (commencement of
operations) to January 31, 1999, the Adviser did not impose any portion of its
management fee amounting to $83,075. Further, the Fund's reimbursement due from
the Adviser for the period August 31, 1998 (commencement of operations) to
January 31, 1999 amounted to $223,108.
Effective September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner
of the Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998, the Board of
Trustees and the shareholders of the Fund approved a new investment management
agreement with Scudder Kemper, which is substantially identical to the former
Management Agreement, except for the dates of execution and termination.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
period ended January 31, 1999, SSC did not impose any of its fees amounting to
$8,263.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the period ended January 31,
1999, STC did not incur any fees.
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 period ended
January 31, 1999, SFAC did not impose any of its fees amounting to $15,625.
17 - Scudder Corporate Bond Fund
<PAGE>
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be invested in the Underlying Funds. For the period ended January
31, 1999, the Special Servicing Agreement expense charged to the Fund amounted
to $147,874.
The Fund pays each of its Trustees not affiliated with the Adviser an annual
retainer divided equally among the series of the Trust, plus specified amounts
for attended board and committee meetings. For the period ended January 31,
1999, the Trustee's fees and expenses aggregated $5,136.
D. Line of Credit
The Fund and several Scudder Funds (the "Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement.
18 - Scudder Corporate Bond Fund
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder Portfolio Trust and the Shareholders of Scudder
Corporate Bond Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder Corporate Bond Fund (the
"Fund") at January 31, 1999, the results of its operations, the changes in its
net assets, and the financial highlights for the period from August 31, 1998
(commencement of operations) to January 31, 1999, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at January 31, 1999 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
March 12, 1999
19 - Scudder Corporate Bond Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; President, Driscoll
Associates; Executive Fellow,
Center for Business Ethics,
Bentley College
Peter B. Freeman
Trustee; Corporate Director 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
Kathryn L. Quirk*
Trustee; Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
Kelly D. Babson*
Vice President
William M. Hutchinson*
Vice President
Thomas W. Joseph*
Vice President
Valerie F. Malter*
Vice President
Ann M. McCreary*
Vice President
Stephen A. Wohler*
Vice President
Thomas F. McDonough*
Vice President and Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
20 - Scudder Corporate Bond Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Prime Reserve Shares*
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series --
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
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 Corporate Bond Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. +++ +++ +++A no-load variable
annuity contract issued by Glenbrook Life and Annuity Company and underwritten
by Allstate Financial Services, Inc., sold by Scudder's insurance agencies,
1-800-225-2470. #These funds, advised by Scudder Kemper Investments, Inc., are
traded on the New York Stock Exchange and, in some cases, on various other stock
exchanges.
21 - Scudder Corporate Bond Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
22 - Scudder Corporate Bond 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 8,000 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
800 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 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
</TABLE>
23 - Scudder Corporate Bond Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $280 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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